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The purpose of this project is to analyze an established company. The report will provide brief background of the company and its culture, critical analysis of a venture and its key people, core business model and business opportunities. The reader will be able to see the analysis of the most recent entrepreneurial thing that company did and major issues within the organization. In conclusion there will be a methodical critic from an entrepreneurial prospective provided that leads to the possible solutions for future.
Stryker Corporation is a medical technology business that develops and manufactures medical implants, surgical technologies, emergency medical and patient handling equipment as well as execution beds of the death penalized people. They make their best effort by cooperating with their customers to run effective healthcare method and bring healthy lives back to the patients. They do not just make a product, but they also provide service to help people. Stryker is broadly based all round the world and is divided into numerous decentralized operational units, each performing as a detached entity: Stryker Biotech, Stryker Canada, Stryker Communications, Stryker Craniomaxillofacial, Stryker Development, Stryker Endoscopy, Stryker Imaging, Stryker Japan, Stryker Latin America, Stryker MedSurg, Stryker Orthopaedics and Stryker Spine. Venture is built on sustainability, creating a long-term contribution in responsible manner to patients, suppliers and buyers, communities, corporate governance and stakeholders. Its products, locations and service contributions are diverse; hence there are different types of motions within medical business that fully outline their social responsible behavior.
Stryker was founded by Dr. Homer Stryker in 1941, an orthopedic doctor that investigated and designed new mechanisms. His inventions led Stryker to slowly integrate into the business and starting to gain capital Stryker was at the level of a small but well-built company. One invention after another and Stryker capitalized more assets that gave a lift to expansion and in 1964 the name of the company was changed to Stryker Corporation.
Characteristics of the business opportunities
In the middle of 19th century it was relatively easy to enter medical industry due to minimal amount of competition, thus nowadays analyzing Five Forces Approach it is barely impossible to do so, regarding the fact that rivalry among existing firms is too high. Company started operating in 1940's, before the beginning of World War 2, in their pre-mature stage of development Stryker has had a big boom in their demand. Dr. Homer Stryker was "in the right place, at the right time". Concerning venture's clearly defined opportunity, it can be stated that Stryker was never eager to gain a pot, he was interested in improving people's lives, thus taking risks. It can be clearly seen from a quote made by Ronda Stryker, Dr.Homer's granddaughter: "My grandpa was innovative and took risks. He was always trying to improve what he had and cared more about helping people than he cared about the money he made" (Stryker, 2009).
In the last century it was a great opportunity to start medical business that was weakly developed and unexamined, taking into consideration the fact that you would be willing to spend a lot of your capital on Research and development to progress.
Core business model
Next part describes Stryker's core business model by using the business model canvas which clearly states the main points which should be included in a Business Model.
Key Partners: The main partners of Stryker Corp. are mainly the employees since they are the ones selling the products. The company attaches a major importance to the close relationship between employees and clients. The main objectives for the employees is to understand the clients' needs and to provide them with what they want, but also since the employee is so closely related to the guest he is also the one being innovative by suggesting new ideas in order to totally fulfill clients demand.
The clients represent key partners as well. They are mainly independent hospitals and surgery centers. Stryker Corp. works with these healthcare centers in order for them to help patients in the most efficient way.
Competitors are also among the key partners. There are major and smaller competitors. Of course Stryker Corp. has an advantage since it was one of the first movers in this industry and it is always focusing on improving quality, service and innovation.
Stryker Corp. has very strong established network with its suppliers. Company pays a lot of attention on maintaining these relationships in order to ensure smooth running of business.
Key Activities: The main activity of Stryker Corp. is sales of medical equipment such as hospital beds, operating room devices and medical devices. The company has a very strong sales force since their employees work on commission, which highly motivates them to perform better. Stryker Corp. states that their sales approach is focusing on personal relationships with individual decision makers.
The company also attaches an importance on marketing and Research and development activities, since the main aim of the business is to always be innovative and to come up with new products and communicate those products effectively to their customers. In order to do so, Stryker has participated in advertisement campaigns over the past few years. Company also provides its customers with a very detailed website.
