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Assignment On:International Business (Solved Case Study of GE) Presented To:Sir Asghar Presented By:Muneeb Ahmad MB-10-41 M.B.

A 4th Semester ( Evening) Submission Date:13 ,Feb 2012 B.Z.U, Bahadur Sub-campus Layyah

Question No 1:Why do you think GE has invested so aggressively in foreign expansion? What opportunities is it trying to exploit?

Answer:The main reason why GE has invested aggressively in Globalization is because the company has realized there is much more than shipping products in foreign countries. To GE the need to invest in globalization is made simpler by remaining committed to guaranteeing that the capabilities and relationships in the market where one needs to succeed are strong enough for the company to invest in (Hill, 2008). With this aggressive investment, the companys then CEO, Welch, realized that the European Economy had a weak point in the year 1989 to 1995 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:In acquiring globalization in Latin America, the unpredictability of the economy worsened during the collapse of Mexican Peso. This made GE gain increased advantage to buy even more companies. In 1997 and 1998, Asia went in to an economic crisis with the currency going into turmoil. This made it easy for GE to acquire opportunities in Japan and other Asian countries. In the end, the company was in a position to attain 40% of its revenues from global sales with an up to 20% increase from 1985. Increasing sales, increasing market share, reduction of budgets and acquiring economy of scale are some reasons why GE went global. In moving some of the headquarters from United States, GE is trying to escape the sluggish domestic spending in US hence turning more of their focus in overseas to get hold of the increasing demand for its products. The current state of the US economy is uncertain making it worth the while for multinationals to shift some of their headquarters to other more potential parts of the globe. 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.

In addition, GE moved the healthcare headquarters in London from US in Amersham and in 2008 headquarter of the oil and gas equipment was relocated to Italy and that of GE money to London. All this is in the name of remaining close to its customers. For instance, in moving the money headquarters to London, the company went closer to its customers in both Europe and Asia. 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 No 3: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:While internationalizing its senior management, the company is trying to be sensitive in terms of culture. The company realizes that with the hiring of managers with strong work ethics and with deep comprehension of local languages, working in the localities of the foreign markets will be easier. Again, the Midwest where most of the headquarters have shifted has expatriates with strong ethics for work and this makes it even easy to penetrate the market. 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 government and the local Chinese people. This is as a way of effectively and efficiently achieving a touch of cultural sensitivity which would have been hard to achieve with the use of outsiders.

Question No 4:What does the GE example tell you about the nature of true global business? Answer:For a company to achieve the true global image, it is necessary to ensure that they are working in the closest range with their customers. These would mean evaluating their global market share to establish the locations which have had increasing and promising market trends for their services and products. After, the company can relocate to their headquarters to those areas just to make sure that they esteem customers have the best of services in terms of quality and satisfaction. To gain a penetration in the relocated offices, the company must ensure that it is working with managers from the locality to give them the sensitivity of culture and win even more market. In other words, shipping products to foreign lands in not just enough, being closest to ones customer works out best.