Coloplast went from a production structured organization to a functional structured organization. In the production structure the focus was on the products wish were divided into 3 product divisions. In the functional structure the company focus on specialization of tasks. Before: the production organization The production organization structure also called Division Structure is divided into 3 production division; skin, wound care and continence care, and ostomy care. Each division beyond having its department for research, development, sales and marketing, contains all the necessary resources and functions.
By applying the production organization, a company gains the followings benefits: A structure where it’s easy to define the objectives and word work assignments can simply be coordinated, within each division. Another Benefit Coloplast can gain on this structure is the flexibility among workers. Workers from one department can be put on assignments in another department within the same division, if needed. This’s made possible by the fact that most of the workers are not specialist in any specific field. Should any problem occur in the division structure the causes are quickly detected and solved.
This type of structure allows local leaders to make small locale adjustments to meet the challenges in there division. But this system holds its own weaknesses. It can harm communication flow between different divisions. This may result in loosing the overall focus on the objective of the organization. It may happen that each local division create its own culture witch may not necessarily be compatible with the company’s culture as a whole. The limited communication between divisions makes it hard for them to exchange experience and expertize.
This system by nature is heavy and costly. In order for the company to have all the necessary resources and functions within each division, they can’t afford the best expertize on every field. After: the functional organization The new organizational structure focuses more on functions. Unlike the previews structure that focused on the product. This new structure pulls functions out of the different divisions and put them in centralized units, each specialized in respectively Globale Maketing, R and D and Global Operations.
As a consequence, the former divisions are reduced to production units and subsidiaries; that receives instructions from the top. To assure communication between top and bottom, Coloplast place Commercial Excellence above the whole new structure. With the three functional divisions, Coloplast makes sure that there a clear purpose that goes all the way through the whole company, when it comes to their global marketing, innovation and how new products should be developed. As a result Coloplast becomes a unified company with no duplications of tasks.
The greatest advantages of this functional centralized structure is its lightness and affectivity. It gives the opportunity to hire highly specialized staff. As Coloplast CEO puts it; “The subsidiaries have a huge, but simple, responsibility: they ? ll have to sell like the dickens” meaning that Coloplast now can headhunt exact talents for each function. The workforce those talents brings is not only promoting a single product but the company as a whole. Employees have the opportunity to learn from their superiors.
They also have the opportunity to work alongside colleagues who relate to their professional interests and abilities, thus making for a more productive and enjoyable environment. By moving the production responsibility from all division to the Global Operation in cheap-labor countries, it’s possible for Coloplast to reach the point of an Economical of scale. Like any other organization structure, the functional organization has weaknesses. Because of the decision-making within the functional works from top to bottom, it’s a constant challenge to make sure that the organizations objectives are integrated at the bottom.
Another disadvantage is that units may have limited flexibility in problem solving, making changes or responding quickly to customer demands and needs, since the final decision-making authority rest with the top level of management. So how does Coloplast solve these challenges? Commercial Excellence/Business Excellence For solving the challenge of implementation of the organizations objectives and assurance of a two-way communication, Coloplast places “Commercial Excellence” above the entire new structure, which acts like the strong arm, that’ll prepare budgets and make sure that objective are achieved.
Commercial Excellence or Business Excellence is the systematic use of quality management principles and tools in business management with the goal of identifying improvement opportunities, area of strength and ideas for future organizational development. It’s a support function that’ll help ensure “best practice” so that the organization can avoid those complications. Conclusion This new organizational structure is a natural step for the entire group, not only does it outsource to cheaper-labor countries but it has also given Coloplast improved profitability and an organic growth of 7%.
The sustained competitiveness Coloplast has gained is due to the change of organization structure where they went from a production organization to a functional organization. With the transformation came the opportunity of standardization of tasks, this leads to efficiency and expertise in the related fields. This was something they lacked in the production organization. By implementing the Business Excellence, Coloplast shows that it’s aware of the weaknesses of the new organization design and intent to avoid them.
Lars Rasmussen, Coloplast CEO, emphasizes how important it’s that this supporting system doesn’t end up like a police maneuver, keeping subsidiaries in an iron grip. “Instead it shall ensure “best practice” and set such high standards, that where that is difficulty, it’ll become natural to draw on headquarters”. It’s all about motivation, contributing to people and relying on each other. This serves as a great factor for self-actualization for the individual employee witch is not only contributing to the fulfillment of personal potential but also to the work-environment.
The new organization has great potential; they have cut production time by half, they went from 13 factories to 10, constantly stimulating innovation by supporting Coloplast Incubator. Coloplast current strategy placed a great deal of responsibility on the shoulders of their employees, as well as implementation of some standard guidelines and the right motivation. There are no doubt about the new structure is more complex than the previews one. Annex