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Teleflex Canada: A Strategy Business Case - Yolanda Williams

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Teleflex Incorporated designs, manufactures, and distributes specialty-engineered products. This is a strategic business case. for Teleflex and its spin-off: TeleFlex Canada.

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Teleflex Canada: A Strategy Business Case - Yolanda Williams

  1. 1. Business Case PresentationYolanda Williams ,5/5/2011ybowdrywilliams@gmail.com
  2. 2. 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
  3. 3. 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.
  4. 4. 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.
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 8Executive Leadership TeamBenson F. SmithPresidentRichardA. MeierEVP and ChiefFinancialOfficerLaurence G. MillerEVP,General Counseland SecretaryVince NorthfieldEVP for GlobalOperations, MedicalJohn B. SiddharthaPresident,Aerospace& Commercial
  9. 9. 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.
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. 13Strategic ChallengesHow to grow market share and stay competitiveHow to decrease costsHow better utilize capacity to increase profit
  14. 14. External AssessmentSTRATEGY FORMULATION
  15. 15. 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
  16. 16. 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
  17. 17. 17Auxiliary Power Unit Supply Chain
  18. 18. 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
  19. 19. 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.
  20. 20. Industry EnvironmentSTRATEGY FORMULATION
  21. 21. 21Direct Competitive RivalsPorter - Competitive RivalryIndustry Profit Potential = HIGH
  22. 22. 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
  23. 23. 23Industry EnvironmentPorter - Threat of New EntrantsNew Entrant Competitor• Daxor CorpStealth Competitor• China Medical TechnologiesIndustry Profile = HIGH
  24. 24. 24Industry EnvironmentPorter - Threat of SubstitutesThermoKing• Established network with industrial vehiclemanufacturers (Schneider truck lines)• Provides Refrigeration TechnologiesRigMaster• Attempts both innovation and low costleadershipIndustry Profile = HIGH
  25. 25. 25Industry EnvironmentPorter - Power of BuyersCustomerInput onInnovationsHighCustomercontactExceptionalproductqualityIndustryProfitPotential =HIGH
  26. 26. 26Industry EnvironmentPorter - Power of SuppliersInputs onsalesDrivesInnovationExceptionalproductqualityIndustryProfitPotential =HIGH
  27. 27. 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
  28. 28. Internal AuditSTRATEGY FORMULATION
  29. 29. 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
  30. 30. 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
  31. 31. 31Direct Competitor Comparison ReflectsTeleflexcompetitors inthe Medicalenvironment. Statistics notavailable onTeleflexCanada due torecent sale andprivatization.
  32. 32. 32Internal AuditFinancial - Industry ComparisonTeleflex IndustryTotal OperatingRevenue1.82B 360BNet Income 108.43M NAROA/ Productivity 6.6% NAEPS 5.97 NA
  33. 33. 33Internal AuditFinancial - Competitor ComparisonTeleflex IndustryTotal OperatingRevenueNet IncomeROA/ ProductivityTeleflex Merit MedicalSystemsTotal OperatingRevenue1.82B 315.95MNet Income 108.43M 14.59MROA/ Productivity 6.6% 3.4%EPS 5.97 .43
  34. 34. 34Internal AuditFinancial - Performance Trends ComparisonYear20092010Total OperatingRevenue1.76M1.80MNet Income302,094201,094Stockholder’sEquity1.58M1.78M
  35. 35. Strategic SituationCompetitive Advantage AnalysisSTRATEGYFORMULATION
  36. 36. 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
  37. 37. 37Strategic SituationTop 2 Implemented StrategiesIntensiveInternational2010First moverProfitableInternational2009Partnerships&RestructuringProfitable
  38. 38. 38Strategic FormulationCompetitiveAdvantage – Barney VRINCompetitive Advantage DecisionValuable Capabilities YESRare Capabilities YESCostly to Imitate YESNon-substitutable YESCompetitive Consequences – Sustainable Competitive AdvantagePerformance Implications –Above Average Returns
