The purpose of this paper is to present a comprehensive analysis on Generic Electric (GE) two decade transformation accomplished by the company’s former CEO, Jack Welch. The paper comprise an external analysis of the industry environment, an internal analysis of the company, an analysis of the fit between the firm’s competencies and its strategic choices, an analysis of the organization's design, and an analysis of the strategic leadership of the firm.
As CEO of GE, Jack Welch's management became well-known and prominent, with little reliance on bureaucracy and outdated business processes. The primary concern for Mr. Welch was to acquire new businesses and make sure that each business unit in GE was functioning appropriately. Throughout his management, GE improved rapidly in terms of revenue, culture and leadership. The culture of learning and innovation helped Welch as well as the company in confronting the critics as the company expanded dramatically.
GE’s Two-Decade Transformation: Jack Welch’s Leadership
Generic Electric's is faced with the impending retirement of Jack Welch, therefore, there is escalated uncertainties on whether anyone else can be capable of managing and sustaining the blistering pace of the anticipated growth and overall changes of the Welch era. Being the CEO of GE, the management of Jack Welch remains to be legendary, given the little tolerance for outdated and bureaucratic management of the business processes (Bartlett & Wozny, 2005). Ensuring efficacy in each and every business unit under GE umbrella and acquiring new businesses were the main objectives Welch was concerned with. Throughout his guidance, from 1981 to 2001, the extension of the company was dramatic. The culture of learning and innovation was all included in the incorporation of measures that were related to the development of new product, improvement rates, technological leadership, and these were the main attributes that aided Welch and the company to identify the critics as the company continued to intensify and make profits (Bucifal, 2009). For that case, this article aims to analyze the GE's case study by articulating on various company's statistics.
External Analysis of the Industry Environment for Firm's Competitive Position and Opportunities
Being able to survive in the challenging contexts today requires innovation and thinking in terms of crafting strategies that will enhance the sustainment and establishment of a competitive environment. When an established strategy is employed in an organization, decision making, and structured diversity is enhanced. Organizational leaders are now able to ensure facilitation of organizational growth and development. The Porter’s analysis in this organization include:
Competitive rivalry: To ensure firm's competitiveness was heightened, Welch placed the management and executives in key places to assist him in redirecting the overall culture of the company. For those managers who failed to embrace the new culture, they were let go, and for anyone else who worked against the success of the firm, elimination was done. He had to defy critics and other popular ideas in order to come up with newer initiatives that not only streamlined the organizational performance, but also created and ensured there are profitable business operations and effective human resources that are adding value to the organization (Hitt et.al, 2009).
Supplier power: The supplier power during this entire transition was influenced by the world market in a competitive way with the environment, the political, and economic climate being in constant flux. Nevertheless, Welch was up for the challenge and to him, successful development of the company meant having a compatible team that would ensure GE has been prosperous in earning the trust of diverse stakeholders. This could only be effective through making an assessment of the current environment in order to estimate and determine the way to improve it. Therefore, as a competent leader, Welch pledged to the entire team to focus on his vision for the company and encouraged employees to deliver their best.
Buyer power: In order to increase the buyer power, a drastic restructuring occurred in mid-1980s, where Welch gained currency amongst the managers in GE through replacing 12 of his 14 business heads. This was as a result of price change. Change in price heightened the chances of free interaction between the customers and the managing team, through the strong obligation to the values of management with the readiness to break with the deep-rooted culture that existed in GE, and above all, there was an increased ability to take customer charge.
Threat of substitution: Since the supply was unique, the threat of substitution was slight, and this automated a significant process. Because GE had no substitute products, there was no limit to raising their prices, and so, it was a chance to invest more and make maximum profits.
Threat of entry: In order to have barriers to entry that would deter against new competitors, the GE opportunities came from Welch's investment in other businesses, as this aided in raising the revenue and enhanced the operations of profits, a case that could not be possible with other competitive counterparts. Again, as part of the GE, Welch was extremely concerned in taking over the reins. This would ensure change and the company would evolve into a more competitive organization. Having left the company in a substantial state, Jones allowed Welch to invest in his own ideas and innovations that later on would take the company even further in the business world.
An Internal Analysis of the Firm to identify its Resources, Capabilities, and Core Competencies
As Hitt et.al (2009) stresses, core competencies are the basic principles that provide accessibility for new market and ensure the company has value-added services that are incomparable. And so, the type of leadership style used in this company is what reshaped and ensured the leadership culture was passed on into a culture of innovation. This is what was known as the ‘Imagination and Work' that set apart GE with other competitive counterparts. What's more, the presence of leaders with emotional intelligence allowed for proper and effective communication to everyone in GE, and as a result, this motivated employees, increased opportunities, and enabled that the company had an appropriate management. Yet, the presence of investors and third parties contributed to a great deal in building the customer relationship and buying loyalty, a valuable component that is needed in any successful context. The Immelt's driven approach was seemingly a suitable business opportunity that aided in the sustenance of stakeholder's demand to maintain the competitive position in the business context (Kogut & Kulatilaka, 2001).
Human capital was one of the few resources that were employed in GE. This involves the incorporation of a strategic leadership role with high-skilled personnel, educated employees and provided programs that nurtured the progress in the leadership program, labor force, functional skills, business knowledge, and growth traits like inclusiveness, decisive thinking, and having an external focus. The presence of an infrastructural management context enables the structural changes that dispersed the training program in various states like Shanghai, New York, Tokyo, and Munich.
- Quote paper
- Joe Wessh (Author), 2018, GE’s Two-Decade Transformation. Jack Welch’s Leadership, Munich, GRIN Verlag, https://www.grin.com/document/455071