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  • Ge Tungsram Venture

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    VIPUL SHETTY
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    GE acquired a majority stake in Tungsram, a Hungarian lighting company, in 1989 in order to expand its presence in Europe's lighting market, but faced challenges integrating the two companies due to differences in corporate culture; GE worked to overcome these issues by introducing communication and management practices from its own culture while investing in Hungary and aligning Tungsram's operations with its strategies around efficiency, quality, and profitability.

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    GE-TUNGSRAM VENTURE

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    GE acquired a majority stake in Tungsram, a Hungarian lighting company, in 1989 in order to expand its presence in Europe's lighting market, but faced challenges integrating the two companies due to differences in corporate culture; GE worked to overcome these issues by introducing communication and management practices from its own culture while investing in Hungary and aligning Tungsram's operations with its strategies around efficiency, quality, and profitability.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
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    Download as pdf or txt
    501 views26 pages

    Ge Tungsram Venture

    Uploaded by

    VIPUL SHETTY
    GE acquired a majority stake in Tungsram, a Hungarian lighting company, in 1989 in order to expand its presence in Europe's lighting market, but faced challenges integrating the two companies due to differences in corporate culture; GE worked to overcome these issues by introducing communication and management practices from its own culture while investing in Hungary and aligning Tungsram's operations with its strategies around efficiency, quality, and profitability.

    Copyright:

    Attribution Non-Commercial (BY-NC)
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    of 26

    GE-TUNGSRAM VENTURE

    SAMINA SHEIKH
    HITESH GAWAD
    VIPUL SHETTY
    TUNGSRAM
    TUNGSRAM
    • Formerly known as Egger B.ēs
    Tsa., 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 Hanaman


    Invent 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 Aschner Lipot (1872-1952)
    first in the world and the fact
    CEO
    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 Imre
    Brody worked out the cheap
    domestic yield of krypton
    gas.
    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.

    Infrastructure Media
    Finance
    GE’s Business Portfolio
    • 4 businesses operating in more than 100
    countries … 130+ years
    • Over 300,000 employees worldwide
    • 2008 revenue $182.5 B

    Energy Technology GE Capital NBC


    Infrastructure Universal
    Infrastructure

    Aviation Aviation Financial Cable


    Energy Services
    Oil & Gas Enterprise Solutions Film
    Healthcare Commercial International
    Water & Process Finance
    Technologies Transportation Network
    Energy Financial Sports &
    Services Olympics
    GE Money
    Treasury
    GE’S CULTURE
    • Invest in people • Perform with
    and develop excellence focused
    global leaders in on organic growth,
    a high-integrity productivity, and
    environment. risk management.
    GE’S Strategy

    Be Drive Build Leverage


    Global Innovation Relationships Strengths
    Lead with Use GE’s size,
    Connect Grow expertise, financial
    locally, technology and
    content customer capability, and brand
    scale globally and partner
    innovation
    relationships
    worldwide
    The New Alliance
    GE

    WEDS

    TUNGSRAM

    YEAR : 1989
    Jack F. Welch, Jr., CEO of GE in Hungary,
    accompanied by
    Georege F. Varga CEO and Dr. Peter Wohl
    Vice-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’s
    shares 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 TUNGSRAM
     Individualism  Cradle to Grave culture
     Universalism  At times individualistic & at
     Self Confidence times community oriented.
     Initiatives  Non Initiative
     Aggressive  High wastage of resources
     Communication  Poor financial Management
     Code of Conduct  Lack of communication
     Financially well managed
     Rewards
     Customer Focused
     Low wastage of resources
    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 Tungsram
    workers??
    • 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 & Nagykanizsa
    factories 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 the
    investments 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.

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