GE: Growth of a Giant

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UC MBA, Strategy

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GE: Growth of a Giant

  1. 1. GROWTH OF A GIANT UNITAS: Team 5
  2. 2. Main Issue •The stock price of GE is undervalued •“Stuck” around $35 • 20 times earnings, half of P/E from the Welch era Team 5
  3. 3. Recommendations What can Immelt do to improve the stock price? •Short-term: Repurchase GE stocks •Long-term: •Continue open communication with investors •Marketing: increase visibility to other countries •Increase public awareness of GE’s growth and portfolio, make big announcements on all advancing activities Team 5
  4. 4. Agenda •Overview of GE •Market Factors •Leadership •Growth Initiatives •Recommendations Team 5
  5. 5. Overview • September 7, 2001: Jack Welch hands the reins over to new CEO Jeff Immelt • $150 billion global company • History of double digit revenue growth • Immelt continued with Welch’s basic business model while implementing his own growth strategy Team 5
  6. 6. Core Competence • Generating double digit revenue growth “The core elements of past success: a portfolio of strong businesses, bound through a set of company-wide strategic initiatives and managed by great people in a culture that was performance driven and adaptive.” -Immelt Team 5
  7. 7. Market Factors • Transition from Jack Welch to Jeff Immelt • 9/11/2001 • Overall market conditions • Enron and Tyco scandals • Immelt’s different approaches and styles Team 5
  8. 8. Immelt’s Leadership Styles •Authoritative •Affiliative •Democratic •Pacesetting •Coaching •Coercive Team 5
  9. 9. Immelt’s Initiatives …To Increase Management Capabilities: •New innovative and creative talents •Growth leaders and succession planning •External focus •Ability to think clearly •Imagination and courage •Inclusiveness and connection with people •Expertise Team 5
  10. 10. Immelt’s Initiatives …To Increase Public Understanding: •Transparent operations •Separate balance sheets and independant growth strategies •Frequent and detailed communications with investors •Commitment to corporate responsibility •Rebalanced portfolio and reorganization •GE Industrial •GE Commercial Financial Services •NBC Universal •GE Health Care •GE Consumer Finance •GE Infrastructure Team 5
  11. 11. Immelt’s Initiatives …To Increase Organic Growth: •Marketing focus (ACFC) •Identification of new growth platforms •Push for new services •Commitment to R&D •Imagination breakthroughs •Infrastructure for developing countries Team 5
  12. 12. Cash Generators Advanced Consumer Materials & Industrial Equipment Insurance Services Team 5
  13. 13. Growth Engines Energy Commercial NBC Finance Healthcare Consumer Transportation Finance Infrastructure Team 5
  14. 14. Focus on Growth Engines EARNINGS ($ billion) 25 20 15 Growth Engines 10 Cash Generators 5 0 2000 2005 Team 5
  15. 15. Growth Sustainability Customer Value Growth Innovation Leaders EXECUTE FOR GROWTH Leadership in Globalization Technology Commercial Excellence Team 5
  16. 16. Growth Sustainability (cont.) •“It’s a marathon:” growth as a core competency •Short-term successes •Long-term vision •Leadership •Effective leadership •Talented people • Global market •Push from home •Pull from abroad Team 5
  17. 17. Recommendations What can Immelt do to improve the stock price? •Short-term: Repurchase GE stocks •Long-term: •Continue open communication with investors •Marketing: increase visibility to other countries •Increase public awareness of GE’s growth and portfolio, make big announcements on all advancing activities Team 5
  18. 18. “GE thrives because we use our size to help us grow. (…) Our goal is not just to be big, but to use our size to be great.” Jeff Immelt. Team 5
  19. 19. Questions? Team 5

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