For years GEMS has been exploiting the global product structure which enabled the company to increase its value around the globe. However, this structure has also created challenges within organization and its strategy. With Global product company philosophy, General Electric Medical Systems had made separate joint ventures for CT, X- Ray and ultrasound partnering with regulatory government such as Ministry of Health and the State Drug Administration and their subsidiary manufacturing groups. Due to this, GEMS encountered some challenges associated with these partnerships. Mr. Chen describes that “In one joint venture, partner firm would receive orders for equipment, and then service the orders from its separately and wholly owned factory, thus cutting us out” (GEMS 2002, pg. 14).
In addition, according to D. E. Westney and S. Zaheer, the Global product structure has a potential weakness.
The structure lacks responsiveness to local needs and local customer needs whose demands don’t fit profile expected by the business unit. Also, it is unable to leverage potential synergies across product lines within a country. (D. E. Westney and S. Zaheer, pg. 732) I agree, Strategic issues in one particular country cannot be systematically solved in a different country. In order to implement the business model, the company should create specific strategy which complies with a local market demand and local government regulations. Keith Morgan shows that Chinese government demand GEMS attention. He states, “Some years ago, brokers purchased used medical equipment for the West and dumped it in China. The Chinese government deemed this insulting and banned the sale of used equipment. Without such equipment, rural hospitals would be denied of functionality.” (GEMS 2002, pg. 15)
The Essay on The Case For A Vital And Strong National Government Taking
The Case for a Vital and Strong National Government Taking the Initiative in Order to Achieve Social and Economic Justice Social and economic justice is the necessary prerequisite of our future. What are the main characteristics of a social government? What is social justice? What is the social policy of our government? What is economic justice? Finally, what initiative might the federal ...
In addition, in order to analyze a new market, a company should integrate local skills and expertise within the mainframe of the business structure. In particular, low end market strategies should be implemented by an individual who has a deep knowledge of low end market. For example, Chih Chen head of GEMS China explains “Korea and India and newly acquired unit in Japan, all wanted the same position (to become Center of Excellence for low end manufacturing).
We won after a year and a half of inspections of competing GE factories worldwide”. (GEMS 2002, pg. 14) In conclusion, Mr. Chen explains that, China is already the third largest market for medical diagnostics worldwide and the market is growing rapidly. In order to sell low end products all over the world, the company has to accommodate the Chinese market. He states that “To succeed in the high end and middle tier, you have to be in the US and Japan respectively, to succeed in the low end, you will have to own the Chinese market” (GEMS 2002, pg. 15).
By moving to China, GEMS would have a greater local demand. Chen points out that, “Drop in price of 10% could probably raise sales by 50 % in Chinese market”. Moving to China would enable the company to minimize the variable costs by avoiding local duties and tariffs and local sourcing. Similar strategy was employed in German market dominated by Siemens. GEMS had slowly created relationship with universities and purchased German companies and learned the need of German doctors. This way, the company was able to increase its market from 5% to 25% over the previous decade. However, this time, GEMS has to adjust its strategy to meet low end market demand. (GEMS 2002, pg 16)
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References
1. Tarun , Khanna . “General electric medical systems .” . . (2005): pg 16.Print.
2. Srilata , Zaheer. “The Multinational Enterprise as an Organization.” Multinational enterprise organizations . 1.9 (2005): 349-380.Print