Another key activity is maintaining close relationship between the employee and the customer that helps them retain most of these customers and make sure that the world of healthcare is aware of what Stryker Corp. is providing.
Key resources: Here, once again, the main resource of the company is its employees. For Stryker Corp. it is important to hire people who share the same vision as to improve patients' lives as well as clinical efficiency and effectiveness. The company makes sure to provide them with a safe working environment, strong benefits, services compensation and personal growth opportunities. Stryker has received the Gallup workplace Award which ranks them at the top working places on the world (Stryker, 2009).
Another key resource for the company is its knowledge and innovation. Over the past year Stryker Corp. has spent a considerable amount into research and development in order to always come up with the latest technology and the most performing products.
Other key resources are assets of the company, its technology, products and capital resources. One of the most important resources is the brand of the venture. All of the resources are required to deliver the value proposition to the target group.
Value Proposition: Stryker Corp. focuses on having the highest quality standards in order to offer the best products to its customers. The following are the factors that Stryker relies on: product quality, performance criteria and price.
Company wants to offer the top products in the and also the service that goes with it. In order to do so, employees receive special training programs that help them understand clients' needs and demands and how to be able to fulfill them is the most efficient way.
The design of products has to be made to reduce risks, enhance health and safety, but also to able the doctors to work faster and be more efficient. As mentioned above for Stryker Corp. value of its product is one of the main factors they focus on.
Customer Relationship: Compared to other companies, Stryker Corp. has a very close relationship with their customers. This is done to understand them better and to be able to offer them what they are looking for. By having such a close relation clients feel special and they become loyal to the company. As the CEO, Mr. Macmillan mentioned, "We don't just make "products", we make products and we provide services that help people" (Stryker, 2009). In this industry the relation between customers and business is of a high importance, since together they can create more advanced products which will contribute in healthy lives of millions of people worldwide.
Customer Segments: Stryker Corp.'s target market is known to be the medical professionals and healthcare providers that represent a very high scale demand. That is why the company is operating all around the world to stay the number one provider of medical and healthcare devices.
Channels: Stryker operates through twelve manufacturing and distributions divisions with over 15,000 employees in 120 countries. Stryker has a decentralized system, with its headquarters in the U.S. and several offices around the world, which allows the company to make faster decisions about products and strategies. There is a direct communication between the company, suppliers and customers to make sure to provide them with fast and efficient services.
Revenue Streams: Stryker Corp.'s main revenues are from its sales of medical devices. As mentioned before, the company is divided into several departments the one with the highest revenue being orthopedics. The company itself had sales of 6.7 billion dollars in 2008, with an annual sales growth of 21%. Stryker is traded on the NYSE, it is one of the fortune 400 companies in the world and top 50 Company in the Business Week.
Cost Structure: The main costs of Stryker Corp. are mainly allocated in the Research and development segment. Company decided to invest mainly in this segment since it always wants to be the leading healthcare provider and it is highly important to keep up with the technology and to always try to improve the healthcare system.
Innovation, risk-taking and pro-activity of the venture and its key people
Stryker Corp. is committed to the product quality and highly values innovation. Innovation is the essence of company's dedication to their clients. Research and development teams are working closely with the customers in order to understand their needs better and improve the products. The important part of innovation process is the feedback from people that is conducted periodically. The Stryker Global Technology Center is a core division that is working to boost the innovation to reduce costs while increasing quality. The key person in this area is Ray Umber, Ph.D., business development manager at Stryker. He came up with several innovative ideas that led Stryker to the top place in certain industry segments and now he giving others an opportunity to learn from his experience through training and practice (Stryker , 2009).
From the time when the company was established it is obvious that risk-taking is a big part of all operations. Initial risks are connected directly to the risky nature of the industry. One of the most recent examples of risk-taking was the decision to change the vision of the company after many years of operating. There are also risks associated with decisions of expanding the business through acquisitions, joint ventures and partnerships.
