General Electric Research Paper

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General Electric is a well-known company in many regions of the world, but what people aren’t particularly aware of are the steps that General Electric has taken to get to where it is at today. When I think of General Electric the first thing that comes to mind is the role that the company plays in the production of household appliances, but General Electric is a much bigger contributor to people’s lives than is most people realize. People aren’t familiar with the internal business decisions that General Electric makes to ensure that the company continues to grow and run as smoothly as possible, allowing the company to continue to provide people with the services that they have grown to recognize as being a trademark of General Electric. General Electric has tried different modes of entry when trying to enter the foreign market, particularly acquisitions, greenfield ventures, and joint ventures. We are going to take a look at the journey that General Electric takes to find the best mode of entry to suit its company goal and mission plan, and discuss how each entry mode has given General Electric an advantage, as well as a disadvantage, in the foreign market. General Electric used to prefer acquisitions or greenfield ventures as an entry mode into a foreign market, rather than joint ventures. An acquisition refers to “one company taking controlling interest in another company” (Business Glossary) in some cases which is a majority, meaning that the foreign firm takes an interest of 50 to 99 percent, but can also be a minority, where the foreign firm takes a 10 to 49 percent interest in the firm’s voting stock, or a full outright stake where the foreign investment is 100 percent (Hill, 243). While a greenfield venture involves “finances [being] employed to create a new physical facility for a business in a location where no existing facilities are currently present” (Greenfield Investment). I think that General Electric previously went with acquisitions or greenfield ventures because the company wanted full control, and without the ability to have full control the company wasn’t willing to risk doing business with other companies. Acquisitions and greenfield ventures gave General Electric the power to make decisions and have control over the input and outcome of production either in the companies that it acquired through acquisitions or established through greenfield ventures. General Electric was opposed to joint ventures because it entailed “establishing a firm that is jointly owned by two or more independent firms” (Hill, 429), which would give General Electric little or no control in the new company. I think that General Electric has changed its strategy in recent years, to prefer joint ventures as opposed to acquisitions or greenfield ventures, because the company wants to avoid the possibility of overpaying when acquiring a company, have a security blanket when entering into foreign markets, share the risk of building a new business, and it serves as the easiest option for entering into a market. Joint ventures allow General Electric to avoid the possibility of overpaying for an acquired company, at a time when prices for acquisitions have been bid higher than usual, by allowing General Electric to put money into a company that may have problems beneath the surface, rather than take full responsibility for that company’s problems through an acquisition and run the risk of losing money through the company. Joint ventures provide General Electric with a security blanket when entering a foreign market by allowing General Electric to conduct business in these foreign markets as a partner of a company, giving General Electric some first knowledge and experience within the foreign market without running the risk of entering into a market where the company doesn’t know how business is conducted and potentially ruining all future possibilities of conducting business within that market. General Electric’s lack of knowledge...
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