General Electric Medical Systems - Essay Example

General Electric Medical Systems A. External Analysis The external analysis for GE Health primarily focuses on analysing the competitive environment or the external factors affecting the company. This has been presented using PEST analysis. The competitive analysis has been done using Porter’s five forces. PEST Analysis Political UK offers stable political conditions and a favourable business environment. The laws, rules and regulations are also favourable for any company to establish its business operations in the region. It is said to provide a very politically friendly environment for conducting businesses. This has made it one of the leading destinations of investments by companies expanding their global operations. The country also maintains consular relationships with other countries. This would provide a favourable place for the growth of the healthcare sector (Coleman, 2010, p.12). Economic The open economy of UK enhances the facilities if international trade and also provides opportunities for conducting overseas businesses. The gross domestic product or the GDP rate is as high as $2,345 billion. According to forecasts, it is expected to develop the “strongest business environment of all major European economies for the period 2007 to 2011” (Coleman, 2010, p.12). It is also blessed with a strong workforce which is a basic requirement for the establishment of any enterprise. This implies that the company would not confront with problems in finding manpower. Socio-Cultural The most favourable aspect is the absence of any adverse cultural or religious influences on ways in which businesses are conducted. Also the general business hours starts from 9am and runs till 5.30, which demonstrates very flexible timings of work. The number of working hours in a week is 37.5 (Coleman, 2010, p.12). The media sector is also predominant and flourishing which would provide greater facilities of communication for business and the general public. Technological It has a number of development agencies which look into the promotion of the economic growth of their respective regions. One of the main sectors that come under the purview of these agencies is healthcare technologies. It tries to identify the business needs and prospects of the industry (Coleman, 2010, p.17). The nation has been showing immense productivity growth and has been outperforming most other nations. This can be attributed to the technological innovation of the nation. Competitive Analysis The healthcare system in UK is highly competitive. The government has been making extensive efforts in “extending choice and competition” in the healthcare sector to enhance productivity. This has also been done in favour of improving the healthcare services as per the needs of patients. The result has been improved healthcare services at low costs (Propper, 2010, p.6). “UK Healthcare” is one of the best providers of medical services in the nation. “The UK Albert B. Chandler Hospital” is considered to be one of the best hospitals in the nation. It is also said to be the best academic medical centre. The nation has also witnessed the growth of a number of online medical facilities (UK Healthcare, 2007, p.1). There are numerous numbers of suppliers of medical services. Some of well known names are “Baxter Healthcare Limited”, “Bayer PLC”, “Beckman Coulter UK Limited” (Burton Hospitals, 2008, p.1), etc. It is implied that a large number of suppliers would result in high bargaining powers. This necessarily means that high bargaining power of suppliers would imply a consequent rise in the cost of health care products and services. The number of new entrants in the industry has also been rising fast. In fact, the pharmaceutical industry has also been entering into partnerships with the organisations newly entering into the healthcare space. It is also seen that the new emerging companies have been increasing using new and innovative technologies in their business. The reason why they are also seen to be flourishing is that they are based upon the latest technology usage and innovation. The unique quality of services that they have been offering has made them indispensible in the field of healthcare (Ernst & Young, 2011). Opportunities and Threats From the above analysis a number of opportunities can be realised by the company. Firstly, it is seen that the demand for healthcare services is immense. There are an increasing number of pharmaceutical firms which have entered into partnerships with the healthcare service providers. This provides an incentive for the company to expand operations in the nation. Also, UK had been demonstrating immense technological innovation which makes it a popular place for doing business. Medical services are a field which flourishes with the greater improvement of information and technology. Thus it would be profitable for the company if it tries to enhance it focus on the use of the latest technology and services. The use of latest equipments and tools would enhance attractiveness of the firm. The political, economic and social scenario also looks favourable. The laws and regulations pertaining to conducting businesses are friendly and without any loopholes. Existence of a huge manpower gives it ample freedom to avail the best talents from the industry to employ. The overall economic scenario also looks favourable with a high GDP rate. This rules possibilities of insecurity of conducting business operations. The productivity growth of the nation and technological improvement are also among the best in comparison to other countries. However, it was realised that the number of new entrants in the field of healthcare are is on the rise and this would pose threat for the company. The market is already flooded with a number of tough