Ge Medical Case Study: " in China for China"
Ajaya Tachajanta 2011 General Electric Medical Systems, 2002 Overview GEMS is the world’s leading manufacturer of diagnostic imaging equipment and part of Milwaukee-based GE. It is the leader in MR and CT imaging in all regions. According to Immelt’s strategy, GEMS evolves from taking joint-venture and acquisition as the first step where business’s size is matter. Secondly, Global Product Company (GPC) concept is introduced aiming at cutting cost by shifting the manufacturing activities from high-cost based to low-cost based nations, allowing GEMS to earn more margin. Last but not least, investing in developing marketing and sales organization is emphasized to position GEMS as a more than Equipment Company i.e. to differentiate itself from
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It also tries to introduce new product generation as to shape the usage pattern that would provide GEMS’s competitive advantage. Managing the regulatory interface; It uses “Defense – ensuring the compliance in rules and regulation of particular nations and its competitive position over the competitors, and Offense – trying to influence the evolving rules and regulations” Acquisition strategy; Acquisition starts with joint venture to partnership and then fully acquire. Acquisition is aiming at obtaining a new product line, associating technical expertise to its own product offering, and accessing to new market. GEMS in China and its options To adopt “In China for China” or not, the pros and cons has been used for the conclusion. Let’s start with pros; 1) could avoid the problem of joint venture and renegotiation arising form being cutting out, 2) could enjoy the market size of China which is the third largest medical diagnostics market where GEMS has 40% market share, and the largest low end medical product market, moreover the growth of medical market in China is the fastest, 3) the low cost based countries of production could be hold while domestic production would have greater demand since localized product tends to create the perception of better matched, 4) with the adoption, GEMS would utilize China as the base production both for domestic and export. Hence, GEMS’s competitive advantage in cost and differentiation could still hold