Essay on GEs
Number of words: 606
GE’s two significant acquisitions for strategic management and development are the stock purchase and asset purchase acquisition. The acquisition is part of the corporate strategic plan to develop and categorize the business based on product type. An acquisition is when a company purchases most of the other companies’ shares to attain maximum control. In most cases, the company’s 50% share is bought by the receiving company. In a stock purchase, the buyer acquires the stock of the company from its stockholders. In contrast, in the asset purchase acquisition, the buyer only takes the liabilities and assets specified in the sale agreement.
GE’s main acquisition problem is the massive debt it acquired and underwent through asset purchase acquisition because it was hard to sell its assets to get into balance sheet into shape. It troubled the industry, making it hard to increase profit as the amount of debt exceeded the income, thus the need for strategic management planning through acquisition. (Zhao, 2019). In 2016, Haier Group announced that they had a plan for the purchase of GE electronics. China’s leading home appliance made the tell after over debt of $5.4 billion. The two companies agreed after GE withdrew from a Swedish company that had previously requested for asset acquisition. The motive of Haier Group is to increase benefits through customer satisfaction and provision of more products to increase the traffic of the services.
The challenge Haier faced after the asset acquisition of GE electronics is the global market for the U.S home appliances markets and the target market as competition is stiff from other electronic companies. It also faced challenges with overestimating synergies where despite the two companies merging, customers could not maintain their loyalty hence suffered a loss due to a drop in purchasing. Due to the merging, the two companies suffered from misappropriations of funds, inadequate communication from stakeholders, and a lack of proper coordination. (Nassaji, 2020). The two companies merged suffer from fair completion because the two companies can be relevant when each are in operating on their own. Some staff may be rendered jobless because the same position can be done by one employee from each company hence leading to retrenchment of some members.
GE’s asset acquisition gives insight into how companies mismanage the organization by failing to address the problem that can make a company fall. Strategic management and planning are essential in a company as it helps it set measurable and achievable objectives. Strategic management and planning in a company involves evaluating, monitoring, and providing solutions to companies that may affect productivity. The implementation lesson learned from the acquisition of GE’s electric company is that the management can train its employees to control and manage its expenditure to avoid the purchase. Financial monitoring and evaluation by external and internal auditors are vital as it gives the company a clear picture of where they can be placed. Finally, strategic management and planning put the company in competition with the rest hence instilling production by employees. Acquisition can also be beneficial to a company as it enhances international cooperation and relations thus increase the income of the company. Merging two companies can improve the standards of the other one ,thus promote productivity.( Baloyi , 2021).
Zhao, J. (2019). Haier’s Acquisition of GE Appliances. Journal of Business Diversity, 19(4).
Nassaji, H. (2020). Assessing the effectiveness of interactional feedback for L2 acquisition: Issues and challenges. Language Teaching, 53(1), 3-28.
Baloyi, W. M. (2021). Integrating Environmental Costs into the Life Cycle Costing and Acquisition Strategy of Assets. The Journal of Accounting and Management, 11(1).