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General Electric Medical Systems - Essay Example

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General Electric Medical Systems

GPC required that the manufacturing activity of the entire range of products be concentrated in places, including China, where this could be done at the lowest cost while maintaining standards and supplies made to the entire global market. The alternative would mean that the production in China would be meant exclusively for the Chinese markets.
GEMS also had to decide whether it would continue concentration on excellence in engineering or move to new areas of genomics and healthcare information which would bring it into competition with smaller software companies but has to be done if GEMS has to be part of the emerging technologies that might, one day, make its existing lines of business obsolete and redundant.
Analysis of the market situation revealed that the population of advanced countries was increasingly becoming older needing higher spending on healthcare making double digit growth in healthcare related industry possible. However the low per capita spend on medicine and diagnostics in emerging economies like China and India opened doors for a huge opportunity for GEMS both for new equipment as well as for reconditioned equipment marketed under its Gold Seal program. Other countries in Eastern Europe and Latin America were also emerging as large markets with opening up of their economies and development of their soft infrastructure.
China was predominantly a low-end equipment market and had allowed the use of used equipment also. The market segmentation was high-end products, sold mainly in the US, Japan and other developed countries contributing 45%, mid-tier products 35% and the low-end making up the balance 20%. However it was the cheaper products that had the maximum potential for growth due to demand from China, India and African countries.
GEMS held a market share of 40% in China, more than the combined shares of its main competitors Siemens and Phillips. It was also predicted that a 10% drop in prices would increase sales revenue by 50%. This lowering of prices could only be achieved through 'In China for China' strategy which would involve shifting of existing facilities and personnel from other low-cost countries like Mexico to lower cost China. Then the global markets would have to be fed through increase in production at other facilities or setting up new ones.
Export of products made in China for GEMS markets worldwide that had increased from 60% in 1999 to 70% in 2002. This would have to be pegged back if it were to match Siemens which had a dedicated JV already in operation.
The new challenges faced by GEMS were emerging from the fields of Genomics and Healthcare information systems which were making personalized medicine and diagnostics possible. Competition in these areas would come from smaller companies and require GEMS to move away from its historical strengths of excellence in engineering to bio-technology and bio-informatics. Patient medical history recorded and accessible from wherever the patient is would be new frontiers.
The Chinese market has to be treated as a different entity altogether, especially since GEMS has spent a lot of effort in learning how to 'operate in the jungle'. The next challenge that will surely emerge is ...Show more

Summary

The case study on General Electric Medical Systems (GEMS) is prepared and presented using reports of the company and provides a GE-centric view of the progress and growth of the division and its success. The success is related to the financial performance of the company and does precious little to explore the effects of GEMS actions on the economy and work force…
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General Electric Medical Systems essay example
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