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GE/RCA Consumer Electronics case summary
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GE/RCA CONSUMER ELECTRONICS: Case Summary During the 1970’s and 1980’s the once superior conglomerates of the United States faced unprecedented competition with the emergence of cheaper Asian competitors as globalisation set in. Not only were the Asian competitors producing cheaper products but they were also producing higher quality products which many American companies could simply not compete with. As a result many of these companies including GE Consumer Electronics and RCA Consumer Electronics were forced to implement drastic changes in order to survive. Essentially the GE/RCA consumer electronics business (referred to as CE), came about as a by product of a strategic acquisition of RCA, by General Electric, to diversify into the services sector through the RCA owned National Broadcasting Company as well as supplementing its Aerospace and Defence business with technological synergies. It is important to note that prior to the acquisition of RCA by GE, the consumer electronics divisions of both companies were experiencing significant operational losses. This prompted both to investigate scaling back their operations in these areas and possible exit strategies. The negative stigma attached to the consumer electronics business was further enhanced by the view by GE’s CEO, Jack Welch, that Consumer Electronics was not a core business. Despite the corporate disinterest in Consumer Electronics, an industry analysis supported the decision to maintain participation in the business. As a result, management were given the go-ahead to pursue an aggressive in-house manufacturing strategy of TV sets (based on the current RCA TV operations), with the ultimate viability of the project subject to earning a 15% return on assets by 1989.
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