Legendary Leaders

John Francis Welch, Jr.

Professor Jaana Myllyluoma, Ph.D. Team 4: Randall Casper and Vincent Zhang Assignment 1: Leadership Ethics Proseminar March 5, 2011

Legendary Leaders: Jack Welsh

I. Who is Jack Welch? II. What is the Moral Challenge? III. Discover the Facts IV.Evaluate Stakeholders Claim V. Discern the Options
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Legendary Leaders: John Francis Welch, Jr.

Who is Jack Welch?

born in 1935 in Peabody, Massachusetts.
BS chemical engineering from University of Massachusetts at Amherst, 1957 PhD from University of Illinois Urbana Champaign, 1960.

In 1960, joined General Electric, at a plant in Massachusetts.

became a vice president of General Electric in 1972 moved to GE's consumer goods and services division in 1977. vice chairman of E Credit Corporation in 1979 CEO and chairman of GE in 1981 (age 46)
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Legendary Leaders: Moral Challenge of Shareholder Value Movement

Jack Welch gave a speech in 1981 at New

Yorks Pierre hotel, shortly after taking the helm at GE. This speech was the birth of the Shareholder Value Movement.
In the speech, entitled Growing Fast in a

Slow-Growth Economy, he outlined his beliefs in selling underperforming businesses and aggressively cutting costs in order to deliver consistent profit rises that would outstrip global economic growth.

 History of the Issue Before

the era of Reagan, it was generally understood that business operated on a stake-holder model. Companies were privately held but public in nature given that they were accountable to small shareholders and unions as well as large investors Jack realized from the start that he needed to make some changes in order to stay competitive. He decided to reorganize GE by focusing only on those businesses that were strongest, manufacturing, services, and technology.

On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy your main constituencies are your employees, your customers and your products.

Legendary Leaders: Jack Welsh, Neutron Jack

135,000 GE employees paid off this is 25 percent of the company's workforce. 73 plants closed and 232 offices sold in five years. GE's various companies were organized into three umbrella groups: manufacturing, services, and technology.

Neutron Jack.

Legendary Leaders: Jack Welsh, WINNING

GEs success under Jack Welch conglomerates market capitalization rose from $13 B to $400 B profits grew tenfold to almost $14 billion prompted many executives to place greater emphasis on shareholder value. Many fund managers also backed concept because they are judged on a quarterly basis.

The Stakeholder CSR Model

Tertiary Secondary
GOVERNMENT COMMUNITIES CONSUMER ADVOCATE GROUPS POLITICAL ACTORS COMPETITORS

MEDIA
SPECIAL INTEREST GROUPS

CUSTOMERS EMPLOYEES

Primary THE FIRM

FINANCIERS
SUPPLIERS

Intermediaries

Influence/support

3/2/2013

 Jack Welch, whose stellar record in his two decades at GE helped make shareholder value popular, said that it was wrong for managers and investors to set consistent earnings growth and steady share price increases as their overarching goal. shareholder value come as the credit crisis and the global economic slowdown have caused a radical rethinking of many of the corporate and financial beliefs that held sway over the past few decades. others who tried to perpetuate the stakeholder power model and they were generally eaten up by the market place.

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Legendary Leaders: Moral Challenge of Shareholder Value Movement

Shareholder Value in the Current Credit Crisis and Global

Economic Slowdown?

We have to look critically at his success in light of the strengths and

weaknesses of the shareholder value movement. We had to really assess who were the winners and the losers. Jack Welsh was succeeding at the expense of others in a global capitalist market where we do not yet have new and sufficient standards for doing business.
Context influence behavior and influences strategic decisions around

behavior.

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Questions

Real Estate

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