An audit of an organization named Stryker that includes a SWOT analysis, financial performance, competitor & strategy analysis.

1. Stryker
Audit.
Chetan P. Padme
chetan.padme@icloud.com
1

2. Agenda
SWOT
Stakeholders Recommendation
Strategy
Competitor
Financial
2

3. SWOT
Strengths
• Distribution & reach.; Low cost structure.
• Strong
fi
nancial position; large asset base; better solvency.
• Skilled labor force & investment in training & development.
• Global presence (75 countries) & high brand awareness.
• Large product portfolio in variety of di
ff
erent categories.
• Well-established IT infrastructure
• well-functioning and interactive website & social media
• Number of intellectual property rights; trademarks and patents.
• Partnerships with its suppliers, dealers, retailers and other
stakeholders
Opportunities
• Internet (E-commerce & social media)
• Technological developments
• In
fl
ation; nterest rate
• Green government drive
• Transport Industry
• Implementation of sustainable practices.
• Consumers are becoming more conscious of health
• Trade barriers have been reduced on the import of goods.
• Regulations have loosened in recent years making it easier for
businesses to carry out their operations.
Threats
• Technological developments by competitors.
• Political uncertainties,
fl
uctuating interest rates & exchange rate (do
not provide a stable
fi
nancial and economic environment.)
• Regulations on international trade keep changing.
• Threat from new entrants & Increasing competition is there; but
more importantly the power lies with suppliers and buyers.
• Consumer tastes are changing & substitute products are increasing.
• The rise in prices of fuel led to increased in input costs.
• Increased promotions by competitors.
• Constant technological developments require the workforce to be
training.
Weakness
• Research & development.
• High day sales inventory.
• Low current ratio.
• Cash
fl
ow problems.
• Decision making is highly centralised.
• High employee turnover rates.
• Quality Control & Integration.
• Lack of legal experience (many concern identi
fi
ed in 2020 outlook).
3

4. Financial
Inventory turnover
Observation: Inventory days have increased over the years, whereas the the
inventory turnover ratio has detoriated from 1.89 to 1.52 which is low in itself
as well as compared to competition.
Reasons: weak sales, Excess inventories, overstocking
Need: e
ffi
cient inventory management
Proposed Solution:
A. Inventory Automation Softwares; AI can be leverage to manage process
e
ffi
ciency (advantage: instant noti
fi
cation, real time stock updating and
automated messages for distributor & restocks.)
B. E
ff
ective marketing: Social media, SEO, paid advertising, content
marketing and email marketing
C. Speedup shipping; Encourage sells of old stock
D. E
ffi
cient restocking; Stock inventories that sells well; Proper forecasting
E. Encourage customers to preorder
F. Negotiate purchase prices regularly
G. Smart pricing strategy
4

5. Financial
Trade receivables
Observation: Over the 5 years period, Trade receivables day have increase
Whereas the receivable turnover has deteriorated.
Reasons: Poor credit control Policies/A haphazard Approach to customer
collection/ A
fi
nancially unreliable client base
Need: accounts receivable process is critical for protecting your company’s
fi
nancial health.
Proposed Solution:
• Build Strong Client Relationships
• Invoice Accurately, On Time, and Often
• Include Payment Terms
• Use Cloud-Based Software
• Make Paying Invoices Easy
• Do Away With Having an Accounts Receivable
• Simplify Your Billing Structure
• Follow Up Regularly
• Reconcile frequently
5

6. Financial
Trade payable
Observation: Over the 5 years period, Trade payable days have increase
Whereas the Payable turnover has deteriorated.
Reason: Ideally more payable days would be suitable to have more capital
at hand. But the trend within industry seems to be in favour of suppliers and
vendors.
Need: fine-tune AP turnover ratio and ensure your business has the
resources it needs to compete and innovate e
ff
ectively, meet its obligations,
and develop valuable, strategic supplier relationships.
Proposed Solution:
A. Managing Liquidity Part of Business Continuity Planning
1. Improve payment terms set by your creditors
2. Build supply chain resilience and
fl
exibility
B. Be Proactive with Supplier relationship management
C. Invest in an eProcurement Software Solution (recommended centralised,
cloud-based)
Bene
fi
ts:
• Full transparency and tracking with variety of metric.
• Centralised data management and analysis
• Support inventory management
• Support adjustable automated & contingency
• Eliminates human errors.
6

