General Electrics Joint Ventures - Case Study Example

Furthermore, in the process of being a ‘wholly owned subsidiary’, GE can freely engage itself with strategic alliances (499, 504). Back then, one of the possible reasons why GE stayed away from joint venture agreement is the fear of losing some of its technological know-how to its business partner. For many years, GE has been accustomed of having full control over its business operations. In the process of entering into joint-venture agreement with a local automobile manufacturer in China, GE will have to be forced to share control with its business partner. Q.2 Why do you think that GE has come to prefer joint ventures in recent years?

Do you think that the global economic crisis of 2008 and 2009 might have affected this preference in any way? If so, how? In recent years, GE has come to prefer joint ventures over ‘wholly owned subsidiary’. Basically, it is possible that the global economic crisis in 2008 and 2009 has something to with GE’s decision to enter into joint venture agreements. One of the common problems that most business experiences in the host country is related to the differences in political system, culture, language, and business practices (497).

Because of these differences, there is a strong risk wherein foreign companies could fail to satisfy the specific needs and wants of its target customers. Eventually, this increases the risks of business failure. GE decided to enter into joint venture with the state-owned Shanghai Automotive Industry Corporation (SAIC) in China (484). Aside from making it easier to penetrate the market of the host country, joint venture enabled GE to effectively reduce the risks of losing large sum of money in case of business failure.

When it comes to huge investment on R&D, GE could share the research costs with its business partner (497). Since the local business partner is more aware of the local