Analyzing GE's Global Strategy: Subsidiary Location & Implementation

This report provides a comprehensive analysis of General Electric's (GE) global strategy and implementation, focusing on the reasons for its international expansion, strategic choices available, and the rationale behind selecting a specific location for a subsidiary. It examines various strategic methods of entry into international markets and the potential consequences associated with each approach. Furthermore, the report identifies potential organizational and managerial problems that GE's subsidiary might face while operating in a new international environment and offers strategic advice to overcome these challenges. The analysis considers GE's historical performance, product/service range, market share, and competitive position to provide a holistic view of its global strategy.

GLOBAL STRATEGY AND
IMPLEMENTATION

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1. Reason for parent company international expansion..............................................................1
2. Possible strategic choice available for parent company..........................................................2
3. Reason for selecting choice of location for subsidiary............................................................4
4. Strategic method of entry and possible consequences.............................................................4
5. Potential organizational and managerial problem for subsidiary company in operating its
business in international environment.........................................................................................6
6. Strategic advice for subsidiary company to overcome problem..............................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Global strategy is company that wants to expand its business in global market to earn more
profit margin and sales volume. So, the main aim of global company is to increase sales of
goods and services across the abroad for benefits of firm. Company while planning strategies
related to international expansion, needs to make efforts to understand market situation to find
best method to meet customer’s expectancy. General electric company is American
Multinational conglomerate in New York and having its headquarter in Boston that has
segments into healthcare, digital industry and locomotive. This report has covered key
information related to reason for parent company’s international expansion, strategic choice
available to parent company, reason for selection of location for subsidiary, strategic method of
entry and possible consequence. At last it has also explained about potential organisational and
managerial problem face by subsidiary in international environment.
1. Reason for parent company international expansion
COMPANY HISTORICAL PERFORMANCE
General electric has been initially founded in 1878, by Edison Electric that sell newly
invented light bulb so that wants of the customers can be fulfilled in the best possible manner. In
December 1985, the company have reacquired the RCA for $6.28 billion thus such merger has
contributed in surpassed the capital cities. Furthermore, in 2004, it has bought 80% of Vivendi
Universal Entertainment with an motivate to earn high profit margin and growth in future
circumstances. The company was keep growing its operation, i.e, currently the firm is having
around 205000 employees and had earn revenue of US$ 75.619 billion. Moreover, as per the
statistical information the GE has been rank among 33 largest firm in United States in terms of
gross revenue earned (Peng, 2021). At the same time, it is most 14 th profitability organization
that has focused on delivering qualitative services to customers. In 2013, there were around
307,000 but in 2018 they have been reduced such as 283,000, along with it price per share has
also been decreased. Therefore, General electric in order to retained its market share in
international market has planned to expand its operation in external environment and earn high
profit margin.
Products and services
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General electric has been dealing in wide range of products and services from GE
Aviation, GE healthcare, renewable energy and power and many other services to make
customers happy and satisfied. The wide product portfolio of firm has helped in attracting and
motivating people to become parts of organisation to fulfil their respective requirements. Along
with it, there are also other subsidiaries company of GE that offers services such as GE Capital,
GE Additive, GE Digital and GE Aviation (Hadaya and Gagnon, 2017). Thus, it products and
diverse range of services has helped company in gaining and retaining competitive advantages.
Market share
The company have earned around 22 billion of US dollars in the aviation segment that
has lead in generating more sales volume and profitability. While comparing the result or profit
that has been earned by GE with its competitors, it has been find out that there had been increase
in overall profit by 2.98% by the second quarter of 2021. In addition to this, it can be stated that
the market shares or profit margin of company have decreased in comparison to previous year so
it needs to plan strategies to retained the market share and achieve the end goals.
So, from the above information, it can be said that there are numerous reasons which
enforce GE to expand its business in international market. Such as have a objective to increase
revenue, or enter into new market to add more customers in the firm. Furthermore, it helped in
expansion company in accessing the talented employees form different parts of the world so that
all task can be completed simultaneously (Hayati, Atefi and Ahearne, 2018). The parent
company i.e., GE has reason to enter into international market because it will contribute in
saving overall cost and improving the company reputation. So that millions of customers from
different geographical location are influence to have services of company in order to satisfied
their respective wants.
2. Possible strategic choice available for parent company
With globalisation and increase in competition level in external environment,
multinational company needs to plan appropriate strategy that could be used by the parent
company so that end objectives can be achieved. Multi-domestic, Global, International
and Transnational are the four strategic alternative choice or options that
are available for parent company to retained market share in external
environment (Huang. and Rust, 2017). Such as:
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1. Multi-domestic: Firm that are planning to make use of Multi-
domestic strategy focus on meeting the needs as well as requirements
of local market through customizing the products and services as per
their relative preferences. The subsidiaries company are operating
independent and autonomous from parent company so there is very
less decentralization and loss structure (Smith, 2017). Thereby, the GE
through making use of Multi- domestic strategy can easily have its
operation in different parts of the world and enjoy higher profit margin.
2. Global Strategy: On the other hand, global strategy is completely
different from multi-domestic as they emphasis on providing standard
products and services to customers across worldwide. The goals of
firm are to maximum the efficiency so that overall cost can be reduced
as much as possible. Therefore, as per global strategy, the GE parent
company will be responsible for taking all necessary decision and
other will acts as pipeline in implementing the strategies and products
to end users.
3. International Strategy: In this strategy, the company needs to little
adapt to local culture and global integration while operating its
functions. The headquarter or the parent company i.e, GE will be solely
responsible for formulating all rules and regulation, taking decision so
that it can easily sustain its operation in external environment (Brett,
Gunia. and Teucher, 2017). So, GE through manufacturing the products in
home country and exporting it to different countries with an motivate
that wants of all customers can be fulfilled in effective manner.
4. Transactional strategy: This strategy has both characteristics of
multi-domestic and global firm as it aims to maximum local
responsiveness through global integration. In this company give
importance to brining economic of scale and is ready too adapt its
strategy as per external environment situation. Moreover, it can be
stated that the subsidiaries are integrated and having interdependent
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network with each other across the world that helps in providing best
services to customers. GE through making efficient use of knowledge
and expertise between the subsidiaries is able to contribute in
achievements of strategic objectives (Cui and et.al., 2018).
So, all these four are alternative strategic options that could be selected by the GE parent
company to retained its market share in international market and enjoy high profitability. Out of
which Transactional strategy is one suitable for GE as it will help in effective adapting the
strategy or set of action as per customer’s requirement. Moreover, it firm will able to easily
bring economic of scale or reduce the overall cost through making optimum utilization of
available resources and delivering maximum value to customers. Therefore, it is best as it will
help in increasing overall profitability of firm.
3. Reason for selecting choice of location for subsidiary
General electric has operation in different parts of the world such as United States,
Europe, Asia, America and Middle east and Africa that has helped in attracting and retaining
maximum customers in the firm. Through geographical division the company is able to expand
its market share in different countries thereby enjoy huge profit margin. Therefore, the several
reason that has impacted on selection of location of subsidiary of GE can be illustrated as
follows:
 Number of customers: The first and foremost reason to select a particular location for
the subsidiary company is that number of customer or people that are interested to have
particular products and services provided by the firm. If there are maximum number of
customers, then company have opportunity to select the particular location so that it can
have maximum people in the organisation (Smith, 2017). Thereby, overall sales volume
and profitability of the company can increase and it can gain competitive advantages.
 Availability of labour: The location of subsidiary company generally depends upon
availability of labour and other resources at particular place. Likewise, if there are
number of human or labour available in specific market then location of subsidiary
company will be in such market. Because company i.e., GE can easily have access to the
human resources and other for effectively completing its different task and activities.
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 Potential for growth: Moreover, it can be stated GE has selected different location for
its operation of subsidiary on the basis of potential growth in future circumstances. In
case there is more demand of products and services then firm have opportunities to grow
and expand business operation in external environment. Therefore, available growth
opportunity contributes in selection of particular location and achievement of end
objectives.
4. Strategic method of entry and possible consequences
Market entry strategy are the method or strategies that are plan by the company to enter
into new market so that potential individuals can be attracted to be part of firm. Direct exporting,
licensing, joint venture, partnership and buying a company are different strategic method of
entry that are used by company to enter into new market to achieve its set goals in best possible
manner. Therefore, the several strategic entry methods that can be used by GE can be explain in
detail as follows:
 Direct exporting: General electric can make use of direct exporting method in order to
expand its business operation in new market through exporting its products and services
to different countries. The subsidiary or distributor will be responsible for providing the
products or services of firm to end users so that their requirements can be meet (Tallman,
Luo and Buckley, 2018).
 Licensing: The another market entry method that can be opted by the GE is licensing
which is very sophisticated arrangement in which organisation transfer the right to make
use of firm services to other organisation. This type of strategy could be used by the
enterprise in case it is planning or wishing to enter into large market share. Licensing is
most risky method as it requires a long term commitment by the firm to effectively
sustain its business operation and grow.
 Franchising: It is method of market entry that is mainly suitable for business that have
repeated business model likewise food outlets. Company that have strong brand
recognition or image can easily expand business operation in new market for
achievements of end goals (World Health Organization, 2019). So, it is fruitful strategy
for rapid international expansion and growth of firm.
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 Joint venture: It is such type of market entry strategy in which the firm make
partnership with third independent party that manage all operation of the firm. In another
words, in joint venture, the two company agrees that they will work together in specific
market by creating a third firm to pursue all the operations. Therefore, in joint venture
both risk and profit margin of the organisation are shared equally or specific ratio as
previously discussed.
 Greenfield investment: It is the strategy entry method in which company needs to
make investment to purchase land, facilities and others resources so that all task of the
company can be effectively completed. Moreover, the greenfield investment market
entry strategy is most cost and risky because of involvements of government restriction,
regulation and access technology and other skill labour (Masiero, Ogasavara. and Risso,
2017). Therefore, GE through making use of greenfield investment can successfully
expand its operation in international market.
Therefore, it can be summarized that all the above stated market entry strategy could be used
by the firm to attain the set goals. Among which the Joint venture is best suitable as it by making
partnership with other firm can easily have sufficient resources and market share to enjoy high
profitability or revenue. It will also lead in reducing the cost of company to enter into
international market and add more and more customers in the firm.
5. Potential organizational and managerial problem for subsidiary company in operating its
business in international environment
Subsidiary company of general electric while having operation in international
environment face potential issue in organisation and management so that fruitful outcome can be
achieved by the firm (Duplaix and Savage, 2020). In addition to this, the global business
environment is ever-changing in nature therefore company in order to sustain its operation needs
to overcome the organisational and managerial problem which can be stated as follows:
 Human resource management: The general electric subsidiary face challenge related to
human resource management or managing the diverse range of people. As each of them
have different point of view, knowledge and skills and capabilities that acts as issue for
manager of company to coordinate diverse range of people to work in team. Moreover,
the company also face issue pertaining to accessing the highly talented and qualified
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employees that are ready to work for overall growth and development of organisation
(Lasserre, 2017). Therefore, GE subsidiary needs to overcome the issue of human
resource management for better outcome.
 Changing global environment: Secondly, subsidiary of GE is also suffering from issue
pertaining to continuous changes that are happening in external global environment.
Such as development in technology, change in customers taste and preferences, policies
of government and many more. Subsidiary company are unable to change its strategy as
per current market scenario thereby face difficult in attracting and retaining maximum
number of individuals in the firm (Jia and et.al., 2017). Thereby, the subsidiary of
general electric in order to enhance its profitability needs to find alternative method to
cope with changing government environment.
 Process standardisation: Furthermore, it has been identified that in context of
management and organisation, the subsidiary of GE face issue in process standardisation.
As it resulted in making the control process more complex as subsidiary needs to follow
regulation, standard and procedure that are made by the parent firm. In addition to this,
company is not able to find innovative and creative idea that could be used by the firm to
attract customers and expand its operation. Thus, strict process and procedure resulted in
challenge for the subsidiary firm to follow the same to promote its business operation in
the similar market.
 Decision making process: At last it can be stated that the Subsidiary company of
general electric face challenge or issue related to decision making process. As all the
major decision are taken by the parent company that is general electric which needs to be
followed by the subsidiary while operating their respective functions (Aguilera and et.al.,
2019). Thereby, subsidiary of GE to grow and sustain their operation needs to make
more flexible rule and regulation that can be easily abided by the subsidiary and the end
objectives of firm can be achieved in limited time frame.
