BUAD 497 : Strategic Management : Social and Environmental Responsibil

The Company chosen is "Danfoss A/S" which is the main focus for the first task. The two competitors I chose is "Rexroth AG: A Bosch Company "and "HYDAC International".

 

Task 1

Analyse the current business- and macro- environments to identify threats and opportunities for the next five to ten years. Compare strengths and weaknesses with those of competitors and then go on to suggest, and justify, a corporate strategy to ensure success in the future. NB. your strategy must not be the same one that the company Danfoss has already announced that it will follow – i.e. we are looking for an alternative strategy 

Task 2 

Discuss the role of leadership in the implementation of new strategies.
You may illustrate your answer using real examples of successful or unsuccessful strategy changes, but remember to “discuss the role of leadership”. Do not just give a blow by blow account of an actual change process.
Neither am I looking for a summary of the literature’s views on leadership, what makes a good leader, etc.
Remember that this is an academic paper, the academic quality and the range of the literature you use will be key factors in arriving at a mark. 

Danfoss manufactures energy efficient technologies that which empowers industries and communities in building a healthier and comfortable environment in the buildings and the houses(Danfoss.com 2018). Danfoss is a large producer of products, which is, used to cool foods, heating buildings, controlling electronica cars, air conditioning etc. The company produces electronic and mechanical components for the equipment used in many sectors.  Headquarter of Danfoss lies in Nordborg, Denmark. In the year 1933, Mads Clausen founded the company with the vision to build a more energy efficient technologies. In 2002, the Danfoss group joined the UN Global Compact, which consists of nine social and environmental responsibility principles.

Danfoss key development in recent times:

• On 23^rdAugust 2017 the company’s net sale have increased by a huge 13%.
• On 13^thJuly 2017, Danfoss made Kim Fausing as the CEO and president of the company.
• On 14^thDecember 2016, Danfoss in association with EurActiv institute started working for energy efficient products in Europe
  
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• On 20^thSeptember 2016, Danfoss promised to double the energy productivity and joined EP100.

PEST analysis of Danfoss will help to identify the macro environment of the company. With the help of PEST analysis, the political, economic, social and the technological factors will be clear (Pestle, Crowley and Weirauch2014).

Political factors:

The Only political factors that will affect Danfoss is the fallout of brexit. Apart from this other political factors like change in the government policies will not have a huge impact on the organization (Inglehart and Norris 2016).

Economic factors:

Economic factors are those factors, which is related to the country’s economy. The condition of the economy of the particular country will define the sale of Danfoss economy. Weak economic environment will have a huge impact on the organization. The negative impact on the exchange rates will affect the import and export of the products of Danfoss.

Social factors:

The living standard of the people is increasing day by day. People are adopting to a more comfortable living standards by using technologies. The products that Danfoss manufactures aims at providing comfortable environment to its customer. This will be a key factor for the company. Danfoss’s products are accepted worldwide and this will be a huge plus-point for the organization.

Technological factors:

A huge monetary investment in the research and development will ensure continuous technological innovation. The technology innovation will help in improving the technology as well as will also help in bringing more energy efficient solutions. Technology collaboration is a huge opportunity for the company like Danfoss, this will help in increased production.

The Strengths and Weakness of the company are:

Strengths:

• Danfoss deals with wide range of products, which helped them in brand recognition and helped them in creating a good brand image.
• Geographic diversification is one of the key reasons behind the success of the Danfoss. The geographic diversification helped them in segmenting the market.
• Danfoss has a good environmental awareness. In 2002, the Danfoss group joined the UN Global Compact, which consists of nine social and environmental responsibility principles.
• Danfoss manufactures products that are energy efficient. Energy efficient products will help in saving a lot of money and energy this helps the organization in increasing their sales.

Weakness:

• The level of competition in the market for the Danfoss organization is increasing,  this is affecting the company majorly, which can be seen by the decreased revenue over the few years.
• The products that Danfoss produces is not capable for doing business in the developing nation. The prices of the products are excessively much for many consumers in the developing nations or underdeveloped nations.
• The fallout of Brexit have affected the organization in the recent years.

Danfoss competitor like Bosch Rexroth and Hydac has a huge global presence and a huge reputation in the market. This increases the competition and the power of the buyers. Due to the increased buying power of the consumer, Danfoss faces a lot of issue. Competitors as Bosch provides the same services and products at a lower cost and this affected Danfoss massively. Bosch Rexroth has a better brand image than the Danfoss. This has resulted Bosch in gaining a better brand recognition in the industry.

