Teleflex Canada: A Strategy Business Case - Yolanda Williams
Business Case PresentationYolanda Williams ,firstname.lastname@example.org
2Introduction• Who are we?o Company Overviewo Highlights and Featureso Key Operations/Products/Serviceso Executive Leadership Team• Why are we here today?o Current Strategic Challenge
3Company Overview - Teleflex CanadaTeleflex Canada Inc.o founded in 1974o based in Richmond, Canada.o Its plants and facilities in Limerick,Pennsylvania, Litchfield, Illinois andVancouver, Canadao overseas operations in Australia, Singaporeand New ZealandSold• Teleflex Incorporated purchased the marinehydraulic steering line of business from CapilanoEngineering Ltd. in Vancouver to create Teleflex(Canada) Ltd.• TFX Inc. sold the business to HIG partners,private equity firm.
4Company Overview - Teleflex, Inc.History• Began in 1943 and based in Limerick, PA• a multi-strand helical cable and a gear thatcould convert push-pull motions into rotarymotionsFirst useo Spitfire planes in World War IIo flexible cable to adjust the pilots radioo behind the cockpit and out of the pilotsreach.Company Name• The flexible cable was used telescopically toadjust the radio.
5Company OverviewTeleflex Incorporated designs,manufactures, and distributesspecialty-engineered products.HIB Private Capital• 50 companies• Miami, Atlanta, Boston,New York, San Francisco,London, Hamburg andParisTeleFlex(TFX)Inc.TFX CommercialTFX Heavy LiftTFX Marine(TFX Canada)TFX Medical TFX Aerospace
6Key Operations, Products and FeaturesMarine and Auxiliary Power Products• mechanical and hydraulic steering systems• throttle controls and engine and drive assemblies• generators• diesel powered coolant heaterso preheat engine blocks• modern burner unitso heating and cooking applicationsOEM and Aftermarkets• Leisure Boating• Commercial Transportation• Military
7What We BelieveAt Teleflex, we practice a clear set of company values:• Act with integrity in all our business dealings.• Create a common sense of purpose.• Treat employees with respect• Provide superior customer service.• Cultivate an entrepreneurial spirit of creativity andinnovation.• Commit to create long-term value for our shareholders
8Executive Leadership TeamBenson F. SmithPresidentRichardA. MeierEVP and ChiefFinancialOfficerLaurence G. MillerEVP,General Counseland SecretaryVince NorthfieldEVP for GlobalOperations, MedicalJohn B. SiddharthaPresident,Aerospace& Commercial
9Why meet Today?Key Strategic ChallengeFrom a strategic perspective,how willTeleflex Canadacapitalize on its culture ofinnovation to maintain itsaverage growth rate of 25%and improve its hydraulic andthermal technologies over thenext 5 years.
Agenda• Where Do We Want To Go?o Vision Statemento Strategic Intento What Is the Current Situation?• What Will Be the “WinningMove?”• How Will We Monitor the“Winning Move?”• What Will Be the Results?• QUESTIONS and COMMENTS• Request Approval of the“Winning Move”10
11Mission StatementTeleflex MissionEnhance patient outcomes by providing products that helpclinicians protect against infection and improve patient andprovider safety.HIG Private EquityHelping our companies build market leading positions
12Vision StatementTeleflex VisionCreate a world leader in disposable medical products for criticalcare and surgical applications.HIG VisionWe specialize in providing capital to small and medium-sizedcompanies where we can play a significant role in helping tounlock the value potential therein
13Strategic ChallengesHow to grow market share and stay competitiveHow to decrease costsHow better utilize capacity to increase profit
15External AssessmentGeneral EnvironmentExternal Force Decision RationaleInternationalForcesThreat China and India are leveraging internal manpowerand manufacturers to create competitive productsGlobal Forces Threat Its cheaper to make those products in BRIC thanin Canada and AmericaSocialResponsibilityOpportunity Teleflex enjoys an excellent reputation regardingpublic safety and social responsibilityEnvironmentalResponsibilityOpportunity Teleflex produces several product that aredesigned for decreasing the environmentalfootprint in the transportation and military
