Jack Welch was the CEO of General Electric for two decades before Jeff Immelt. Jack Welch was the first of the CEO of the company and the only thing that drove its productivity was his immense contribution and control of the whole organisation. Jack was a believer of transparency and direct confrontation in the management process. The growth strategy before Immelt was solely driven by productivity of the company (Purce 2014). Jack Welch was the one producing a constructive portfolio for the company. He also summarised the low growth extractive and their business in manufacturing. The culture was also based the external standards in the era of Jack Welch. The path taken by Jack in leadership was totally based on the autocratic leadership. He was also focused on developing the financial services sector of the company. He used to set ambitious target for the managers, where in case they are not delivered certain steps were taken against them (Li et al. 2015).. He ended the bureaucracy in the management and changed the whole strategy of Human resource planning. The drive to quality management and strict rules against the poor performers were given too (Bayrakta et al. 2017).
From the above scenario, it can be concluded that Jack Welch of GE was performance driven autocratic leaders. In his time in the company achieved its target. Thereafter, the company board selected a Jeff Immelt as a CEO. The most identified quality in Jeff Immelt that has been very important for the company is his people management skills (Leonardi 2015). The innovation strategy that are identified by him and taken steps to implement placed the company in a premium place. His focus on the organic marketing and organisational changes were his main approach to incorporating change in the organisation. It was followed that Welch’s leadership approach was very different from Immelt’s (Johnson et al. 2013). Immelt’s process of cheering people while doing the work was given more emphasis while he ruled in his time. His style of leadership was man-of-the-people were well managed and accepted in the staff as he was also friendlier to his staff. In place of taunting Jeff Immelt use to motivate and cheer people (Purce 2014).
Global approach and expansion – with the hurdles of economy, like 9/11 or be it the 2008-2009 financial crisis international trade market remained competitive in the commercial and consumer finance sector. However, with the globalisation, bigger opportunities also came with it. Such as market expansion opportunities in serviceable product marketing (Al-Najjar et al. 2017).
With handling many, turbulent during the years 2001 – 2012 the central theory has been to drive the organic growth strategy simultaneously. The four of the GE’s major business sectors were identified to improve with the new strategies of the company.
Gaining the competitive advantage in the international level was also incorporated in their business strategy of growth stimulation. The healthcare became a concentrated area of the company’s growth strategy under Immelt. It was also stimulated by two key acquisitions of Abbott diagnostics and Amersham Equipment Company (Johnson et al. 2013). In energy sector, they became a key player by acquisition of next generation oil and gas power and by acquiring AstroPower. The infrastructure increased its percentage of space in their portfolio to 75% by 2016 (Leonardi 2015). The capital finance stages 25% of the portfolio. The most competitive of the emerging markets were China, Eastern Europe, Russia, Middle East, India, South East Asia and Latin America. These are the markets were the company can explore more rather than remaining in their country (West et al. 2015).
The core competencies that have backed GE’s high growth over the years are very important for efficient use of their resources. As efficiency of resources were focus of Jack Welch, on the other hand Jeff Were driven by innovation and bringing differentiation strategy. As known as the next generation CEO Jeff was mainly driven to increase the financial health of the system. Thus, they became a conglomerate whose main cash flow was from the commercial financial consumers (Leonardi 2015). With different collaboration with foreign employees and Olympic Games they enhanced their strategies to increase the capacity of the company, which lead to strategic inoculate of the company. The company to country strategies and possibility of increasing global presence and mastering in reverse innovation were foundation of their resource base. Technology was also their major weapon (Madsen and Walker 2015). The 6% investment in Research and development and few key strategic acquisitions in diagnostic, television network, nano technology, energy conversion and sustainable energy left them with various sources to extract investments from (West et al. 2015). The reputation and strong brand image equipped them with high value in the customer’s eye and brand recognition. Capabilities of are required to manage the huge resources that the company is equipped with. The diverse portfolio management of the company must be served with a complex objective. The structure of the company’s hierarchy in terms of management is given below (McGrath 2013).
As a global growth and operation vice chairperson John G Rice was personally council by Jeff. Both of the managers took different initiatives to endorse their vision, Jack Welch found the Work?out system to let cross department employees of the company to discuss about managerial problems. The vision of boundary less organisation to promote sharing of information in the international market (Li et al. 2015).. After globalisation, the advantages of the opportunities increased. Six Sigma was developed and incorporated to increases the total quality management (Madsen and Walker 2015). Therefore, the customer satisfaction, performances, targets were improved. The new digitalisation of all aspects in the business also enhanced their field of opportunities (Speculand 2014). Immelt added Imagination breakthrough to individuate promising businesses, incubate them and protect their Ecomagination to find response to clean and efficient energy, Costumer Focus to revitalise marketing, create consumer-oriented programs, develop bundling product combined with services across businesses (Schilke 2014).
Figure: organisational structure
Source: (Rogers 2016)
As highly diverse company, GE is at an advantage of providing their customers with integrated customer service. Thus, the main objective of the business is simplified while having the lesser difficulty in executing them. Many initiatives taken by the Jack Welch as well as Jeff Immelt has enabled the company to smoothly execute their business (McGrath 2013). The low growth business has been proficient as cash generators and divestment in plastic as the price of petroleum increased even them a cash retention strategy. Focusing and strengthening their core capabilities in healthcare, financial services, infrastructure and NBC universal have also given leverage while creating Synergy in the whole portfolio of the business (Speculand 2014).