7. Financial
Liquidity Ratios
Observation: Current ratio is constantly decreasing a peak was seen in
2019 but the overall trend is declining. And same is in case of Acid test ratio.
Reason:
• There are problems with inventory management, ine
ff
ective or lax
standards for collecting receivables, or an excessive cash burn rate,
if the trend continues & current ratio falls below 1, the company likely
won't have enough liquid assets to pay o
ff
its liabilities.
• Acid-test ratio is lower than the current ratio, it means that a
company's current assets are highly dependent on inventory.
Proposed Solution:
A. Monitor accounts receivable e
ff
ectively to ensure that client’s are
billed properly and prompt payment are being made
B. Negotiate longer payment terms with vendors whenever possible
to keep money longer with the
fi
rm.
C. Review pro
fi
tability on various products and services, assess
where prices can be increased to increase or maintain pro
fi
tability.
D. If there are unproductive assets that the business is storing
without strategic goal then its time to get rid of them.
7

8. Financial
Debt to equity & Gearing Ratio
Observation:
• Over the 5 years period, Debt to equity ratio has seen consistent
increase.
• The trend indicates that Stryker’s
fi
nancial leverage is increasing
therefore, it is more susceptible to downturns in the economy and the
business cycle.
Reason:
• Decrease in the return on invested capital
• Investments for future growth
Proposed Solution: (which can be used to pay the company's debt.)
A. Selling shares.
B. Releasing more shares to the public to increase shareholder
equity,
C. Inventory Management
D. Debt restructuring
8

9. Financial
Pro
fi
tability Ratios
Return on investment Funds (ROE) : After 2018, a decline is observed;
perception less e
ffi
cient at creating pro
fi
ts and increasing shareholder value.
Number on the other had if seen is still positive 12.22%. Which is good.
Return on capital employed : After 2018 a decline is observed; Number on
the other had if seen is still positive 12.22% which mean though there is
decline the company is still pro
fi
table but decline is a result of focus on
value creation and growth.
Proposed Solution:
A. Debt
fi
nancing (Already being done; Gearing is evidence)
B. Level of Operation (Low perming products needs attention)
C. Disposal of Assets (Chances are already being done strategic exists form
25 market is evidence of that.)
D. Reduced Cost (Already having low cost structure) and Increase sell
9

10. Financial
Pro
fi
tability Ratios
Operating pro
fi
t margin & Gross Pro
fi
t margin: Pro
fi
t margins have been consistent over the past 5 year a slight decrease is seen in the year of 2020
but the primary reason is disruption of market because of pandemic. Where as the margin are high and shows con
fi
dence in the ability of companies
pro
fi
tability.
Capital turnover: Working capital turnover measures how e
ff
ective a business is at generating sales. And the
fi
ve year trend suggest it is decreasing
over time.
Proposed Solution:
A. Improve E
ffi
ciency.
B. Analyse how the assets are used and ways to improve the productivity of each asset. The output should increase without any signi
fi
cant
increase in any other expenses.
10

11. Competitor
Key Competitor
Johnson & Johnson Smith & Nephew
Hill-Rom Holdings
Integer Holdings
Medtronics
Medline Industries Sonova
Getinge
DJO Global
J&J is performing best among the
competitors whereas Medtronic
being the second.
J&J has shown strategic decline in
number of manufacturing facilities
after 2018.
Medtronic established 9 new
facilities during Financial year 2016.
Market capitalisation of J&J and
Medtronic is high, reason being
wide product portfolio, large
organisational size and presence in
more markets.
Step increase in performance of
J&J seen in
fi
rst quarter 2018
reason being divestiture of its
diabetes medical devices business.
J&J is comparatively Large
organisation with 132.2k workforce
with signi
fi
cant hiring around
second and third quarter of 2017;
Medtronic being the second with
90k workforce.
J&J and Medtronic being the
industry leader utilising the social
media channel to strong arm their
position in the market and keeping
the stakeholders and consumer
involved.
Performance Analysis
11

