Present a current critical strategic analysis of ONE

Business Unit within General Electric

(GE HEALTCARE SBU)

By Okuwa Jackie Idagbe

June 2020
INTRODUCTION

The dynamics of global business world has been affected by Globalization. With the
increased volatile market trends business owners are finding new strategies to stay
relevant One company that has managed to stay relevant irrespective on the market
trend is GE. General electric is an American multinational company that is
headquartered in New York and has operations in several nations worldwide. The GE
Company has businesses in some of the major sectors in the economy specifically in
healthcare, power, aviation, renewable energy, manufacturing, finance, light, oil and
gas.

In this report we shall focus GE Healthcare Strategic Business Unit (SBU). GE

Healthcare is strategic business unit (SBU) of General Electric(GE) .It is the number
three SBU in terms of position in revenue generation among the eight business units of
GE with over $17billion income in 2019 and employing over 50,000 employees in more
than 140 countries worldwide. GE Healthcare objective is have a better world
consisting of more precise and efficient healthcare by providing innovative technologies
in medicine, producing intelligent and innovative gadgets, digital infrastructure, data
analytics, applications and decision support tools that enable healthcare specialists
analyze, treat and monitor their patients more efficiently and enhanced results.
(gehealthcare.com)

This essay would analyze and cover resources audit, BCG matrix of products and
service mix, future opportunities and strategic goals of GE healthcare division.

STRATEGIC POSITION OF GE HEALTH CARE

It is important for a company to have a clear understanding of how of the industry it is

operating or intents to operate in an organized environment to stand a chance of
sustaining the business or competing for market share and having competitive
advantage. The strategic position of a company would depend on its ability to
continuously create value to customers and produce products and services that
differentiated from what other competitors are offering. Furthermore, Ugonna (2018)
expressed that Strategic positioning is a system used by companies to make sure
relevant development in the organization's administrations are attained. GE Healthcare
has been able to successfully employ good strategy and positioned itself in the market
properly , this can be seen in how the company’s has effectively used its ability in
developing and churning out innovative quality products even in the face of stiff
competition from other healthcare companies the likes of Siemens, Philips and Canon
Medical Systems

The fig 1 above shows GE healthcare profits since 1997 to 2019.

From the fig above we can see how important healthcare SBU is to the GE
conglomerate. With a good financial standing, the company has embarked on various
acquisition which has led to the strengthening of its strategic position as a major player
in the global healthcare market

GE Healthcare Differentiation Strategy

GE Healthcare follows porter’s (1985) differentiation strategy, whose competitive

advantage is achieved by creating unmatched value to customers , producing
unequalled quality and innovative products. The company attracts targeted customers
by offering them unique and quality products that are differentiated through innovative
technological research and development. GE healthcare boasts of advanced research
and development processes. The drive for technological innovations in healthcare has
led to an increase in the number of patents owned by the company in the US. GE
leverages on the differentiation strategy by offering its products to many markets thus
maximizing sales based on a larger customer base. GE Healthcare occupies 11%
market share in the US market for healthcare equipment (Trefis Team, 2016). This
statistics indicates that GE Healthcare is successful and strategically positioned in the
healthcare market as the United States account for about 26% of the world's healthcare
market. (Trefis Team, 2016). GE Healthcare SBU operates in a market that is
technology and innovative sensitive, and as such demands an innovative strategy that
is dynamic and intuitive to succeed. (GE Annual Report, 2019).

GE Healthcare SWOT Analysis

SWOT Analysis would be used to evaluate the strategic position of GE Healthcare in

other to ascertain if the company would be able to sustain the competition and remain
competitive in the industry. The Internal analysis of GE Healthcare indicate that it is
having qualified and capable leadership and management system that drives its
operations. Also we can see that the company’s work force is very skillful and
competent to handle the technological innovation, research and development operation
of the company. Before the company engages its employees and prospective
customers they are taken through rigorous preparation in their training institute under a
well-structured program, where they are trained , developed and furnished with all the
required and essential knowledge to deal with with dynamic global need. (Eddusaver,
2019).

Strengths

The key strengths would include

 Product quality,
 strong innovation and technologies,
 strong brand promise,
  operational excellence,
 global presence,
 skilled workforce and excellent management (Geoff, 2019).

According to Grant (2005) the most important capability of GE healthcare lies in its
knack for recruiting and nurturing of the world’s best employee. Byrne (1998)
accentuated to Grants submission when he opinioned that the GE Healthcare Human
capital development unit develops the structure that best fits the SBU by selecting a
robust and prospective workforce that are trained and nurtured to become outstanding
employees

Thanks to its financial standing, GE Healthcare strong point is also further augmented
by its ability to achieve inorganic growth through acquisition of competitors and other
similar business fragments. This move has further made its market share and presence
across viable markets greater than before (Berkeley, 2018). With the mergers and
acquisitions GE healthcare now have a higher operational and cost efficiencies for the
SBU across administrative, support, infrastructure, and clinical hospital functions
(Brandon, 2015).

