How difficult was the task Immelt faced when he assumed the CEO role in 2001? Was there any imperative to maintain the past operation?
Immelt task was not an easy one. First, a lot was expected from him considering the fact that his predecessor (Welch) had made GE thrive into a successful firm. Immelt needed to ensure that the company continued to enjoy its success. In other words, Immelt needed to find ways of increasing performance according to the stakeholder’s expectations. In fact, the shareholders were used to increased performance in terms of consistent growth on sales and earnings.
Moreover, Immelt became CEO at a time of terrorism set backs and a shaky economy. Four days after his appointment, the World Trade Center towers were attacked. Besides, a scandal involving Enron, one of the G.E’s companies, became known leading Enron to bankruptcy. All this changed the corporate landscape. In fact, Immelt had a big challenge in managing the impacts of these crises. The unfortunate events led to a destabilised fragile stock market.
Moreover, the turn of events triggered a downturn in an overheated economy. All these factors led to the loss of confidence from the investors creating resentment in the community at large. Immelt had to act otherwise the company is moving towards liquidity. In an effort to help in the crisis, the firm’s donations ranged from financial assistances to medical equipment.
Despite the financial assistance, Immelt hopped to increase the firm’s earnings significantly within the two year financial period. With the current circumstances, the financial analysts were eager to see thios greate achievement. Despite the strategies that were put in place, the share prices fell significantly below 7% within seven days leading to over $80 billion dollars loss in market capitalisation.
The drop in share prices and market capitalisation was below the expectations of G.E since Immelt’s profits annual growth target was placed at18%. Compared with Welch era, the stock price stuck at around $35, 20, which was only half of the price-to-earning (P/E) ratio of the predecessor. As a result, Immelt was seen as a failure and he had to find ways of making things right. Change was inevitable due to all this issues. Immelt had no choice but to give up on the past operations and find ways to increase G.E’s revenue.
Whether Immelt’s management approach was different from Welch’s form of management and whether they faced similar challenges
Immelt’s challenges were different from those of Welch. As such his management approach had to be different. Actually, Immelt changed the firm to become more innovation driven in order to deal with new environment. After fallout with Eron, Immelt worked hard to maintain the previous relationship with both the investors and other stakeholders.
This was aimed at regaining the stakeholders’ confidence in G.E. Besides, he made a stream of timely acquisitions and clever deals that propel the firm to a better growth path. He decided that premium will be placed on companies that could generate their own growth and sold the underperforming businesses to fund his strategy.
What were the major differences in strategic vision between Immelt and Welch?
Immelt concentrated more on marketing as compared to Welch who concentrated on production. In addition, he initiated ACFC (At the Customer for the Customer), which was an initiative to bring G.E’s practices to meet customers’ challenges. Moreover, Immelt held Town Hall Meetings to get an idea on what the customers wanted.
Further, Immelt initiated transparent operations. On the other hand, Welch encouraged communication between employees at all levels, which became a motivating factor. Such actions ensured good work relation and understanding between the employees. However, Immelt established external communications. The action was because he recognised that corporate executives face critics. Therefore, external communication established more openness and trust and managed G.E’s public relationships with all the stakeholders.
Additionally, Immelt was more committed to social responsibility. He believed people should work in a firm that they can help make a change in the world. Immelt also invested in research centers. He upgraded G.E’s research and development center in New York. In addition, he established a center in China and also authorised the construction of a new one in India.
Would you have proposed a similar strategy like Immelt? Why or why not?
Immelt strategy was a brilliant one. He did analyze the market and then set his long-term business goals and stuck to then, before he implemented his strategy. The strategy turned out to be successful because he decided to focus on the customer. Clients’ preferences remained significant to the firm.
The firm realised that maintaining the customer base and satisfaction is important for sales growth. Immelt got more people to work for him due to his commitment to corporate social responsibility. Immelt realised that having employees who are motivated leads to increased performance.
How well was Immelt implementing his strategy? What were his greatest achievements?
Immlelt did implement his strategy to the latter. The strategic focus was to make profits. Considering the fact that he took over when the market was in turmoil, he did manage to come out as the winner in the long-run. I guess the “end justifies the means.” Immelt managed to fuel top-line growth through acquisition and geographical acquisitions. In 2003, G.E’s revenue was already going up. By 2004, revenues outside the U.S.A grew to over 15%. Immelt also managed to make GE maintained its competitive edge through innovations.