Ge Healthymagination Case Study Analysis Template

Case | HBS Case Collection | November 2011 (Revised August 2012)

Healthymagination at GE Healthcare Systems

Vineet Kumar and V. Kasturi Rangan

Jeff Immelt, the CEO of GE, introduced a new innovation strategy named "healthymagination" in 2009. With cost, quality, and access as its three pillars, healthymagination ensures a strong focus for new product introduction efforts all around GE. But will this focus enable GE to achieve and maintain market leadership across a healthcare market that is being buffeted by strong currents, including cost pressures, changes in chronic disease patterns, and rationalization of buyer behavior? Moreover, healthcare spending is also increasing in emerging economies, which could provide a strong growth engine for the future. Tom Gentile, the CEO of GE Healthcare Systems (GEHS), a key player in the Medical Imaging market, wonders how the innovation strategy might respond to these changes. GE has historically been a technology leader, selling the most advanced equipment to a variety of medical establishments. Will a complete shift to healthymagination allow GE to demonstrate strong organic growth through innovation, as Immelt had charged executives at GE?

Keywords: Innovation and Invention; Product Marketing; Marketing Strategy; Medical Devices and Supplies Industry; Health Industry;

Table of Content

Introduction

Company Background

GE Corporate Strategy

Six Part Growth Process: Organic Growth Objective

Strategic Planning

Strategic Analysis

SWOT

Ansoff Matrix for GE’s Corporate Strategy

Strategic Definition

Environmental Analysis – PESTEL

BCG Growth-Share Matrix

Bowman and D’Aveni’s Strategy Clock

Suitability Analysis – Directions for Growth

Competitive Strategy

Strategic Directions

Strategic Methods

Conclusion

References

Introduction

“Strategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations.” (Johnson et al., 2008)

The following report will focus on analyzing the corporate strategy of General Electric (from this point on referred to as GE) during the period of Jeffrey Immelt as CEO of GE more specifically from 2005 until present. It will look into what GE’s corporate strategy is and its suitability in terms of environment, capabilities and stakeholder expectations. The time period was chosen to show how the six-part growth process was introduced and implemented through different strategies.

Company Background

GE is an American company, founded in 1892 by Thomas Edison in Fairfield, Connecticut where it still has its headquarters today (Forbes, 2014). The company has subsidiaries all over the world in 130 countries exploiting opportunities in emerging economies (GE’s Corporate Website (a), 2014). It is currently listed as No 7 of the Global 2000, The World's Biggest Public Companies (Forbes, 2014). The company operates in finance and technology currently divided into six segments: Energy (Power Water, Oil Gas, Energy Management), Aviation, Healthcare, Transportation, Home Business Solutions and GE Capital (Forbes, 2014). Following the legendary Jack Welch, Jeffrey Immelt has been the CEO of GE since 2001 helping the company through a number of environmental impacts such as 9/11, the global financial crisis, Hurricane Katrina and Fukushima, all with significant impact on the needs and demands of the external environment and thus on GE as a company (Grant, 2013).

GE Corporate Strategy

"Corporate strategy is the identification of the purpose of the organisation and the plans and actions to achieve that purpose." (Lynch, 2006)

When looking at a company’s goals and overall purpose it is best to start with their mission statement and then look into the strategies through which the organisation hopes to achieve these goals.

“GE {NYSE: GE} works on things that matter. The best people and the best technologies taking on the toughest challenges. Finding solutions in energy, health and home, transportation and finance. Building, powering, moving and curing the world. Not just imagining. Doing. GE works.” (GE’s Corporate Website (d), 2014)

So basically GE invests in research and technology to secure innovation for their customers so they can live in a better world where diseases can be cured, saving energy and money is made easy and transportation is constantly improved.

So how does GE as a company manage to achieve this kind of innovation? GE invests in projects that may not pay off immediately, but bring great innovation and profits to the company in the long run. The following strategies will give some insight as to how GE manages its RD and how they seek to serve their customers.

Six Part Growth Process: Organic Growth Objective

Figure 1shows GE’s growth strategy as developed over a few years and released in the 2005 annual report. Its main objective is organic growth which GE aims to achieve through a number of strategies. It is defined as a six-part process with no real starting or end point. However, in an interview Jeff Immelt revealed to the Harvard Business Review that he sees the starting point as great technology because that leads to great products and “if you don’t have a good product, you’re not going to sell much” (Havard Business Review, 2006).

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Figure 1: GE’s Growth Strategy (Harvard Business Review, 2006)

Ecomagination

Ecomagination is a programme introduced in 2005 to present “GE's commitment to build innovative solutions for today's environmental challenges while driving economic growth” (Ecomagination, 2014). This entails not only producing more energy efficient and eco-friendly products, but also reducing the company’s water usage by 22% from 2004 to 2010, lowering its GHG emissions by 24% in the same time period and investing in Ecomagination RD to increase the revenue resulting from Ecomagination products and services (Ecomagination, 2014). Ecomagination projects include most of GE’s portfolio: Healthcare, Appliances, Oil Gas, Lighting, Energy Management, Transportation, Aviation, Power Water and Intelligent Platforms (Ecomagination, 2014).

In 2012 GE was said to have reached $25 billion in Revenue from Ecomagination projects proving that environmentally responsible projects can also benefit a company financially (Brown, 2013).

Imagination Breakthrough

Imagination Breakthrough was introduced to make sure that the budget cuts and limitations introduced by Immelt would not affect projects with the potential for market leading innovations and thus the potential for high returns (Havard Business Review, 2006). This was the innovation part of the six part growth process turning GE into growth leaders.

Healthymagination

“Healthyimagination is our $6 billion strategy for taking on one of the toughest challenges: global healthcare. We work to increase quality, access and affordability of health.” (Healthyimagination, 2014).

This strategy announced in the 2009 annual report shows GE’s commitment to not only provide state of the art technological healthcare, but also provide it for everyone with their initiative and mission statement “help cure the world”. The figure below shows how GE implements this strategy.

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Figure 2: Healthyimagination Strategy (Healthymagination, 2014)

Diversification

GE has always been a very diversified company often defined as a conglomerate, however with Immelt’s takeover came an organizational restructuring that led to the elimination of some low-margin activities. Altogether Immelt eliminated and reorganized the business units from a total of 12 in 2001 to 6 in 2012 (Grant, 2013). Leaving the company with the following business units: Energy, Aviation, Capital, Home Business, Healthcare and Transportation.

Diversifying a company like this can give a company flexibility and security by reducing business risk. If one business unit is struggling financially it can receiving funding generated by another area, it does not have to shut down. It also gives a company flexibility to invest generated revenue in areas they see fit for example the Imagine Breakthrough and Ecomagination projects even if this means investing in other business units.

Globalisation

The aim of Globalisation is to “create opportunities everywhere and expand in developing markets” (Harvard Business Review, 2006). This strategy is particularly useful to exploit local knowhow and profit from the general growth of developing economies (Crooks, 2013). GE also has a presence in Japan the country with the highest rate of technological advancement besides the United States.

GE has recently announced that investing in the growing continent Africa is also something they will be doing stating that the “rewards outweigh the risk” (Volcovici, 2014).

Strategic Planning

The following diagram portrays my procedure and the tools used to help analyse and define GE’s corporate strategy.

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Figure 3: Strategic Planning Procedure (Adapted from: Free Management Book’s Corporate Website, 2014)

Strategic Analysis

SWOT

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