Weaknesses

 Unstable revenues

 Voluntary manufactured goods recalls

 Environmental legal limits

GE Healthcare has not been to replicate the kind of success it has enjoyed in the US
and European markets in emerging markets like China and, this is seen as a major
weakness on the companies part. The company needs to emphasis its effort on Asia-
Pacific economies as they are the fastest growing market and seen as the new hub or
focal point for the healthcare industry due to region's growing spending on healthcare.
Opportunities

Prospects include

 Product development
 Market potential
 External growth strategy

GE Healthcare can leverage in the opportunity presented by emerging markets (such as

China and Brazil) where there is increased demand for healthcare, with a good
population in the seniors category, increased protracted and lifestyle-related disease
and the countless need for use of diagnostics and intensive care in patient care all
adding up to an increase in demand for the company’s products and services (GE
Annual Report, 2018).

Developing countries seem to be the long term growth drivers for the company as US
and Europe remain the key markets for healthcare equipment in the short term,

It is in GE Healthcare best interest to be ready to harness the teeming opportunities in

the emerging markets

Threats

 Market competition
 Increasing in regulatory law
 Outsourcing

Siemens Healthcare, Philips and Canon Medical Systems and Hitachi Medical Systems
are the biggest competitors that pose the biggest challenge to GE healthcare from
gaining absolute control of the health care industry .
RESOURCE AND VALUE SYSTEMS OF GE HEALTHCARE-A CRITICAL
EVALUATION

Businesses need to harness the value created by of all the available resources to work
together to ensure productivity and fulfillment of organizational objectives. The value of
GE healthcare is underpinned in its ability to pull together the avalanche of resources
available to it achieve the desired business result.
Adopting porter (1985) value chain model is very useful in identifying and analyzing the
GE capabilities..The company capabilities or competences are further expounded

GE Healthcare Competitive Strategy/Advantage

Capabilities /Competences

Resources

Tangible Intangible
Human Resources
GE Healthcare stunning GE healthcare sophisticated
Financial Resources GE Healthcare Skills/
(borrowing capacity and Technology
Knowledge
Cash Securities)
Market reputation and
GE Healthcare Staff
GE Healthcare flexible Assets resources
Motivation
&Infrastructure (Plant, Land
Leadership and Management
and Equipment)
Figure 2: Resource/Competences at GE Healthcare

Management &Leadership

GE Healthcare arguably boast of the best management and leadership system

that encapsulates its activity as explained by Louis (2019).Current CEO Jeffrey
Immelt's democratic motivational leadership style has transformed the company
into an inventive and innovative culture and setting the pace for an innovative
and dominant workforce., Immelt’s has fashioned a different atmosphere in the
company by relating with the employee at different levels. Under Immelt
leadership, the business ensures a robust training program for workers that is
completely financed by the company. (GE 2016)..

Human Resource Development

In addressing human capital development GE Healthcare requires a procedure

to drive the talent development to strategic and operational needs (Chan 2011).
GE has established a Global Learning center that is designed to provided the
necessary innovative development in business knowledge, functional and
leadership skills program and growth traits such as decisive thinking, external
force, inclusiveness and imagination at work. GE healthcare investment in
Human Capital Development has no doubt increased its strategic position.

Technological Innovation

Changes in Technology and inventive clients has necessitated GE healthcare to

constantly advance in hi-tech principally with rivals like Siemens to achieve the
superlative result in a cost effective manner. (Ugonna, 2018). The company has
shown pro-activeness to emergent market strains and this has led to the launch
of various high-tech innovations for reengineering and imagination discoveries.
Example of such a move is depicted in the ECG gadget built by GE healthcare.
The company invests heavily in Research &Development to develop new
technology and innovative solutions and this has distinguished it from their
competitors in terms of cost, quality and delivering of products that are of value
to customer.

Diversified Portfolio
The level of diversification that is evident in the GE Healthcare SBU has allowed
for sharing of its core competencies like its patents, skilled workforce and
knowledge among the company businesses units.

Financial resources
The financial resources which is made up of the balance sheet, profit and loss,
cash flow statement etc can reveal how well the company is able meet all its
financial obligations. The company boasts of a stable balance sheet and good
cash flow .The Company continues to make profits year in year out
(Statista.com)

GE Healthcare VRIO Analysis

This model reveals facts about GE healthcare resources and capabilities

and competitive power.
Valuabl Inimitabl Non-
Resources/Capabili e Rare e substituta Result
ties ble.
Output
Yes Yes Yes Yes
Leadership Competitive
advantage
Output
Yes Yes Yes Yes
Human Development Competitive
advantage
Output
Yes Yes Yes Yes
Innovative Technology Competitive
advantage
Financial Output
Yes Yes Yes yes
 Resources Competitive
advantage
Output
Yes Yes No No
Diversified Portfolio Temporary
Advantage
Table1: VRIO table for GE Healthcare Resources and Capabilities

The resources and capabilities discussed above pass the Valuable and Rare
test, they can be seen as true GE healthcare assets and they provide the
company with competitive advantage over their competitors.

