Strategic Analysis of Fisher and Paykel - Case Study Example

Strategic analysis of Fisher and Paykel Name Institution Table of contents 1.0 Executive summary 1 1.1 The business strategy for Fisher and Paykel 1 1.1.1Strategic management and strategic competitiveness 1 1.3 Internal and external environment 2 1.4 Strategy formulation 4 1.5 Business level strategies 4 1.6 Competitive dynamics 6 1.7 Corporate level strategies 6 1.7.1 Diversification 6 1.7.2 Resources utilization 7 1.7.3 Activities 7 1.7.4 Restructuring and acquisition 8 1.8 Strategic actions and strategic implementation 8 1.9 Organizational structure and control 10 2.0 Strategic leadership 10 3.0 Appendices 11 References 13 1.0 Executive summary Fisher and Paykel started involving itself in health care in the late 1960s. The company is listed in the New Zealand stock exchange and Nasdaq. Subsequently, the company is listed in the Australian stock exchange. The company’s boasts of an excellent consistent growth strategy. Fisher and Paykel projects expanding wide range of innovative medical devices to improve care to patients. The strategy aims at improving the outcome for patients and subsequently increase returns to shareholders. Further, Fisher and Paykel intends to invest in research and development in medical technology to assist clinicians in providing first care to patients. The strategic goal of investing in research and development will help the company to acquire new and improved medical equipments (Guttma and Hawkes 2004). The equipments will contribute to the company’s array of technologies which are paramount in providing excellent services to its patients. 1.1 The business strategy for Fisher and Paykel 1.1.1Strategic management and strategic competitiveness Fisher and Paykel has faced a wide array of risks problems and issues. The risks, issues and problems are financial, operational, competitive and strategic in nature. Fisher and Paykel has responded to competition through planning in order to anticipate unforeseen changes in the health sector. The company bases its plan on strategic planning to enhance its performance and serve patients well. Fisher and Paykel’s strategy is a game plan for research and development. The company’s strategic interests are to meet stringent standards in order to ensure market acceptance. The strategic issue is that the company attains quality and controls in its services. The company operates a quality management system which provides standards that are in accordance with the international standards for offering healthcare. The standards apply to both the manufacturing facilities and the sales network (Hanson, 2008). Fisher and Paykel has strategically put in place mechanisms to aid its growth internationally. The company hired qualified staff to market its wide range of products. The employees work hard to ensure that its products are supported. The move further aims at ensures that the companies products and applications get the attention of health professionals. This strategy has ensured the company generates approximately 99% of its sales revenue outside New Zealand (Fisher & Paykel 2012). The company ensures that its product are manufactured and assembled in controlled working environment. The products are certified by the standards of certification. At the heart of Fisher and Paykel’s strategic management in the strategic planning system (Hoffman 2007). In this system Fisher and Paykel ensures that strategic management is incorporated in the strategic planning of its activities. The strategic management process at Fisher and Paykel ensures that a full set of commitments decisions and actions are putting place to for Fisher and Paykel to achieve competiveness and achieve good profit margins. 1.3 Internal and external environment A firm’s strategic management process is looked at from its analysis of the internal and external environment (Katsioloudes 2006). The company has put up strategies to ensure that patients are adequately taken care of and that they have a positive outcome with the company. Fisher and Paykel has improved its resources, capabilities and key competencies to formulate a working strategy. These are the company’s source of strategic inputs. The strategy has enabled the company to provide health care, design and manufacture products and systems for use in respiratory care. The strategic inputs have aided the company to provide treatment of obstructive sleep apnea. The strategy of growth makes the company to achieve competitiveness and attain high returns. The company has put in place effective strategic decisions that take place in integrated strategy formulation and implementation process. This has brought about desired outcomes. The strategies outcomes are the company’s to expansion of the nasal mask by offering new F&P nasal mask. The introduction of F&P nasal mask has ensured that the company attains its strategic interests of improving the treatment of obstructive sleep