Many Japanese were unaware, but there was an incident going on in the United States since 2000 that hadn’t happened in the last 100 years. General Electric (GE), one of the companies that might be said to be the soul of the United States, which was established by the inventor Edison and never sank, has lost its corporate value. The company was secretive, and the reason was a mystery in the business world. “I wanted to know why a big success company fails,” Bill Gates said.This book was revealed by a reporter from The Wall Street Journal, who has been chasing the secret for more than 20 years.“Where did the organization that was the” strongest company “in the history of the rise and fall of the GE empire make a mistake?”(Published by Diamond). What was happening inside a giant company that was always a model for Japanese companies, partly because it was a leader in the electrical and heavy industry? What did the CEO, who sold the traditional business that nurtured the company’s proud leaders, think and what kind of reaction came from inside and outside the company? (Translation: Hidefumi Mitate)
Sale of GE Plastics
One of GE’s most historic businesses has been sold.
Welch, Immelt, Bournestein, and countless other talented people, GE Plastics was sold. Founded in 1930 and driving the prosperity of Pittsfield, Massachusetts, the division changed the world with the invention of Lexan. It is a plastic pellet used in products all over the world. The colorful body of the iMac G3, the famous desktop computer that brilliantly announced Steve Jobs’ return to Apple, was also made in this division.
Immelt has invested in its favorite marketing efforts to inform the general public regarding the existence of Lexan and other products. Just as Intel made the quality of its chips widely known with the “Intel Inside” sticker, Plastics’ marketing team wanted to allow consumers to identify their product line.
GE launched a site called “Polymer Land” as an early in-house experiment using the Internet. It’s a cheap amusement park-like name, but it’s a site that sells B2B plastics needed to make home appliances and machine parts.
However, there was no result. Even if it was decorated with buzzwords and product stickers in the Internet age, the decline in profit margin might not be covered. Soaring crude oil prices, in particular, put pressure on GE Plastics’ raw material costs. Seeing the results, Immelt sold Plastics to Saudi Basic Industries for $ 11.6 billion.
Still financial dependence
Immelt said the sale of Plastics might support “a group of businesses that continue to grow, grow revenue and improve performance.” Of course, the cash earned from the sale was also used to buy back a large amount of the company’s stock. Immelt assured investors that GE had a complete understanding of what they were doing, with continued fierce acquisitions and sales and increased reliance on financial services. He emphasized that while he remains credible as a leading 20th century company, he is trying to pave the way for innovation to lead the future.
Immelt also said that risks are well managed. In a 2006 investor letter, GE has more than $ 560 billion in financial assets, but manages it “with sub-industry losses,” and the Capital Board of Directors properly looks at it. I praised myself for making it shine. For all deals, CRO (Chief Risk Officer) Jim Corica has submitted a memo with his views, and “we are spending regarding an hour discussing it with Corica.” Also mentions.
However, internal criticism did not go away. Those who felt that GE’s corporate culture was completely different from what Immelt was talking to the outside world suspected that Immelt didn’t understand how capital works in the first place. I don’t know if that criticism or question is right, but what is certain is that GE has always relied on GE Capital to make stable profits.
