Description
The ppt that includes General Electric's strategic planning in detail.It also covers business plan and implementation in the SBU's of GE.
Agenda
? Origin of Strategic Planning ? Strategic Business Units ? Define Business Plan
? Planning – staffing, acceptance, impact, assessment
? Integrating strategic planning ? Implementing the new structure
? The Next Steps
Origin Of Strategic Planning
? Reasons for considering strategic planning
? Profit less growth
? Triple a rating in jeopardy ? Decentralization lead to problems of control
? Massive investments in projects with long gestation periods
? Reg Jones assessment of the situation
? Poor planning and understanding of the company ? Organizational structure
origin of Strategic planning… contd
? Hiring Mckinsey & co to study the effectiveness of GE's corporate
staff and planning done at the corporate level
? Recommendations
Introduction to Strategic Planning
? Comments on the Mckensey report
? Setting up the task force headed by W.D Dance (Group V.P) ? Final outcome
? Restructure the corporate staff into two parts
o o
Corporate administrative staff Corporate executive staff
Establishing Strategic Business Units
? Problems in implementation
? GE’s existing structure of groups, divisions and departments
o
Superimpose the proposed structure on the existing one
? Designations of the SBU’S
SBU OverLay on existing organisation
Corporate executive office
Group SBU
Group
Group
Division
Division
Division SBU
Division Department SBU Department SBU
Departments
Departments
Departments
Defining a business plan
? Data consolidation
? 9 block summary ? Listing of the topics to be covered ? Identification and formulation of environment
assumptions of strategic importance ? Identification and in-dept analysis of competitors, including assumptions about the probable strategies ? Analysis of the SBU own resources ? Development and evaluations of strategic alternatives
defining a buSineSS plan… contd
? Data consolidation
? Preparation of the SBU strategic planned estimated of
the capital spending for the next five years ? Preparation of the SBU operation plan, which detailed the next year of the SBU strategic plan ? Reg Jones later added a provision on how the plans are to be presented
Investment Priority screen
BUSINESS UNIT POSITION LOW MEDIUM HIGH INDUSTRY ATTRACTIVENESS HIGH
MEDIM LOW
Staffing the planning effort
? Two important actions to be taken
? Each SBU manager was required to hire a strategic planner ? Both the SBU manager and strategic planners were required to
attend strategic planning seminars at GE’s management development center in Crontoville New York
Acceptance of planning
? According to fortune “GE stopped making vacuum
cleaners, fans, phonographs heart pacemakers, an industrial x ray system and numerous other products that failed to deliver the return Jones demanded” ? They exited a total of 73 product categories ? GE’s successful exit from the mainframe business in may 1970 also played a pivotal role in legitimizing disventures ? As one manager commented
acceptance of planning… contd
? While the sale of GE’s computer business preceded
the adoption of strategic planning, somehow people began to connect the two. and Jones subsequent promotion gave even more credibility to those managers who were willing to face up to the face that certain businesses had to be exited. ? Planning systems helped the managers to face up to facts
? Fallacy of the floating J curve
Impact on the business mix
GE'S Business mix (%) Sales 1970 22.8 21.5 23.1 28.5 0 15.9 -11.8 Earnings 1970 29.6 26.5 28.4 9.1 0 20.1 -13.7
Consumer products and services Power Systems Industrial components and systems Techinical systems and materials Natural resources International Corporate eliminations
1977 23.5 18 20.6 23.1 5.4 14.3 -4.9
1977 29.6 6.9 17.6 22.7 18 6.5 -1.3
impact on the buSineSS mix … contd
? A major contributor in the shift in GE’s business mix was
the acquisition in 1976 of Utah international-a billion $ mining company
? Hedge against inflation ? Synergy with existing GE businesses
? Internal developments also contributed to the shift in
business mix
? Engineered materials didn’t even exist as a business in 1960.In
1970 it had sales of $ 2 billion,$ 200 million net ,with an ROI of 18% ? Other examples can be of aircraft engines, information services and several businesses
Impact on management systems
? By 1977 the impact of the planning was felt by GE’s
other management systems
? Manpower planning and selection had been linked to
the strategic planning process ? A means to evaluate a managers performance ? In the area of incentive compensation, performance screens were developed that seperated the financial and the non financial objectives of business ? In terms of the organizational structure a major change was the dissolution of the corporate executive staff and the return to a number of separate functional staff components
Assessment of strategic planning
? Since strategic planning was implemented our real
growth businesses have been funded even when we were cash short in 1974 and 1975.The key is for the guy who is running a growth business that requires resources to gain the confidence of the people at the top of the organization. Strategic planning can help to get that confidence. ? An internal audit reported that 80% felt that strategic planning has been ingrained in GE
