Organizational Structure GE

Evolution of the Structure:

Started by Thomas Alva Edison in 1876, General Electric has grown tremendously into
successful organization and amongst the largest in the world.
Before 1950, GE was managed centrally from Schenectady, New York. The basic
organization was a general office with four departments: sales; accounting, collection,
and credit; manufacturing and engineering; and law and patent in 1895.
There was a certain level of Decentralization before, but primarily this came into full
power only after World War II. This was in spite of GEs major competitor,
Westinghouse, diversifying in 1930 (Chandler, 1977). Post World War, GE carried out
an extensive program of expansion and decentralization (GE, 1966). In its first 50
years, their efforts were directed primarily toward consolidation, integration, and
centralization of a number of previously separate organizations; however, as its
business grew, the number of products, their sales volumes, and the locations for their
manufacture expanded. It became obvious that the centralized organization scheme
was unwieldy and slow to react to technical and market changes. The need for a more

decentralized organization became increasingly apparent. In 1950, Ralph J. Cordiner,

their new president, was to lead the charge. The New Organization The basic
organizational changes were to create an Executive Office, five groups of related
product divisions, departments, and affiliates together with the General Electric Supply
Corporation, comprising 21 operation divisions, and 51 separate product departments
(GE Annual Report 1951). The executive office consisted of the President, Chairman of
the Board, group executives and services, i.e. functional, officers, and was located in
New York City. Also, Cordiner initiated a massive three year effort entitled
Management Development Study (Smiddy, 1955). It involved consultants, academics,
and over 300 GE employees. The basis of the effort was Cordiners belief that the
decentralized GE organization required thousands of managers and the traditional
system had been producing them in the hundreds.
GEs organization structure consists of four verticals, each for the specific product.
These are:
1.
2.
3.
4.
5.
6.

Energy
Capital
Appliances & Lighting
Healthcare
Aviation
Transportation.
The Energy division consists of three subdivisions: (1) Oil & Gas, (2) Power & Water,
and (3) Energy Management. John Wood Group PLC, Wellstream Holdings PLC, and
Dresser into GE, would be the three newly acquired companies added to the Oil & Gas
subdivisions within the Energy division.
Apart from the six subdivisions, GE also had Global Growth & Operations as a
subdivision. This is responsible for the sales out of United States.

Multidivisional Structure
Wide variety of products is offered by many organizations. Some of these
organizations sell their offerings across an array of geographic regions. This requires
the firm to be very responsive to the customers needs. Yet, as noted, functional
structures tend to be fairly slow to change. As a result of which, many firms do not

continue the use of a functional structure as their services increase. And many times,
the new choice is a multidivisional structure. Employees are divided, in this type of
structure, into departments according to the product areas and/or geographic regions.
General Electric (GE) is an example of a company organized this way. As shown in the
organization chart that accompanies, most of the companys employees belong to one
of six product divisions (Energy, Capital, Home & Business Solutions, Health Care,
Aviation, and Transportation) or to a division that is devoted to all GEs operations
outside the United States (Global Growth & Operations).
Multidivisional structure allows a firm to act quickly. When GE makes a strategic move
such as acquiring of John Wood Group PLC, only the division that is relevant needs to
be involved in integrating the new unit into GEs hierarchy. The transition would be
much slower if the structure would have been functional because all the divisions in
the company would need to be involved. A multidivisional structure also helps an
organization to better serve customers needs. In the summer of 2011, for example,
GEs Capital division started to make real-estate loans after exiting that market during
the financial crisis of the late 2000s.Jacobius, A. 2011, July 25. GE Capital slowly
moving back into lending waters. Pensions & Investments Because one division of GE
handles all the firms loans, the wisdom and skill needed to decide when to reenter
real-estate lending was easily accessible.

Boundary less Organizations

Most organizational charts show clear divisions and boundaries between different
units. The value of a much different approach was highlighted by former GE CEO Jack
Welch when he created the term boundary less organization. A boundary less
organization is one that removes the usual barriers between parts of the organization
as well as barriers between the organization and others. Askenas, R., Ulrich, D., Jick, T.,
& Kerr, S. 1995. The boundary less organization: Breaking down the chains of
organizational structure. San Francisco, CA: Jossey-Bass. Eliminating all internal and
external barriers is not possible, of course, but making progress toward being
boundary less can help an organization become more flexible and responsive.
GE in India: Change in Matrix structure
GE, are adding more complexity to their organizations. Its no longer enough for the
separate businesses to act autonomously to make sales calls to the shared corporate
customers, or to set up their own infrastructure in China and India. In 2011 regional
executives in GEs powerful divisions began to take on another reporting axis to
corporate market executives who manage across product divisions to leverage
infrastructure, build local relationships and manage key customers in 13 critical
markets. That means another axis added to the matrix organization and it means
tension. GEs matrix is still not as complex as the structure of IBM or P&G. Both of
these successful giants have mastered the complexity and turned it into an advantage
for customers and shareholders.