Over the time line of Stryker Corp. it is evident how pro-active the venture is. Acquisitions play a big role in company's expansion. Stryker Corp. strategically grows into related industries to increase its products offering and get access to new resources and technologies. Over last year company acquired numerous ventures that are important investments for future success. This is also a high risk, since acquisitions require big amount of capital expenditures. Based on the financial situation in the world due to the 2008 crisis, such decisions can be seen as risky. However, Stryker orients on long-term strategy where these acquisitions are important. Proactive programs are also taking place on the smaller level inside the company. Last year, Stryker Corp. presented the program Proactive Distributor Selling that gives managers the opportunity and capacity to "better develop, manage, and coach distributor relationships to maximize sales training results" (n.a., 2009).
Proactive approach is seen throughout all divisions of the company, from supply chains, manufacturing to sales. Company is adapting changes all the time with a goal of improving operations and value of the business. The present CEO of Stryker Corp., Stephen MacMillan is a perfect example of a proactive leader. He leads the company through a change time, explains the reasons and future moves, motivates people to adapt and react to these changes.
Traits and characteristics associated of the company's key people
There are three key people throughout the history of Stryker Corp.: three CEOs who led the company to the success and who had different traits and characteristics, which makes them successful entrepreneurs.
First person who deserves an acknowledgement is the first CEO, Dr. Homer Stryker. He was the one who started the company being driven by his passion and interest in improving patients' care. He was a very innovative person, many of his ideas became standards in the industry of medical equipment nowadays. During his work as a surgeon he encountered few problems and difficulties that he saw as opportunities for improvement. One of the main reasons of his success and success of his product was the fact that he was doing what he liked, what he was passionate about. He believed that his inventions will change the medical practice in a better way. He knew how to look at his business from customers' perspective, therefore his products were always a match of their needs. Due to his achievements Stryker Corp. grew and became an international producer of medical equipment and surgical products.
Second remarkable person is John Brown. His time as the CEO of a company was notable by quite different achievements than his predecessor. John Brown was a risk-taker, he made decisions to decentralize the company after many years being centralized. He saw big future for Stryker Corp. and this step was necessary at the time. He was a good planner who knew how to motivate people by giving them empowerment and responsibilities. Under his management members of the sales team got possibilities to get involved into creation of innovative products due to their good knowledge of customers. His 20% forever rule led the company to the new heights. John Brown built up the competitive advantage for Stryker Corp. that still serves the company. He had an ability to foresee, to manage company wisely, he kept the company going towards success.
One of the key people in the company today and the example of successful entrepreneur is Stephen MacMillan, the present CEO of Stryker Corp. He wants to move the company further and expand its operating field. He is passionate about raising the level and often exceeds his own ambitious goals. As well as John Brown he took a risky decision of changing the vision of the company. This is a fundamental change that takes a lot of hard work to ensure success. For Stephen MacMillan, "it's all about coaching his team to stay ahead of the pack" (Much, 2006). He has a great ability to motivate people, to manage company's resources wisely, plan everything one step ahead. He creates a positive image for Stryker Corp., gets involved in company's affairs and builds solid reputation for himself and company as a whole.
Company's culture, values, vision and mission
Stryker Corp. is the global leader in medical technology industry with the long history of success and strongly established culture. Success of the venture lays in discipline, stamina, ability to recognize the opportunities in the market, move quickly and adapt to current changes.
Furthermore, culture differs from company to company and it is usually established naturally. Every time when people come together with the shared purpose culture is created. Stryker Corp.'s culture was changing throughout the past, different set of values and incentives were created for employees, with aim to increase the overall financial performance of the company and bring back the benefits to patients, shareholders, community and its employees. Today they are focused on innovation, improving the quality of the products in order to build up trust and integrity.
