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GE Healthcare is a well-established subdivision of General Electric (GE) that specializes in offering different diagnostic equipment to healthcare providers (Singh, 2014). In the recent past, it started its operations in the Indian market while discovering it as a potential source of the skilled and talented workforce (Singh, 2014). Nonetheless, it faced several challenges when conquering this geographical segment. Consequently, the primary goal of the paper is to assess emerging trends, internal and external barriers, steps, and contribution of the established strategy to the value chain development.
To enter the Bottom of the Pyramid Market (BOP), GE Healthcare implemented an entirely new strategy and introduced inexpensive Electroencephalography (EEG) equipment (Singh, 2014). The development of this instrument was triggered by several external trends. One of the main reasons was the projected growth of the Indian healthcare industry with its value of $30,000 that was expected to double in the recent future (Singh, 2014). This trend provided a rationale for choosing India as one of the opportunities due to its rapid growth and favorable economic environment.
Meanwhile, another trend was linked to the structure of the market. The domestic competition was represented by low-cost products such as catheters while the equipment was fully imported by international brands such as Siemens (Singh, 2014). This tendency created disparities in healthcare, as people were not able to afford expensive screening procedures. In this case, the development of a low-cost EEG machine helped the company create a distinct competitive advantage and satisfy the needs of the target audience.
Nonetheless, as mentioned earlier, the company had to face several challenges, and some of them were associated with its internal structure. One of them was the fact that GE Healthcare heavily relied on push strategy while not creating value but simply “pushing” the existent products to the market. This approach implied that the major focus was on developed customers. These actions resulted in the inability to meet its financial goals such as reaching $5 billion in revenues in the following year (Singh, 2014).
This internal barrier slowed the growth of the enterprise in the Indian segment. Thus, another challenge was the marketing strategy of the company. Initially, when entering the emerging market, the company continued aiming at globalization and did not take into account the special needs of the selected geographical regions. Not creating different strategies for dissimilar areas also slowed the development of GE Healthcare. Overall, it could be said that a combination of these internal obstacles resulted in low-profit margins and shrunk market shares.
It could be said that the company had to address different external obstacles. One of them was the lack of awareness of the Indian population about a newly developed product (Singh, 2014). Along with compliance with Indian regulations, it was one of the major obstacles, as this aspect was directly linked to the growth of market shares and revenues of the company (Butler & Tischler, 2015). One of the possible ways to address it would be creating partnerships with medical institutions to distribute information about a new inexpensive service. At the same time, it would be logical to organize different educational sessions for similar purposes.
In turn, it could be said that another external barrier was associated with limited distribution channels, as the company experienced hardships when creating new partnerships (Singh, 2014). To resolve this issue, it was reasonable for the enterprise to design an effective integrated strategy that would not only include product development but also its marketing and promotion. Distributing prototypes could be viewed as one of the solutions to attract new partners and acquire feedback simultaneously.
Specific Steps to Develop in BOP Market
To summarize, the first step to growing in the BOP market was devoting more attention to the Indian market while creating individual approaches for each region and developing its profit-and-loss center (Singh, 2014). These activities entirely comply with the concepts of strategic thinking and planning, as they implied increasing control over operations in India in the long-term perspective.
Developing products such as MAC 400 to cater to the need of the BOP market and distributing them via the joint venture with Wipro and other partners could be viewed as subsequent strategic steps. Along with estimating high financial returns, these actions were rational since they not only defined the company’s development and pathway in the recent future but also stimulated the interest of the employees by increasing their motivation and setting high expectations.
Contribution of Strategy to the Value Chain
Lastly, it is essential to evaluate the ability of the identified strategy to influence the value chains in both developed and emerging markets. In the first place, a designated focus on India assisted the company in designing an entirely new value proposition by occupying an empty market niche. With the help of a novel approach, the company was able to make its products affordable for the layers of the population with low socioeconomic status. This aspect assisted the company in creating a unique low-cost product. As for developed countries, this strategy could be defined as reversed innovation (Singh, 2014).
Making products light and inexpensive contributed to the development of an entirely different competitive advantage and value proposition in the developed markets while triggering more demand and creating additional value. Overall, it could be said that the BOP market strategy turned out as mutually beneficial for all geographical areas of operation of GE Health.
Butler, D., & Tischler, L. (2015). Design to grow: How Coca-Cola learned to combine scale and agility (and how you can too). New York, NY: Simon & Schuster, Inc.
Singh. (2014). GE Healthcare (A): Innovating for emerging markets. Web.