[Annotated] Why General Electric is struggling

The iconic^[각주:1] American conglomerate has a new boss and a new strategy 

General Electric (GE), an industrial conglomerate founded by Thomas Edison 125 years ago, is in trouble^[각주:2]. Its market valuation^[각주:3], once over $400bn, is now closer to $150bn. Its share price has fallen by about two-fifths this year alone^[각주:4]. The firm recently replaced Jeffrey Immelt, its long-serving^[각주:5] chairman^[각주:6] and CEO, with John Flannery, another company veteran. What went wrong at one of America's best-known^[각주:7] and oldest companies?

GE's traditional strengths are in asset-heavy^[각주:8], engineering-oriented industries. Starting with electrical goods (Edison famously commercialized^[각주:9] the light bulb), the firm expanded into areas such as^[각주:10] power-generation equipment, locomotives^[각주:11], industrial plastics and aviation^[각주:12]. It also built up a successful business in^[각주:13] health-care technology, making high-end medical scanners and other fancy kit. Its global network of research laboratories is one of the world's top generators of new patents^[각주:14]. Under Jack Welch, who ran the firm from 1981 to 2001, GE expanded dramatically (with hindsight^[각주:15], analysts say recklessly) into financial services^[각주:16], which by 2000 contributed more than half of the profits^[각주:17]. The diversification^[각주:18] away from^[각주:19] the company's core strengths^[각주:20] made it seem much more valuable to investors, but this proved a chimera^[각주:21]. The financial engineering^[각주:22] was built on unsustainably^[각주:23] risky bets^[각주:24], and the distractions^[각주:25] arising from^[각주:26] that complicated and politicized business^[각주:27] led bosses to ignore festering problems on^[각주:28] the industrial side. 

After GE's finance arm^[각주:29] had been weakened by^[각주:30] the global financial crisis Mr Immelt wound down^[각주:31] the company's financial holdings^[각주:32]. Its current troubles are primarily^[각주:33] the result of his failure to prepare GE for heightened competition in^[각주:34] a slowing^[각주:35] global energy market, This has squeezed GE's power business^[각주:36], its biggest division^[각주:37], and the firm expects operating profits in^[각주:38] this segment to^[각주:39] decline by over 25% in 2018. Mr Immelt also made some expensive acquisitions^[각주:40] at a tie of^[각주:41] low oil prices. He spent $10.1bn to buy Alstom, a French company selling power-generation kit, and $7.4bn to win control of Baker Hughes, an American oilfield-services group^[각주:42]. Neither is doing as well as hoped^[각주:43]. 

Mr Flannery unveiled a new strategy in^[각주:44] November. It rests on^[각주:45] three pillars^[각주:46]: cost control^[각주:47], cultural change^[각주:48] and cuts^[각주:49]. He slashed the promised dividend by half^[각주:50], which will save on top of^[각주:51] the $2bn in annual cuts Mr Immelt was forced to concede^[각주:52] earlier this year^[각주:53]. Mr Flannery is using carrots and sticks to^[각주:54] restore management's focus on^[각주:55] financial returns^[각주:56]. He will alter^[각주:57] the pay structure^[각주:58] to incentivise executives to^[각주:59] generate free cash flow^[각주:60]. He is also slimming down^[각주:61] the unwieldy^[각주:62] and toothless^[각주:63] board of directors^[각주:64], even placing an activist investor on^[각주:65] the board. But while his approach to costs and culture looks sensible^[각주:66], big investors wonder at^[각주:67] his efforts to shrink the firm^[각주:68]. Mr Flannery says he will dispose of^[각주:69] some $20bn in assets in the next two years. That may sound like a lot, but is rather less impressive compared with^[각주:70] GE's total assets^[각주:71] last year of $365bn. If Mr Flannery can defy^[각주:72] the sceptics^[각주:73] and turn the firm around^[각주:74], he will deserve to surpass^[각주:75] even the lionized^[각주:76] Mr Welch in the annals of^[각주:77] American management. 

