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RDB Business Case Study 2013

Valdemar s Counterproposal [Culture] -Happy European Family -Remain as private limited company -Change name to Green Bearings, an RDB company [Re-branding] -Divide Factories per region -Form strategic alliances with Brazilian, Chinese, Indian companies -Find major investor

2020 Anna vs. Valdemar = Conflict! -Anna unsatisfied; Valdemar s proposal is too shortterm

RDB 2020 [Vision Statement (?)] -Globalization and green approach -Become PLC: Frankfurt stock exchange -Sell megafactories: Offshore 12 smaller factories in Brazil, China, India [Organizational Structure] -Improved marketing: E-Zines + Internet/Online presence 2005 Anna Holstein joins. Presents RDB 2020 1970s Unaffected by energy crisis due to contingency planning -Japanese companies implement JIT production = More competitive [Marketing Production]

2008 Collapse of Icelandic banks;[Crisis management] -Lost funds, but recovered [Cash flow problems, Sources of finance]

2000s Avoid millennium bug (technological disaster)

1951 Valdemar Holstein starts working at RDB

1965 Valdemar Holstein becomes CEO of RDB -Implements TQM, Benchmarking, Kaizen -RDB: lower profit margins, but remains profitable -Eco-Campaigners protest against RDB pollution [External environment, stakeholder conflict]

1945 Japanese competitors enter. - BUT RDB maintains market share [Competitive Analysis] 1930s Competes with UAB (medium quality/price) & FIB (low quality/price) - Maintains market position: High quality high price [Pricing Strategies, Market Analysis] 1915 RDB Founded by Henrik Holstein - Private Limited Company [Organizational Structures]

Case Study Glossary


Key: U Unit Words with a * have Internet definitions Contingency plan (U 1.6): a plan outlining what the entrepreneur plans to do in case the business does not go as well as planned (A back-up plan). Brand loyalty (U 4.3): is seen when customers buy the same brand of product time and time again (they must therefore have brand preference) Benchmarking (U 5.4): is the process of identifying best practice in an industry, in relation to products, processes and operations. It sets the standards laid down by the best business in the industry for the organization to emulate. Total Quality Management (TQM) (U 5.4): is the process that attempts to encourage all employees to make quality assurance paramount to the various functions (production, finance, marketing &personnel) of the organization. Economies of Scale (U 1.7): refer to the lower average costs of production as a firm operates on a larger scale. Benefits include easier and cheaper access to finance, marketing economies, division of labour and technological economies. Market Share (U4): measures the value of a firms sales revenues as a percentage of the ind ustry total. Hence, a business with 35% market share means that for every $100 sold in the industry, the firm earns $35 of the sales revenue. *Regional Trading Blocs: A regional trading bloc is a group of countries within a geographical region that protect themselves from imports from non-members. Trading blocs are a form of economic integration, and increasingly shape the pattern of world trade. OR In general terms, regional trade blocks are associations of nations at a governmental level to promote trade within the block and defend its members against global competition. Just-in-time Production (U 5.7): is a stock control system that originated in Japan. Under a JIT system, materials & components are scheduled to arrive precisely when they are needed in the production process. Downsizing (U 2.2): is when the size of the core workforce is reduced. This is often associated with Delayering (removing one more levels in the hierarchy in order to flatten out the organizational structure). Globalization (U 1.9): is the integration of economic, social, technical and cultural issues of the worlds economies. This has taken place largely due to the expansion of multinational corporations and governments advocating freer international trade. Offshoring (U 2.2): is a form of outsourcing that involved relocating business functions and processes to another country. *Artificial intelligence: Artificial intelligence is the intelligence of machines and robots and the branch of computer science that aims to create it.

Unique Selling Point (USP) (U 1.7): This is the technique that makes one product stand out from other products that are available on the market. Autocratic Leadership Style (U 2.4): Autocratic refers to managers and leaders that adopt an authoritarian style by making all the decisions rather than delegating any responsibility to their subordinates. Instead, the autocratic simply tells others what to do. Paternalistic Leadership Style (U 2.4): Paternalistic managers and leaders treat their employees as if they were family members by guiding them through a process of consultation. In their opinion, they act in the best interest of their workers. Primary Sector (U 1.1): refers to business involved in the cultivation or extraction of natural resources, such as farming, mining, quarrying, fishing, oil exploration & forestry. Secondary Sector (U 1.1): refers to the section of the economy where business activity is concerned with the construction & manufacturing of physical products. Automation and mechanization in modern societies has seen this sector decline in terms of employment. Internal/Organic Growth (U 1.7): occurs when a business grows internally, using its own resources to increase the scale of its operations and sales revenue. Also known as internal growth, it occurs through a firms effort to sell more of its own products by using its own resources. External/Inorganic Growth (U 1.7): occurs when a business grows by collaborating wit, buying up or merging with another firm. It is a more expensive but quicker method of growth than organic growth. External growth is also known as inorganic grown or amalgamation. *Kanban Approach: The name 'Kanban' originates from Japanese, and translates roughly as "signboard". Kanban is a method for developing software products and processes with an emphasis on just-in-time delivery while not overloading the software developers. Kaizan Approach (U 5.4): Kaizan is the Japanese term for continuous improvement. It is a philosophy followed by those who strive for a quality culture. /Kaizan is where people in the workplace are constantly trying to find ways to improve work process and task. The concept of Kaizan is therefore a process of productivity and efficiency gains within a firm that comes from a small and continuous improvements being made by the workforce, rather than a large one off improvement. Pressure Group (U 1.4): is a type of special interest group which consists of individuals with a common concern who seek to place demands on organizations to act in a particular way or to influence change in their behavior. Examples include Greenpeace and People for the Ethical Treatment of Animals (PETA). *Environmental Campaigners: NOTE: I couldnt find the exact definition but its quite straightforward, however this is one of the statements made by an actual environmental campaign, so you have something to work around. Arouse publics awareness of environmental issues and encourage the active contributions of various sectors towards a better environment. (Definition of the campaign itself rather than the campaigners) *Job Security: the probability that an individual will keep his or her job; a job with a high level of job security is such that a person with the job would have a small chance of becoming unemployed. OR Assurance (or lack of it) that an employee has concerning the continuity of gainful employment for his/her work life.

