Post on 03-Apr-2018
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Dr.S.Balasubrahmanyam
StrategicManagement
PGPI(Sections A&B)
6th March,2013
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Strategies for Growth:
Growth Through International Expansion
GE Medical Systems
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The Healthcare Industry:
Significant Differences across Countries
Dim ension US Europe Japan China India
Healthcare
Spending
Highest in
the world
High Second
highest
Very low per
capita
Very low per
capita
Future
Growth
Moderate
(ageing
population)
Moderate
(ageing
population)
Moderate
(ageing
population)
Very high
(large and
growing
Very high
(large and
growing
Healthcare
providers
Not-for-
profit
hospitals
Govt owned
hospitals
For-profit,
private
hospitals
Mainly govt
hospitals
For-profit
private
hospitals
Healthcare
payment
Govt,
Insurance,Patients
Mainly
govt, partlypatients
Insurance,
mainlypatients
Govt; but
increasinglyby patients
Mainly
directly bypatients
Main focus
or emphasis
Cost control Cost control Use of
sophisticated
equipment
Affordable
prices; better
equipment
Affordable
prices; better
equipment
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Key Success Factors in International Expansion
* Knowledge of Local
Conditions
* Adaptation to meet Local
Conditions
National Differentiation
or Adaptation
* Global Standardization
and Best Practices
* Leverage Global Scale
Actions companiescan take to improve their
Performance in International
Operations?
Performance+
Globalization
or Aggregation
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GEs Global Product Company:Global Standardization and Local Responsiveness
The Global Product
Company
Local Responsiveness to suit
Differences across countries.
(Product, Sales, Marketing)
Global Standardization
And Global Scale
(R&D, Manufacturing)
Aggregation Adaptation
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Drivers of Advantage in
International/Global Business
Comparative or
Where you do things
Competitive
Advantage
How you do things?
(based on location) (distinctive activitiesacross the value chain)
Competitive Advantage is seen to be more durable
than Comparative Advantage
+
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ADAPTATIONAGGREGATION
GEs GPC Model:
Aggregation + Adaptation + Arbitrage
ARBITRAGE
GE
Philips
Siemens
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The Global Product Company:Critical Tasks and Challenges
The Global Product
Company
How to Coordinate the
Globally Dispersed Value
Chain both EfficientlyAnd Effectively.
How to Configure the
Value Chain across Multiple
Countries to exploitAdaptation, Aggregation
And Arbitrage Advantages
Configuration Coordination
+
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GPC vs In China For China
ADAPTATIONAGGREGATION
ARBITRAGE
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International Strategies:Evolution and Change over time
Should GE Modify the GPC
To In China for China
NO YES
- The Economics forCertain Products
dont justify this change.
- The GPC is working fine,so why change it?
- That is our Source of
Advantage over rivals
- Making products in China
for China will help to better
adapt products to meet unique
needs in China
-China is a large market to
Enjoy Scale Benefits
- These products can also be
sold in other emerging mkts
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Global Standardization Vs. National Differentiation:
Variation Across Industries
Emphasis
Chemicals,
Microprocessors
Consumer
Products
High
On Global Std.
And Scale
(Aggregation)
Cement Law Services
Food
Need for National Differentiation
(Adaptation)
Low
Low
High
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Types of International Strategies
Transnational Strategy
An emphasis on both global scale/best practices and local responsiveness
E.g.: Auto companies, appliance companies
Multi-domestic Strategy
Treat ever international market as different and inde endent
Primary focus is on local responsiveness E.g.: Law Firms; some food companies
Global Strategy
Treat all international markets as homogenous and similar
Provide standardized products/services to all markets
Focus on global scale and efficiency
E.g.: Chemical companies