OTPR ASSIGNMENT

GENERAL ELECTRIC

BY
ANIMA TAPADIYA
ADIT SHAH
ADITHYA SASIDHARAN
CHINTU BOUSALLY
FEBA THOMAS
NAYANA MENON
SAUMYA SHAHI

ORGANIZATION AND ITS STRUCTURE

For decades General Electric (GE) has been on the top of the Fortune 500 list. General
Electric is the world leader in manufacturing, research and development and international
global cooperation. It has been for a very long period of time the foundation stone of
innovation. Having an employee base of more than 35,000 technologists all over the world,
the manufacturing and development branch has played a huge part in creating imports and
exports to drive the U.S. economy.
GE, a company best known for its innovation would require a structure that would allow
decentralization so as to orient itself towards quick adaptation and environmental change and
thus has a Divisional structure. Due to growing instability in the environment, most
organisations look for cutting out layers of management and decentralizing decision making.
GE has also adopted the same method and therefore its decision making is pushed down to
the divisions in the organization. The Presidents of respective divisions report to the
Chairman & CEO. Further, the heads of functional departments report to the corporate staff,
who in turn report to the Chairman & CEO. CEO provides information to the Corporate
Executive Office who in turn shares this information with the Board of Directors and
Shareowners.

Fig 1: Diagram showing Organizations reporting structure.

The current structure followed by GE which is a Divisional structure with many product
groups. Prior to this, GE had a Divisional structure with individual products. Taking into

consideration the growth initiatives such as Technical Leadership Services, Customer

Focus, Growth Platforms and Globalisation, GE restructured its Business Portfolios.
Being an organization with many products groups with large number of products within each
group it is fairly appropriate that GE has a Divisional Structure. For eg- Healthcare offers
products and services like- Diagnostics imaging, Global services, Surgery etc. Taking into
account factors of environmental instability such as advent of biosciences, emergence of
nanotechnology, commercial opportunities, ageing population, growing energy demand; GE
has rightly structured itself to create value for customers by leveraging its core competenciesparticularly for products which are highly customized and have high growth markets. High
coordination across functional groups is enhanced.

Fig 2: Diagram for Organization structure with product and product divisions.
Internally, the current CEO of GE, Jeff Immelt emphasises on the idea of relating the
employees with the organisation and motivating them which in turn creates a people friendly
environment that provides higher coordination.
In our opinion, GE would face issues if related products in different divisions are not
compatible with each other, eg certain products of GE Money and GE Finance. Lack of indepth knowledge among the employees can lead to customer frustration when the employees

are unable to answer the queries related to other divisions. Employees would be more
oriented towards a product line and would lack functional speciality.
VISION AND MISSION
The mission and vision of an organization are closely related to the purpose of the
organization. This is mainly due to the fact that the vision and mission of an organization are
related to effectiveness only when the strategy, the goals and the objectives of the
organization are aligned with the vision and mission of the organization.
General electric doesnt exactly have an official mission statement, but presents it through
GE Works Equation which is as follows [3]:
We look at what the world needs X (A belief in a better way + A relentless drive to invent
and build things that matter) = A world that works better
This is how GE explains it:
We have a relentless drive to invent things that matter: innovations that build, power,
move and help cure the world. We make things that very few in the world can, but that
everyone needs. This is a source of pride. To our employees and customers, it defines
GE.[3]
GE is unique in the aspect that it has no public mission statement. Instead it is governed by
four ideals which breed the culture General Electric has become so famous for [2].
Imagine. From the very beginning, GE has always stood for one capability above all others the ability to imagine. At GE, Imagine is an invitation to dream and do things that one didn't
know one could do. Jeff Immelt (CEO) says that imagination fuels GE. It is through this
innovation that GE is shaping the world.

Solve. Every business has a reason to exist. GE exists to solve problems for its
customers, communities, societies and for itself. For any of these, GE desires and
wills to take a hard look at major issues faced today and provides a solution.

Build. GE does not have a vision as such for its future but it is headed to fulfil a quest
and not just a destination. The quest to growth. To get there, the methodology for
them is to build. Building is the key to the future. Their desire is to build not just a
larger

company

but

stronger

one.

