Intuitive Surgical Inc.

A surgical system that typically includes a patient side cart, surgeons console, associated surgical equipment, and vision system is produced by Intuitive Surgical Inc., a global marketer and designer of various surgical systems. Through the translation of natural movements onto the console, the organization's proprietary da Vinci technology typically enables surgeons to control invasive scissors, endoscopic instruments, ultrasonic cutters, forceps, scalpels, and accessories (Wikiwealth, 2016). The business also offers a variety of associated surgical tools and other ancillary items, such new eyewear. Robots, robot platforms, and sterile drapes intended for use during surgical procedures. The company develops, markets as well as markets robotic technologies that are designed for improving clinical outcomes and helping patients return quickly to their active productive life. This paper evaluates the company's performance by analyzing its financial and general position in the market.
Background Analysis
The organization's mission is to extend the advantages of minimally invasive surgery to one of the broadest possible base for patients. The company's mission is to provide the least invasive and safest option for surgery (Linkedin, 2017). As from December 2015, the surgical Robotic industry tends to hold a market share of about $ 4 billion. Since its inception, the company is believed to have installed more systems compared to its competitors. The company continues to venture into new business including colorectal procedures and hernia repair. Many manufacturers and investors still believe that the company's surgical robotics have not yet been exploited. This in turn creates an opportunity for Intuitive Surgical Inc.


Substitute Products
One of the organization's competitors is waiting for FDA to approve its new business venture with the aim of incepting a new as well as a less costly substitute for Intuitive Surgical systems. This means that the profits obtained from this company would largely be affected, particularly after the patents have expired. This would mean that the competitors would have the opportunity of making similar surgical systems.
Internal Environmental Strategy
The company's internal environmental factors refer to factors within the company that affects it. Firstly, there is employee motivation. This is a very important and significant aspect of the internal environment. Workers who are motivated tend to work diligently towards the achievement of the company's objectives. One internal strategy of
Corporate Level Strategy
The company's corporate level strategy is usually concerned with strategic decisions that tend to affect the entire company. This includes its human resource management as well as the allocation of resources (Nag et al, 2007).
Business Unit Level Strategy
The company purposes to include a larger number of patient population under its minimally invasive surgery treatments with the aim of benefiting patients to attain better surgery outcomes as well as faster recovery times. As a result, the company aims to achieve this objective by bringing value to surgeons, patients and hospitals via technological advancements as well as the evolution of the different surgical systems (Collins, 2016). For the company to improve its target surgical procedures, the company is focused on attaining various goals. Firstly, the company wishes to convert its target open procedures to the organization's da Vinci MIS Procedures. Secondly, the company wishes to facilitate challenging MIS operations that are presently performed by an inadequate number of extremely skilled surgeons. Another strategic goal is to facilitate a single-port surgical option for some less invasive procedures for improving outcomes. However, for the organization to achieve these goals, it has to undertake different initiatives such as increased number of system placements, expansion of da Vinci's system across the general surgery specialties, particularly colorectal surgery and hernia repair.
Functional Level Strategy
The functional level of the company is the level of the operating departments and divisions. It is the duty of these strategies to provide specific direction to functional managers regarding the execution of strategies and plan for the successful implementation. The role of Intuitive Surgical Inc. functional strategies is very important for the existence of the organization. Functional strategies provide support to the overall business strategies as well as it spells out the ways in which the functional managers would need to proceed on with the aim of achieving the company's set objectives and goals. The organization's departments such as finance production, human resource and marketing are normally based on the functional capabilities of the company.
The company has a responsibility to different stakeholders. The first one is employees. The company has a responsibility to maintain good working conditions for employees and to make sure that they are motivated to work with them. Employees are responsible for providing labor to the company. The second stakeholders are the patients. These are the individuals who receive the services offered by the organization. The third stakeholders are the owners. These are the individuals who invested in the company and created it. Other stakeholders entail the stock holders who buy shares within the organization.
The company has a hierarchical organizational structure. Large companies such as Intuitive Surgical Inc. have tall structures with numerous levels of workers reporting upwards to the team leaders, and later upwards to the operational management. The company has a long chain of command with what is considered as a narrow span of control. The chain of command is the number of levels within the company. Span of control refers to the number of workers who are supervised directly by one individual.
Financial analysis
  Cost of goods sold Average Inventory ISRG Industry averages
Inventory turnover 814300 182300 4.466812946 3.96 Strong
         
  Net revenues Total assets    
Asset turnover 1890100 6486900 0.291371842 0.56 Medium
         
  Current assets Current liabilities  
Current ratio 3,250,400 596,500 5.449119866   Strong
         
  Current assets - inventory Current liabilities  
Quick ratio 3,068,100 596,500 5.143503772 3.87 Strong
         
  Total liabilities Total assets    
Debt to asset ratios 709100 6486900 0.109312615   Strong
         