apnea. The strategic inputs are one of the factors that have made the company to expand its clinical applications and new products contributing to an increase in revenues to NZ$ 16.7 million as at March 2012. The firm’s achievements are as a result of choosing managers who take actions to move the company in the right direction. The company has achieved results due to managerial analysis and strategic positioning in circumstances surrounding the firm’s situation. The company has managed to achieve coherence among the existing competitive factors. The coherence has ensured high performance. The company does not only react to the internal and external environment, it interacts with these variables through its strategic top managers. Fisher and Paykel has achieved a strategic fit through the alignment of the company’s resources capabilities and finally its competencies. Achieving strategic fit requires alignment of the firm’s resources, capabilities and competencies with environmental opportunities and threats (Raps 2004). 1.4 Strategy formulation Strategic formulation for Fisher and Paykel works well because Fisher and Paykel is cognizant of its current strategic position. Businesses operate depending on a variety of dependent external forces. Understanding these forces is a prerequisite for management to determine where the opportunities and threats to its strategic plan exist. In health sector in New Zealand, there has been introduction of more regulations changing the environment in which businesses operate. The regulations specifically focus on corporate governance and the changing expectations of consumers. Similarly, organizations continually get affected by the ever changing technology and concerns regarding environmental issues. A clear picture of these forces makes a Fisher and Paykel to assess the opportunities that it should take advantage of and the threats that threaten its strategy. For Fisher and Paykel to understand its strategic positions, it has evaluated its potential. This is an internal review that reflects whether the Fisher and Paykel can fulfill its future strategies. Fisher and Paykel’s capability is viewed in terms of availability of human and physical resources to carry out its strategic plans. Fisher and Paykel is in a favorable position because it has the resources to have an advantage over its competitors (Oum, Park and Zhang 2000). 1.5 Business level strategies Fisher and Paykel has put in practice mechanisms to asses risks that the company faces. The laws and regulations facing Fisher and Paykel as a company offering health care are myriad. The mechanisms are instrumental in ensuring the company avoids violation of regulations. The company provides the best practices to implement the corporate program which is vital to avoid violation of laws and regulations in its activities. The corporate program for the company begins with a candid assessment of risks. The company address who what and where there is an intersection of the company’s activities and risks that may potential harm the company’s activities. He company has plans to grow sales by 2%-3% faster that the market growth rate in the health sector. The company plans to achieve this by growing its sales and ensuring that it manufactures products that comply with the standards established. The company has plans to deliver growth in earning per share to generate free flow productivity of a high percentage. In addition, the company has prioritized its resources on the biggest and profitable activities. This is achieved through innovating products and developing the international market that offers a great opportunity for growth (Fisher & Paykel 2012). Fisher and Paykel has taken significant steps to ensure that it saves costs and becomes more focused on culture. The company plans to save $10 billion by January 2013. The cost saving program is based on reducing approximately 4700 non manufacturing costs related to overheads by the end of 2013 financial year. The company has a workable plan in its strategic plan to save $1.2 billion in manufacturing in its health products and transport costs. Consequently the company plans to grow its market costs at a slower rate than the sales growth rate. This action aims at generating greater efficiency. Implementation of this business level strategy for Fisher and Paykel will enable the company to reach effectiveness and save the compat $1 billion the next five years. 1.6 Competitive dynamics The company aims at reviewing competitor activity within the health sector to strategically position itself above the benchmark in the industry. It aims at engaging tactical plans to provide tactics to influence its competitive position positively. Fisher and Paykel has captured the synergies, and new technology to attain competitive edge relative to its competitors. The health care industry in New Zealand has faced cuts in monies allocated for health care. This has forced Fisher and Paykel to become creative to fight shrinking resources. Fisher and Paykel has assessed competitor’s activities and consequently developed a one step ahead strategy to counter competition. 