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 Matrix
Worldwide
Product
Division
Area
Division
International
Division
International Product Life Cycle
Raymond Vernon
Multinational Organization
Decentralized federation
Key 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 Hub
Strategic 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
MNC
Transnational
Company
Export Firm
International
Organization
Integration
Low
High
L
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w

H
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g
h

R
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s
p
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n
s
i
v
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n
e
s
s

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 Shihs smiling curve
Learnings from the case
How do MNC create value?




Can MNC survive without creating value?
Adapting to the
context
Changing the
context