General Electric Harvard Case Solution & Analysis

Abstract

GEMAG faced severe problems in the implication and execution of project C, which exceeded from the capital investment initially approved by the board of directors. The company also faced lower profits and volume in 1980s. There were different alternatives that could be applied which included: no change in the project, go ahead with the project and going back to the board and to ask for more funds. The management of the company had to take action by doing required modification in the project C and then approved an additional budget from the board of directors. After the evaluation of the three alternatives, the last alternative seemed more feasible as it would help the company to make the project successful.

General Electric: Major Appliance Business Group (Abridged)

By the end of 1980, management of General Electric had to decide about the execution of the required modifications in the project C. Although, the managers engaged in the project were excited about it but still they were worried about potential implications of some components of the project. The company had invested $28 million in the project to achieve leadership in profitability, product quality, productivity, process quality and quality of work life along with low cost and increased market share (Duncan, 1996).

From 1973 to 1979, net income of the company was stable at 1.5% of growth rate while the sales and net income to sales were increasing by 3.5% (235,078) and 3% respectively. Further, the company faced lower volume and profits than planned in 1980s because of the recession. The company had made lay-offs in its Louisville plant by laying-off almost 2000 employees.

On the basis of the company’s diversified portfolio, it quickly became the dominant player in the market with strong brand recognition. However, the exposure to the global economy was rising which could be a threat for the business.

In order to become a world class dishwasher manufacturer, the company needed to improve the quality of the factory by providing training in technical problem-solving decisions. In order to achieve this, the company was planning to implement Project C. The issue faced by the company was to make a decision about the level of modifications required for Project C (Evans, 1999).

Managers of the company must decide on choosing from the following alternatives as early as possible in order to avoid further problems. It can be as follows:

  • No change, wait for the project to be completed and analyze the modifications required at that point.
  • Go forward with some modifications that are required by limiting capital to $2.8 million.
  • Go back to the board and ask for an increase in budget.

All the alternatives mentioned above have some pros and cons but the best alternative would be the one with quality, productivity and timeliness in the production and development. The company should first go for the second option by making some modification required for the project within the capital limit approved by the board of directors. For that, management of the project identified several possible modifications in the project that included: improving the quality of the factory environment, providing skills required for the technical problem solving, revisions in GE’s management information and support systems, adding a value engineering development cycle and dropping construction of an integrated computer control room.

The company should consider criteria that are strongly related to the success of Project C. Modification 1 is positive in all aspects while modification 2 is positive in terms of quality and time. Modification 3 is not appropriate in all three goals of the project while modification 4 is positive in terms of quality and HRM. The company should then go back to the senior management and ask for more budgets by making a proposal that includes all the additional costs, risks and resource allocation............................

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