1. GE acquired Hungarian company Tungsram in 1989 to enter the European market, driven by Tungsram's strength in science and technology and Hungary's low operational costs. 2. GE implemented strategies like divesting non-lighting businesses, cost cuts through scale and job reductions, and quality initiatives like Six Sigma to turnaround Tungsram's performance. 3. By 1996, GE had renamed Tungsram to GE Lightening Tungsram, invested $600 million, increased market share to 16-17%, and posted $7.3 billion in profits.

1. General Electric in Hungary Group 9Atul AnandAvinashBesimaGanesh BhatSrivathsan

2. Entry into European MarketAcquisition of Tungsram in 1989 with 51% stakeDriving Factors:To penetrate into European Market

3. Traditional strength of Tungsram in science and Technology

4. Low operational cost and cheap labour

5. Free Market Economy Condition :Change in political system from communist to democraticHungary Vs USA

6. Tungsram from 1980-1989Insufficient investment in R&D(1-2% of sales)

7. Poor internal communication and information system

8. Low Operating Efficiency :

9. Losses due to wastage and breakage was high

10. Product Development Life cycle was large :3 years

11. Huge Unutilized Inventories.

12. Time between order and delivery was 90 days.Leading Change ..GE

13. Divestment (Stay Fit ) : From 1990-1992 Tungsram interest in products other than lighting was divested.

14. Cost Cut Leadership: (Strategy to increase the Market share)Economies of scale. Huge investment in Manufacturing and Infrastructure to generate the ability to produce large volumes.Cutting down the employees.Leading Change ..

15. Workout sessions (Removal of Bureaucracy):Bring together the people(employees at different levels) who knows the issue best

16. Challenge them to develop creative solutions

17. Brain storming

18. Make yes or no decisions on the solutions at the instant.

19. Empower people to carry out solutions.360’ Feedback (Employee Improvement )Feedback about a employee provided by his subordinates , peers and supervisors .

20. Includes self assessment.

21. The results are used for appraisal , training and development of employees. Leading Change ..

22. Best Practices : Quality at its bestBenchmarking :Process of comparing one’s business process and performance metrics with to that of industry bests or best practices from other industry.Quality Assurance : Six Sigma :Motorola introduced Six Sigma &GE was the first company to successfully implement with a new sexy LOGO.Just In Time Approach :(Inventory Management ):Benefits :Improved capacity and output

23. Quality assurance and hence customer satisfaction

24. Reduced wasteLeading Change ..

25. Effect of Changes1994GE fully bought out TungsramProduct Development cycle reduced from 3 years to 1 year.199590% of GE European production in Hungary, GE western European facilities closed down.

26. Tungsram declared as center of manufacturing excellence.1996Renamed to GE Lightening Tungsram, Invested $600 million in restructuring operations

27. GEL Market share increased from 5-6% to 16-17%

28. GE posted 7.3 billion profit, increase of 11% Current ScenarioLeslawKuzaj is the Regional Executive for CE (Central Europe)

29. GE Hungary generated HUF 667 billion revenues in 2008, with 98% exports.

30. GE Hungary and its affiliates employ 11,000 people.

31. Two core GE businesses –Technology Infrastructure and Energy – operate four factories in three cities, and also a regional headquarters and two technology centres in Hungary

32. In 2008, the company ranked third on the list of Hungary’s largest exporters, eighth based on its revenues.AwardsAviation - "For Veresegyhaz" Award

33. Energy - "For Veresegyhaz" Award

34. Energy - Healthy Workplace Award, Corporate category

35. Consumer & Industrial – Generosity Award 2009

36. Business Superbrands Award

37. Energy, Veresegyház – Best Workplace for Women, 3rd place among companies employing more than 250 associates

38. GE Lighting Global Technology Team – Hungarian Star Award Questions What does GE’s experience in Hungary tell us about the prevailing political, economical, social, technical factors affecting the acquisition? What can be the alternate strategy GE have adopted for Tungsram ?

39. PESTLE ANALYSISPolitical:Hungary's Communist government, which was facing an election it ultimately lost to a coalition, offered concessions to GE -- including freedom to choose investments, repatriate profits, and lay off workers. The opening of the Berlin wall in November, 1989 spurred GE to clinch the dealEnvironment: Given Hungary's Communist background, GE's David Gadra, 42, lectured his staff on ''What means profit?''. No sooner had Gadra explained than he found himself back at the blackboard scribbling out graphs and flow charts to answer the next question: ''Why profit?''

40. Socio-Economic:To cushion the culture shock for the Hungarians, the company chose as chief executive Hungarian-born George Varga, 54. A college student at the time of the 1956 uprising, he fled to the U.S. Varga has spent 28 years with GEVARGA surrounded himself with seasoned executives. His managers average 18 years' service. Says Varga: ''We didn't want the young tigers. We need people with the sensitivity to perform a cultural marriage. We have the ideal team to sell our ideas to the Hungarians.‘’To help lower costs without cutting people, more than 30 GE manufacturing experts were called from the U.S. Each spent about two months at one or more of Tungsram's seven plants working on one of 82 cost-paring projects.

41. Economic:Before:Tungsram was in desperate need of investment capital, new technology, and management expertise.Tungsram got 70% of its $300 million in revenues from the West, chiefly Europe. Thus it offered a tempting mix of Western European market share and Eastern European wages.AfterAt Tungsram, labour accounted for one-quarter of the cost of making a light bulb, compared with one-half in the U.S. GE was booking profits every time it transferred goods abroad, it kept sending out large quantities of products that the sales companies didn't need right away -- or couldn't sell at all.GE got a rude shock when it checked warehouses in France and Germany and discovered $3 million of six-watt car headlights, which haven't been used since the 1970s.

42. Technical:Bulbs produced were the slow-growth, low-margin end of the lighting business. They were rapidly losing ground to a whole family of costlier, high-tech, energy-efficient products.One production line, for example, turns out three million outdoor spotlights a year for yards and driveways. But the line also manages to break another half a million or so, causing a large loss in glass, tungsten wire, and other raw materials. The floor is covered with glass shards, and tall trash cans overflow with discarded bulbs.Legal:No legal issues as the Democratic coalition government agreed to GE's terms

43. Alternate StrategyGREENFIELD VENTURE IN EUROPE