Danfoss — Global Manufacturing Footprint
(9 pages of text)
AWARD WINNING CASE - Supply Chain Management Award, 2012 European Foundation for Management Development (EFMD) Case Writing Competition. The case examines the supply chain, managerial, and organizational challenges facing a large European industrial company competing in a mature industry with strong price pressure. Established in the 1930s in Denmark, Danfoss initially produced automatic valves for refrigeration plants. The company has since grown into a major industrial group. Until the mid-1990s, Danfoss had the majority of its sales and production in Europe. This changed, however, with the arrival of a new CEO, who initiated a process to change the company into a global player within all of its main business areas.
Following this process of internationalization, the company was facing three main issues which top management was concerned about: Danfoss’s manufacturing network; its continued global growth; and its highly engineering-based culture. The first issue stemmed from the fact that Danfoss had followed a strategy of one product, one plant. This had created a situation with a lot of highly specialized product lines and very few common features between them. On the other hand, the internationalization strategy had so far been quite successful in Eastern Europe and China. In the United States, however, the company was still experiencing difficulties despite heavy investments in its manufacturing capacity in Mexico. In China, the company had experienced success and wanted to secure long-term growth in the market. The third issue was the very engineering-based culture of the company, which among other things was manifested in the fact that Danfoss previously developed products at the expense of consumer demand and preferences.
The case presents many different issues and topics for classroom discussion or written assignments. Various objectives can therefore be emphasized, although the central issue of the case is the extreme dispersion of the company’s international activities and the lack of coordination and configuration of these activities. The main teaching objectives of the case are:
- Supply chain management
- Corporate strategy
- International strategy
- Organizational design
- Family ownership
Denmark;International, Large, 2004
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