Arkansas State Strategic Management GE and Berkshire Hathaway Paper

Content Type

User Generated

User

ynheragenivf28

Subject

Business Finance

School

Arkansas State University

Description

In order to find some answers, this paper should look at the following issues:

1. Leadership: What role does leadership play in long-term financial performance? What is the G.E. leadership style? What is Berkshire Hathaway’s (Warren Buffet’s) leadership style? How would you describe the differences in leadership style of the two companies during the twenty-year period? Are there differences that would affect long-term financial performance? Explain how and why.

2. Culture: Are their differences in the culture of each of the organizations that might explain performance differences? What is the G.E. culture? What is the Berkshire Hathaway culture? What are each company’s values? Do these differences explain performance differences? Explain how and why.

3. Compensation: What are differences in compensation for the CEO’s and other executives of the two companies and how might that contribute to differences in performance? Explain how and why.

4. Management Oversight: Are there differences in the way each company manages and overseas each of the operating businesses? Do the differences contribute to differences in performance? Explain how and why.

5. Approach to Acquisitions: Both G.E. and Berkshire Hathaway have made a number of acquisition over the twenty-year period. Is there a difference in how each company approaches acquiring other companies? Do they have the same criteria? How may the differences in approaches affect long-term financial performance? Explain how and why.

Unformatted Attachment Preview

PAPER -STRATEGIC MANAGEMENT-G.E. AND BERKSHIRE HATHAWAY-SUMMER 2019 The General Electric Company and Berkshire Hathaway are both companies who are involved in many unrelated businesses but have had markedly different financial results over the past twenty years. G.E.’s total revenues grew from $90.8 billion in 1997 to $122.1 billion in 2017 (34% over the 20 year period); Berkshire Hathaway’s revenues grew from $10.4 billion in 1997, to $242 billion in 2017 (a growth of 222.7% over 20 years). During the same twenty year period, G.E.’s net profits grew from $8.2 billion in 1997 to $8.0 billion in 2017 (before large write-offs due to restructuring and other related costs, which resulted in a net loss of $6.2 billion). At the same time, Berkshire Hathaway’s profits grew from $1.9 billion in 1997 to $44.9 billion in 2017, or by 226%. G.E. stock price at the end of 1997 was $24.76 and at the end of 2017 was $17.45. A loss of 30% over the twenty year period. G.E. shares now trade between $7.00 and $8.00 a share. G.E. shares traded at an all-time high of $155 per share (split adjusted) in 2000. Berkshire Hathaway’s stock price (class B shares) at the end of 1997 was $22.74 and $198.22 at the end of 2017. A gain of 89% over the 20 year period. G.E. was founded by Thomas Edison in 1892; and Berkshire Hathaway was founded and is still run by Warren Buffett in 1965, but began in 1888 as cotton mill. Both G.E. and Berkshire Hathaway have both consumer goods businesses and industrial businesses. G.E. has 313,000 employees world-wide and Berkshire Hathaway has 360.000. Both companies have had an unrelated diversification strategy for some time and both have made acquisitions in unrelated businesses, and both have interests in various segments of the financial services industry (banking, insurances, and financing). Both companies also have investments and interested in international operations to various degrees. The overriding question to be answered by the this research paper, is why has Berkshire Hathaway performed so much better the General Electric during this twenty-year period when they both have similar strategies and are involved in a number of similar businesses? In order to find some answers, this paper should look at the following issues: 1. Leadership: What role does leadership play in long-term financial performance? What is the G.E. leadership style? What is Berkshire Hathaway’s (Warren Buffet’s) leadership style? How would you describe the differences in leadership style of the two companies during the twenty-year period? Are there differences that 1|Page would affect long-term financial performance? Explain how and why. 2. Culture: Are their differences in the culture of each of the organizations that might explain performance differences? What is the G.E. culture? What is the Berkshire Hathaway culture? What are each company’s values? Do these differences explain performance differences? Explain how and why. 3. Compensation: What are differences in compensation for the CEO’s and other executives of the two companies and how might that contribute to differences in performance? Explain how and why. 4. Management Oversight: Are there differences in the way each company manages and overseas each of the operating businesses? Do the differences contribute to differences in performance? Explain how and why. 5. Approach to Acquisitions: Both G.E. and Berkshire Hathaway have made a number of acquisition over the twenty-year period. Is there a difference in how each company approaches acquiring other companies? Do they have the same criteria? How may the differences in approaches affect long-term financial performance? Explain how and why. ASSIGNMENT DETAILS Prepare a paper addressing the above issues of 5-7 pages (double-spaced and excluding the title page, abstract page, and reference page) that follows all the course Guidelines for Written Assignments including APA format. The paper should include a cover page; abstract; introduction (stating purpose of the paper and analysis process); a section for analysis of each of the five questions; a section for the summary and conclusions; and a reference page. Paper must use a minimum of four (4) credible outside sources. C Vogus Arkansas State University College of Business Strategic Management 5/2019 2|Page
Purchase answer to see full attachment