According to their mission statement:
"What matters most to us and to our customers is quality innovation and cost. Those are three areas how we are delivering for today and investing in future" (Stryker, 2009). Company's strong financial and leadership position put the expectation for its products even higher and according to that company has to find the way to exceed customer expectations. Moreover, one of the core values and components in the Stryker Corp.'s culture is sustainability. Organization believes in making differences by partnering with their customers and providing them effective healthcare system in order to improve health of their patients. It has built up strong believes and attitudes with their employees that present the essence for their future expansion. According to Striker Corp. they "do not just make products - our technologies, solutions and services are focused on improving the people's life" (Stryker, 2009). They strive to develop and manufacture products that could sustain the environment and its resources. With being sustainable in such a demanding and vigilant industry where the space to make mistake is highly minimized, company's sustainable commitment and responsibility is placed on the highest level. One of the key values is being Social Responsible Corporation in everything what business does. Venture acts as corporate citizen with strong commitment to the patient care by producing the safe products, high quality instrumentation and implants, seeking to minimize the negative effect on the environment, supporting the humanitarian missions and improving quality of life for patients. Building up the trust with customers and patients is everything what social responsibility is. Moreover, vision statement that presents the power tool to retain people with constant shared values was changing in the past with Stryker Corp. as well.
Today Stryker Corp. emphasizes on ethics and their vision is: "producing products which improve the lives of patients, providing employees with a challenging and rewarding work environment, supporting the communities in which we operate, and generating exceptional returns for our shareholders" (Stryker , 2009). Stryker Corp. is not just profit oriented as it used to be before. Now the essential part of its success is the fact that company became more efficient and sociable responsible. Stryker is everything what entrepreneurship is. It was found by Dr. Homer Stryker and his innovative idea that enabled Stryker to be become what it is today, the leader in medical technology. Stryker Corp. involves sense of innovation and constant risk taking that is associated on the daily basis since it is operating in a very sensible environment.
Evaluation of failures
Stryker Corp. is a strong believer in ethics and bringing the special spirit within its people to compete, make changes and win over the long term. Because of their strong reputation in such sensitive industry, where one mistake or product defect could leave undesired consequences on their image and brand, failures are not tolerated. Taking the case of Surgical Navigation System, where there was a reasonable probability that a product could cause health problems or even create consequences leading to death, Stryker Corp. recalled the product and stopped its usage. This gave the company bad publicity, but it responded fast by pulling out all products from the market and arranging repair for all of them. Very important fact is that in this case Stryker Corp. assumed its responsibility and closely cooperated with public, special control agencies and auditors. After this company became even more cautious and increased safety and security measurements in order to minimize the risks and prevent negative impacts that can decrease their performance in a demanding and competitive market.
Recent entrepreneurial thing
Apart from the fundamental change of the company's vision that was discussed earlier, one of the main changes, which happened within Stryker Corp. in 2009, was that the Stryker legend, John W. Brown, retired from the board of directors. As mentioned previously he was one of the biggest influences towards the growth of the company. With his retirement the company decided to hire two more directors to replace his position in the board.
One of the new members, Mr. Howard Lance is a former chairman, President and CEO of Harris Corporation, which based its operations mainly on telecommunications. The reason for this recruitment was to use his experience and knowledge within the Hong Kong market, where he has lived and worked since Stryker's 2010 goal was to expand in the Chinese market.
The second gentleman, Mr. Srikant Datar is a former professor of Harvard Business School, who already brings new perspectives towards the team, especially towards the emerging markets. However, mainly his responsibility will lie in bringing new entrepreneurial ideas towards the bio-tech field of the company.
The reason this recruitment is the most entrepreneurial thing the company did in the past year is because it will bring a new perspective and help the company grow stronger in the years ahead.
Since the company is currently facing consequences of the economic crisis something entrepreneurial had to be organized in order for the company to differentiate from the competition and persuade to their goal of being number one in the medical industry.
Idea of hiring a former telecommunication CEO might not seem much related to the medical industry, but from an entrepreneurial side of view it brings new ideas and risks, which will lead the company towards growth.
Major problem in the venture
The major problem area not for Stryker Corp. only, but also for majority of organizations around the world, is the crisis. Looking at previous years, Stryker has always had a significant growth rate, even in 2007 and 2008. In 2009, however, it changed. Stryker only managed a growth rate of 0.1% in sales and 4% in earnings per share. As Mr. MacMillan states in the 2009 annual report, "Clearly, this is not the kind of revenue and earnings growth our shareholders have historically expected from us, and we will never be satisfied with delivering results like these" (Stryker, 2009), indicating that these numbers are not up to the satisfaction level in order to meet their goals. On the other hand he also states that "2009 felt more like a boxing match. We went toe-to-toe with a volatile global economy, rolled with some marketplace punches, moved quickly and battled back" (Stryker, 2009). Here he is describing how tough the year was for the company in terms of keeping it up to the level expected by the shareholders.
