It was the ideal American corporation, a monster with ambitions that mirrored those of the nation as a whole.
General Electric, which was founded in 1892, expanded its influence into virtually every household during the following century. It specialised in the sale of light bulbs, TVs, and washing machines. Its jet engines paved the way for long-distance flight, its generators provided electricity for homes, and its medical equipment assisted in the diagnosis of illnesses.
Finally breaking with the past, General Electric is dividing itself into three divisions. The company has been hit hard by the long-lasting impacts of the 2008 financial crisis, as well as an emerging market economy that is less welcoming to multinational corporations.
Earlier this week, the corporation announced that it will spin off its health-care segment in the first quarter of 2023, followed by its energy companies one year later. That would leave the company’s aviation section as its only surviving operation.
H. Lawrence Culp, the chief executive who was hired three years ago to bring the corporation back to life, described it as a “defining event.”
In the words of Scott Davis, chief executive of Melius Research, an independent financial research firm: “GE was trapped in the past, and now it’s too late. It’s finished.”
History of General Electric dates back 129 years to when Thomas Edison’s Edison Electric Company merged with another firm, in a transaction supported by banker J. Pierpont Morgan, who was instrumental in the formation of many of America’s major corporations.
Throughout the company’s heyday, which occurred during the later decades of the twentieth century, G.E. spent billions of dollars in revenues in new enterprises, and this growth made the company’s brand unavoidable. “We bring excellent things to life,” became the marketing slogan for General Electric.
Long regarded a “widow and orphan stock,” General Electric was widely owned, treasured for its dividend, and thought to be secure. The company’s presentation to investors included talking about the company’s size and reach. Under the leadership of Jack Welch, who headed General Electric for two decades until 2001, sales increased by roughly fivefold, reaching $130 billion. The value of its stock on the stock exchange increased from $14 billion to more than $410 billion in only a few years.
According to Fortune magazine, Mr. Welch is “the manager of the century,” and in 2000, The Financial Times dubbed General Electric “the world’s most recognised corporation” for the third consecutive year.
Under Mr. Welch’s leadership, General Electric became a training ground for a rising cadre of star executives. They were created and then transferred from one company to another every few years.
When the financial crisis occurred in 2008, the buildup backfired, resulting in G.E. being forced into a credit squeeze. The company’s top executive at the time, Jeffrey R. Immelt, made the decision to dramatically reduce the size of the company’s large financial subsidiary, GE Capital.
Other companies suffered as a result of the financial crisis, and some Wall Street corporations were forced to close their doors as a result. However, few companies outside of Wall Street are currently suffering the price that G.E. During the company’s race to divest several of its ailing financial assets, its overextended power-generation division proved a stumbling block to its overall success.
Mr. Immelt was replaced by John Flannery, a long-time executive of General Electric. He declared the end of the age of the mega-corporation and said that the new G.E. would be smaller and more straightforward in its operations and management.
While Mr. Immelt predicted that General Electric would become “a Top 10 software firm” by 2020, by integrating software and sensors into industrial equipment, Mr. Flannery revealed intentions to reduce that business’s expenditure by $400 million by the end of the fiscal year.
Mr. Culp said on Tuesday that the company’s dissolution was in keeping with the times, pointing out that other industrial giants had reduced their operations. GE’s major German competitor Siemens has recently separated its health-care and energy divisions from the rest of the company. Honeywell International, another large industrial corporation with a diverse range of businesses, has also sold off part of its operations.