Ad Here  
May
June
July
August
September
October
 
 
IFCI to raise NCDs upto Rs 2000 crore Big-ticket investments march towards Punjab Connecting the unconnected Towards peace of mind Three more leather clusters… Realty sector takes a break... - AirAsia India infuses funds to fight out competition More gensets and diesel engines from TAFE Well-refined – RIL’s refinery margins zoom Strategy war escalates between Hero and Honda Industry-well poised to invest on expansion Housing Innovation Challenge, 2015 Applauding enterprise... Celebration time at MS Chola Chennai to get a roundabout Metro Chola MS launches motor app Curbing steel imports will hurt small business... Climate change may change the way businesses work... Scoot offers just Rs.13,500 to ANZ... TiE applauds innovative entrepreneurs An aerospace-defence cluster in Tamil Nadu… TOP 10 CEO Compensation Techies trip to India Is Indian telecom industry heading for a monopoly? Brand leaders come forward... Steel loses its sheen People Flow Day- Safety BRICS development bank WABCO’s second Chennai plant Innovation that helped Chennai port Purdue and IIT-M sign the dotted line Carrefour’s quick exit Ridley marathon to India European crisis is a global crisis! Economic issues take a back seat at G20 summit Rating of states to be released soon TII’s single largest investment at Thiruthani Chola MS net crosses 100 crores Need to focus on ease of doing business... Blue Star plans a new plant in south Pharma market dozes Economic, business and social sustainability Time to fast-pace the logistics sector Adding Zest to Scooty Focus on self-certification and third party inspection Illicit markets a concern to growing economy An American alliance in the chemical industry? Celebrating 180 years of relevance Placing the right shoe forward... Dynamic e-commerce scenario Auto test tracks launched at GARC Oragadam campus Murugappa- a year of consolidation Durga - India’s largest blast furnace; now operational TVS Logistics – another acquisition to sharpen the business model Gem of social service... Automotive Vision Plan II... ISRO's 100th mission Schwing Stetter India joins hands with US-based Gomaco Make way for the new and dynamic railways On the ‘milky’ way Creating Tamil Nadu Banana brand A global plastic event in India STFC raises money Hero Motocorp - smooth ride Four daughters and a proud father ECGC expands operations Apple maps – finding its way TCS’ revenues cross Rs 100,000 crore TII-challenging year with flat growth CUB: towards card-less withdrawal Nigeria comes nearer OBO Bettermann for better lightning protection Striking cords for 25 years… When Centre visits the state Indigo stays leader with 40 per cent share The new look- 4s Verna LVB gears to become a financial supermarket Veritas Finance- financing the unfinanced ALL-two launches in a row TN budget pragmatic and moderate on fiscal deficit Changing dynamics in human resource management Smart controls for cooling large multi-zone spaces ... Realising double digit growth in Tamil Nadu Tata Steel commence operations at Kalinganagar Backpack laboratory Research needs more funding World labour laws at a glance Chennai will soon get its World Trade Centre Nothing to hide... Bridging the skill deficit in pharma industry Downsizing spree... Airlines wage price war ALL to launch electric busses Secured NCDs from Shriram City Business Breif Sun Edison launches solar pumps Hyundai excites again Reality bytes Investor friendly Japan Business Briefs Chennai Port is at last decongested! Flexible labour laws… ALL – truck industry is recovering from degrowth SumInfra- corridor based development... Indian Bank – global businesses crosses Rs 3 lakh crore... Inclusive and forward moving... Holiday Inn opens in OMR Chennai Digital retail transactions stabilise at higher level… Waste, a gold mine
 
Downsizing spree...
“When the rate of change on the outside exceeds the rate of change inside, the end is in sight,” said Jack Welch.

Tough words from an iconic leader, who also said that every leader and every firm will have to reinvent themselves every few years and the velocity of that reinvention depends on the changes in the industry and the environment they are part of.

The rapidly growing digital, the rapidly changing industrial world and the many firms that are at the intersection of the two worlds have quite a few challenges to address in today’s times of tectonic shifts. While this juncture has many companies in a tight spot to establish survival, some also herald it as an opportunity to achieve dominance over others.

The new CEO of GE, John Flannery, took some drastic decisions soon after he took the top job.  It sent shock waves through the markets and the 330,000 strong firm. GE shares slumped on his cutting the dividend by half.

 

Moody’s downgrades GE

The ‘extreme deterioration’ in GE’s energy business, prompted Moody’s Investors Service to downgrade GE.

Jeff Cox of CNBC puts it in a succinct form: “Moody’s takes GE to task for using $25 billion from asset sales in 2016 and 2017 to repurchase stock in an effort to boost share price, taking out $10 billion of debt to fund acquisitions and paying out a dividend higher than cash flows and as the company was downsizing key operations.” 

GE has a long road ahead to turnaround, to shed businesses, to refocus on strong businesses like healthcare and so on. In fact, in alignment to this notion, GE has now closed all R&D centres except the ones in the US and India. These crossroads are somewhat similar to what Lou Gerstner faced in IBM, when IBM was in a much worse state and faced near bankruptcy.  That story is brilliantly documented in Gerstner’s book, Who Says Elephants Can’t Dance?

Even the elephant can dance.

 

Challenges of de-diversification…

Prof Michael Useem of the Wharton School sums it up by stating that Capital Allocation Policy and Ope-rational Rigor are two of the major issues that brought both firms to their knees. 

He believes that the new strategy of John Flannery, which he calls de-diversification, is the right one, but there are very many challenges that GE will face in executing such a strategy. 

IBM was turned around by 2002 when Lou Gerstner left a job well done. Lou, being an outsider, wasn’t expected to succeed in IBM.  He eventually did.  But John Flannery, being the homebred leader that he is, has a lot of weight on his shoulders as he wrests the future of GE. 

To recollect Jack Welch’s four Es for a leader: John has shown the Energy and the Edge in making firm decisions and moving forward. The world is yet to see his ability to Energize GE and his Execution ability to accelerate the change inside to match the change outside. 

Author :
Reported On :
Sector :
Shoulder :
RELATED NEWS
ABOUT IE
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
 
PRIVACY POLICY
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
TERMS AND CONDITIONS
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
 
CONTACT US
S-15, Industrial Estate,
Guindy,
Chennai - 600 032.
PHONE: +91 44 22501236
EMAIL: indecom1968@gmail.com