*Technological Disaster: Cant find a proper definition. Flow Production (U 5.1): is a form of mass production whereby different operations are continuously and progressively carried out in sequence. Batch Production (U 5.1): involves producing a collection of identical products (known as a batch). Work on each batch is fully completed before production switches to another batch. It is used where the level of demand for a product is frequent and steady. Job Production (U 5.1): is a method of production that involves the production of a unique or one-off job. The job is entirely completed by one person (such as a tailor) or by a team of people (such as architects). Corporate Social Responsibility (CSR) (U 1.3): refers to the consideration of ethical and environmental issues relating to business activity. A business that adopts CSR will act morally towards its various stakeholder groups. Working Capital (U 3.1): also known as net current assets, is the day-to-day money that is available to a business. It is calculated as the difference between a firms liquid assets (the value of cash , socks and debtors) and its short-term debts (such as creditors, tax and overdrafts). Innovation (U 5.6): means the commercial development, use and exploitation of an invention or creative idea that appeals to customers. Redundancy (U 2.1): occurs when the employer can no longer afford to employ the worker or when the job ceases to exist. Redundancies are often referred to as retrenchments or lay-offs. Outsourcing (U 2.2): is the act of finding external people or businesses to carry out non-core functions of a business, such as cleaning and ICT maintenance. E Commerce (Electronic commerce) (U 4.6): is the trading of goods and services via the Internet. B2B (U 4.8): stands for business-to-business and refers to online trade conducted directly for the business customer rather than the end-user, such as Amazon.com supplying books to other book retailers. B2C (U 4.8): stands for business-to-consumer and refers to online business conducted directly for the enduser (the consumer), such as Amazon.com selling books directly to private individuals. Primary Research (U 4.2): also known as field research, involves data being collected by the researcher since the information does not currently exist. Collective Bargaining:- is the negotiation process whereby trade union representatives and employees representatives discuss issues with the intention of reaching a mutually acceptable agreement. Business Angel (U 3.1):- are wealthy and entrepreneurial investors who risk their money in small to medium sized business that have high growth potential. Joint venture (U 1.7):- this occurs when two or more businesses decide to split the costs, risks, control and rewards of a business project. Industrial Park:- A portion of a city that is zoned for industrial use (as opposed to residual or commercial use). Industrial parks may contain oil refineries, ports, warehouses, distribution centres etc.

Retrenchment:-the act of reducing expenditures in order to improve financial stability. Budget (U 3.4):- refers to a financial plan for expected revenue and expenditure for an organization for a given period of time. Synergy (U 1.7):- is the whole being greater than the sum of parts, 1 + 1 = 3. Corporate Culture (U 2.6):- Describes the traditions and norms within an organization, such as dress code etc. Democratic Leadership style (U 2.4):- is a leader who prefers to discuss with and involve employees in decision making. Narrow Span of Control (U 2.2):- means that there are fewer subordinates who are accountable to a manager. Wide Span of Control (U 2.2):- Occurs when a manager has many people under his/her control. Tall Organization structure (U 2.2):- it has many layers in the organization hierarchy. Therefore, it is likely that each manager will tend to have a narrow span of control. One-off special order:- it is when a product is unique either by shape, size, colour or price or age, modern or antique. Organization structure (U 2.2):- Organizational structure refers to the hierarchy of an organization and how the components of this hierarchy work together to achieve the objectives of the company. For example, in a particular area, there are staff reporting to manager, who may report to another manager, or directly to a CEO (depending on the complexity of the structure or the size of the organization). Multinational Company (U 1.9):- A multinational corporation (MNC) or multinational enterprise (MNE) is a corporation that is registered in more than one country or that has operations in more than one country. It is a large corporation which both produces and sells goods or services in various countries. Company Town:-A company town is a town or city in which much or all real estate, buildings (both residential and commercial), utilities, hospitals, small businesses such as grocery stores and gas stations, and other necessities or luxuries of life within its borders are owned by a single company. Gross Profit (U 3.5):- the net sales minus the cost of goods and services sold. Net Profit (U 3.5):- net profit is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time (usually one year). Homogeneous environment:- Organizations operating in homogeneous environments can specialize in producing one good or service to be distributed to the market. Supply Chain Management (U 4.6):- is the art of managing and controlling the sequence of activities from the production of a good or service to its delivery to the end customer, in a cost effective way. Global Workforce:- refers to the international labor pool of immigrant workers or those employed by multinational companies and connected through a global system of networking and production.

