General Electric's foreign expansion strategy and global headquarters relocation

Globalization at General Electric: Discussion Questions and Corporate Profile

Case Discussion Questions

GE has invested very aggressively in the foreign expansion of its company. There are several reasons why the company would do that. Among those reasons is the attempt to exploit opportunities in various countries that were or are having financial difficulties (Carlson, 1991). When the Asian Crisis hit, GE invested in Asia. When Europe was struggling, GE invested there, because it was a good financial move.

This appears to be a pattern with GE, which is actually a very smart way for a company to get more international influence and attention. Foreign expansion was considered by GE originally, because it saw an opportunity to get into the market in other countries, and it was able to do it at discounted rates. That was very important to GE, because the less money it spent on getting into the global market the more money it would have available for infrastructure, the hiring of employees, and the securing of even more areas in the U.S. And across the world where its products could be manufactured and sold (Fairly, 2005).

Some may see GE as greedy, but really it is a company that is very smart about how it expands and what it has to offer to everyone. Because it makes so many different products, and because it is selling those products to a wider audience in more parts of the world, it needs to expand its company holdings beyond the United States (Carlson, 1991). It can be more difficult to keep track of things in other countries when all of the headquarters are in the U.S., also, so GE decided to make another bold move by establishing the headquarters of some of its divisions in different parts of the world.

If a company division was very involved in selling to Europe, for example, its headquarters were moved to London. Asian divisions were moved to Asian countries, and GE had the opportunity to reach out to more customers. It only makes sense to have a particular division located where it will do the most good for the most people and generate the most sales for the company.

2. GE is moving many of its global business headquarters to foreign locations (Mahon, 1990). These moves are greatly benefitting the overseas locations, but they can also benefit the United States. Foreign location benefits are relatively obvious. Some foreign countries are struggling with lowered wages and other economic issues. When companies like GE move into those kinds of countries, they are much more likely to help the countries improve their economies, because they have a lot to offer that other companies in that country might not have available.

In other words, they have the operating capital and other economic boost that is needed by developing countries or countries where the economy is currently weak. GE can also boost a country's economy by hiring many of its citizens to work for the GE division that has moved into that area. That will allow people who need good-paying work to get involved with a company that will treat them fairly.

For the United States, GE's moves into foreign countries can also be beneficial. More U.S. people will buy from a large, trusted company than from a company that they are unfamiliar with. The bigger name GE makes for itself, the better chance it has of making sales. Additionally, when certain divisions are moved to an overseas location, the divisions that remain in the U.S. can become the focus.

There is less stress, because the people who are running and working for the U.S. divisions have less on which they must focus (Carlson, 1991). They are not being pulled in every direction because there is simply too much with which to keep up. When that takes place, it allows the U.S. divisions of GE to prosper, and allows the people who work for the company to prosper, as well. That is highly beneficial to the U.S. And to any foreign countries in which GE has taken an interest. Overall, it is beneficial for everyone.

3. Internationalizing the ranks of senior management is something very important for GE (Carlson, 1991). This is done in order to make GE a truly global company and help it operate more easily in the sense that cultural and regional differences can be better understood. In other words, culture matters to GE, and when there is an international mix of people in the senior levels of management there is very little concern that one culture is being favored, ignored, or misunderstood.

Cultural misunderstandings are easy to come by, especially when there are many people working together, or when a large group of people get together and attempt to decide what would be best for groups of people who may be very different from them (Haney, 1944; Hammond, 1941). With that being the case, it is better to have a good mix of cultures, so that misunderstandings about a particular culture can be diffused and people can learn more about the people who are the main customers of a company like GE.

In the past, GE was mostly run by middle-aged, white, American men (Carlson, 1991). Over time, that has changed - and the diversity that it has created has been one of the best things GE could have ever done to help itself improve as a company. The reason why this is so significant ties in with the global expansion and large international presence of the company. In other words, if GE is interested in working internationally or globally, it is vital that the cultures with which GE will be doing business be represented by the senior management of the company (Carlson, 1991).

That helps GE stay on the right track with offerings and negotiations, but it also shows customers and potential customers that GE is interested in more than just making sales. GE wants to help customers get what they need, and that is difficult to do if the company does not understand the customers. By having a clear idea of what customers need based on their desires and their cultural attitudes, new and better products can be created, and these products can also be offered to customers in a way that they will accept and appreciate, which is beneficial to the company.

4. True global business can be seen in the GE example, because having a global business is more than just having a company with a U.S. location that is willing to sell its goods or services to people and companies in other countries (Carlson, 1991). That is certainly a start, and it is the level where most companies begin to go global. However, companies that remain at that level are at a distinct disadvantage when it comes to getting more accomplished and taking their business to the next level. A truly global business is about the customers, and about their cultures (Carlson, 1991; GE, 2008).

Companies that are interested in competing in a global marketplace, and that are interested in growing their market share in international settings, must be aware of the differences between their home culture and the cultures of others. It all comes down to communication, which is easier when a company has a presence in a particular country. By moving its division headquarters to different places around the globe, GE has shown that it is deeply committed to having a true global and international business of which it can be proud (GE, 2008; Jeff, n.d).

It is not realistic for GE to have a presence in every country, or for the company to understand the nuances of every culture. It is important, though, to show that it is trying - as a company - to understand all of its customers and to provide those customers with what they really need from a company with which they do business. When they find a business like GE, which is committed to understanding and working with them, they will be more likely to buy from that business.

