The Financial Effects of Strategic Divestment – An Analysis of GE Capital

Abstract

Strategic thinking and initiatives are traditionally focused on expanding business operations, developing new product lines, or entering new markets. Disruptive innovation, blue ocean strategy, and fast follower innovation differ in application, methodology, and specifics that vary from industry to industry, but commonalities remain. Building out new platforms, products, services, and customer engagement initiatives are virtually ubiquitous with different strategic techniques. That said, and the focus of this analysis, is the interpretation of strategy within an alternative framework. Focusing on the transition of General Electric from a multinational conglomerate heavily dependent on General Electric Capital Corporation to a conglomerate focusing on industrial technology and sustainability this research analysis the effect of strategic divestment on organizational performance. Analysing this transition both in terms of financial ramifications and a strategic headset, a review of the financial performance of GE provides a quantitative platform to conduct a strategic analysis. Strategy, and strategic divestment and decision making involve divestment, a multifaceted approach, and realignment of organizational resources. What this research does, in this context, is examine the strategic framework and direction of GE as this reposition occurs, alongside the financial performance generated during this transition.