GE’s Two-Decade Transformation Jack Welch’s Leadership PDF

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As a successful firm, GE has the right resources, which are aligned with the correct features and attributes. However, Welch played a crucial role in strengthening the valuable resources that in turn created efficiency and effectiveness (Bartlett & Wozny, 2005). This aided in addressing the opportun...

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Running Head: GE’S TWO-DECADE TRANSFORMATION

GE’S TWO-DECADE TRANSFORMATION: JACK WELCH’S LEADERSHIP Student’s Name Professor’s Name Institution Course Date of Submission

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GE’s Two-Decade Transformation: Jack Welch’s Leadership Executive Summary This report is purposed to offer an in-depth analysis of renaissance of GE that was successful as a result of the efforts of CEO Jack Welch. The impact of his leadership style and the implications in this organization will, therefore, be examined. The report constitutes a reflexive examination that was performed by the team, through employing the use of perspectives that are achieved via professional experience. Acting as the Chief Executive Officer, Welch’s management skills became legendary, following his tolerance and need for having an archaic and bureaucratic business process. One of the best fields that he used to operate with effectiveness was ensuring that there was the new formation of each business unit under the management of GE. As a successful firm, GE has the right resources, which are aligned with the correct features and attributes. However, Welch played a crucial role in strengthening the valuable resources that in turn created efficiency and effectiveness (Bartlett & Wozny, 2005). This aided in addressing the opportunities and minimizing the threats. During the tenure of Welch, GE was regarded as the most admirable company globally in financial perceptions. Therefore, through identifying and examining the management style of Welch and attempting to apply them in our strategic culture today, it’s vivid that GE requires a person who values the change in business culture that was created by Welch. Introduction 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

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GE, the management of Jack Welch remains to be legendary, given the little tolerance for archaic 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

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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 mid1980s, 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 commitment to the values of management with the willingness to break with the old 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

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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

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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. Through implementation of employee training in GE, the development could be achieved through having the appropriate organizational structure, right culture, and effective communication through an updated information system. Remarkably, reports indicate that over 1 billion was spent every year through holding training and even during the period of recession. Hence, the GE program motivated people to get training and certified skills in advanced manufacturing that would see them being future engineers. Besides, Immelt's hiring of new employees was a vital perception in enhancing change within GE, which was a chance to create more pressure on production and imagination. There was improvement and inspiration within GE through employee training and concentrating more on purchasing from external proficiency to heighten the business model. An Analysis of the fit between the Firm Competencies and its Strategic Choices The fit between the firm competencies and its strategic choices is mainly exhibited by technological risks and competitors. (Hitt et.al (2009) postulates that when a firm has an opportunity to make the irreversible investment because of future uncertainties, there is an option value to delay. Within GE, the real options approach improves the Net Profit Value on the basis of investment appraisal by giving a means for the firm to choose the options to delay, an important factor of flexibility. Let us assume that because of price fluctuations and global crisis in the complex system, GE sector of energy has passed through supply shortages and failure to

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make profitability. Thus, the best strategic choice is to leverage its distribution channels because the decline in market contexts is what leads to loss. As a capital-rigorous venture, the CEO can surrender the project to estimate the salvage value, which is applicable within the next five years. By then, the GE Energy can continue developing, and/or abandon the project, but the main choice is to go ahead with the development. An Analysis of the Organization's Design As Hitt et.al (2009) stipulates, firms and organizations ought to structure their designs as per the core capabilities instead of basically depending on business components. This concept has been applicable within GE in that the multifaceted reformation of the organization structure from a highly integrated leadership have been divided into different units, thus enhancing crossbased incorporation. This form of organizational strategy saw the market value of GE improve from an estimated value of twelve billion to thirty-seven billions in a span of twenty-five years. Further, Immelt adjusted the organizational structure from result-centered to a very complex and diverse uncompromising structure that acts as disorganizer's and delay management appraisal. This is a strategy that facilitates in getting closer the business structure closer. The mission of Welch was to restructure the company for the purpose of becoming the number one in the competitive market. He, therefore, embraced change and expected all other employees to replicate his actions. He even encouraged his team to be ‘Better than the Best'. Different management structures for reporting were employed at distinct points of the transformation. For a case in point, he perceived as if there were too many layers at every headquarter group, and resultantly, he imposed a process of de-staffing that encouraged a vertical reporting structure with several heads of department who reported directly to him. As well, together with the management team, they shared the same aspect of management values, with the