1.7 Corporate level strategies 1.7.1 Diversification Fisher and Paykel has entered many economic markets through diversifying products. The company adopts an approach to sell its goods and health care services both locally and internationally. The company has widened its operations to Asia, North America and Europe. The company manages to diversify because it has a wide range of humidification products and systems used in treating respiratory disease. This product mix is the key for the company to recover from sluggish sales associated with one product line (Thompson 2006). 1.7.2 Resources utilization The company adopts a functional strategy to improve its economic resources. The resources are raw materials equipments and labour. The company has a production processes that streamline its operations to eliminate duplicating processes. The company intends to acquire the best resources at a cheap cost. 1.7.3 Activities The company has focused on integrating various activities among its departments. Each department works hand in hand with other departments to focus on completion of overall business goals and objectives using the best ways possible. The health care company integrates the functions of the production department, advertising, inventory, and supply departments. The managers are motivated to ensure that departments focus on improving business operations. The activities at Fisher and Paykel create a structure that coordinates its strategic plan to Success. The Company depends upon implementation plans that contain activities geared towards critical areas of operations. Fisher and Paykel strive to balance its activities to between current needs and future developments. These activities create opportunities for Fisher and Paykel to monitor its stability in the present and predicting its future success. The activities ensure that the company attains high level of patient satisfaction, patient retention. The success of Fisher and Paykel is pegged on its strategic objective of engaging in activities that are profitable and benefit its customers. The company’s activities are geared towards managing financial aspects of health care programs it rolls out. The company engages in cooperate social responsibility activities that build stronger presence in host countries. Its strategic plan makes it possible to mange the organizations resources while keeping the activities moving in the right direction. The company’s activities are collective, promoting opportunities and overcoming the challenges it faces. 1.7.4 Restructuring and acquisition One strategy for Fisher and Paykel is acquisition. Fisher and Paykel adopted this strategy to provide better services to patients. The driving factor behind acquisition was to increase profits, build brand loyalty and access larger markets. Acquisitions are part of a strategic formulation and implementation process that is a constant, never ending and integrated process in Fisher and Paykel. Strategic acquisitions have made Fisher and Paykel reassess and adjust its operations to provide quality services. To cope with change Fisher and Paykel strategically innovates its services to accommodate change. This is in line with its strategic management objectives of continuously being dynamic and complex. Fisher and Paykel acquired the European cookware business Elba as part of is strategy for acquisition. Fisher and Paykel has adopted a strategy to restructure its operation. The company made news in by adopting a two phase restructuring that included raising NZ $ 189 Million.The Company raised this equity against a backdrop of a difficult international credit market. 1.8 Strategic actions and strategic implementation The pronounced component of strategic management in Fisher and Paykel is translating plans into successful and effective actions. Fisher and Paykel has created an organizational strategy that leads to strategic implementation of strategic plans. Fisher and Paykel has improved amenities and developed new information systems as added services. This makes it to one of the best institutions for respiratory treatment (Oum, Park and Zhang 2000).The innovations are offering superior services and providing fully flat beds for patients. Fisher and Paykel has strategically built a considerable reputation in the market and gained the trust of customers. Fisher and Paykel have strategically positioned itself in different markets. The company has a commanding presence in New Zealand and Australia. Fisher and Paykel continues to develop innovations and systems to improve the company. This is in accordance with its strategic objective of increasing profits and rendering better customers services. With its achievements, the company has an established reputation and image in the market (Oum et al 2000). The board