Report

Report Student Name Institutional Affiliation Date Report General Electric (GE) is a renowned Fortune 500 company that has witnessed significant transformations and challenges over the years. Founded in 1892 by the merger of Edison General Electric Company and Thomson-Houston Electric Company. Initially, GE was involved in electricity generation, lighting, and various electrical products. Over the years, the company diversified to offer aviation, healthcare, renewable energy, and financial services (General Electric, 2018). One of the most significant moments for GE was in the year 2000 when the company embarked on a transition to a new leadership team under the guidance of CEO Jeff Immelt. The transition followed a backdrop of a shifting economic landscape as characterized by the bursting of the dot-com bubble and ensuing downturn. Subsequently, GE faced problems during the 2008-2010 global financial crisis and the subsequent economic turmoil due to the COVID-19 pandemic in 2020. This essay discusses the impact of effective management on GE, highlighting how the management assisted the company during the tough economic times. Top Management The top management of GE has changed considerably since 2000. Leaders became the top executives under different circumstances, with each leader facing unique challenges and opportunities during their tenure. Because of the different circumstances under which the top executives became leaders, this shaped GE's trajectory and impact on the business world. In 2000, Jeff Immelt succeeded Jack Welsh as GE’s CEO. Immelt had held various leadership positions with the company, including serving as the Senior Vice President. He found a company facing numerous challenges especially due to the dot-com bubble burst. Immelt inherited a company facing a changing global landscape. As Immelt proceeded, the company was adversely affected by the 2008 global financial crisis. The crisis caused a decline in GE’s stock price and profitability (Huber, 2008). As a result, GE required extensive restructuring to adapt to changing market conditions. Immelt’s term as CEO ended in 2017, paving way for John Flannery. The new CEO came at a period where GE needed to undertake restructuring. During this time, GE had grown its portfolio, making it too diverse. Diversification had caused an increase in the number of operations, which made GE lose focus on the core business aspects. Flannery initiated plans aimed at divesting non-core assets and put more effort on core business. Unfortunately, Flannery’s tenure did not last for long since Larry Culp replaced him in 2018. Culp experienced the same problem as his predecessor together with declining stock price. The high levels of debt because of major acquisitions caused financial challenges to the business. The new CEO has been working towards reducing the debt and improving the flow of cash to strengthen different units of the business. Major Strengths That Led to Success Several strengths at the time of leadership transition in 2000 were instrumental for the success of the business and led to more growth. Firstly, GE had interest in different industries. For instance, the business was running major units in aviation, financial services and healthcare. According to Han, Lee & Kim (2019) businesses need to diversify to mitigate risks by ensuring that challenges in a single sector can be neutralized by the growth of another sector. Being in multiple industries enabled the business to enhance its overall performance. In particular, the decision to diversify enabled GE to have revenue stability. Where some units experienced turbulence, GE could continue earning revenue from well performing industries. Such consistency in revenue facilitated stability of the business, which was critical in ensuring long-term survival of GE. Because of diversification, GE had a competitive advantage over firms that focused on a single sector. Having interests in different sectors allowed the business to leverage its expertise across the business units to gain a competitive advantage over its competitors. At the same time, diversification permitted GE to be more adaptable in the midst of ever changing business environment. The company was better placed to focus more on units experiencing growth and adjust its strategies to mitigate risks. The second strength for GE was a strong global presence. GE had its presence in more than 100 countries, which enhanced its global presence. Such a global footprint was needed to allow the business access to markets worldwide. With a wider market access GE managed to improve its sales revenue. In particular, the business managed to take advantage of growing opportunities in emerging markets while still operating in the more established markets. With a global presence, GE managed to diversify its risks. Kim & Milner (2019) indicate that businesses operating in a single country are subject to political and economic regulatory changes, which sometimes do not favor business operations. Henc...