ELECTRIC’S CORPORATE STRATEGY – Group assignment
For many years, GE has been held up as the exception to two
arguments: (1) that related diversification strategies outperform unrelated
diversification strategies, and (2) that conglomerates are no longer a viable
organizational form in an era of outsourcing, focus, and shareholder value
maximization. Whereas many formerly diversified firms have become narrower and
more focused with their corporate strategies, GE continues to buy and sell
businesses and operates an extremely complex set of businesses. This case
provides a vehicle for examining the strategic rationale behind GE’s corporate
strategy and complex diversification. The core arguments for and against
unrelated diversification can be linked to the GE strategy.
Why is GE proposing to sell its light bulb and appliances divisions?