WHERE THEY CAME FROM
It’s only fitting that one of the most acquisitive companies in the world is itself the product of a merger. The brainchild of inventor extraordinaire Thomas Edison, who established the Edison Electric Light Co. in 1878, General Electric was created after the 1892 merger of two companies: Edison General Electric and Thomson-Houston Electric. Today, G.E. is the only company listed in the Dow Jones Industrial Average that was also included there in 1896.

WHAT THEY DO
The question is, what don’t they do? G.E. is a market leader in almost all its sectors — G.E.’s financial arm is also one of the world’s largest financial services firms by assets. G.E. survived the conglomeration craze of the 1960s, when low interest rates allowed companies to make acquisitions through leveraged buyouts, by staying focused on aligning the operational management of its disparate businesses.

In its current makeup, instituted by chairman and C.E.O. Jeff Immelt, the second-largest company in the world by market capitalization is composed of six units:

• G.E. Commercial Finance, offering financial services to manufacturers, distributors, and end users

• G.E. Healthcare, making and selling a wide range of medical equipment and services
  

• G.E. Industrial, producing and selling consumer appliances, industrial equipment, and plastics, and offering related financing and services

• G.E. Infrastructure, dealing with the air-transportation, rail, and energy-generation industries

• G.E. Money, offering financial services to consumers, retailers, mortgage lenders, and auto dealers in about 50 countries

• NBC Universal, producing and distributing TV programs and films

WHAT THEY GOT RIGHT
The G.E. of the popular imagination was shaped by its revered former chairman and chief executive Jack Welch, who reigned from 1981 to 2001. He demanded efficiency and informality, ordering every business to be No. 1 or No. 2 in its sector—or risk being sold off or shut down. The layoffs on his watch—190,000 during one two-year span—earned him the nickname “Neutron Jack.” But there was a softer side to the charismatic Welch too—one that encouraged managers to question all business practices and to find better ways of spurring productivity. Welch’s G.E., which appears regularly in management case studies, emphasized “lean and mean.”

In the Welch era, G.E.’s profits soared, with annual shareholder returns averaging 23 percent. This was markedly better than the results from the five other top 10 Fortune 500 companies that existed throughout the same era.

WHAT THEY GOT WRONG
Between 1947 and 1977, G.E. (legally) dumped more than 500 tons of carcinogenic polychlorinated biphenyls, or PCBs, into New York State’s Hudson River. In 1990, a judge ordered a cleanup that’ll be one of the largest in American history—and will cost G.E. hundreds of millions of dollars. Also in 1990, G.E. was convicted on criminal and civil charges of defrauding the U.S. Department of Defense and then, in 1992, it was convicted on charges of corrupt practices in the sale of military jet engines to Israel, for which it was $100 million.

By now, the luster has worn off Welch’s star. Many companies are reconsidering his manic fixation on beating expectations. G.E.’s reputation for churning out exceptional executives has also been tarnished. The latest example is former Home Depot chief Robert Nardelli, who stepped down amid shareholder ire over his excessive pay.

WHAT'S NEXT
Inheriting an already finely oiled machine, Immelt has been free to focus on overall corporate strategy and has implemented several programs, including a cross-training effort that helps top execs understand, and thereby promote, G.E. businesses outside their own areas of expertise. He has also instituted a formal process to require yearly “imagination breakthroughs”—ideas capable of generating $100 million in new revenue within three years—from each business group. G.E.’s current revenue base stands at $150 billion. While there are about 100 such projects under way, none has yet produced a winner.

To address its troubled past in regard to the environment, G.E. plans to double research spending on green technologies to $1.5 billion by 2010. Immelt expects more than half of G.E.’s product revenue to come from such innovations by 2015.

Based on revenue expectations for these initiatives, Immelt has set an anticipated growth rate of 8 percent—nearly double G.E.’s typical 5 percent annual growth rate. —Zubin Jelveh