Essay about General Electric Case Analysis

Joint ventures (JV) are a popular method of foreign market entry because they theoretically provide a way to join complementary skills and know-how, as well as a way for the foreign firm to gain an insider’s perspective on the foreign market. Since China began its market opening in 1978, joint ventures have been the most commonly used form of foreign direct investment (FDI), with about 70% of FDI in China in the 1980s and 1990s taking the form of joint ventures (Qui, 2005, p. 47). The Chinese company, as well as the foreign investor, has since 1978 been drawn to the joint venture form. Walsh, Wang & Xin (1999) note that from the Chinese

The foreign partner can also become a competitor by selling its production in places where the parental company is already in.

A foreign investor may enter into a joint venture by combining with a national of a host country to create a new entity or by acquiring a portion of an existing local entity.

Black & Decker Corporation is a corporation based in Towson, Maryland, United States, that designs and imports power tools and accessories, hardware and home improvement products, and technology based fastening systems.

Joint Ventures (JV)- an agreement under which two or more partners own or control a business.

Joint venture can help Saudi Group in diversifying its business activities. Milton R. Stewart; Ryan D. Maughn (2011) pointed out “Efficient and cost effective ways to enter foreign markets that allow companies to share risks and exploit synergies with partner companies continue to drive businesses toward international joint ventures, it can provide access to unique business opportunities and new geographic markets that may not otherwise be available, especially to smaller and medium sized businesses”. Business diversification can avoid Saudi Group depends on profit contribution from local business activities only, profit from international entry can help in expanding the local business activities. Joint venture is able to resolve both long and short-term problem and effectively deal with the weaknesses and thread of Saudi

Haspeslagh and Jemison (1987), argue that what determines the success of a acquisition is not the actual purchase itself, but the development of the acquisition strategy the supports. Unfortunately, many executives face the acquisitions as an end, not a means to achieve that end. According to this author, the acquisition is only one strategy business growth. There are others as internal growth, joint venture, partnership, franchise and strategic alliance. All should be evaluated by the company before implementing a business development strategy. A proper analysis of the acquisition goes beyond the study's own candidate company. It must include a contribution from the analysis of potential acquisition for the strategic development, as well as

International joint ventures is an overseas business owned and controlled by two or more partners; starting such a venture is often as an entry strategy (Deresky, H. 2014.p.377), while joint ventures refers to an independent entity jointly created and owned by two or more parent company.

First off, the profits monetarily is by far the most obvious factor. Multinational corporations can create unique partnerships that allow for global investments of which were not obtainable for a long time due to the costs and difficulties. An excellent example is the agreement between the Walgreens Company & Alliance Boots in 2015 (1). With this merger, Walgreens has a foot in the European market and has boosted their profits significantly by 14.4% ($1.4 Billion Net Earnings reported in 2nd Quarter of 2016) (2).

The lesson learned from this is that sometimes it is easier and faster reach a new market via joint venture, even though the profit will be less, but the company can save a lot of money in studying the new market trying to understand the new culture and how they purchase and also it can minimize the risk because there is a national brand supporting the new international brand, which gives confidence and security to the customers.

General Electric’s lack of knowledge within foreign markets, because it is unfamiliar with the territory and the business structure, is decreased when the company uses a joint venture. The use of a joint venture in this case decreases the financial and economic risk by not putting so much pressure on General Electric if the company isn’t as successful as General Electric would hope that it could be. A joint venture can be the easiest option when entering into a new market because it allows General Electric to join forces with a company that is already established within the foreign market that General Electric is trying to enter, bringing some knowledge and experience of the foreign market to the table. I think that the global economic crisis of 2008-2009 does have an impact on General Electric’s preference to use joint ventures instead of continuing to use acquisitions or greenfield ventures. The global economic crisis of 2008-2009 may have been an eye opener for General Electric making the company realize that at any point in time the companies that General Electric have put so much time and money into can run into financial problems that could potentially destroy General Electric altogether. Had General Electric

It is because through the joint venture, the company is more familiar with the situation of the company there. The negative outcome is that the management system different between the company. So it is hard to make a decision making. It is because there is different opinion of each person.

Shimano is a manufacturer of mechanical bike components for mid- to high-end road bikes. They do not make frames and they do not sell directly to customers via retail stores, but rather to bike manufacturers that want to use Shimano’s components. They have been, by far, the leader in their industry for years. They netted around a 14 percent profit margin, dwarfing that of almost all bike manufacturers, and did so using their many competitive advantages over rivaling brands.

Doing these acquisitions at some certain stages were important to diversify GE technologies and maximize its market share (Immelt, 2005), however, the balancing between growing organically by empowering the company from within and acquiring some companies is even more important for setting up the company directions. Since more than half of the company revenue is derived from its financial services (Company Data 2008), this brings the argument onto the table about the nature of the company making it a financial company with a manufacturing arm.

Joint ventures have further benefits. Joint ventures are based on sharing individual ability and resources for the purpose of achieving a mutually beneficial objective. Sony gains access to Ericsson’s market share and their network of infrastructure and handset technology. Ericsson can acquire Sony's experience on consumer electronics, fashionable designs and production processes. Hence, the joint venture overcomes Sony's low market share and strengthens Ericsson's ability of research and product development. Thus joint ventures resolve the opportunism issue with OEM, licensing and franchising.