Managing Organizational Change

Managing Organizational Change - Managing Organizational...

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Managing Organizational Change Revolution at Oticon A/S (A): 1. What are the competitive requirements of Oticon in the audiology industry? Define a strategy for achieving competitive advantage in this industry. Compare and evaluate your strategy with the specific actions taken by Lars Kolind after assuming his position as CEO of Oticon A/S. Oticon was number one in market shares of 15% in worldwide hearing aids products in the end of the 70’ because their technology advancement in miniaturization enabled them for the mass production of hearing aids. This position was challenged by the invention of the ITE (in the ear hearing airs device) that was a better technological substitute than the BTE which dominated by Oticon. The market share of Oticon dropped from 15% to 7% by 1987 since the introduction of the ITE. Lacking the economies of scale from BTE, Oticon became the number three hearing aids behind Siemens Audiologische Technik (Erlangen, Germany) and Starkey (Minneapolis, USA). With these conditions, we can address the competitive requirements of Oticon in the audiology industry. Being number three is very difficult to sustain any profitable business because it can not compete with the market leaders in financial resources, marketing, brand equity, as well as technology creation with the companies like Siemens and Starkey. To survive they need to improve from their current strengths of high quality and high cost manufacturer to agile company with highly selected customer focus since quality hearing aids is the standard of regular products. The strategic plan for achieving competitive advantage in this industry can be addressed using 1) technology advancement 2) economies of scale 3) customers 4) organization innovation. The breakthrough invention of ITE that eroded the market share of BTE is the best way for any company to gain the competitive advantage. The know-how on how the mass produce the needed hearing aids can realize the economies of scales for the new invention like ITE. Targeting specific market segment for the best ROI as well as making a company more agile are also valid method to achieve competitive advantage in audiology industry. After Lars Kolind assumed the position of Oticon’s CEO, he cut 10-15% of corporate employees and loss-money businesses. He also realized that the company can not compete with two bigger competitors in technology, marketing and sales because of the financial resources. With these constraints, he could only try to focus on customers and organization innovation. Oticon was targeting the high-priced segment of the market as well as
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This note was uploaded on 01/15/2012 for the course BUSI 3003-5 taught by Professor Ralph during the Winter '11 term at Walden University.

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Managing Organizational Change - Managing Organizational...

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