Growth Strategy
Stratasys Limited is one of the leaders in the world’s market of 3D printing. The company competes with a few other manufacturers and is to deal with the challenges presented by them when it comes to the delivery of value. Stratasys specializes in the provision of AM solutions (additive manufacturing) to the production of parts of products as well as end products. One of the primary value creation orientations of the company is the establishment of a complete and multidimensional ecosystem for the self-integration in multiple market niches.
Simple Rules
The simple rules of Stratasys focus on the search for benefits by means of innovation or the improvement of products and services, acquisitions, collaboration, and expansion. These rules can be characterized as boundary rules because they provide clear areas of orientation for the company employees and help them concentrate their efforts on the pursuit of clearly outlined kinds of opportunities.
Besides, these rules can be recognized as priority rules because they specify which objectives Stratasys favors over the others as the spheres carrying the best market advantages. Moreover, these rules can be qualified as timing rules as the company attempts to be a pioneer of 3D printing solutions and services and win the clients through offering the most advanced capabilities and the latest inventions.
Short-Term
The company’s short-term growth strategy involves the careful management of its financial resources and revenues. The report concerning the performance of Stratasys in the second quarter of 2015 indicated 182.3 million dollars in revenue and about 23 million net loss (non-GAAP) with the net income of only 8 million (Stratasys Reports Second Quarter 2015 Financial Results, 2015). To compare, the net income reported after the end of the first half of 2015 significantly exceeded that of last year.
As a result, the authorities of the company made a statement that their efforts in the short-term growth strategy will be directed at the management of finances and the adjustment of the company expenses to the current state of the market (Stratasys Reports Second Quarter 2015 Financial Results, 2015). Besides, the latest report as to the result of the third quarter showed that Stratasys continued to experience problems with the net loss.
The report maintained that “the Company believes that during 2013 and 2014, Stratasys and the overall 3D printing industry experienced a period of extraordinary growth that may have created excess capacity in the market” (Stratasys Reports Preliminary Third Quarter Financial Results, 2015).
The current situation persists due to the latest tendencies of the consumer behaviors that show weak investment into the equipment. The excessive net loss may be also associated with the active investment, as one of the main expansion and growth strategies of Stratasys is the attraction of new customers.
Long-Term
Regardless of the current disappointing results and high expenses, the leaders of the company still project growth in the long-term (Stratasys announces $938M loss in third quarter; predicts long-term growth, 2015; Stratasys Reports Preliminary Third Quarter Financial Results, 2015).
To be more precise, the future growth strategy of the company will be based on such elements and activities as the enhancement of vertical capabilities, the improvement of customer support, expansion of the market infrastructure, and increased product development (Stratasys Reports Second Quarter 2015 Financial Results, 2015). The rhythm of growth of Stratasys has become inconsistent, based on the latest performance reports.
The company has shown excellent results during 2013 and 2014, whereas this year it has been facing difficulties maintaining the same rapid pace of development because of the slowdown in the customer activity. Stratasys continues to take various measures in order to enhance its results. One of such initiatives is the collaborative project between Stratasys and PTC announced in June 2015. The purpose of the project is to combine the benefits provided by the PTC Creo design software created by PTC.
The cooperative strategy is directed at the creation of value through the provision of a seamless experience for the customers by making the transition between design and printing easier for the workflow (PTC and Stratasys Collaborate to Define and Deliver Design for Additive Manufacturing, 2015).
This collaborative project combines such objectives as value addition, creation, and delivery. Since the company is engaged in the launch of various partnership projects these days, the excessive expenses may be explained by the active operations. That way, Stratasys is working to create volume which will result in the building up of an economy of scale and pay off in the long-term.
Therefore, the inconsistence of the company’s growth rhythm is justified as the leaders of Stratasys are targeting long-term goals. In addition, this strategy is not new for the company and has been employed last year when Stratasys invested in the cooperation with Interfacial Solutions, a company producing thermoplastics based in Wisconsin (Halterman, 2014).
Challenge of Operating in High-velocity Environments
The market of 3D printing today is a fast developing environment with a small number of the key competitors. It can be characterized as an oligopoly; however, the competition in this market is incredibly tight due to the fact that all of the firms target the same population segment and provide similar services and products.
