The power generation household’s name inherited from Thomas Edison is trimming down its intricate conglomerate of several industrial businesses to survive from its growing difficulties to preserve its market dominance. For Benjamin Gomes-Casseres, Professor of International Business in the Brandeis International Business School, the GE Model based on “creating value by actively sharing capabilities among its disparate businesses which, with one important exception, were all rooted in manufacturing,” is dead.
GE’s realignment included former CEO, John Flannery, giving up the helm to on Oct. 1, 2018, and being replaced by H. Lawrence Culp. The industrial behemoth is focusing on key business lines to ensure its survival and lay the groundwork for its revival. On Nov. 2, 2015, GE concluded the purchase of Alstom SA’s power and grid businesses spread across 20 countries for close to EUR9.7 billion. By October of the same year, the end result was a US$22.8 billion write-down, stemming primarily from a pronounced decrease in natural gas turbines demand, to the favor of increasingly cost-effective solar and wind power systems.
Still reeling from this loss, GE is following former CEO John Flannery’s plan to trim down the 128-year-old corporation’s portfolio to focus on jet engines, power plants and renewable energy. Case in point, in June 2018, GE announced it was spinning off its healthcare business and separating its oil services company, Baker Hughes, and aiming to revamp its power unit.
What Does it Mean for Mexico?
Echoing HQ’s restructuring plans, GE will abandon the oil, medical equipment and locomotive machinery business units and will focus in the aeronautic industry and power generation business niche. In an interview with El Financiero, Vladimiro de la Mora, President and CEO of GE in Mexico, shared that innovation was the centerpiece of GE’s growth in the country and it is looking to continue down that road. De la Mora highlighted the record growth year 2017 represented for the company in Mexico and used the MoU signed with the National Institute of Clean Energy and Electricity (INEEL) on Oct. 9, 2018, to share experience and key information in thermal and renewable energy projects.
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