Trian Fund Investment has put General Electric under increasing pressure to meet its profit targets because the multinational failed to meet the expected profit in the last financial year. In late 2015, Trian invested $2.5 billion in the company expecting increasing yields, but the investor is concerned about the missed profit goals. As a result, General Electric has employed strategies that seek to cut industrial operations costs in the next two years and tie executive perquisites to profits in its primary business. In 2017, GE seeks $17.2 billion in operating profit, while cutting back expenses by $1 billion to 23.9 billion and extra $1 billion in 2018. Thus, the company expects to slash $ 2 billion in expenses over the next two years (Gryta & Benoit, 2017).
Attaching executive benefits to profitability will ensure that the CEO and those reporting directly to him earn more or get as much as 20% reductions on their bonuses based on whether the profit or cost reduction objectives are attained (Gryta & Benoit, 2017). The decision to stabilize the firm’s profit is at the corporate level because the top management pilots the strategic decisions that direct the company towards its goals and objectives, thus it is more rational to hold them accountable for any shortfalls (Kazmi, 2008). GE’s decisions will be effective albeit it might take at most three years and not the projected two-year period, to reach its profitability goals. The consortium has responded by reducing staff at its headquarters, centralizing IT operations, and cutting back spending on research and internal travel. As a method of enhancing profitability, GE has shed businesses with low-profit margins such as home appliances and concentrated on its core businesses.
According to Wheelen, Hunger & Barmford, 2017), the decisions comes in the fifth and sixth stages of the strategic decision-making process. They are levels that enable an organization to identify the keynote problems affecting its operations and as a result, develop the best alternatives to address the shortcomings.