Ge’s Two-Decade Transformation: Jack Welch’s Leadership

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GE’S TWO-DECADE TRANSFORMATION: JACK WELCH’S LEADERSHIP DESCRIPTION General Electric (GE) is a multinational company that operates in the following segments: Energy, Technology Infrastructure, Capital Finance, as well as Consumer and Industrial. Thomas Alva Edison, who found the company in 1878, started the company from its early focus on the generation, distribution, and use of electric power to become, more than a hundred years later, one of valuable and competitive companies with various business units that spread in more than 100 countries around the world. When Jack Welch, who were 45 years old, took over GE in 1981 and became the youngest CEO in GE’s history, the GE’s value of market capitalization was $13 billion, whereas when he resigned from GE in 2001, the market capitalization increased to be more than $300 billion. He succeeded to make GE as the most competitive company in the world through five following phases: 1. Welch’s Early Priorities: GE’s Restructuring In the early of his leadership period, Jack Welch set the standard for each of GE’s business units to be number 1 or 2 in its industry – or to be not in the market completely. He detailed the strategy into a “three circle concept” that categorized GE’s businesses as technology, core and service. He wanted to diversify product lines of the company and make them to be high quality products in the world. However, he also gave a warning to “fix, sell, or close” uncompetitive businesses that included central air-conditioning, housewares, coal mining, and consumer electronic business. Jack Welch’s goal was to make GE become more “lean and agile” that is implemented through downsizing, destaffing, and delayering. He decreased the number of employees at GE from 404,000 in 1980 to 292,000 in 1989. However, between 1981 and 1985, he succeeded to increase the revenue from $27.2 billion to $29.2

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