General Electric Capital Services, Inc.

GE is a diversified services, technology and manufacturing company with a commitment to achieving customer success and worldwide leadership in each of its businesses. GE operates in more than 100 countries and employs 313,000 people worldwide. Jeffrey R. Immelt, who replaced management legend Jack Welch, is Chairman and Chief Executive Officer as of September 7, 2001.

GE's products include major appliances, lighting products, industrial automation products, medical diagnostic imaging equipment, motors, electrical distribution and control equipment, locomotives; power generation and delivery products, nuclear power support services and fuel assemblies, commercial and military aircraft jet engines and engineered materials such as plastics, silicones and super-abrasive industrial diamonds. Through its affiliate, the National Broadcasting Company, Inc., GE delivers network television services, operates television stations and provides cable, Internet and multimedia programming and distribution services. Through another affiliate, General Electric Capital Services, Inc., GE offers a broad array of financial and other services.

The Company traces its beginnings to Thomas A. Edison, who established Edison Electric Light Company in 1878. In 1892, a merger of Edison General Electric Company and Thomson-Houston Electric Company created General Electric Company. GE is the only company listed in the Dow Jones Industrial Index today that was also included in the original index in 1896.

GE Mission

GE leaders, always with unyielding integrity:

Are passionately focused on driving customer success

Live Six Sigma Quality ... ensure that the customer is always its first beneficiary ... and use it to accelerate growth

Insist on excellence and are intolerant of bureaucracy

Act in a boundary-less fashion ... always search for and apply the best ideas regardless of their source

Prize global intellectual capital and the people that provide it ... build diverse teams to maximize it

See change for the growth opportunities it brings ... i.e., "digitization"

Create a clear, simple, customer-centered vision ... and continually renew and refresh its execution

Create an environment of "stretch," excitement, informality and trust ... reward improvements ... and celebrate results

Demonstrate ... always with infectious enthusiasm for the customer ... the "4-E's" of GE leadership: the personal Energy to welcome and deal with the speed of change ... the ability to create an atmosphere that Energizes others ... the Edge to make difficult decisions ... and the ability to consistently Execute

Top Competitors

ALSTOM makes high-speed train cars, track-laying equipment, and signaling devices, as well as luxury passenger ships, naval vessels, and natural gas tankers. Other products include turbines and generators, and electric drives

Siemens has operations worldwide in the automation and control, information and communications, lighting, medical, power, and transportation sectors. It is also active in the semiconductor sector through a majority stake in chip maker Infineon Technologies. Siemens is Europe's largest electronics and electrical engineering firm and one of the world's leading mobile phone handset makers. The company is expanding its US operations, which have been reorganized under Siemens Corporation.

Financial Highlights

2000 revenues of $129.9 billion

2000 net earnings of $12.7 billion

Quarterly dividends of $0.16 per share.

Quarterly dividends, paid every quarter since 1899, have increased every year since 1975.

Stock Price: 52 week high of 56.1875, 52 week low of 28.6900

Shares outstanding of 9.933 billion

P/E Ratio of 28.36

EPS of 1.37

Market capitalization of 385.10 billion (11/5/2001)

Number of share owners is 2.1 million

2000 international revenues of $53 billion (41% of total revenues)

2000 R&D expenditures of $2.2 billion

2000 total assets of $437 billion

About Jack Welch

Jack Welch joined GE Plastics in 1960 after earning his Ph.D. in chemical engineering from the University of Illinois. In 1968, at only 33 years of age, Jack Welch became the company's youngest general manager ever. Earnings increased at a compound rate of 31 percent under Welch, and at 37 he was asked to head up the components and materials group.

Welch was viewed by many as a maverick and a renegade. In contrast, Jones had developed GE's reputation for stability, sound management, and predictable earnings increases. Welch became a serious contender for the position in 1977, when Jones reorganized the company into six sectors and appointed one of six potential CEOs to each sector. Welch eventually took office in April 1981, shortly after his 45th birthday.

Case Overview

The corporation Welch was asked to head was very complex. In 1951, there were nine organizational layers between the CEO and the shop floor. The numerous layers of middle management gave employees comfort.

The company was divided into 150 business units, each dedicated to a single product or product line. These units were equipped with support staff from all functional areas and grouped into businesses, which were in turn grouped into sectors. GE's extremely diverse business portfolio encompassed everything from appliances to aerospace to information services. GE was a financially strong company; however, its growth rate was approximately equal to that of the gross national product.

Welch took on the task of "taking GE to the next level" by articulating a new