Coloplast Case Study Essay
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 …show more content…
Expand in Europe. Many locations were scouted before Hungary was implemented, and there are several Eastern Bloc countries with low wage, and production costs. However, there is more risk in operating in one of these countries as the geopolitical implications in these countries can cause cost savings to be eroded.
Recommendation and Implementation
Relocate to china. Now that Coloplast has realized it’s deficiencies in their process with the offshoring to Hungary, they can mitigate these for the future in their relocation to China. The whole initial decision to offshore in the first place was to reduce cost. Hungary was less costly than Denmark, and China is less costly than Hungary. It makes business sense to relocate to China production wise as the wages are significantly lower than the Danish and Hungarians. There are organizational challenges in this implementation in that the geographical distance between Denmark and Hungary can amplify many of the scenarios that arose from their offshoring to Hungary. Their knowledge transfer must be coordinated well in advance with any offshore implementation. They must establish well set corporate guidelines on how to relocate and manage production sites in advance of any physical offshoring move. They must learn from the mistakes identified with their previous project. They must also apply the best practices from Hungary and