The crisis itself is the major problem. But within the crisis, sub-problems are found such as the fact that it leaves the market place in an unstable condition, where customers are afraid to buy products. The most common solution is to produce more effectively and lower the costs. Stryker Corp. did just that. The problem was that the quality decreased. The FDA (Food & Drug Administration) has through the years become stricter in regulating the medical industry and this affected Stryker Corp. by receiving three warning letters upon their quality on products. The complaints mainly address their biotech and hip implant sector. Company was also accused for falsified hospital documentation, which is not just a quality problem, but becomes a PR problem. Competition is also a major indicator in the problem of reducing your costs. The medical industry is highly competitive industry, especially when it comes to innovations that increase quality and safety. Innovations, on the other hand, require big capital expenditures. To stay competitive Stryker Corp. had to further invest in this sector. The last problem in the year 2009 is that Stryker Corp. has some elements of a decentralized company (recent organization is hybrid between centralized and decentralized structure), which makes it difficult to carry out the same plan towards fighting the crisis in all operating countries.
Possible solution and evaluation
The next step in the problem analysis is to identify possible solutions towards the problem in order to achieve better results in 2010. The suggestions are listed below:
Keep the operations as they are, since the market will grow by itself in 2010.
Increase expenses on improving the quality
Decrease production costs in order to decrease price
Fully centralize the company
Invest more in innovations to improve competitive advantage
Hire a consultant, who can ensure the quality of the products being produced
Increase PR spending to increase the company's image
In order to find best-match solution, all of them need to be evaluated. The first point can be good, if their market analyst is correct. On the other hand, the market is unpredictable in most cases, therefore, the company would undertake a risk by following this statement of growth. Thus, first option is not a valid solution to the problem. Second possible solution based on the fact that quality was the major sub-problem that arose from the crisis and it is vital to ensure both PR and customer loyalty. Therefore, this option should be considered. Next alternative outlines a theory that is a "must do" to any company's future success. Decreasing production cost should always be a big part in order to achieve economies of scale, but decreasing that should not be a reason for decreasing the price, because once the recession will come to an end, the company will benefit more from not having changed the price. Solution number 4 is an absolute no-go solution. A major change such a centralizing the company in the times of crisis will just bring more trouble and confusion then there is already. In addition, if the communication is strong, the decision making towards changes in the market will be perceived much faster in a decentralized company or hybrid. Alternative number 5 is probably not the best solution in this case. In the times of crisis there is no need to further increase spending on innovations and most likely that competitors will not do it either since every company is trying to manage their expenses wisely. However, it does not mean that innovation segment must be neglected since it is one of the key elements in this industry. The most reasonable solution is number 6 in terms of sustaining the quality of the products produced and redistributed. It is always helpful to have someone from outside the company to give opinions upon the products and basic operations. Last alternative would also not contribute towards the major challenge of fighting the crisis, since it would mean more expenditure, which indirectly contributes to growth.
To finalize upon the options analyzed above, the recommendation for Stryker Corp. would be to hire a consultant and continuously try to decrease costs. The consultant would ensure higher quality and ultimately increase in company's image since fewer customers would have complaints upon the products. In addition, with consultant's help, reduced number or no warning letters from the FDA can be achieved. In order to come back to the growth expected by shareholders, our recommendation is to continuously decrease costs and thereby achieve economies of scale.
Stryker Corp. is a major company in the world's medical device industry and not an individual business anymore, as it is seen from entrepreneurial perspective. However, its key people and their activities are remarkable from this point of view. This venture has an organized structure, clear goals and objectives that drive company towards continuous growth. Based on evaluation of core business model and major problems that Stryker Corp. has today, there are still many business opportunities that can be undertaken and recommendations provided will contribute in the future success.