competitors. Moreover, an increasing number of healthcare service providers have been emerging using the latest and the most innovative technologies. Lastly, with the increasing number of suppliers, their bargaining powers are also increasing. This would be a cause of concern for company as they would have to lower their costs consequently. B. Internal Analysis The internal analysis provides key capabilities of the company in terms of its infrastructure, resources and competencies. It explores the core competencies that allow the company to excel in the market. Finally, it draws the strengths and weaknesses from the analysis. Capabilities GE healthcare services have shown steady growth which was driven by precision diagnostics and life sciences. The consistent of the company can also be attributed to be driven by the latest installed information technology and solutions. The growth was also driven by the booming and expanding emerging markets. The recovering conditions in the developing market have also contributed to the pace of growth of the company (GE, 2010, p.2). The following diagram demonstrates the growing revenues of GE healthcare. Figure 1: Growing Revenues- GE Healthcare (Source: GE, 2010, p.2) The company’s operational excellence helped in the attaining cost effectiveness. It has also been able to produce better and innovative products. The company has made big investments in the global market. Most importantly, the company has always kept upgrading itself with the change in global culture and made it suitable for meeting the changing needs of future (GE, 2010, p.3). The following figure depicts the operational excellence of the company. Figure 2: Operational Excellence (Source: GE, 2010, p.2) The company’s expertise lies in information technology, medical imaging, patient monitoring systems, medical diagnostics, disease research, biopharmaceutical bio manufacturing technologies, drug discovery etc. The company’s efficiency lies in its ability to detect disease at early stages, monitor its progress, and inform physicians which would help them to tailor the individual treatments for the individual patients (Company Database, 2009). The following diagram depicts how the company has been changing its culture and delivering to the market. Figure 3: Changing culture along with changing environment, GE (Source: GE, 2010, p.5) The company’s financial performance has also shown improvement over the years. This has been because of better production of products and the company’s ability to exploit the emerging markets. It has emerged as the leader in producing advanced diagnostics. This has resulted into better cash performance and attainment of better margins (GE, 2010, p.8). Figure 4: Improvement in Financial Performance (Source: GE, 2010, p.8) Core Competencies The core competencies of the company lie in its ability to utilise the best technologies and produce services and products at low costs. The company has shown continuous improvement in its quality of products in healthcare and efficiency. “$123 billion spent on patients could have been reduced by $40 billion using Intermountain Healthcare’s standards” (GE, 2010, p.7). Innovation and technology are some of the factors the company has excelled at. Technical leadership has produced high-margin products and win over competitive battles as well as create new markets. It has more than 2000 researchers across its global research centres which remain linked to the market and cater to the customer requirements. GE Healthcare entered into an alliance with “iSixSigma” and introduced and launched a portal in the internet. This was primarily done to focus on the “healthcare application of Six Sigma - a rigorous, data-driven method for process and quality improvement” (GE Healthcare, 2010). The measure throws light on the company’s initiative and enthusiasm to produce the best quality of services and excel in the field of healthcare. The alliance was a measure to leverage the respective core competencies of the individual companies and to bring about transformation in the delivery and administration of healthcare services across the world. The portal developed has made the community on the whole more equipped to solve the greatest healthcare problems. The combined effort was able to foster and generate innovation in the entire healthcare industry (GE Healthcare, 2010). Strengths and Weaknesses The key strength lies in the fact the company uses the best and the latest of technologies. These are the consequences of the company's extensive initiative on research and development. The research and development team provides the primary strength for the company for ensuring the production of the best healthcare services in future. The company has also been able to design low cost strategies and various cost cutting measures. The cost effectiveness has resulted into increased financial strength. The increase in capacity, and developing large economies of scale, core business concentration, leveraging synergies by forming alliance with other companies to attain process optimisation. The company has a broad product and service portfolio which is sufficient to meet all kinds of requirements of customers. The company also has great potential to utilise the prevailing market condition. The company’s success in operational performance has been recognised worldwide and forms a key strength for the company. The company is greatly exposed to the global market. This provides the basis for the increase in the number of competitors for the company. This is expected to business rivalry among competitors which it would have to confront. This would account for the weakness of the company. Since the global financial status is remains unstable, it would be difficult for the company to retain stability in terms of its price. It is