Q1: Why do you think GE has invested so aggressively in foreign expansion? What opportunities is it trying to exploit?
GE started off with a key goal to be the “number 1 or 2 globally in every business in which it participated”. With this key goal, GE hence started invested agressively in foreign expansion. Secondly, the aggressive invement was further facilitated by the economic factors in certain foreign countries. GE was being presented with potential market share that it can possibly control. Hence, GE tried to exploit the weakness in other countries situation to penetrate the market. For instance, the economic weakness and uncertainty in Europe, Latin America and Asia. Thirdly, GE was aware of the many opportunities that are available as a result of globalisation which include diversification of business, economies of scale, cheaper production and wider array of technology, infrastructure, telecommunication and information available.
GE as a business has the aim of increasing revenue and reducing costs. Foreign expansion supports GE in achieving these. The ability to diversify the business brings about risk reduction. GE is able to tap on a bigger market with more products and services available and hence a possible increment in revenues.
With a bigger market, GE is able to produce a larger quantity, achieving economies of scale and hence a reduction of cost. The cheaper labour force available in certain foreign markets would drive down GE production costs and hence a reduction of cost for GE as a business. The technology, infrastructure, telecommunication and information available in companies that GE acquired in foreign markets provide it with additional tangible and intangbile assets that would value-add to the business.
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Q2: What is GE trying to achieve by moving some of the headquarters of its global businesses to foreign locations? How might such moves benefit its country of incorporation?
Relocation of headquarters is...