Lead. GE is already synonymous with leadership. But with this comes huge
responsibility. The responsibility to change. Because change is the essence of what it
means to lead. Leadership is one of the essential differences between companies who
thrive and companies who survive.

Values
The values at GE reflect the spirit and energy of a company that has the solid foundation to
lead change as business progresses. And they articulate a code of behaviour that guides the
company through that change with integrity. Some of the values that are adhered to by GE
Passionate, Curious, Resourceful, Accountable, Teamwork, Committed, Open and Energizing
At General Electric, the corporate vision is 'We bring good things to life' and Be the world's
largest provider of electronic commerce solutions that create intelligence for business supply
chains. [1] The corporate success depends on the vision articulated by the top management
of the organization. For a vision to have any impact on the employees of an organization, it
has to be conveyed in a dramatic and enduring way. [1] In simple words, a vision statement is
one that describes what an organization's future would look like. One of GE's long time
initiatives is the training and cultivation of strong and inspiring leaders.
STRATEGY
An organization builds its strategy keeping in mind its internal strengths and weaknesses as
well the opportunities and threats the external environment holds. Strategy involves
channelizing all the organizations resources and energy towards the accomplishment of a
unifying and focused organizational goal. It could also be viewed as a devised plan of action
to reach a desired goal.
The companys strategy went through a radical transformation as Jack Welch took over as
CEO in the year 1981. Welch laid emphasis on performance management, internal efficiency
and cost- cutting. He believed in encouraging employees to work to the best of their abilities
and constantly pushing their boundaries to be able to perform better. During this time, they
also decided to concentrate on promising businesses that could be pushed to number one or
number two in the industry while exiting the less profitable ones.
Welch realized the importance of effective leadership as well as nurturing talent and thus
focused on delegation of responsibility and rewarding or incentivizing employees. He devised
a motivation scheme where superior performance was recognized and rewarded with

generous bonuses and incentives. Various techniques were initiated to help achieve the
desired outcome, some of which are as follows:
Work-Out: This can been regarded as a widely successful move by Welch and can be
viewed as a means of busting bureaucracy and attacking the organizational problems wherein
employees could fearlessly communicate their views on management practices.
Six Sigma Quality: GE has incorporated this concept in their culture which helps them focus
on developing and delivering flawless products and services with a relentless search to meet
and exceed their customers expectations. The core idea behind Six Sigma is that if one is
aware of the defects that exists in a process, one can investigate how to eliminate them and
get as close to zero defect as possible. To achieve Six Sigma Quality, a process must produce
no more than 3.4 defects per million opportunities. This demonstrated Welchs awareness of
creating value for his customers.

Boundaryless Company: This initiative was focused at blurring the internal and external
boundaries of GE to promote sharing of best practices and learning and to facilitate a flow of
knowledge which Welch believed was the key in transforming diversity into a competitive
advantage.
Globalization: With a view to minimize costs, this initiative was directed towards exploiting
the international economies of scale and taking advantage of the various business
opportunities as they arise worldwide.
Jack Welch was quick to realize that in this era of constant change the survivor would be the
one who understands the change and adopts to it the fastest. He also understood that an
excellent technical strategy or solution alone does not guarantee success but also its
acceptance and implementation by the people of the organization is equally important. At the
same time, one needs to pay attention to cultural factors to make a project successful.
Jeffrey Immelt took over the reins of GE in 2001 at a time when the share price of the
organization was plummeting and a crisis situation was created with an existing trust deficit
among the investors due to the 9/11 crisis and a few other scandals.
Immelts letter to the shareholders in 2003 stated three strategic imperatives as: (1) sustaining
its strong business model, (2) strengthening the business portfolio, and (3) driving its growth
initiatives. He believed in driving growth through innovation by taking risks and

incorporating a global workforce. To achieve this, the expenditure on infrastructure for