Social Contract:- An implicit agreement among the members of a society to cooperate for social benefits. Global Identity:- The occurrence of international recognition of a firm. Demographic Changes (U 1.5):- demographic change is a change in the average age, income, gender etc in a market. Brand awareness:-The likelihood that consumers recognize the existence and availability of a company's product or service. Creating brand awareness is one of the key steps in promoting a product. Cell production:- Cell production has the flow production line split into a number of self-contained units. Each team or cell is responsible for a significant part of the finished product. Strategic Objectives (U 1.3):-refer to the longer term aims of a business organization. Tactical Objectives (U 1.3):-these are short term objectives that affect a segment of the organization, such as a department. Operational Objectives:- Short-term goal whose attainment moves an organization towards achieving its strategic or long-term goals. There are also called tactical objective. Going Public (1.2):- when a firm decides to convert its company into a public limited company. Shareholders (U 1.4):-these are people who own a part of the shares in a company. External Stakeholders (U 1.4):- A party such as a customer, supplier, or lender that influences and is influenced by an organization but is not a member of it. Internal Stakeholders (U 1.4):- Individuals who reside inside the company as board members, executives, managers, employees, and trade unions and who benefit directly from their contributions to the growth of the company. Relocation:- When a business moves to or establish in a new place. Public Private Partnership:- Involvement of private enterprise (in the form of management expertise and/or monetary contributions) in the government projects aimed at public benefit. Business Plan (U 1.2):- A business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals. Secondary Research (U 2.4) :-Secondary research(also called desk research) involves collecting data which already exists. This includes using information from reports, publications, Internet research and company files.

Unit 1 Business Organization and Environment Primary sector 1.1 Secondary sector 1.1 Going public 1.2 Business plan 1.2 Corporate Social Responsibility (CSR) 1.3 Strategic objectives 1.3 Tactical objectives 1.3 Pressure group 1.4 Shareholders 1.4 International shareholders 1.4 External shareholders 1.4 Demographic changes 1.5 Contingency plan 1.6 Economies of scale 1.7 Unique selling point (USP) 1 .7 Internal/organic growth 1.7 External/inorganic growth 1.7 Joint venture 1.7 Synergy 1.7 Globalization 1.9 Multinational company 1.9

Unit 2 Human Resources

Redundancy 2.1 Downsizing 2.2 Offshoring 2.2 Outsourcing 2.2 Narrow span control 2.2 Wide span of control 2.2 Tall organization structure 2.2 Organization structure 2.2 Secondary research 2.4 Autocratic leadership style 2.4 Paternalistic leadership style 2.4 D e m o c r a t i c leadership style 2.4 Corporate culture 2.6

Unit 3 Accounting and Finance Working capital 3.1 Business angel 3.1 Budget 3.4 Gross profit 3.5 o f Net profit 3.5

Unit 4 Marketing Primary research 4.2 Brand loyalty 4.3 E commerce 4.6 Supply Chain management 4.6 B2B 4.8 B2C 4.8

Unit 5 Operations Management Flow production 5.1 Batch production 5.1 Job production 5.1 Benchmarking 5.4 Total quality management (TQM) 5.4 Kaizan Approach 5.4 Innovation 5.6 Just-in-time production 5.7

SWOT Analysis
Internal Strengths: - Held in high-esteem both locally and regionally by stakeholders (good reputation). - Very highly-skilled local workforce in each mega factory. - Workforce is very loyal to RDB. - High quality ball-bearings (product). - Implementing Total quality management and Kaizen as well as benchmarking techniques. - Strong contingency planning allowing for effective crisis. Management in the past and thus likely in the future. - Strong co-operation with the local governments (German and Danish governments). Weaknesses: - Workforce are too localized and thus not very culturally understanding of newer customer base. - RDB holds very little focus towards being eco-friendly with very little green approaches to their production of ballbearings considering high pollution of mega-factories. Leads to lower perceived Corporate Social Responsibility. - Very small budget allocated to the marketing department with easy to achieve objectives leading to sleepy department and small promotion that could potentially increase awareness. - Certain technological upgrades being delayed as well as maintenance of machinery getting outdated. Threats: - Japanese companies continuing to use JustIn-Time production making them more efficient and thus more competitive due to this Unique Selling Point. - Demand of the ball-bearing industry is lowering in Europe where the companys mega-factories are based due to expansion of high-tech industries. - Pressure groups demonstrate against RDB due to the high-pollution being emitted by factories. - The continued demographic changes in Europe caused by globalization undermine RDBs values of a European Happy Family. - Labour costs in Europe continue to increase leading to higher costs and collective bargaining can hinder the business.

External Opportunities: - Outlook of ball-bearing industry remains promising as continued major use of mechanical devices for making vehicles, jets, space shuttles etc. - Demand of ball-bearings increasing greatly mainly in developing countries such as Brazil and India. China being another major customer. - Improvements in ICT and wide-spread use of the internet have led to marketing/promotion opportunities through the use of e-zines. - Public-private partnerships with the Danish and German governments. - Potential of implementing green practices to improve reputation and CSR. - Changing from a private limited company to a public limited company listed on the Frankfurt stock exchange with the floatation period allowing generation of capital and funds. - Major external investor can be found to generate funds and remain family controlled. - Strategic alliances with companies in China, India, and Brazil can be completed to allow for closer location to main customer as well as lower labour costs in these countries.

