Assignmnet Question 1:

What Business is Medtronic in?

The Medtronic company's business is medical equipments and services.

What product categories does it compete in? Which

categories are growing and by how much(%)? Are any
product categories "in trouble"?
The product categories are:
1. Cardiac and Vacular products. The cardiac and varcular products' net sales
increased $835 million by 9% compared with FY2015.
2. Minimally Invasive Therapies. The minimally Invasive therapies category has
increased $7,176 by 301%. But considering that this product category has
newly formed in FY2015 the fourth quarter, so we can interpret that the
targeted net sales for this category in FY2015 might be the same as the
Cardiac and Vascular category. Then we can get the increase in $202 million
and by 2%, which might be more reasonable.
3. Restorative Therapies. This caegory increased $459 million in total and by 7%
as a whole. However, the subcategory product spine and Neuromodulation
has decreased by 2% and 3% each. So the two are in trouble.
4. Diabetes Products. This category increased $102 million in total and by 6%
relatively.

Who are its customers?

There are various types of customers for Medtronic's products and services.
1. For its cardiac and vacular products, the customers include primary specialists
like electrophysiologists, implanting cardiologists, heart failure specialists,
cardiovascular, cardiothorasic, and vascular surgeons and interventional
cardiologists and radiologists.
2. For its minimally invasive thrapies products, the main part of the customers are
hospitals, physicians' oces, and ambulatory care centers, other alternate site
healthcare providers.
3. For its restorative therapies and products, the customers include spinal
surgeons, neurosurgeons, neurologists, pain management specialists,
anesthesiologists, orthopedic surgeons, urologists, interventional radiologists,
and ear, nose, and throat specialists.
4. For its diabetes products, the customers are endocrinologists, diabetologists,
and internists.

What is the distribution of its business geographically?

In FY2016, the geographically distributed net sales are:

U.S. : $16,422, 57%

Non-U.S. : $8,708, 30%
Emerging Markets : $3,703, 13%

How does it sell its products?

Most of its products and therapies are through direct sales in the U.S and with a
combination of direct sales and distributors in the markets outside the U.S area

Who are its key competitors?

Its key competitors are Johnson & Johnson, Boston Scientic and St.Jude.

Assignment Question 2:
Is its current financial performance(GM and OI) "good"?
For MDT FY2016:(in million)
GM(%): $19,691(68.3%)
OI(%): $5,291 (18.4%)
Compettitors

GM(%)

OI(%)

Johnson&Johnson

69.27

27.39

Boston Scientific

71.35

-4.37

St Jude

68.71

18.59

GC Aesthetics

50.69

-81.07

Stryker corp

66.38

18.71

Globus Medical Inc

75.62

31.61

Presbia

-6.54

-11849.67

Trimedyne

33.41

-10.18

Hologic

52.96

14.51

Allergan

68.08

-20

Edward LifeSciences

75.25

24.96

Covidien

59.36

18.69

The Medtronic company can be treasted as well performed for its main market is business
market selling hardwarea and services. The General benchmark is respectively 18% and
15%, both are less than its 18.4%. So from this respect, the performance is good. However,
from the industry respect, as we choosed several its competitors,the MDT is ranked 6th
position, seems not good in the position. But consider that it has acquisized Covidien, so in
the long run its OI should keep increasing. And also considered that those competitiors'
main business might also not be in the same sector as Medtronic's, so the benchmark

derived merely for its competitiors might not be so reasonably to compare with.

Are GM and OI improving or deteriorating? In absolute

terms? In relative(% revenue) terms?
The GM increased $5,739 million in absolute terms, but decreased by 0.6% in
relative terms.
The OI increased $1,525 million in absolute terms but decreased by 0.2% in
relative terms.
So the GM and OI performance both are deteriorating.
However, consider that the acquision of Covidien occured in FY2015, so the segment
MIT Group's net sales should be adjusted. If adjuested to $9,361 million, as we
cannot adjust the COGS, we can only conjusture that the OI and GM should be
improving as the instution for the acquision should be to improve the performce and
the absolute GM ad OI are actually increasing.

Which Income statement line items drove the change in

relative operating income from FY2015 to FY2016? By
how much?
From FY2015 to FY2016, the OI% dropped by 0.24%. The factors for this change
was drove by:
Research and development expense decreased by 0.38%
Selling, general, and administrative expense decreased by 1.23%
Special charges(gains) net increase by 0.43%
Restructuring charges, net decreased by 0.16%
Certain litigation charges, net decreased by 0.12%
Acquisition-related items decreased by 1.73%
Amortization of intangible assets increased by 3.08%
Other expense, net decreased by 0.21%

What opportunities & challenges does Medtronic face in

accelerating its revenue and profit growth in the future?
For the revenue, as Medtronic finished acquision of Covidien, so we can
expect the revenue to keep an steady growth rate as there are new markets
joining into the blueprint. Also, how to keep the market share and manage to
increase the share can be challenging.
As we can see from previous questions, the OI% and GM% are deteriorating.
If we assume that the acquision should bering benefits and improve
Medtronic's performance, then for the FY2016, the company di not perform
well. Then the challenge is how to utilize the benefits Covidien can bring to
maxmize the revenues and operating income.

Another challenge or opportunity might be how to enlarge its non-domestic

market. As we can see from the 10-K, the Non-U.S. market percentage keeps
decreasing form 2014 to 2016, so after the acquision, there can be new
market for Medtronic to explore in global market. This can also be a challenge
in another way.
The oprtunity along with the acquision is the leading place in the minimally
invasive technology, so Medtronic should keeps reasearch and develop new
tech and products in this area to stay in the edge.