GE-TUNGSRAM VENTURE

SAMINA SHEIKHHITESH GAWADVIPUL SHETTY

TUNGSRAM

TUNGSRAM

• Formerly known as Egger B.ēsTsa., which was established in Vienna in 1862 producing telephone and telegraph sets. however, its product profile featured carbon filament lamps just a few years after the announcement of the celebrated invention by Edison.

• 1896: Transforms into a Joint Stock company at Budapest.

• Sandor Just and Ferenc HanamanInvent tungsten filament lamps offering a much higher luminous efficacy and longer life.

The TUNGSRAM trade mark was registered in 1909 and the letter "T“embedded in a circle in 1938.On Jan.1st,1984, the trade mark got into the company’s name too. The word "TUNGSRAM" is originated from the English and German names of tungsten(TUNGSTEN+WOLFRAM). With this name the Company wanted to emphasize that it was the owner of the tungsten lamp patent granted first in the world and the fact that it engaged itself with the lighting business. Tungsram had become important players in the light source market for a long time. Their mass-production, however, could start only in 1936 when ImreBrody worked out the cheap domestic yield of krypton

gas.

Aschner Lipot (1872-1952)CEO

TUNGSRAM Centre Of Excellence

The leads and the staff of Tungsram Research Institute taken sometime in the early 1930s. Esteemed personalities: Imre Brody (85), Lipot Aschner,(90), Ignac Pfeifer (91), Zoltan Bay (92).

Life is Stronger….

Hurdles :� Affliction, re-organisation, profile changes and

management disarray.� Foreign Trading deprived by the Hungarian Government.

� Research Base Taken Away.

Success in the sixties :

� Product Consolidation-radio tubes was firmly established and complemented by the production of transmitting tubes.

� Launch of TV picture tube factory in VAC� Semiconductor and Machine Factory in the town of

Gyongyos.

GENERAL ELECTRICAL

WHO IS GE ??

Global infrastructure, finance, and media company taking on the world’s toughest

Challenges.

InfrastructureFinance

Media

GE’s Business Portfolio

• 4 businesses operating in more than 100 countries … 130+ years

• Over 300,000 employees worldwide • 2008 revenue $182.5 B

EnergyInfrastructure

Technology Infrastructure

GE Capital NBCUniversal

�Energy�Oil & Gas�Water & Process Technologies

�Aviation�Enterprise Solutions�Healthcare�Transportation

�Aviation Financial Services�Commercial Finance�Energy Financial Services�GE Money�Treasury

�Cable �Film�International�Network�Sports & Olympics

GE’S CULTURE

• Invest in people and develop global leaders in a high-integrity environment.

• Perform with excellence focused on organic growth, productivity, and risk management.

GE’S Strategy

Be Global

Connect locally, scale globally

Drive Innovation

Lead with technology and content innovation

Build Relationships

Grow customer and partner relationships worldwide

Leverage Strengths

Use GE’s size, expertise, financial capability, and brand

The New Alliance

GE

WEDS

TUNGSRAM

YEAR : 1989Jack F. Welch, Jr., CEO of GE in Hungary, accompanied byGeorege F. Varga CEO and Dr. Peter WohlVice-President(1991).

The status of the bride (Tungsram) • Hungarian Government skimming larger portion of

revenues earned by Major exporter’s to support it’s Teethering economy.

• Tungsram ends up paying 85% of it’s profit from it’s 90% export business as tax to the Hungarian Government.

• The hungarian credit bank buys 91% of Tungsram’sshares in lieu of the 83 million debt taken by Tungsram.

• The hungarian bank marries Tungsram to Consortiun of Austrian Banks by selling of 49% shares of tungsram

GE in Hungary

The status of the bridegroom (GE)

• No great presence in the western Europe for light bulb business.

• Failed alliance with Thorn/EMI.

• Core competencies : Technology, profit realisation, financially well managed.

• Stake holder & Customer centric.

Clash of Corporate culture

GE� Individualism

� Universalism

� Self Confidence

� Initiatives

� Aggressive

� Communication

� Code of Conduct

� Financially well managed

� Rewards

� Customer Focused

� Low wastage of resources

TUNGSRAM� Cradle to Grave culture

� At times individualistic & at

times community oriented.

� Non Initiative

� High wastage of resources

� Poor financial Management

� Lack of communication

The new Alliance

• GE buys out 51% share of Tungsram for $150M.

• GE-Tungsram loses equity values in less than 4 year.

• Scrapping of idle inventory in Tungsram european ware houses.

• GE pumps fresh investment in Hungary, closes down factories of Thorn EMI.

• Communication link established between the topline & bottom line.

• “English” introduced as a medium of communication

• Production paced up in Tungsram plant & worker’s efficiency measured.

• Control on inventory, quality & production wastage.

• GE aligned it’s core values with Tungsram either forcefully or by mutual agreement.

• Vision of being either no.1 or no.2 in lighting business.

• Higher profit realisation.

• Customer Service & Stake holders.

Life after the new alliance• 1989 – Investor

• Tungsram, Hungary: first major privatization in the region

• 2009 – Investor, supplier, customer

• $1,5 Bn investment

• 25 000 employees

• 3 banks

• 16 plants

• 7 business technology centers

• 3 regional business headquarters

• ’08 revenues : $3.5 Bn (+34% growth)

• ’09 revenues: $3.4 Bn

• Strong supplier base

Questions

• Was GE Ruthless in laying-off the workers?? Did GE exploit the Tungsramworkers??

• What advantages did Hungary offer GE??

• How did GE end the cultural clash with Hungary??

• What are the future challenges for GE regarding the environment??

Was GE Ruthless in laying-off the workers?? Did GE exploit the Tungsram workers??

• 1990-20,000 workers laid off.

• 2009- Closure of the VAC & Nagykanizsafactories cutting down 2750 jobs

How did GE end the cultural clash with Hungary??

How did GE end the cultural clash with Hungary?? contd

The Hungarian

organisation set by

GE in 1996.

The Pink bridge illuminated

by GE for Breast cancer

Awareness.

How did GE end the cultural clash with Hungary??

New decorative lighting of HeroesÕ Square, made and

sponsored gy GE Lighting Tungsram on the occasion of

HungaryÕs 1100 anniversary in 1996

What advantages did Hungary offer GE??

� 100% foreign ownership permitted.

� The Foreign Investment Act of 1988 grants full protection to theinvestments and businesses of non-Hungarian resident investors. Currently, foreign firms control 2/3 of manufacturing, 90% of telecommunications & 60% of the energy sector.

� The Act guarantees that investors will be treated in the same manner as national investors, and contains a repatriation guarantee under which foreign investors are free to remit profits and investment capital to their home country in the event of partial or complete termination of their enterprise.

What are the future challenges for GE regarding the lighting industries??

• Phasing of the incandescent tungsten filament light due to high carbon emission.

• Laying off workers.