1. Was buying Amersham a good idea? Why or why not? We support the idea that GE Healthcare, which is one of the biggest conglomerates globally, took the right step in acquiring the business Amersham in order to expand the business and restructure its core business into becoming a global standardized business aiming to provide products that answers the needs of consumers in the market today. The following advantages below are what General Electric Health Care would gain after taking over Amersham in UK.
•EXPAND ITS CORE BUSINESS FURTHER: SINCE BOTH COMPANIES ARE COMPETENT IN different fields, GE has a competitive advantage in terms of technology that treats late stage disease; Amersham aims to focus on core competencies towards providing treatment before the disease occurs or during early stages. With combination of these two firms, GE could invent products aiming to diagnose disease at early stage, and help foresee treatments that best suit the disease occurring. GE Healthcare can expand their portfolio business further with strong competencies intact.
ELIMINATING COMPETITORS: WITH AMERSHAM AS A GROWING COMPANY AND acquiring many firms and merging with many IT firms, GE might see them as a threat in the future. However, being able to become one firm, we see that the business can work together and work hard on knowing what each other are good at in order to leverage their competencies and compete to become the largest company globally for health care products.
•GROWTH IN NEW SECTOR: WITH THE EMERGENCE OF NEW MARKETS, ESPECIALLY IN developing and emerging markets, GE can aim to supply product through their core implementation of COE or Center of Excellence, which the company has relocated itself to Britain which they feel they could invent technologies and ship parts for manufacturing at cheaper locations where they can be adapted and produced to different markets depending on the buying power of each customers from each country.
(China, for example) •NEW TECHNOLOGY/INVENTION: WITH BOTH FIRMS HAVING ADVANTAGE OVER STATE OF the art technologies and intellectual properties of their technologies, GE can aim to invent new technology with help from IT and systems that two companies owned in order to combine and come up with best products to suit different markets.
•BUSINESS CONNECTIONS: AMERSHAM HAS GOOD CONNECTIONS WITH CLINICS AND hospital which will enable GE to expand their customer target base and expand their business for the goal of achieving sales of 25 billion by 2010. •COE: WITH THE GOAL OF USING CENTERS OF EXCELLENCE TO MANUFACTURER IN cheaper locations for economies of scale and enter into emerging markets, this require the acquisition to come up with standardized products and parts which GE will produce machines with standardized parts or little adaptation required when products are sold to various locations globally.
•LONG TERM COMMITMENT FROM USERS: AIMING TO SALE PRODUCTS AT COST, WITH low margins from sales of machines which cost millions of dollars, GE will gain advantage from providing products at cost, which will supply consistent income and profit through after sales and parts required for machine operations and become a sustainable business. •ACCURATE DIAGNOSIS: WITH COMPETENT THAT DIFFERS, BUT TOGETHER WORK WELL AS one, we will see GE new machines become equipped with state of the art technology to help cure diseases and eliminate errors in diagnosis and causes of accidental death rates from error in disease/medical treatments.
2. How does Amersham relate to the core idea behind Global Product Company that was the essence of GE Medical System (the predecessor company to GE Healthcare) GE Medical Systems developed itself to be Global Product Company with the philosophy of concentrating manufacturing wherever in the world to GE standard and cost efficiency. They relied on a wholly owned direct sales organization. The vision of Amersham CEO Castell was meshed with GE Medical System’s goal which wanted to be the leader of healthcare development.
His vision was about personalized medicine which was developed based on individuals or small groups of patient genetic profiles. Shifting from late disease healthcare model to an early health by focusing on diagnosing and treating diseases in the earliest stage as well as emphasized advances in “biology, bytes, and broadband” which advances in genomics and related science, connectivity, and information technology are also relevant. After the acquisition of GE and Amersham, Amersham was a key component of Immelt’s plan to reemphasize research and development.
Immelt, GE CEO, focused on growing the corporation organically through innovation and departing the Global Product Company initiative that focused on cutting costs by shifting manufacturing and engineering activities from high-cost to low-cost countries. They customize products to suit each country needs with new-generation product. This helps to lower the cost. He developed “Imagination Breakthrough” projects that had taken GE into a new line of business, geographic area and customer base.
The projects provided incremental revenue and let GE be an expertise in both Health manufacturing diagnostic and Bioscience. 3. What kinds of actions did Immelt and Castell have to take in advance of the merger to ensure that any potential gains could be realized? What must Joe Hogan, in his new CEO role, now do to build on their earlier actions? Initially, Immelt and Castell had encountered with an issue of Antitrust regarding to the merger because the US and UK regulators were convinced that the merger could create a monopoly or unfair markets.
Therefore, the CEOs had to try to convince the regulators and general public of both countries to avoid the disapproval that the purposes of merger were mainly to expand GE’s global presence, to increase the revenue, and to be the global leader in Healthcare products. Moreover, the contrasting specialization and expertise between GEMS and Amersham will definitely bring the obviously potential gains in term of cutting-edge healthcare technology.
The diversification from a “late disease” healthcare to an “early-health” under Immelt’s concept “rebuild a culture of innovation” will not only tremendously differentiate GE healthcare from other Healthcare competitors, but also reposition GE Healthcare into more clinical and disease focused business as well. Further to the “early-health”, Castell has divided the continuing advances in three areas:
Biology, Bytes, and Broadband. Biology: focusing on the pharmaceutical industry and aiming to be the forefront in this field Bytes and Broadband: focusing on the digitization and storage of medical images and files. However, the potential gains could have been more obvious and realized if Immelt and Castell set out the clear profit goals. Prior to the new CEO role of Joe Hogan, he has to continue on developing the business model that fits the divergent merger, yet still remains the core value of two companies.
Hogan also has to try to eliminate barriers of cross-culture management styles between two countries and ensure that perception and commitment of GEMS and Amersham’s employees are led in the same direction as intended. Besides, Joe should also continue seeking for more possible acquisitions with the cutting-edge healthcare companies to gather GE Healthcare’s synergetic resources in order to develop the most advanced products in the market.