Case study: General Electrics
The reason to make such foreign expansion was forced from its goal, that to be number 1 or 2 globally in every iciness in which it participated. Internal opportunities As the saying goes, chances only favor the prepared minds, GE starts participate in different business in its early business, such as the formed of GE Commercial Finance in 1905, the acquisition of Ken-Radar Tube Manufacturing Corporation in 1952, the formed of MANIC with partner Microsoft in 1996, etc..
The outstanding business achievement, building up Gee’s potent background and powerful infrastructure. The increase of market share in different field, GE own more and more local companies in TTS home country America, in which provided GE a great capability to make such aggressive foreign investment strategy, to fulfill its company goal. External opportunities Opportunities seem to be within Jack Wheel’s grasps, GE captures every advantage of the economic uncertainty to make acquisitions or capital injections.
In the case mentioned “GE took advantage of economic weakness in Europe from 1989 to 1995 to invest $17. 5 billion in the region, half of which was used to acquire some 50 companies. When the Mexican peso collapsed in value in 1995, GE took advantage of he economic uncertainty to purchase companies throughout Latin America. And En Asia slipped into a major economic crisis in 1997-1998 due to turmoil in the Asian currency markets, Welch urges his managers to view it as a buying opportunity. In Japan alone, GE spent $1 5 billion on acquisition in Just six months.
. When GE earned more profit from international business, there are logically generating more capitals and market share globally. 2) What is GE trying to achieve by moving some of the headquarters of its global businesses to foreign locations? How might such moves benefit the company? Everyone knows that there are deterrence between running a business in none country and in foreign country, as there are national differences in each area, such as political, economic, legal system and even culture.
Political system Political system can be assessed by to dimensions: the degree to which the country emphasize collectivism as opposed to individualism, and the degree to which they are democratic or totalitarian . The citizen of a country desire state ownership or an individual’s freedoms can probably affect a business, such as GE television eradicating would not enter China, as there is no freedom of expression, no democracy in so call free media.
Economic system There are three board types of economic systems, a) market economy, b) command economy and c) mixed economy.
In each economic system, the prices of goods and services, and the assets of ownership are different . GE is an American multinational conglomerate corporation, where the United States has a mixed economy that the elements of both market economy and command economy are existed, so GE logically will invest in the country which has market economy or mixed economy such as Canada, China, Mexico, Japan, and Germany, but not the country Ninth command economy such as Cuba, North Korea and Laos.
Legal system rhea structure of law between countries has immense importance to international business; it determined whether the property rights, product safety and liability are protected, the nature of law within countries affect the development progress of a company. That is why GE moving some of the headquarters of its global businesses to foreign locations, when negotiate to foreign companies and governments, a person come room the regions in where they work are invaluable in deal with such affairs.
Besides, SE shifted its R centers overseas, a deep understanding of local language and culture knowledge is critical when getting close to its customers, GE can better design equipment that is best suited to local needs, for example in manufacturing MR. scanners, it helps GE generate more revenue. Do these moves benefit the United States? These moves bring both pros and cons to United Stated, for the benefits it bring, The moves can let GE learn some valuable skills from the foreign market, and the workers an transfer the skills back to United Stated, that increases the technological skill and management resources.
Besides, the moves of headquarters indirectly help GE earn more revenue, it make effect on the income from inward inflow of foreign earnings, and increase the Gross National Income of United Stated, However, when GE moving some of its headquarters to foreign locations, it would like to lay off some workers and hire the people in that foreign location, which may increase the unemployment rate. 3) What is the goal behind trying to “internationalist” the senior management ranks at GE? What do think it means to “internationalist” these ranks?
In definition, internationalist means to make international and to place or bring under international control.
The meaning of”internationalist” these ranks are the same, to hire management elite from around the world, place it in the place that best suited for the company, the “internationalist” here are meant to the staff it hired. rhea goals behind” trying to “internationalist” the senior management ranks at GE” is to make the business runs more smoothly when in a local operation, it is important to look at a variety of markets.
In corporate diversifying internationally, the senior management ranks cannot contain only nationals from home country, as views and living standard are not the same, where GE knows it, a local professional has a better understanding of the local political, legal systems and cultural backgrounds, and they are invaluable when making a bargain to local companies and governments. In addition, people from different places may generate different idea in brainstorming, Inch in pa reticular advent osseous to the research and development area. ) What does the GE example tell you about the nature of true global businesses? It needs to face many challenges to become a true global business, from Gee’s example can be seen that, a true global business are not only saying that the number of international subsidiaries or the number of foreign workers it owned, but also a comprehensive and circumspect management, and the following natures. A true global business need a clear mission, like Gee’s goal was to be number 1 or 2 globally in every business in which it participated, knowing the main direction of company that drives the staff to work.
Also, a broad vision shows what a company souses should not only in its home country, a true global business must have a holistic view, a broad and long-ranged view in the coming future, for example, if GE are not taking advantage in each country’s economic weakness, and develop its business, there are no such conglomerate in America today. Besides a clear mission for its staff, a true global business needs to let its customers know what their cultural ‘aloes is and how it is, a catchword is needed, like Imagination at work is a GE philosophy, they values at innovation builds, powers, moves and cures the world with advanced technology.