12. Competitor
VRIO Analysis
Resources Value Rare Imitation Organization
Competitive
Advantage
Talent to Manage
Regulatory and
Legal Obligations
Yes No Can be imitated by
competitors
Yes Critical factor
Access to Cheap
Capital
Yes No Can be imitated by
competitors
Not been totally
exploited
Not signi
fi
cant in
creating
competitive
advantage
Track Record of
Project Execution
Yes, especially in an
industry where there
are frequent cost
overun
No Yes, some
competitors are
ahead from the
beginning & some
have imitated but not
all.
Yes, company is
successful at it
Providing Strong
Competitive
Advantage
12

13. Competitor
Ref. Graphs
13

14. Stakeholder
Stakeholder Mapping & Focus
Stakeholders
Economical
Customers
Distributors /
Retailers
Suppliers
Shareholders
/ Investors
Social /
Political
Government
authorities
Politicians
NGOs
Technological
Government
authorities
Community
Local
communities
Academic
Associations
Internal
Employee
External
Consultants
Contractors
Recruiting
agencies
Other
agencies
Licensor
Strong Focus on:
• Employee (major importance to the close
relationship between employees and
clients.)
• Clients (mainly independent hospitals and
surgery centres, etc.)
• Competitors
• Strong network of suppliers & Distributors
• Shareholders and investors
14

15. Strategy
Focus & Analysis
Strategy Focus:
• Investing in people: For stronger health, safety, talent and inclusion
• Resource E
ffi
ciency: A material di
ff
erence
• Ethics and accountability : We operate under the belief that
transparency, honesty and fairness should always be paramount,
without exception
• Product lifecycle innovation : Made of more
• Responsible supply chains : demand a higher standard
Strategy Analysis:
• Stryker is strengthening it's position in all line by implementing an
aggressive acquisition strategy that capitalises add on to
fi
ts into it's
existing businesses.
• Signi
fi
cant spending on R&D, vital aspect of Stryker’s acquisition to
ensure sound technology.
• Prizing on acquiring technology and implementing scale
manufacturing thereafter ensures de-risked buys.
• Under the new leadership, divisional leaders have been given
autonomy to innovate and identify best deal to HQ.
15

16. Recommendation
Small increments can di
ff
erentiate
Stryker from the competitors.
Social Media channels are under-
utilised. Can be used for e
ff
ective
stakeholder engagement & strong
portrayal of brand.
Power lies with Buyers and
suppliers; Engagement has to be
more e
ffi
cient
Need for educating the consumers
about the Products, Improvements,
engagement channels.
Data analytics can be used to
enhance overall performance.
Accelerate digitalisation:
Incorporation of IOT & industry 4.0
technologies.
Stryker is already exploring M&A to
increase the reach to market as
well as to improve the product
portfolio.
Skilled workforce can be leveraged
to minimise the investment on T&D.
Digital marketing can increase the
performance implementation of
SEO, PPC, Back-linking, email
outreach can be Bene
fi
cial.
Revamping of the customer
interaction model by technology
Integration (continuous
improvements across Business
processes)
Problems associated with
Inventories need strategic actions
like streamlined the process by
integration of AI & cloud based
centralised system. (Proposed: 1.
Oracle Net-suite or 2. SAP WMS)
Power lies with Buyers and
suppliers; Engagement has to be
more e
ffi
cient
16

17. Thank you.
In case of any doubts or further consultations feel free to contact me at
chetan.padme@icloud.com
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