Case Study- Ge

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Case Study: GE's Two-Decade Transformation: Jack Welch's Leadership Case • How difficult a challenge did Welch face in 1981. How effectively did he take charge? Jack Welch encountered a very difficult situation in 1981; the economy was in a recession, almost one of the worst recessions any organization has witnessed since the Great Depression of 1929. The strong dollar was losing value and the unemployment rate was at an all-time high. Interest rates were consistently on the incline during the time Welch took over as CEO of GE. Jack Welch was both a transformational leader who showed an aggressive reasonable style of leadership. He did not let the recession discourage him from keeping a competitive advantage over the competition. He set a standard for each business to make sure that GE was either #1 or #2 in their current industry or they would disengage. His strategy was to "fix, sell or close", for example, when Welch took charge of the company his objective was to fix the problems delaying GE from operating to its fullest potential, sell the company if it is more of a liability than an asset, or close the organization and start from scratch. Mr. Welch entered the organization insisting that GE needed to become more “lean and agile” resulting in a 50% reduction in the staff which consisted of the deadweight or low-performers that were unproductive or unprofitable. Unfortunately, Welch came into the realization that his current management staff was unable to lead the corporation to success, therefore he proceeded with organizational downsizing. In essence, Welch's methods were extremely effective and his decision to downsize has given GE increased levels of profitability and an increase in sales revenue. He also redefined the budgeting process of the company by evaluating external competitive criteria like looking at sales in market share or if they had
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