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GE - TWO DECADES OF TRANSFORMATION UNDER JACK WELCH By Priyank Sinha(FT11441) Purnendu Singh(FT11442) Rachna Saini(Ft11443) Rahul Jain(FT11444) Rahul raj(FT11445)

General Electric case study

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GE - TWO DECADES OF TRANSFORMATION UNDER JACK WELCHGE- THE LEGACYCreated in 1878 by Thomas A Edison Developed into highly centralized and tightly controlled model by 1930s. Shift towards decentralization in the 1950s. Started developing strategic planning system by the 1960s Reorganization of GE started by Reg Jones ² 1973 Established 10 groups, 46 divisions and 190 depa

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Page 1: General Electric case study

GE - TWO DECADES OF TRANSFORMATION UNDER

JACK WELCH

By

Priyank Sinha(FT11441)

Purnendu Singh(FT11442)

Rachna Saini(Ft11443)

Rahul Jain(FT11444)

Rahul raj(FT11445)

Page 2: General Electric case study

GE- THE LEGACY

Created in 1878 by Thomas A Edison Developed into highly centralized and tightly

controlled model by 1930s. Shift towards decentralization in the 1950s. Started developing strategic planning system

by the 1960s Reorganization of GE started by Reg Jones –

1973 Established 10 groups, 46 divisions and 190

departments supported by 43 strategic planning groups.

SBU (Strategic business unit) based structure

Page 3: General Electric case study

CHALLENGES FACED BY JACK WELCH IN 1981.

U.S economy was in recession High interest rates and strong dollar futher

increased the problems. Country’s highest unemployment rate since

Depression.

Page 4: General Electric case study

HOW DID JACK WELCH MANAGE IT?

#1 or #2:Fix,Sell or Close concept-to disengage i.e standard for each business to

become the #1 or #2 competitor in industry Three circle concept(1983)Businesses were categorized as

Core-reinvesting in productivity and quality High Technology-Investing in R & D to stay on the

edge Services-add outstanding people and make

contiguous acquisitions.

Page 5: General Electric case study

Restructuring Businesses sold for freeing capital and many new

acquisitions were made. 50% reduction in strategic planning staff to make

organization “lean and agile” ”Real time planning” concerning:

Page 6: General Electric case study

a)Current market dynamicsb)Competitor’s key strategiesc)GE business responsed)Greatest competitive threat over next three

yearse)GE business’s planned response Reduced number of hierarchical levels and

directly controlled all business.

Page 7: General Electric case study

THE BIG QUESTIONS ..

What was the objective for the series

of initiatives that he undertook in the early 80s, late 80s, early 90’s and towards retirement ?

What was the rationale and logic for these initiatives ?

Page 8: General Electric case study

EARLY 80’S

GE’s Restructuring-downsizing, destaffing and delayering

to sustain the staff that actually added value direct control of business to enhance competitiveness to break the old culture and to bring about

change

Page 9: General Electric case study

THE LATE 80’S

Software Initiatives “dubbed Work-Out” and “Best practices”:

aimed at creating a new culture with speed , simplicity and self confidence as its elements

correcting the management practices learning from other companies , to increase

productivity “Work out” : provided employees and their

bosses with a forum to discuss problems and ideas.

Page 10: General Electric case study

Going Global mission was to make “Businesses” global and not

company evaluations were done on world market position. to expand outside after making a strong base at

home.

Page 11: General Electric case study

Developing leaders: best training and development resources for

personal and professional growth to make employees loyal and to rebuild the trust

lost in 80’s due to layoffs. to make G.E the best place to work for which the

best people compete to get into. to inculcate a set of values which every manager

should follow.

Page 12: General Electric case study

INTO THE 1990’S

Boundaryless Behavior to enhance “integrated diversity ” i.e an open

and friendly environment for exchanging new ideas

setting a set of standard principles that to be followed by G.E managers all over the world.

removing barriers between marketing, sales, engineering, manufacturing etc for easy flow of work

Six Sigma Quality Initiatives-to increase productivity , lower costs and

improve quality.

Page 13: General Electric case study

Stretch : Achieving the impossible-setting higher “stretch” goals for business-to achieve much higher targets which look

impossible to achieve.-to invent better methodologies and set new

standards in the in the process. Service Business-to explore new opportunities and supplement

the slowing growth in product domain._to win huge customer base by delivering

adding value to their products.

Page 14: General Electric case study

TOWARDS RETIREMENT

“A players” with 4 E’s 4 E’s stand for:

Energy : excited by ideas. Ability to energize others Edge: ability to make tough calls Execution: turning vision into implementation

E-business launched “destryyourbusiness.com” redefining business model and taking advantage

of internet for their expansion.

Page 15: General Electric case study

How does such a large, diversified company continue to grow and defy critics?

Was Welch adding value ?

Page 16: General Electric case study

GE is still on the path of continuous innovation

Welch made GE a success during his tenure and implementing many new strategies which were criticized by many.

His idea of restructuring and downsizing was criticized but it set a strong base for company , these decisions had their own price.

He took many initiatives to set a new culture which was sustainable in long term

Page 17: General Electric case study

He was not only a leader but a model for companies , who invented new measures and strategies which were adopted by others.

He was criticized for selling businesses when they were in loss ,but he took decisions which proved to be fruit full in long run.

He brought GE to the heights where it is now with his wise calculated decisions and risk taking ability.

Page 18: General Electric case study

THANK YOU