...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 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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...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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...Stryker Corporation: in-Sourcing Pcbs 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...
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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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...Case Study of Stryker Corporation 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)...
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...1. What are the missions of CERs and the capital budgeting process at Stryker? Mission: Standardize and formalize the capital budgeting process. The CERs and capital budgeting process were implemented so that a more formal process of requesting capital expenditure and approving them would be applied. All this was put in place to support cash flow targets and maintain Stryker’s 20% growth benchmark. To what extent have they been shaped by elements of corporate finance theory? They are heavily influenced by corporate finance theory * All submissions are required to show the net present value (NPV), internal rate of return (IRR) and payback period. * They need to highlight the project’s anticipated outgoing cash flow and earnings effects on the company and describe specific risks that could affect the projects abitily to deliver projects economic results. * Specifically for mergers the CER would include financial analyses of “Best Case” and “Worst Case” scenarios which would include income and cash flow figures. To what extent are they shaped by Stryker’s particular industry, history, and culture? These factors play a role in shaping the CERs and capital budgeting: * Industry: With a growth in the medical industry and an aging baby boomer population Stryker would naturally see a growth. However to continue to achieve this growth a steady or increased rate they would need to establish a method (in this case CERs and capital budgeting process) to...
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...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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...MEMO Group 4 is recommending investors to hold their stocks in Stryker Corporation. This memo focuses on measures and additional information which support the position not to buy or sell, but to hold Stryker stock. Included are certain of the company’s liquidity and solvency ratios, along with profitability, dividends history and stock ratios. Stryker is a leading medical technology company based in Kalamazoo, MI. More than 2/3 of their sales are within the US, where most products are marketed directly to the medical community. The remaining sales are in over 100 countries through company-owned sales subsidiaries and branches, as well as through 3rd parties. Stryker sells 3 types of cutting edge, advanced technology products: Orthopaedics, Medical Surgery, and Neurotechnology and Spine1. In Stryker’s main revenue-generating product, Orthopaedics, the company is one of five leading competitors globally. Prior to the financial analysis, we highlight three major activities of the company in 2014: firstly, several mergers and acquisitions added expertise, customers and assets, the most intriguing being MAKO, which helps the company build out robotic arm assisted surgery; secondly, a major recall to its hip system occurred due to corrosion; and thirdly, the company continues to spend for patents and R&D. Stryker’s liquidity and solvency ratios appear far from impressive (see ref 1. Liquidity/Solvency). The Current and Debt to Assets ratios point to diminishing liquidity...
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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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...1.0 Definition of Sukuk in general The word ‘sukuk’ is taken from the Arabic name to represent the financial certificate or an Islamic bond. It comes in Arabic form which is “sak” in singular and “sukuk” in plural. Sukuk is the Islamic bond or security that provides return to investor without breaking the Islamic law, which prevent in charging or paying interest. Sukuk in Islamic finance provides an opportunity to obtain the expected return with the lowest risk as the majority of investment opportunities is based on the stock market. Income is fixed when applying sukuk resulted in no interest is charged on the bonds. Bonds are securities based on debt while sukuk are securities based on asset. Sukuk is an important mechanism that will enhance the financial international capital markets through Islam. Sukuk are primarily composed of investment certificates of ownership claim in a pool of assets. In conclusion, sukuk refers to Islamic bonds that give an advantage to the investor to own a piece of property, along with a commensurate cash flow and risk. Sukuk is in compliance with Islamic law and also refers to the Islamic principles which do not charge interest. 2.0 Background of Sukuk in general Sukuk is an Islamic capital market instruments. Sukuk refers to Islamic securities with rather distinctive features in the modern day of Islamic finance. The first Sukuk transactions occurred in Damascus, Syria, located in the Grand Mosque of Damascus in the 7th century AD...
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...Case 2 Problem Canadian firearms program was started as an implementation of Firearms Act 1995 (Bill-C68). This multi-jurisdictional program was set to help regulate the mandatory registration of firearms and licensing requirements of firearm owners. At the core of this program was a new IT system – CFRS (launched Dec 1, 1998) planned to eventually replace the ageing system of Canadian police (Restricted weapons registration system) and also integrate various existing police systems – CPIC and FIP. This program had its fair share of success in terms of good volumes of registration, licenses and gun transfers. However, it ran into cost escalations and budgeting issues at end of its 3rd year. With official reported costs of around $1 Billion and unofficial ones at $ 2 billion, figures that far surpassed the original “break-even” estimates for this program. A multitude of problems exist behind this situation, * Lack of central leadership, coordination and vision. * Disparate public opinion on the Firearms act and its relevance * Poor credibility due to provinces opting out of this program * Parliament’s ignorance and loss of control on costs * Lack of supporting infrastructure needed for the new system to work efficiently * Integration of diverse IT systems with varying complexity * Weak internal and external communication , program rescoping and frequent changes in deadlines In order to arrive at recommendations, it is necessary to assess...
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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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...DATA E HORA|ATIVIDADE|LOCAL| 09/07/2013|Audiência Pública: Diálogos Governo-Sociedade sobre o Orçamento Federal|Auditório do Anexo 1 do Palácio do Planalto| O EVENTO 1 Audiência Pública: Diálogos Governo-Sociedade sobre o Orçamento Federal 2 Organizado por SG/PR e MPOG/SOF 3 Por ser audiência pública, atende ao inciso I, parágrafo único, do artigo 48 da Lei de Responsabilidade Fiscal. PARTICIPANTES/PÚBLICO 4 Ministérios e representantes da sociedade civil PAUTA E OBJETIVO 5 Pauta: discussão com a sociedade sobre o orçamento federal 6 Objetivo: definir quais, na visão da sociedade, seriam as políticas e os programas prioritários para a PLOA 2014. Essa priorização será enviada aos Ministérios por meio de um relatório consolidado pela SG/PR. CONTEXTO/HISTÓRICO 7 Participação da sociedade, por meio do Fórum Interconselhos, na construção do Plano Plurianual – PPA 2012-2015: o Em 2011, durante a elaboração do Projeto de Lei do PPA, foi constituído o Fórum Interconselhos como ambiente de interação, processo participativo e de atuação conjunta dos representantes da sociedade civil, por meio dos Conselhos Nacionais de Políticas Públicas. o Dele participaram representantes de 32 Conselhos, quatro Comissões Nacionais e 65 entidades da sociedade civil. o Com 77% das ações sugeridas completamente incorporadas e 20% parcialmente aceitas, a proposta do PPA foi enriquecida e aperfeiçoada a partir da contribuição de representantes da sociedade. 8...
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