GE and Jack Welch

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Case Details:

Case Code : LDEN002
Case Length : 11 Pages
Period : 1981-2001
Pub Date : 2002
Teaching Note : Available
Organization : GE
Industry : Varied
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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The Making of a CEO Contd...

However, in 1961, Jack Welch decided to quit the US$10,500 job as he was unhappy with the company's bureaucracy. He was offended that he was given a raise of only US$1000, the same amount given to all his colleagues. He had even accepted a job offer from International Minerals and Chemicals in Skokie, Ill. However, Reuben Gutoff, an executive at GE convinced Jack Welch to stay back. Reuben Gutoff promised that he would prevent him from getting entangled in GE red tape and would create a small-company environment with big-company resources for him. This theme of 'small-company environment' with 'big-company resources' came to dominate Jack Welch's own thinking as the leader of GE. 

Leadership and Entrepreneurship Case Studies | Case Study in Management, Operations, Strategies, Leadership and Entrepreneurship, Case Studies

Jack Welch quickly rose to become the head of the plastics division in 1968. He became a group executive for the US$1.5 billion components and materials group in 1973. This included plastics and GE Medical Systems. 

In 1981, Jack Welch became GE's youngest CEO ever (Refer Exhibits I & II). His predecessor, Reg Jones said, "We need entrepreneurs who are willing to take well-considered business risks - and at the same time know how to work in harmony with a larger business entity…The intellectual requirements are light-years beyond the requirements of less complex organizations."

The Welch Era at GE: 1981-2001

During the first five years as CEO, Jack Welch emphasized that GE should be No.1 or No.2 in all businesses or get out of them.

He disposed off the businesses with low-growth prospects, like TVs and toaster ovens. He expanded the financial-service provider GE Capital into a powerhouse. He also entered the broadcasting industry with the acquisition of RCA Corp., the owner of NBC TV network...

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