Professional Documents
Culture Documents
CORPORATION
Shaping Culture
Through System
GROUP 5
JAHJA SHELY MEIFUZI
WISNU DASUKI
SAMMY SANTOSO EDI
SURYANTO STEVANUS
PASSAT
Guidant Corporation
Established in January 1994
Created from the spin-off of 5
companies from Medical Devices
and Diagnostic Division -> generate
value by reducing costs and
creating competencies.
Design, produce, and sell medical
devices
Product : pacemakers, defibrillators,
catheters, and devices for minimally
invasive abdominal surgery
Business unit
1.Cardiac
Rhythm
Management
(CRM)
2.Vascular Intervention (VI)
3.Minimally Invasive Surgery (MIS)
Sales organizations
1.Western Hemisphere Sales
2.European Operations
3.Pacific Rim Sales
Challenge :
Competitor
create
new
technology in similar product
(more smaller) and subtitute
product with lower price.
Building
and
maintain
customer by create product
that have competitive price.
To be able achieve cost
leadership to compete with
competitor
GUIDANTS STRATEGY
Sharehold
er Value
Global
Innovation
Product
Economic Partnerships
With
Customers
Worldwide
Build strong relationships
with
physicians
and
healthcare administrations
Develop
a
direct
salesforce
in
markets
(Japan and Europe)
Reorganize sales function
to
establish
closer
relationships
with
customers and become
independent
from
the
business unit.
Organizational Excellence
Create organizational excellence as As a culture in which all
employees function as owners of Guidant
Create employee commitment to the new Guidant Corporation and
create core theme to work with for the eight strategic design teams
Shareholder Value
To create shareholder value, IPO in 1994
Create company goal : double market value in 1999
($ 7 billion)
Cascade the company goal into 6 financial goals :
Sales growth
greater than
competition
Decrease
effective tax
by 1% per
year
Maintain
capital
expense
below
25% Debt to
Equity
Decrease
OPEX 2% of
sales per
year
Improve
gross
margins
Residual income
= Net income Cost of Capital
= Net income (Average Assets Average Current
Liabilities)*13,5%
Performance Measurement
System
10% of compensation was
contingent upon increases in
this residual income measure
for Guidant
60% of their compensation
linked to stock performance
through stock ownership and
stock options (as part of the
long term compensation)
The incentive structure would
facilitate
communication,
learning and mobility across
divisions
Performance Measurement
System
The bonus was adapted to
the changing needs of the
division and based on the
divisional performance.
The employees contribution
was invested in a diversified
fund
Next, would be necessary to
fine-tune
the
incentive
system
to
reflect
unit
performance more heavily
than corporate performance.
FUTURE
RECOMMENDATION
Manage risk by comply to regulation.
Setting the balanced incentive system.
Repetitively internalize the vision, mission to have goal
congruen.
Focus to customer needs by achieve cost leadership to
creare competitive product price.