After a stressful delivery of our paper about tourism the next core course, international firm strategies, started already. Lectures were confined to one week, followed by two weeks to write a paper. One important topic of the lectures was how to manage distance between two or more countries. Multinational enterprises usually operate in a so-called ‘home’ country and in ‘host’ countries. Since no two countries are exactly the same in terms of culture, political system, consumer behavior, etc. there are certain risks and responsibilities carried by the firm. An ‘international corporate responsibility’ (ICR) strategy helps to mitigate the risks and to manage the responsibilities. This ICR strategy is somehow different from a more regional ‘corporate social responsibility’ (CSR) strategy since global issues need to be considered as well. Our group was assigned to analyze General Electric Company (GE). The result was a 66-pages report on the company, its internationalization strategy in China, as well as a advise to the company on how to augment its operations in the energy sector in China. We turned the ten minutes presentation into a CNN ‘interview’ between the anchorman and Jeffrey Immelt, GE’s chief executive and chairman of the board. After being being elected best of our group consisting of seven presentations, we won the second rank of the entire class, with 20 against 36 (BP, first place) votes.
Authors
David Eberle, I-Chien Lee, Pablo Mandelz
Executive Summary
Jeffrey Immelt, General Electric’s chief executive, recently announced that the company should ‘scale globally’ yet ‘connect locally’, implying a glocalized international strategy. The conglomerate recognizes the huge potential of so-called ‘growth markets’ such as China, especially in the energy infrastructure sector. Yet, multinational enterprises face complex challenges when expanding to new horizons. GE encounters both risks and responsibilities as it extends its branches around the globe. A sound international corporate responsibility (ICR) strategy mitigates complications and provides a sustainable framework in which the company can operate on an international scale. The company currently advocates two complementary ICR schemes, recognizing its own responsibility towards all stakeholders involved. The first, ‘ecomagination’, focuses on the development and production of ‘green’ technology, which enables future economic growth worldwide thus leading to a sustainable competitive advantage. The second strategy concerns proper citizenship behavior, which aspires to dialogue with employees as well as customers in order to find common solutions improving welfare. Yet, the company’s share value is still struggling to recover from its all time low after the bankruptcy of Lehmann Brothers in late 2008. This paper proposes the so-called ‘S+P’ strategy tackling the two major challenges of GE Energy when managing distance in China. On the one hand, capacity building (‘S’) ought to create a market for ‘green’ products and services by increasing environmental awareness of locals as well as educate suppliers on how to create sustainable goods. Improving the rule of law in China (‘P’), on the other hand, should help GE Energy to build on its unique technological expertise without fearing being copycatted by domestic competitors. Combined, the two parts pave the way towards a sustainable sustainable competitive advantage (SSCA) for GE Energy in China and embrace Mr. Immelts goal of ‘scaling globally’ by adapting the conglomerate’s strategy to China’s unique economic context.
Files
Paper “GE Energy: Managing Distance in China”
Presentation “General Electric”
Video