innovation was increased and GEs global research facilities were improved because Immelt
firmly believed that managers should lead the industry rather than simply following demand.
Immelt focused on the following initiatives to achieve his targeted outcome:
Customer Focus: This scheme was aimed at improving the organizations ability to create
value for the customers by bundling products with support services and combining products
and services across businesses to deliver highly customized solutions. His strategic focus was
on establishing a differentiation advantage through innovative products and services and
enhancing customer focus.
Ecomagination: This initiative was planned in response to the growing demand of cleaner
and more energy efficient technologies across sectors varying from infrastructure, health,
energy, rail, aviation. The management at GE soon began to realize the importance of
sustainable development with a focus on the environment. New technologies were viewed as
an essential ingredient to successful and profitable product innovation and quality
improvement.
Growth Platforms: The most important feature of Immelts growth strategy are Growth
Platforms which relates to identifying areas with unstoppable opportunities. This could
either be in terms of expansion of existing businesses or setting up of new entities. Immelt
wanted to analyse the market and establish potential segments which could offer lucrative
opportunities and returns.
Immelt launched an extensive plan to make GE renowned for innovation and organic growth
along with operational excellence, which his predecessor Jack Welch had focused on. He
wanted it to become as much a religion as Six Sigma had been under Welch. To attain this
goal he also launched a 4 day program: Leadership, Innovation and Growth (LIG) which
gave managers an opportunity to reach a consensus on the various business barriers and also
address the issue of balancing short term and long term goals.
Immelt has been highly successful in implementing various strategies and the soaring
revenues of the company bear testimony to this fact.
ORGANIZATIONS ENVIRONMENT
The organizations environment depends on the external environment. Business organizations
can react to changes in the external environment by changing their internal environment.. Its

very important for the manager to analyze the business environment so that an effective
business strategy can be pursued. An analysis of the external and internal environment of GE
has been explained through SWOT and PEST analysis.
PEST Analysis
a) Political
Different nations have different political systems and GE has to adhere to the political factors
in each nation where they have established their centres. Some of the countries present
favourable environment for business survival and growth whereas others present difficult
conditions.

b) Economic
There are several economic factors like fluctuations in interest rates, exchange rates and
money value that affect activities and operations of General Electric. Deflation and
inflation in different countries where GE has ventured often influence business
productivity and profitability. General Electric has recorded decreased sales mostly due
to lower lending rates by banks.

c) Social-Cultural
Norms, culture, religion and social factors often determine how a business should
conduct itself in a particular country or environment. The working hours, employment
policies, procedures for appointing managers and the type of goods to be produced
depend on the culture in a country.

d) Technology
Technology is advancing at an enormous pace. Each day we have several innovative
products coming up and the old technology is getting outdated. To sustain in this highly
competitive environment, many companies have turned to innovation, research and
development which have brought about improved levels of technology. Among the
countries with the highest rate of technology advancement are United States and Japan
which General Electric has ventured into.

Swot Analysis
Strengths

Global recognition: GE was ranked the world's largest company in the Forbes
magazine, 2009. General Electric's brand is the world's most recognized brand. It has
been able to attract more customers due to its advantage over other companies.

Global strength and competitiveness: GEs products are known for their quality and
the company is known for their customer centric approach. As a result, it has
attracted numerous clients which also include government agencies.

Excellent Management: GE utilizes a unique and modern management style,

whereby business operations are divided into business units (BU). Each BU plays a
distinct role within the company and is managed independently. The managers of
each BU are accountable and responsible for the actions and decisions that they take
and this increases the productivity of each BU which results in increased productivity
of GE as a whole.

Diversified lines of operation: GE has invested in a wide range of products under

technology, energy, automotives, and aviation and home appliances to financial
services and insurance services. This kind of diversification shields the company from
risks in case of misfortunes.

Environmental initiatives: GE has invested in the production of environment

friendly technologies. 'Ecoimagination' program is one such example. This has earned
a good reputation for the company which is considered socially and environmentally
responsible.

Weaknesses

Under-performing energy sector: The energy sector is not performing as expected

due to the global crisis and serious fluctuations in fuel prices. Fluctuations in prices of
oil and gas have mostly been caused by supply shortages and this has threatened the
company's profitability.

Opportunities

Mergers and acquisitions: Mergers and acquisitions not only help the company to
expand globally but to diversify its activities and explore new areas thus increasing
productivity.

Research and development: There is a dedicated group of employees who are

committed in the company's relentless efforts to ensure the production of innovative
products which meet current customer demands.

