Read the case General Electric in Textbook on page C-193

Case Synopsis

This case looks at the history of General Electric since the 1960s, with particular focus on the tenure of CEOs Jack Welsh (1981-2001) and Jeffery Immelt (2001-2017), and the company’s struggles in the post Immelt era. The case opens by detailing the main strategic challenges faced by this large diversified enterprise in the pre-Welch era. Next, the case explores how Welch articulated a strategy, restructured GE, and drove performance accountability and productivity improvement programs throughout the company over his twenty-year tenure. Welch was followed by Immelt, his hand-picked successor, who struggled to match his mentor’s performance. The case documents how Immelt tried to move on from the Welch era while matching Welch’s performance record. As described in the case, he ultimately failed to do this, leaving GE in a worse state than he found it. The case closes with a discussion of the steps taken by Immelt’s immediate successor, John Flannery, to try and deal with the excesses and errors of the Immelt era (and perhaps the Welch era too).
Address the questions below:
What is your assessment of Welch’s tenure?
What was Immelt trying to achieve at GE? What is your assessment of his tenure? What were the positive aspects? What didn’t work and why?
What are the challenges now confronting Flannery? What should he do?
What does the GE case teach you about how to create value through corporate diversification?