GE HEALTHCARE VALUE SYSTEMS

GE healthcare has over years strived to differentiate its capabilities or competencies in
other to achieve competitive advantage. This they have achieved by
 sustaining its global value networks and value creation,
 promoting learning and research to sustain innovation,
 managing relationships and global presence,
 product differentiation and achieving cost efficiencies.

In order to determine whether GE Healthcare values are still competitive, whether its
activities can create value for the customer , we would employ Porter’s value chain
analysis will be used to appraise GE healthcare the value systems..
Fig 3 Porters Value chain

GE Healthcare is concentrating its efforts on developing its core competences

and outsourcing other none core activities. To support this strategy the company
has ventured more in the manufacturing of the products rather than the
manufacturing of parts which it considers as non-value creation activity.

GE Healthcare has vital infrastructure, which attracts competent personnel and

exceptional talent .GE healthcare is making deliberate efforts to ensure its
workforce performs efficiently by exposing them to world class training facilities
and new technologies .This has translated in the company achieving superior
performance consistently in the market.

Differentiation and achieving cost efficiencies has been adopted by GE

Healthcare over the years as a tool to achieving completive advantage. The
company provides high quality and differentiated services to its customers.
Superior Knowledge Management capabilities and sustaining meaningful
relations have also resulted into cost efficiency advantages. As a means of
achieving lower cost the company has moved some aspect of its operation to
low cost countries and promote its partnership with low cost and reliable
suppliers.
PRODUCT/SERVICE PORTFOLIO MIX

According to GE Healthcare (2019), “The Company is a leading global medical

technology and life sciences company that provide a broad portfolio of products,
solutions and services used in the diagnosis, treatment and monitoring of
patients and in the development and manufacture of biopharmaceuticals”. ”. GE
Healthcare has six major business units or portfolio: Global Diagnostic Imaging
Unit, Integrated IT Solutions (IITS), Medical Diagnostics Business Unit Clinical
Systems Unit, GE Healthcare Life Sciences Unit and GE Healthcare Surgery
Business Unit

The Bolton Consulting Group (BCG) matrix with its two variable concepts, would
be deployed to analyze GE healthcare’s business unit. BCG matrix is also
referred to as growth share matrix and is a corporate planning tool that is used
to portray the brand of the firm or a business unit on a quadrant along the
horizontal axis of relative market share and the vertical axis of speed of market
growth.

Fig 4: BCG Matrix Model (Rick De Veliger, 2019).

From the diagram above we can infer that GE healthcare is a cash cow given its
high market share but a relatively slower market growth. It shows how the GE
healthcare can utilize its innovative healthcare products and their cash rich
balance sheet to ensure growth in both the market share and growth.

GE healthcare accounts for over 15% of the highly regarded and largely
capitalized GE shares or market capitalization.

Products/Services Revenue in 2018 Revenue in 2017

Imaging and Digital $9.7B $9.5B
Solutions
Diagnostic and clinical $6B $6B
hardware
Life science products and $4.7B $3.6B
healthcare services
Total $19.7B $19.1
Table 2: GE SBU Market status 2017-2018

We can see an increasing market in life sciences and products in 2018 .Growth revenue
increased by 10% with the help of ultrasonography and imaging devices and became
one of the main drivers for growth. This division is the star of GE healthcare

To move from a Question Mark into a Star, GE-Healthcare is advised to concentrate on

product development and innovation. It can be concluded from this BCG matric that a
high piece of the overall industry doesn't generally prompt gainfulness. Organizations
with a low piece of the overall industry can be profoundly beneficial.

ANALYSIS AND EVALUATION OF GE HEALTHCARE KEY FUTURE DIRECTIONS

FOR STRATEGIC GROWTH
We shall look at the key strategic steps that GE healthcare need to take to ensure its
strategic position in the future. The future direction is heavily based on technological
innovation. With the changing business environment, turbulent and demographic shifts,
there is no gain saying that technology is a key driver for the future and for

GE healthcare to develop in the future, innovation should be the core on their

operations.

In 2018 GE announced that it would be separating its healthcare business to a fully

stand-alone business as made public by the CEO and Chairman of GE, John Flannery.
The separation would allow them to invest in innovation and pursue the SBUs growth
strategy. (GE reports, 2018) The company continuously leads in the production of
modern and innovative medical

imaging scanners and other healthcare tools and equipment, including software, data
analytics and Artificial Intelligence applications. (GE reports, 2017) .According to Kieran
Murphy, president and CEO of GE Healthcare “GE Healthcare’s vision is to

drive more individualized, precise and effective patient outcomes. As an independent

global healthcare business, we will have flexibility to pursue future growth opportunities,
react quickly to changes in the industry and invest in innovation.” (GE reports, 2018)

CONCLUSION

It can be concluded from the essay that GE Healthcare is having a strong

resource, financial and intellectual capital capability to stay competitive in the
Global Health market.
GE Healthcare should continue in its strategic proactiveness in monitoring its
internal and external environment to ensure that the strategies it has adopted
remain relevant within the industry context and to achieve long-term growth and
competitive advantage. .
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