PEST-G ANALYSIS

Political Offshoring to 12 smaller factories European labour costs: too expensive and collective bargaining in the long term

Economical Collapse of Icelandic banks List RDB on Frankfurt Stock Exchange

Social Company towns: local workforce and employers Valdemars moral obligation to provide jobs in Denmark

Technological Growth of the automotive sector High-tech industries: computer software and artificial intelligence Japanese: just-intime production Millennium bug Use of ICT in communications

Green/Environmental High pollution claims made by environmental campaigners Energy crisis Competitors make strategic alliances RDB 2020 = CSR

CHARACTER ANALYSIS:
HENRIK HOLSTEIN Traits: Founder of Royal Danish Bearings Founder: Starting with a blue-collar job, he appreciates and understands hard work- in order to succeed. That hard work allowed him to develop a certain wisdom that neither his son nor his granddaughter have. RDB founded in 1915: Very traditional and old school in terms of his values Mechanist: He has a methodical and logical mindset Visionary: Innovative and is a risk-taker, willing to delve in to the unknown Leadership skills: Paternalistic, due to his rise in the corporate world and not instant success he stays very in touch with his employees and guides them whenever guidance is asked for. Motivational theories: How he motivates his employees is not clearly stated however according to his character and leadership skills we would assume that he could be using the following: Taylor McGregors theory Y- because its a relatively disciplinary all the while motivating his employees Vroom and Mayo (HL Students) He could also be using financial motivational theories to help him motivate his employees, because as an entrepreneur; money is a major source of motivation as well as inspiration Piece rate could be a possibility. VALDEMAR HOLSTEIN Traits: CEO of Royal Danish Bearings Whole career spent at RDB- Very dedicated and devoted to his job. Leadership skills: Tall organizational structure- possibly autocratic Empowers employees- Paternalistic, since he remains to be quite authoritarian due to the tall organizational structure. Somewhat of a perfectionist as he has adopted TQM Takes pride in the family business thus enhancing the prestige of RDB Remains to be quite traditional and is less innovative than his father as he overlooks certain things that could potentially threaten the success of RDB due to his bureaucracy Very traditional in his ways, the fact that he spent his whole career at RDB shows that he knows nothing else except how to run this family business. Motivational theories: Pretty much the same as his father, except more autocratic.

ANNA HOLSTEIN Traits: CEO of Royal Danish Bearings No experience of a mechanist, had RDB handed to her with no actual hard work. She is very distant from the employees due to the absence of any common things to relative to each other with. Anna completed the IB Diploma meaning that she is a lot more multicultural and modern than her father or even her grandfather, both being very traditional men. The IB learning profile could be very relevant to identifying her characteristics as a person.

Education: All in big cities (Copenhagen & New York)- Very modern mindset. She cares for the environment she has studied green engineering and has tried to implement her green values in RDB. International Experience Cares for brand image and likes to keep up appearances. OFFSHORING: RELEVANT VOCABULARY: Offshore Company: Firm registered or incorporated outside the country where it has its main offices and operations, or where its principal investors reside. Offshore Outsourcing: Work done for a company by people in another country that it typically done at a much cheaper cost. Outside of costs, offshore outsourcing may be used to complete tasks that the company may not be equipped to handle in-house. Call centers are a popular service that is often outsourced to other countries. Offshore outsourcing is often blamed for increasing unemployment in a specific country due to the lack or elimination of jobs. Offshore Production: Manufacturing or assembly in another country, typically one with lower wages or less strict labor regulations, of products for domestic sale or use. Many businesses use offshore production to take advantage of wage gaps between developing and developed nations, keeping prices low and profits high by lowering labor costs.

CASE STUDY APPLICATION: Anna Holstein wishes to expand RDB by off shoring in countries that are thriving in industrialization. By doing so Anna would have to: Downsize the mega factory in Denmark Sell 2 mega factories (Germany/Sweden) Thus causing an extremely high rate in redundancy, people of her country would be losing jobs and the whole ideology of family will be forgotten about once expansion is carried out internationally. Anna (as mentioned earlier) cares for brand image and likes to keep up appearances, however off shoring as a whole could be very contradictory to Annas values as offshoring as a whole could be seen as cheap labor exploitation, this is not compatible with her eco-friendly ideals and could potentially threaten her brand image due to cheap labor. GLOBALIZATION: RELEVANT VOCABULARY: Globalization: The worldwide movement toward economic, financial, trade, and communications integration. Globalization implies the opening of local and nationalistic perspectives to a broader outlook of an interconnected and interdependent world with free transfer of capital, goods, and services across national frontiers. However, it does not include unhindered movement of labor and, as suggested by some economists, may hurt smaller or fragile economies if applied indiscriminately. Anti-Globalization: (Valdemar Holstein)-Movement whose participants are opposed to capitalism and globalization. The philosophy of the movement is based on the belief that individuals and organizations can achieve social, personal and economic goals without the negative consequences associated with capitalism. The anti-globalization movement places more emphasis on economic efficiency and human decency versus corporate competition and profits at any cost. Pro-Globalization:(Anna Holstein)-In favor of policies that encourage increased trade, open communication, and the unrestricted movement of people among nations. Pro-globalization companies, organizations, and

individuals support policies such as free trade, off-shored manufacturing, and open borders, and oppose limitations such as tariffs, embargos, and other internationally restrictive economic and political actions by national governments.

