This website uses cookies to ensure you have the best experience. Learn more

Finance Essay

4709 words - 19 pages

Copyright © Oxford Management Publishing 2009

Corporate Strategy Analysis: General Electric Co. (1981–2008) – A Case Study
Stanislav Bucifal

Introduction The General Electric Company (GE) is widely regarded as one of the world’s most successful corporations of the 20th century. This paper aims to analyse critically the corporate strategy of GE during the period from 1981 to 2008 under the leadership of two very different but equally influential CEOs—Jack Welch and Jeff Immelt. The paper is organised in four sections. The first section describes GE’s corporate strategy from 1981 to 2001 with Jack Welch as CEO, followed immediately by a critical analysis of Welch’s strategic approach in ...view middle of the document...

As part of his efforts, Welch led a sustained attack on bureaucratic processes and in its place he sought to instil a culture of openness, confidence, leadership and creative thinking at every level of the organisation. Through his organisational restructure Welch ruthlessly eliminated several layers of management and shed a large number of jobs, which earned him the nickname ‘Neutron Jack’ referring to the deadly neutron bomb

Published: November 2009 in Management Online REview,

ISSN 1996-3300


which kills people but leaves buildings standing ( 2009). The biggest staff cuts were made in administrative functions and business decision making was delegated to line operation managers. Welch implemented a major restructure of the GE business portfolio, focusing on a limited number of sectors with promising performance and growth potential, whilst retaining a fairly diversified portfolio of businesses. This was achieved through the sale of GE’s less profitable businesses and retention or acquisition of businesses identified as number one or number two in their industry (Grant 2008, p.304). The strategy led to several huge divestments and the shifting of emphasis towards GE’s technology-based businesses and service businesses (Bock 2001). A series of acquisitions that followed led to the phenomenal growth of GE Capital, which became one of the world’s leading diversified financial services companies (Grant 2008, p.304). Figure 1 shows GE’s organisational structure and business portfolio in 2001. Figure 1. GE’s Organisational Structure and Business Portfolio in 2001

Source: Adapted from Grant (2008)

The annual budget was a central component of GE’s existing strategic planning system. Welch moved strategic planning and other administrative functions into the business units (Bock 2001). The budget locked line managers into explicit performance and cost targets, regardless of changes in market conditions (Grant 2008, p.307). Welch retained the annual cycle but introduced two changes to the system. First, initial financial targets were prepared by the controller’s office rather than individual line managers. And second, the budgets were allowed to be revised as the competitive conditions changed (Grant 2008, p.307). The complex document-centric complex budgeting process was replaced with a much faster and less formal personal process based around a simple standardised five-page playbook in which line managers summarised the key strategic issues their businesses faced (Grant 2008, p.306). A central part of Welch’s corporate strategy was nurturing talent and leadership through the delegation of responsibility and deployment of powerful incentives. He designed a motivation scheme which permeated deep into ranks of middle management rewarding superior performance with generous bonuses and recognition of talent. Stock options on

Published: November 2009 in Management Online REview,


Other Papers Like Finance

Finance Essay

2606 words - 11 pages sectors, governmental and not-for-profit institutions and financial services firms. Many sourcing issues relate to organizations as a whole, others concern specific business functions, such as HR, Operations, IT, Legal&Finance, Communication, Marketing&Sales, Procurement and Facilities. Most of its customers are among the top 500 in the Netherlands. Key customers are KPN, ABN AMRO, het Kadaster, Robeco and Akzo Nobel. With regard to its

Finance Essay

2960 words - 12 pages Beacon International College Course: Pearson BTEC Level 5 HND in Hospitality Management Unit: Finance in the Hospitality Industry Assignment No: 1 Name: Yau Chiu Wai(Sam) Submission: 4/12/2014 1. Identify and review the possible sources of funding that can be used for SEAFRONT hotel new business venture. Explore variety of options, discuss the advantage and disadvantages to assist you to derive the best possible approach. For


3301 words - 14 pages sectors. But there are some lacking to finance and accounting department. Because, They do not enjoy much competitive advantage than any other competitive leading company. In this situation they should be careful their costing sector. They have so many current assets so they have to invest these assets in productive sector and minimize their liability. We trust that Square Pharmaceuticals go ahead day by day. 8. Bibliography: 1

Finance - 8546 words

8546 words - 35 pages make the reasons for the change quite clear to investors so as to avoid sending a false signal, and they should make the change fairly gradually in order to help investors through the move. 17-4 Residual implies left over, and the residual dividend policy implies that dividends are paid only after the company has used all necessary earnings to finance its capital budget. Note in the following graph that the firm has a cost of capital schedule

Why Finance?

