Globalization and General Electric (GE)
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). Companies moving into foreign countries often rework their products to fit the countries culture, but they will also use the new way of thinking among people to save money when developing their products. Cheaper products will be more successful in developing countries.
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. Another benefit of moving the company’s headquarters to a foreign country is that people are likely to buy and use a product that is made with in their country. The initial impact of moving the headquarters to a foreign country would hurt the local economy because of the immediate job loss. In the long run though, since GE is a larger American owned company, the US would still receive money if the company is...
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