Globalization at general electrics Essay Example | Topics and Well Written Essays - 2250 words

Globalization at general electrics - Essay Example First, GE chose to invest aggressively in foreign expansion for the obvious reason of desire to grow the company. Foreign investment results in more branches of the company, and this is directly linked to increased revenues for the company due to the additional branches, which will generate additional profits for the company (Rugman & Collinson 2008). Therefore, GE bought other companies in various countries, which were in a financial jeopardy, and were on the verge of collapsing. GE bought the financially unstable companies at a faster rate, mainly because, this was the only opportunity it had to acquire those companies and expand, since these would be seized by other companies, if GE would not act fast. This is a strategy, which GE used to ensure that its expansion was rapid. Aggressive expansion of GE might have been aimed at ensuring that the company moves closer to most of its customers, since this would be easier and cheaper for the company to address the various concerns and n eeds of its customers, while increasing its total sales revenue. In addition, international expansion by GE was intended for the company to increase its customer base, since this would acquire more and new customers in the new geographical locations that it established itself. In addition, GE chose to expand because of the company’s wish to deal with their foreign markets on a higher level. By adopting globalization, GE wanted to prove that the relationship between the company and its foreign markets was strong enough to allow the country to directly invest in the foreign countries, while being assured of profits. Rugman & Collinson (2008) argued that it not enough for a company to be shipping its products to foreign countries. Instead, a company should consider getting closer to its customers in the foreign markets, and establish a close relationship with them, to boost revenue and address consumer needs appropriately. Finally, GE might have chose to expand internationally i n order to save on the costs it incurred in the form of wages for its employees. Employees in other countries outside the United States are paid lower salaries and wages, mainly because of the economic status of their country, which is usually lower, compared to the United States. Therefore, most American multinationals choose to expand outside the United States in order to explore these lower wages (Rugman & Collinson 2008). Question 2 According to Birkinshaw, Braunerhjelm, Holm & Terjesen (2006), the corporate headquarters of a company plays a valuable role in influencing the relationships between the company and the financial markets, as well as its stakeholders. Stakeholders of a company include customers, as well as the competitors of the company, which are the most important stakeholders of a company. Therefore, by moving its headquarters to foreign markets, GE wanted to influence the relationship with its customers in the foreign countries. This would result in a stronger rel ationship than the one that existed previously. Most companies claim that the decision to move their headquarters to foreign countries is influenced by their desire to be in close proximity with their international customers (Rugman & Collinson 2008). In the case of GE, like most companies, this company has moved most of its headquarters of its other businesses from the U.S.A. to other foreign countries.