343 words - 2 pages My interest in finance stems from an early passion for math. Quantitative work was always appealing to me. As I started growing older, I learned more about finance that seemed to combine the love I had for numbers and human interaction. I exposed myself to finance related classes such as Economics and began to participate in finance related activities such as Euro Challenge and Econ Challenge. I became engrossed with Forbes articles and reading

Micro Finance

5439 words - 22 pages institutions and poverty alleviation and development programmes to meet the needs of needy small and poor borrowers kindle the micro finance concept. The impact of micro finance programmes on reduction of poverty is considerably encouraging in many countries. Many studies have revealed that micro finance has made positive impact on some socio economic variables like empowerment of women and Schedule Caste and Scheduled Tribes, child education

Behavioral Finance

392 words - 2 pages Behavioural Finance Security Analysis and Portfolio Management Behavioural Finance This is referred as a field of study that combines behavioural and cognitive psychological theory with conventional economics and finance to explain why people tend to behave in unpredictable and irrational manner. It tries to explain how investors often tend to differ from the traditional and rational economic assumptions because misrepresentation, over

Finance Assignment

4181 words - 17 pages JOURNAL OF ECONOMICS AND FINANCE EDUCATION  Volume 9  Number 2  Winter 2010 29 Using Microsoft Corporation to Demonstrate the Optimal Capital Structure Trade-off Theory John C. Gardner, Carl B. McGowan Jr., and Susan E. Moeller1 ABSTRACT In this paper, we apply the trade-off theory of capital structure to Microsoft. We use data for bond ratings, bond risk premiums, and levered CAPM betas to compute the cost of equity and the weighted

Business Finance

644 words - 3 pages economic outlook it could be concluded that investing in this company is a good decision. Word count (535) References Brealey, R. A., Myers, S. C., Marcus, A. J. Fundamentals of Corporate Finance. (McGraw- HillIrwin. New York. 2012). Karpoff, J. (1987). The Relation Between Price Changes And Trading Volume: A survey. Journal of Financial and Quantitative Analysis, vol. 22, 109-125. Lintner, John. (1965). The Valuation of Risk Assets and

International Finance

1289 words - 6 pages security market line has historically been flatter than the capital asset pricing model (CAPM) would predict. Reference: Adair, T. A. (2006) Corporate finance demystified. London: McGraw-Hill. Benninga, S. (2011) Principles of finance with Excel. New York: Oxford University Press. Bierman, H. (2007) The capital budgeting decision: economic analysis of investment projects. New York: Routledge. Fama, E., F., French, K., R., (2004). The

Corporate Finance

2010 words - 9 pages 1074 words excluding tables) Reference Ross, Westerfield, and Jaffe (RWJ), Corporate Finance, 9th edition, Irwin McGraw-Hill. Brealey, R.A., S.C. Myers, and F. Allen, Principles of Corporate Finance, McGraw-Hill/Irwin, 11th Global Edition. Royston Wild (2013). A Closer Look at HSBC Holdings' Dividend Potential. In The Motley Fool. Retrieved November 15, 2013 from:

Related Essays

Finance Essay 4674 Words

4674 words - 19 pages to be quite as fast-paced as Sales & Trading. MYTH OR ? REALITY Will a job in banking make me millions? You may earn more than in another industry, but a private jet will still be a stretch. • you will need to take professional exams “To be successful, you must be able to demonstrate passion for your work. Genuine passion is hard to fake.” WHAT IS CORPORATE FINANCE? Corporate Finance delivers the strategic advice and

Finance Essay 734 Words

734 words - 3 pages Summary of Apple’s Latest Launch: iFinance According to the article on the newspaper of Barron’s, “Apple’s Latest Launch: iFinance,” written by Randall W. Frosyth on February 10, 2014, once computer technology leading enterprise--Apple company not only has produced many unimaginable and wonderful computerized gadgets, such as iPod, iPad, and iPhone for the modern society, but also has extended its energetic innovation to the finance world

Finance Essay 2403 Words

2403 words - 10 pages capital in order to develop the best compete . Ratio is consistent with the previous indicator . Indeed, the " long-term debt / equity " ratio shows that the company I did not have enough capital to finance its activity because of its small size is the giant J. In fact, this company is obliged to into debt and therefore has a very high ratio. What is a hazard. Generally all small businesses borrow to finance their activity which explains the

Finance Essay 3028 Words

3028 words - 13 pages FINANCE I initially joined Colgate for the opportunity to work for a recognized multinational, and the prospect of having a global career was very enticing. I am currently a Finance Director for Colgate-Palmolive in the Philippines. What I like most about working at Colgate is the exposure to different cultures, the focus on people development, and the strong global ethics mindset. Since joining Colgate, my professional development has taken