GE: Corporate Strategy Gone Wrong

At its peak, General Electric $($GE$)$ was one of the largest and most admired companies in the United States. With its light bulbs, ovens refrigerators, plane engines, and medical devices, GE touched the lives of every American. Today, the company is a shadow of its forme self, broken up into three parts: aviation, health care, and energy. Two of them $($health care and energy$)$ will be spun out as independent companies, while the venerable GE $($likely from $2024$ on$)$ will be active in only one business: aviation. This is the story of how bad strategy felled GE$-$the bluest of blue$-$chip companies in the United States.

From Jack Welch to Larry Culp, $2000-2022$

In $2000,$ GE was the most valuable company globally, with a market capitalization of almost $$600$ billion, equivalent to $$1$ trillion today $($see Exhibit MC$8\mathrm{.}1).$ An investment of $$100$ in GE on April $22,1981,$ the day Jack Welch took over as CEO, would have been worth $$10,679$ on August $28,2000,$ when GE's market value peaked. Given his success in making GE the most valuable company globally, the media hailed Jack Welch as the best CEO of the century. And investors loved Jack Welch.