Jack Welch and Jeffrey Immelt - Continuity and Change in Strategy, Style and Culture at GE


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Case Details:

Case Code : LDEN040
Case Length : 22 Pages
Period : 1981-2006
Pub Date : 2006
Teaching Note :Not Available
Organization : General Electric Company Industry : Diversified
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background

GE's origin can be traced back to the late 1800s, when Thomas Alva Edison (Edison), invented the first successful incandescent electric lamp in 1879. Edison was an entrepreneur as well as an inventor and started several small businesses dealing with power stations, wiring devices and appliances during the late 1870s and 1880s.

In 1890, he brought all these businesses together and combined them under the Edison General Electric Company (EGEC). EGEC merged with the Thomas-Houston Electric Company4 in 1892 to form GE. The newly formed GE was then headquartered in New York. In 1894, Edison gave way to Charles Coffin (Coffin), a former shoe salesman, as the CEO of GE.

Coffin licensed out the electric bulb technology to other companies, thus consolidating GE's position in the emerging lighting industry. Coffin also created a formal hierarchy at the company and organized GE's various businesses in a systematic manner, arranging each unit around a product line. Coffin was also responsible for setting up financial control systems at GE.

Coffin had a long tenure at GE and eventually stepped aside in favor of Gerard Swope (Swope) in 1922. Under Swope, GE launched several progressive industrial relations initiatives, setting up new policies to give employees pensions, bonuses, stock purchase options, profit sharing and group insurance. GE also became the first company to establish an unemployment pension plan, which guaranteed laid-off workers a stipend of $7.50 per week for a period of 10 weeks after the layoff. In 1940, Charles Wilson (Wilson) became the CEO of GE. Wilson was an autocratic leader and employee relations deteriorated during his tenure. After the Second World War (1939 to 1945), GE faced a major crisis in industrial relations due to the increasing clout of the trade unions.

The crisis culminated in a major strike in 1948, which caused a rift between the blue collar workers and the top management at the company. By the 1950s, GE was a major industrial conglomerate with interests in a variety of businesses. But growth brought its own problems. From the beginning, GE was organized like a holding company, with a few executives at the headquarters monitoring the activities of the various businesses.

Excerpts >>


4]  The Thomas-Houston Electric Company was founded in 1879 by Elihu Thomson and Edwin J. Houston. It was a competitor to EGEC, until the merger of the two companies.

 

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