Threats

Competition: Since every other company is coming up with innovations each day,
operating in an environment where there is stiff competition is a threat. GE can
overcome competition by coming up with better production techniques and
technology as compared to its competitors.

Financial crisis: The global financial crisis has had an effect on most companies in
the world today. The rising prices and shrinking bank lending rates have deprived
businesses of the profits and capital.

Media depictions: GE has been a victim of media deception and was associated with
the Enron scandal which brought a lot of criticism and loss of investor
confidence. The documentary named 'deadly deception' displayed GE as a threat to
human life for participating in testing and building of nuclear weapons

GE has a number of strengths that work to its advantage by enhancing profitability. Its global
recognition, strengths and competitiveness put GE at a favourable position as compared its
counterparts. The use of business units for management presents an effective way to manage
the company which promotes accountability and decision making among business unit
managers. The profitability is enhanced by the mergers and acquisitions that have diversified
the company's product range and in turn leading to better profits.
Various threats and weaknesses threaten the performance of the company by presenting
constraints on the company's management. High levels of competition, financial crises and
threat of information loss are a threat to the companys survival. Weaknesses within the
company including the poor productivity of the energy sector and flexibility threat could
impact negatively on the company.

TECHNOLOGY

For a Conglomerate like General Electric, which Jack Welch describes as grocery
shop, technological change is inevitable. After 1981, soon after Welch became the
CEO, there were many changes made in technology, which ultimately changed the
structure of the entire company. With all these changes, he was able to change the
company from a $12 billion company to $480 billion behemoth.
Having a wide diversity of products under its wings, General Electric has taken up
various technology changes. Technologies involve work processes, techniques,
machines and actions used to transform the organizational inputs. Few changes in
technology made in GE were as follows:
Technology based businesses and service businesses
When Jack Welch took over as CEO in 1981, he made his strategy to get rid of all
areas generating less than top-class returns. This resulted in disposing of around 70
existing businesses and focusing more on technology and service based industries. For
this, creating 1000 new entities and acquisitions of companies were done. By reducing
the number of existing businesses they were operating, they were able to operate on
their core competencies and achieve either first or second in its industry strategy. In
2002, Jeffrey R. Immelt, the successor of Welch, noted a few emerging global trends
like, the energy demand and global warming concerns, the emergence of
nanotechnology, and vast opportunities in the developing markets. He valued for the
customers by investing on GEs core competencies, especially in superior technology,
heavily customization for customers. They had to change the structure of the
organization to cope up with the changes in the technology as well as the strategy of
the company under Welch. Discontinuing businesses in many sectors as well as
adding new businesses, lead to challenging roles. The employees were marked for
their performance and the as a part of the strategy, around 10% of the people were
removed and this created a competitiveness, which was healthy for the company.
Many businesses which they started as a small unit like plastics, later turned out be a
multi-billion dollar industry.

Six sigma
The methodology, originally developed by Motorola, was implemented by GE
throughout the whole organization in 1990s under Jack Welch. When applied at
General Electric it became the largest quality-control measure ever adopted in

America. Among the benefits of the system is its focus on achieving measurable
financial results from any project to which it is applied. GEs target was to reduce the
defects to 3.4 per million products. The program required a huge investment in
training and implementing but ultimately led to great gains in profit and productivity.
Since General Electric had industries in manufacturing, lean manufacturing
techniques like six sigma was well aligned with the structure and strategy of the
company. This methods not only ensured that they reduced on costs, but also created a
trend and culture which other major companies followed. Also using this lean
manufacturing technique, they were able to customize the end products and it
ultimately helped in customer satisfaction. With the deployment of Six Sigma, Welch
clearly demonstrated his customer centric strategic role for GE. Welchs continuous
push for adaptation, speed and excellence strengths which are the hardest for others in
the industry to imitate, became GEs most valuable core competencies.
Boundaryless Organization
According to Welch boundryless organization is where we knock down the walls
that separate us from each other on the inside and from our key constituencies on the
outside. These changes helped GE to bridge between GEs business units that helped
the organization to capture some of the benefits of its diverse knowledge base. Many
examples of these initiatives can be founded in GE, wherein technologies from
various countries or subsidiaries were implemented throughout GE. By implementing
these technological changes, GE was following the overall strategy of the company.

