General Electric Case Analysis Essay

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Case Discussion Questions

1. GE used to prefer acquisitions or Greenfield ventures as an entry mode rather than joint ventures. Why do you think this was the case?
According to our textbook, a firm can establish a wholly owned subsidiary in a country by building a subsidiary from the ground up, the so-called Greenfield strategy, or by acquiring an enterprise in the target market. Acquisitions have three major points in their favor. First, they are quick to execute. By acquiring an established enterprise, a firm can rapidly build its presence in the target foreign market. Second, in many cases firms make acquisitions to preempt their competitors. Third, managers may believe acquisitions to be less risky than Greenfield ventures. When …show more content…
Is there any way for GE to reduce these risks?

First, as with licensing, a firm that enters into a joint venture risks giving control of its technology to its partner. However, joint-venture agreements can be constructed to minimize this risk. One option is to hold majority ownership in the venture. This allows the dominant partner to exercise greater control over its technology. But it can be difficult to find a foreign partner who is willing to settle for minority ownership and GE’s agreements normally give even the minority partner in a joint venture veto power over major strategic decisions, and control issues can scuttle some ventures. However, another option is to “wall off” from a partner technology that is central to the core competence of the firm, while sharing other technology.

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 example, opportunistically taking advantage of a partner, how might this impact the company going forward? According to the text, GE is well known for its innovative management techniques and excellent management development programs. Many partners are only too happy to team up with GE to get access to this know-how. The likely benefits of this reputation to GE is that the company builds trust in the market, and looking like an attractive partner which GE can then access knowledge
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