Stratasys managed to gain a significant advantage due to its orientation to the quantity of the sold and installed 3D printers around the world; in this aspect Stratasys has defeated the other competitors (Stoffel, 2015). Besides, over the years of its rapid development that company has managed to accumulate a large capital that is available for the future investments (Stoffel, 2015).It is possible to assume that this capital provides help for the company in its current struggle with the net loss.
Expansion and diversification
One of the strategies Stratasys employed stay on top in the high-velocity environment is the constant pursuit of the improvement of the range and quality of the services the company offers to its clients by means of acquiring new tools. For instance, the acquisition of a tool called GrabCAD allowed Stratasys to make their additive manufacturing more diverse (Barkai, 2015). At the same time, the partnership project with PTC helped the company include the opportunities for design in the additive manufacturing (Barkai, 2015).
The strategy of acquisitions has ensures the company’s steady growth and attracted a larger number of clients, but also allowed Stratasys to capture value by means of introducing innovative (world’s first color 3D printer working with various materials), and creative (cooperation with PTC, GrabCAD, RedEye, and Harvest technologies) approach to additive manufacturing solutions.
Expanding the range of services and capabilities of the company’s technologies and products, Stratasys facilitates its own value as a provider of unique services that can satisfy the needs of different kinds of consumers. In turn, this approach allows the company to stay relevant and demanded even when the financial activity and spending capacity of some segments are slowing down. Constant diversification and innovation ensure the company’s flexibility and adaptability.
Thus, the current net loss has a potential to create additional value in the future. Moreover, these days, Stratasys is actively working on its integration in the European markets and expanding geographically. That way, the acquisition of Israel-based Objet in 2012, and the current orientation to the creation of a strong ecosystem in Europe is a confident move towards the future global success (Lansford, 2014).
One of the recent reports of Stratasys informs that the company has made a new acquisition (German-based RTC), and is ready to strengthen its position in the European market within the next year (Stratasys Strengthens Its Position and Commitment to German Speaking Region, 2015)
Supply Chain
As a globally expanding company, Stratasys is to manage its supply chain and make smart decision regarding the addition of value and the infrastructure. With additive manufacturing strategy, each stage of the supply chain is to be carefully integrated and evaluated based on its purposes and impacts.
Currently, the company is focused on the improvement of every step of its supply chain maximizing its efficiency and taking into the considerations such stages as design software, materials, equipment, capacities, and services (The value of additive manufacturing ecosystem according to Stratasys, 2015).
The optimization of the company’s supply chain will create major impact on its future performance in terms of the attraction and retention of the customers. The company cannot afford to lose the clients to the other competitors in the market knowing the contemporary low consumer activity.
Conclusion
Competing in a high-velocity environment, Stratasys is to have a diverse strategy as to its growth. That is why the company makes an emphasis on the pursuit of several value capturing advantages such as the increasing customer base due to geographical expansion, the diversification of the services by means of acquisitions, and the availability of services through the optimization of the supply chain.
This year has not demonstrated the rapid growth for the company compared to the results of 2013 and 2014. However, the company is adjusting its spending and invests in the long-term growth.
Reference List
Barkai, J. (2015). Kalypso Acquires GoEngineer. Web.
Halterman, T. (2014). Stratasys continues growth strategy with Interfacial Solutions buy. Web.
Lansford, T. (2014). Stratasys races from the pole position at Euromold 2014. Web.
PTC and Stratasys Collaborate to Define and Deliver Design for Additive Manufacturing. (2015). Web.
Stoffel, B. (2015). Forget 3D Systems Corporation, I’m Buying Stratasys, Ltd. Stock in 2015. Web.
Stratasys announces $938M loss in third quarter; predicts long-term growth. (2015). Web.
Stratasys Reports Preliminary Third Quarter Financial Results. (2015). Web.
Stratasys Reports Second Quarter 2015 Financial Results. (2015). Web.
Stratasys Strengthens Its Position and Commitment to German Speaking Region. (2015). Web.
The value of additive manufacturing ecosystem according to Stratasys. (2015). Web.