Professional Documents
Culture Documents
Abed Ramadan Case 2
Abed Ramadan Case 2
Case 2
1) How difficult a challenge did Welch face in 1981? How effectively did he take charge?
Welch faced a very difficult challenge taking over the position as CEO of GE. His predecessor,
Reg Jones, set the bar extremely high at the company leaving a legacy for Welch to compete
with as the new CEO.
The types of challenges faced by jack Welch after coming on board in 1981 is extremely
excessive interest rates, this caused any investment strategies to require careful consideration
of costs. The fact that unemployment was also extensive made sales revenue less than
projected for many products. Also the nation was experiencing a recession which means
investors were not buying as much stock and inventories were high. Welch moved decisively to
invest his attention in taking advantage of proven performance products and services due to a
very hefty portfolio of business options. He then challenged his managers and teams to be
proactive and look for ways to improve the business using the phrase GE to become “better
than the best”. Some of the goals established involved totally restructuring the company from
the top down in five years.
Jack was effective in that his changes resulted in reclaiming $11 billion in capital from selling off
businesses. The result was a reinvestment in $21 billion of more technology based, leading
edge business during a time of recession.
How effectively did he take charge? Welch was extremely effective in taking over the GE
reins. Although his predecessor was quite successful during his reign and the business thrived,
there was still the need for change. The business world was evolving, and competitors
attempted nonstop to stay ahead of GE. Fortunately, Jones had left the company in a “good
place” during the transition, allowing Welch to come in with his new and innovative ideas to
take the company even further in the business world.
When analyzing Welch’s rationale for the changes made, it is important to identify the benefits
of incorporating Porter’s five forces model to analyze competition within an industry. Welch
based his proposed and implemented changes on proven tactics used by other successful
companies to achieve his strategic organizational goals. Realizing that bureaucratic models
of organizational structure were prone to promoting sluggishness, Welch opted to depart from
this model and implement a more flat organizational structure to assist in meeting his defined
objectives. Although unpopular at the time, Welch’s decisions and actions have through time
become renowned as revolutionary exposing sheer genius in executing changes within an
organization.
3) How does such a large, complex diversified conglomerate defy the critics and
continue to grow so profitably? Have Welch’s various initiatives added value? If
So, how?
The way to growth is through streamlined processes and lean management. Best in Class
system for inventory, production, training, financial, and every phase of the business has led to
record profits. By the late 80s operations were experiencing at $2 billion dollar profit margin
and sales revenue was on the increase. Now GE is known not so much for the products as
services. The In-site Medical Service diagnostic tool allows GE remotely gives customers
information on medical equipment, for example (Bartlett & Wonzy, 2005). This became a model
for reinventing the service industry.
Six sigma process improvement development project management tools and services allow GE
to choose only the best (Black Belt) leaders and most promising new ventures and count the
cost prior to getting involved. Then after implemented, the metrics will allow the new business
to be monitored and tweaked to remain efficient and productive.
The advances in technology, the supplier chain, the global telecommunications expansion, and
the internet make traditional brick and mortar companies look archaic. GE has managed to stay
at the cutting edge by incorporating the latest methods in remaining at the forefront of its
industries. While many companies consider mergers, joint ventures, and some even have had
to close their doors. GE has remaining at the top of its game due to the vision of Jack Welch
along with the ability to implement not simply discuss goals and objectives. His desire to be the
best with his 4 E’s energy, enthusiasm, edge, and execution allows him to achieve any level of
success that is pursued.
Welch’s replacement will have the task of moving the company to the next level which is e-
business and internet expansion. This is a monumental task for a company with so many
businesses (350) under one umbrella (Bartlett & Wonzy, 2005). However, if they can continue
to look forward and remain united, there is only one direction the company can go, up.
Conclusion
As stated throughout this analysis, Jack Welch stepped out into uncharted territory with lofty
aspirations of making dramatic change within the GE organization for positive growth. These
efforts were achieved through several unprecedented means and reorganization of the existing
organizational structure to facilitate discussion, communication, and constructive criticism
unilaterally throughout the company. Although some of his chosen methodologies were
deemed by critics as “radical” and “risky”, the results of Welch’s actions speak for themselves
as a testament to his strategic leadership at the GE helm. The agility, responsiveness,
productivity and ultimately profitability realized as direct results of Jack Welch’s actions while
operating in the office of GE CEO are key indicators of the lasting impact that his legacy leaves
for future officers tapped to fill the position. Programs and processes established under his
watch leave an impressive standard for successors. Without a doubt, Jack Welch’s leadership
has left a lasting impact on GE and the business world.