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willingness to think outside the box, take charge, and push the envelope as team players. In order to compensate them, Welch ensured that these employees were rewarded with incentives and generous bonuses (Bartlett & Wozny, 2005). To add to the point was the fact that Welch ensured a culture that was characterized by self-confidence, rapidity, and simplicity through fostering effective communication. To ensure his commitment lasted longer, he launched the program on Work Out that was a forum for communication between employees and managers. As a matter of fact, it was certain that the success of GE was reliant on the team's strength, therefore, with the yearning to relentlessly achieve milestone, he set up his team for success, and he based everything on people's beliefs and decision making, and as quoted, Welch stated that "I own the people, you just rent them." Welch's replacement is a great challenge within GE because clear communication of the vision is vital. There will be the need to foster an open communication channel in an effort to encourage teamwork. An Analysis of the Alignment among the Elements of Organizational Design De Andrés et.al (2012) speculates that through formulating a suitable strategic planning with ROA framework, managers are encouraged to reflect on the implications of uncertainty and implement appropriate strategies to use in order to cope with those possible uncertainties. The argument mainly stresses on distinct change to result in a progressive implication than an interrelated diversification to the firm to increase the options of growth to a new dawn. As one of the GE's elements of organization design, distinct diversification is regarded to be a connection of RO, where the opportunities to invest are based on those developed before decisions to invest, which serves to gear the growth of the firm's portfolio. Again, the expandability of operations within GE is an unrelated segment that aligns with the rise to a call option on the basis on the

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existing resources because of ability to transfer the operational capabilities to diverse sectors (Kogut & Kulatilaka, 2001). In 2009, the conditions and high uncertain industrial structural level, the expansion costs, and the location were the elements that encouraged GE to engage in early investment in businesses that have higher precariousness. The assumption behind the diversification of GE in unrelated segments is the availability of opportunities to invest, that improved learning and exploration on particular areas of interest. In addition, strengths is another element that ensures organizational design in that some strengths offers an opportunity to exploit more than one opportunity, while others are just for specific opportunities. In this case, the manager is given a choice to invest in opportunity in opportunity particular strongholds or not. By all accounts, the top management of GE is reviewing and considering a greener environment in UK market where it can introduce and develop the eco-friendly infrastructure and green technology system. An Analysis of the Strategic Leadership of the Firm The leadership of both Welch and Immelt is highly perceived to demonstrate the aspect of competency by the way it has enhanced and leveraged the diversified portfolio for use in strategic synergies, which enhances company growth in the ever competing market (Dull, 2010). With facts, it is suspected that GE is the leading company globally because of its business units system that encourages the division of managers who act like small business owners only for the purpose of identifying the needs of customers. Consequently, the competencies are what links all the diversified businesses. For example, the diversification within GE enhances increased skilled labor, patents, and core competencies that have shared knowledge. In both China and India, GE ensures there is a healthy relationship to encourage the potential access to diversify its market in those counties. As a result, this improves the brand reputation, ensure coherency and customer

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satisfaction, increase profitability and efficiency, and exploit labor resources. Thus, with the strategic leadership it has, GE provides competency and reveal the future growth opportunities. The customer focus initiative was Welch's modernism which then offered a deeper insight into productivity, adopted change acceleration process, and made boundaries of communication less structured for process improvement. It was through this leadership initiative that learning environment led to Six Sigma, and customer impact, which is now the main focal point of GE. However, the crucial development outcome of its core business leadership is deeply related to environmental projects with a response to the customer needs. For example, the leadership strategies used within GE is dubbed as Ecomagination that offers a room for the development of more products and market expectations, a case that was implemented through structures of acquisitions and divestments in different sectors. Being able to offer profound leadership management skills creates differentiation advantage through allowing production of innovative goods and services and the need for customer focus. The leadership strategy used in this firm allows for adept comprehension of the GE capabilities and increase competitiveness in the linkage of important products, core components, and business contexts (Kogut & Kulatilaka, 2001). Conclusion In a nutshell, this paper has offered an all-inclusive analysis of the GE's Case study that shows the dramatic change within GE organization as affirmative. However, for the efforts to be fully achieved, there are unprecedented means to be used and the reorganization of the existing company structure to facilitate communication, discussion and unilateral constructiveness throughout the company. The main focus was generated from the GE's core capabilities and resources to aid core competitiveness. The responsiveness, ultimate profitability, productivity,

GE’S TWO-DECADE TRANSFORMATION and agility realized through this assessment are the consequences of Jack Welch's actions when he was the CEO, and they are essential implications of the long-lasting impact left for others to replicate and do more for the company.

References Bartlett, C.A., & Wozny, M. (2005). GE's two-decade transformation: Jack Welch'sLeadership. Harvard Business School Bucifal, S. (2009). Corporate Strategy Analysis: General Electric Co.(1981–present). De Andrés, P., De La Fuente, G., & Velasco, P. (2012). Tackling the Corporate Diversification– Value Puzzle using the Real Options' Approach. Dull, M. (2010). Leadership and organizational culture: Sustaining dialogue between practitioners and scholars. Public Administration Review, 70(6), 857-866.

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GE’S TWO-DECADE TRANSFORMATION Hitt, M. A., Ireland, R. D., & Hoskisson, R. A. (2009). Strategic management: competitiveness and Globalization: Concepts and Cases. Cengage Learning. OH: Cincinnati. Kogut, B., & Kulatilaka, N. (2001). Capabilities as real options. Organization Science, 12(6), 744-758.

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