16External AssessmentGeneral Environment PESTAnalysisExternal Force Decision RationalePolitical/Legal Forces Opportunity Teleflex enjoys several partnerships within itshome countries that awards it for maintaining incountry workforcesEconomic Forces Opportunity The economies of emerging countries offersincreased market shareSocial-Cultural Forces Opportunity Brand awareness has been favorable. Productsare known for reliability. Firm view customersas partners in product improvement.Technological Forces Opportunity Teleflex has created more than 20 designpatents in the last 3 years and has improvedperformance on current product lines. CurrentlyR&D is working on creating new products forglobal market entry
18External Assessment - Primary Customer ProfilePareto Principle -80/20• Recreational Boating• Commercial transportationManufacturers/Distributors• Need reliable parts for its meets its needs• Parts that can be added to their supplychains• US Government partner• Maintained partnerships with Cummins,Clarke for distributionHighlights
19External AssessmentPrimary Competitor ProfileProductsKey OperationsAftermarketOwnership• manufactures transport temperature controland HVAC-Refrigeration systems for trailers,truck bodies, buses, shipping containers, andrail cars.• Produced at about 10 plants in sevencountries, the lineup is marketed worldwidethrough a global dealer network.• In addition to its line of new systems, ThermoKing offers used and remanufacturedrefrigeration units to customers.•Frederick Jones and Joseph Numero started Thermo Kingin 1938 to transport fresh chickens across long distanceswithout spoiling. The company is part of the ClimateSolutions (formerly Climate Control Technologies) divisionof Ingersoll-Rand.
22Industry EnvironmentPorter - Competitive RivalryIndustry Profit Potential = HIGHTFX vs. Industry Leaders Column1 Column2 Column3 Column4Statistic Industry Leader Leader TFX TFX RankMarket Capitalization Alcon Inc N/A 2.51B 28 / 178P/E Ratio (ttm) CONSORT MEDICAL 1,644.12 10.43 48 / 178PEG Ratio (ttm, 5 yr expected) China Medical Technologies 33.7 1.32 38 / 178Revenue Growth (QtrlyYoY) NANOSONICS FPO 142.20% 5.80% 62 / 178EPS Growth (QtrlyYoY) NuVasive 2427.60% 104.30% 9 / 178Long-Term Growth Rate (5 yr) Heartware International 69.50% 10.50% 47 / 178Return on Equity(ttm) Conceptus 77.19% 6.32% 51 / 178Long-Term Debt/Equity(mrq) 46.252 N/ADividend Yield (annual) Daxor Corp 25.10% 2.20% 4 / 178Acquire• Companies (15 in 5 yrs)• ResourcesInnovate• R&D Investments• Patented DesignsServe• Customer Relations• Distributors
23Industry EnvironmentPorter - Threat of New EntrantsNew Entrant Competitor• Daxor CorpStealth Competitor• China Medical TechnologiesIndustry Profile = HIGH
24Industry EnvironmentPorter - Threat of SubstitutesThermoKing• Established network with industrial vehiclemanufacturers (Schneider truck lines)• Provides Refrigeration TechnologiesRigMaster• Attempts both innovation and low costleadershipIndustry Profile = HIGH
25Industry EnvironmentPorter - Power of BuyersCustomerInput onInnovationsHighCustomercontactExceptionalproductqualityIndustryProfitPotential =HIGH
26Industry EnvironmentPorter - Power of SuppliersInputs onsalesDrivesInnovationExceptionalproductqualityIndustryProfitPotential =HIGH
27Industry EnvironmentPorter – IndustryAttractivenessForce Decision RationaleCompetitive Rivalry HIGH India and China have large systematicinfrastructures in place to compete inmarket categoriesNew Entrants HIGH BRIC are creating components and maydecided to bring product creation in-countryThreat of Substitutes LOW Must build a product to meet directneedPower of Buyers LOWPower of Suppliers HIGHPorter’s Five ForcesOverall Industry Profit Potential - HIGHIndustry = ATTRACTIVE
29InternalAuditPorter – Value ChainAnalysisActivity Decision RationaleInbound Logistics Significant Inbound includes value chain inputs and are well-identifiedOperations Significant Operations are located in key global locationsOutbound Logistics Significant Outbound includes outputs of value chain and arewell-identifiedMarketing and Sales Significant Knows their customer/market segments and proofis customer loyaltyService Exceptional Intensive customer service and incorporatescustomer recommendations into productdevelopment pipelinesPrimary Value Chain Activities
30Internal AuditPorter – Value Chain AnalysisActivity Decision RationaleFirm Infrastructure Significant Has unused capacity in placeHR Management Significant Jobs are in demand, expanding globallyTechnology Significant Innovation a central focusProcurement Significant Solid relationships and contracts are buildfor long term partnershipsSupport Value Chain Activities
31Direct Competitor Comparison ReflectsTeleflexcompetitors inthe Medicalenvironment. Statistics notavailable onTeleflexCanada due torecent sale andprivatization.
