Posted: July 12th, 2023

The Restructuring of General Electric: Lessons in Adaptation and Resilience

Identify a company that has undergone some major changes in its operations (for example, a major restructuring or takeover).
Evaluate the nature of these changes and how effectively the organisation has responded or is responding to these changes in the short and long term.
Determine what important lessons can be learned from this experience.
Students will have to demonstrate an in-depth knowledge and practical applications of the business models covered during the course.
NOTE: This assessment must be in an essay format and 2,500 words (approx.) in length.
DEADLINE FOR SUBMISSION: 11.59pm on Thursday 23rd March 2023.
Corporate Strategy – Assessment 2 Format
Title Page.
Introduction.
Background of company (or main company if a merger, joint venture, sale or acquisition).
Event (describe the merger, joint venture, sale, acquisition, expansion, retrenchment, bankruptcy, scandal, or deregistration).
Note: The event must not have occurred before the year 2000.
How the company managed the event (strategy, logistical operations etc.).
Outcomes (or how the Event impacted on the company and the reasons for this impact).
Recommendations (how could or should the company have dealt with the Event to ensure better outcomes).
Conclusion.
Bibliography.

__________________
The Restructuring of General Electric: Lessons in Adaptation and Resilience

Introduction:
In the dynamic landscape of the corporate world, companies often face significant changes that require them to adapt and respond swiftly to survive and thrive. This essay examines the major restructuring undertaken by General Electric (GE) and evaluates the effectiveness of the organization’s response to these changes in the short and long term. By exploring GE’s approach to restructuring, analyzing the outcomes, and providing recommendations, we can derive important lessons for strategic management.

Background of General Electric:
General Electric, founded in 1892 by Thomas Edison, has historically been a global conglomerate operating in various sectors, including aviation, healthcare, power, renewable energy, and finance. For more than a century, GE built a reputation as a leading innovator and industrial powerhouse, embodying the principles of efficiency and diversification.

Event: The Restructuring of General Electric:
In 2018, General Electric faced a significant restructuring event marked by divestments, strategic realignments, and financial challenges. Under the leadership of CEO John Flannery, GE embarked on a series of actions to reshape the company, responding to external market pressures and internal operational issues. The restructuring aimed to address mounting debt, refocus on core competencies, and restore investor confidence.

How General Electric Managed the Restructuring:
General Electric’s restructuring strategy focused on three key pillars: portfolio simplification, cost reduction, and organizational transformation. To simplify the portfolio, GE divested non-core assets, such as its transportation and lighting divisions, to generate liquidity and streamline operations. Additionally, the company reduced costs through workforce reductions and operational efficiencies across its various business segments.

Organizational transformation involved centralizing decision-making and enhancing accountability within each business unit. This entailed improving transparency, performance measurement, and operational execution, while also fostering a culture of innovation. Moreover, GE aimed to strengthen its financial position by restructuring its financial services arm, GE Capital, and reducing its exposure to risky assets.

Outcomes of the Restructuring:
The restructuring had mixed outcomes for General Electric. In the short term, the company experienced significant financial challenges, including a substantial decline in stock value and credit rating downgrades. The divestment of non-core assets resulted in a reduction of revenues and market presence in certain sectors. Moreover, the company faced legal and regulatory scrutiny regarding accounting practices and financial disclosures.

However, in the long term, General Electric demonstrated resilience by refocusing its efforts on its core businesses, such as aviation, power, and healthcare. The divestments allowed GE to shed underperforming units and concentrate on areas where it held a competitive advantage. The company’s emphasis on innovation and digital transformation helped it stay relevant and adapt to changing industry dynamics.

Lessons Learned and Recommendations:

Clear Strategic Focus: The restructuring highlighted the importance of maintaining a clear strategic focus aligned with core competencies. GE could have avoided some of the negative outcomes by proactively divesting non-core assets before they became a financial burden.

Agility and Adaptability: The ability to adapt swiftly to changing market conditions is critical. GE could have responded more proactively to emerging trends, such as renewable energy, by investing in innovative technologies and diversifying its product portfolio.

Effective Communication and Transparency: Enhancing communication and transparency during the restructuring process is crucial to managing stakeholders’ expectations and maintaining trust. GE should have provided clearer and more consistent messaging about its strategic vision, progress, and potential challenges.

Embrace Digital Transformation: GE’s focus on digital transformation enabled it to navigate the evolving landscape successfully. However, the company could have accelerated its digital initiatives, leveraging advanced analytics and artificial intelligence to optimize operations and drive innovation.

Conclusion:
General Electric’s restructuring journey highlights the challenges and opportunities companies face when undergoing significant operational changes. Despite initial setbacks, GE’s strategic realignment and focus on core businesses have positioned it for long-term growth. The lessons learned from GE’s experience emphasize the importance of clear strategic focus, agility, effective communication, and embracing digital transformation. By applying these lessons, organizations can effectively respond to disruptions, secure their future, and create value for stakeholders.

Bibliography: