...provide the PCBs to other departments. The main benefit of this proposal is the high reliability because the company would have high control degree based on the quality and delivery of their own products. If the company implements this proposal, the account payable period to the manufacturer would increase from 30 days to 120 days. The fact that payment was not due for 120 days means that its customers typically would pay Stryker for finished goods before Stryker was required to pay its materials supplier. This benefit would increase the company’s cash flows and liquidity. Also, the managers and engineers already master the knowledge of using the equipment and systems needed to produce the PCBs and familiar with the manufacturing equipment. Therefore, the Stryker can use its own employees rather than hiring other people outside the company or training their own employees to produce the PCBs, resulting in the low labor cost. Last but not the least, the company already has its own factory that can be used for constructing the new facility. So the Stryker doesn’t need to buy or rent the factory for this proposal, which lower its equipment cost. Although this in-sourcing proposal has a lot of benefits, it also has some potential risks. The biggest risk is that the company has to invest large amount of money at the beginning, which may results in the company’s shortage of the cash flow, even worse results in the company’s bankruptcy. Comparing with the option #1 and option...
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...Stryker BUAD 341-0, MWF 1:00PM Isral Hadero 04/28/2014 Table of Contents Introduction 1 Theme 1 History of the Firm 1 Product Line of the Company 3 Industry History and Analysis 4 Major Competitors 4 NAICS Numbers 5 Relative Industry Sales, Returns and Maturity 5 Stock Performance 6 Financial Analysis 7 Ratio Analysis 9 Pro forma 11 Assumption 12 Growth Rate of Sales 12 Asset Acquisition 13 Financing Needs 13 Conclusion 14 Appendices 15 Income Statement 15 Balance Sheet 16 Sources and uses 17 Percentage of Sources and Uses 19 Firm Ratios 21 Industry Ratios 22 Graphs of Ratios 23 Bibliography 26 Introduction This paper contains the financial analysis of Stryker corporation and its major competitors during the past 5 years. Also a 3 year forecast is created to show were the company is heading and changes needed to be made to be more efficient. Theme Time are hard for the medical industry with the global economic crisis and with the announcement of the Affordable Care Act’s medical device excise tax. Stryker corporation has done better than the industry on average sustaining a strong financial while presenting new products in the market. Growth is becoming slow for mature firms but Stryker is making all the right moves to dominate the market. To increase growth the company has shifted its focus on acquisitions. With the acquisition of Trauson, a Chinese leading manufacturer of surgical products...
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...Stryker Corporation is a medical company founded in 1946 by Homer Stryker. It specializes in medical technology and it is headquartered in Kalamazoo, Michigan. This report will be focused Stryker Corporation’s capital budgeting process and identifying some of the strengths and weaknesses that come along with it. The missions of CERs and the capital budgeting at Stryker: Stryker Corporation has had an outstanding growing background since it started. They have a benchmark of 20% growth annually, and one of the reasons the firm has been able to do this is their way of managing their capital budgeting process. Stryker used CERs (Capital Expenditure Requests) in their capital allocation process. These were basically permission forms that were submitted to be filled out by the authorities in order to get allowance to spend a certain amount of money. The mission of the CERs and the capital budgeting process at striker is to standardize and formalize the capital budgeting process. The CERs made it easier for the company to keep track of the expenditures that were made in each division. Thus, the firm was able to support cash flow targets and maintain the 20% growth of the company. The CERs have been shaped by elements of corporate finance theory. The fact that the CERs are made to have a smarter way of managing the expenditures of the company, automatically refers to the principal goal of corporate finance which is to maximize shareholder’s wealth. Since the CERs are helping...
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...us ed in a spreadsheet, or transmitted in any form or by any meanselectronic, mechani cal, photocopying, recording, or otherwisewithout the permission of Harvard Business School. TIMOTHY A. LUEHRMAN Stryker Corporation: In-sourcing PCBs In late May 2003 executives in Stryker Corp orations Instruments business were actively considering a change in their sourcing strategy fo r printed circuit boards (PCBs), a key electronic component of many of Stryker Instruments medi cal products. Currently, Stryker purchased PCBs from a small number of contract manufacturers. The Instrument s business anticipated spending more than $10 million in each of the next two years on PCBs, an amount that would increase as the Instruments business grew. In re cent years, the performance of some contract manufacturers had been unsatisfactory with respect to quality, delivery and/or responsiveness and Stryker had repeatedly found itself looking for new suppliers. More generally, contract manufacturers tended to operate on thin margins with scant capital. Ba nkruptcies were not uncommon, and even without bankruptcy, a financially weak supplier was simply less reliable. Given recent events and the shaky appearance of several current suppliers, Stryker Instruments had resolved to address the issue. Stryker Instruments manufacturing managers stud ied three options for improving the situation. Option #1 was to maintain the current basic...
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...Stryker Case Study 1) CER-The Mission of CERs are to facilitate order and efficiency through a chain of command like structure. In order to efficiently manage M&A for any conglomerate, a multi-level corporate structure is necessary. This ranges from approvals of liaisons, lower management, and board approval depending on the financial size of the decision. The importance of capital budgeting for a company like Stryker is that in order to maintain their 20% growth corporate strategy, they need the assets to do pursue that. That comes in the form of acquisitions, and other business forms such as licensing, investment in PPE, etc. CERs help delegate the work and research required to make smart investments by incorporating multiple requirements which are written out in the CERs. These include a 2 part document that entails an overview of the project, and then the financial analysis that justifies the acquisition in great detail. As per the study, large acquisitions CERs can be multiple volumes in depth. * The CERs involve the use of principles such as Net Present Value. They, on average, require a 5 year future cash flow in the CER. Also they compare IRR and use their 20% growth requirement as a benchmark. They use payback period too, but as far as value goes, takes the backseat to some of the other financial tactics they use. Since the CER is used for all levels of business decisions, the payback can possibly be used in the small dollar investments of current...
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...Stryker Corporation Deciding whether to keep outsourcing or in-source PCBs Stryker Corporation has 3 different options regarding the supply of needed PCBs. Option 1: contemplates the fact of keeping the same suppliers but with significant changes in order to assure continuous supply of PCBs and quality. No investment is needed. Option 2: establishing a partner with a single supplier. This way there would be a sole supplier for Stryker established in a new facility near them, this would give more certainty and control over continuous supply and quality standards. Again, no investment is needed. Option 3: in-source the PCB’s, there is a project for investing and owning a plant for producing their own PCB’s, this way they would assure a continuous supply and have 100% control over quality standards. In this case, there is a big amount of capital that should be invested, which is needed to be analyzed in order to see whether it is viable for the company or not. The case present several information regarding expected production costs for in-sourcing and expected purchases for outsourcing. Since there is no projected information of Income Statement, then the only cash flow analysis that can be made is by comparing the efficiency gained by in-sourcing the PCBS compared to the costs of keep buying the PCBs. The case contemplates the projected comparison from 2004 to 2009 of the costs of buying PCBs from an external supplier and the costs of making the PCBs. What we will analyze...
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...Stryker Corporation Case Study Stryker Corporation Case Study Andrew Wyatt Brett Nymeyer Brett Sundberg Josh Ihnen Executive Summary It is 2003 and Stryker Corporation is proposing to build a new facility that would be able to produce a key component (printed circuit boards) in-house instead of outsourcing that activity to suppliers. Currently, Stryker purchases PCBs from a small number of contract manufacturers but recently the suppliers have been underperforming in quality and delivery. The proposed plan would create a high degree of control over this product, ensure quality, and create an economy of scale in the long run. However, this plan also required the most capital outlay in both money and resources. The project would have an initial investment of a new building, capital equipment, and IT infrastructure totaling $6,287,258. However, there would also be cost savings in the long run from decreased purchases from suppliers even after the increased expense of Stryker’s manufacturing costs. To find out if this project offered an adequate return on investment we performed a Net Present Value Analysis and also calculated Internal Rate of Return and Payback Period for years 2003 through 2009. Analysis 1. Does this project make sense? We like the insourcing proposal and think that it makes business sense for several reasons. However, these reasons are based off of the information taken from the case before we analyzed NPV, IRR, or Payback...
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...HARvAR D I " , srNEss I , . " Tt . W-rEr 5gor6ffi, TIMOTHY A. LUEHRMAN Stryker Corporation: In-sourci In late May 2003 executives in Stryker Corporation component of many of Stryker Instrument,s medica from a small number of contract manufacturers. more than 910 million in each of the next two Instruments business grew. In recent years, been unsatisfactory with respect to quali$ repeatedly found itself looking for new su bankruptcy, a financially weak suppl appearance of several current suppli Stryker Instruments' establish a Stryker was Stryker ucts. Currently, Stryker purchased ts had resolved to address the issue. nt basic sourcing policy for PCBs, but with important tect against future disruptions by acquiring safety stocks of rcing of all electronic assemblies. Option #2 would boost supplier of PCBs and ility for supplying them. The partnership and incriased business from the supplier, further boosting its reliability. Option #3 was for acture its own PCBs in its own facility near company headquarters in such a facility was up and running, as well. PCBs PCBs ments business anticipated spending an amount that would increase as the of some contract manufacfurers had /or responsiveness and Stryker had lly, contract manufacturers tended to were not uncommon/ and even without reliable. Given recent events and the shaky rs studied three options for improving the situation. Option #1...
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...Stryker Corporation Case Study Andrew Wyatt Brett Nymeyer Brett Sundberg Josh Ihnen Executive Summary It is 2003 and Stryker Corporation is proposing to build a new facility that would be able to produce a key component (printed circuit boards) in-house instead of outsourcing that activity to suppliers. Currently, Stryker purchases PCBs from a small number of contract manufacturers but recently the suppliers have been underperforming in quality and delivery. The proposed plan would create a high degree of control over this product, ensure quality, and create an economy of scale in the long run. However, this plan also required the most capital outlay in both money and resources. The project would have an initial investment of a new building, capital equipment, and IT infrastructure totaling $6,287,258. However, there would also be cost savings in the long run from decreased purchases from suppliers even after the increased expense of Stryker’s manufacturing costs. To find out if this project offered an adequate return on investment we performed a Net Present Value Analysis and also calculated Internal Rate of Return and Payback Period for years 2003 through 2009. Analysis 1. Does this project make sense? We like the insourcing proposal and think that it makes business sense for several reasons. However, these reasons are based off of the information taken from the case before we analyzed NPV, IRR, or Payback Period, so they are...
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...Harvard Case Study Stryker Corporation: Capital Budgeting Term Paper Laini Tsang Golden Gate University MS Finance, FI 312 Summer 2013 Stryker’s Capital Budgeting Harvard Case Study Table of Content Case Background and Summary Pharmaceutical Industry’s Landscape Stryker’s New CERS and why it is “painful”? Propositions Conclusions 2 Stryker’s Capital Budgeting Harvard Case Study Case Background and Summary Founded in 1941 in Michigan, Stryker Corporation is a fast-paced company with continuously exceptional growth rates. Over the last 27 years, the company historically increased revenues by 20%. The company’s culture prides itself on service ethics, integrity, innovations, accountability, and customer relationships; it is one of the world’s leading medical technology companies with history of successful stories. Stryker’s products focus on implants for joint replacement, trauma, spinal surgical products, neurologic and endoscopic equipment. The company has well diversified product portfolios with solid fundamentals. Over the years, the company’s accretive mergers and acquisitions brought operational synergies and cost efficiency, strengthening the pipeline with increasing profitability. This paper examines Stryker’s capital budgeting process (CER – Capital Expense Request) and why this process, after its modifications in 2005, had slowed down the company’s internal capital project requests. From the company’s financials, we can see their capital...
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...Stryker Corporation: In-sourcing PCB’s Conclusion: If Stryker consider option 1 and keep safety stock of the electronic board then it will not resolve the problem of quality of input material. It will also increase the cost of inventory which will affect the profitability. But this could resolve the problem of reliable delivery of goods. That is if the supplier is unable to deliver the material in timely manner then they would have enough inventory that they can continue production without any hurdles. If it considers option 2 that is to create partnership with their suppliers then they will be able to receive continuous delivery of goods as well as the supplier will ensure high quality of goods to be delivered. But relying on only one supplier is dangerous if the supplier will be unable to deliver goods due to uncontrollable factors or the partnership will break then they will be in great trouble. It Stryker consider option 3 to manufacture the electronic board internally. They will have a positive NPV of $18.97m due to huge saving in cost of purchasing from contractors. The IRR is far above the 15% discount rate which shows that in case the discount rate reaches at 72% then NPV will be equal to zero. And this is not possible that discount rate reach to 72%. The payback period shows that the investment made in the year 2004 will be recovered in 2 years and 0.6 months, so the return from investment is very high. But the problem is that this is not their core business and...
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...The U.S. Army's 25th Infantry Division, nicknamed "Tropic Lightning," is headquartered at Schofield Barracks, Hawaii and is assigned to the Pacific Command. The Division of nearly 17,000 soldiers stationed in Hawaii, at Fort Wainwright and Fort Richardson, Alaska, focuses primarily on training for low intensity conflicts throughout the Pacific region. However, the 25th ID is fully involved in the Global War on Terror and deploys units in support of Operation Enduring Freedom in Afghanistan and Operation Iraqi Freedom in Iraq. The Tropical Lightning Division underwent the Army's modular re-organization in 2006. The 25th Infantry Division now has four Brigade Combat Teams (BCT) and an Aviation Brigade. The 1st and 2nd BCTs have fielded the Stryker combat vehicle, and the 4th BCT is Airborne qualified. The division's shoulder patch, a lightning bolt superimposed on a taro leaf, was formally adopted in 1943. The colors of gold and red were those of the late Hawaiian monarchy. While soldiers over the years have jokingly nicknamed the patch the "Electric Chili Pepper" or the "Electric Strawberry," in 1953, the nickname "Tropic Lightning" was officially adopted. In 1921, the United States Army formed the Hawaiian Division to protect the islands and our growing interests in the Pacific region. On October 1, 1941, the Hawaiian Division was split to create the 24th and 25th Infantry Divisions. The 25th Infantry Division was stationed at Schofield Barracks, on the island of Oahu, Hawaii...
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...1. (1) Option #3 was for Stryker Instruments to manufacture its own PCBs in its own facility near company headquarters. (2)Benefits for option 3: ● Better control the quality, delivery and cost; ● Maintain the business stability; ● Supply PCBs to other Stryker businesses; ● Be able to implement cost shift and avoid tax; (3) Risks for option 3: ● Carry the inventory; ● Incur large capital outlay and sunk cost; ● Increase headcount, payroll and other expenditures (materials, infrastructure, R&D, maintenance, PP&E and depreciation) of Stryker; ●Bear the risk that the equipment may be outdated; (4) Compared with option #1: ●Benefit: no capital outlay; to some extent can protect future against disruptions with lower cost; flexibility; ●Risk: instability in quality, cost, delivery and responsiveness; Compared with option #2: ●Benefit: can improve quality of the supplies by increasing business with the supplier; ●Risk: the possibility of bankruptcy and weak financial performance of supplier; the sole supplier can strongly affect Stryker’s performance; coordination problem. 2. (1) Followings are the key assumptions of our write up: ● Stryker Instruments incurred all capital expenditures including (construction and improvements, furnishings and non-manufacturing equipment, communication equipment and IT infrastructure and capital equipment) in year 2003, before the implementation...
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...of time, it is critical to have the person transported to a facility that can identify the problem and start treatment immediately. Failure to stay within this timeframe can ultimately mean the difference between life or death for personnel. https://archive.org/details/ost-military-doctrine-fm4_02x2c1, Department of the Army, Medical Evacuation, Retrieved April 21, 2014. http://medevacmatters.org/, Army Medical Department (AMEDD) MEDEVAC Innovations, AMEED, Retrieved April 22, 2014 Medical evacuation is a critical component of any war type scenario. How quickly and efficiently a medical team can remove and provide medical treatment to soldiers is paramount. With these requirements in mind, I chose the Stryker M1133 as my transport of choice. The Medevac Stryker M1133 is a...
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...AFIN328 Financial Risk Management Department of Applied Finance and Actuarial Studies Faculty of Business and Economics Unit Guide D2 Day; Offered in Session 2, North Ryde 2012 Table of Content Table of Content General Information Convenor and teaching staff Credit Points Prerequisites Corequisites Co-badged status Unit Description 2 3 3 3 3 3 3 3 Learning Outcomes Graduate Capabilities Problem Solving and Research Capability Creative and Innovative Effective Communication Commitment to Continuous Learning Discipline Specific Knowledge and Skills Critical, Analytical and Integrative Thinking Engaged and Ethical Local and Global citizens Capable of Professional and Personal Judgement and Initiative 4 5 5 5 6 6 7 7 8 8 Assessment Tasks Class Test 1 Class Test 2 Group assignment Final Examination 10 10 10 10 11 Unit Schedule Delivery and Resources Policies and Procedures Academic Honesty Grades Grading Appeals and Final Examination Script Viewing Special Consideration Policy Student Support Student Enquiry Service Equity Support IT Help 12 13 14 14 14 14 14 15 15 15 15 Research and Practice 16 Page 2 of 16 General Information Convenor and teaching staff Unit Convenor: Alan Rai Email: alan.rai@mq.edu.au Phone: 9850 1169 Office: E4A 228 Consultation Hours: 1-3pm Monday Lecturer: James McCulloch Email: james.mcculloch@mq.edu.au Consultation Hours: Consultation during tutorials or via email Credit Points 3 Prerequisites ACCG252...
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