Management w10 analysis

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West Texas A&M University *

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4315

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Management

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Apr 3, 2024

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Under Jack Welch, General Electric (GE) focused on companies that were either number one or number two in their respective categories, aggressively cut costs, and strictly enforced employee performance reviews in an effort to maintain market dominance. Vertical integration, diversity, and geographic reach were given top priority in Welch's plan. Nonetheless, the company's large losses in the 2008 and 2001 recessions demonstrate how vulnerable it was due to its restricted international growth and excessive dependence on GE Capital. Under Jeffrey Immelt, GE attempted to divest non-core operations like NBC Universal and its appliance sector in order to focus on industrial engineering. With deals like Alstom, Immelt shifted his attention more toward the power sector in an attempt to reduce his exposure to the financial markets and promote long-term success. Nevertheless, since these measures did not provide the desired results, GE's financial losses, high debt load, and declining stock prices continued. After a series of poor leadership changes, including the appointment of John Flannery to succeed Immelt as CEO, the company moved away from insider management when Lawrence Culp was named the new CEO. The current board, which includes activist investor Trian Fund, is attempting to alter the company's strategy in an attempt to turn around GE's finances. Discussion Questions: 1. What constituted the cornerstone of Jack Welch's GE strategy? - Welch's strategy focused on aggressive cost-cutting, market dominance, and strict performance assessments to streamline operations and ensure that corporations were leaders in their respective areas. 2. What caused GE to suffer in the recessions of 2001 and 2008?

- Due to its excessive dependence on GE Capital and constrained international growth, GE was exposed to economic downturns, which resulted in large losses and a drop in the company's market value. 3. What outcomes was Jeffrey Immelt's endeavor at GE reform able to attain? - With deals like Alstom and the sale of non-core companies, Immelt increased his bet on the power industry and attempted to reestablish GE as an industrial engineering company. However, because these efforts were failing to yield the desired results, GE kept suffering financial setbacks and declining stock prices. 4. What criteria did the current board use to select Lawrence Culp as the new CEO, and what changes are they hoping to implement? - After a series of poor leadership changes, including Flannery replacing Immelt as CEO, Lawrence Culp was appointed. The current board, which includes activist investor Trian Fund, is attempting to change the way the corporation approaches turning around GE's financial predicament. This could include a shift in the company's leadership to outsiders and significant alterations to the business model. Conclusion: In conclusion, General Electric's corporate strategy has evolved dramatically throughout the years under the direction of Jack Welch, Jeffrey Immelt, and currently Lawrence Culp. During Welch's leadership, the company adopted aggressive cost-cutting and market dominance practices that, while initially effective, left it vulnerable to economic downturns due to its over reliance on GE Capital. Immelt attempted to restructure by refocusing on industrial engineering, but as evidenced by his continuing financial losses and declining stock prices, he could not meet the anticipated goals. The appointment of Lawrence Culp as CEO raises the possibility that the

company is leaning toward outside leadership and that a strategic overhaul will receive increased focus in an attempt to turn the company around.The present board is willing to make significant changes to GE's corporate strategy in order to address the company's issues and position it for long-term, sustainable growth, including the influential activist investor Trian Fund. A thorough examination of GE's business strategy's history indicates that adaptability and strategic vision are essential for navigating the intricate global market. For a while, Welch's strong approach proved effective, but it also revealed problems that needed to be addressed. Sustainable development cannot be attained by Immelt's turn toward industrial engineering, notwithstanding the importance of diversity. GE has the opportunity, under Culp's leadership, to reconsider its strategic direction and take back the lead role in the industrial sector at this critical juncture. GE's course will likely be impacted for some time by the impending strategic changes, which will be molded by the current board's vision. These changes will underscore the necessity of strong leadership and strategic decision-making for the long-term survival and prosperity of companies.

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