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General Electric Medical Systems - Global Product Company concept

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General Electric Medical Systems - Global Product Company concept

The Global Product Company concept means ”to concentrate manufacturing – and ultimately other activities – wherever in the world it could be carried out to GE’s exacting standards most cost-effectively”. That means that the production is moving to countries where people are mostly underutilized (the example given in the case study tells about engineers from Eastern Europe, who cost only $1,5/h). There are two major reasons why a company would do that:
a. Maintaining/Raising the margins - One of the most important goals of every company is profit. It can be raised in two ways: either a company has to make bigger revenues or it has to lower costs. When a company can …show more content…

What is also important, as time passed China would probably start switching from low-end to middle- and high-end equipment which would boost the sales even further. Genomics and health care-IT are still small but growing in importance areas of medicine. They will not only change the practice of medicine, but also “challenge medical equipment manufacturers”. These areas would be a source of competitive advantage in the future. Still there are many risks and potential costs involved in the process of entering these areas.
GEMS would have to enter a field which was still unknown to him, so in the beginning it would take time to create or acquire new and sufficient know-how. R&D costs would have to be high.
Furthermore genomics is still controversial in case of ethics, which means that wrong decisions could prolong the adaptation process for the customers. There are also many challenges regarding marketing of health care-IT. What is more, Siemens and Philips control 80% of this market.
On the other hand GEMS has “the ability to absorb new talent pools” and “is not likely to be beaten by existing competitors”. Also “GEMS typically spent 7% to 9% of sales on R&D projects and held the philosophy that the best technology would always win in the marketplace”.
It had many situations of successful inventions which in the beginning required big R&D costs.
What is more, in the past GEMS was able to gain significant share

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