1. iconic ; [형용사] …의 상징[아이콘]이 되는, 우상의 [본문으로]
2. be in trouble ; 어려운, 곤경에 처하다 [본문으로]
3. market valuation ; (경영) 시장가치 [본문으로]
4. ~ year alone ; ~년, 해 동안 만의 [본문으로]
5. long-serving ; [형용사] (명사 앞에만 씀) 장기 근무한 [본문으로]
6. chairman ; (pl. / 장-mən /) 1. (회의의) 의장 ;; 2. (회사・위원회 등의) 회장 [본문으로]
7. best-known ; [형용사] [WELL-KNOWN의 최상급] 가장 잘 알려진 [본문으로]
8. asset heavy business model ; An asset heavy business model is one where significant capital expenditure is required to start the business. The business model involves ownership / leasing of assets and therefore a lot of upfront capital investment. [본문으로]
9. commercialize ; [타동사][VN] [흔히 수동태로] (특히 지나칠 정도로) 상업화하다 [본문으로]
10. expand into ; …로 확대하다. [본문으로]
11. locomotive ; [명사] 기관차 ;; 미국식 [|loʊkə|moʊtɪv] 영국식 [|ləʊkə|məʊtɪv] [본문으로]
12. aviation ; [U] 항공(술) [본문으로]
13. build up a business ; 사업체를 설립하다. [본문으로]
14. patent ; [C , U] 특허권[증] [본문으로]
15. hindsight ; [U] (일이 다 벌어진 뒤에) 사정을 다 알게 됨, 뒤늦은 깨달음 ;; 참고 ; foresight ;; 미국·영국 [|haɪndsaɪt] [본문으로]
16. financial service ; [명사] 금융 서비스 [본문으로]
17. contribute ; 3. ~ (sth) to sth 기여하다, 이바지하다 ;; 미국∙영국 [kən|trɪbju:t;英 또한 |kɒntrɪbju:t] [본문으로]
18. diversification ; 1. [U] 다양화, 다양성, 잡다한 상태 ;; 2. [UC] 변화, 변형 ;; 3. [UC] (경제) (사업의) 다각화, (투자 대상의) 분산 [본문으로]
19. away from ; ~에서 떠나서 [본문으로]
20. core strength ; [NOUN] the strength of the underlying muscles of the torso, which help determine posture [본문으로]
21. chimera ; 2. 가공의 괴물; 근거 없는 환상; 망상(wild fancy) [본문으로]
22. financial engineering ; (경제) 금융공학(金融工學) [본문으로]
23. unsustainably ; [부사] 떠받칠 수 없게, 지지할 수 없게. [본문으로]
24. bet ; 2. (비격식) 짐작, 추측 [본문으로]
25. distraction ; 1. [C , U] (주의) 집중을 방해하는 것; 머리를 식히게 해 주는 것 [본문으로]
26. arise from ; …에서 발생하다[일어나다], …이 원인이다 [본문으로]
27. politicize ; [vn], [흔히 수동태로] 1. 정치적 논쟁거리로 삼다, 정치 이슈화하다 ;; 2. 정치에 개입시키다 [본문으로]
28. festering ; [형용사] (英속어, 강조) 지겨운[지겹게], 싫증이 나는[나도록]. [본문으로]
29. arm ; 6. OF ORGANIZATION | [주로 단수로] ~ (of sth) (조직의) 부문 [본문으로]
30. weaken ; 1. (능력・세력 등을) 약화시키다; 약화되다 [본문으로]
31. wind (sth) down ; 1. (사업·활동 등을) 서서히 줄이다(그래서 마침내 종료되게 한다는 뜻) [본문으로]
32. holdings ; [명사] (주식, 채권 등의) 재산 [본문으로]
33. primarily ; [부사] 주로 ;; 미국·영국 [praɪ|merəli;英또한|praɪmərəli] [본문으로]
34. heighten ; [동사] (감정・효과가[를]) 고조되다[고조시키다] [본문으로]
35. slowing ; [형용사] 더딘, 활기가 없는 [본문으로]
36. squeeze ; LIMIT MONEY | [타동사][VN] (재정적으로) 압박하다 [본문으로]
37. division ; 4. PART OF ORGANIZATION | [C+sing./pl. v.] (약어:Div.) (조직의) 분과[부/국] [본문으로]
38. operating profit ; 영업 이익, 이윤 [본문으로]
39. segment ; 1. 단편, 조각, 구분, 부분, 분절 [본문으로]
40. acquisition ; 3. [C , U] (상업) (기업) 인수, 매입(한 물건) [본문으로]