of Fisher and Paykel supervises the management of Fisher and Paykel. The board determines objective and the strategies to achieve these objectives. The board sets the policy framework in which the business operates. Fisher and Paykel board of directors is committed to adhering to the best practices in health care provision. The board commits to ensuring that the company maintains high standards of ethics. The board regularly reviews the company’s governance structure that is consistent with the bests practice in the industry. To spread its principles, the company has spread its governance principles to New Zealand and Australia. The governance manual for the company consists of charters and chapters that reflect its strategic objectives. These objectives relate to the preferred corporate practices and procedures for Fisher and Paykel. 1.9 Organizational structure and control The organization structure is a process through which parts of a business should be efficiently coordinated. The organizational structure of Fisher and Paykel is a work based structure. The adopted structure is a strategy to encourage members of staff. The members of staff are encouraged to establish a unified vision, to be responsible for plans linked to goal and support processes within boundaries that are defined. This creates a positive focus for the employees. The organizational structure at Fisher and Paykel promotes the sharing of power. Power is devolved from the CEO to the managers. This brings about democracy of information, skills development and eventually autonomy. 2.0 Strategic leadership Strategic leadership in Fisher and Paykel are responsible for Strategic choices. These are decision making process that occurs after available analysis of data and information. Strategic decision in Fisher and Paykel are based upon the key areas of a business that provides it with opportunities to gain competitive advantage. These areas are products, services and technological advancement. The company has a team of strategic managers who are responsible for the implementation of strategic plans. The senior product manger heads the team of Fisher and Paykel the other members of the strategic tem on leadership are the director of business development, the marketing director, group marketing manager, group product manager and the global product manger. The company boasts of experience marketer who posses strong strategic and analytic skills in marketing the company’s products (Olso 2006). Additionally, the marketers are responsible for relationship management. 3.0 Appendices Appendix 1: Generic case analysis work sheet Industry management marketing Finance production others How many companies Social economic Organizational structure Simple leadership Product Price Place distribution Liquid capital structure performance Value chain Primary activities Secondary activities Corporate culture Appendix 2: Case analysis form Objectives SWOT Future strategies evaluation Profits Growth Survival Current strategies Business level Corporate strategies Internal Strengths Efficiency Quality innovation External threats new entrants rivalry substitutes Diversification Integration Competitive strategy Circuit analysis Accomplish objectives Solve problems Impact analysis Management Marketing Human resource Operations References Blumentritt, T and Danis, M( 2006).Business strategy types and innovative practices, Journal of Business Strategy, Vol. XVIII, No. 2, (Summer), pp. 274-291. Fisher and Paykel( 2012).Improving Patient Care and Outcome. Retrieved 23 October 2012.http://www.fphcare.com/about-us/ Guttman, H, M and Hawkes, R S, (2004).New rules for strategic management, Journal of Business Strategy, Vol. 25, No. 1,pp. 34-38. Hanson, E (2008). Strategic management: competitiveness and globalisation, Thomson, South Melbourne, Victoria, Australia. Hanson, D., Hitt, M. A., Ireland, R. D. and Hoskisson, R. E. (2011). Strategic Management: Competitiveness and Globalisation, Pacific Rim 4th edition, Cengage, Australia. Hoffman, R. C, (Spring 2007).The strategic planning process and performance relationship: does culture matter? Journal of Business Strategies, Vol. 24, No.1, , pp. 27-48. Katsioloudes M, I, (2006), Strategic management: global cultural perspectives for profit and non-profit organisations, Elsevier, Jordan Hill, Oxford. Lovas, B, Ghoshal., S. (2000)., "Strategy as guided evolution", Strategic Management Journal, Vol. 21 pp.875 - 896. Olson, E. G (2006). Not by technology alone: sustaining winning strategies, Journal of Business Strategies, Vol. 27, No. 4, pp. 33-42.. Oum, T.H, Park J,H., Zhang A. Zhang (2000), Globalization and strategic alliances, The case of the airline industry. Elsevier Science, Oxford Raps, A, (2004). Implementing strategy, journal Strategic Finance. Vol. 7, No. 4, pp. 30-52. Thompson, L, (2006). Strategy: winning in the marketplace: core concepts, analytical tools, cases, 2nd edn, McGraw-Hill/Irwin, New York, NY. Read More