Internal strategic evaluation of Sturm, Ruger, & Company, Inc.

Ruger

Sturm, Ruger, & Company, Inc.: An Internal Strategic Evaluation

Sturm, Ruger, & Company, Inc. is the fourth-largest firearms manufacturer in the United States, having earned a strong position as a maker of relatively high-quality yet median-cost weapons marketed primarily towards the commercial sporting industry (Sturm, Ruger, & Co., 2012; Yahoo Finance, 2012; Reuters, 2012). Founded in 1949 by William B. Ruger and Alexander McCormick Sturm, the company known popularly as Ruger first made its name with a semi-automatic pistol that incorporated elements of German Luger and American Colt design, both in its functionality and in its aesthetics; the popularity and strong sales of this company were all but solely responsible for the continuation of the partnership and firm, propelling the company into the manufacture of other firearms and currently into the manufacture of casts for golf clubs used by a variety of club manufacturers (Sturm, Ruger, & Co. 2012; Reuters, 2012). The company does not currently engage in the distribution of its products or in the sale of any weapons save to the wholesale distributors that serve as its channel to the consumer market (Sturm, Ruger, & Co., 2012).

The following pages will provide an overview of the company's apparent internal strategy given its current position and operations. Analysis of stock performance and other financial indicators, statements of intent and other clear expressions of strategy made by the company itself, and external analyses of position and likely future moves will all be assessed in making a determination of several areas of strategy. Though the company does not have a strong international presence, at least not directly, the potential for future strategy in this area will be assessed as will the possibility of current international sales that are not a part of the company's stated strategy or its direct operations. In this manner, the full range of existing internal strategy and likely future strategy(ies) as well as strategy recommendations will be provided, with the information presented in as comprehensive and as detailed a manner as possible. Reference will also be made to current standard texts and theories so as to situate the analysis of Sturm, Ruger, & Company, Inc.'s strategy in current empirically- and scholarly-vetted frameworks and understandings. From this, it will be possible to make certain practical recommendations based on the analysis of the company's current strategic position and focus, and such recommendations will be provided in the conclusion.

Strategic Condition/Building Blocks

Sturm, Ruger, & Company, Inc. is currently performing far beyond the expectations of external analysts and of the company itself, and as recently as May of this year the company announced a brief (approximately one week) suspension of new order acceptance, as the backlog of orders that the company was faced with exceeded one million units (NASDAQ, 2012). Earnings reports have consistently exceeded most analysts expectations, as well, and the company is continuing to find ways to improve efficiency and improve capacity in order to meet the ever-stronger demand and sales numbers that it has been consistently experiencing, and this has also led to very strong stock performance for the company in the past year despite a relatively recent and significant drop (NASDAQ, 2012; MarketWatch, 2012). This drop, already partially corrected, could be due to legislative worries and other news items and does not appear to accurately reflect company performance; the company's strong sales and relative insulation in its process orientation -- the company only manufactures firearms, and much of its value chain exists with its client wholesale distributors and other un-owned firms (MarketWatch, 2012; Reuters, 2012; Yahoo Finance, 2012). Overall, the company's strategy appears to have remained largely unchanged over the decades of its operation save for the increased expansion when the company went public in 1990: it makes high-quality firearms that are relatively simple and affordable that meet the needs of sportsmen of all skill levels and varieties, and it is all but wholly focused on the United States market (Sturm, Ruger, & Co., 2012).

Mission Statement

Borrowing from the "Vision" section of Sturm, Ruger, & Company, Inc.'s corporate website, the mission of the company is, to preserve our hard-earned reputation as a manufacturer of quality firearms and investment castings that simultaneously deliver value and innovation…Ruger focuses on serving our shareholders, our loyal customers and our employees. We strive to provide the high quality products demanded by our customers as efficiently as possible, which provides long-term value for our customers and promotes the interests of customers, employee and shareholders alike.

(Sturm, Ruger, & Co., 2012).

Simply put, the company's mission as derived from it vision is directly and explicitly in keeping with its externally visible strategy of creating high quality yet affordable firearms, and the company's stated commitment to its shareholders, current customers, and its employees can be seen in some ways as indicative of the strong domestic emphasis that the company has -- ensuring that current stakeholder's needs are being met is a more central concern for the company than expanding to new markets.

Functional Level Strategy

Because the company is very limited in its scope of operations and is very well integrated, consisting of just over one-thousand employees and only three primary facilities, there is not a great deal of difference between the various levels of strategy as they are typically identified (Morris & Pinto, 2007; Reuters, 2012; Yahoo Finance, 2012; (Sturm, Ruger, & Co., 2012). That is, the functional, business, and corporate strategies of the company are highly similar and very directly related given the singular area in which the company operates. That being said, key features of the company's functional strategy that demand mention include the company's current lack of debt and significant holdings of cash and cash equivalents, which are approaching one-hundred million dollars, which taken together enable the company to retain a great deal of flexibility in its operations and also give it the ability to remain somewhat insulated in price shocks in materials and transportation costs, as well as to weather larger economic downturns such as the recent recession (NASDAQ, 2012; Yahoo Finance, 2012). The company has a very steady workforce with low turnover and long-standing partnerships with its distributors and suppliers, all of which make for a very solid and cohesive functional strategy that again points towards solidifying and maintaining its position in the current domestic market (Morris & Pinto, 2007; Sturm, Ruger, & Co., 2012).

Corporate Level Strategy

At the highest level, the company's strategy remains as singular and as cohesive as in lower levels. Ruger Golf is the company's only foray into an industry other than firearms, and with the limited and unchanging nature of this portion of the company's business it can hardly be considered a significant strategic feature (Morris & Pinto, 2007; Strum, Ruger, & Co., 2012). Instead, corporate strategy at the company appears to be simply perpetuating the legacy of the company's two founders and long-time heads, which consisted of making quality firearms at affordable prices and ensuring both efficiency and stability in the processes utilized to do so (Strum, Ruger, & Co., 2012). The company does not engage in speculation nor does it appear at all concerned with further diversification (Yahoo Finance, 2012).

Global Level Strategy

As mentioned above, Strum, Ruger, & Company, Inc. is focused entirely on the domestic market in the United States, and does not operate internationally (Strum, Ruger, & Co., 2012; Yahoo Finance, 2012). This does not mean that the company is wholly devoid of a global or international strategy, however; through some of its wholesale distributors and these distributors' own client (i.e. purchasing) companies, firearms manufactured by Sturm, Ruger, & Company, Inc. are sold in other markets, and possibly in greater numbers than what is currently known to the company (and to outside analysts) (Reuters, 2012; NASDAQ, 2012; Yahoo Finance, 2012). While marketing efforts and actual operations are limited to the domestic United States market, then, it would seem that the company is almost certainly taking into account potential international sales in the design of its products, and though it is not tailoring products for different markets it is ensuring that the product lines it currently produces are of broad enough appeal to be desirable to sportsmen outside of the United States in addition to the U.S. citizens that make up its core end-consumer base.

Resources and Capabilities

With no debt, very strong cash reserves, and fully-owned facilities on both the East Coast and in Arizona, Sturm, Ruger, & Company, Inc. is well-equipped with the resources it needs to continue meeting increasing demand in its chosen market, despite the minor hiccup in backlogged units that occurred this May (NASDAQ, 2012; Yahoo Finance, 2012; Strum, Ruger, & Co., 2012). The company does not have the capability to radically shift business models or operations, having been set in its current mode of business for some time, but this is hardly likely to prove detrimental to the company. Instead, this solidity and cohesiveness appears to be serving the company quite well, allowing it to prosper in its selected business area while avoiding the volatility and the uncertainties of entering new industries (Morris & Pinto, 2007). This company will remain successful for the foreseeable future if it maintains its current strategy.

Conclusion

The success that Sturm, Ruger, & Company, Inc. has met with does not mean that some recommendations cannot be made to improve profitability still further. Direct international expansion might be advisable in order to increase market share and profits, and the pursuit of military contracts could also prove an enormous boon to the company. Both of these strategies would represent enormous shifts for the firm, but with their current cash reserves and other strengths this could be an opportune time to achieve such radical growth.