BUSINESS ENVIRONMENT

General Electrics Joint Ventures

GROUP 5
ROOPAM JAIN 251179
ROSHAN NAVLANI 251180
ROUNAQ JUNEJA 251181
RUCHI PONIA 251182
RUPAK JAIN 251184
SHREYA MAHAJAN 251185
SHUBHAM SINGHAI 251186
SIDDHANT SIKARWAR 251187
SIDDHARTH JAIN 251188
SIDDHARTH SHARMA 251189
 Q.1. GE used to have a preference for acquisitions or
greenfield ventures as an entry mode, rather than joint
ventures. Why do you think this was the case?

M A N Y C O M PAN I E S C HO OS E AC Q U I S I T I O N S O R GR E E N F I E L D
IN VE ST ME NT S AS AN E NT RY B E CAUSE THE Y GIV E THE
C O M PAN Y F U L L C ON T R O L AN D AL L T HE P R O F I T S .

F I R M S M A Y A L S O F I N D A C Q U I S I T I O N S AT T R A C T I V E B E C A U S E
T HE Y C A N I M M E D I ATE LY B E G I N B U S I N E S S I N TH E F O R E I G N
C O U N T R Y, W H I L E G R E E N F I E L D I N V E S T M E N T S A L L O W
C O M PAN I E S TO E S TAB L I S H OP E R ATI ON S E XA C T LY AS T HE Y
WAN T T H E M .
 Q.2. Why do you think that GE has come to prefer joint ventures in recent
years? Do you think that the global economic crisis of 2008-2009 might
have impacted upon this preference in any way? If so, how?

A. GE could benefit from the local partners knowledge of competitive conditions, culture, and
language, political and business environment. Also the organization may gain by sharing the
operational cost and risks with the local partner.

B. Prices for some acquisitions in the past have been bid so high that GE is reluctant to acquire for
fear of overpaying.

C. In certain nations, China being an example, economic, political, legal, and cultural
considerations make joint ventures as easier option.

D. GE sees joint ventures as a good way to share the risk of building a business in a nation where it
lacks local knowledge.

.GE Capital expanded its mortgage lending, bought up corporate debt and muscled into
commercial property, all of which left it horribly exposed when Lehman Brothers collapse
in September 2008 led to a markets meltdown
 Q.3. What are the risks that GE must assume when it enters into a joint
venture? Is there any way for GE to reduce these risks?

1. The employees of the two companies might collude among

themselves
2. Misuse of confidential information of one of the parties by the other
party
3. Wastage of time
4. Losing money
5. Letting go of important technology
6. Gaining nothing of significance in return
7. Squandering your credibility
8. Partners may have different objectives for the same venture.
9. Different management styles and cultures can result in poor
cooperation and integration.
 RISK MANAGEMENT

1. Contracts should be very clear in the very beginning and

the terms and conditions and clauses mentioned should
be easily understandable and accepted by both the
parties alike.
2. The success in a joint venture depends on thorough resea
rch and analysis of aims and objectives of the firms.
3. Conducting a corruption risk assessment
4. GE should have a strong business strategy before commi
tting to any joint venture.
Q.4. The case mentions that GE has a well-earned reputation for
being a good partner. What are the likely benefits of this
reputation to GE? If GE were to tarnish its reputation by, for
example, opportunistically taking advantage of a partner, how
might this impact the company going forward?

GE WILL LEARN DOMESTIC KNOWLEDGE FROM THE

PARTNERS AND,

REDUCE THE RISK AND COST OF ESTABLISHING THE

COMPANY IN FOREIGN MARKETS

AND MORE JOINT VENTURES WILL LEAD TO THE MORE

BUSINESSES.

IF GE TARNISHES IT REPUTATION BY TAKING THE

ADVANTAGE OF A PARTNER, THEN IT WILL BE A HUGE
NEGATIVE IMPACT ON THE COMPANY GOING FORWARD.
Q.5. In addition to its reputation for being a good partner, what other assets
do you think GE brings to the table that make it an attractive joint venture
partner?

Excellent management development programs

Access to knowledge

Boosts productivity

Vast experience of GE, financial strength of

company, flexibility
THANK YOU