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Submitted by cgallo on June 15, 2008
Category: Business
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A) The Main Problem:
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During the management of Jack Welch followed by Jeff Immelt, General Electric Medical System (GEMS) had grown to be the lead player in medical diagnostic equipment supplies and maintenance services. In 2002 when Joe Hogan took up the position he faced a difficult situation of having to decide whether GEMS should continue its policy of being a Global Products Company (GPC) or modify the concept to ‘In China for China’ in order to continue into the future with the Transnational Management view that the company wanted to achieve and maintain. Some of the issues that GEMS had to deal with were the following:
• The business did not have the right configuration of assets and resources to maintain and sustain international growth outside the United States.
• The GPC philosophy permeated through Research and Development (R&D), causing product design to be outsourced into countries with unutilized talent (i.e. Eastern Europe engineers with master degrees that after the cold war was only earned about $1.5 per hour)
• Lastly, it was recognized by top management that the GPC needed to evolve as it moved into the future.
B) The Company Background:
GEMS was founded in 1923 and set up as a wholly-owned subsidiary of the General Electric Company. GEMS is a global leader in medical imaging, interventional procedures, healthcare services, and information technology. Healthcare spending as a percentage of GDP had increased worldwide over the previous three decades. The evolution of GEMS from a US Company to one whose non-US revenues exceeded 50% in 2002 was a multi-stage process. On the other hand, collaboration with pharmaceutical companies and return to the business of selling and servicing equipment will make GEMS relevant in the newly biochemical world of diagnostics.
There were few pillars in which GEMS devoted time and money in order to attain both emerging health practices:
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