aSSeSSment of Strategic planning… contd
? There were also shortcomings ? Excessive effort devoted to cosmetics and upward merchandising of strategic plans ? Perceived ineffective review of the SBU plans .Operations managers thought that the corporate level reviewers were not competent enough to carry out the review ? Immediate need to ear profits may mar the strategic planning process
A single general electric
? Apart from the evaluation of 43 SBU’s another problem was
the fragmentation of GE ? It was on its way to become a holding company ? What was needed was a single integrated GE identity
Integrating strategic planning – 1977-1980
? In Jan 1977 Reg Jones announced his plans to revise GE’s strategic
planning process and to establish a sector organizational structure ? This would help to improve the strategic planning process and to integrate GE ? Joe thought that the corporate review of SBU’s suffered from overload and the sector structure was a way to reduce the workload ? There were two reasons for the structure change ? To find his successor ? To bring new ideas and approaches to the problems faced by the business
Developing Leaders
Corporate Executive Office
Sector Sector Sector
Group SBU Divisions Departments
Group
Group Division Departmental SBU
Division SBU Departments
Strategic integration and corporate challenges
? Two problems appeared: ? At Operating level we were suffering unnecessary costs from duplication ? At strategic level, limited focus was there on major opportunities and threats in 80s
? To provide corporate direction and impetus on such issues,
Corporate Planning Challenges concept was introduced
Strategic integration and corporate challengeS… contd
Corporate plan
Resources international Update corporate plan
Planning challenges
Sector reviews and evaluation
Resource allocation and budgeting
Resource and budget reviews
Strategy development
Final budget
Strategic integration and corporate challengeS… contd
? Planning challenges set the stage for annual strategic
planning cycles ? CEO issued challenges that were addressed in strategic plans of SBUs and other sectors ? Other than CEO two new approaches were used to generate challenges- International sector and Resource Planning ? International Sector: - to increase visibility - to foster and integrate international business (electric iron mftg.)
Strategic integration and corporate challengeS… contd
? Resource planning:
- to track handling critical resources - senior corporate staff were given responsibility of assessing them
Implementing the new structure
? Need to allow time for new structure to take root
? Jones made following assessment 3 years later
- sector approach was very successful - excellent means to deciding upon a successor - GE had launched a “Technological Renaissance”
Shareowners
Board of Directors Corporate Executive Office Reginald H. Jones, Chairman
Walter D. Dance, VC
Jack S. Parker, VC
Corporate planning n development
Corporate planning n services
Executive manpower staff
Corporate relation staff Leonard C maler Senior VP
Office of general Council and Secretary
Robert Fredrick
Senior VP
Robert Kurtz
Senior VP
Theodore LeVino
VP
Walter A. schlotterbeck
Senior VP
Corporate finance staff Alva May Board of Directors
Senior VP
Customer products and service sector John F. Welch Jr. Senior VP n Senior Exec
Industrial products n Components sectorS Stanley Gault Senior VP n Senior Exec
Power Sector
International Sector
Technical Systems n materials sector Edward Hood Senior VP n Senior Exec
Utah International inc.
Thomas A. Senior VP n Senior Exec
John Burlingame Senior VP n Senior Exec
Alexander Wilson CEO
GE in 1980: a call for growth
? Challenging Static Forecasts: ? Existing strategic plans v/s Jones’s growth challenge ? Vision from long range forecasts of 1984 was same as that in 1979 ? Basis of existing strategic plans was disputed (projected %age earned from sales) ? Reasons for caution were- SBU’s were carrying burden of major investment plans and were twice as dependent on productivity rather than price for inflation recovery
Realigning ge’S resources
? Selecting target areas with greatest potential
- energy - communication, information and sensing - energy applications productivity - materials and resources - transportation and propulsion - pervasive services
Realigning ge’S reSourceS… contd
? CEO issued arena related challenges to launch 1981
planning cycle ? Initially use of arenas was at corporate level ? Success or failure depended on how hard Corporate management pushed it
The next steps
? What kind of management system needed ?
? Previously SBU, Sector Planning and Strategic Management were used in ? ? ?
?
shaping GE’s approach Jack Welch had to cope with major changes taking place while keeping the original structure intact There were many issues to be dealt with- handling expansion, choosing arena/sector segmentation and to better company’s international objectives Several key challenges were- inflation, increasing productivity and international business, increasing ventures and entrepreneurship Management had to be selective while dealing with these issues and challenges
“Change before you have to.” ~ Jack Welch “Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.” ~ Jack Welch
THANK YOU
doc_384623855.pptx
The ppt that includes General Electric's strategic planning in detail.It also covers business plan and implementation in the SBU's of GE.
