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

GE-Two -Decade Transformation - Case Study ExampleHowever, the beau monde has in the past encountered severe challenges before attaining its current global position. In the late 20th century, the company encountered challenges which threatened its operations and stability. This paper will examine GE, discussing strategies utilise by the companys management in the wake of severe challenges. Welchs Challenge in 1981 In the year 1981, when Welch took over management of GE from Jones, the company experienced legion(predicate) of hardships that threatened its existence. In 1981, the US economy suffered serious recession, which meant that banks lent money at unbelievably risque interest rates. The high interest rates were especially disadvantageous to companies such as GE that required borrowed capital to sustain its business. In addition, the US dollar was quite stiff at the time making GEs international business operations quite unprofitable and unmanageable. The tough economic time s 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 through the adoption of numerous strategies. Welch first adopted the number one or two, fix, sell or close strategy that required all GEs business social units to be leaders in their respective industries or face check. 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 n ecessary 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 functioning (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 ensure the company achieved Welchs objectives, the CEO initiated a series of strategies between the late 1980s and early 1990s. These initiatives centered on the spectrum of achieving organisational 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. Welchs initiatives were able to reclaim the companys operations, bolster 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 centered on the nonion 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 sought to instill the nuance of strength in value addition