HSA 599: Case Study 2

HSA 599: Case Study 2 1

GE Healthcare (B):

A CSR Dilemma

The Venue 40 Ultrasound

In the 1990s, GE had attempted to develop an inexpensive ultrasound machine focused on offering the basic ultrasound functionality using PC-based software. These efforts were subsequently shelved because the machine’s performance was not considered adequate for GE’s mainstream markets. However, a decade later, the idea was revived by GE’s China R&D team as worth exploring for the local market, given the trade-offs that low-income consumers there were willing to make and the technologically more advanced laptop-based platforms that could now be potentially used.

The R&D team in China came up with a compact ultrasound - the Venue 40 - that relied on touch-screen technology and eliminated the buttons, knobs and keyboards of conventional machines. Further, the device’s smooth surface facilitated the cleanliness required in sterile environments, and its intuitive interface appealed to physicians new to ultrasound.

While GE’s conventional machines could cost over $100,000, the cheapest Venue 40 sold for under $20,000. Soon after the product’s China launch in 2009, GE started selling different variants in other emerging markets and in untapped segments back in developed markets.1

A Corporate Social Responsibility (CSR) Dilemma

GE would, however, need to carefully manage the marketing, sales and distribution of the new device in markets where ultrasound technology was seen to have exacerbated the problem of the disproportionate number of abortions of female foetuses, leading to major concerns about gender imbalance. For example, one news report estimated gender selection to be a $100 million business in India, and the cause of 10 million “missing girls” over two decades.2 Another article estimated the missing girl count for China to exceed 40 million over a decade, again blaming easy availability of ultrasounds for much of that.3 As a market leader in ultrasounds, GE was caught up in the controversy.

While both India and China had made gender determination illegal, enforcement remained a challenge. Critics argued that GE’s aggressive marketing encouraged the practice. It was also accused of insufficiently monitoring whether its machines sold through third parties were used legally. In response, GE had tightened its sales process in 2004, and had even suffered a dip in sales as a result. Meanwhile, a significant fraction of illegitimate practitioners continued to manage access to ultrasound machines by other means and GE remained a regular target of NGO protests and court cases.

GE faced a dilemma, especially as it was trying to portray many of its BOP-related efforts as CSR initiatives. How aggressively should it market ultrasound machines to the mass market beyond large hospitals? Was it worth being conservative, even at the risk of losing a large chunk of legitimate sales? More broadly, how far should it get involved in trying to fix the core issue - a continuing preference for male children in some cultures?

1 Jeffrey R. Immelt, Vijay Govindarajan and Chris Trimble, “How GE is Disrupting Itself” Harvard Business Review October 2009.

2 Kate Darnton, “Where are the baby girls?” International Herald Tribune December 3, 2010.

3 “China grapples with legacy of its ‘missing girls’”, China Daily, September 15, 2004.

03/2011-5776

This case was written by Jasjit Singh, Assistant Professor of Strategy at INSEAD. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.