Anna has proposed to expand RDB in strategic areas in the world where: - There is cheap labor - High rate of unemployment - Could help improve the economy of the countries she wishes to expand in - She has spread out the expansion in all areas of the world, even in different continents. Anna is pro-globalization because she is young, therefore will be quite modern in her way of thinking and will be aware of all the technological advances and how that could benefit RDB on the long-term due to economies of scales. This also will be a good chance for RDB to widen their customer base, not only in Europe but globally and risks will be spread in regards to production because small factories will be built all around the world instead of having mega factories in a concentrated areas of Anna must be aware of the: -Increasing rate of competition when thinking of globalizing RDB -Increasing rate in demand due to popularity

RDB Leadership analysis: Leadership: is the process of influencing and inspiring others to achieve a goal, from completing a task to achieving corporate objectives. The way people lead differs from individual as will be analyzed below.

Henrik Holstein: Can be viewed to have a paternalistic leadership styled as it mentions in the case study (line 45) that he had a paternalistic leadership style, relating to Likerts four styles of leadership. (HL) Autocratic (SL)

Valdemar Holstein: Valdemar Holstein based on Likerts four styles of leadership theory would lie between the Benevolent Autocratic leadership style and exploitative autocratic leadership style (Likert, HL) as the case study refers to how he is paternalistic like his father but at the same time is autocratic with his employees when it comes to collective bargaining agreements were being renegotiated. Situational leadership (SL) Anna Holstein: Anna Holstein can be viewed as to have an autocratic leadership style because upon taking her job in the engineering department, she seems to make decisions without any input from the employees themselves nor does she delegate her tasks to expand to any of her subordinates. It can also be potential that she does have a situational leadership style as she does attempt to change the corporate culture of RBD.

Blake and Mutton Grid: (HL)

The Blake and Mutton Grid is a graph, which shows a range of various leadership styles across an x and yaxis with the X-axis representing the concern for production and the Y axis representing the concern for the people. Henrik Holstein: May potentially lie in the (9,9) co-ordinates of the grid indicating that he has a Team management style where there is a high concern for the people and the task given. This may be potentially

because of the fact that he maintained high quality goods as well as having a concern for his workers by adopting a paternalistic leadership style.

Valdemar Holstein: Valdemar could lie in the (6,8) co-ordinates of the grid as mentioned he does become more slightly autocratic hence a lower concern for his people as well as a drop in the focus of task as the quality of the bearings could not be further improved due to technological delays.

Anna Holstein: Based on the profile analysis above, Anna may lie in a (9,1) co-ordinate in the grid, hence adopting an Authority Obedience management as the case study mentions how she has very little regard to the people and focuses more on the products becoming greener and environmentally friendly. * Analysis of the 3 characters on the Blake and Mutton Grid is subject to opinion provided with evidence from the case study.

Motivation Theories
Vrooms Expectancy Theory Victor Vroom suggested that people will only put effort to do a task when they expect that their role will help to achieve the required result. If workers feel they lack the ability, expertise or skill to achieve a target, then their level of effort will be lower. Instrumentality: people hold the perception that if they meet performance expectations, then they will be rewarded accordingly. Managers need to ensure that promises are upheld. Valence: people place different values on different rewards. In tackling a task, they will think about whether it is worth the extra effort. Expectancy: People have different expectations about their ability and different perceptions of the difficulty of a task.

In terms of the case study, such motivation theories can only be applied to the managers and current / potential workers of RDB. - Currently, workers can be seen as motivated through using Vrooms expectancy theory as they feel loyal to the firm considering they work in such large industries and can directly see the results of their work in the production of ball-bearings. - However, it is in the managerial positions that vrooms expectancy theory can be applied more effectively as previously, the marketing department would not have felt motivated due to the low budget allocated to them and thus low results expected. The managers in the marketing department would thus be motivated by the planned increase in budget allocated to their department and greater objectives to market through online presence. The workers in this department would theoretically work harder. - Moreover, it is stated that Valdemar empowered middle managers. The managers would then feel that their role plays a greater importance to the firm and be motivated to work harder.

Adams Equity Theory John Stacey Adams equity theory suggests that workers will naturally compare their efforts or rewards to those of others in the workplace. Therefore, if each worker should receive a remuneration package that reflects his or her efforts, Adams argued that workers will only be motivated if their package is seen to be fair in relation to others in the workplace. There is inequality to those who put in more effort and are paid lower salaries. As for Adams Equity Theory, it is evident that it would apply to if the company decides to follow with Annas plans and open smaller factories in Brazil, China, and India. The workers in these countries would be paid less than the European workers sent to the offshored factories which may cause demotivation as both workers or managers may have the same responsibilities or put in the same effort. Therefore, RDB must be careful when implementing their salaries to the workers of lower developed countries.

Market and Product Analysis for RDB


Ball bearing:- A ball bearing is a type of rolling-element bearing that uses balls to maintain the separation between the bearing races. The purpose of a ball bearing is to reduce rotational friction and support radial and axial loads. It achieves this by using at least two races to contain the balls and transmit the loads through the balls

1915:- the market of ball bearings was anticipated to be promising; according to the Boston Matrix the product is considered to be a rising star. This means that the product is considered to have a high market share and a market growth. And the product is still considered to be promising, as it is predicted that its market size will increase over the next decades. According to the Ansoffs Matrix, Henrik Holsteins move to a new market of an existing product such as a ball bearing, this strategy of his could be considered as market development. RDB prefers to operate in a business-to-business market. One of the prime benefits of operating in such a market is that RDB will benefit from a higher transaction as it will be able deal with several companies and wholesalers. The company is able to maintain customer loyalty and brand loyalty, as the product is of such good quality. Ball bearings had a high demand in the market, as RDB produce the product in three different ways. The product goes through flow production, for standard sized ball bearings, it goes through batch production for consumers who use non-standard sized products, and job production takes please for one-off special orders. Present time:- As years passed, the product demand in Europe had started to decline. RDB could see the potential market growth in countries such as Brazil, China and India. Therefore the target market and the demographics of the market are most likely to change. The company had changed their brand image to Green bearing to sustain in the market and adapt to the change occurring in the market. This is an extension strategy taken by RDB to increase the life span of their product. RDB has to redo their market research and apply all the steps taken for the marketing mix. The product has to be relocated since the demand of the ball bearings has started to rise in different countries such as Brazil, China etc. These steps will be taken to increase their products life. The different extension strategies which could be used by RDB would be rebranding their product into being more environmentally friendly to attract more consumers into their products and maintaining a good reputation in the market.

