Since the beginning of the Global Financial Crisis, the General Electric Corporation (GE) has managed to stay afloat despite the harsh conditions. What’s more, the company has managed to remain profitable throughout GFC (Mann 2015). The reasons for this include the regulations introduced to the market since the GFC’s inception, the management decisions made by the GE’s executives, and, to some degree, their leadership practices.
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GE’s financial success and robustness that was demonstrated during the crisis-era is often ascribed to the changes brought by Jack Welch, who was the company’s CEO until 2001 (Krames 2005). For instance, GE Capital established by him was responsible for the impressive assets of $661 billion in 2008, in the middle of the crisis (Kapur 2015). Besides, the implementation of the new statutory regime that introduced new regulations has prompted GE to form a risk committee of independent directors, the move which secured stability in the profitable sector of the company (Tonello 2012).
Another external regulation that proved a key point in GE’s success is the “Twin Peaks” regulation model (Cooper et al. 2014). Because of it, the Australian financial institutions were less exposed to the esoteric, highly leveraged, and highly derived financial products (Schmulow 2016). GE Capital, which at this time was engaged in virtually any possible financial activity, benefited grossly from the stability, which was among the main reasons for the impressive bottom lines exhibited by GE during the last years (Mann 2015).
Cooper, G, Dirkis, M, Hill, J, Stumbles, J, Tolhurst, G, Vann, R. J, & McCracken, S 2014, Regulation and reforms to enhance financial stability in the post-gfc era. Web.
Kapur, R 2015, GE sells $32 billion loan and lease portfolio to Wells Fargo. Web.
Krames, J 2005, Jack Welch and The 4 E’s of leadership: how to put ge’s leadership formula to work in your organization, McGraw Hill Professional, New York.
Mann, T 2015, Why General Electric is unwinding its finance arm. Web.
Schmulow, A 2016, Financial regulation: Is Australia’s ‘twin peaks’ model a successful export. Web.
Tonello, M 2012, Should your board have a separate risk committee?. Web.