General Electric Under Jack Welch
In 1980 right before Welch took the position as CEO of General Electric, GE's organizational rigid structure, resistance to change, and bureaucratic climate made it impossible to perceive important environmental changes. Furthermore, the organizational structure, decision-making process and information management procedures no longer fit the organization's needs. In 1981 Jack Welch was not considered a leading contender for GE's top job. However, his performance and earnings record ultimately won him the position over six other candidates. When Jack Welch took office as the new chairman and chief executive officer of General Electric, the company had entered the stage between the maturity and decline. Even though he had no formal master plan for GE's reorganization, he did have a vision of what he wanted the company to be. The first step in realizing his vision was a dismantling of the out dated administration that was strangling the company. At the start of Welch's tenure the GE administration was built around three hundred separate businesses, basically a formula for inefficiency. Welch tore through the company’s foundation with a vengeance and by the mid 1980’s had overseen nearly 120,000 layoffs. Entire lines of business were dismantled or sold off under Welch's policy of exclusively maintaining operations that were ranked first or second in their given field. In other words, Welch took GE out of the declining industries and put it in markets where there was room for economic growth. By 1985 billions of dollars had been made or saved through sales and layoffs. Welch sought opportunities for growth by reinvesting those billions and considered possible takeover targets. He eventually settled on RCA, originally a GE startup but at the time of the merger, a top competitor in the high-tech and defense industries. The merger made sense as an effort to unite American manufacturing in those fields against its...
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