General Electric Case Essay

2784 WordsSep 2, 201312 Pages
How difficult a challenge did Welch face in 1981. How effectively did he take charge? According to the Harvard business case “GE's Two Decade Transformation Case Analysis”, Jack Welch assumed as CEO of General Electric year of 1981, he had the task of stimulating the competiveness and prolific capability of the corporation. The United States economy was in a time of recession due to the high interest rates and a strong dollar exacerbated the problem, so it results in the highest unemployment rates since the time of the United States depression. CEO Welch comprehend that GE needed to make some changes in restructuration of the company and this involved the modernization and reorganization of operations, reducing the organization, and decrease of payrolls and strict efficiency measures. The first challenge in GE’s restructuring was to each business to be # 1 or 2 competitors in its industry and fix, sell, or close uncompetitive business. He elaborated this general # 1 or # 2 objective industry into 3 circle concept that include business categorized as core, high technology, and services. This strategy can be perceived such as diversification of each unit division, so each unit can concentrate in its superior capabilities in order to achieve and sustain competitive advantage. One of Welch main decision was the selling of some business including air-conditioning, housewares, coal mining and consumer electrics business, so GE received 11 billion of capital by selling over 200 businesses, which accounted for 25 % of sales in 1980. Also, GE made over 370 acquisitions, with a investing more 21 billion in different business such as Westinghouse lighting, Employer Reinsurance, RCA, Kidder, Peabody, and Thomson/CGR, the French medical imaging company. At this point, Welch was analyzing which division was not efficient in order to GE to continue investing resources and

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