RDB will have to promote their product globally in order to raise awareness. One of the best methods to promote their products is by using e-commerce or e-zines(online magazines) this will allow RDB to reach a larger audience in a shorter period of time. RDB could use the mass media to promote their product to a wider audience, this could be done by advertising ball bearings on television. A more effective method of promoting ball bearings for RDB would be that the CEO of RDB could meet in person with the responsible entities in the government of Brazil, China and India, this would have a larger impact and face to face interaction eliminates the chances of misunderstandings and miscommunication.

The product life cycle of ball bearings, and the extension strategy taken place to increase the life span of the product.

Globalization of RBD: Globalization is the growing integration and interdependence of the worlds economies. In reference to RBD, because RBD factories are located in the Europe and are apart of the EU (a regional trading bloc), it encourages business such as RBD to expand into more parts of Europe as there are no tariffs included as well as easier transportation methods. This may serve an advantage to RBD because competitors outside the EU competing against RBD would be at a competitive disadvantage due to the tariffs imposed on foreign businesses. It also seems that throughout each generation of the Holstein family, globalization seems to become an adopted technique by RBD as Anna wants to expand globally as opposed to Valdemar who wants to keep the business in the European region, creating potential conflict. (Stakeholder conflict) With Annas continued interest to expand globally, there are a few things that need to be taken into consideration such as the lack of knowledge Anna may have on new countries such as Brazil, India and China (countries where factories she plans to set up are to be located). Offshoring: Offshoring is an extension of outsourcing that involves relocating business functions and processes overseas. In reference to RBD, Annas plans are to use product offshoring in countries like India, china and Brazil. Reasons for Anna to want to locate there are because of the economic climate in these countries and hence be able to save on variable costs such as wages by paying them less than their European Counterparts due to laws such as the minimum wage act.

Stakeholders: A stakeholder refers to any person or organization that has a direct interest in and is affected by the performance of a business. Lists of Stakeholders: Employees Managers Anna Valdemar Henrik Pressure groups Government (for taxation purposes) Suppliers and consumers Stakeholders differ based on their affiliation with the business. Stakeholders who work for the business are referred to as internal stakeholders. The other forms of stakeholders are external stakeholders, which do not form part of the business but have a direct interest in the company. In the case study, there has been conflict amongst key stakeholder such as conflict in business ventures between Anna and Valdemar. Another example of stakeholder conflict would be between pressure groups and RBD the company itself. Pressure groups are a form of a special interest group, which are organizations that advocate certain issues. Pressure groups in reference to the case study have expressed concerns over high pollution levels by RBDs mega factories. To resolve stakeholder conflict, it depends on the relative bargaining power that each of the conflicting stakeholders has. For example, to prevent pressure groups from protesting RBD could start acting ethical as proposed by Anna or could pay the group to stop protesting. The way to resolve stakeholder conflict is dependent on the Level of power and Level of interest. (HL)

Keywords and relevance to RDB Multinational: A corporation that has its facilities and other assets in at least one country other than its home country. Such companies have offices and/or factories in different countries and usually have a centralized head office where they co-ordinate global management. Very large multinationals have budgets that exceed those of many small countries. Nearly all-major multinationals are American, Japanese or Western European, such as Nike, Coca-Cola, Wal-Mart, AOL, Toshiba, Honda and BMW. Advocates of multinationals say they create jobs and wealth and improve technology in countries that are in need of such development. On the other hand, critics say multinationals can have undue political influence over governments, can exploit developing nations as well as create job losses in their own home countries. This is what RDB will do if they follow Annas plan. Business to Business B2B: A type of commerce transaction that exists between businesses, such as those involving a manufacturer and wholesaler, or a wholesaler and a retailer. Business to business refers to business that is conducted between companies, rather than between a company and individual consumers. This is in contrast to business to consumer (B2C) and business to government (B2G). A typical supply chain involves multiple business-to-business transactions, as companies purchase components and other raw materials for use in its manufacturing processes. The finished product can then be sold to individuals via business to consumer transactions. An example that illustrates the business-to-business concept is automobile manufacturing. Many of a vehicle's components are manufactured independently and the auto manufacturer must purchase these parts separately. For instance, the tires, batteries, electronics, hoses and door locks may be manufactured elsewhere and sold directly to the automobile manufacturer. In the context of communication, business-to-business refers to methods by which employees from different companies can connect with one another, such as through social media. This type of communication between the employees of two or more companies is called B2B communication . This is what Anna is trying to do. Organic Growth: The growth rate that a company can achieve by increasing output and enhancing sales. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and mergers do not bring about profits generated within the company, and are therefore not considered organic. Organic growth represents the true growth for the core of the company. It is a good indicator of how well management has used its internal resources to expand profits. Organic growth also identifies whether managers have used their skills to improve the business. Valdemar has done this well. Line 13 Premium Pricing: Practice in which a product, such as high-end perfumes, jewelry, clothing, or cars, is sold at a price higher than that of competing brands to give it snob appeal through an aura of 'exclusivity.' Also called image pricing or prestige pricing. This is how RDB held its ground against UAB and FIB (competition). Lines 19-20 Secondary Sector: The portion of an economy that includes light and heavy industrial manufacturers of finished goods and products from raw materials. Businesses that make up the secondary sector of industry often require substantial machinery to operate, and they create waste that can contribute to environmental pollution. RDB are part of this sector and provide their ball bearings to other companies in this sector. Just-in-time: Production processes based on JIT inventory system which allows faster response to customer demands without large finished goods or goods-in-process inventories. Japanese competition uses this production method. Lines 25-30 Unique Selling Point (USP):Real or perceived benefit of a good or service that differentiates it from the competing brands and gives its buyer a logical reason to prefer it over other brands. USP is often a critical component of a promotional theme around which an advertising campaign is built. Anna could focus on a new USP for here 2020 plan. Lines 110-112

