Businessmodel of Stryker

Customer Segments

Stryker manufactures and sells a broad range of medical devices and equipment for use in various procedures and treatments. The Company markets its products directly to customers in the healthcare industry, including:

• Healthcare Facilities, including hospitals, clinics, medical laboratories, and specialist care units;
• Medical Professionals, including physicians, surgeons, and specialist medical professionals; and
• Medical Distributors, including medical equipment distribution providers. Stryker serves customers in more than 100 countries worldwide. The majority of its business, however, is conducted in its native US, including Puerto Rico, which accounted in 2015 for 71.5% of overall annual revenue. The Company’s other customers are divided into Europe, Middle East, Africa; Asia Pacific; and other foreign countries, which include Canada and certain countries in Latin America.

Value Propositions

Stryker provides value to its customers in the following ways:

• Its reputation and industry standing, with the Company established as leading medical equipment and product manufacturer in the US and abroad, having received a number of awards and serving a number of large customers;
• Its proprietary technologies and designs, with the Company developing and employing its own proprietary technologies in its products and equipment, with unique designs and production, setting its offerings apart from competitors;
• Its broad range of products, with the Company offering a wide range of medical devices and medical equipment products for uses in various situations, including navigation instrumentation, cameras, surgical tables, beds, and lights;
• Its international reach, with the Company serving customers in more than 100 countries across North America, Latin America, Asia Pacific, Europe, Africa, and the Middle East; and
• Its industry expertise, with the Company employing specialist technical and medical personnel, as well an experienced team of industry executives. ### Channels

Stryker operates a website at www.stryker.com, through which it provides information on its medical device products, equipment offerings, and other services and solutions. The Company does make sales through an online sales channel. It does, however, operate an online portal for customers of its ProCare solution, which allows customers to access certain tools and resources online.

Stryker makes its sales primarily through its in-house direct sales force and dedicated sales subsidiaries. The Company maintain separate dedicated sales forces for each of its principal product lines, allowing it to provide a high level of expertise to each medical specialty served, sales teams also organised by geographic region. Stryker has sales and support offices across North America, Latin America, Asia Pacific, Europe, Africa, and the Middle East, including in Japan, Brazil, the UK, Bahrain, and South Africa.

Additionally, Stryker makes sales through a network of third parties, including authorised distributors, independent sales agents, and third party dealers.

Customer Relationships

Stryker does not make its products available for sale on a self-service basis. The Company, however, does operate an online customer portal for its ProCare platform, through which customers are able to access certain tools and resources without interacting with members of the Stryker sales and support teams.

The majority of Stryker’s sales are made through its dedicated sales teams and subsidiaries, each of which has its own specialist personnel who are able to provide a knowledgeable and informative service. The Company provides a personal service to its customers, establishing the individual needs and circumstances of each customer before agreeing upon a sales and distribution contract. Stryker seeks to establish recurring business from its customers.

Stryker provides ongoing technical support to its customers, operating a dedicated technical support team, the members of which are available to provide personalised support services to customers over the phone or via an online contact form. The Company also offers and online parts ordering service and on-site field support services. Additionally, customers are able to access a range of online resources through the Company’s website, including online product manuals. Stryker also provides a range of training and education resources.

Customers are also able to interact directly with Stryker and its employees through its social media accounts with YouTube, Facebook, and LinkedIn.

Key Activities

Stryker is a medical technology company engaged in the design, manufacture, marketing and sale of medical devices and equipment. The Company aligns its operations into three reportable business segments: Orthopaedics, which primarily comprises the Company’s production and sale of implants used in hip and knee joint replacements and trauma and surgeries; MedSurg, which comprises the Company’s production and sale of surgical equipment and surgical navigation systems, such as endoscopic systems and patient handling and emergency medical equipment, as well as other specialty medical device products; and Neurotechnology and Spine, which comprises the Company’s production and sale of both neurosurgical and neurovascular devices. Stryker serves an international customer base spanning more than 100 countries, serving healthcare professionals, medical facilities, and specialist equipment and device distributors.

Key Partners

Stryker works closely with a range of partner companies and organisations throughout the design, manufacture, and sale of its products. These partners include:

• Supplier Partners, comprising supplies of raw materials, tools, and equipment used in the manufacture of the Company’s products and devices, as well as suppliers of services, and technologies that are utilised across the enterprise in support of its general operations;
• Research and Development Partners, comprising various research facilities, academic institutions, and medical device companies that assist the Company in the design, development, and production of its products and solutions;
• Channel and Distribution Partners, comprising various third party intermediaries, such as distributors, independent sales agents, and dealers that extend the Company’s sales reach, particularly in jurisdiction where the Company has a limited presence;
• Professional and Trade Partners, comprising various professional and industry bodies, with which the Company collaborates in promoting and developing the medical technology industry. Stryker partner with a number of professional and industry bodies, including The American Association of Hip and Knee Surgeons, The Medical Devices Manufacturing Association, the Arthritis Foundation, and the Association of Perioperative Registered Nurses. The Company has also recently agreed a co-marketing deal with OrthoSensor and a strategic partnership with Osiris Therapeutics.

Key Resources

Stryker’s key resources are its technologies and intellectual properties, its raw materials and supply chain, its design and development facilities, its manufacturing facilities, its sales and distribution infrastructure, its IT and communications infrastructure, its partnerships, and its personnel.

Protection of its unique design and technologies is key to Stryker’s business. As of 31st December 2015, Stryker owned approximately 1,884 US patents and approximately 3,014 international patents. Searches of records published by the US Patent and Trademark Office identified numerous patent applications filed in Stryker’s name, including applications entitled ‘Inflatable mattress and control methods’, ‘Adjustable continuous filament structure and method of manufacture and use’ and ‘Ambulance cot and loading and unloading system’.

Stryker also owns and or leases a number of physical properties that are key to its activities. This notably includes its network of more than 30 manufacturing facilities across North America, Europe, and Asia, as well as its international distribution infrastructure.

Cost Structure

Stryker incurs costs in relation to the design and development of its products, the manufacture and distribution of its products, the procurement of raw materials and supplies, the maintenance of its IT and communications infrastructure, the implementation of marketing and advertising campaigns, the management of its partnerships, and the retention of its personnel.

In 2015 Stryker accrued total cost of sales in the amount of $3.34 billion. The Company also recorded selling, general and administrative expenses totaling $3.61 billion, and research and development costs totaling $625 million.

Revenue Streams

Stryker generates revenue through the manufacture and sale of various medical devices and medical equipment products, which it sells directly to the healthcare industry. The Company’s product sales are organised by operating segment, and comprise

• Revenue derived from the sale of products and implants used in hip and knee joint replacements;
• Revenue derived from sale of various medical equipment products and surgical navigation systems; and
• Revenue derived from sale of neurosurgical and neurovascular devices. Stryker also generates a small portion of its revenue from other services and solutions, such as planning and design services.

In 2015 Stryker generated annual sales revenue of $9.95 billion, up slightly on the $9.68 billion recorded by the Company in 2014. The Company’s largest revenue generator was its Orthopaedics segment, which recorded sales for the year of $4.22 billion. This was followed by the MedSurg segment which recorded sales of $3.90 billion.