GE-Two -Decade Transformation Case Study Example | Topics and Well Written Essays - 1000 words

GE-Two -Decade Transformation - Case Study exercisingHowever, the company has in the past encountered severe challenges before attaining its current global position. In the late twentieth century, the company encountered challenges which threatened its trading operations and stability. This paper will examine GE, discussing strategies employed by the companys management in the wake of severe challenges. Welchs Challenge in 1981 In the year 1981, when Welch took all over management of GE from Jones, the company experienced numerous of hardships that threatened its existence. In 1981, the US economy suffered sound recession, which meant that banks lent money at unbelievably high interest rates. The high interest rates were specially disadvantageous to companies such as GE that required borrowed capital to sustain its business. In addition, the US dollar sign was quite strong at the time making GEs international business operations quite unprofitable and unmanageable. The tough economical times experienced in the US also meant that GE had to lay off some of its employees and reduce hourly positions (OBoyle, 1999). This put Welch and the company in a tough position, having to balance the companys operations among the few remaining employees. Moreover, GE faced serious competition, particularly from Japanese companies. Global competitors had significant competitive advantages over GE as their nations of domicile were free of economic crisis like the US. However, despite the immense challenges, Welch was able to take charge of the company rather effectively by dint of the adoption of numerous strategies. Welch first adopted the physique one or two, fix, sell or end dodging that required all GEs business units to be leadership in their various(prenominal) industries or face closure. This strategy was effective in eliminating unproductive units of GE and strengthening the remaining units, which became leaders in their industries. The closure and sale of unproductive units provided necessary capital for productive units to strengthen their operations. Welchs strategy was effectual as it freed capital for strategic investments, which enhanced the companys bottom line effect (Slater, 1998). Welchs Objectives and Initiatives When Welch became the CEO of GE in 1981, he established the new company objectives to leverage GEs performance within the companys diverse business portfolio. In order to do this, Welch required all company employees to become better than the best in their positions and responsibilities (OBoyle, 1999). In order to moderate the company reachd Welchs objectives, the CEO initiated a series of strategies between the late 1980s and early 1990s. These initiatives center on on the spectrum of achieving organizational change through restructuring its staffing, layering and size. Through the adoption of the initiatives and strategic change, GE was able to achieve substantial competitive advantage within its markets. Wel chs initiatives were able to revitalize the companys operations, aggrandise its image, and achieve massive profit margins. Welch streamlined the companys staffing, especially in the companys planning unit to ensure GE was lean and agile. The logic behind Welchs de-staffing initiative revolve around on the notion that company or unit productivity does not rely on the number of staff in the unit, but rather the value each staff adds to the unit or company. Welch desire to instill the culture of strength in value addition