Ge Medical Case Study: " in China for China"

Ajaya Tachajanta 2011 General Electric Medical Systems, 2002 Overview GEMS is the world’s leading manufacturer of diagnostic imaging equipment and part of Milwaukee-based GE. It is the leader in MR and CT imaging in all regions. According to Immelt’s strategy, GEMS evolves from taking joint-venture and acquisition as the first step where business’s size is matter. Secondly, Global Product Company (GPC) concept is introduced aiming at cutting cost by shifting the manufacturing activities from high-cost based to low-cost based nations, allowing GEMS to earn more margin. Last but not least, investing in developing marketing and sales organization is emphasized to position GEMS as a more than Equipment Company i.e. to differentiate itself from the competitors with services. However, with the recent China opportunity, GPC concept has been shaken by “In China for China” policy. Hence, GEMS has to consider whether to modify GPC by adopting the new policy to directly focus on Chinese market or not. Company’s Strategies Manufacturing strategy; According to GPC concept, it is focused on creating a cost competitive advantage by shifting manufacturing from high to low cost nations. Center of Excellence would assembled the product which later be shipped globally, allowing economies of scale to be reached. Hard and soft technologies and skills have to be transferred through the move using pitcher-catcher concept. The attempt to purchase from supplier in low-cost based nations is executed as to save input cost. In order to build a quality supplier meeting GEMS’s standard; GEMS would help in reengineering, training, and developing local suppliers. To make GPC work, supply chain management is critical. Even though GPC does incur inventory, logistics, documentation, and import duty cost, its benefit of saving material and labor cost (30% in the first year) seems to overwhelm the cost. R&D and product design strategy; It is highly focused on developing the best technology while