Globalization at General Electric - Essay Example

Globalization at General Electric Introduction Sustainability of international business is different from other businesses that focus on the local ordomestic market. Although both international business deals with the same problems, international businesses have, more difficulties related to marketing and sustainability. From the given case study, general electric company was experiencing difficulties relating to globalization. The company deals with array of electric items ranging from electric generators to medical equipments. The company has annual revenue of $180 in the domestic market (Hill, 2011). However, the company’s management is determined to increase the company’s annual revenue by venturing into the international market. The CEO of the company is considering different marketing options that the company can launch its products. Currently the CEO is considering Latin American market and the European markets. If the company launches its products through these markets, it will encounter current market situations as its major problem. For instance, the European market was the worst hit by the international financial crisis. On the other hand, the Latin American market is a developing economy that has not yet reached its stability. This indicates that if the company ventures into either of the markets, it will encounter the current problems experienced in the market. In addition, the products of the company may not fit appropriately in the proposed market. The international market condition and economic forces (Hirschey, 2009) bind the choice for appropriate market. For instance, the company is facing stiff competition arising from the rapid expansion of Chinese and Indian economies. Currently the Asian economies are at their peak and, therefore they have high demand for infrastructures products. On the other hand, the European markets have reached their levels of stability thus making lifestyle commodities the main trade items. Balancing the needs of every economy is the main problem been experienced in the company. GE has aggressively invested in international expansion due to its needs revenue sustainability and market requirements. In addition, the company is targeting to increase its customer base and benefit of large-scale operations. For the company to reach its revenue targets, it requires exploiting the opportunities in the international market as an element of sustainable growth. Although America has a vast economy, the company is willing and ready to face challenges that are related to the international market. Currently the company has a variety of market conditions from the selected markets. If the company launches its products objectively, it is likely to achieve the economic benefits in each of the selected markets. For instance, the company is expecting an extended market for infrastructural products such as heavy-duty generators and jet engines. On the other hand, the company is expecting to compete favorably with other manufacturers who are currently targeting the European market. Successful global business not only requires a company to sell or distribute its products in the selected markets, but also creates sustainable business and trade links. This requires the need for companies to set up international marketing units and where possible set up trading links with the acquired markets. Establishing marketing units in the selected markets is a major challenge in international markets since the company has to adopt the current market situation and personnel. In addition, successful international business may require the company to set up production units in the selected markets. For the company to set up production units in the selected markets, it requires to utilize the market situations in the selected countries. Setting up production units in the selected markets is the main strategy that the company can use to be as close as possible with its customers. The company has considered selecting and empowering its international delegation to boost its international interest and domination. For instance in 2008 the company moved its headquarters to London as a strategy to capitalize on the European market (Hill, 2011). In addition, the company is considering empowering its managers in the field as a strategy to raise its international influence. During this implementation, the company faced challenges relating to staff recruitment particularly recruiting senior management staff. The following list contains the current problems facing GE business in their order of priority. Identified problems Venturing into Asian and Latin American markets Dynamic market needs Setting production units in the target markets Recruiting sales and market representatives Achieving sustainable markets and production Setting a state of monopoly in the renewable energy sector Achieving considerable control of the communication industry From the identified problems, the company would be well of if it solved them according to their in order of priority. In addition, the company needs to set up a rationale that will guide it through the problems. Secondly, the problem needs to utilize solution across the different problems. Thus, the company needs to utilize solutions across different problems according to their order of priorities. Venturing into the Asian and Latin American market would be a giant step for the company. This is because these two markets have diverse opportunities and hence attractive to global investors. This indicates the need for fast and timely action in order for the company to secure its place in the emerging markets. Other problems such as setting of marketing and production units will come out as opportunistic problems. Successful business in the selected markets will therefore become a complete solution for the opportunistic problems. However, the company has the opportunity of addressing the problems independently. Problems arising from the needs to set up production units in the selected markets can be solved though mergers and takeovers. It would be easier for the company to set its business on already established business instead of starting fresh businesses. This approach will enable the company to utilize already established business channels and market. In addition, the company will benefit from reduced tariffs and the already established customer base. Collaborating with other established businesses will also enable the company lower the cost of hiring and maintaining new members of staff particularly the management team. The Chinese markets will provide diverse opportunities for the company to merge or collaborate with other technology manufactures. GE is also likely to benefit from the current wave of attracting foreign investors in developing economies. The company will benefit from reduced tariff rates and business support. However, support from the government can only be considered as an alternative solution to the problems of establishing new businesses in the selected markets. Although most problems affecting international market are market oriented, the company faces design related problems arising from the dynamic nature of the market and changing trends. The technology Industry is the most affected by problems that are related to design due to energy constraints and policies. Rapid technological advancements have also contributed to the factors related to design and cost effective production mechanism. The company is considering investing in research as the basic solution to the problems related to design and management of production cost. Investing in intensive research will enable the company to achieve effective competitiveness in the international market. For instance, the company faces stiff competition from Chinese companies that produces similar or related products. For example, GE produces MRI scanners that sell at $ 1.5 million. On the other hand, a Chinese company producing similar product is able to offer the product at a market price of about $ 500,000. Although both products have similar levels of performance, they have great disparity in terms of cost. The company will therefore achieve a competitive advantage in the market if it invests in intensive and extensive research. Intensive research will enable the company to search for measures that will enable it lower its production cost in order to achieve effective competitiveness over its rival companies. The company is considering shifting its research