General Electric (GE) has been leading a prominent standing due to its corporate strategies of buying and selling the related and unrelated businesses. The author evaluates the two core arguments of GE (1) expanding the existing value chain with related diversification strategies surpass in excellence in contrast to unrelated diversification, and (2) that businesses with a number of diversified units could not lead in an era of enhanced outsourcing, and of deep focus on shareholder value maximization.
The traditional approach of acquisition of unrelated businesses has been obsoleting after the rapid embracement of outsourcing strategies. GE operates an extremely complex set of business activities with many different business units. This case explores the strategic rationale behind GE’s corporate complex strategy of diversification and provides the pros and cons of unrelated diversification for GE in the longer term.
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