Do not neglect domestic market, warns Welch

DOMESTIC FOCUS: Welch, pictured, warned companies in the Gulf not to neglect local markets at the expense of expanding internationally. (Getty Images)

Former General Electric chief executive Jack Welch on Tuesday told ArabianBusiness.com in an exclusive interview that he believes that Gulf businesses should not neglect opportunities in the local region at the expense of expanding globally.

"The concerns they are having in the Gulf are dealing with rapid growth, getting the right people in the right place and the processes that go with that," said Welch, speaking on the sidelines of an exclusive business forum in Dubai.

"The easiest thing for them is to stay in the Gulf and grow like hell - the question is with the appetites... this guy in Dubai is going to find doing business here much easier than going over to North Africa as it is so much more difficult to go abroad and enter a new market."

Welch is hosting a two-day seminar with 150 eminent Gulf business leaders, exclusively covered online by ArabianBusiness.com, showcasing his 21 years' experience as the head of GE where he grew the company's market value from $12 billion in 1981 to $400 billion in 2001.

At his first executive management seminar in the Gulf, Welch disagreed with delegates who were favouring opportunities overseas, even in the Middle East and North Africa region, at the expense of the local market.

"I like local expansion more than horizontal expansion, where you expand outside because you have so much money," said Welch. "The hardest thing to do is acquire conglomerate behaviour, followed by entering a market where the languages are different, followed by where the cultures are different."

"The easiest thing to do is to stay where this government likes you and the market is growing at 15%."

Welch said at the 'Winning Strategies with Jack Welch' forum that chief executives in the region were ultimately responsible for their companies' strategic ambitions.

"The issues will be driven by a CEO - whether their companies become conglomerates or big regional players," said Welch. "Ten years or more from now, there will be busted train wrecks of those who did some of these things too fast."

Welch, regarded the 'CEO of the Century' by Fortune magazine, also said that he saw that the current oil boom in the Gulf as benefiting the region much more than the boom in the 1970s.

"I would say you're doing a damn good job," said Welch. "There seems to be great focus on building schools and hospital, more of a community focus than there was in the last boom. I would say there is much more balance with the infrastructure development of society than just growth."

Building talent and human capital in the region was hugely important, but Welch dampened the usefulness of MBA programmes at institutions like Harvard in the management of companies.

"An MBA gets you in the door, and gets you pretty high. After a week, it's worth nothing."

'Winning strategies with Jack Welch' runs in Dubai from April 21-22.

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USER COMMENTS (1 COMMENTS)

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I agree with Welch
Posted by Abid on 22 April 2008 at 14:22 UAE time


It does make a lot of sense of leading companies to concentrate and grow in their domestic markets, rather than look at expansion options beyond the borders.

Every company has its unique set of work ethics, business processes and cultural identify that it develops over a period. Rapid growth and expansion especially across geographical regions result in a catalyst situation, which triggers off a reaction wherein the basic foundations are diluted if not eroded away.

Business leaders would do well to realise that it is easier to consolidate and build on a mountain to reach the sky rather than to go and build a hill on a faraway uneven land.

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