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CORPORATE STRATEGY OF

GENERAL ELECRTIC

ABOUT THE COMPANY:


General Electric, or GE, is an American multinational conglomerate corporation incorporated in Schenectad, New York and headquartered in Fairfield, Connecticut, United States. General Electric was formed by the 1892 merger of Edison General Electric Company of Schenectady, New York and Thomson-Houston Electric Company of Lynn, Massachusetts with the help of Drexel, Morgan & Co. The company was incorporated in New York, with the Schenectady plant used as headquarters for many years thereafter. Around the same time, General Electric's Canadian counterpart, Canadian General Electric, was formed. The company describes itself as composed of a number of primary business units or "businesses." Each unit is itself a vast enterprise. GE is a massive, diversified, and profitable conglomerate with a lot of very good but unrelated businesses. The company operates through five segments: Energy, Technology Infrastructure, Capital Finance and Consumer & Industrial. GE's divisions include GE Capital, GE Energy, GE Technology Infrastructure, and GE Home & Business Solutions. Through these businesses, GE participates in markets that include the generation, transmission and distribution of electricity (e.g. nuclear, gas and solar), lighting, industrial, automation, medical imaging equipment, motors, railway locomotives, aircraft jet engines, and aviation services. Through GE Commercial Finance, GE Consumer Finance, GE Equipment Services, and GE Insurance it offers a range of financial services. GE also produces General Imaging digital cameras. It has a presence in over 100 countries. General Electric's formal organizational structure involves a hierarchical system. Share owners, the Corporate Executive Office, and the Board of Directors make up the top of this structure. The Chairman and Chief Executive Officer of the company act as the intermediary between the top of the structure and the presidents of the four sectors. GE appears as a small organization in the shell of a large company. At the top there are executive leaders who are followed by the middle managers then the floor employees.

CORPORATE STRATEGY :
Corporate level strategy fundamentally is concerned with the selection of businesses in which the company should compete and with the development and coordination of that portfolio of businesses. Corporations are responsible for creating value through their businesses. They do so by managing their portfolio of businesses, ensuring that the businesses are successful over the long-term, developing business units, and sometimes ensuring that each business is compatible with others in the portfolio. During the period when Jack Welch was the CEO i.e., during 1981-2001, corporate strategy was all about performance and efficiency. He embarked on a radical transformation of GEs strategy, ushering in a new era of performance management and internal efficiency. Welchs profit guidance aimed for earnings growth of 1.5 times to double of the GDP growth rate and his management philosophy found its articulation in GEs sloganSpeed, Simplicity, SelfConfidence. These values would reflect not only in the organisations systems and processes but also in GEs products and services through their simple and highly functional designs. Throughout his 20 years as CEO, Welch relentlessly drove his subordinates to the limits of their abilities, encouraging employees at all levels to embrace ambitious targets and continuously improve their performance. Welch was renowned for his use of constructive conflict as a means of eliciting commitments from line managers and making difficult decisions. As part of his efforts, Welch led a sustained attack on bureaucratic processes and in its place he sought to instil a culture of openness, confidence, leadership and creative thinking at every level of the organisation. Through his organisational restructure Welch ruthlessly eliminated several layers of management and shed a large number of jobs. The biggest staff cuts were made in administrative functions and business decision making was delegated to line operation managers. Welch implemented a major restructure of the GE business portfolio, focusing on a limited number of sectors with promising performance and growth potential, whilst retaining a fairly diversified portfolio of businesses. This was achieved through the sale of GEs less profitable businesses and retention or acquisition of businesses identified as number one or number two in their industry. The strategy led to several huge divestments and the shifting of emphasis towards GEs technology-based businesses and service businesses. A series of acquisitions

that followed led to the phenomenal growth of GE Capital, which became one of the worlds leading diversified financial services companies. A central part of Welchs corporate strategy was nurturing talent and leadership through the delegation of responsibility and deployment of powerful incentives. He designed a motivation scheme which permeated deep into ranks of middle management rewarding superior performance with generous bonuses and recognition of talent. Stock options on the company were used extensively to link financial rewards to corporate performance, with nearly 22,000 stock options awarded to GE employees by the end of 1995, compared to only 400 in the early 1980s.