32Internal AuditFinancial - Industry ComparisonTeleflex IndustryTotal OperatingRevenue1.82B 360BNet Income 108.43M NAROA/ Productivity 6.6% NAEPS 5.97 NA
36Strategic SituationPrimary Implemented StrategyTo further1. expand business and market presence2. grow our business3. build on our market leading positions focus on product quality, and product innovation
42Strategic SelectionWhat do we want to accomplish?Long Term Objective (LTO) DecisionFinancial Increase RevenueCustomer Increase Market ShareProcesses Efficiency and InnovationLearning Increase Dealer and Mechanic TrainingPrimary LTO – Market Share IncreaseLong-term Strategic Objectives
43Strategy SelectionWhat do we want to accomplish?
44Identify Key Strategic OpportunityTarget Develop new value chain relationshipsBenefit – Diversify sourcing of goods and distribution channelsStrength – Increase International brand recognitionOpportunity – Many speed to market competitorsAnnual Budget - $50M
45Strategy SelectionKey Strategic Option BIdentify Key Strategic OpportunityTarget – Increase Research and DevelopmentBenefit – Increase products in pipelineStrength – Improves product qualityOpportunity – Does not produce an immediate benefitAnnual Budget – $100M
46Strategy SelectionKey Strategic Option C - Hardball KillerFocus relentlessly on competitive advantageTarget: Market DevelopmentBenefit: Increase sales internationallyStrength: Utilize supply chain capacityOpportunity: Infusion of fund needed(obtained by being acquired)Annual Budget – $250M
47Strategic SelectionKey Strategic OptionAssessmentOptionsForced Ranking1 = Best,2 or 3 = WorstProfitable CompetitiveAdvantageGrowthPotentialAssessmentSummaryOption A 3 2 3 8Option B 2 1 2 5Option C 1 1 1 3Strategic Forces Ranking Assessment
48Strategy SelectionThe Winning Move - The Big "Aha"Focus relentlessly on competitive advantageTarget: Market DevelopmentRationale:1. Increase Global Presence2. Utilize capacity with new sales contracts3. Increase Brand recognition
62Strategy OutcomesWhat will be the results?Top 3 Strategy OutcomesMost OptimisticImprove Market share by 25%Increase sales forces for leadsMost LikelyIncrease International Sales by 10%Operate at peak capacityMost IntuitiveNew customer loyalty – 20%Integrate customer improvement ideas with R&D
63Lessons LearnedTop 5 Lessons Learned1. When researching acompany for a case studycheck the news first.2. It is difficult to locateinformation on privatecompanies.3. You really need at least 3weeks to pull informationfrom obscurity.4. Profit margins depends asmuch on its value chain asits does on customers.5. I really appreciate givingmy presentation on thelast day. (Thanks Don!)
64RecommendationKey Strategic ChallengeThe Winning MoveFocus relentlessly on competitive advantage
66Thank You!Thank You!Teleflex Marine Onboard Rewardshttp://www.youtube.com/watch?v=3AyJInLKDcICelebrating over three decades of design and engineeringof hydraulic and auxiliary power technologies.