Globalization and General Electric (Ge)
Question No 1:-
Why do you think GE has invested so aggressively in foreign expansion? What Opportunities is it trying to exploit?
GE has invested so aggressively in foreign expansion because of the potential development that is possible. The United States is a prominent developed country, while other countries are still developing. This gives GE the possibility to expand their business by giving the country new products and opportunities to develop their economy. GE takes advantage of the economic uncertainty of foreign countries to move into the country at a lower cost. For example, when “Asia slipped into an economic crisis GE spent $15 billion acquiring companies in just six months” (International Business, textbook p. 37). With this aggressive investment, the company’s then CEO, Welch, realized that the European Economy had a weak point in the year 1989 to1995 which he took advantage of and invested about $17.5 billion in European market. With these amounts, half went to the acquisition of 50 new companies. Question No 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? Do these moves Benefit the United States? Answer:-
By GE moving some of its headquarters to foreign countries they are trying to achieve a closer relationship with the people and government of the country. In many cultures like China, it is necessary to have great level of cultural sensitivity in order to be successful. This is very difficult for outsiders to obtain, so by having a local office you can gain this by bringing people of that culture into the company. By getting to know the culture and customs of the country GE would be less likely to make marketing mistakes. Making a mistake of any size can be disrespectful to the people of the country and cause them to boycott the company’s products. Additionally, the company has had the advantage of increased revenues as a result of the dynamism of the Asian economies making it shift some of its jet engine headquarters to India and China who are the main purchasers of the same. Again, compared to the US market, the Asian market in china and India has huge investments in infrastructure mainly in Airports, Railways and power stations. With this advantage, analysts have it that by 2012, the company will generate 55 to 60 percent of international business. This is therefore a means of achieving the true multinational or global company image. Other reasons for such relocations are the increase in revenues Through increased sales in the developing economies. These moves will benefit the states Just in the form of newer designs in equipments and with new ideas. Question No3:-
What is the goal behind trying to“internationalize”the senior management ranks at GE? What do you think it means to“internationalize”these ranks? Answer:-
The goal in internationalizing senior management ranks at GE is to better understand their markets. This will allow GE to have a greater amount of local knowledge, as well as knowledge of the local culture and language. These both will help tremendously when GE is doing business all over the world. I believe that Internationalize describes the process of integrating foreign culture, traditions, and knowledge into a company in order to give that company a better connection and understanding in order to do business. Internationalizing the high ranks means hiring country managers from within the country where the company needs to succeed. This means that unlike earlier on when the company only hired Americans for the top ranks in GE Company, internationalization will mean leaving slots in the ranks to be filled by managers from the foreign countries where the company has invested. For instance, in China, GE must leave slots to be filled by Chinese managers to enable the company to work effectively with the...
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