From the reign of Jack Welch to Jeff Immelt as CEOs at GE, the firm has been in pursuit of being a truly global company (Murray, 2016). GE has over 420 manufacturing plants spread all over the planet resulting in immense firm flexibility (Murray, 2016). The firm’s policies are what has received a tremendous impact from the globalization trends at GE. Specifically, GE has had to outsource its manufacturing plants to developing nations, establish research and development centers outside US borders, shifting company divisions and head offices to foreign lands, as well as focusing more on exports (Mullock, 2016).
It is also inarguable then that most of these developments and turns at the firm have come by as a result of the significant impact and inducement provided by technology changes. In order to take advantage of the human resource and other resources in the developing world, GE has outsourced manufacturing plants as well as Research and Development (R&D) to these countries.
The recent developments and policy changes in China and India have encouraged great foreign direct investments by giant multinationals of GE’s threshold, and GE has moved into these markets to capitalize on that (Mullock, 2016). The reasoning behind these moves has been to remain cost-effective in pursuit of global expansion. The offshoring of GE’s plants, however, has not been easy for GE. Other multinationals in these countries have grown in the capital muscle to pose a considerable threat and competition to GE (Ruinan, 2018).
For instance, GE produces Magnetic Resonance Imaging (MRI) scanners in London and sells them at $1.5 million while the same scanners produced by a GE-affiliated R&D center in China, the China Technology Center in Shanghai, is tagged at $0.5 million (Mullock, 2016; Ruinan, 2018). Such price disparities manifest the paradox that is orchestrated by macroeconomic factors in developing nations.
Offshoring and outsourcing have a significant impact on GE’s quality and supply chain. GE has seemingly performed well with the diversification strategy especially in the 2008/2009 global economic crises and despite the pile-up of inventory of small and replacement power generating machines, GE’s equipment is known to be responsible for over 30% of all power generated worldwide (Pino, 2014).
This focused diversification together with the desire to get leaner in terms of the portfolio size implies that GE can channel its core competencies to the power infrastructure and technology businesses. Technology changes, especially in IT and the overdependence of transactions on the Internet as well as the automation of production have featured dramatically in GE’s outsourcing and supply chain decisions. From the company’s annual reports, in 2011 alone GE achieved an 18% international growth with a cumulative revenue totaling $147 billion and over 13,000 new jobs created in the US alone (Mullock, 2016).
Within decentralized and distributed R&D centers, engineers, scientists, and researchers work in collaboration as unified virtual teams courtesy of technology (Mullock, 2016). These collaborations have been seen to advance productions in the areas of power electronics and composite material design amongst other fields. Furthermore, technology changes have significantly bolstered crucial knowledge functions, for example, the non-standard software development in India (Murray, 2016).
Technology changes have also been the force that has facilitated the establishment of new divisions and head offices in foreign countries by GE. For instance, London is the favorite of a majority of GE care executives as the city fosters easy air travel to whichever destination in the world (Mullock, 2016). Pragmatically, GE has had undergo globalization and technology changes amid very protectionist government policies.
References
Mullock, H. (2016). Impact of globalization on General Electric (GE) policies. Web.
Murray, A. (2016). GE’s Immelt signals end to 7 decades of globalization. Web.
Pino, I. (2014). Does General Electric Company still make electricity? Web.
Ruinan, Z. (2018). Medical device makers hit by tariffs. China Daily. Web.