GE was founded in 1878 by Thomas Edison.

In the beginning his primarily focus was on

generation, distribution and use power which led company to success and become one of
the world’s leading diversified industrial companies. A century later, in addition to its core
businesses in power generation, household appliances, and lighting, the company was also
engaged in businesses as diverse as aircraft engines, medical systems, and diesel
locomotives.
Between 1930 and 1950 company was highly centralized leadership style and all the
decisions were controlled by a management. GE had delegated responsibility to hundreds of
department managers, leading a trend towards greater decentralization.
However, the structure shifted to a more decentralized one in the 1950s, driving the
company towards a sophisticated strategic planning system in the 1960s.
When Welch’s predecessor Reg Jones inherited the company in 1973, he led it to become a
professional bureaucracy. Jones brings fresh blood and new strategic direction to one of the
most diversified enterprises in the world. During the Jones period in GE company sales more
than doubled and earnings grew even faster. He decided in 1977 to make some
organizational changes, in way that he capped GE’s departments, divisions, groups, and SBUs
with a new organizational layer of “sectors,” representing macrobusiness agglomerations
such as consumer products, power systems, or technical products.
In 1981 45-year-old Welch became CEO. In that period the U.S. economy was in a recession.
High interest rates and a strong dollar exacerbated the problem, unemployment . To
leverage performance in GE’s diverse portfolio of businesses, the new CEO challenged each
to be “better than the best” and set in motion a series of changes that were to radically
restructure the company over the next five years. Welch started to change the vision of GE
as it relates to its employees, management and the aim of its products. His goal was to fixed
those poor achieving product lines that could be fixed, sell those product lines that could be
sold but not fixed and drop those product lines that could not be fixed or sold.
Jack Welch made few initiatives implementation:
Restructure
During 1981 and 1990 Jack Welch freed up approximately $11 billion in capital by selling
over 200 of its own businesses. He has done this to craft an exact emphasis on a corporate
plan. On the other hand, Welch accomplished approximately 370 procurements which
permitted the company additional emphasis their efforts. Welch has sold these businesses in
order to downsize the corporate layers of the company.
The overall objective of Jack Welch was to bring rapid change in the organization culture,
strategy, product and market-based decision making. He was concerned more about the
organization’s performance along with the division and units that were in losses were shut
down in his tenure; however, the division that needed some efforts converted into the
profitable ones. Jack Welch was taking the software initiative as well for ‘Work-Out’ and
‘Best Practices’. He believed that an organization can achieve growth and productivity by
implementing restructuring, removing bureaucracy and downsizing but it cannot maintain
high productivity with the practice of cultural change in the long run. In the software
initiative, his target was to reorganize the company’s culture following the speed, simplicity
and self-confidence principles. Through downsizing GE eliminated 59,290 salaried and
64,160 hourly positions between 1981 and 1988; divestiture eliminated an additional
122,700. Even when offset by the acquisitions, the number of employees at GE declined
from 404,000 in 1980 to 330,000 by 1984 and 292,000 by 1989. Between 1981 and 1985,
revenues increased modestly from $27.2 billion to $29.2 billion.
Going Global
Implementing strategic reconstruction, GE had internally strong base to go global. After the
become number 1 or number 2 competitor at the own market during the reconstruction
period gave the company confidence and the opportunity to go global and apply the same
standards to global market position. In the period when Europe economic downturn, the
collapse of the Mexican peso, and Asia crisis GE made a few great investments in the
respective countries with some acquisitions and joint ventures. This investment helped GE to
access partner knowledge and decrease the development cost and risk. Result was that in
1998 global revenue was three times higher than domestic.

Service business
In 1994, Welch launched a new strategic initiative designed to reinforce one of his earliest
goals: to reduce GE’s dependence on its traditional industrial products. Shortly after, every
single GE business was exploring service-based opportunities rather than simply focusing on
the traditional business inventory. He believed that there was untapped potential in the
product service sector, and so encouraged GE to pursue it. By 1996, GE had built an $8
billion equipment services business and this trend continued for GE in 1997, when 20
service-related acquisitions were made. The product services sector that Welch initiated has
now turned into a huge percentage of GE’s revenue as a whole, causing a radical business
shift in the company.
Six sigma
One of the last initiatives that Welch established before his retirement was the
establishment of the Six Sigma quality program. This program focused on efficiency and
employee satisfaction. Welch began to make the move toward companywide Six Sigma
quality levels in 1995. By the Annual Meeting in April of 1999, he announced that the $500
million investment had already returned $750 million, with an expectation of a $1.5 billion
return by the end of the year. This initiative was perhaps the most influential that Welch
made while at GE, because it not only redefined efficiency at GE, but it also redefined
individual employee satisfaction.
E-business
In 1999, just two short years before Welch would be retiring, he introduced his fourth
strategic initiative: e-business. He may have underestimated the importance of the internet
during his previous years at GE, but by 1999, he couldn’t deny its presence and necessity any
longer. While he couldn’t play much of a role in the development of their online presence,
he did initiate the push that caused GE to begin transitioning their presence online. David
Mark, a partner at McKinsey and Co., noted that this transition could take over a decade to
take place, which would cause it to be “a long-term challenge for Welch’s successor,”