General Electric Assignment

Globalization at General Electric

Why do you think GE has invested so aggressively in foreign expansion? What opportunities is it trying to exploit?
General Electric is one the largest industrial conglomerates in America. It has invested so aggressively in foreign expansion is due to the fact that they want to achieve their main goal which was to be number one or two globally in every business in which it participate. They took opportunities to exploit countries which having economic downturn. In term of example, in Europe from 1989 to 1995, they manage to invest $17.5 billion in the region, half of which was used to acquire some 50 companies; in 1995, when the Mexican peso collapsed in value, they purchase companies throughout Latin America; and during the economic crisis in Asian currency markets in 1997 and 1998, which led to the company spend $15 billion on acquisition within six months in Japan only. As a result, by the end of Welch’s tenure in 2001, their international sales revenues increase from 20 percent until 40 percent.
They used their opportunities carefully to establish their market throughout the world.

What is GE trying to achieve by moving some of the headquarters of its global business to foreign locations? How might such moves benefit the company? Do these moves benefit the United States?
By moving some of the headquarters of its global business to foreign locations, GE believes that to succeed internationally, they must be close to their customers. By GE moving some of it’s headquarters to foreign countries they are trying to achieve a closer relationship with the people & government of the country. In many culture like China it is necessary to have great level of cultural sensitivity in order to be successful. This is very difficult for outsider 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 culture & customs of the country GE would be less likely to make marketing mistake. Making a mistake of any size can be disrespect to the people of the country & cause them to boycott company’s product.
Moving some of its headquarters to foreign countries the main benefit is it gives opportunity to get closer to customer & can able to know culture and customs of the local people. Another benefit of moving company’s headquarters to foreign country is that people are likely to buy & use a product that is made with in their country. The initial impact of moving some of it’s headquarters to foreign countries would hurt the local economy because of the immediate job loss.
I don’t think it has benefits for the United States when GE moved to different countries .The main goal is to have benefits for the internationalization of the company & to be closer to its customer.

What is the goal behind trying “internationalize “the senior management rank at GE? What do you think it means to “internationalize” these rank?
GE is trying “internationalize “the senior management rank, they has goal behind it. They want to reduce deep understanding of local language and culture which is often critical. I think these rank “internationalize” means to make international or to place or bring under international control. In our case study I read that GE internationalization of their management rank. One of their activities to internationalize is increasingly traveling overseas for management training and company event.

What does the GE example tell you about the nature of true global businesses?
True global business is a business that is headquartered locally (in overseas) for the aim of getting closer to its customers. It exploits their local market knowledge as well as their local culture and language knowledge. The General Electric example tells me that the nature of true global businesses is only to make as much money off of the people as humanly possible to do so.

India’s Transformation

What kind of economic system did India operate under during 1947 to 1990? What kind of system is it moving toward today? What are the impediments to completing this transformation?
India in 1947 was characterized by very low per capita income. During 1947 to 1990 India was undergoing serious social reforms. During this period India used a system called central planning. This is basically a system whereby the economic system is decided upon from the top down, and everyone has a role to play in keeping the system running. It focuses on using homegrown produce and does not import in a lot of goods. It also sees people less ruled over and more as part of a big machine, to re-iterate the fact that everybody is more equal. This can also be seen as mild communism. Today, however, the economy of India is a lot more geared towards the capitalist strategy. This basically means that it is fashioned more around money and making profit than caring for the people in the system. Because of this, more and more things are imported and no longer made locally, because more of a profit can be made by buying in.
This is one of the impediments, that its people are sold out and forced to work cheap labor jobs because the system has changed; now it is solely interested in making money. This is a transformation that has happened worldwide and started in the west, mainly by America and closely followed by Britain and the rest of the world.
How might widespread public ownership of businesses and extensive government regulation have impacted the efficiency of state and private business and the rate of new business formation in India during 1947-1990 time frame? How do you think these factors affected the rate of economic growth in during this time frame?

The impact of widespread public ownership of businesses and extensive government regulation on the efficiency of state and private business and the rate of new business formation in India during 1947-1990 time-frame are given below:
Rigid growth rate of private sectors
Late in getting permission for establishing new business for new product (for private enterprises)
Heavy industries revered for state owned enterprises by a larger share.
Development of a healthy private sector stunted
Difficulties in firing employees
The issues identified above lead us to some major factors that affected growth rate of Indian economy during the time period. First and most important factor is the occurrence of unemployment. As mentioned above, it might take long time to get permission to diversify into a new product and thus to a new sector of business with new job vacancies.
Late permission might result in longer unemployment and hence lessened the economic growth rate. Although labor laws made it difficult to fire employees but this law did not create any scope for new employment. Unemployment made the path for second factor, poverty. As unemployment people could not contribute to their families, financial condition of lower-middle and lower class people became worse resulting in poverty.

How would privatization deregulation and the removal of barriers to foreign direct investment affect the efficiency of business, new business formation, and the rate of economic growth in India during the post- 1990 time period?

Privatization, deregulation, and the removal of barriers to foreign direct investment would affect the efficiency of business, new business formation, and the rate of economic growth during the post-1990 time period by making it more appealing for the private business owner to start a new business. With fewer regulations to follow and less barriers the private business owner would have more freedoms with their business and would be more efficient because they wouldn’t have to wait for government approval for everything.

India now has pocket of strength in key high-technology industries such as software and pharmaceuticals. Why is India developing strength in these areas? How could success generate growth in other sectors of the Indian economy?
I think India is developing strength in software and pharmaceutical areas because they have such a large amount of resources and inexpensive labor. Success in these industries will help generate growth in other areas of the Indian economy by encouraging business owners to open up internationally. These industries are high rollers. The pharmaceuticals that are just off patent can be produced at a much lower cost and this brings a great deal of income in for India’s economy. The revenue from taxes from the telecommunications and pharmaceutical industries are helping to develop all other areas of the Indian economy.

Given what is now occurring in the Indian economy, do you think the country represents an attractive target for inward investment by foreign multinationals selling consumer products? Why?
Foreign investment is up in India. In fact, foreign investment rose from $150 million in 1991 to $15.3 billion in 2007. However, India is an attractive destination for foreign multinationals selling consumer product remains to be seen. Certainly, the large population will serve to attract some companies, but the fact that some 40 percent of the world’s population living in abject property are in India will scare other companies away. Moreover, it is still not easy to run a company in India to laws limiting everything from who can be fired to who can manufacture certain products.
It does. If the tariffs go lower the Chinese will bring their low cost products to India. This will destroy the domestic worker and India would soon lean on imports.
In 1991, India’s reserve was 67 tons of gold ($2 billion). In 2009, India’s reserve was 200 tons more ($285 billion). “These signs point to an upbeat outlook for the Indian economy in 2010 which, in the view of some observers, seems as bright as the gold the country has recently acquired. The year could see more gold purchases; India needs to diversify its basket of foreign assets, 90% of which is still in dollars.

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