Agenda
? Origin of Strategic Planning ? Strategic Business Units ? Define Business Plan
? Planning – staffing, acceptance, impact, assessment
? Integrating strategic planning ? Implementing the new structure
? The Next Steps
Origin Of Strategic Planning
? Reasons for considering strategic planning
? Profit less growth
? Triple a rating in jeopardy ? Decentralization lead to problems of control
? Massive investments in projects with long gestation periods
? Reg Jones assessment of the situation
? Poor planning and understanding of the company ? Organizational structure
origin of Strategic planning… contd
? Hiring Mckinsey & co to study the effectiveness of GE's corporate
staff and planning done at the corporate level
? Recommendations
Introduction to Strategic Planning
? Comments on the Mckensey report
? Setting up the task force headed by W.D Dance (Group V.P) ? Final outcome
? Restructure the corporate staff into two parts
o o
Corporate administrative staff Corporate executive staff
Establishing Strategic Business Units
? Problems in implementation
? GE’s existing structure of groups, divisions and departments
o
Superimpose the proposed structure on the existing one
? Designations of the SBU’S
SBU OverLay on existing organisation
Corporate executive office
Group SBU
Group
Group
Division
Division
Division SBU
Division Department SBU Department SBU
Departments
Departments
Departments
Defining a business plan
? Data consolidation
? 9 block summary ? Listing of the topics to be covered ? Identification and formulation of environment
assumptions of strategic importance ? Identification and in-dept analysis of competitors, including assumptions about the probable strategies ? Analysis of the SBU own resources ? Development and evaluations of strategic alternatives
defining a buSineSS plan… contd
? Data consolidation
? Preparation of the SBU strategic planned estimated of
the capital spending for the next five years ? Preparation of the SBU operation plan, which detailed the next year of the SBU strategic plan ? Reg Jones later added a provision on how the plans are to be presented
Investment Priority screen
BUSINESS UNIT POSITION LOW MEDIUM HIGH INDUSTRY ATTRACTIVENESS HIGH
MEDIM LOW
Staffing the planning effort
? Two important actions to be taken
? Each SBU manager was required to hire a strategic planner ? Both the SBU manager and strategic planners were required to
attend strategic planning seminars at GE’s management development center in Crontoville New York
Acceptance of planning
? According to fortune “GE stopped making vacuum
cleaners, fans, phonographs heart pacemakers, an industrial x ray system and numerous other products that failed to deliver the return Jones demanded” ? They exited a total of 73 product categories ? GE’s successful exit from the mainframe business in may 1970 also played a pivotal role in legitimizing disventures ? As one manager commented
acceptance of planning… contd
? While the sale of GE’s computer business preceded
the adoption of strategic planning, somehow people began to connect the two. and Jones subsequent promotion gave even more credibility to those managers who were willing to face up to the face that certain businesses had to be exited. ? Planning systems helped the managers to face up to facts
? Fallacy of the floating J curve
Impact on the business mix
GE'S Business mix (%) Sales 1970 22.8 21.5 23.1 28.5 0 15.9 -11.8 Earnings 1970 29.6 26.5 28.4 9.1 0 20.1 -13.7
Consumer products and services Power Systems Industrial components and systems Techinical systems and materials Natural resources International Corporate eliminations
1977 23.5 18 20.6 23.1 5.4 14.3 -4.9
1977 29.6 6.9 17.6 22.7 18 6.5 -1.3
impact on the buSineSS mix … contd
? A major contributor in the shift in GE’s business mix was
the acquisition in 1976 of Utah international-a billion $ mining company
? Hedge against inflation ? Synergy with existing GE businesses
? Internal developments also contributed to the shift in
business mix
? Engineered materials didn’t even exist as a business in 1960.In
1970 it had sales of $ 2 billion,$ 200 million net ,with an ROI of 18% ? Other examples can be of aircraft engines, information services and several businesses
Impact on management systems
? By 1977 the impact of the planning was felt by GE’s
other management systems
? Manpower planning and selection had been linked to
the strategic planning process ? A means to evaluate a managers performance ? In the area of incentive compensation, performance screens were developed that seperated the financial and the non financial objectives of business ? In terms of the organizational structure a major change was the dissolution of the corporate executive staff and the return to a number of separate functional staff components
Assessment of strategic planning
? Since strategic planning was implemented our real
growth businesses have been funded even when we were cash short in 1974 and 1975.The key is for the guy who is running a growth business that requires resources to gain the confidence of the people at the top of the organization. Strategic planning can help to get that confidence. ? An internal audit reported that 80% felt that strategic planning has been ingrained in GE
aSSeSSment of Strategic planning… contd
