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Gems

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GE Health Care Case

Executive Summary

General Electric Healthcare was created in 2004 when General Electric (GE) acquired U.K. biosciences firm Amersham. Its predecessor organization, General Electric Medical Services (GEMS) originated as an x-ray business in the 1940s. Jeff Immelt took over GEMs in 1997 and took steps to grow the business from a $4 billion company to a dominant force in the worldwide diagnostic imaging market. Immelt stepped up acquisitions including a company that formed the basis for GMS-IT, a subsidiary focused on healthcare IT. One of his most significant initiatives was the Global Products Company (GPC) initiative that focused on cutting costs by shifting manufacturing, design and engineering activities from high-cost to low-cost countries. Under GPC, each product was built in one or two “Centers of Excellence (COEs)” and shipped anywhere in the world. “Between 60% and 90% or products made in a COE ended up being sold elsewhere.”[1] GPC’s global approach drove manufacturing, R&D, Product Design, Sales, Marketing, and Human Resources strategies with the ultimate goal of saving 10-30% on materials and 50% on labor.

In 2000, Immelt became CEO of GE and passed leadership of GEMS to Joe Hogan and charged him with the task of growing the company 20% annually. Hogan modified GPC and adopted an “In Country for Country” approach to better address country-specific demands within the existing global supply chain logic of GPS. The initiative was spearheaded by an “In China For China” policy that served “as the model for a localized version of the GPC concept that focused on segmenting and developing internal markets and building local management capability.”[2]

In 2001, GEMS partnered with Amersham and, in 2004, GE acquired the company for $10 billion. Together, GEMS and Amersham became known as GE Healthcare and Amersham CEO William Castell was named CEO of the new company. Castell advocated a shift from a late-disease...