GENERAL MOTORS AND ITS PATH TO INTERNATIONALISATION

GENERAL MOTORS AND ITS PATH TO INTERNATIONALISATION

Introduction
Internationalisation concerns the process through which a firm increases its reliance on foreign markets and countries as a means of growth and financial performance improvement. The main components of a firm’s degree of internationalisation consist of the number of countries in which the firm has foreign business operations (Tallman and Li, 2003) and the number of diverse social cultures of the countries in which the firm operates and the geographic diversity of the foreign markets (Hofstede, 2001) Thus, the degree of internationalisation reflects the various differences across the countries and markets in which the firm undertakes foreign operations. General Motors Corporation (GM) is the world’s largest automaker employing over 325,000 people in 32 countries. In 2006 it sold over 9 million cars and trucks globally in 5 continents with a global market share of 13.5 %( see appendix1).

Internal and external triggers of Internationalisation
The economic world has shifted from being a cluster of national economies to a global and more interdependent marketplace, based on line import, export and distribution of products, services and information around the world. The internal triggers for internationalisation of firms consists of factors such as management’s interest in internationalisation, foreign queries about the organisation’s products and saturated home market (Hollensen, 2004)

The American automobile industry is the biggest in the world in terms of number of cars manufactured and sold (Mintel, 2006). The U.S. automobile market is saturated with the global car manufacturing companies. This situation has led to over capacity in US. Jung and Lee (2006) argues that sales have decreased in the highest consumption regional markets such as the United States, Western Europe and Japan, which collectively represent about 70 percent of market share worldwide. Because of this consumption decrease,...