? There were also shortcomings ? Excessive effort devoted to cosmetics and upward merchandising of strategic plans ? Perceived ineffective review of the SBU plans .Operations managers thought that the corporate level reviewers were not competent enough to carry out the review ? Immediate need to ear profits may mar the strategic planning process
A single general electric
? Apart from the evaluation of 43 SBU’s another problem was
the fragmentation of GE ? It was on its way to become a holding company ? What was needed was a single integrated GE identity
Integrating strategic planning – 1977-1980
? In Jan 1977 Reg Jones announced his plans to revise GE’s strategic
planning process and to establish a sector organizational structure ? This would help to improve the strategic planning process and to integrate GE ? Joe thought that the corporate review of SBU’s suffered from overload and the sector structure was a way to reduce the workload ? There were two reasons for the structure change ? To find his successor ? To bring new ideas and approaches to the problems faced by the business
Developing Leaders
Corporate Executive Office
Sector Sector Sector
Group SBU Divisions Departments
Group
Group Division Departmental SBU
Division SBU Departments
Strategic integration and corporate challenges
? Two problems appeared: ? At Operating level we were suffering unnecessary costs from duplication ? At strategic level, limited focus was there on major opportunities and threats in 80s
? To provide corporate direction and impetus on such issues,
Corporate Planning Challenges concept was introduced
Strategic integration and corporate challengeS… contd
Corporate plan
Resources international Update corporate plan
Planning challenges
Sector reviews and evaluation
Resource allocation and budgeting
Resource and budget reviews
Strategy development
Final budget
Strategic integration and corporate challengeS… contd
? Planning challenges set the stage for annual strategic
planning cycles ? CEO issued challenges that were addressed in strategic plans of SBUs and other sectors ? Other than CEO two new approaches were used to generate challenges- International sector and Resource Planning ? International Sector: - to increase visibility - to foster and integrate international business (electric iron mftg.)
Strategic integration and corporate challengeS… contd
? Resource planning:
- to track handling critical resources - senior corporate staff were given responsibility of assessing them
Implementing the new structure
? Need to allow time for new structure to take root
? Jones made following assessment 3 years later
- sector approach was very successful - excellent means to deciding upon a successor - GE had launched a “Technological Renaissance”
Shareowners
Board of Directors Corporate Executive Office Reginald H. Jones, Chairman
Walter D. Dance, VC
Jack S. Parker, VC
Corporate planning n development
Corporate planning n services
Executive manpower staff
Corporate relation staff Leonard C maler Senior VP
Office of general Council and Secretary
Robert Fredrick
Senior VP
Robert Kurtz
Senior VP
Theodore LeVino
VP
Walter A. schlotterbeck
Senior VP
Corporate finance staff Alva May Board of Directors
Senior VP
Customer products and service sector John F. Welch Jr. Senior VP n Senior Exec
Industrial products n Components sectorS Stanley Gault Senior VP n Senior Exec
Power Sector
International Sector
Technical Systems n materials sector Edward Hood Senior VP n Senior Exec
Utah International inc.
Thomas A. Senior VP n Senior Exec
John Burlingame Senior VP n Senior Exec
Alexander Wilson CEO
GE in 1980: a call for growth
? Challenging Static Forecasts: ? Existing strategic plans v/s Jones’s growth challenge ? Vision from long range forecasts of 1984 was same as that in 1979 ? Basis of existing strategic plans was disputed (projected %age earned from sales) ? Reasons for caution were- SBU’s were carrying burden of major investment plans and were twice as dependent on productivity rather than price for inflation recovery
Realigning ge’S resources
? Selecting target areas with greatest potential
- energy - communication, information and sensing - energy applications productivity - materials and resources - transportation and propulsion - pervasive services
Realigning ge’S reSourceS… contd
? CEO issued arena related challenges to launch 1981
planning cycle ? Initially use of arenas was at corporate level ? Success or failure depended on how hard Corporate management pushed it
The next steps
? What kind of management system needed ?
? Previously SBU, Sector Planning and Strategic Management were used in ? ? ?
?
shaping GE’s approach Jack Welch had to cope with major changes taking place while keeping the original structure intact There were many issues to be dealt with- handling expansion, choosing arena/sector segmentation and to better company’s international objectives Several key challenges were- inflation, increasing productivity and international business, increasing ventures and entrepreneurship Management had to be selective while dealing with these issues and challenges
“Change before you have to.” ~ Jack Welch “Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.” ~ Jack Welch
THANK YOU
doc_384623855.pptx