The culture of competition

Jack Welch was against the concept of bureaucracy and was entirely in favour of
general guidance. Under Welch's leadership, formal meetings and various committees
decisions were no longer required in order to implement change. More authority
rested among the lower echelon leaders, who were more familiar with the immediate
problems and ground realities and also had the possible solutions than the distant
senior executives. This created a lot of flexibilities among the employees and decision
making processes were no longer a timely affair. The communication between the
hierarchy increased and this led to the overall benefit of the company.

CULTURE
Culture at any organization is understood as the set of values, norms, guiding beliefs and
understandings that is shared by its members as the correct way to think, feel and behave. At
General Electric, the culture gives its employees diverse opportunities for innovation,
exposure, learning and a sense of purpose through strong sense of volunteerism.
GE believes strongly in being a good corporate citizen and has ensured that it does so by
setting high ethical standards, leadership in corporate governance, environmental compliance
and community engagement. As a result of this they have won several awards like "The
World's Most Admired Companies 2013" by Fortune and "The World's Most Ethical
Companies 2013" by Ethisphere.
Innovation is an integral part of the GE culture where employees are given abundant
opportunities to work on new and exciting projects and are encouraged to come up with
alternate solutions for better results. GE culture also includes a process of continuous
learning with training programs designed to help employees to enhance their skills and reach
their full potential. A significant initiative under the GE culture was the General Electric
Women's Network launched in 1997. This endeavour was undertaken to improve the
conditions of the work space for women. This saw the development of new and existing
talent amongst women in GE and also in terms of retention and promotion of women in
technology and engineering.
One of the major stronghold in the culture of GE was the" work out plan" set forth under the
regime of Jack Welch. GE had a strong history of freewheeling, innovative risk seekers who
placed little value for seniority, even though this encouraged innovation amongst its
employees. Problems occurred when different departments had different cultures. To tackle
this problem the work out plan was implemented to make sure managers from different
department met at least once in a week to solve problems that the company might be facing
and get an idea of what was happening in each department. The communication between
hierarchies in the organisation was without boundary as each employee could communicate
between the horizontal and vertical hierarchies without any issue. This allowed the
employees to learn and grow within the company allowing them to contribute to the overall
development of the company. GE endorses a healthy balance between the trust and formal
procedures of decision making. Because of the strong culture presence in GE, employees
follow the rules and regulation without the need for legalized documentations. Each

employee is given free rein to work and interact with their co-workers in a boundary less
culture that promotes learning and improvement.
General Electric believes that different characteristics can be found in different countries and
hence thrives to attract diversity to best suit different departments in their company. This has
lead the employees in the company to have a more cultural integration and work under
circumstances which best suits them. Last but not least, GE maintains a consistent culture
around the world by using a global company culture, this make it easier to communicate
and cooperate between the different branches around the world.
Jack Welch identified that for the employees of the company to feel as if they are a part of the
team it was imperative that the employees were constantly motivated, involved as well as
informed about the changes in the company. This was further reinforced by the top
management who organized events and meetings to discuss and solve any issues. The end
result being that the employees became more adaptable to the changes in the company and a
sense of camaraderie arose amongst them.
When Jeff Immelt took over as CEO of General Electric his main concern was the lack of
risk taking nature he observed amongst his managers. He believed that a constant fear of
making the bottom line had caused his managers to shy away from taking risks, as a result he
believed a total cultural revolution was required at GE. One major step towards this was he
started hiring people from outside GE, earlier the GE culture allowed mostly internal
promotions but Immelt felt that leaders from outside would bring in more experience to the
company. Another aspect he changed was the criteria for monetary incentives, while under
the regime of Welch incentives was solely on the basis of performance, the new change
ensured that innovation was also a criteria in deciding the incentives. Risk taking became the
new norm of the day at GE and risk failures were given special plaques at General Electric.
This approach ensured that top end management would be on their toes with fresh ideas and a
new innovative oriented era rose in the GE culture.
CHANGE
During the late 1960s GE encountered the problem of direction, control and profitability.
The basic organisational structure has the board of directors at the top and below was the
legal and financial departments which included many advisories. The basic structure was
decentralized and vertical hierarchy and the partitions were made mainly on the basis of
geographical hierarchy. In 1972 Reg. Jones became the CEO of the company, bringing in

