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GEMS Journey to the top!

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Jovana Jochem

on 1 October 2014

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Transcript of GEMS Journey to the top!

Porters Five Forces
GEMS: Way to the top!

ProSulting Worldwide -
Team 17: Delhay, Jochem, Zalais & Polo

1. General Electrics Medical Systems Division (GEMS)

Corporate Strategy
The Vision
2002 - The Change
Integration-responsiveness (IR) framework
2. GOAL!
Change the global positioning strategy to
remain competitive
Give a strategy that gives a
competitive internal organization
To set at
20% (revenue) growth
per year and a
ROC (return on capital) of 35%
per year.
Thank you for your attention!
Porter's Generic Strategies
Target markets

Because they spend more than any other country on healthcare, overall and on a per capital basis
Nearly all individuals with insurance were covered for diagnostic testing
Problem that replacement and new equipment market was slowly growing there
5. Conclusion
Transnational strategy
Strong global integration and strong local responsiveness
Standardize to be cost-efficient, adapt when needed, to be able to offer right kind of products
Cost Leadership Strategy
Increasing profits by reducing costs of production, while charging industry-average prices
Increasing market share
Targeting markets?
Who are we?
Corporate Strategy
To make health care

To make it
for developing countries
new technologies
To continue
the market

The Vision
1. The Company
2. The Goal
3. Analyzing GEMS
Porters Five Forces
4. Strategic Options
Global Integration & Responsiveness Model
Porter's Generic Forces
Targeting markets
5. Conclusion
6. Suggestions

General Electrics Medical Systems Division
World’s leading manufacturer of diagnostic
imaging equipment
Company from the medical and healthcare industry
Belongs to General Electrics which in 2002 had the largest market capitalization

Cost of medicine is different from one country to another
Rise of money spent in healthcare
Level of health care totally different in every country
Changes that happens in industry - away from engineering heritage towards biochemistry
Learning process to compete with entrepreneurial software companies


Global company : Global Company Program
The principle of Six Sigma
Several joint-venture and acquisition
Good Reputation
High-quality products
Portfolio of clients
Market leader
Low costs of products
Low producing costs
Perfectly trained business leaders in different countries

Accountable towards GE
Need to do a technical switch to compete
Other large companies that produce the same product

Bio-medicine more and more present nowadays
Population is aging
Utilization of medicine, drugs and healthcare more and more common
Developing countries
Global strategy
Home replication
Pressure for global integration
Pressure for local responsiveness
Strong global integration and strong local responsiveness
Medical industry is generally a global industry, GEMS a leader in global practices
Economic efficiency on worldwide scale, e.g. manufacturing in low cost countries
Economies of scale
Global sourcing of resources, e.g. training managers in multinational groups
Production and marketing operating globally
The level of health care varies largely between countries, satisfying customers needs
New technology enables personalized medicine
Local distribution structure helps to understand local manners and governmental restrictions
Training local managers
Differentiation: adapt products to each country
-> Standardizing value-chain activities to remain cost-efficient
-> Satisfying customers needs by adapting to the country's level of healthcare
6. Suggestions to GEMS
Elements of the value-chain
Concentrate the production in few locations where competitive advantage can be maximized and reduce the set of suppliers (resource allocation)
Have to be organized on a global scale - uniform policies on a global basis, standardize management control system and decision-making power is shifted to the region manager
Keep a flexible approach
Facilitate transfer of knowledge:
the country manager develops the lead market in his country and transfers the knowledge gained
Implement a planning strategy
Cost Leadership
Differentiation Focus
Cost Focus
Source of Competitive Advantage
4. Strategies for GEMS
Global Integration & Responsiveness Model
Porter's Generic Forces
Targeting markets?
Cost Leadership Strategy
Increasing profits by reducing costs, while charging industry-average prices.
Increasing market share through charging lower prices, while still making a reasonable profit on each sale because of lower costs of production.
Involves being the leader regarding the cost
What is it?
What is needed?
Cost Leadership Strategy
Access to the capital needed to invest in technology that will bring costs down.
Very efficient logistics.
A low-cost base (labor, materials, facilities), and a way of sustainably cutting costs below those of other competitors.
Being the leader

Cost Leadership Strategy
Why we chose it?
GEMS is a leader on the market
GEMS already produces at low-costs
The company will sell at average prices
GEMS has access to the capital needed to invest in technology and very efficient logistics
3. Analyzing GEMS
ProSulting Worldwide
Threats of new entrants
Pharmaceutical companies
Rivalry is HIGH
Siemens, Philips, Toshiba
Supplier Power
Need to have long-term partners
Each partners produce each part of the product

Customer Power
Customers are hospitals and doctors.
They can choose from whom they buy according to the best price
3. Analyzing
Threats of substitute products
New technologies that enter the market
Change in terms of healthcare information technology and personalized diagnostics
Change away from engineering heritage towards biochemistry
Learn to compete with entrepreneurial software companies
Demographic changes
Global information flows have made differences between developed and developing nations more clearer

2002 - The Change
Important market for our GEMS future

- The largest number of hospitals (11 times more then in USA)
- High demand for diagnostic equipment
- Individuals mainly pay for their own healthcare
- Price regulation problems

- Healthcare industry expected to grow at 13% annually
- Population is getting older and healthcare focus on chronic conditions
- Individuals mainly pay for their healthcare

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