Tags: Strategic Management APA Formatting leadership management Long term financial performance GE and Berkshire Hathaway

User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

please find the attached files. always a pleasure. good bye

Running head: STRATEGIC MANAGEMENT

Strategic Management G.E and Berkshire Hathaway
Name
Tutor
Institution
Course
Date

1

STRATEGIC MANAGEMENT

2
Abstract

Strategic management approaches such as leadership, corporate culture,
compensation, management oversight, and approaches to acquisition define the future of a
company, especially long term financial performance and success. A leaders, for example,
plays the critical role of guiding employees and reviews their performance in order to
highlight areas that need improvement, leading to increased productivity thus higher
profitability. Leaders are also responsible for ensuring that an organization is able to keep up
with technological changes and innovation. Culture influences the ability to retain customers
and support learning and innovation, compensation determines employee’s motivation and
job satisfaction, management oversight influences the ability to align daily activities with
long term goals, while approaches to acquisition determine the level of risk as well as the
ability to share resources amongst parent company and subsidiaries. General Electric
Companyand Berkshire Hathaway have adopted different strategic management approaches,
hence the two companies had a big performance disparity between the years 1997 and 2017.

STRATEGIC MANAGEMENT

3
Introduction

General Electric Company(G. E) and Berkshire Hathaway’s have a lot in common,
including the fact that they have both been in operation for several years, and have
established their presence in several industries in the US market and globally. Even though
the two companies have a lot in common, the period 1997-2017 was a major defining
moment for the two, with Berkshire Hathaway’s emerging much more successful in terms of
revenues, profitability, and share price. The two companies performed differently due to their
different strategic management approaches. This paper analyses how the two companies
differed in terms of leadership, culture, compensation, management oversight, and acquisition
approaches.
Leadership
Leadership is the ability to motivate a group of people and guide them towards
accomplishing a task and achieving a common goal. In the business world, leadership is the
ability to inspire and direct a team of workers and colleagues towards meeting set targets.
Leadership plays a key role in financial success as it ensures setting of a clear and achievable
vision. A leader inspires employees to understand how their role fits in to the bigger picture
of an organization’s mission and vision. The leader does so by explaining this vision to
employees, and helping them set individual targets. Leaders also ensure that employees are a
right fit and that they are motivated through; ensuring that the employees hired are a fit for
the organization, and by influencing them to perform their tasks as is expected.
G. E’s leaders, throughout the 20 years, have adopted atransformational approach.
FormerChairman and CEO Jeff Immelt adopted a team based approach which entails working
closely with the people, and guiding them towards realizing change. The company has been
focusing on long term success, mentoring employees, and stabilizing GE’s position among its

STRATEGIC MANAGEMENT

4

close competitors. Since his take over in 2002, Immelt focused on restructuring the
organiz...