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Vision & Goals

General Electric‟s corporate vision is 'We bring good things to life'. This vision is guided by
some goals they have which are; imagine, solve, build and lead. At GE, imagine is an
invitation to dream, where employees do things they didn‟t think they could do. GE is here to
solve problems for its consumers, communities and themselves. GE also has a quest for
growth, and when they look to the future, they know that for them, there's only one way to get
there. Build. The last goal is to lead, that is a drive to be the first in everything that they do. So
they not only have to maintain their present condition, they also have the responsibility to
grow. These vision and goals inspire the employees of GE while asking them to do the best,
most or greatest.
Dominant Logic

After his initiation, Jack Welch set the standard of GE to become #1 or # 2 in its industry.
Jack Welch decided to intervene with the dominant logic that the organization was
following. The sector level bureaucratic center of strategic control consisting of a number of
hierarchical levels was downsized, de-staffed and decentralized. He shifted his focus to core
competencies which meant reinvesting in productivity and quality while focusing
technology innovation and services. SBUs that did not meet his criteria of being #1 and #2
were let go regardless of profitability. A considerable amount of acquisitions were made and
employees that he believed did not add value were let go. Then again by 1996 they moved
towards service business which can be regarded as another dominant logic as their internal
mindsets were changing form selling products to “helping our customers to win”. So, after
that they moved toward service related acquisitions & joint ventures.



Corporate parenting
The barrier-free model that Welch had adopted during his era seems to be a very effective one
since GE had continuously succeeded in its corporate parenting strategies through this model. It
could achieve business unit synergies through compatibility because of similarity in strategy,
skills and culture. It had achieved corporate synergies while restructuring the business,
facilitating skill and resource linkage across SBUs, providing know-how for acquisitions and
expansion, improving product and process technologies. Moreover synergies were also evident
across national boundaries and allowed for exchanges of ideas that helped improve
performances. Six-sigma plan was undertaken by all the SBUs. Parenting strategy that GE
followed was mainly Development and Linkage. This is because the Welch era constantly went
through restructuring and the purchase and sale of new SBUs.







Linkages


Development


Central Services

Stand Alone
Corporate
Parenting
Strategies
High






Low

(Degree
of
corporat
e
interven
tion)
Operating Financial
(Nature of corporate intervention)



At the same time, the parent company created synergies in the SBU which were operational in
nature and had a high degree of corporate intervention. Most of the time it is quite difficult to
align new SBUs with the culture of the acquiring company but Welsh was able to do that thus
creating synergies.
This above mentioned integration model, which is an example of sharing ideas within GE,
provides a crucial lesson. Learning from each other can increase efficiency and productivity.
Moreover, integration can reduce costs as well as increase transaction effectiveness.

Business unit synergy
GE handled its SBU‟s quite successfully & tried to create business synergy by increasing
compatibility & complementarities. For example it has increased its compatibility when they
tried to learn job shop techniques from Canadian appliances which increased efficiency by
applying similar strategy. However, it also tried to increase its complementarities as GE was not
stuck into only on the product, they also focused on the service business later which also
increased their revenue, and here synergy arises from the differences. In addition GE‟s boundary
less behavior also helped them to increase their compatibility as they learnt from other SBU‟s
like asset management from appliances, transaction effectiveness from GE capital; cost reduction
techniques from aircraft engines & global account management from plastics.








Corporate Synergy:


 Productivity was boosted by reengineering and restructuring(M-form structure) the
whole process. Through a paradigm shift in management style and culture (downsizing,
de-staffing and de-layering) GEs operating profits rose dramatically from $1.6 billion
to $2.4 billion between 1981 and 1985. Productivity also increased through different
infiltrate concepts developed by Welch, such as Work Out and Best Practices, Croton
Ville‟s management development facility. Welch‟s objective was to create a culture
where all felt engaged and everyone had voice so that GE can eliminate overhead by
being „lean and agile‟.


 Facilitating Skill and resource linkages was done through the execution of Six Sigma,
which not only led to better productivity and enhanced quality, but created further cost
synergies through error minimization.

 GE stressed its synergy in going global by taking every opportunity possible i.e. by
Exploiting parent relationships to set up a base and develop it through their expertise.

Centralized
Management control
(1930)
Decentralized
Management control
(1950)
Central Service
(1980)


 Welch had created A Players—individuals with vision, leadership, energy and courage.
The four E‟s were energy, enthusiasm, edge, execution. This was actually a process of
replacing inefficient managers.
Merger-Acquisition and Going Global
GE realized few years into Jack Welch‟s tenure that going global needed to be a priority for it
grow exponentially. In the growth strategies undertaken by GE, M&A and organic growth both
played a vital part. The company invested in new plants for their existing businesses in different
locations, both local and international. According to porters acquisition test they were in a good
position as acquirer, as their chosen industry were structurally sound & in most of the case they
bought it by taking advantages of the economical condition at low cost premium.


Service Business and e-business:
In 1994, Welch launched a new strategic initiative designed to reinforce one of his earliest goals:
to reduce GE‟s dependence on its traditional industrial product. And it was so successful that
after one year nearly 60% of GE‟s profit started coming from service business which were only
16.4% in 1980.
In order for the better opportunities in 1999 he introduced his fourth and the last strategic
initiative in his tenure which was e-business. He launched a program named
“destroyyourbusiness.com”. Within two months each unit had a full time dyb.com team focused
on the challenge of redefining its business model before someone else did. Welch always
believed that, „Change means opportunity‟. He successfully proved that by the proper
implementation and use of the e-business, which can be considered as a good initiative by GE as
it increased their profit, so this SBU has created more market value in GE‟s portfolio.




Recommendation:
This case was given mainly to understand GE‟s evolution in culture and business style through
Jack Welch‟s tenure so we haven‟t put any new strategies. They were successful to develop
integration capability. However, GE‟s diversification must be based to the core competences and
to the related industries where GE can utilize its competitive advantages to give value both end
users and business customers. And about the succession planning, they should hire their new
CEO from their existing top-management to be more specific from HRM department as Welch
emphasized more on developing GE‟s human resources. And the new CEO keeps the existing
management style (for the time being) and business model; it will help making the shareholders
feels secure. GE‟s can also keep Welch as a consultant for the particular time being.