Coloplast Case Study Essay

891 Words Aug 6th, 2014 4 Pages
Executive Summary

Coloplast, an international company that specializes in developing, manufacturing, and marketing medical devices, implemented an off-shoring strategy in order to stay viable, competitive and keep in focus the dynamic market needs. Implementing this strategy has brought some issues that were unexpected for Coloplast. One of the issues was with the organizational structure. Coloplast’s off shoring involved moving operations to Hungary. They would be operating with Danish and Hungarian production plants, where production processes were not the same. Misunderstandings and miscommunication arose amongst employees and created managerial and operational challenges. Another issue that arose was knowledge management and
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They chose to offshore as this entailed lower cost and availability of skilling workers. They did not want to rely on third parties, and third parties lack Ithe in house knowledge needed for Coloplast’s operation. Coloplast was seriously considering relocating to a low cost location for some time. They were in danger of certain factors such as reimbursement, policy changes, price pressures due to wholesaler concentration, and powerful insurance companies. Their establishment in Hungary was due to the significant savings in production costs, which were 20 percent less than Danish levels. After they had factored in wage increases, Coloplast was convinced this offshore move would be financially advantageous in the long run. Building costs were 50% less in Hungary than Denmark. Cost considerations were an issue, but logistical considerations were weighed to be more important. Large regional differences existed within Hungary in terms of wage and infrastructure. Coloplast was located on the attractive side of Hungary and other major companies were close by, which played a part in their decision to off shore. Although the relocation of operations involved mature product lines, the decentralized structure still made documenting planning and production

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