Stryker Corporation: in-Sourcing Pcbs
Stryker Corporation: In-sourcing PCBs
Table of contents:
Executive summary
1. Introduction 2. Analysis of current position 3. Analysis of new project 3.1 Methodologies and processes of Valuation 3.2 processes of Valuation 4. Conclusion
References
Appendices A & B
Executive summary:
The executive for Stryker Corporation recently considered setting up own factory to produce Printed circuit boards (PCBs) – a key electronic component of many of Stryker instrument’s medical products due to a big concern of current shaky sourcing suppliers. This proposal is targeted on the feasibility of the investment on financial projection such as Net Present Value, Internal Rate of Return and payback period as well as its business impact. They all seemed to reveal quite positive results to take the investment after evaluating. Most data sources are based on Stryker Corporation documents and estimates. Stryker has assumed the tax rate to be 36% and a hurdle rate of 15% for net present value calculations. In this analysis, it also anticipated expenditures on PCBs for the period 2004-2009 under the old sourcing strategy (Luehrman, p. 4).
1. Introduction:
Due to the predicted large increasing demand for Printed circuit boards (PCBs) and current unstable sourcing suppliers, the executive had resolved to address the issue by three options: One is maintaining the current sourcing policy but to also fortify more safety of stocks; another is to collaborate with a sole supplier and establish a standalone facility for supplying them; Option 3 is for Stryker instruments to take an in –house decision and manufacture its own PCBs. This proposal is intended to assess the valuation of option 3 for whether it offers a positive return on both financial and future business aspects or not.
2. Analysis of current position
In recent years, the reliability of PCBs suppliers has been drawn into a question, with respect to quality, delivery and responsiveness. The problem has
Table of contents:
Executive summary
1. Introduction 2. Analysis of current position 3. Analysis of new project 3.1 Methodologies and processes of Valuation 3.2 processes of Valuation 4. Conclusion
References
Appendices A & B
Executive summary:
The executive for Stryker Corporation recently considered setting up own factory to produce Printed circuit boards (PCBs) – a key electronic component of many of Stryker instrument’s medical products due to a big concern of current shaky sourcing suppliers. This proposal is targeted on the feasibility of the investment on financial projection such as Net Present Value, Internal Rate of Return and payback period as well as its business impact. They all seemed to reveal quite positive results to take the investment after evaluating. Most data sources are based on Stryker Corporation documents and estimates. Stryker has assumed the tax rate to be 36% and a hurdle rate of 15% for net present value calculations. In this analysis, it also anticipated expenditures on PCBs for the period 2004-2009 under the old sourcing strategy (Luehrman, p. 4).
1. Introduction:
Due to the predicted large increasing demand for Printed circuit boards (PCBs) and current unstable sourcing suppliers, the executive had resolved to address the issue by three options: One is maintaining the current sourcing policy but to also fortify more safety of stocks; another is to collaborate with a sole supplier and establish a standalone facility for supplying them; Option 3 is for Stryker instruments to take an in –house decision and manufacture its own PCBs. This proposal is intended to assess the valuation of option 3 for whether it offers a positive return on both financial and future business aspects or not.
2. Analysis of current position
In recent years, the reliability of PCBs suppliers has been drawn into a question, with respect to quality, delivery and responsiveness. The problem has
References: Investopedia US 2013, Incremental cash flow, viewed 30 March 2013, < http://www.investopedia.com/terms/i/incrementalcashflow.asp>. Investopedia US 2013, Net present value, viwed 30 March 2013, < http://www.investopedia.com/terms/n/npv.asp>. Luehrman, T 2009, ’Stryker Corporation: In-sourcing PCBs’, Harvard business school, January, pp1-6, viewed 29 March 2013, President and fellows of Harvard College. Pierson, G, Brown, R, Easton, S, Howard, P&S. Pinder 2011 Business Finance,11th edn, McGraw Hill, Sydney. Appendices: Appendix A: Appendix B: