Right Way to Grow a Company

Stryker Growth

Growth at Stryker

Stryker has been around for more than half a century and it was all started with the company's founding doctor's vision and initial selling of inventions and his general orthopedic practice. Since then, the success and growth of Stryker has continued to grow with leaps and bounds. While Stryker as a company has encountered challenges and issues over the years such as class action lawsuits and hot competition, their growth strategy seems to be on point and heading in the right direction (Stryker, 2014).

Stryker basically started up in the 1940's and was hitting its stride in the 1960's and much of the 1970's. However, things changed greatly when Lee Stryker and his wife died in a plane crash in 1976. Even so, the company went international just before that and hit $17.3 million USD in sales after that. The board of directors unanimously christened John W. Brown as Stryker's successor in February 1977. Since then, sales have gotten larger and larger, Stryker is now loaded on the New York Stock Exchange and Stryker now operates in foreign companies such as Italy and Australia. In addition to their organic growth, Stryker has also acquired companies such as what they did by snatching up Howmedica in 1998. Their growth and overall performance has garnered praise and/or rankings from Forbes, Industry Week, Barron's and the Nightingale Award Association (Stryker, 2014).

In recent years, Stryker has ramped up acquistions to speed up their growth through acquistions of companies like Berchtold Holdings for $172 million USD. Their growth is rising at a solid rate, with both organic and revenue growth clocking in at six percent recently. Hip joint sales, one of Stryker's bread and butter products, rose nearly ten percent. For FY 2011, they made a solid $8.3 billion. That rose to $8.65 billion in FY 2012 and topped $9 billion in FY 2013, ending on 12/31/2013. Their operating income has fallen over that same period, probably the result of their aggressive acquisitions and the costs of the same, but their operating income is still comfortably above a billion. As such, it is clear that while they're spending a lot of money and it is not all on organic growth, they have ample resources to cover their expenses. This is confirmed by looking at their balance sheet, which shows that total debt is consistently less than half of their assets and their net tangible assets has not been below $3 billion USD over the last three full fiscal years. Stock holder equity has risen more than a billion and a half USD over that same timeframe. In short, the business is growing strongly, debt is manageable and there is strong value for the shareholder's dollar (Yahoo, 2014).

The generic strategy of the company is to attain growth both organically and through acquiring companies that strongly align with the aims and goals of Stryker rather than conflict with it and slow it down. Acquiring or otherwise straying into too many lines of business different from Stryker's core units would slow the firm down so they are on the right track. It is obvious that the market buys into the strategy that Stryker is taking because except for two swoons over the last few years, one in mid-2011 and the other in mid-2012, the stock price has steadily risen over the last five years from roughly $30 a share USD to more than $80. If Stryker was giving mixed message and/or was underperforming, then the stock price would not be on a strong ascent like that (Yahoo, 2014).

As for Stryker's grand strategy in general, it is clear that they are willing to do what is reasonably possible and reasonable to grow the firm. However, they do not do things that allow Stryker to stray, they do not incur too much debt and they do not rely too much on inorganic growth strategies, which is a good strategy to employ. In looking at the values and mission espoused on the Stryker website, it is clear what their value disciplines are. For example, one of their major links on their "About Us" page is about corporate governance and their commitment to the same. The specifically suggest and explain that they clearly define the role of the directors and the size of its board as well as how the directors and board members are selected. Having the right people with high ethical standards is necessary and proper for a firm to growth ethically and responsibly rather than growing too fast and/or at the expense of the firm's values, ethics and general commitment to social responsibility.

Speaking of social responsibility, they do a yearly social responsibility overview and they also show a tracking of its greenhouse gas emissions information. With this, it is clear that while they intend to grow as quickly but safely as possible, they wish to do so in a way that is responsible from an energy consumption and conservation standpoint. Their values and overall grand strategy also clearly include, per the contents of their 2012 social responsibility review, a commitment to growing through the continued use and re-use of sustainable resources and energies and that they welcome feedback and thoughts as to how they are doing.

As for a recommendation, they are already doing a lot of the things that will keep them in good shape growth- and revenue-wise. However, one thing they really need to stick to is to make sure they don't branch out too much in terms of their products in services. They have thousands upon thousands or products but it is possible for an over-diversification to hurt the company over the long haul. However, so long as each product line and segment is self-sufficient and profitable, then things can really be left as they are. However, if one or more business units starts to drag the company down, Stryker should explore fixing that problem or, if it makes more sense, cutting loose the dead weight either by doing a spin-off or selling the segment to a firm that wishes to acquire it for a fair price. This would streamline the revenue streams and would be an immediate cash infusion to Stryker.