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General Electric's Joint Ventures

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Palmira Da Silva

on 19 September 2014

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Transcript of General Electric's Joint Ventures

General Electric's Joint Ventures
Question 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 2008-2009 might have affected this preference in any way? If so, how?
Lower risk and costs
Linking local companies gaining valuable knowledge of the local market
Easiest route in countries where local laws prohibit other types of entry modes
Economic crisis could play a role in future investment decisions by GE
Shared cost and risk implied by joint ventures may be attractive to GE in troubled economic times
Question 1
GE used to prefer acquisitions or greenfield ventures as an entry mode rather than joint ventures. Why was this the case?
Their prevailing philosophy was that if GE did not have full control over the company they acquired, the deal was not done.
They wanted majority ownership
Question 4
The case mentions that GE has a well-earned reputation for being a good partner. What are the likely benefits of this reputation to GE? If GE were to tarnish its reputation by, for e.g, opportunistically taking advantage of a partner, how might this impact the company going forward?
GE's positive reputation makes for a friendly partnership with other companies
GE's innovative management techniques and strong management development program make them attractive as a partner company
The knowledge flow goes both ways as GE acquires knowledge on the local markets in return
Boosts Productivity and influences overall growth
Question 3
What are the risks that GE must assume when it enters into a joint venture? Is there any way for GE to reduce these risks?
Risks-
Paying too much
Employee colluding with the people
Misusing either party's confidential information
Waste your time
Lose money
Let go of important technology
Gain nothing of significance in return
Squander your credibility
Risk Management-
Contracts are clear
Compromise the ability of the agency
Conducting a corruption risk assessment
Control
Overview of General Electric's
General Electric (GE) is an American multinational conglomerate corporation incorporated in New York and headquartered in Fairfield, Connecticut.
The company operates in the following Industries: Energy [2013 inactive], Technology Infrastructure, Capital Finance as well as Consumer and Industrial.
General Electric was formed by the 1892 merger of Edison General Electric Company of Schenectady, New York, and Thomson-Houston Electric Company of Lynn, Massachusetts, with the help of Drexel, Morgan & Co
The case study outlines why GE went from preferring acquisitons or greenfield ventures to preferring joint ventures when entering a foreign market.
Question 5
In addition to its reputation for being a good partner, what other assets do you think GE brings to the table that make it an attractive joint-venture partner?
Innovation management techniques
Excellent management development programs
Access to knowledge
Boosts productivity
Impact of a tarnished reputation

GE will find difficulty in finding willing partners in the future
A tarnished reputation could be detrimental to the firms future growth
Profits will decline over time
GE might have to re-strategize themselves in order to gain favour in the markets they have targeted
Introduction

Palmira da Silva 23123583
Tapiwa Chitongo 25233750
Keletso Kau 24126489

Presenting case study week 8 - General Electric's Joint Ventures
Video
Conclusion
Questions Time
1) Name one industry that General Electric's operates in?

2) What are the benefits of participating in a joint venture?

3) What are the risks a company can go through when partaking in a joint venture?

Even though joint ventures are generally small projects, major corporations also use this method in order to diversify (e.g General Electric)
Since money is involved in a joint venture, it is necessary to have a strategic plan in place, so both parties must be committed to focusing on the future of the partnership, rather than just the immediate returns
Ultimately, short term and long term successes are both important. in order to achieve this success honesty, integrity, and communication within the joint venture are necessary
Full transcript