Evaluation Essay on Stericycle Inc.

Introduction and Background of the Company

This report will focus on formulating strategies, selecting and implementing a strategy that would help improve the company. After drawing the implementation plan, it would be necessary to evaluate the strategy and provide a corrective action plan if necessary. A strategy is the action plan that managers take to achieve the organizational goals and objectives. However, a strategy can be described as the overall direction set for an organization as well as its various components to attain a desired state in the future. The success of any company depends on the strategies selected and implemented by the management. The strategy involves integrating the activities of an organization and allocating and utilizing the available resources in an organizational environment to achieve immediate goals and secure the future. When planning a strategy, the managers should ensure that decisions are not made in a vacuum and that actions taken by the organization may be met by a reaction from the employees, suppliers, customers, competitors, as well as those affected (Karim & Arif-Uz-Zaman, 2013).

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Stericycle Inc. is a multinational waste management organization that assists other entities to stick to the stern regulatory guidelines instituted by the government. Stericycle Inc. was constituted in 1989 after the US Congress voted for regulations on how to dispose of medical waste, and it is headquartered in Lake Forest, IL. As a global leader in business-to-business service provision, Stericycle, Inc. operates in three segments namely Domestic Communication & Related Services, International Regulated Waste & Compliance Services, and Domestic & Canada Regulated Waste & Compliance Services. The company provides highly specialized solutions for laboratories, healthcare practitioners, hospitals, and a variety of other organizations (Stericycle, n.d).

Stericycle Inc. is present in twenty-one nations, which includes full operations in the US, UK, Portugal, Romania, Spain, Japan, Ireland, Chile, Brazil, and Canada. The primary role of the company is to make sure that all the waste products from chemists, clinics, laboratories, and hospitals are handled safely and in an eco-friendly way to avoid exposure or effects of potentially harmful or hazardous substances. Not all the countries mentioned above access all the services offered by the company. For instance, only secure information services are offered in France, while only regulated waste services are available in Japan. The company has over a million customers across the countries it operates in, and approximately twenty-six thousand employees. Stericycle Inc. has been listed in several Forbes lists but has dropped in most of them. For example, it dropped from Most Innovative Growth Companies and Most Innovative Companies worldwide. It also dropped from America's Best Employers list (Forbes, n.d). Considering this, the company appears to have lost its way a bit.

Alternative Strategy Generation

David (2011) describes alternatives strategies as the strategies that an organization creates to set the course, for which material and human resources will be utilized, for a greater chance of achieving the desired objectives. Ideally, a business develops alternative strategies when it is struggling and seeks a new direction to gain a competitive advantage, or increase profits. To generate alternative strategies for Stericycle Inc, it would be necessary first to carry out a SWOT analysis of the company to determine what may help the company to accomplish its objectives and to identify the obstacles that need to be minimized or surmounted to achieve the desired outcomes. After developing an analysis of their company's strengths, weaknesses, opportunities, as well as threats, the managers can identify the choices or alternatives to build the strategic plan around. It is important to note that by itself, a SWOT is not actionable. However, by matching up factors from one segment with those from another segment, one can begin to identify possible actions based on the SWOT analysis. The reason for matching external factors with internal ones is to make out a fit between market opportunities and organizational strengths (David, 2011). Similarly, by matching opportunities with threats or weaknesses, one can be able to see some compelling pairs worth pursuing. SWOT analysis of Stericycle Inc. is summarized in table 1 below.

SWOT Analysis

Strengths

• Plant throughout and route density
• High rate of customer retention
• Offers a broad range of services
• Industry leadership and expertise

Weaknesses

• Weak internal controls and procedures
• Inorganic growth
• Huge amounts of debt
• The international RCS segment operates at a loss

Opportunities

• Firms outsourcing to other nations offer openings for Stericycle as well as the competitors.
• The growing population has resulted in more need for these services.
• The rising attention on recycling and reaping renewable energy from waste
• Up-and-coming international markets in health care, as well as environmental control, create a demand for these services.

Threats

• Regulations of renewed recyclable adopted in 2016 threaten the existing category of commodities.
• Possible changes to regulations of the environment as well as other expectations.
• Highly competitive industry
• Low barriers to entry
• High risk of lawsuits and fines due to strict enforcement of violations.

