The Jack Welch Era at General Electric Essay example

Analyzing GE’s corporate-level strategy from 2001 – present with Jeff Immelt as CEO, GE focuses on the growth and development platforms. Technology is the key driving force for GE’s future and growth. Advancements in industries such as energy, health and aviation fueled demand for cleaner and more efficient energy production. GE identified new markets with potential high-growth that offered attractive returns through strategic mergers and acquisitions. As CEO, Jeff Immelt established a process for identifying projects that offered attractive growth potential which were then nurtured and treated as special projects or initiatives that were not subject to strict budget constraints. Immelt introduced GE’s three strategic imperatives as: (1) sustaining its strong business model, (2) strengthening the business portfolio, and (3) driving its growth initiatives. www.ge.com

Under Welch, GE lacked a large amount of social responsibility in my opinion. Friedman’s view that social responsibility is exhibited by obeying the law while increasing profits seems to be a similar idea to the rigid beliefs that Welch held for GE during his management. Many times in his time as the CEO of GE, Welch made questionable decisions about ethical dilemmas that the company faced. Often, the company was overfunding the pension fund and using the money to generate profits on the balance sheet (as interest income.) GE executives profited from the pension fund overfunding because their bonuses were tied to corporate profits, and the business was also able to

1. Corporate social responsibility is defined in Chapter 5 as the corporate duty to create wealth by using means that avoid harm to, protect, or enhance societal assets. Did GE in the Welch era fulfill this duty? Could it have done better? What should it have done?

When first looking at this article it is hard to pinpoint exactly what the core problem would be, because the case study looks at the transformation created by Jack Welch over two decades. The case study explains the changes made overtime that made the company become what it was by the end of the two-decade transformation. That leads readers to look at what could have had the most impact on the company, and for this particular case study the impact came from the drastic changes made by Welch when he became CEO in 1981. While the change was not terrible there are ways to handle it better from the beginning instead of trying to fix it in the end. According to Ken and Scott Blanchard’s article about the best ways to bring change into a company there are six steps: breakdown communication, plan your action, sell the change, collaborate smartly, refine for success, and give your next change initiative its best chance (Blanchard, 2013).

General Electric is the core of a holding company holding exhaustive list of divisions and business units which are designed to support the centralized strategic planning. Jack Welch as a CEO restructured GE and took off to the world’s most successful corporation with high stock prices derived from top caliber operating margins and seemingly unending revenue streams.

Background Information- General Electric Company, known as GE the world over, is an American-based, multinational corporation headquartered in Connecticut. In 2010, the company reported in excess of $150 billion in revenues, net income of over $12 billion, and almost 300,000 employees. It operates through four basic segments: Energy, Technology Infrastructure, Capital Finance and Consumer and Industrial Production. In 2011, GE was ranked the 6th largest firm in the United States as well as the 14th most profitable. Since its founding by Thomas Edison in 1990, and becoming one of the original 12 companies listed on the Down Jones Industrial Average in 1986, GE has been iconic in its relationship as an American innovator. In fact, GE founded RCA in 1919 to further the use and disbursement of international radio, just one example of their early commitment to innovation (GE Fact Sheet, 2012).

In 2001, the Multinational Monitor released over 40 documented grievances against GE, just before CEO Jack Welch’s Retirement (The Case Against GE). Some of these grievances date back to things GE had done since the 1940s, including nuclear testing on people in the United States. However, some are as

Jack Welch, former CEO of General Electric, was one of the first CEOs to change a company so drastically and destroy policies that had been for years. When Jack Welch first entered General Electric, he was given a PPO project on plastic. Jack Welch contributed greatly. Yet, he was only given

Therefore when Friedman mentions the role of a corporate executive, it doesn’t make sense for an individual working towards improving the business to care about social responsibilities if it isn’t a desire of his employer (Friedman, 1970). A corporate executive should only worry about social responsibility in his personal life not when the corporations stakeholders and employers money is at stake (Friedman, 1970). When a corporate executive acts voluntarily, he is “acting as a principle, not an agent; he is spending his money or time or energy…” (Friedman, 1970,

Management guru Jack Welch, former CEO of General Electric, has been instrumental in forming today’s top business management leaders by imparting effective knowledge in leadership management; he is widely credited with transforming GE into a multibillion-dollar conglomerate.

4. Corporations have a duty to correct adverse social impacts they cause. GE failed the basic elements of corporate social responsibility which is to take voluntary actions that go beyond what is compelled by law, regulations, or other mandates. It not only did not cut its pollution outputs to below the legally permitted levels, it missed minimum allowable levels completely, according to the text. Many of the 39 offenses mentioned earlier, most were from pollution hazards. Additionally, GE failed to correct adverse environmental impact caused by its manufacturing plants. According to the text, GE was responsible for polluting the Hudson River with toxins from its manufacturing plant in New York. As oppose to collaborating with governmental agencies utilizing its financial and corporate positioning to correct or at the very least, mitigate the issue; GE instead spent almost a half of billion to win the fight against the cleanup efforts.

Jack Welch’s vision of what GE was possible of gave the company a vision for twenty years while he was the CEO and chairman. He states, “leaders make sure people not only see the vision, they live and breathe it.” (Winning, pg 67) He not only allowed for employees to stretch, but demanded it. In teaching workers to stretch Welch knew that workers “may fail. In fact, they probably will fail. But stretching, and stretching the business, is going to improve performance results.” (Jack Welch on Leadership, pg 105) He also states that “only by setting the performance bar high did it become possible to discover people’s capabilities.” Jack Welch’s emphasis on candor and breaking the bureaucracy of modern business separated him from his contemporaries. He excited others of the possibility of being the biggest and best company in the world and rewarding his best employees that shared the values of GE. According to FORTUNE Editorial Director Geoffrey Colvin In "The Ultimate Manager, Welch leads the annals of management history not for anticipating the new world's changes ahead, but for acting on them: "His great achievement is that having seen it, he faced up to the huge, painful changes it demanded, and made them faster and more emphatically than anyone else in business. He led managers into this new world, which we still inhabit, and just as important, he showed business

2. Does GE under Welch illustrate a narrower view of corporate social responsibility closer to Friedman’s view that the only social responsibility is to increase profits while

Jack Welch was fascinated with chemical engineering and entered GE in 1961 as a junior engineer near where he attended college at the University of Massachusetts. Jack Welch chose General Electric, as he desired a small company atmosphere. He was about to put in his resignation, when an executive at the time assured him that no matter how big the company grew; it would still maintain the small atmosphere feel which made Jack stay and not pursue other opportunities. In 1968 Jack became head of GE’s plastics division, a $26 million-dollar operation. He also oversaw all the marketing and in 1971 became the vice president of GE’s chemical divisions. In 1973 he controlled all the strategic planning for the company and was getting exposure to many of the top executives leading to where in 1979 he became the vice chairman of General Electric. Being that he worked his way from an entry level position, by proving success through his accomplishments, Jack Welch became the youngest chairman and CEO within GE’s history in 1981. “Under his leadership he took the company from $12 billion in value to $280 billion and developed emerging markets with numerous mergers and acquisitions.”

The Lincoln Electric Company proves that the right mix of “organizational culture styles” can achieve profitable business growth over the long haul.