some important changes. It mainly focused on bringing specialization, co-ordination and cooperation. He brought in strong R&D department revolution inside the company, changed the
strategies and improved relations on GE with the government. Under Jones' administration,
the company's sales doubled and earnings grew faster and faster.
So the major change in GE was brought upon by the change in leadership style of Jack Welch
when he was appointed as the CEO in 1981. In 1981, the world was going through a global
recession and though the value of dollar was high, there was huge unemployment created.
Jack Welch process change focuses mainly on reorganization of strategies; relating services,
technology and core concepts of GE and staff reducing process so that only worthy staff
remain. He reduced the number of hierarchies from 9-10 to 3-4. He made the organisation
make more decentralised decisions meaning more and more people were involved in making
decision and it wasnt dependent on only himself. Welchs corporate strategy was all about
performance and productivity. Throughout his 20 years of life career as CEO, he persistently
drove his subordinates and the employees to the limits of their abilities, encouraging
employees at all levels to clinch ambitious targets and continuously improve their
performance and ratings. Thus he imparted a nickname of Neutron Jack as he completely
changed the organisation structure and cut jobs and was sort of a dictator. Core competencies
provide access to new markets, added value to the companys products and are difficult to
replicate by competitors. Welch clearly understood that the GEs best capital was their human
capital. The procedure of quality control and assurance was addressed through the
implementation of the six-sigma quality control program throughout the company.
Jack had a focus that he will acquire the raw materials at low cost and thus try to bring down
the operational costs. There were also external factors involved which were like expansion of
GE into international market. When we relate it to porters five force model, the rivalry of GE
with its competitors was very high. Apart from that it had a threat of new entrants from other
countries of Europe and Asia. But there was less growth of GE in other countries which Jack
Welch saw as an opportunity. It was further continued by the next CEO Jeff Immelt. The
main tactics used by GE was contemplating on its core competencies by improving the
leadership qualities in the employees and change of organisational structure.
In 2002, Jeff Immelt was appointed as a successor of the best leader Jack Welch which
transformed GE into something magnificent which no other leader could have done. Jeff is
thought to have changed the GEs philosophy completely. He brought in a change in ideology

and the question was will he be able to continue to get the profits which Jack managed to get
in the last 2 decades. The outsiders of the other companies were brought up in higher
positions, which created conflicts between the management and the union because the people
were forced to leave their jobs and werent credited for their work in the company. He
believed in motivating employees and not making them work by force. The very consistent
mark on GE that it is an old traditional company was to be changed to modern company by
Jeff. Thats why he brought many changes in technology and he focused on expansion of
business to Europe and Asia. The profits in the first 3 weeks soared so down that people had
started to lose trust in him but gradually in 2012 the profit showed increase. He believed that
a company should not go behind high stock price but should see the long term growth of the
company. He increased some layers which were reduced by Jack that is he made the company
a bit more centralized. He believes in marketing and sales strategies of his to grow and make
GE a diversified company. He became more customer centric and GE now gives its products
based on their customers liking.
All this said, some think that the leadership under Jeff has led to the downfall of the company
compared to what it used to be during Jack Welch. Though he has not been a leader who will
take risk but he has also expanded his business to the new countries. Though both may have
different styles of working, there have been challenges faced by both during their tenure. It
also said on the other side that the vision of a new leader and his courage to change the style
of Jack led to a lot of expectations on him. But now only time will tell if the profits earned by
GE are sustainable and how its structure is leading to its growth or downfall.

REFERENCES
[1] http://www.1000ventures.com/business_guide/crosscuttings/vision_mission_strategy.html
[2] http://www.answers.com/Q/What_is_the_General_Electric_mission_statement
[3]

http://www.strategicmanagementinsight.com/mission-statements/general-electric-

mission-statement.html
[4] http://www.answers.com/Q/What_is_GE's_mission_statement
[5] http://www.studymode.com/essays/Macro-Environmental-Factors-Of-Ge-439974.html
[6] http://richet.hubpages.com/hub/PEST-Analysis-of-General-Electric-Company
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http://businessandfinancematters.blogspot.in/2010/08/pest-analysis-of-general-