Globalization Impact To Ge

Kitech, Inc.

(General Electric)

Nick Maenhout

Anna Mak

Lee Riley

XueYi Zheng

Jaina Zavala

Globalization is a concept GE has begun to grasp. GE, with 50,000 engineers and its largest R&D center outside the U.S., is "tapping into best brains on global basis," as CEO Jeff Immelt would say. Perhaps replacement of top management and executives by more foreigners and moving one or more of its headquarters out of the United States would help the cause of globalization.

One reason for worrying about globalization Immelt mentions is the "hollowed out" U.S. manufacturing base. Daniel Altman from the International Herald Tribune stated that "United States may no longer even be the first economy among equals," thus, GE needs to be more involved in other economics with "foreign operations proliferating".

Also, as mentioned before in our lecture readings for class, the country has a $1 trillion trade deficit and our country is not producing enough engineers to compete globally. "We are not working hard enough to be exporters," Immelt said. According to Immelt, globalization should be a process where all parties win. "If we make money in a country and for a country, we have the right to succeed," Immelt said. "In the end we need to earn the right to globalize."

One way GE is globalizing is by paying more attention to India since Immelt feels it is very well positioned to become a stronger global economic force. "When I joined GE in 1982, Japan was the absolute global threat." Immelt said. "My predecessor sent us to study Japan. The great companies turned out to be those that could leave Japan, such as Toyota and Canon." GE recognizes that the object of globalizing is creating a win-win situation. "Can the standard of living in India grow by 100-fold without the standard of living in the U.S. going down over time?" Immelt asked.

Immelt strives to have GE design technology in emerging markets like China and India in order to take advantage of emerging market economics. The company is constructing a magnetic resonance scanner in China since they could not engineer it in the U.S. "We have to think of emerging market economics," Immelt said (Farber).

Another example of globalization within GE is becoming integrated globally with the company's local and national affiliates, which will result in superior company wide performance. GE's example of helping newly acquired Nuovo Pignone become integrated has posed many changes and also higher performance results. Some of the changes include redesigning the system's control and implementing Six Sigma. As a result of this integrated solution, Nuovo Pignone managers can share information with other managers around the world.

GE is also focused on the re-allocation of a particular segment of the business - the core consumer finance division, dealing with consumer credit (particularly credit cards). The decision of GE was to re-allocate this division of their corporation from Stamford, Connecticut to London, England. This move was done, or is being planned, simultaneously with the retirement of the old president of that division, David Nissen, the head of GE Money for the past 15 years, with William Cary, who is already located in London.

For GE, especially in the consumer credit sector, overseas earnings are making a large impact on total company revenues. Additionally, to appease those opposed, GE claims that this sector is already diversified over the entire world (in over 50 countries). This means that the transfer of any employees, which GE says is only 30 or so, will have a minimal impact on sending any jobs overseas.

Since the new CEO is already situated in London, the transition will be smoother, according to GE. The writer of the article ("GE Money to Move Its HQ to London, Guerrera) does not actually support or oppose any particular decision, but rather just explains the facts as they are stated by GE. GE's take on the matter offers evidence that they do realize the concern felt within the U.S. of bringing jobs overseas. However, they make clear statements toward the fact that such a change is only for monetary