  Total liabilities Total shareholder's equity  
Debt to equity ratio 709100 5,777,800 0.122728374 0.06 Medium
         
  Gross income Net revenue    
Gross profit margin 2,704,400 1,890,100 143% 62.35% Strong
         
  Net income Net revenue    
Net profit margin 735900 1,890,100 39% 11.14% Strong
         
  Net income Total assets    
Return on Assets 735900 6486900 11% 6.23% Strong
         
  Net income Total shareholder's equity  
Return on Equity 735900 5,777,800 13% 15.74% Weak
Data retrieved from: https://finance.yahoo.com/quote/isrg?ltr=1
Commenting on the results
From the results, it is much evident that the company is healthy in terms of financial performance. This is as shown by the various categories of ratios. The calculated ratios were compared against the industry averages and the results also confirmed the same regarding the company's performance. In terms of liquidity ratio, the company had a higher current ratio than the industry average; showing that the company is liquid enough to cover its short-term obligations. In the case of activity ratio, the company had a higher inventory turnover but with a lower asset turnover; in which case, the company was efficient in managing its inventory but then faced limitation in using its assets effectively to yield revenue. As shown by gross and net profit margin, the company is highly profitable as shown by its ability to generate more profit from its sales than an average company in the industry. It also has a higher return on assets meaning the management were more productive in using company's assets to generate revenue than the industry average.


Technique Analysis
BCG Matrix
For the company to create a BCG matrix, it has to gather its growth-rate and market-share data on its products and business units.
High Relative Market Share Low
Stars
Thoracic surgery
Urology Question marks
Video assisted thoracic surgery
Cash Cows
General Surgery
Gynecology
Hysterectomy Dogs
Hernia repair
Radical prostatectomy


Low
For Intuitive Surgical Inc., the cash cows are the da Vinci Surgical systems with the purpose of bringing a minimally invasive surgical option to the patients. The da Vinci system tends to feature a 3HD vision system that facilitates for a clear and magnified view of the patient's inside body. The da Vinci system normally consists of different major components. This includes: a patient side-cart, interactive robotic arms, propriety Endowrist instruments and 3D HD vision systems. These are the products that when used appropriately generate more money for Intuitive Surgical Inc. Therefore, for Intuitive Surgical Inc. to maintain the present level of productivity, the company should invest in cash cows. This is because, they provide the finances required to cover the administrative costs as well as to fund the company's debt. Dogs refers to the company's products and units that tend to have a low growth rate and low market share. In most cases, they break even. The third quadrant is the question marks. This means that the company has a high growth prospect with a low market share. Therefore, it should only invest in question marks if the new products have the potential for growth. The last quadrant is the stars. It refers to the organization's products and units that tend to have the ability of generating huge amounts of money.
Grand Strategy Matrix
Rapid Market Growth
Quadrant 2 Quadrant 1
Product development Market penetration
Market development Forward integration
Weak competitive position Strong Competitive position
Quadrant 3 Quadrant 4
Retrenchment Joint ventures
Liquidation Diversifications

Slow Market Growth
In the above figure it shows the various strategic options which are available for the company. In the first Quadrant, the company can pursue a market and product development as well as try to penetrate in new markets. In the second quadrant, the company may pursue horizontal vertical integration and product development. In the third quadrant, the company may take part in a weak competitive position by retrenching its workers. This would result in the loss of good will and motivation for the remaining employees. The last quadrant represents a strong competitive position such as engaging in joint ventures. This mean that the company would have additional revenues to pursue its business ventures (Wu & Chen, 2014). Currently, Intuitive Surgical Inc. is in the first quadrant. This is because it is pursuing a market and product development strategy. Its current operational strategy is to include a greater patient population specifically under its minimally invasive surgery treatments. It also aims to benefits its patients with faster recovery times and better surgery outcomes.
IFE Matrix
This is a strategic management tool aimed for evaluating and creating major weaknesses and strengths in functional areas of the business. The IFE matrix tends to provide a basis for identifying as well as evaluating relationships that take place in these areas.
Internal strengths
Loyal employees
Access to reliable and cheap financing
History of reduced service complaints Weight
10%

20%

40% Rating
4

4

3 Weighted Score
0.40

0.80

1.3
Internal weaknesses
Little diversification
Absence of strategic partners
Limited access to various international markets
10%

