1. Joint ventures can be very unstable if the partnership is not properly established. For a company like GE, with a large amount of income to invest in new partnerships and new strategies, it can certainly be beneficial to build their own venture from scratch as a greenfield venture (Business Leadership Management, 2015). However, when GE was utilizing acquisitions and greenfield ventures, the economy was a very different animal than it is today. Today, the economy is much weaker than it was in the years prior to the 2008-2009 downturn; risk in the marketplace needs to be carefully considered and avoided by most companies, even companies that can be considered to be industry giants.
2. As stated previously, it is almost certain that GE has come to prefer joint ventures as a direct result of the economic downturn that happened in 2008-2009. Prior to the economic downturn, the country was not necessarily in a great economic state; the attacks of September 11th, 2001 had caused a minor downturn in economic growth, and there was the suggestion that America was headed into a recession (Obstfel & Rogoff, 2009). However, it was not until 2008 and 2009 that the crisis really began to take hold and affect some of the largest segments of the American economy (Castells, 2014).
In addition to the economic crisis of 2008-2009, there are a number of benefits of a joint venture that cannot be had when a company takes on greenfield ventures or acquisitions. Many of the emerging markets of the world are in places where governance is still sporadic and unpredictable at best; in these types of locations, it is often beneficial for companies to make partnerships with local ventures to avoid having to deal with the realities of a corrupt local government or workers that speak only the local language.
3. There are a number of different risks associated with joint ventures, and despite the benefits previously mentioned in regards to joint ventures, there are no guarantees that a joint venture will solve all the problems that a company has in terms of their mergers and acquisitions strategy (Büchel, 2013). When a company enters into a joint venture, they suddenly have access to a new market, with a new company; undoubtedly, GE vets all of the companies that it enters into joint partnerships with very closely, to avoid any kind of miscommunication between the partners.
4. If GE were to suddenly begin to take advantage of their partners, the first thing that is likely to happen is that partners would begin to break off their association with GE. When the public begins to perceive that GE is acting in ways that are inappropriate and manipulative, the company loses support for its various ventures; because GE relies on customers to make profits, this could be a turn of events that would be very difficult for GE to overcome in the American marketplace. Another issue that could very well plague GE that is less business-based is the issue of public perception. There is no doubt that American consumers do not like a bully, and when they perceive that a company is acting in a way that is bullying other companies, the general tide of public opinion can turn against the company very quickly, even if that company has a longstanding history in the American marketplace. One of the most notable things that GE does is refuse to make agreements with companies if the two companies cannot come to an agreement regarding the goals of the joint venture.
5. GE’s powerful position as an institution in the American economy has made it a force to be reckoned with in many different niche markets. Although it sometimes wrestles for control with potential joint venture partners, the reputation of being a fair and equitable partner goes far for GE in the business world. The successes that the company has had in the marketplace since its inception is all the evidence many companies need to want to invest energy in building a successful partnership with GE; however, GE does not always successfully make agreements with companies regarding joint venture goals.
