Jeff Immelt and the New General Electric

[pic 1]

Executive Summary

The case analysis involved analysing the strategies of General Electric, which is not only the world’s biggest industrial corporation of the 20th Century but also a famed ‘model of management’ for all the business schools and other corporates. The analysis was carried out on the journey of the company during the first decade of the 21st Century under the leadership of Jeff Immelt.

The analysis also involved comparing two contrasting styles of leadership, one of Jack Welch and the other of Jeff Immelt. It was majorly focussed upon how Jeff Immelt with his unique leadership style overtook the reigns of a successful company in a dynamic changing business environment and worked on continuing the company on its glorious path of success.

The analysis involved evaluating how Jeff Immelt with his unique leadership style went on to redirect GEs strategy. The focus which was earlier on reducing the costs now shifted towards achieving organic growth, being customer centric and working on innovation. Additionally, the analysis was carried out on understanding how these strategies were in sync with the needs of the dynamic environment of 21st Century and also whether these strategies were backed up by General Electric’s resources and core competencies.

Moreover, it involved analysing how they were required to make certain organizational changes which were a necessity for the success of the redirection strategy and ended the analysis with pondering upon alternative strategies for GE.

Table of Contents

Introduction        3

PART I: Analysing Jeff Immelt’s redirection strategy for GE        5

PART II (A): Analysing how Jeff Immelt’s redirection strategy for GE was in alignment with the dynamic business requirements of the 21st Century        7

PART II (B): Analysing how Jeff Immelt’s redirection strategy for GE were in alignment with General Electric’s resources and capabilities        9

PART III: Analysing the changes required in the organizational structure of GE for successful implementation of the new strategy        10

PART IV: Evaluating alternative strategies for General Electric        12

Conclusion        14

References        15

Introduction

General Electric was established in 1892 with the merger of Electric Light Company of Thomas Edison and the Thomas Houston Company. Its business model was built upon the idea of using Edison’s patents (electricity generation and distribution, electric motors and light bulbs) and using a business system capable of turning these significant scientific discoveries into marketable products.

GE was considered not only as the world’s biggest industrial corporation of the 20th Century but was a ‘model of management’ for business schools and other corporations (Geoff Colvin, 2006). The General Electric inherited by Jeff Immelt in 2001 was considered as the world’s most valuable company in terms of their market capitalization. In fact, it was the only organization to have continually remain a member of the prestigious Dow Jones industrial index since the inception of the index in 1896.

PESTLE Analysis of General Electric:

Strategic planning of any business model considers analysing all the functional sub-divisions and factors in a united direction (Dockalikova, 2014). PESTLE analysis is one of the best analytical method to analyse these various factors (Gupta, 2013).

[pic 2]

Fig: Common Factors to be analysed with the PESTLE Framework

• Political / Legal:  GE had been criticised in the past with allegations for disguising their business risks by consolidating their financial statements. This included consolidating the financial statements of their industrial businesses with the successful financial services GE Capital thereby disguising the business risks.
• Economic: Firstly, the financial crisis of 2008-2009 had a serious impact on General Electric’s growth engine, their financial services arm GE Capital. Once a major growth driver was now being viewed as a ticking time bomb. This event even went on to negatively impact their S&P ratings which got downgraded from AAA to AA+ rating in 2009. Second factor under economic consideration for GE is the emerging markets (China, India, Russia, Africa, Middle East, Latin America, South Asia and parts of Eastern Europe) GDP growth rate which is around three times of the world GDP growth rate as a whole. These emerging nations can prove as key growth centres for General Electric (Kissinger, 2017).
• Social: GE Healthcare can benefit significantly from the world’s aging population. It would create growth opportunities in their healthcare products and services domain. The ever increasing world population in the developing world also creates opportunities for their other businesses including technology and energy business.
• Technology: The advancements in the field of technology has created demands for GEs core businesses such as infrastructure products and services and opportunities in energy, aviation, transportation and oil and gas production.
• Environment: The major challenges of global warming and water scarcity and need for water conservation would create needs for technology advancements and innovatory solutions in the field to deal with these world problems which can be an a major growth avenue opportunity to be capitalised by GE.

PART I: Analysing Jeff Immelt’s redirection strategy for GE

Jeff Immelt was appointed as the CEO of General Electric in 2001, succeeding Jack Welch who had served as the CEO for the past two decades. Shortly after he joined as CEO, a series of events impacted their business landscape, the most prominent one being the 9/11 terrorist attack. Other major challenges he faced during his tenure comprised of high profile corporate scandals and the 2008 financial crisis (Jeff Immelt and the New General Electric, 2015).

...