The global product idea is an idea central to General Electric's fundamental business vision. Essentially, GE wanted to build a strong a global presence as possible by concentrating its activities, primarily manufacturing , in places around the world that allowed these activities to be carried out as cost-effectively as possible while maintaining GE's rigorous standards.
Manufacturing Benefits: shift from high-cost to low-cost countries, there already
an extensive network of sales and marketing in place around the world to support this shift, switching to suppliers in low-cost countries would save 10-30% on materials and 50% on labor. Initial fixed costs, but payback usually occurs within two years, because a lot of the plant and equipment can be sourced locally. Can tap into new talent in these low-cost countries and establish early relationships in areas that don't have a lot of business previously.
Manufacturing general info: biggest thing is development of suppliers - have to have a long-term strategy, need to establish long-term, working relationships with suppliers to be successful (can start out buying simpler parts and over time buy more complex parts as trust and information exchange grew). Goal is to have truly independent suppliers, so no financing is provided to developing suppliers (although having a GEMS contract certainly helps them get that financing elsewhere). First-year cost savings = 30% with expectation of ongoing 10% reductions annually.
Manufacturing costs: Inventiry, logistics, documentation, import-duty costs. Costly to rely on less-experienced workforce in a new location. With every shift to a low-cost country, employees from old location and headquarters have long commutes home. Employees left behind in old countries usually lost their jobs.
R&D and product design benefits: Opportunity to harness talent pools in countries at a relatively low cost and prevent competitors from doing so
Sales benefits: two things: moved from price-based to value-added discussions, and began to view in-house service providers as a new kind of customer, not a competitor. These two shifts in attitude would help GE as they move into new markets.
Marketing: customers around the world were generally seen as consistent, but there was a need/cost to/of reconciling cost-effectiveness with social and cultural norms.
Other activities, like managing the regulatory interface, human resources, and managing acquisitions, were important parts of the company, but the marginal benefits and costs of each of them was not much affected by being in a low- or high-cost country.
GEMS in China: On one hand, GE could keep their global product philosophy consistent and experience...