Globalization

Chapter 1 = Global Market Place Globalization at General Electric

General Electric, the company that Thomas Edison founded, and now the largest industrial conglomerate in America, produces a wide array of goods and services, from medical equipment, power generators, jet engines, and home appliances, to financial services and even television broadcasting (GE owns NBC, one of America’s big three network broadcasters). This giant company with revenues of close to $180 billion is no stranger to international business. GE has been operating and selling overseas for decades. During the tenure of legendary CEO Jack Welch, GE’s main goal was to be number 1 or 2 globally in every business in which it participated. To further this goal, Welch sanctioned an aggressive and often opportunistic foreign direct investment strategy. GE took advantage of economic weakness in Europe from 1989 to 1995 to invest $17.5 billion in the region, half of which was used to acquire some 50 companies. When the Mexican Peso collapsed in value in 1995, GE took advantage of the economic uncertainty to purchase companies through-out in Latin America. And when Asian slipped into a major economic crisis in 1997-1998 due to turmoil in the Asian currency markets, Welch urged his managers to view it as a buying opportunity. In Japan alone, the company spent $15 billion on acquisition in just six months. As a result, by the end of Welch’s tenure in 001, GE earned over 40 percent of its revenues from international sales, up from 20% in 1985. Welch’s GE, however, was still very much an American company doing business abroad. Under the leadership of his successor, Jeffery Immelt, GE seems to be intent on becoming a true global company; for one thing, international revenues continue to grow faster than domestic revenues, passing 50% of the total in 2007. This expansion is increasingly being powered by the dynamic economies of Asia, particularly India and China. GE now sells more wide-bodied jet engines to...