Jack Welch at General Electric
Date: 2015-10-07; view: 513.
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Discussion
Read the article again and complete the following summary in your own words
Adrian Slywotzky and other management gurus argue there is a growth crisis on the basis that (1)_______.
Another consultant, Chris Zook predicts that (2)_______.
However, Zook has found that many companies are forecasting (3)_______.
_______ , _______ and _______(4) are three companies which have experienced healthy growth.
Zook believes that the secret of these companies success lies in (5)_______ .
Swissar's growth initiative involved (6) _______ which may have led to (7)_______ .
In the 1990s, Marconi's decision (8)_______ caused (9)_______.
What is the ‘core' business of each of these companies? Brainstorm the possible “adjacencies' some of these companies could tap into:
a) a publisher of children's books
b) a restaurant
c) a bicycle manufacture
d) a supermarket chain
e) a mobile-phone company
Jack Welch, the legendary chairman and CEO of General Electric, spelled out his strategy clearly with his “number one, number two” concept. He pledged to continue to operate or to acquire only those businesses that would be number one or number two in their market. He took over a company in 1981 that had 350 different businesses in its portfolio clustered in 43 Strategic Business Units. Those businesses that did not perform or could not be improved to meet the goal would be divested. The corporate winners would only be those who are the “leanest”, the “lowest-cost worldwide producers of quality goods and services or those who have a clear technological edge, a clear advantage in a market niche.
Welch put forward a “fix, close, or sell” policy. He drew three circles representing services, high technology and core businesses, and placed the names of 15 businesses inside the circles. The businesses outside the circles would be divested if they could not be improved. Welch stated, “I am looking at the competitive arena. Where does the business sit? What are its strengths vis-à-vis the competition? And what are its weaknesses? What can the competition do to us despite our hard work that can kill us a year or two years down the road? What can we do to them to change the playing field?” He continued: “If you have a game that's vulnerable, somebody can move fast, get you. And you don't have a checkmate play or another move. You've got to get out of that game”
In addition to the ‘number one, number two' policy, Jack Welch reoriented the company toward services. When Jack Welch began managing GE, the company was composed of 15 percent services and 85 percent products. As the company began the 21st century, it had a mix of 25 percent products and 75 percent services, including financial cervices and medical systems”
While focusing on strengths and shifting to services, GE under Welch embraced globalization. Operating in more than 100 countries, the company has about 45 percent of its 293,000 employees outside the United States and earns approximately the same share of revenues outside the country. The company was named the World's Most Admired Company by Fortune and the World's most Respected Company by the Financial Times. Welch's choices of what businesses to maintain, improve or to exit; the decision to enter into international markets; and orientation toward services established goals for General Electric.
Designing Managing Strategy
By Danel F Spulber, p. 10 -11