The changes that Jeff Immelt has reformulated in GE’s management model necessitated the new strategies that he has incorporated in the company. As an inheritance, Jeff has the management structure that is very stringent in nature (Al-Najjar et al. 2017). The pressure was too high for the employees, which was a hindrance to the management style that was Jeff’s idea to incorporate. Welch necessitated session C review for every day and thus the performance was monitored to gauge potential of every manager (McGrath 2013). The output metric was the only thing that standardised their measurement of cost efficiency, profitability, productivity (Speculand 2014).
The HR initiatives taken by company to diminish the traditional managing system and enriching the entrepreneurial environment made it possible for the people in organisation to rebalance the management of human resource. The development of pillar jobs of the company enhanced skill development of the employees (Galbraith 2014) .
The re-organisation of 6-macro business and leading the teams with the most experienced top executives as well as the change in organisational structure also helped them necessitated the company profile. The only thing that mattered was the responses that the employees gave (Johnson et al. 2013). Innovation and new business development in order to increase profitability were inclusive in their strategy. Thus, it also helped them in implementing and monitoring (West et al. 2015).
The advantage in competition along with the contribution from revenue and profit, equipped them with financial stability that helped them further in research and development. Jeff’s vision involved growth platform and coordination among the organisational units (Galbraith 2014).
The listing of GE in Dow Jones Industrial average was necessitated by general partners of the company.CEO Jeffery appeared to be favourite of the investors. In addition, though the stock value decreased DJIA increased. In his time, the company remained overvalued (Forgang 2015). However, the synergy was decreased by tax implication (Rothaermel 2015). The natural disaster in time of Jeff Immelt that happened reduced their full implementation of their growth strategy. The relentless acquisition and mergers down powered their overall span of control in the growth strategy. In the two decades, the growth was 35 times in the overall stock markets (Speculand 2014). The cost leadership which was implemented was in Welch’s time was maintained by Jeffery Immelt. The efficiency made them reach 5 billion dollar annual revenue, which was the ultimate mission of the CEO. By focusing on core business, the business the integration of the business was improvised (Johnson et al. 2013).
Therefore, from the above discussion on the case the core strengths of the business are global recognition as new ventures and competitive advantage. In addition, global strength diversified product lines and environmental initiatives towards corporate social initiatives clear their strategy towards further expansion (Speculand 2014). More opportunities lie in expansion through mergers and acquisitions. As financial services business and consumer finance are more lucrative business of the company, they also can improvise in that area (Forgang 2015).
Strategic options are available in the market development as well as product development. Product development can be focused, as that can be a better utilisation of the rigorous research and development of the company. The acquisition of Interbanca Sand .P.A, Whatman Plc, Vectogrey and Turbomecanica is one of the most strategic plans, which intensified their path of better opportunities (Hill et al. 2014).
The demand and supply management can be optimised. This optimisation will include the application of operations and distribution in their global chain of services. The minimisation of operating cost and inventory management will reduce the manufacturing cost, transportation cost and distribution cost. The gross margin in return on investment can ultimately increase the profit margin of the company (Rogers 2016).
Their research and development in the component parts of car-manufacturing sector can be useful to the new era of electric car business. The effectiveness of their operation can support the cost efficiency of the business. As the prediction goes, electric cars are the future of the business and thus it will increase the profit. Inclusion of this strategic integration of the business will prove to be profitable in the coming years (Galbraith 2014).
More value creation of the products and services must also be given emphasis. The company has achieved more success in the last two decades. The breaking of a completely new sector is known can add new values to the business. Adding more value to the business can be done increasing the suppliers account. Buyer’s perception of the business must be clear which can lead to high customer satisfaction (Hill et al. 2014).
The communication among the all business channel can be utilised by the company to improve customer satisfaction and more customisation of their products. Capitalising in the corporate social responsibility that they have taken initiative to incorporate in their operations, can prove to be useful in creating better business value for future. The brand image and brand identity can be improved for rather importance aspects (Rogers 2016).
Entry to the new and emerging market can improve their market expansion strategy. Improvising the healthcare sector and exploring the new opportunities enabled by their exclusive new generation equipments and digitalised instruments are strength, which can further improve their market opportunities (Johnson et al. 2013).
Strengthening certain functions of the company can also improve the organisational changes. The marketing functions as if increasing brand recognition and brand identity can be further extend their company’s brand awareness (Li et al. 2015). This will ensure the longevity of the business. The cross business function and imaginational breakthroughs by sharing resources and capabilities of the company. Fitting the change strategy in departmental functions implemented by Jeff Immelt can also be used in further extensions (Forgang 2015).
The breakup of GE is argued to be a desired key strategy to decentralise the business. This will ensure the further improvement in control and strategic consideration. The top-level executives are very much capable of running the business on their own. With the breaking up decision, certain challenges and advantages will increase the risk but preservation of the resources and capabilities. Thus, it will also help to improve the human resource management of the whole company (Forgang 2015).
Combining the innovation strategy with their growth strategy in order to gain more competitive advantage in the international market can improve the usage of their vast resources. The cultural shift in business can bring more innovation in the internal environment. Instead of aggressive environment a participative or joint environment work, increase the effectiveness of the work done. Change in business portfolio can improve the viability of product (Bayrakta et al. 2017).
Reference
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