That is true even if they have to wait longer for the product or pay a higher price for what they are getting. By communicating with customers and by moving its division headquarters to a place where that division is most frequently needed, the dedication shows to the customers, and GE is better able to meet the needs of those customers for a price that they will be happy with and in a way that shows the company actually cares about the products it offers and the people who buy from it.

Corporate Profile

Company name/corporate headquarters location

The company profiled here is General Electric Company, commonly known as General Electric or GE. It is not to be confused with the British company of the same name. It has division headquarters in various places around the globe, but its main corporate headquarters are in Fairfield, Connecticut, United States (Carlson, 1991).

Company size (number of employees)

As of 2010, GE had 287,000 employees. This can fluctuate slightly with the economy and with new products that are created and must be launched, but the company is relatively stable in that it generally has a similar level of employees on hand in any given month or year and has had that level of employees since it has recently grown. It is likely that number will continue to rise.

Description of products/services

General Electric Company makes appliances, but they also offer aviation products, electronics for consumer use, electric motors, parts for electrical distribution, energy components and solutions, entertainment products, financial options, healthcare choices, gas solutions, lighting, locomotives and locomotive parts, oil solutions, software, water solutions, weapons, and wind turbines.

It is very easy to see that GE is committed to making many different kinds of products and getting involved in many different types of products and services. Despite its many offerings, it is committed to being ranked first or second in everything that it offers, so that its standards are always high and the company always gives the customer what he or she needs in order to be satisfied with the interaction with the company (Carlson, 1991). GE did not always offer so many things, but it has moved from one product into other products with speed and assurance, and left many of its competitors behind. In the beginning, GE focused on only a few select product areas (Mill, 1947; Woodbury, 1944; Thomas, n.d.). It soon became apparent that the way to go was to expand into more offerings, however, which was a business strategy that has served GE well.

Description of marketing activities

Marketing is something in which GE has always been heavily involved (Carlson, 1991). There were many marketing attempts by GE in the past in the United States, and now the marketing is moving more toward Europe and Asia. That does not mean that GE does not want to continue to sell to Americans, but only that the General Electric brand is more established in the United States. Less marketing is necessary to keep the company fresh in the minds of consumers, because just about everyone in the United States has heard of GE, knows what the company has to offer, and sees it as a quality brand.

In countries where GE has not been as well-established and where people are not as familiar with the brand, it is necessary for GE to market more aggressively (Carlson, 1991). Their activities can include everything from TV ads to Internet and radio advertisements, as well as print media. Because there are so many different options for GE and the world is the company's oyster at the moment, there is a need to continue to spread out into more countries and provide more customers with quality goods and services. It is important for customers to have choices, and GE is helping to provide that.

Where the company advertises and promotes its products/services

Right now, the company advertises through all different kinds of media. Since GE offers such a wide range of products and services, the company understands that not all of its customers will be acquired in the same way. Where some businesses have to focus on a narrow target market for a niche product, GE is concentrating on a wide target market, or many smaller market segments that can be rolled into one. The picture of the GE consumer is far different than the consumers of some other companies, simply because GE has so many services and products from which a person can choose.

Some people who buy GE products may love to watch TV, and others are more interested in the radio, the Internet, or magazines. By understanding how consumers get their information about a particular kind of product or service, GE can focus on what the customers need and want, instead of wasting time, effort, and money offering goods and services to a wide array of people who may not be interested in those things. It is not necessarily easy to have so many small target markets, but GE is large enough that it can afford marketing gurus who will look through the product and service offerings, study the market, and come up with suggestions for marketing campaigns that will work for GE based on what the company is trying to sell and who would be most interested.

History of the company

General Electric Company was founded in 1892 by Thomas Edison, Edwin Houston, Elihu Thomson, and Charles Coffin (Carlson, 1991). It was actually the merger of two companies, as there was Edison General Electric and Thomson-Houston Electric Company (Carlson, 1991). When those two companies merged, General Electric Company was born. The two plants that were open at that time (one for each of the companies that merged) are still open, and they both carry the GE banner. That is perseverance and commitment. A Canadian counterpart was formed at nearly the same time as GE, which was incorporated in Schenectady, New York and was headquartered there for quite some time before the headquarters were eventually moved to their present location of Fairfield, Connecticut (Carlson, 1991).

What are the major events in its history and when did they occur

GE has had a rich history. There have been major events - both good and bad - in its past, which are represented here.

1896 - General Electric became part of the Dow Jones Industrial Average.

1935 - The first garbage disposal was marketed by GE.

1942 - GE develops the first American jet engine.

1962 - A GE scientist named Bob Hall invents the solid state laser.

1970 - The GE computer systems division was sold to Honeywell.

1996 - MSNBC is formed, in order to compete with Cable News Network (CNN).

2000 - GE does away with the Montgomery Ward brand, due to a decline in sales.

2001 - NBC acquires Telemundo, a leading Spanish language network.

2006 - GE Healthcare acquires IDX Systems, a medical software firm.

2011 - GE sells NBC Universal to Comcast, but still owns 48% of the Venture.

This timeline is largely just a sampling, because there are so many significant events that GE has been through over the years. They have made the company stronger, and there have been surprisingly few setbacks. All companies have setbacks at times, but GE has had fewer of them than most companies its size. This is partially because of a good business strategy from the beginning, but also partially because GE reacts quickly when it sees that there is a problem. Reacting quickly means that GE can also recover more quickly, which is vital to any company that wants to continue to succeed.