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

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