Reference no: EM133251275

Case: Given the description below, identify two decisions by one of the CEOs of the GE company under review that you consider to be strategic. One of the decisions must have contributed positively and the other negatively.

Discuss the decisions in detail, clearly highlighting the impact of each decision and why you think it is recommended/not recommended. History: In 2000, ge's stock peaked at $60 per share but has since declined by over 75% to $13 per share.

This represents a compound annual return of minus 7% per year. In 2001, its market capitalisation was over $400 billion. By 2017, it had fallen to 11th place, with a market capitalisation of $259 billion. How GE managed to become the world's most successful company, and the factors that led to its epic fall. In 1889, Thomas Edison turned his invention of the light bulb into a number of business interests.

These included the Edison Lamp Company, which produced electric lamps. Edison machine works, which created electric motors and some others. Drexel Morgand&Company, an investment bank co-founded by JP Morgan, approached Edison and offered to merge all its businesses into one.

The result was the Edison General Electric Company. In 1896, GE was listed on the New York Stock Exchange and was one of the original 12 companies in the new Dow Jones Industrial Average. During the 1900s, GE made numerous acquisitions and quickly became the leader in the power plant industry. In the 20th century, GE moved into technology and computers and worked with IBM. GE's business began to take off in 1981, when Jack Welch (a former mechanical engineer) became CEO and President of GE. This led to an extremely complex corporate structure with dozens of unnecessary bureaucratic layers that made the company inefficient;

The CEO restructured the company, laying off employees and divesting the company's underperforming business units. Welch valued simplicity and divested the underperforming business units. He oversaw 600 acquisitions during his 20-year tenure. GE was created to finance GE's customers, for example: if an aircraft manufacturer wanted to buy a GE jet engine, they could borrow money from GE Capital to finance the purchase. Jack Welch realised that GE Capital could in fact be very lucrative in its own right and aggressively expanded the scope of its operations by extending personal loans to car loans and other financial services.

This became one of the company's most profitable businesses. During his tenure, he increased the company's market capitalisation from $12 billion to $410 billion. He increased revenues from 27 billion to 130 billion in 1982 ? Jeff Immelt joined GE and became CEO in 2001. His start was catastrophic. Only a few days after he took over, the bombing of the towers took place, which affected GE's capital. The disaster resulted in an insurance loss of at least $600 million and had a negative impact on GE's aircraft engine business. The 2008 recession also hit GE hard, as its industries suffered revenue reductions. As a result, GE saw its profits more than halve (from $22 billion to $11 billion) in 2007 and less than $11 billion in 2009. Jeff Immelt has also been active in acquisitions. In 2004, he bought Amersham plc for 10 billion euros. By 2008, almost half of the company's profits came from financial services.

The company turned into a bank that sold some engines on the side. GE Capital's operations were extremely diversified and, until the financial crisis, the company specialised in subprime mortgages. It was also in the credit card business, providing credit lines for walmart and lowe's branded credit cards.

At the end of 2017, Jeff Immelt was replaced as CEO by John Flannery In 2018, GE's board of directors voted unanimously to remove Flannery as CEO and appointed Lawrence Kolp He took over GE to reduce losses from -23 billion in 2018 to just 1.5 billion in 2019 and in 2020 reported a profit of $5 billion It finally appears that GE is turning the page on its last few decades, but it has a lot of work to do before it can achieve the same level of success and admiration it once displayed