Case Study Description of Coloplast A/S - Organizational Challenges in Offshoring
Coloplast's future global manufacturing strategy was based on relocation of volume production of mature product lines to low cost countries like Hungary and China, whereas most creative and innovative activities (pilot production, ramp-up and range care) were held captive in Denmark. The large scale project of offshoring, first volume production and later perhaps other activities, to Tatabanya, Hungary constituted a major shift in the operational strategy for Coloplast, which resulted in a series of organizational and managerial challenges. An important feature of the case is the surprise to the management team of how challenging it was to globalize the operations despite Coloplast's international experience operating a network of subsidiaries in more than 26 countries. The management team learned a lesson of how important it is to have the structure, the organization and the mindset in place when offshoring production. Sourcing internationally is obviously very different from selling internationally as it involves the entire organization. The learning process of the management team and the challenges they faced is unfolded in this case.
Authors :: Torben Pedersen, Jacob Pyndt, Bo Nielsen
Swot Analysis of "Coloplast A/S - Organizational Challenges in Offshoring" written by Torben Pedersen, Jacob Pyndt, Bo Nielsen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Offshoring Coloplast facing as an external strategic factors. Some of the topics covered in Coloplast A/S - Organizational Challenges in Offshoring case study are - Strategic Management Strategies, IT, Operations management, Organizational culture and Global Business.
Some of the macro environment factors that can be used to understand the Coloplast A/S - Organizational Challenges in Offshoring casestudy better are - – cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, increasing commodity prices, increasing energy prices,
increasing government debt because of Covid-19 spendings, wage bills are increasing, etc
Introduction to SWOT Analysis of Coloplast A/S - Organizational Challenges in Offshoring
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Coloplast A/S - Organizational Challenges in Offshoring case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Offshoring Coloplast, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Offshoring Coloplast operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Coloplast A/S - Organizational Challenges in Offshoring can be done for the following purposes –
1. Strategic planning using facts provided in Coloplast A/S - Organizational Challenges in Offshoring case study
2. Improving business portfolio management of Offshoring Coloplast
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Offshoring Coloplast
Strengths Coloplast A/S - Organizational Challenges in Offshoring | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Offshoring Coloplast in Coloplast A/S - Organizational Challenges in Offshoring Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Offshoring Coloplast in the sector have low bargaining power. Coloplast A/S - Organizational Challenges in Offshoring has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Offshoring Coloplast to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Offshoring Coloplast has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Offshoring Coloplast to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Offshoring Coloplast
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Offshoring Coloplast does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Offshoring Coloplast has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Offshoring Coloplast has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Analytics focus
– Offshoring Coloplast is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Torben Pedersen, Jacob Pyndt, Bo Nielsen can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to recruit top talent
– Offshoring Coloplast is one of the leading recruiters in the industry. Managers in the Coloplast A/S - Organizational Challenges in Offshoring are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Global Business industry
– Coloplast A/S - Organizational Challenges in Offshoring firm has clearly differentiated products in the market place. This has enabled Offshoring Coloplast to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Offshoring Coloplast to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Offshoring Coloplast has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Coloplast A/S - Organizational Challenges in Offshoring HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Offshoring Coloplast digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Offshoring Coloplast has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Global Business field
– Offshoring Coloplast is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Offshoring Coloplast in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Offshoring Coloplast is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Offshoring Coloplast is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Coloplast A/S - Organizational Challenges in Offshoring Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Coloplast A/S - Organizational Challenges in Offshoring Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Weaknesses Coloplast A/S - Organizational Challenges in Offshoring | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Coloplast A/S - Organizational Challenges in Offshoring are -
High operating costs
– Compare to the competitors, firm in the HBR case study Coloplast A/S - Organizational Challenges in Offshoring has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Offshoring Coloplast 's lucrative customers.
High cash cycle compare to competitors
Offshoring Coloplast has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to strategic competitive environment developments
– As Coloplast A/S - Organizational Challenges in Offshoring HBR case study mentions - Offshoring Coloplast takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Interest costs
– Compare to the competition, Offshoring Coloplast has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High bargaining power of channel partners
– Because of the regulatory requirements, Torben Pedersen, Jacob Pyndt, Bo Nielsen suggests that, Offshoring Coloplast is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Offshoring Coloplast is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Coloplast A/S - Organizational Challenges in Offshoring can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Offshoring Coloplast supply chain. Even after few cautionary changes mentioned in the HBR case study - Coloplast A/S - Organizational Challenges in Offshoring, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Offshoring Coloplast vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Coloplast A/S - Organizational Challenges in Offshoring that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Coloplast A/S - Organizational Challenges in Offshoring can leverage the sales team experience to cultivate customer relationships as Offshoring Coloplast is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Coloplast A/S - Organizational Challenges in Offshoring, it seems that the employees of Offshoring Coloplast don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Lack of clear differentiation of Offshoring Coloplast products
– To increase the profitability and margins on the products, Offshoring Coloplast needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Offshoring Coloplast has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Offshoring Coloplast even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Opportunities Coloplast A/S - Organizational Challenges in Offshoring | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Coloplast A/S - Organizational Challenges in Offshoring are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Offshoring Coloplast in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Manufacturing automation
– Offshoring Coloplast can use the latest technology developments to improve its manufacturing and designing process in Global Business segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Low interest rates
– Even though inflation is raising its head in most developed economies, Offshoring Coloplast can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Offshoring Coloplast can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Offshoring Coloplast to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Offshoring Coloplast can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Offshoring Coloplast in the consumer business. Now Offshoring Coloplast can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Offshoring Coloplast has opened avenues for new revenue streams for the organization in the industry. This can help Offshoring Coloplast to build a more holistic ecosystem as suggested in the Coloplast A/S - Organizational Challenges in Offshoring case study. Offshoring Coloplast can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Offshoring Coloplast can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Coloplast A/S - Organizational Challenges in Offshoring suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Leveraging digital technologies
– Offshoring Coloplast can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Offshoring Coloplast to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Using analytics as competitive advantage
– Offshoring Coloplast has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Coloplast A/S - Organizational Challenges in Offshoring - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Offshoring Coloplast to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Offshoring Coloplast can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Coloplast A/S - Organizational Challenges in Offshoring, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Coloplast A/S - Organizational Challenges in Offshoring External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Coloplast A/S - Organizational Challenges in Offshoring are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Offshoring Coloplast with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Offshoring Coloplast can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Coloplast A/S - Organizational Challenges in Offshoring, Offshoring Coloplast may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Offshoring Coloplast in the Global Business sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Offshoring Coloplast in the Global Business industry. The Global Business industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High dependence on third party suppliers
– Offshoring Coloplast high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Regulatory challenges
– Offshoring Coloplast needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Global Business industry regulations.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Offshoring Coloplast.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Offshoring Coloplast needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Environmental challenges
– Offshoring Coloplast needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Offshoring Coloplast can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Offshoring Coloplast will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Offshoring Coloplast can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Coloplast A/S - Organizational Challenges in Offshoring .
Weighted SWOT Analysis of Coloplast A/S - Organizational Challenges in Offshoring Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Coloplast A/S - Organizational Challenges in Offshoring needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Coloplast A/S - Organizational Challenges in Offshoring is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Coloplast A/S - Organizational Challenges in Offshoring is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Coloplast A/S - Organizational Challenges in Offshoring is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Offshoring Coloplast needs to make to build a sustainable competitive advantage.