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Emerald Group Publishing Limited
Copyright © 2006, Emerald Group Publishing Limited
The fortunes of manufacturing companies are always changing but few have had a greater fall from grace than Britain's General Electric Company (GEC), the remainder of which was recently acquired by the Swedish telecommunications manufacturer, Ericsson. Formed in 1889 GEC's golden period was under its Managing Director Arnold Weinstock, who increased the company's turnover from £100 million in 1960 to £11 billion in 1996 and transformed it into Britain's largest manufacturing enterprise. GEC's range of products included power generation equipment, turbines, domestic electrical appliances, industrial and consumer electronics, ships, defence and telecommunications equipment. During the late 1990s, after Weinstock's retirement, there was a period of acquisitions and sales of subsidiaries aimed at restructuring the company into a manufacturer of communications and Internet devices. At the same time it was renamed “Marconi” Corporation after one of the companies it had acquired many years previously. The founder of that company, Guglielmo Marconi, was one of the early pioneers of radio communications. However, the problem for the new Marconi was that it was formed just before the “dotcom” crash, which left it with debts of £4 billion and overvalued assets. So the £1.2 billion paid by Ericsson for Marconi compared with its value of £35 billion only a few years previously.
The lessons that emerge from GEC's and Marconi's mixed fortunes are by no means straightforward. One argument might be that GEC should have stuck with what it knew best and not ventured into new and risky areas of business. But there are many well-established firms that have foundered just because they have not changed. The automobile manufacturers in the US are a good example. On the other hand some companies have faced up to the risk of moving into new business areas and emerged as successful market leaders. Take the example of Nokia. Originally it was a paper manufacturer; then it moved into rubber products and cables, and now it is one of the world's leading mobile telecommunications companies, having only moved into electronics in the 1960s.
Can this all be put down to good or bad luck? Maybe at one time it might have been the case, but businesses today have the benefit of technologies, information and decision-making systems that should remove luck from the equation. One lesson that does emerge from the recent experiences of many manufacturing companies is that neither a purely commercially-led or technology-led strategy is likely to succeed. Like the editorial policy of Journal of Manufacturing Technology Management there has to be a blend between the two. The increasingly complex world of business demands equally complex strategies that only a blend of management and technology can provide.