General Electric's Joint Ventures Case Study

In: Business and Management

Submitted By henningsarah13
Words 1109
Pages 5
General Electric’s Joint Ventures
Sarah Henning
Marian University - International Business (BUA-310)

Abstract
This paper will examine GE’s international business and look at their preferred entry modes into foreign countries. It will examine the pros and cons of acquisitions, Greenfield ventures, and joint ventures. The paper will look at GE transition from one entry method to another.

General Electric’s Joint Ventures General Electric used to prefer acquisitions or Greenfield venture as an entry mode rather than joint ventures. While joint ventures offer firms the opportunity to share costs and risks it also gives joint control to both partners. Joint ventures have many significant disadvantages. General Electric when entering into a joint venture risks giving control of its technology to its partners. They also would not have as tight of control over their subsidiaries that it might need to realize experience curve or locations economics. Finally shared ownership arrangements can lead to conflicts and battles for control between the investing firms if their goal and objective change over time, or if they take different views to what the venture’s strategy should be. GE has found that as much as it would like majority ownership, or even a 50/50 split, sometimes it has to settle for a minority stake to gain access to a foreign market. (Hill, 2006, p. 441) There are three major benefits to Acquisitions. Acquisitions are quick and in many cases the firm makes an acquisition to preempt their competitors. Finally managers believe acquisitions are less than Greenfield ventures. The biggest advantage of establish a Greenfield venture in a foreign country is that it gives the firm a much greater ability to build the kind of subsidiary a company many want. General Electric preferred the use…...

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