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Coloplast A/S—Organizational Challenges in OFFSHORING
Transcript of Coloplast A/S—Organizational Challenges in OFFSHORING
Background & Operations
Demographic /Social Analysis
Political Legal & Economic
Global & Technological
Porters Five Forces
Firm's competitors and resources
Discussion & Recommendation
Coloplast A/S Operations
Denmark to Tatabánya, Hungary
Plant Manager of Colopast’s Hungarian subsidiary (2001 to 2004; 3.5 years)
Managed a staff of 550
Director of Coloplast’s Danish subsidiary 2005
Chief Operating Officer of Coloplast
Needed 50% more manufacturing space by 2010
10 % organic growth rate
Operational assumptions and activities
Significant changes to exploit the full potential in Hungary
Interdependent relationship between the Danish and Hungarian operations
Lack of knowledge transfer from the Danish operators to the Hungarian operators
Development of new task areas and roles for Danish workers
Coloplast A/S Background
Founded by Elise Sorensen in 1954
Worlds first self adhesive, disposable, ostomy bag
Lack of business potential
By 1957, half of production exported
This trend increased to 97% by 2005
Chronic Care Products:
External Environment Demographic/social
Coloplast depends on two lines of products
Health care system in developed countries cooperation has drove prices down
Political/legal & Economic
Legal issues related to defective products
Lying off employees in Denmark
Prosperous economic conditions in the relocated country.
Global & Technological Environment
97 per cent of Coloplast revenue was generated from overseas
Sales were sustained through multiple subsidiaries
Relocating to China is still on progress
Technology improvement might decrease the need for ostomy bags
Porters Five Forces
- 900 staffs too double its product volume
Pilot production phase
- R&D, design and marketing
- resources of in building and fine-tuning
Volume production phases
Function for plant conjunction
primary support functions
- quality, engineering, maintenance, planning and logistics.
Secondary support functions
- information technology
(IT), facility management and accounting
Firm’s resources Cont
save 66% if Coloplast Hungary buy directly from Hungarian
- tackle operational inconsistencies in the machinery
– important resource of manufacturing
Production planning systems
each production units has its own unique production planning
Programmable logic controllers (PLCs)
control and manage automatic production machines
Critical Issues Related to Offshoring
Management and Operational Issues
Systems and the transformation of organizational structures
Regulations, Rules and Production Systems
Changes are NECESSARY
Discussion and Development Solutions
Significant operational changes needed to be in place in order to exploit the full potential of the Hungarian subsidiary.
How to get raw materials?
How to distribute finished goods?
How to transfer tacit knowledge between different locations?
How to communicate effectively?
Developing mentoring system
Transfer of knowledge
Comprehensive relocation strategy
Expand client base
Internal communications platform
Annual Reports. (2013, October 31). Retrieved March 5, 2014, from Coloplast: http://www.coloplast.com/Documents/Investor%20Relations/Annual%20reports/GB/Annual%20report%202012-13.pdf
Coloplast a/s. (2005, May 26). Retrieved from http://www.coloplast.com/Documents/Investor Relations/Presentations/2004-5/H1/DDF 26-05-2005 - Coloplast.pdf
Mesko, J. (2014, March 5). Coloplast Settles Hundreds of Vaginal Mesh Lawsuits for $16M. Retrieved March 5, 2014, from DrugWatch: http://www.drugwatch.com/2014/03/05/coloplast-settles-mesh-lawsuits/
Nielsen, B., Pedersen, T., & Pyndt, J. (2008). Coloplast - organizational challenges in offshoring. Ivey - Richard Ivey School of Business,
Critical Issues Related to Offshoring Cont
General marketing environment and political/economic policies will influence the company's strategies
Is it too risky for the company that 97% revenue was generated outside Denmark
Some risk factors
Thanks for your listening
Q & A