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 - – increasing commodity prices, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, increasing transportation and logistics costs, increasing energy prices,
competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, 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 -
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.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Offshoring Coloplast are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Strong track record of project management
– Offshoring Coloplast is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
Innovation driven organization
– Offshoring Coloplast is one of the most innovative firm in sector. Manager in Coloplast A/S - Organizational Challenges in Offshoring Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Offshoring Coloplast has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
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.
Effective Research and Development (R&D)
– Offshoring Coloplast has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Coloplast A/S - Organizational Challenges in Offshoring - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
Superior customer experience
– The customer experience strategy of Offshoring Coloplast in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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 -
Skills based hiring
– The stress on hiring functional specialists at Offshoring Coloplast has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Coloplast A/S - Organizational Challenges in Offshoring, in the dynamic environment Offshoring Coloplast has struggled to respond to the nimble upstart competition. Offshoring Coloplast has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Offshoring Coloplast has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Coloplast A/S - Organizational Challenges in Offshoring should strive to include more intangible value offerings along with its core products and services.
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.
Low market penetration in new markets
– Outside its home market of Offshoring Coloplast, firm in the HBR case study Coloplast A/S - Organizational Challenges in Offshoring needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Offshoring Coloplast is dominated by functional specialists. It is not different from other players in the Global Business segment. Offshoring Coloplast needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Offshoring Coloplast to focus more on services rather than just following the product oriented approach.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Coloplast A/S - Organizational Challenges in Offshoring HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Offshoring Coloplast has relatively successful track record of launching new products.
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.
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.
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.
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 -
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.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Offshoring Coloplast is facing challenges because of the dominance of functional experts in the organization. Coloplast A/S - Organizational Challenges in Offshoring case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Developing new processes and practices
– Offshoring Coloplast can develop new processes and procedures in Global Business industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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.
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.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Offshoring Coloplast can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Offshoring Coloplast can use these opportunities to build new business models that can help the communities that Offshoring Coloplast operates in. Secondly it can use opportunities from government spending in Global Business sector.
Loyalty marketing
– Offshoring Coloplast has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
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.
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 -
Stagnating economy with rate increase
– Offshoring Coloplast can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
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.
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.
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 .
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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Offshoring Coloplast business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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.
Consumer confidence and its impact on Offshoring Coloplast demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology acceleration in Forth Industrial Revolution
– Offshoring Coloplast has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Offshoring Coloplast needs to keep up with the evolution of technology in the Global Business sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
