Balubar, Krystal Shane B.

AE 115 FINALS ACTIVITY 2 CASE STUDY

Relating to the topics discussed in this course, what were the errors committed by GEC.

 Failure to act in the best interests of its shareholders and workers. The downturn of GEC
resulted in worldwide job cuts and company’s profit lowered for almost 50%. Simpson failed to
plug into the mood and sentiment of their customers, and now faced with serious questions from
institutional investors, who have lost faith in Marconi's strategy.

 Ineffectual professional obligations. They have misplaced their optimism when they assumed
incorrectly the market. The over expenditures in telecoms assets and the combination of massive
overcapacity, a worldwide slowdown and the negative effect on telecoms operators meant that
Marconi's customers needed to cut back drastically on equipment expenditure aren’t anticipated.

 Failed to maximize profits and have not avoided layoffs. The collapse in the Marconi share
price which reduces the value of its equity happened within a year. Simpson sold off GEC's
defence operations for £7.7bn and used the cash to embark on a spending spree in telecoms,
mainly in America.

 Dismantling of the Weinstock Legacy which failed to sustain commitments. For 30 years,
GEC had largely been a defence contractor. It had a reputation for being risk-averse and ultra-
conservative with money. Weinstock had built up a cash mountain of £2bn but Simpson quickly
turned the coin upside down.