As earlier discussed, SWOT analysis helps the managers to identify possible actions, as well as the obstacles that need to be minimized or eliminated to achieve the desired outcomes. From the company's SWOT analysis above, several alternative strategies were formulated based on market opportunities and organizational strengths. First, since the company has a high customer retention rate, it should focus on an acquisition-led growth strategy to scale up its waste management venture as well as expand into other related lines of business. According to statistics, most multinationals companies made numerous acquisitions to attain their present situation (David, 2011). Therefore, acquisition strategy would help Stericycle grow in its capacity as well its customer base. The acquisition strategy would aim to gain a regional waste management network. After that, the company should focus on making tuck-ins of its competitors to expand its customer base. This way, the company would build a strong customer list, then it can cross-sell its services to make the acquired businesses more beneficial or gainful.

The second alternative strategy would be to create a robust customer ecosystem in biomedical waste management and compliance. Outside Stericycle's ability to develop business density, the company appreciates that the waste management industry has low barriers to entry. As seen from the SWOT analysis above, Stericycle's business industry has low barriers to entry, and this is because anyone can collect waste and deliver them to a processing facility. To remain competitive in the industry, Stericycle should strive to develop a strong customer network in healthcare waste management and compliance. The company can achieve this by positioning itself as a reliable and trusted partner in the provision of waste management services, which will afford them opportunities to offer additional related services such as compliance and training. This strategy will deepen the relationship between the customers and the company and will facilitate further advancement. Also, Stericycle should remain committed to offering quality services at competitive prices. This way the company will have a competitive advantage over the competitors as well as the new entrants into the business; therefore the company will remain profitable.

The third alternative strategy of Stericycle would be to downscale operations or sell their international RCS segment. As evident from the company's SWOT analysis, one of the major weaknesses of the company is that the international RCS segment still operates at a loss. The current woes of the company may be attributed to this segment. The International RCS is eating up the company's resources because since it operates at a loss, it will always depend on the parent company for support to fund its operations, and eventually it will pull the company down (Stericycle, n.d). In my expert's opinion, it would be prudent for the company to downscale the segment's operations, close it down, or sell the business. Alternatively, Stericycle can divert the capital of the international RCS to other business lines that would be profitable to the company. Otherwise, it would be suicidal to continue pumping funds into this segment's operations. Also, I believe that the company lost its way with the expansion into document shredding and hazardous waste disposal. These businesses are beyond the company's core competency and are more capital intensive, more cyclical, more competitive, and less profitable. The company started facing a decline in ROIC and marginal compression when it expanded into these businesses. Therefore, it should do the same thing as the international RCS segment: downscale the businesses operations, close them down or sell the businesses. Better still, it can also divert the capital of these businesses to other business lines or segments that would be more profitable to the company.

The fourth alternative strategy would be to collaborate with hospitals to raise awareness of the opioid epidemic and reduce the availability of drugs on the street by implementing kiosks at hospitals and police stations and also holding disposal events to bring awareness to the crisis. Apart from creating sustainability in protecting the environment, this move will also be the company's corporate social responsibility strategy. Each organization should realize that sustainability is a continuous quest. No matter how much an organization can achieve, there is always more to be done the next day. Considering the mission and vision statement of Stericycle, this strategy supports the company's goals and objectives. Companies that give back to the community through their corporate social responsibility programs create a good corporate image and improve the loyalty of their customers. However, intensive CSR programs are not feasible in struggling companies since they require a lot of funding.

The fifth strategy is that the company should sell its non-core assets, as well as other businesses that are not profitable. While the sale of these businesses will reduce the full year forecasts of the company, it would be helpful for the company's sustainability in the long-term. As indicated in the SWOT analysis, another significant weakness of Stericycle is that it has large amounts of debt. The accumulating debts would finally affect the operations and profitability of the company in the long run. The proceeds from the sale of core-assets and non-functional businesses may be used to ease the burden of the debts. While this strategy could lead to an immediate fall of the company's earnings and revenue, the strategy would benefit the company in the future, and its impacts are long term. For instance, the strategy would increase the compound annual growth from 6 to 10% over the next five years. This strategy would be an ideal way of transforming the company (Karim & Arif-Uz-Zaman, 2013).

Strategy Prioritization and Selection

According to Noe et al. (2006), prioritizing alternative strategies increases the rates of success of strategies, increases the focus and alignment of the managers around organizational goals. Prioritizing strategies also clears doubt for the operational team when...