In 1952, General Electric Co. (GE) absorbed their completely owned subsidiary, International General Electric Co., Inc. (IGEC) and made IGEC a division of the company. This article explores the reason for this absorption from the viewpoint of GE's export trading. If we limit ourselves to only some indicators of international cartel and foreign direct investment, we cannot fully examine GE's international business history.
During the interwar period, GE had led international cartels, the Phoebus Agreement in the electric lamp field, and the International Notification and Compensation Agreement in the electrical apparatus field to protect the American market and to compete in the export market. Because of the segregation of the domestic market from the foreign market and the different way in which business was conducted, the structure of IGEC was appropriate for its international strategy.
But World War II changed the export market. First, the war cut off the relationship between IGEC and the London-based cartels. Second, the German and Japanese industries dropped out of the international market. And, after the war, the general demand for electrical apparatus and appliance rose significantly.
In this favorable environment, GE decided to strengthen its export effort. It, however, met with stiff competition from Westinghouse Corporation (WH). In order to compete with WH, GE needed to adapt its own manufacturing facilities to the exporting business. GE then absorbed IGEC and changed its managing structure into a multidivisional one.
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