International Business Assignment nr.

1 Globalization at General Electric

K. Toufarova

1. Why do you think GE invested so aggressively in foreign expansion? Because GE tries to achieve its main goal: To be number 1 or 2 globally in every business in which it participates. Nowadays GE is not just an American company doing business abroad, but it had become a true global company. The revenues from international sales are growing significantly. This expansion is being powered by growing economies of Asia (particularly China and India). GE can achieve its goal through: Increasing its market share and sales volume at its home country and overseas GE necessarily needs to own more and more local and overseas companies. Increasing revenue from the international sale More revenue from international sales will logically generate more funds, which can be used for purchasing and acquiring new companies. It may also increase its market share globally. What opportunities is it trying to exploit? economic weakness in certain parts of the world with the aim of investing to the region, but in fact to acquiring companies to take advantage of economic uncertainty caused by the currency market collapse for the aim of purchasing or acquiring companies to help in process of development in under develop areas with the aim of profiting from it later 2. What is GE trying to achieve by moving some of the headquarters of its global businesses to foreign locations? GE strongly believes that to succeed internationally, it must be close to its customers. Thats why it builds or transfers its headquarters abroad. How might such moves benefit the company? Basically the company might benefit from more attractive location (in business climate terms) such as: to be geographically closer to its customers in the place of its existing activities, agglomeration of headquarters in the same sector of activity, a short distance away its customers, closer to business opportunities to be closer to its customers through its local managers, which might have better understanding of local culture, business procedures and law ability to manage/lead an overseas business unit more effectively Tax advantages (potentially) Lower wages, well-educated labour force (potentially) Costs reduction, reduction of overheads (potentially) Industry of specialization Foreign government invitation (potentially) Good infrastructure (potentially)

Do these moves benefit the United States? There might be a potential influence on Gross National Product (GNP) The USA can benefit from good reputation of American companies - (representation) The USA government can establish diplomatic relationship with foreign counties

3. What is the goal behind trying to internationalize the senior management ranks at GE? GE makes efforts to get closer to its customers. It hires local country managers (within the country they want to penetrate or do business), who have better knowledge of the local market, local culture and language. It is crucial especially when a firm want to do business with local companies or government. What do you think it means to internationalize these ranks? That means the integration of the local market knowledge and application of cultural sensitivity approach through engaging their local managers in the managerial decision-making process. 4. 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.

DMG-Shanghai
1. Why do you think that it is so important to cultivate guanxi and guanxiwang in China? Business environment, which values good relationships, reciprocal obligations and loyalty, can make the business running and improve the business moral as well as the moral philosophy. Reciprocal obligation glues the network together. 2. What does the experience of DMG tell us about the way things work in China? What would likely happen to a business that obeyed all of the rules and regulations, rather than trying to find a way around them as Dan Mintz apparently does?

The experience of DMG tells us that business in China is strongly regulated, restricted and bounded. The government influence is significant and the firm, who wants to do business in China, must overtake many obstacles. It also says that, who wants to do business in China, must build up strong connection with government representatives first. If the firm obeyed all of the rules and regulations, than the business opportunities are very limited and bounded. 3. What are the ethical issues that might arise when drawing upon guanxiwang to get things done in China? What does this suggest about the limits of using guanxiwang for a Western business committed to high ethical standards?

The ethical issue that might arise is a firm, who wants to make business in China, will have to build up tight connection with government representatives first. It might not be easy for an foreign company to establish professional relationships with government. Some kind of help from a local celebrity or business people is highly desirable. Making business without obeying guanxiwang is impossible in China.