RDB has a tall organizational structure: In its simplest form a tall organization has many levels of management and supervision. There is a long chain of command running from the top of the organization e.g. Chief Executive down to the bottom of the organization e.g. shop floor worker. However, tall structures rarely exceed 8 levels of management. This is firstly because the number of layers (i.e. management levels) decreases the span of control. Secondly the disadvantages of the tall structure begin to outweigh the advantages of a tall structure. Advantages of tall Organizations There is a narrow span of control i.e. each manager has a small number of employees under their control. This means that employees can be closely supervised. There is a clear management structure. Disadvantages of tall Organizations The freedom and responsibility of employees (subordinates) is restricted.

The function of each layer will be clear and distinct. There will be clear lines of responsibility and control. Clear progression and promotion ladder.

Decision-making could be slowed down as approval may be needed by each of the layers of authority. Communication has to take place through many layers of management. High management costs because managers are generally paid more than subordinates. Each layer will tend to pay its managers more money than the layer below it.

The last disadvantage is not necessarily true. The cases study states that employees are happy with their current wages as well as proud to be part of the organization due to its success and family-like corporate culture.Lines48-50

RDB Structure
The business is a family run organization, headed by Henrik Holstein, and passed on throughout the generations to Valdemar Holstein and Anna Holstein. This family mentality was passed on throughout the business to all its employees who also felt like they were joining a family. In line 13, it states that RDB expanded by internal (organic) growth. This occurs when a business grows internally, using its own resources to increase the scale of its operations and sales revenue. Internal growth is typically financed through the profits of the business. In relevance to RDB: in order for a company to expand internally, it needs to have enough resources and cash to fuel its own growth. The fact that RDB grew internally gives insight into the fact that it was successful prior to its growth and was run well and organized by Holstein. Benefits of organic growth: Better control and coordination: It is often easier to grow internally than to rely on external sources. For RDB, the fact that it was a family owned business strongly suggests that the internal understanding of the company was shared as they were all family and understood the easiest ways in which to make the business successful. It is also relatively inexpensive to grow internally, as the source of organic growth comes from retained profit. Since the business was already highly successful and had a good reputation, and was well organized and managed, there would have been a large amount of retained profit meaning that RDB would have had enough retained profit to organically grow quite efficiently. Through organic growth, the business also maintains corporate culture, and so no new company cultures will have an effect on the way the company is run. In addition to this, since it is a family run business there will be an even stronger maintenance of corporate culture.

There are also limitations of organic growth: Diseconomies of scale A need to restructure: When a firm grows in size, there is a need to change its management and personnel structure. Organizational structure: The CEO/Chairperson: Henrik Holstein, followed by Valdemar Holstein, followed by Anna Holstein. The CEO is the Chief Executive Officer, or the managing director. Henrik Holstein represented the head of the Board of Directions of RDB. The main roles of his job were: The act as a figurehead or ambassador for the organization Lead the team of directors Represent the desires, ideas and beliefs of the BOD Formulate organizational objectives and policies with the BOD Communicate with the directors regarding any problems, concerns and decisions that they need to be aware of Devise and implement corporate strategy

B-2-B structure: RDB operates in a B2B market, meaning that all transactions of commerce by the company occur between businesses rather than between consumers or the government. Most B2B products are purchased by companies to be used in their own manufacturing, producing goods and services to be sold on. The value added product can then be either sold to yet another company; or to the consumer, which shows that ballbearings are products which are used mostly by other businesses rather that used for personal

consumption. There are certain risks involved with B2B transactions: if Holstein buys products in bulk from another business at a lower price (economies of scale) and the product is not suitable for the business, it puts the entire business at risk. The company consists of 3 mega-factors spread across Europe: The business slowly seems to be looking to globalize. In addition to this, Anna recruits a workforce from India, Asia and South America in order to resemble the business customers. Globalization: is the integration of economic, social, technical and cultural issues of the worlds economies. This has taken place largely due to the expansion of multinational corporations and governments advocating freer international trade.