6. Strategic advice for subsidiary company to overcome problem
From the above analysis, it can be stated that in order to resolve the key issue or
challenges that are face by Subsidiary company of GE. The manager needs to devote time and
efforts to understand the current situation, alternative options that are available to overcome the
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problem or issue for better results. Therefore, several strategic advices for Subsidiary company
of general electric to have operation in international market can be explained in detailed as
follows:
 Formulation of separate board for subsidiary company: It is one of the most
important decision that needs to be taken by company such as GE while establishing the
subsidiary company. That is, it should have separate board from parent company or not.
Along with it, the organisation should pay more attention to the composition of the board
by having mix of local and parent company (Brett, Gunia and Teucher, 2017). GE should
also ensure that it must maintain executive control over the strategic direction of firm so
that all functions can be smoothly completed in limited time frame and cost.
 Fostering the mutual relationship between the parental and subsidiary: In order to
overcome the above issue related to management and organisation of subsidiary
company. GE needs to put efforts to foster on building strong relationship between the
parent and subsidiary firm so that all task can be smoothly completed in effective
manner. Furthermore, it will help company in easily changing or adapting it strategy as
per external environment situation thereby enjoying competitive positioning.
 Ensure consistent and quality of information: In order to promote simultaneous
working of both parent company and its subsidiary, the GE needs to ensure that there has
been consistent and quality flow of information among them. As consistency will
contribute in resolving the chance of conflict and confusion arising between the parent
and subsidiary company (Hadaya and Gagnon, 2017). Furthermore, helps both of them
too aware about the changes that are happening in external environment thereby find
strategies in order to cope up with the situations.
So, all the above three discussed are suggestion that could be implemented by the firm to
overcome the issue related to organisation and management for achievement of set
objectives. Thereby, it will help both parent and subsidiary company in coordinating with
each other and enjoying the common or their respective objectives.
CONCLUSION
The above report has helped in understanding key information related global strategy
and implementation that contributed company in easily expanding its business operation in
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different parts of the world to earn huge profit margin. Moreover, it has been learned that firm
through making use of different market entry strategy can easily generate awareness among
customers and sustain its operation for many years. The subsidiary company faces a range of
issue in context of organization and management of resources in international environment so
that end goals can be achieved. At last it can be stated that through applying or implementing the
above advice related to the way problem can be overcome by subsidiary company of GE can
have more growth and development in future circumstance.
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REFERENCES
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flux. Strategy Science, 4(2). pp.61-69.
Brett, J. M., Gunia, B. C. and Teucher, B. M., 2017. Culture and negotiation strategy: A
framework for future research. Academy of Management Perspectives, 31(4). pp.288-
308.
Cui, L and et.al., 2018. Corporate political connections in global strategy. Global Strategy
Journal, 8(3). pp.379-398.
Duplaix, N. and Savage, M., 2020. The global otter conservation strategy. eScholarship,
University of California.
Hadaya, P. and Gagnon, B., 2017. Business Architecture: The Missing Link in Strategy
Formulation, Implementation and Execution. ASATE Publishing Inc..
Hayati, B., Atefi, Y. and Ahearne, M., 2018. Sales force leadership during strategy
implementation: A social network perspective. Journal of the Academy of Marketing
Science, 46(4). pp.612-631.
Huang, M. H. and Rust, R. T., 2017. Technology-driven service strategy. Journal of the
Academy of Marketing Science, 45(6). pp.906-924.
Jia, F and et.al., 2017. Global sourcing strategy and structure: towards a conceptual
framework. International Journal of Operations & Production Management.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Masiero, G., Ogasavara, M .H. and Risso, M. L., 2017. Going global in groups: a relevant
market entry strategy?. Review of International Business and Strategy.
Peng, M. W., 2021. Global strategy. Cengage learning.
Smith, K. E., 2017. A European Union global strategy for a changing world?. International
Politics, 54(4). pp.503-518.
Tallman, S., Luo, Y. and Buckley, P .J., 2018. Business models in global competition. Global
Strategy Journal, 8(4). pp.517-535.
World Health Organization, 2019. Global influenza strategy 2019-2030.
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