South University Online
Dr. Patrick Udeh
January 30, 2012
Case Study: GE: Jeffrey Immelt – Change in Strategy, Style and Culture
In all companies changes in strategies, style and culture are experienced when management changes occur. This was no different with GE. As Jack Welch stepped down as CEO after 20 years, Jeffrey Immelt was chosen as his successor. He had some big shoes to fill. “Immelt became the hero of GE at one of the most difficult times in American economic history” (Regani & George, 2009, p. 146). Not only was the U.S. experiencing a recession and the bursting of the dot.com bubble, but 4 days after he began his term as CEO, the terrorist attacks of September 11 took place.
With the allegations of fraud at Enron and Tyco, investors became concerned and began selling their shares (Regani & George, 2009, p. 147). They were also concerned about the profitability and how much of their “growth depended on acquisitions and how much of it was organic” (Regani & George, 2009, p. 147). Immelt took steps to win over the investors and maintain the growth and profitability of GE. Immelt began by redesigning the executive compensation package to be based on the company performance as opposed to the individual’s performance. His next step was making changes to GE’s portfolio. “Immelt said that GE had acquired other companies not simply to fuel expansion, but also to improve the business portfolio (Regani & George, 2009, p. 147). By 2002, they were restructuring by downscoping the less profitable businesses and “acquiring other strategically significant ones (Regani & George, 2009, p. 147). By 2005 he had spent in excess of $60 billion to acquire businesses in “renewable energy, cable & film, entertainment, bioscience, and security” (Regani & George, 2009, p. 148). In addition to increasing and globalizing R&D, he changed the...