General Electric: Turnaround Management Under Three Different CEOs
(6 pages of text)
Case (Pub Mat)
In 2019, after one year in the position, H. Lawrence Culp Jr., the first outsider chief executive officer (CEO) of General Electric Company (GE) was faced with the task of gaining the stock market’s faith in his ability to turn GE around. During the tenure of his two predecessors (from 2001 to 2018), GE’s stock price had declined significantly, and investors were concerned. The new CEO introduced the lean management philosophy and restructured divisions like GE Power to enhance free cash flow (FCF), a key concern of GE investors. By October 2019, analysts believed that strategies taken by him were not enough to improve GE’s stock market performance. Could he, as an outsider, prove to be a better CEO than the insiders had been? How should he manage GE’s business units? How could he increase FCF and the market valuation of GE? Should he continue with lean management?
This case is suitable for undergraduate- or graduate-level programs in courses on business strategy, strategic management, and strategic leadership. The case elaborates on the turnaround strategies CEOs can opt for and examines how different CEOs pursue different strategies. The case further highlights the significance of free cash flow (FCF) and strategies CEOs can take to appropriately allocate resources across different strategic business units. After working through the case and assignment questions, students will be able to
- critically analyze the role an outsider CEO can play in improving a firm’s performance;
- evaluate the significance of and strategies used to enhance a firm’s FCF;
- critically analyze the performance of business units of a conglomerate and use the Boston Consulting Group (BCG) matrix to make investment decisions across business units; and
- describe actions a CEO needs to take to implement a lean management system.
United States, Large, 2019
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