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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