Download - General electric medical systems, 2002
General Electric Medical Systems, 2002
Healthcare systems across the globe
• US- Funding comes from government (45%), private insurance (33%), out of pocket (17%) and the rest from private.
• Japan has universal health coverage, with around 27% population above 65+
• France has universal health insurance, with 75% being government sponsored.
• India has hardly any health insurance with 75% out of pocket expenses
• 50% urban Chinese has health insurance, with hospitals being government run and underpriced
• Trends in Healthcare
The industry• Market share-50%, Siemens, Philips & Toshiba-
30% (2002)• Siemens- $4bn, with 50% of its sales from USA,20%
Germany (leader). Profit margin is 10%. Equipment -3% & Services- 15%
• Philips- $5bn, with 50% of its sales from USA,30% Europe, 15% Asia. Profit margin is 3%. Equipment -3% & Services- 10%
• Toshiba- $2.3bn, second largest player in Asia and strong in CT and ultrasound, 5% margin.
General Electric Medical Systems (GEMS)
• $8bn dollar division within GE, with operating margin at 18% and growing at around 16% annually, mkt share is 50%
• Leadership (Exhibit 3 & 4)• Immelt bought an initiative called GPC.• Manufacturing was handled by COE. • 7to 9 % of sales was spent on R&D• Sales and marketing were local operation• 60% of revenue came from equipment sales, and 40%
from services.• Used equipment market was at $1bn with 15% growth
with GEMS share of around 30%. • China imbroglio!!!!
International Structural Stages Model
Foreign Sales as Percentage of Total Sales
Foreign Product Diversity
Global MatrixWorldwide Product Division
Area Division
International Division
International Product Life Cycle Raymond Vernon
Multinational Organization
Decentralized federationKey assets, responsibilities and decisions decentralized
Informal HQ-sub relationships overlaid with financial control
Management regards overseas operation as a portfolio of independent business
Characteristics of mainly European companies that ventured aboard pre World war
International Organization
Assets, resources, decisions decentralized but controlled from HQ
Formal Management planning and control for tighter HQ-Sub Linkage
Management regards overseas operation as a appendages to a central domestic corporation
Characteristics of mainly US companies that ventured aboard post World war
Global Organization Model
Centralized HubStrategic Assets, resources, responsibilities and decisions centralized
Tight Control of Decisions, resources & information
Management treats overseas operations as delivery pipelines to a unified global market
Characteristics of mainly Japanese companies that ventured aboard during 1980s
Integration-Responsiveness Grid
Integration
Low High
LowH
igh
Res
pons
iven
ess
Global Company
Organizational Characteristics of the Transnational
Organizational Character tics
Multinational Global International Transnational
Assets & capabilities
Decentralized and self sufficient
Central & Globally scaled
Centralized and HQ centered
Dispersed, interdependent and specialized
Role of subsidiaries
Sensing and exploiting opportunities
Implementing parent company strategies
Adapting parent company competencies
Differentiated contributions by national units worldwide
Diffusion of knowledge
Developed & retained in subsidiary
Developed and retained at the centre
Developed at center and transferred
Knowledge jointly developed and shared worldwide
The Pharmaceutical Industry Value Curve
Stan Shih’s smiling curve
Learnings from the case
• How do MNC create value?
• Can MNC survive without creating value?
Adapting to the context
Changing the context