General Electric:

Jack Welch is said to be the best business CEO ever.  Small in size Welch ruled both the American and Global business markets like a king.  When Jack Welch started his reign in 1982 as General Electric's CEO, he started to shake things up immediately.  Welch started his notorious sacking by cutting an estimated 100,000 jobs.  Welch, who is famous for his job sacking strategy, started the trend of down sizing.  His down sizing strategy led GE from a $1.6 billion dollar company in 1982 when Welch started to a $15 billion dollar company in 2000 with its stock market capitalization hovering near $400 billion.  Welch turned General Electric into the worlds largest company. 

Vitality Curve:

Welch used what he calls his Vitality Curve in order to rate his staff.  The Vitality Curve uses a bell shape showing the top 20% as future leaders, the middle 70% as vital to the companies success, and the lower 10% as dead wood.  In Welch’s first seven years when he down sized by an estimated 100,000 jobs only the dead wood where cut loose.  Welch used his Vitality Curve as a motivational tool. This is how Jack Welch was able to squeeze every last drop of efficiency out of his company. In explaining his Vitality Curve Welch stated, “You don't want the end of the horse, you want the head of the horse.” 
                                                                                                             
Welch like many great leaders is not concerned about taking the unpopular view.  Although some think that these mass sackings are brutal, Welch believes that keeping people around who will not grow and prosper is the brutal part.  Many economists think that GE has taken a brutal approach but Welch points out that GE was much more sympathetic than those companies who laid off 500,000 in silicon valley on one day.  GE down sized over a few years and offered very good benefits to those that where let go. 

Jack Welch's Strategic Management Framework:

Welch’s Vitality Curve that was used to assess his employees is comparable to the Strategic Management Framework.  Welch’s overall goal is to obtain above average performance.  In order to obtain the goal Welch used a strategy that is now called down sizing.  During down sizing Welch is trying to assess his resources, which in this case is GE’s employees.  In down sizing Welch is trying to get rid of the “dead wood,” or the employees that do not have any capabilities to contribute to the company.  If the “dead wood” does not contribute to the companies comparative advantages then the above average market is affected.  By down sizing Welch is getting rid of the employees that do not contribute to General Electrics competitive advantage. 

Welch used the strategic management framework to his advantage as his company consistently outperforms its competitors in all aspects of the business.  This is a large part of why even in the current economic standstill General Electric will receive an 11% growth.