A Project Report On G E Case Study

Submitted to:Mr Vinay Chirania

Submitted by:Ajay Kumar Soni PGDM 11-13

1. How does a large, complex diversified conglomerate defy the critics and continue to grow so profitability? How have Jack Welchs various initiatives added value? The complex diversified conglomerate consisting of overlaying groups of 46 divisions and 190departments all supporting 43 business units were faced with a recession, an economy of high unemployment, high interest rates, and an overvalued U.S Dollar. These uncertainties and climate of continuous change and increased competitions led Welch to the realization that overcoming the magnitude of challenges would require unconventional leadership and bold strategies. He understood that in turbulent times, strategy was not just about building a position of sustained competitive advantage but rather formation and implementation of a strategy centered on the development of timely responses and flexibility to create successive temporary advantages. To successfully achieve such objectives required the reconfiguration of organizations resources and competences. In times of uncertainties and recession, the normal course of action for many businesses is to engage in cost cutting strategies, but studies demonstrate that such strategies are not always sufficient. Investment in the right places during hard economic times enables a company to perform better during and after a recession. Evidence of this is shown when considering the fact that that Welch divided the remaining businesses into three categories known at The Three-Circle Vision. Welchs goal of making GE lean and agile resulted in de-staffing and reduction of bureaucracy, eliminating layers of hierarchical that were bottlenecks to growth and operational, personal and production efficiency. The underlining principle in the transformation is that in order to operate an effective and efficient world class business, and sustain number one or two positions in an industry, GE had to invest in the right businesses and develop staffs that are the best at what they do. Individual employees were empowered to lead in their own capacity by finding ways to contribute to the value system of the company. Leaders were challenged to find ways to make their people more effective and competitive. Open forums were created to find avenues of improvement at all levels of the firms business, operations, human resources and employee morale. Critics saw the companys strategy of developing leadership and employee capabilities enhancement as being risky especially in times of uncertainties. They also viewed the removal of boundaries through what was known as Work-Out best practice and the creation of the boundary less as being radical and risky. Values added include but not limited to the reduction of bureaucracy which resulted to more expedient processes, and effective operation. Welch extended his Fix, sell or close from the national level to the international level. He also saw the challenges in other countries and economic difficulties as opportunities for new investments and expansions. Values added also included the transforming of GE culture to a more learning, knowledge sharing and demanding of excellence, commitment and service to the goal of the organization.

2. What is your evaluation of Welchs approach to leading change? How important has he been to GEs success? Jack Welchs mission was to restructure the company in order to become the number one or number 2 competitor in the industry. He embraced change, expected his team to do the same, and challenged his team be better than the best . He employed different management reporting structures at different points of the transformation. For example, he felt as though there were too many layers at all large headquarters groups, as a result he spearheaded adestaffing process which resulted in a vertical reporting structure with major department heads reporting directly to him. In addition, his team of managers shared the same commitment to management values. Furthermore team members had to have the willingness to take charge, to think outside of the box, to push the envelope and most of all to be team players. In return Welch compensated those employees with generous bonuses and incentives. Welch fostered open communication and created a culture characterized by speed, simplicity, and self confidence. In order to show his commitment he launched the Work Out program which created a forum where employees and managers could work out new ways of interacting with each other. Welch never rested on his last success; he continued to innovate and to look for ways to grow the business both internally and externally. For example as Work Out began he began to think of additional ways to increase productivity. As a result the best practices program was created in an effort to learn from other companies and to identify the reason for their success .Welch believed in developing leaders and provided the tools for them to do so. He adapted a human resource department that would be in line with his goals. He challenged his managers to identify future leaders, and then developed a training program and a developmental plan for all key jobs. He understood that GEs assets were in fact their people and in turn had to be managed as a company resource. Welchs unwavering involvement in every facet of the business was essential to all of these incentives, and directives. His philosophy was nota do as I say not as I domentality. Inaddition he never rested on his last success. He created the Stretch program in an effort to push people to be the best they can be, to test boundaries, and to get people to think of fundamentally better ways of performing their work.. Ultimately Welchs strategy was to look at the external factors that affected GEs success, while implementing a bottom to top approach. Ultimately he realized that the success of GE relied on the strength of his team. To that end he was relentless in ensuring that his team was set up for success. Everything Welch did reflected his belief in his people and as he once stated. I own the people, you just rent them.

Welchs replacement will need to establish him/herself and make a name for themselves. This person will need to clearly communicate their vision and how they will go about accomplishing those goals. He/she will need to continue to foster open communication in an effort to continue to foster teamwork. Innovation will be crucial if the company is to thrive under the new leadership. Welchs replacement will need to make a name for himself by creating new programs that continue to foster employee/employer relations, and by understanding the importance of looking at the external factors that affect the overall business.

3. How difficult a challenge did Welch face in 1981? How effectively did he take change? When Welch became CEO in April 1981, the US economy was in recession, with high interest rates and a strong dollar exacerbating the problem. But, contrary to the notion that Welch inherited a moribund company, things were going quite well already. Over the course of Jones's leadership (not forget that this guy also was voted as CEO of the year), which began in 1973, revenue had grown at an average annual rate of 12 percent, and earnings had grown at 16 percent, not much different from Welchs 20-year-performance. In my opinion, the challenge for Welch was to spot trouble before it occurred, to take preventative measures, and to make the most of GE's (and stock markets) tremendous momentum. The challenge for Welch was to keep the earnings growth at a high pace as the numbers of the company (assets, revenues, etc) get bigger. For a huge elephant as GE, it was getting highly risky not to implement a change that makes a turnaround on its bureaucratic business model. In some ways, Welch was able to implement his sweeping agenda of change in GE because he created a sense of crisis within the organization. Instilling the notion that massive change was necessary helped him to reduce employee resistance to the plan, in addition to generating buy-in at both senior levels and shareholders.