Hungarian Case of General Electric

It is unlikely that the rate and magnitude of change in the global competitive environment will slow in the future and multinational firms are in for increased competition in the next decade. The opening up of the Central European economies had offered a unique opportunity to the multinational giant General Electric for expansion into new markets and for the competitive production of lighting equipment for Europe. Between 1989 and 2002, General Electric invested about $ 1 billion in Hungary, the then most promising of Central European economies, to acquire Tungsram, the world’s oldest lighting company. Encouraged by the success of its an initial investment, General Electric proceeded to expand into banking, manufacturing, and engineering in Hungary and this expansion resulted in the creation of General Electric Hungary Inc. This essay attempts to take a look at the important considerations behind General Electric’s Hungarian expansion at a time when its lighting equipment operations are being threatened by the desire of Chinese manufacturers to capture export markets in Europe.Strategic management is about the achievement of strategic competitiveness and earning above-average returns (Hitt, 2001, Chapter 1). In the present era of globalization, strategic management for the multinational company means being able to take advantage of opportunities that are available across the globe in order to align operations with business strategy so as to maximize returns and the security of investments (Akbar, 2005, Pp. 1 – 5), (Henisz, 2002, Pp. 1 – 6) and (Cullen, 2005, Chapter 1). Multinational corporations can establish new facilities, extend market share, and benefit from factor – cost advantages by investing in transition and less developed economies (Richet, 2001, Pp. 2 – 5). Western firms have sought to enhance their presence in Central and Eastern Europe in order to pursue a strategy of penetration and conquest of new markets, (horizontal integration), as well as to reallocate resources in order to reap advantages associated with factor costs (vertical integration).