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TEHRAN, November 20 - The newish boss’s plan is focused on slashing costs, sharpening culture and shrinking to the core
TEHRAN, Young Journalists Club (YJC) -The newish boss’s plan is focused on slashing costs, sharpening culture and shrinking to the core.
“NUMBER one, cash is king…number two, communicate…number three, buy or bury the competition.” These rules were laid out by Jack Welch, a brash but brilliant former boss of General Electric (GE). The American industrial conglomerate, founded by Thomas Edison, has operations ranging from health care and aviation to lighting and energy. During Mr Welch’s tenure, from 1981 to 2001, his company’s market value rose from about $15bn to over $400bn. Today, it barely tops $150bn. Having fallen by more than two-fifths this year, GE is the worst-performing stock in the Dow Jones Industrial Average, a composite index that has risen by nearly a fifth since January 1st.
Jeffrey Immelt, Mr Welch’s amiable successor, violated all three rules. To be fair, he did steer GE through a sharp downturn in aviation following the September 11th 2001 terrorist attacks and unwound its risky financial arm after the global financial crisis. But on his watch GE’s core power business deteriorated to the point where the firm now cannot generate enough cash to pay its promised dividend (see charts). His reliance on multiple accounting standards and opaque long-term service contracts led financial analysts to complain about a lack of openness.
Source:Economist
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