5%


15%
1

2


2
0.1

0.1


0.3
Total Weighted Score 100% 16 3
Major weakness 1, minor weakness 2, minor strength 3 and Major strength 4
The company's major strengths include: a history of reduced service complaints, access to reliable and cheap financing and loyal employees. Having loyal employees is important and crucial to the success of the organization. For Intuitive Surgical Inc. its employees showcase a lot of trust and high optimism in meeting the company's vision and goals. This drives them into initiating actions and becoming highly productive in executing their work. As a result, they able to accomplish various tasks beyond their job description. Secondly, Access to reliable and cheap financing. The company has the ability to obtain different financial services including insurance, credit, payment and deposits. This financial access tends to promote growth for the business through provision of credit, intensifies competition and boosts growth. The company has a history of reduced service complaints. This in turn allows customers to make positive assumptions about the company, leading to increased customer satisfaction. However, there are a number of weaknesses that the company has. Firstly, the company has few strategic partners. As a result, it fails to utilize other organization's strengths that would otherwise make both of them stronger in the long run. By creating a strategic partnership, the company will position itself in such a manner that a wide variety of opportunities become available. Secondly, the company has little access to international markets. Venturing into international markets will increase the company's growth, customers and profitability. Thirdly, the company has little diversification. It is very important for Intuitive Surgical Inc. to pursue a diversification strategy because it maximizes return through investing in different products which in turn maximizes its risk.
QSPM Strategy
Quantitative Strategic Planning Matrix refers to a high-level strategic management plan for evaluating possible strategies. Therefore, it tends to provide an analytical method for comparing different feasible alternative actions.


SWOT analysis of Surgical Inc.
SWOT analysis refers to a way of evaluating the weaknesses, threats, strengths and opportunities that tend to affect a company.
Strengths
The company is a market leader and among those with the highest share in the healthcare industry
The company has a strong brand. This has triggered customer loyalty to the company's operations.
Being a market leader, the company enjoys the advantages coming with large economies of scale
Opportunities
Firstly, it has sufficient room for international expansion. This can be done by marketing products through the internet.
Secondly, new inventions and applications are yet to discovered. This means that the company can hire young talent with new skills and abilities with the aim of coming up with new inventions.
Weaknesses
It is evident that the company has stiff completion and thus must come up with strategies to improve its competitive advantage.
Other huge medical device organizations that focused on the provision of devices in minimally invasive surgery treatments include Abbot Laboratories, Verb Surgical, Medtronic (MDT) as well as Boston Scientific (BSX).
Threats
The organization faces threats from the insurance cut backs. This is a huge problem because it means that during times of crisis and damages by fire or other causes, then it would not get the full compensation amount.
Alternative Strategies
Business environments such as that of Intuitive Surgical Inc. are very uncertain. As a result, the company needs to be flexible and innovative so as to survive. There are 3 different alternative strategies that the company can pursue. Firstly, it can pursue a differentiation strategy. The company can create products that have features that tend to differentiate it from those of competitors. These features should be difficult for competitors to copy. When introducing the new features, the company must ensure that the product complements customer needs and that its flexible. Secondly, the company can pursue a diversification strategy. This is a type of growth strategy where the company develops new products for its existing customers or new markets. The main benefit of diversification is that Intuitive Inc. will gain competitive advantage. The third alternative strategy is the adjacent business strategy. The company should focus on its current customer preferences with the aim of seeking growth opportunities. This can be achieved by introducing new products or developing new distribution channels.
There are several cultural factors that must be considered when analyzing and choosing among strategies. Firstly, it is adaptability and flexibility. Companies that remain flexible are in most cases likely to embrace changes as well as create an environment that tends to remain open to communication. A stable culture normally fosters a culture of team work, cooperation, unity and partnership among employees. Another factor that needs to be identified is process implementation. This includes utilizing technology with the aim of facilitating the attainment of goals.
The best alternative strategy is the diversification strategy. This is because, the strategy can help Intuitive Inc. to better to better use its resources, increase the number of sales as well as minimize the risks and uncertainties associated with market upheavals that tend to affect a specific product.
In conclusion, it is evident that Intuitive Surgical Inc. has numerous products that allows surgeons to operate on patients using minimally invasive options. The company's main product is the da Vici Surgical system that is used extensively by surgeons across the globe. This system in combination with the company's instruments and accessories tend to bring enhanced vision, precision and dexterity to minimally invasive surgery. However, the company needs to pursue a diversification strategy with the aim of reducing risks and gaining a competitive advantage.












References
Nag, R; Hambrick, D.C & Chen, M.J (2007). What is strategic management, really? Inductive derivation of consensus definition of the field. Strategic Management Journal. 2(9): 935- 955
Linkedin (2017). Intuitive Surgical. Retrieved on 23/4/2017 from https://www.linkedin.com/company/intuitive-surgical
Wikiwealth (2016). Intuitive Surgical (ISRG) SWOT Analysis. Retrieved on 23/4/2017 from www.wikiwealth.com/swot-analysis.isrg
Collins S (2016). A closer look at Intuitive Surgical's Business Strategy. Retrieved on 23/4/2017 from marketrealist.com/2016/05/closer-look-intuitive-surgical's-business-strategy
Wu, I. L., & Chen, J. L. (2014). Knowledge management driven firm performance: The roles of business process capabilities and organizational learning. Journal of Knowledge Management, 18(6), 1141-1164.


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