  39. 39. 39Competitive Dynamics - SWOTStrengths• Innovation• Customer Loyalty• Brand recognitionWeaknesses• Low Investments• Dependency on olderpartnerships• Unused capacityOpportunities• Global market trends towardsgreen sustainability• BRIC competition qualityissuesThreats• Competitors Speed tomarket• Competitors leveragingeconomies of scaleSWOT
  40. 40. 40Prioritized SWOT MatrixTOWS AnalysisInnovation to BRIC product quality issues
  41. 41. Strategy SelectionSTRATEGY IMPLEMENTATION
  42. 42. 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
  43. 43. 43Strategy SelectionWhat do we want to accomplish?
  44. 44. 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
  45. 45. 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
  46. 46. 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
  47. 47. 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
  48. 48. 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
  49. 49. 49Strategy SelectionThe Winning Move - Implementation PlanLaunch• June 2011Control• Balanced ScorecardMonitor• Monthly
  50. 50. 50Strategy SelectionThe Winning MoveMcKinsey 7S Implementation SupportYESStrategyStructureSystemsSharedValueStaffSkills
  51. 51. 51Strategy SelectionThe Winning MoveFunctional Implementation SupportYESManagement Production&OperationsHumanResourcesMarketingFinanceR & DInfoSystems
  52. 52. Strategy ControlSTRATEGY EVALUATION
  53. 53. 53Strategy EvaluationControl Plan Balanced Scorecard FinancialShort-Term Goal: Achieve new customersMeasure: Monthly salesTarget: Increase .2% salesStrategic Initiative: Financial Metrics, Sales contractsTiming: 3rd quarter 2011Functional Responsibility: SalesAnnual Budget: $15M
  54. 54. 54Strategy EvaluationControl Plan - Balanced Scorecard ProcessShort-Term Goal: Supply Chain EfficiencyMeasure: Industry Efficiency BenchmarksTarget: 2012 efficiency increase – 5%Strategic Initiative: Supply Chain MetricTiming: 2nd Quarter 2012Functional Responsibility: OperationsAnnual Budget : $5M
  55. 55. 55Strategy EvaluationControl Plan Balanced Scorecard CustomerShort-Term Goal: Increase Customer satisfactionMeasure: Industry customer metricsTarget: 2012 Customer Loyalty – 90%Strategic Initiative: 2012Customer opinion surveyTiming: 3rd Quarter 2011Functional Responsibility: MarketingAnnual Budget : $2M
  56. 56. 56Strategy EvaluationControl Plan Balanced Scorecard EmployeeShort-Term Goal: Cross train employeesMeasure: Industry Productivity Award CriteriaTarget: 2012 HR productivity – 98%Strategic Initiative: 2013 360 Employee Feedback surveyTiming: 3rd 2012Functional Responsibility: Human ResourcesAnnual Budget : $50M
  57. 57. 57Strategy EvaluationThe Winning Move - Risk ManagementPrimary Crisis: Value Chain Disruption due to natural disasters- Parts availabilityContingency Plan:-Store inventory strategically-Purchase bulk supplies-Negotiate new supply chain agreements
  58. 58. 58Strategy EvaluationThe Winning Move - Best Scenario PlanScenarioMonthly sales exceeds targetsAction• Idle capacity will be utilized• Monthly, Increased profits• Increase budget by 15%
  59. 59. 59Strategy EvaluationThe Winning Move - Worst Scenario PlanScenarioNew markets development doesn’t meet targetAction• Perform market analysis• Quarterly• Survey distribution channel partners for market needs• $15M
  60. 60. 60Strategy EvaluationThe Winning Move - Competitor Response Scenario PlanScenarioLower price of products in TeleFlex new market targetsAction• Industry news, Market trends• Monthly, strategy adjustments• $5M
  61. 61. STRATEGIC OUTCOMES
  62. 62. 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
  63. 63. 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!)
  64. 64. 64RecommendationKey Strategic ChallengeThe Winning MoveFocus relentlessly on competitive advantage
  65. 65. 65Questions/ Comments
  66. 66. 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.

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