activities oversees as a strategy of exploiting international business opportunities. The company’s CEO has selected Munich and shanghai as the target market research centers for the company. Other targeted regions include the Indian city of Bangalore. The company hopes to achieve production designs that best fits the identified markets. International business not only faces problems related to products and sales promotion, but those riled to management. Currently GE is controlled from its head office in the USA. However, its international ambitions require the company to set up management and control centers in the regions of interest. This indicates that the company needs to consider cultural differences across the selected markets. For instance, the company needs to consider viability of its business in the Chinese and Latin American markets. Issues of language would also be a major challenge for the company. To solve these problems, the company needs to corroborate with experts from the identified markets. The situation might be a bit tricky in the Chinese market, which relies on Chinese as their main language of communication. Although the basic solutions are the most appropriate the company needs to consider the suitability of alternative solutions. When hiring the new employees the company needs to consider Hofstede’s cultural dimension in order to determine the right employees for the available positions. The company will achieve this strategy by comparing the local community with possible staff from other countries. The power of distance is the first important dimensions that the company should consider. The power of distance is the difference that exists between people due to their position. The power of distance therefore determines the relationship between the superiors of the company and the subordinates in the company. Most European societies have high level of power of distance, which creates a distance between superiors and subordinates in a company. Businesses set in Europe should therefore have Europeans as senior management staff and workers from other countries as junior staff. Alternative solutions are unlikely to achieve or provide more sustainable solutions to the problems affecting the business. In addition, alternative solutions are less likely to attract opposition that may arise or affect direct solutions. The most appropriate alternative solution would be dependent on technology. Currently most of the possible solutions been considered for the business are related to the establishment of physical businesses. However, the company should explore the suitability of e-business. If the company implements e-business through information technology, then it can rely on its current personnel and business infrastructures. E-business will also enable the company to explore other markets beyond its target market. Establishment of e-business will also enable the company to solve the arising management puzzle due to possibility of central control from GE headquarters in the US. In addition, successful e-business will enable the company to solve or lower its operation costs through a reduction of its staff maintenance fees. Reduction in management and marketing cost will be replicated as reduced cost of operation. This will enable the company to achieve the desired levels of reduced operation costs. Reduced operation cost will be realized through cost effective mechanisms or methods that the company will employ in order to reach the targeted market (Lawrence, Weber, Post, 2005). Reaching the targeted markets or the ability of the company to explore the target market is the most appropriate strategy that the company should employ to achieve considerable levels of competitiveness. Although production and design options are instrumental to business, the company would be most effective if it increases its effectiveness in the market place. This is because the competitive advantage of a business is more dependent on its marketing principles and strategies. The company’s ability to control the market will enable its management to utilize other recourses that arises from diversified market options. In this case, diversified marketing option will be reflected in both management and the production unit of the company. For instance, the company would be able to achieve a high degree of management through its integrated management system. The company’s ability to attract a large market will also enable the company to benefit from economies of scale. This will be possible due to availability of large market for the company’s products. On the other hand, the company will be able to achieve a state of monopoly resulting from its intensive and aggressive marketing activities. This will enable the company to lower its marketing and sales promotion cost to a considerable amount. The GE business demonstrates a clear example of an ideal modern business. The need for international expansion is a significant aspect of modern business. Most businesses in the current business environment have international ambitions (Greiner, 2007). However, most businesses face generic issues that affect international business. Problems related to international business include issues related to marketing and production. Management issues are also evident in modern businesses. Other than management and marketing issues, modern businesses are faced with problems related to the choice of perfect market according to the current global business situation. Currently global business faces various challenges relating to choice and selection of appropriate market place. Emergence of south East Asian economies such as china and India has affected market trends and global business. In addition, the anticipated decline of European and American economies has also affected pattern for international business (Hirshleifer, Glazer, & Hirshleifer, 2005). Most companies are considerate about their existence and the outcomes of the current market stratification. The choice for American, European or Asian market is dependent on the current and future prospect of the company. Currently America and European markets have strong economies and hence they provide basic market to the company. However, there is a considerable shift in market and investment from the west to east. This requires companies or businesses to be considerate about their future and current business opportunities. Although European and American markets have the most attractive business environment, the Asian markets are considered as the most sustainable (Greiner, 2007). This is the main factor that has contributed the rise of international business and shift of markets from west to east. In addition, governments and other business controllers in this region have diversity in their attitude towards investments and foreign investors. It is evident that the Chinese and Indian economies prefer international investment compared to other countries. Conclusion GE is an established business that has global ambition. Although the business has a well-established local market, the company is considering setting up businesses in the international market. Target locations include China, India and Latin amerce. The proposed market has great disparity compared to its current business environment. For the company to launch its products effectively, it needs to work on the current challenges through direct or alternative solutions. Direct solution to the problems will include setting up production and marketing units in the identified markets. This will be achieved through direct involvement of the company and recruitment of personnel. Although direct solution provides an immediate response to the current problems, they are costly and hence risky. Therefore, the company should consider application of technology though e marketing as alternative business solutions. References Greiner, E. (2007). Evolution and revolution as organizations grow. Harvard Business Review. July-August, 37-47 Hirshleifer, J. Glazer, A. & Hirshleifer, D. (2005). Price theory and applications: Decisions, markets, and information. London: Cambridge University Press. Hirschey, M. (2009). Fundamentals of Managerial Economics 9th Ed. Boulevard: Cengage Learning. Hill, C., (2011). International business: Competing in the global marketplace. (8th ed.). New York: Irwin/McGraw-Hill.  Lawrence, A. T., Weber, J., Post, J. E. (2005). Business and society: Stakeholders, ethics, public policy. 11th Edition. Boston: McGraw-Hill, Irwin. Read More