GE & Honeywell: A Failed Merger
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Case Code: BSTR085 Case Length: 14 Pages Period: 2004 Pub Date: 2004 Teaching Note: Available |
Price: Rs.400 Organization: General Electric Company, Honeywell International Inc. Industry: General Business, Countries : US Themes: Mergers, Acquisition and Takeovers |
Abstract Case Intro 1 Case Intro 2 Excerpts
GE Background
The roots of GE can be traced back to Thomas Alva Edison (Edison), the inventor of the incandescent light bulb. Edison set up a company called The Edison Electric Light Company (EELC) in 1872, to conduct experiments on electricity, and in 1879, he invented a carbon-filament lamp and direct current generator for incandescent electric lighting. The EELC essentially comprised of a number of smaller companies involved in different businesses ranging from power stations and wiring grids to electrical appliances. The Edison Electric Light Company merged with The Thomas-Houston Electric Company in 1892, to form General Electric (with headquarters in Schenectady, New York).
In 1894, Charles Coffin (Coffin) replaced Edison as CEO of GE. Coffin brought about a number of changes in the company by creating a rigid hierarchy and organizing the company around different individual "works", or units dealing with specific product lines or jobs.
He also imposed rigid financial controls to keep the different units on track. By the end of the century, GE was able to consolidate its position by licensing its electric bulb technology to other companies. Gerard Swope (Swope), who succeeded Coffin in 1922, played an influential role in making positive changes in industrial relations at GE. He introduced a number of schemes such as group insurance, profit sharing, bonuses, pensions, home-mortgage assistance, stock-purchase plans, etc., which were widely appreciated and further consolidated GE's position in the industry. GE also became the first company to establish unemployment pension plans, which guaranteed its laid-off workers a stipend of $7.5 per week for a period of 10 weeks after layoff...
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