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Danaher Corporation: Strategic Case Analysis

Essay by   •  December 2, 2012  •  Case Study  •  781 Words (4 Pages)  •  7,540 Views

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Danaher Corporation: Strategic Case Analysis

Business-Level Strategies -- Danaher Corporation has adopted, implemented, and mastered a low-cost and differentiation business-level strategy giving the company a competitive advantage through its management capabilities and facility processes; therefore, resulting in one of the best-run conglomerates in the U.S. today.

The central pillar to Danaher's success lies in the effective strategy of "kaizen," or continuous improvement, called the Danaher Business System (DBS). Based off of Toyota's Production System (TPS), Danaher implements a world-class strategic plan focused on its people, plans, processes, and performance, which is centralized around high-quality, efficient and effective delivery, low-cost, constant innovation, and profitable growth.

DBS provides a sustained competitive advantage, and enables Danaher to not only differentiate itself, but also to "pursue our objective of becoming the most-innovative and lowest-cost manufacturer of the products we offer (Anand & Hood, 2008)."

Corporate-Level Strategies -- Danaher's corporate-level strategy is obtaining attractive, value-added mergers and acquisitions (M&A) in vertical markets.

Danaher targets platforms that are capable of generating over $1 billion in revenue, offer significant market share, and enjoy large margins and returns. Through its scrutinized process, Danaher has evolved from identifying niche markets within fragmented industries to identifying diverse platforms with sustainable competitive advantages.

Quantitative Performance Assessment -- As Danaher focused its resources on diverse platforms and continued to implement DBS, revenues increased significantly. From 2001-2006, it reported an increase in revenue from $3.8 billion to $9.6 billion, an annual growth rate of over 20%. During this same period, operating cash flows increased nearly $1 billion. Over the last 20

years, Danaher has consistently returned 25% to its shareholders, outperforming large companies such as GE at 16% and Berkshire Hathaway at 21% (Anand & Hood, 2008).

Through both M&A and process improvement tactics, Danaher carves out a competitive advantage in six successful strategic platforms; Medical Technologies, Environmental, Test & Measurement, Motion, Product Identification, and Mechanics' Hand Tools. Each one of these platforms sustains a growth rate between 5% and 7% and generates from $900 million to $3 billion per platform (Anand & Hood, 2008).

Danaher not only implements its strong competitive advantages domestically, but also internationally. In 2007, over 50% of its revenues came from foreign emerging markets. This expansion increased its cumulative returns on stock to 150%, compared to S&P 500 returns of 25% (Anand & Hood, 2008).

External Factors -- When the U.S. economy

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