Coloplast Case
Executive Summary
Coloplast has been in operations in Denmark for nearly 60 years. The company specializes in producing medical devices such as disposable ostomy bags, antifungal cremes cleansers and moisturizers. For 42 years, all Coloplast operations were contained within Denmark, however 97% of its revenue was generated by exporting its products beyond its national borders. In 1999 the company changed its philosophy and began to investigate off shoring its production facilities. In 2001 the first Coloplast production facility opened its doors outside of Denmark. The expansion took place in Tatabanya Hungary. This location was chosen because of cheaper labour and land rates, as well as a more favourable tax rate. The
…show more content…
Internal estimates indicate that by 2010 the company will require double its current product volumes. At the same time they have set aggressive profit margin and growth goals. The international production expansion strategy is an important part of its goals. Coloplost hopes to meet the growing demand of its customers and achieving revenue goals by expanding production facilities in countries with lower operating costs
One of the lessons learned by Coloplost after the expansion in Hungary is the importance of the transfer of knowledge and communication between all segments of the business. This area needs to be improved prior to further expansion to China. During the last expansion management was so busy dealing with communication issues that they failed to fully take advantage of local sourcing opportunities, instead importing more expensive options.
Management in Denmark must also decide how to properly utilize their domestic workforce, when many of their current production positions are shifting to new countries. This will be a very important decision as these employees hold a high level of tacit knowledge of the company that it does not want to lose.
The reporting of sales/conversion back to Danish currency represented a 2% loss. Continued expansion into new markets in both production and sales will make this issue even larger then it currently is.
It is in the companies best interest to retain its Danish workforce when
that are relevant to the practice of management. They describe two contrasting models of workforce
Exporting has become a very important business strategy nowadays. In order for firms to expand to the international market, and also to maintain and grow their share of market in whatever industry they are in, depending on their goals and objectives, any company must at least explore this possibility. A few and important advantages might come into place, in that they can extend their sales potential of their existing products, increasing margins through a larger customer base. Also, these small to large businesses can consolidate by gaining global share of market, they can reduce their dependence on their existing markets,
Production operations played a huge role on whether to allow more production in North America, or more in Europe-Africa. After many decisions, we begun to notice that North America, and Europe-Africa were our main consumers and had stronger demands for our products, we suddenly realized that we should offer the other more compensation to raise the production. We than decided to offer Asia-Pacific, and Latin America a larger discounts, and longer return dates, to increase the demands.
During the recent past however, when the company became a more dominant global competitor and a publicly traded conglomerate, the numbers of employees leaving the firm have increased, generating adjacent problems of employee recruitment, training and retention. In other words, the major challenges currently faced by the company are related to talent management. At a more specific level, the issues refer to the following:
This can be seen from Fig 3 that the export and import during 2005 and 2006 have significantly increased and it is foreseen that the future global trend would be increasing. Also, in order to lower the production costs, lots of international companies will transfer part of work in some countries with lower labor and material costs. This kind of out-sourcing activity enhances the global cooperation as well.
Throughout this semester we have learned about global sourcing and why companies seek sourcing outside of their home country in our case, outside of the United States. Global sourcing arises numerous possibilities for a company including greater profit potential, better access to raw material, possible new international markets, and access to other financial resources. One of the top benefits of producing a product outside of U.S. is that it can be done at a lower cost.
Coloplast, an international company which specializes in developing, manufacturing, and marketing medical devices, implemented an off-shoring strategy in order to be different, stay competitive and meet the dynamic market needs. In implementing this strategy, Coloplast had several issues and the first was the organizational structure. Due to changes in the organizational structure of its Danish and Hungarian production plants, misunderstandings arose between employees which resulted in serious of organizational and managerial challenges. However, the management resolved these differences through
There is a small exporter of laboratory and industrial centrifuges in Pennsylvania, the company is called Spin Cent. the passive export direction was the primary goal of the company. The reason for an international orientation of Spincent was a difficult US economy. but this gave the company the incentive to focus more and more on international markets. Above all, the issue of standard export was now seen as an ambitious goal. the Asian markets have become a main target for the company, which is still so fresh, because Spincent has existed for the first time in 7 years. Langfrisitg, to establish favorable and solid relationships with a sales network in the region were the efforts of the company.
process different models without any special tooling up time or pauses in the production flow. An upgraded technology would position the company not as a “new comer” in international market but as a needed force to drive innovation. Company should leverage some of its domestic strengths to expand internationally. The company could either open new stores internationally or apply a targeted acquisitions of foreign competitors strategy to enter new markets and reinforce technological and productive capabilities. The company should start Exporting on an opportunistic basis to use the production surplus of the company in neighboring countries especially in Middle East and North Africa, to eventually become a core element of the company growth strategy. Furthermore, The company should invest heavily in upgrading its manufacturing quality and productivity to
The need of the modern business to look outside of the doors of the company to improve profit margins has become a necessity in today’s market. The advent of technology and crossing of borders have expanded this search for efficiencies to other countries.
Since goal of the ABC Company is to achieve a sales growth of more than 100%, it may have to except some risks. There aggressive way ahead is very risky from an entrepreneurial perspective. While implementing the planned expansion of production lines, the following factors should be carefully considered:
Many workers in Hungary possessed the required skills which including technical and management knowledge. Generally, the Hungarians had a very high technical standard and appreciated substantial experience from working for other Western international companies in Hungary.Choosing Hungary give Coloplast the chance to access to well skilled employees. Moreover, the secondary support functions of Coloplast are outsourced to the third party and it required the new location have many alternative vendors. Hungary is one of the countries that have enough vendors to provide the support of IT and accounting
We would like to expand our production; therefore we chose to open a new factory in
This extended essay aims to answer the research question “How effective has Amorepacific’s joint venture in China been as a growth strategy?” This topic answers the business strategy of their company, as well as flaws and conflicts blocking their development. Focusing on the topic, I will be looking in the context of joint venture, marketing topic within the Business Management Syllabus. How Amorepacific has successfully gain profit from China through joint ventures but also loses their large spending power due to the North Korea and South Korea Missile Conflict. With an overview of the Missile Conflict, and the history of the company within the industry to better reflect and understand the current situation of the company. Additionally, knowing the strength, weaknesses, opportunities and possible threats (SWOT), to analysis their success, profits, and suitable growth options.
The earth is very competitive today for each and every business. In every sphere of life and business, competition has become more and more aggressive. Every firm tries to obtain and retain efficient employees to meet the future challenges. In this rivalry, obtaining and retaining the best employees has become very important, as employees are that factors who make a firm alive and proceed to the path of profit. Many people pay the house rent from their income which is 60% of the total income of a person.