General Electric's business operations and growth strategy in India

General Electric in India

Recent economic figures point to the tremendous growth of India as the world's popular investment hub. Foreign direct investments (FDIs) in the country have depicted a surge as investors seek opportunities in the second populous nation in the world (Mishra & Shaopeng, 2013). The country occurs as a close competitor to China, as the preferred investment hub globally. Since independence, India upholds democracy in rule and governance. In the 1970s, India occurred as a preferred hub for multinationals such as IBM. The nation is popular for providing a favorable environment for multinationals to thrive. In this paper, we analyze some macro and micro economic factors that affect the way of doing business for General Electric in India.

Legal/Political factors

Effect of Common law on GE

Historically, India has grown as one of the most preferred investment hubs for multinationals. The presence of General Electric (GE) in India dates back to 1902. GE has managed to stay afloat in the market through various projects in energy, financial services, healthcare, and transportation. India's policy on invitation and facilitation of FDIs takes either the government approval route of the automatic route. The automatic route does not need prior approval whereas governmental approval route requires approval from the Foreign Investment Promotional Board. The presence of General Electric depicts the automatic route as hundred percent ownership traces to the U.S. Law on FDIs prohibits investment in sectors of atomic energy, agriculture, betting, gambling, and lottery. GE does not participate in either of the prohibited businesses, an aspect that favors it presence in India (Noronha, 2010).

However, problems may arise with the implementation of legislation in case the government changes policies concerning the operation of FDIs in the nation. In most cases, poor drafting of new laws depicts inconsistencies thereby conflicting interpretations from the government itself. The policies released through press releases or press notes at times give conflicting interpretations of the law. For example, the element of labor legislation has depicted a challenge for GE and other FDIs. Despite the reduction in powers endowed to trade and labor unions, the nation still depicts significant cases of pro-worker legislation. Judicial systems have also depicted challenged due to the presence of archaic pleading systems. It may take long for processing of cases. Most rules in India occur as open to interpretation from authorities such as regulators amongst others.

Economic system

India portrays a market-based economic system characterized by reduced corporate taxes, relaxed restrictions, and removal of price controls. The adoption of this type of economic system favored recovery of the balance-of-payments crisis after the collapse of the Soviet Union. Economic liberalization favored FDIs in the nation with GE capitalizing on the chance to venture into other business and facilitate expandability (Mishra & Shaopeng, 2013). Liberalization has encouraged an increase in the utilization of GE's goods and services.

Recently, GE has endeavored to strengthen and bolster its business relationship with India with more investments in the 'Make In India' initiative (Panchal, 2015). The company realizes the need to capitalize on favorable economic liberalization factors to spur growth and development. India's economic system promises to give GE a favorable environment for business as the key player in Asia's growth. The absence of government interventions through license quotas, industry subsidizations, and license quotas bring immense contributions to the business growth of the nation.

Competition (domestic and foreign)

Despite GE's early presence in India, stiff competition has risen from other companies, domestic and foreign. The diversity in operations of GE has accumulated several competitors in various fields of interest of the company. For example, stiff competition in the field of financial services explains the presence of domestic companies such as SBI Capital Markets Limited and Bajaj Capital Limited. Multinational such as Siemens and Phillips pose significant competition to GE. The presence of a conducive business environment has resulted in the significant competition in the country.

Geography

India's geographical location has favored FDIs in the post-liberalization period. Additionally, the nation's time zone favors conducting business with other countries on different time zones. During working hours, GE can communicate with Americans at the end of the day, afternoon for Europeans, and morning hours for Australians (Manian, 2011). Eight hours a day enables GE to accomplish business with other nations spanned on different geographical locations. India depicts outstanding favorability in transport logistics as it borders several Asian nations including Pakistan, China, and Bangladesh. India's vast coastline plays a significant role in the nation supply-chain model. The factors have enabled GE to thrive having to capitalize on the significance of the difference in time zones and the strategic geographical location.