CSR for Royal Danish Bearings


Due to RDB manufacturing in three mega-factories, the amount of pollution that the factories would produce is quite substantial. External pressure has been put on Valdemar by some environmental campaigners due to the high pollution levels in the vicinity of the RDB factories. Valdemar has ignored these claims and has not tried to reduce the amount of pollution being emitted by the factories. Anna Holstein has graduated with a green engineering degree in university, therefore being more aware of the environmental impact that the business has. In 2005, Anna began implementing green approaches to the business. Anna believed the business should significantly increase its spending on research and development, as well as its impact on the environment and on its customers carbon footprint. Annas main goal is to save energy. She hopes this will be done by selling two of the mega -factories in Northern Germany, Sweden as well as significantly downsizing the factory in Denmark. Furthermore, Anna hopes to open twelve small factories around the world, mainly in Brazil, China and India. New workers would be recruited locally and on lower wages. The costs would be significant in the short term. However, labour costs would be lowered in the long term. This would benefit RDB by having more money to spend on research and development on the green ideas that Anna had hoped to implement in the business.

Valdemar utilizes the following; TQM: A holistic approach to long-term success that views continuous improvement in all aspects of an organization as a process and not as a short-term goal. It aims to radically transform the organization through progressive changes in the attitudes, practices, structures, and systems. Total quality management transcends the product quality approach, involves everyone in the organization, and encompasses its every function: administration, communications, distribution, manufacturing, marketing, planning, training, etc. (1) Commitment and direct involvement of highest-level executives in setting quality goals and policies, allocation of resources, and monitoring of results. (2) Realization that transforming an organization means fundamental changes in basic beliefs and practices and that this transformation is everyone's job. (3) Building quality into products and practices right from the beginning. (4) Understanding of the changing needs of the internal and external customers, and stakeholders, and satisfying them in a cost effective manner. (5) Instituting leadership in place of mere supervision so that every individual performs in the best possible manner to improve quality and productivity, thereby continually reducing total cost. (6) Eliminating barriers between people and departments so that they work as teams to achieve common objectives. (7) Instituting flexible programs for training and education, and providing meaningful measures of performance that guide the self-improvement efforts of everyone involved. Kaizen: Japanese term for a gradual approach to ever higher standards in quality enhancement and waste reduction, through small but continual improvements involving everyone from the chief executive to the lowest level workers. Benchmarking: A measurement of the quality of an organization's policies, products, programs, strategies, etc. and their comparison with standard measurements, or similar measurements of its peers. The objectives of benchmarking are: (1) To determine what and where improvements are called for. (2) To analyze how other organizations achieve their high performance levels. (3) To use this information to improve performance. Paternalistic Leadership: A type of fatherly managerial style typically employed by dominant males where their organizational power is used to control and protect subordinate staff that are expected to be loyal and obedient. A manager with a paternalistic leadership style might be appropriate for a business with a more formal and hierarchical structure where creative thinking is not required of staff. This is the optimal leadership style for RDB. OCCASIONALLY AUTOCRATIC, just to keep things in check. Lines 45-46. Page 250251 Hoang MAYBE MORE Situational Leader (contingency management) The right person, using the right style for the right situation. Anna is more situational. Changing according to aims and objectives of the company. E.g. Flow, batch and job production take place according to the type of ball bearing and the customers needs and wants. Lines 63-65 Private limited (LTD): A type of company that offers limited liability, or legal protection for its shareholders but that places certain restrictions on its ownership. These restrictions are defined in the company's by laws or regulations and are meant to prevent any hostile takeover attempt. The major ownership restrictions are:

(1) Shareholders cannot sell or transfer their shares without offering them first to other shareholders for purchase. (2) Shareholders cannot offer their shares to the generalpublic over a stock exchange. (3) The number of shareholders cannot exceed a fixed figure (commonly 50). Note: Anna intends to shift to PLC mainly to raise finance via the issuing of shares. Lines 123-125. Page 31-34 Hoang. Public Limited: A company whose securities are traded on a stock exchange and can be bought and sold by anyone. Public companies are strictly regulated, and are required by law to publish their complete and true financial position so that investors can determine the true worth of itsstock (shares). Also called publicly held company. Blake and Mouton: Authority Obedience Not Middle-of-the-road because they do not listen to all stakeholders. Valdemar cares about internal stakeholders but not external ones. Lines 40 43. Page 254 Hoang

Discuss the importance and role of branding for RDB when changing their name from Royal Danish Bearings to Green Bearings, an RDB Company
1) Branding as a legal instrument gives lawful ownership of the product and protects it against imitation. RDB are in an industry that is all about technology and innovation. If they change their name the new brand will protect their innovations against imitations from rivals UAB and FIB, especially important in such a competitive and growing industry such as RDBs 2) Branding as a risk reducer suggests that existing customers will still stay loyal if RDB keep RDB as part of their brand name. There is always a risk when changing brand names of alienating existing customers so it will be important to keep the high quality brand image and keep customers informed that Green bearings is still RDB. This will help avoid the possible risk of failure when changing company names. 3) Branding as an image enhancer will encourage customers to pay premium prices for the feel good factor. It will enhance the image of the company to now be associated with the word green. However, if they are going to rebrand to this name they need to ensure that they make customers aware of why they have rebranded with this name. If Valdemar says the company will be green in name only, then existing clients may feel the company is trying to fool them in to paying a premium price for products that are not socially responsible to the environment at all. 1) However it could be said the role of branding when changing company names is not as important as the quality of the product itself if the company is going to rebrand they need to justify doing it with a quality product/service. RDB are doing it to try and increase sales, but if the product is not any better in terms of quality then the rebranding in the long term may prove useless if customers perceive the company as providing the same product/service 2) Conclusion it is very important in attracting new customers and keeping existing customers loyal however the quality of the product/service must also justify the rebranding for customers or in the long term they may not continue to pay premium prices