General Electric Medical Systems
General Electric Medical Systems 1. Q 1. What is the underlying logic behind the global product idea? What are the costs and the benefits that are expected?
Global Products Company(GPC) strategy is based on the following underlying logical premises: a. Markets for medical equipment are systems are becoming increasingly global in nature. They are no more restricted to only the developed First and Second World countries having advanced healthcare systems. The burgeoning market is that of emerging and developing economies. Thus, there is a need to meet the growing demand for affordable medical equipment in these economies and retain its market leadership b. Needless to say that low-cost leverage is the only way to win a large chunk of this new pie and therefore GEMS has to shift to a cost-efficient strategy c. GEMS realised the potential of tapping production & sourcing centres where there was parity in output quality and labour skill-sets but overall cost was much lower. d. The GPC strategy involved sourcing quality components from the most cost-effective suppliers and establishing the manufacturing bases in most cost-effective geographies. e. As most of the GEMS manufacturing involved sourcing complicated components from across the globe to two-three manufacturing/assembling centres and then distributing across the globe from these centres, the challenging aspect of GPC was in the development of intermediaries along the supply chain to ensure un-interrupted supply & production flows.
The following are some of the costs and benefits of the above mentioned strategy of globalizing production to facilitate a low cost production:
Benefits:
1. As materials form 80% of the manufacturing cost, sourcing of materials from low-cost countries would enable a significant amount of saving. The key would be to develop long-term relationships with local suppliers and once that is done, it means
Global Products Company(GPC) strategy is based on the following underlying logical premises: a. Markets for medical equipment are systems are becoming increasingly global in nature. They are no more restricted to only the developed First and Second World countries having advanced healthcare systems. The burgeoning market is that of emerging and developing economies. Thus, there is a need to meet the growing demand for affordable medical equipment in these economies and retain its market leadership b. Needless to say that low-cost leverage is the only way to win a large chunk of this new pie and therefore GEMS has to shift to a cost-efficient strategy c. GEMS realised the potential of tapping production & sourcing centres where there was parity in output quality and labour skill-sets but overall cost was much lower. d. The GPC strategy involved sourcing quality components from the most cost-effective suppliers and establishing the manufacturing bases in most cost-effective geographies. e. As most of the GEMS manufacturing involved sourcing complicated components from across the globe to two-three manufacturing/assembling centres and then distributing across the globe from these centres, the challenging aspect of GPC was in the development of intermediaries along the supply chain to ensure un-interrupted supply & production flows.
The following are some of the costs and benefits of the above mentioned strategy of globalizing production to facilitate a low cost production:
Benefits:
1. As materials form 80% of the manufacturing cost, sourcing of materials from low-cost countries would enable a significant amount of saving. The key would be to develop long-term relationships with local suppliers and once that is done, it means