Stryker Corporation: In-Sourcing Pcbs Case

BUS 730 Decision Making

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Case:Stryker Corporation: In-sourcing PCBs

Problem: Should Stryker corporation choose the new in-sourcing project?

Objective: 1. To reduce the purchase of PCBs and gain profit.

2. To reduce risk.

3. To control PCBs' quality and delivery.

4. To improve the liquidity of cash.

Alternatives 1. Out-sourcing

2. In-sourcing

Consequences If Stryker uses its original sourcing strategy, the firm will spend lots of money to buy PCBs and the cost will increase in the future, and gain thin profit margin. Also Stryker found that the performance of some manufacturers was not good, the bad quality of the PCB will influence the end products' quality.

If Stryker use in-sourcing Strategy, it will promised the highest degree of control over the quality and delivery. From the calculation of new project's NPV, we find the outcome is $2122331.64, so this project will bring profit to Stryker. Also, under the forecasting of the new project , account payable will increase that means the firm will get more cash to reinvest and improves the ability of continue operation. But there are some subjective risk we need to concern, expansion a new product will make more risk, otherwise the subjective risk we also need to concern.

Tradeoff/

Analysis From the Tradeoff Analysis table we can see that in-sourcing strategy is better than old sourcing strategy.

There are many issues on Stryker's old sourcing strategy. The performance of its suppers and manufacturer was not good. So out-sourcing strategy is not fit Stryker in the current situation. Although the new project need firm to buy a building and spend time on producing equipment, the NPV is positive and IRR is acceptable. Also in-sourcing strategy can ensure the quality, the good quality of product can increase firm's competitiveness in the market. But the