41. tie ; 4. ((일반적으로)) 이어주는[접합시키는] 것 ;; 5. [pl.] 인연; 연줄, 유대; 기반; 의리; 속박, 의무, 구속 [본문으로]
42. oilfield services company ; 유전 개발 회사 [본문으로]
43. neither is ~; (둘 중) 어떤 것도 아니다, ~하지 않다 [본문으로]
44. unveil ; 2. (새로운 계획・상품 등을) 발표하다 [본문으로]
45. rest on ; ~에 기초하다 ;; 1. ~에 달려 있다[의지하다] [본문으로]
46. pillar ; 6. (시스템・조직・신념 등의) 기본적인 부분[특징] [본문으로]
47. cost control ; 비용 관리, 원가 관리 [본문으로]
48. cultural change ; (문화일반) 문화변동(文化變動) [본문으로]
49. cut ; [명사] 3. 삭감, 에누리, 할인 감가(減價) ((in)), 임금의 인하 ;; 11. 몫, 배당 ((of, in)) [본문으로]
50. slash ; 2. [흔히 수동태로,흔히 신문에서] 대폭 줄이다[낮추다] [본문으로]
51. on top of ; in addition to something; also [본문으로]
52. concede ; 2. ~ sth (to sb) | ~ sb sth (특히 마지못해) 내주다[허락하다] [본문으로]
53. earlier this year ; 올해 초 [본문으로]
54. carrot and stick ; 당근과 채찍, 회유와 위협, 보수와 벌 [본문으로]
55. focus ; (pl. fo・cuses 또는 foci / 'fəUsaI ; 美 'foU- /) 1. [U , C] [주로 단수로] ~ (for/on sth) (관심・흥미 등의) 초점[중심]; 주목 [본문으로]
56. return ; 5. PROFIT | [U , C] 수익 [본문으로]
57. alter ; (alters[-z]) 1. 〔크기·성질·형상 따위〕를 바꾸다, 고치다, 개조하다. 동의어 CHANGE [본문으로]
58. pay structure ; 임금, 급여 체계 [본문으로]
59. incentivize ; [타동사] <…을> (보상금을 주어) 장려하다 ;; 미국·영국 [inséntəvàiz] [본문으로]
60. free cash flow ; FCF (경제) 잉여현금흐름, 잉여현금흐름모형, 여유현금흐름 [본문으로]
61. slim down ; (기업·조직의) 군살을 빼다[규모를 줄이다]; 군살이 빠지다[규모가 축소되다] ;; 동의어 ; slim something down [본문으로]
62. unwieldy ; 2. (시스템・사람들 집단이) (너무 크거나 복잡해서) 통제[조직]하기 힘든 [본문으로]
63. toothless ; 2. 강렬함[예리함]이 없는; 효과가 없는 [본문으로]
64. board of directors ; [명사] 이사회 (cf. director 이사; syn. board member) [본문으로]
65. place ; 5. 〔신뢰·희망 따위〕를 (…에) 두다[걸다]; (…에게)〔책임〕을 지우다, 〔압력〕을 넣다[in, on]. [본문으로]
66. sensible ; 1. 분별 있는, 양식(良識)을 갖춘, 지각 있는, 상식적인, 똑똑한; 판단력이 있는 ;; 2. <행동·이야기 등이> 현명한, 재치 있는; 사리에 맞는 [본문으로]
67. wonder at ; …에 놀라다. ;; to be very surprised by something [본문으로]
68. shrink ; (shrank / SrӕNk / shrunk / SrVNk / 또는 , shrunk , shrunk) 2. (규모・양이[을]) 줄어들다[줄어들게 하다] 참고 shrunken [본문으로]
69. dispose of sb / sth ; 1. ~을 없애다[처리하다] ;; 2. (문제·질문·협박을 성공적으로) 처리[해결]하다 [본문으로]
70. compared with ; ~과 비교하여 [본문으로]
71. total assets ; [명사] 자산총액, 합계자산 [본문으로]
72. defy ; (-fied) 1. 무시하다, 문제삼지 않다, 얕보다; 공공연히 반항하다 ;; 2. <사물이> 허용하지 않다, <해결·시도 등을> 좌절시키다(baffle) ;; 3. (어려운 일을 해볼테면 해봐 하고) 도전하다, 벋서다 [본문으로]
73. sceptic (英) ;; (美 skep・tic) 회의론자 ;; 참고 ; Euro-sceptic [본문으로]
74. turn around ; (경기·경제 등이[을]) 호전되다[호전시키다] ;; 참고 ; turnaround ;; 동의어 ; turn something around/round [본문으로]
75. surpass ; [동사] (격식) 능가하다, 뛰어넘다 [본문으로]
76. lionize ; 1. (英) 입을 모아 찬양하다, 떠받들다, 명사(名士) 취급을 하다 [본문으로]
77. annals ; 3. (단체·학회 등의) 연보(年報), 정기 간행물. [본문으로]