Your contribution can guide someone’s learning journey. Share your
documents today.
Running head: MODULE REPORT GENERAL ELECTRIC GE BRAZIL1 Managing Governmental Relations, Political Risk, and Alliances Student’s Name Institutional Affiliation Date of Submission
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
MODULE REPORT GENERAL ELECTRIC GE BRAZIL2 Managing Governmental Relations, Political Risk, and Alliances Introduction The company, General Electric GE, intends to apply appropriate strategies towards responding to external and internal factors that affect the business. Such factors are identified using PESTLE analysis of General Electric GE. The analysis will determine the macro and micro industrial environments in relation to business operations under gas and oil, electric lighting, and energy among others. Otherwise, this strategic management analysis must consider government relations, political risks, and alliances in relation to operations and micro/macro-environmental factors (Luthans & Doh, 2018, pg. 30). The general implications of government relations, political risks, and alliances will then be addressed while ensuring that industry-specific impacts are accounted for. However, addressing the identified factor will need consideration of the General Electric GE’s intensive growth and competitive strategies to encourage strategic alignment. Those alignments are important in terms of maintaining the position of the company and becoming an influencer (Bruha, 2014). Risk Assessment and Management Political Risks and Government Relations Assessment a)Political Situation Until recently, Brazil has been considered as one of the biggest general electric markets in South America. However, with preceding incidences involving the bid for the impeachment of her president and other political activities causing uncertainties, the country has sunk and is still predicted by investors to sink into what analyst’s term as “the worst recession” within a 25-year
MODULE REPORT GENERAL ELECTRIC GE BRAZIL3 period of business confidentiality. According to one journalist, Ammann, of Estado de S. Paulo, natives are hoping to witness economic and political advances within the next few months or investors and multinational corporations would consider “re-evaluating” their operations in the country (Mercosur, 2004). A company like General Electric GE, for instance, has invested approximately $1.62 billion in the last two years alone (i.e. in technology and new products) and prospectively, would see them to 2020. However, such recessions have badly hit the industry making production to drop to 28% and sales by 32% (Camargo & Mendes, 2013, pg. 522). b)Government Alliances and Relations With an unstable political environment, most investors still recognize Brazil as a major operational base. According to the president of General Electric GE, the government is planning to make changes in their tax and fiscal policies, as well as regulatory and labor laws. However, in the meantime, they are terrible and uncompetitive. The response of the government towards such matters has also been slow with many multinational companies shifting their operations to other South American countries like Chile and Argentina (Silva, 2016, pg. 2002). Apart from that, the business culture of Brazil denotes that operations between businesses and clients be built on trust and knowing business partners personally and professionally is vital. Organizations are not required to speak about the country’s political, religious, corruption, crime, poverty, and deforestation state (Camargo & Mendes, 2013, pg. 524). In addition, natives are more fluid to the notion of time and thus, they are always late to work and operations. It, therefore, means that business processes in Brazil are longer compared to most countries while business regulations are complex. However, as mentioned before, the government is planning to make necessary changes in most business regulations (Mendes, Et al., 2013, pg. 448).
MODULE REPORT GENERAL ELECTRIC GE BRAZIL4 Political Risks and Government Relations Management i)Managing political risks General Electric GE intends to use a number of strategies to manage political risks in Brazil. Some of such strategies include: a)Business insurance plans and policies General Electric GE will reconsider its insurance plans and policies, as this is one of the most powerful ways of curbing political risks. Even though political risk at the macro level is hard to manage, the organizational level political risk could be mitigated via premiums (Mendes, Et al., 2013, pg. 451). b)Using Control Procedures The organization will be proactive to avoid politically risky situations. Therefore, the firm will employ scoring systems to evaluate any political catastrophe likely to occur. Apart from that, situations within the country that are politically risky will be evaded by proper assessments and analysis of the same (Pereira, Barroso & Rosenblatt, 2014, pg. 1017). c)Performing further research on General Electric GE’s Micro and Macro Political Risk Environment Risks at the macro or micro levels could be alleviated by thorough microenvironment research and shifting investments to other industry segments that are less risky politically (Pereira, Barroso & Rosenblatt, 2014, pg. 1018). d)Political Risks Diversification
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
MODULE REPORT GENERAL ELECTRIC GE BRAZIL5 The creation of strategic units for business optimization is vital. Risk diversification could then be done by creating strategic units in different geographical locations in the country (Silva, 2016, pg. 2001). ii)Managing cultural implications and government relations To mitigate cultural implications, the General Electric GEintends to use local business operational norms and policies in its mainstream operations. The company will also employ more native workers to deal with customer related issues and increase productivity. Apart from that, the company will employ new government regulations and tax compliance policies to avoid going into loggerheads (Bruha, 2014).
MODULE REPORT GENERAL ELECTRIC GE BRAZIL6 Reference Bruha, P. (23 July 2014). Regulatory Environment for Business in Brazil. [Online]The Brazil Business.Retrieved on 3 Nov 2018, fromhttp://thebrazilbusiness.com/article/regulatory- environment-for-business-in-brazil Camargo, I. & Mendes, D., P. (2013). “Risk Responsibility for Supply in the Brazilian Energy Market,”Proceedings of IEEE Power Engineering Society General Meeting,vol. 1, p. 520-524. Luthans, F., Doh, J. P., (2018). Globalization and Internal Linkage.International Management, 15, p. 30. Mendes, D., P., Santana, E., A. Camargo, Andrade, C., S. & Nunes, H., R., A. (2013). “Modeling issues of the Brazilian market design",Proceedings of IEEE Power Engineering Society General Meeting, vol. 1, p. 447-452. Mercosur (2004). South American Economic Organization. [Online]Encyclopedia Britannica Online. Retrieved on 3 Nov 2018, from:https://www.britannica.com/topic/Mercosur. Pereira, M., V., Barroso, L., A. & Rosenblatt, J. (2014). “Supply adequacy in the Brazilian power market,”Proceedings of IEEE Power Engineering Society General Meeting, vol. 1, p. 1016-1021. Silva, E., L. (2016). “Supply adequacy in electricity markets based on hydro systems - the Brazilian case,”Energy Policy, 34(15), p. 2001-2002.