Strengths and Weaknesses of the Oticon Company

Strengths and Weaknesses of the Oticon Company

Oticon is a hearing aid manufacturing company from Denmark. Hans Demant founded the company in 1904, alongside his son, William. The company has been quite prosperous for a while: in the 1970s they started selling internationally, but soon started facing the problem of being a small company which operated worldwide. They also seemed to show no interest on keeping up with new technologies, thus their products were beaten by the competition of  multinational corporations.

Strengths and Weaknesses of the Oticon Company

In need of a turnaround, in 1988 Lars Kolind became president of the company, Being the first non-family member in charge of the business. Helped by  Niels Jacobsen, they decided that it was “Time to Think the Unthinkable” (“Hearing aids, information on hearing loss and tinnitus | Oticon”, 2018).

Strengths and Weaknesses of the Oticon Company

The philosophy they were planning to firmly base the company on was to make people smile:

“Help people live the life they want, with the hearing they have” (Kolind, 2018).

They didn’t want to only provide hearing aid, but change people’s lifestyles. According to Kolind and Jacobsen,

“an Organisation should not work like a machine, it should work like a brain” (2018).

Strengths and Weaknesses of the Oticon Company

This is when the revolution within the company had started. Around this time all boxes, hierarchies and job descriptions had been removed. The job was organised in teams working on a project, no titles were assigned, an open space was created in order to incentivise communication, which had transformed from written memos to a face-to-face dialogue, there was no need for reminders regarding the company’s rules, and the combination of functions was fluid and unique.

Strengths and Weaknesses of the Oticon Company

By 1994 the business had launched 15 new products with the sales raising to 20% per annum. In 1995 they launched the first ever digital hearing aid, which made them win the Innovation Award that same year.
In 1998 Lars Kolind left the company, and Niels Jacobsen took his place, continuing with the same policy. (“Hearing aids, information on hearing loss and tinnitus | Oticon”, 2018).

By adopting the Spaghetti Management in their company, Oticon has clearly faced a huge quality jump, as it can be seen in Appendix 2 at the end of this paper.

Strengths and Weaknesses of the Oticon Company

One of the greatest strengths that the company had at their advantage was a strong president who managed to turn around completely the entire business, revolutionising the working environment. This is the first issue organisations need to face when deciding to take the leap into changing their business from a hierarchical to a spaghetti management. A strong leader is needed for the guarantee of an optimal outcome of the transformation project, and the maintenance of the efficiency of the management (Saez, 2017). The leader has the highly significant role of motivating the staff, and ensuring equity between them. Oticon was very fortunate to have Kolind take over the business. His extraordinary skill of strategic planning, and involving every single person into the decision-making process of the company is what led him to successfully accomplish what was perceived as a utopia (“Hearing aids, information on hearing loss and tinnitus | Oticon”, 2018).

Strengths and Weaknesses of the Oticon Company

Another evident strength that the Oticon Company had, is the fact that the staff was very flexible in adjusting to the new environment. Although some employees did leave the company when the transformation begun, they have been replaced by highly competent people who knew how, and was ready to, handle the new situation. The staff was overall independent and responsible, and managed to keep up the enthusiasm with which they were carrying out their projects. This kind of environment makes sure that no one feels inferior to others, and with a more relaxed environment, on a psychological level, one can channel their entire efforts on the job, thus providing a better efficiency, just as it has occurred within the Oticon Company. (“Hearing aids, information on hearing loss and tinnitus | Oticon”, 2018).

Strengths and Weaknesses of the Oticon Company

The weakness many organisations face regarding this point is the fact that not everyone is able to take their own responsibilities, not for a lack of ability, but perhaps their mind-set is not adequate or it is just a matter of habit. Furthermore, there is the risk that certain individuals would take advantage of their freedom and independency for their own matters. This mind-set would not profit the company and the Spaghetti Management would not proceed successfully (Benegal, 2018). Thankfully, this was not the case for Oticon which, on the contrary, was able to work with skilled professionals.

Strengths and Weaknesses of the Oticon Company

Lastly, a great advantage the company had was the fact that they had enough budget on their own in order to finance the change in management and the resources for their new products. This point may be easily underestimated. If the company hadn’t had the budget, it is possible that this change would have been much harder to accomplish (“Hearing aids, information on hearing loss and tinnitus | Oticon”, 2018). Furthermore, it made it possible to expand their research in new technologies – lacking in the company before the arrival of Kolind – which made them re-enter the market competition, and also win awards for innovations.

Strengths and Weaknesses of the Oticon Company

The Oticon Company does not have weaknesses on a management level. The only factor that could be seen as a weakness is the mistrust that is perceived by some academics and business specialists who claim that the company’s Spaghetti Management is not functioning as they claim it is.

Strengths and Weaknesses of the Oticon Company

If they managed to fix the mistrust issue, this could turn into an opportunity to prove that an oppressing hierarchical structure is not needed in order to keep a business organised. On the contrary, it would prove to the world that a Spaghetti management is the ideal stress-free environment that is needed to boost the company’s efficiency, just as the Oticon company’s reports show.

Strengths and Weaknesses of the Oticon Company

The mistrust is coming from the fact most people are afraid of change. The thought that something new and different is successful scares those who have rooted their success on the “old” and conventional methods and are now afraid of losing it.

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Conclusion

In this essay the Oticon Company has been presented as the case study to analyse in-depth, different types of business managements. The paper has started with an explanation of four different types of management: Hierarchical, Spaghetti, Matrix, and Pure Project. Each have been presented with a comparison to Oticon and opinions from different authors about them and their utility. This section ended with a comparison and contrast between the different types of management and the Oticon Company. Later, an insight of the company’s history has been provided, along with the strengths and weaknesses that came with the managerial transition. This paper has discussed whether a Spaghetti Management is the right decision for a company to adopt, coming to the conclusion that a stress-free working environment, where there are no hierarchical boundaries and ranks diving people, and the communication is immediate, creating stronger bonds and relationships between the staff, will provide a greater efficiency and productivity, creating overall a better working environment, and a notable increase in the productivity and efficiency of the company’s sales. This essay will also suggest a few recommendations and action plans the company might take in order to improve the business.

Strengths and Weaknesses of the Oticon Company

Recommendations and Action Plan

Based on the evidence provided by the essay, the Spaghetti Management used by the company is by far the best solution that they can have. Improvements have been seen since the start of this new: both the sales and the income have risen each year ever since the conversion (“Hearing aids, information on hearing loss and tinnitus | Oticon”, 2018). Although, there is one aspect of the company that still needs work to be done, which is the credibility. Many articles claimed that the company is not truthful regarding its functioning, – it is important to underline that this aspect has nothing to do with the quality or efficiency of the products sold by the company, it is merely related to the functioning of the Spaghetti Management within the company – and that what they are calling a Spaghetti Management in reality is none other than a Traditional Hierarchical Management with a more flexible hierarchy.

The suggestion is that, since the company claims that this system is a well-working regime in their business, they should act upon these negative rumours, and perhaps concentrate on the publicity and/or social media, to prove that it is true that their method is a well-working and successful one and  promote such management to the rest of the world.

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