expected to show vigorous price fluctuations. C. Recommendations and Conclusion GEMS have been established as a reputed brand in the market and have attained considerable success also. The company’s strategic analysis also shows tremendous opportunities for future growth and expansion. The economies are depicting very high costs of health services since long. This is one of those well know companies which has produced services at low costs. One recommendation in favour of the company would be to continue producing services at low costs. It is advisable that the company focuses more on the betterment of the community than profit making. The costs of health services have become sky high and gone out of the reach the common man. It should aim to produce services which people of all income groups is able to avail. The actions taken should reflect the company’s initiative towards serving the community and not its business interests. However, simultaneously it must also retain the interests of the shareholders. The company must devise strategic policies to remain financially stable in the market. It was subjected to extensive financial fluctuations since the onset of the recession. It is critical that the company devise strategies that ensure sustaining against the ill effects of recession. The company should be susceptible to the market fluctuations and must remain stable against all economic shocks. The research and development team of the company should focus on identifying the current shortcomings of the health sector. Having done this, it should attempt to remove the shortfalls or lag that might exist. It is already evident that the company’s research team has worked extensively on the development of low cost strategies. However, it should also focus on the development of human resource of the company. Training should be imparted to develop the competency level of employees pertaining to the job requirements. This would involve strategising the recruitment procedures and providing clear criteria based on which recruitments would proceed. The company should also implement assessment procedures which would identify the extent of its success and its impact on the community on the whole. It could devise a system of feedback from the community availing its services and make an analysis on the same. It should try to handle the complaints that might arise and try and develop policies to remove them. The aim should be to offer services as per the perspective of the patients. It should not be done from the management’s perspective which would be predominantly based on the profit motives. It should make investigation of the areas of serious failures. Having identified the loopholes, the company should attempt to remove the causes of failures. In this regard, the company’s alliance with ‘iSixSigma’ to promote quality is admirable. A well defined system of auditing would be required. This would promote and initiate improvement in the quality of products and services provided by the company. The audit would also help to assess whether the company was being able to make full use of its resources or not. It would also help integrate between the financial and human resources to produce quality services at low costs. The company would also have to make a strategic analysis of the market conditions and take marketing initiatives. Marketing initiatives would include devising price strategies to retain expand market share. A competitive analysis would be required which would provide insight into the existing price levels in the market. Devising price strategies would be effective not only remaining competitive in the market but also for expanding its share of the same. Extending good quality of services would be effective in earning goodwill for the company and this would help in spreading the company name through the ‘word-of-mouth’. Since it is part of the healthcare sector, a word-of-mouth strategy would be more effective than that of an aggressive marketing strategy. Reference Burton Hospitals. 2008. Burton Hospitals NHS Foundation Trust. [Pdf]. Available at: http://www.burtonhospitals.nhs.uk/corporate/docs/FOI/MajorSuppliers.pdf. [Accessed on February 17, 2011]. Company Database. 2009. GE Healthcare. [Online]. Available at: http://companydatabase.org/c/pharmaceutical-preparations/drug-manufacturers/research-manufacturing/manufacturing-technologies/disease-treatment/ge-healthcare.html. [Accessed on February 18, 2011]. Coleman, P. 2010. Doing business in the United Kingdom. [Pdf]. Available at: http://www.rsmtenon.com/~/media/Files/International/Doing%20business%20in%20the%20United%20Kingdon.ashx. [Accessed on February 17, 2011]. Ernst & Young. 2011. Pharmaceutical industry rapidly expanding partnerships with new entrants in health care space. [Online]. Available at: http://www.ey.com/GL/en/Newsroom/News-releases/Pharmaceutical-industry-rapidly-expanding-partnerships-with-new-entrants-in-health-care-space. [Accessed on February 17, 2011]. GE. 2010. GE Healthcare healthymagination Investor Update. [Pdf]. Available at: http://www.ge.com/pdf/investors/events/06242010/ge_deutsche_bank_presentation_06242010.pdf. [Accessed on February 18, 2011]. GE Healthcare. 2010. GE and iSixSigma Partner To Advance Healthcare Quality. [Online]. Available at: http://www.gehealthcare.com/inen/about/quality.html. [Accessed on February 18, 2011]. Propper, C. 2010. The operation of choice and competition in healthcare..[Pdf]Available at: . http://www.em-pow-er.org/resources/Operation+of+choice+and+Competetion.pdf. [Accessed on February 17, 2011]. UK Healthcare. 2007. 100 Top Hospitals: Solucient® Ranks UK HealthCare Among the Nation’s Best. [Pdf]. Available at: http://ukhealthcare.uky.edu/publications/healthfocus/fact_sheets/Fact_Sheet_solucient2006.pdf. [Accessed on February 17, 2011]. Read More