However, Danfoss can gain the competitive advantage by implementing some basic strategies.

Danfoss can reduce the prices of the products and services by cutting down the operational cost in the organization. This will help to decrease the prices and they will be at par with their competitor. Apart from this Danfoss can work on building solar powered technologies, which is in a high demand. This will also be more energy efficient solutions and it will be very economical. The can also diversify their products in the market for example they can manufacture solar cars or solar powered air conditioners, which will help them in creating a new set of customer base. In many developing nations like India, the government is trying hard to provide electricity in the rural areas so they are implementing the solar panels in those areas. Danfoss can use this opportunity and collaborate with the government in providing solar powered electricity. This will be a huge boost in the company’s revenue and will give them a huge number of foreign investors. Danfoss should use these strategies to gain a competitive advantage among its rivals.

Task 2:

Leadership is the activity of leading a particular group of people or organization. Leadership is the process of establishing a vision, sharing the established vision and providing knowledge, methods and information about the vision. Leadership is an important factor and a good leadership skill is required to implement a change in the organization. Without a good leadership skill, the organization will fail to implement the strategies in the organization. The role of the leader is necessary, as he/she will implement tasks accordingly to the employees of the organization. The important role of leadership in the strategy formulation are:

• Involvement: Strategic formulation needs involvement of the employees. Without proper involvement of the employees, the strategy formulation will not be effective. The leader should look into the fact that all the employee of the organization involves in the plan the organization is planning to implement. This will help them in creating doubts, increasee employee skills, and provide a variety of information (Alfes et al. 2013).
• Interest: Implementing a strategy or changes in the workplace requires needs to create a feel of urgency among the employees. The employee should be interested to implement the change. This is the responsibility of the leader to create such feelings among the employees so that they can focus on the strategy implementation.
• Monitoring: The leader should monitor his employees continuously so that he can keep a track of the work progress. This will help the organization to implement the change without much dely. This will also help the leader to implement any change in the strategy if necessary.
• Communication plans: Communication is an important factor in the organization. Effective communication helps in smooth execution of the work process (Herring, Stien and Virtanen 2013). The leader should continuously communicate with his employees so that they can get clarity about the strategy and objectives that the organization is wanting to implement or achieve. Proper communication also helps in increasing the effectiveness of the workers in the workplace. It helps the leader to guide his sub-ordinates if they faces any problem regarding the strategy implementation.
• Encouraging the employees: Employee motivation is an important tool that the leaders uses in the organization. Motivating the employees help to be more effective and they tend to work hard to achieve the organizational goals (Dobre 2013).
• Allocation of tasks: Allocating the tasks to the right employee is very necessary. The leader should allocate the tasks to the right employees, which will in reducing time and the organization will implement the strategy easily. If the allocation of tasks in not correct then it will bear loss and time in implementing the strategy.
• Providing assignments: The leader should give assignments to the employees this will increase their knowledge and skill. This will also help them to implement the strategy effectively. Providing time to time assignments will ensure that the employee works according to the plan and will also help to track progress of the tasks.
• Managing the personnel: The leader should manage his personnel effectively so that they can stay motivated. The personnel management is very important in the organization (Harvey and Allard 2015).

The role of leaders is huge in the organization. Many times the leader cannot handle all the tasks alone. Implementing a strategy is a huge process and the leader cannot handle everything alone. To make the strategy implementation easier the leader should appoint his subordinates carefully who will manage the operation effectively in his absence.

References:

Alfes, K., Shantz, A.D., Truss, C. and Soane, E.C., 2013. The link between perceived human resource management practices, engagement and employee behaviour: a moderated mediation model. The international journal of human resource management, 24(2), pp.330-351.

Danfoss.com., 2018. Danfoss - Engineering Tomorrow | Danfoss. [online] Available at: https://www.danfoss.com/en/ [Accessed 13 Jul. 2018].

Dobre, O.I., 2013. Employee motivation and organizational performance. Review of Applied Socio-Economic Research, 5(1).

Harvey, C.P. and Allard, M., 2015. Understanding and managing diversity: Readings, cases, and exercises. Pearson.

Herring, S., Stein, D. and Virtanen, T. eds., 2013. Pragmatics of computer-mediated communication (Vol. 9). Walter de Gruyter.

Inglehart, R. and Norris, P., 2016. Trump, Brexit, and the rise of populism: Economic have-nots and cultural backlash.

Pestle, W.J., Crowley, B.E. and Weirauch, M.T., 2014. Quantifying inter-laboratory variability in stable isotope analysis of ancient skeletal remains. PLoS one, 9(7), p.e102844.