Coloplast AS
Coloplast Case
Executive Summary
Coloplast has been in operations in Denmark for nearly 60 years. The company specializes in producing medical devices such as disposable ostomy bags, antifungal cremes cleansers and moisturizers. For 42 years, all Coloplast operations were contained within Denmark, however 97% of its revenue was generated by exporting its products beyond its national borders. In 1999 the company changed its philosophy and began to investigate off shoring its production facilities. In 2001 the first Coloplast production facility opened its doors outside of Denmark. The expansion took place in Tatabanya Hungary. This location was chosen because of cheaper labour and land rates, as well as a more favourable tax rate. The city is located in the Western region of the country which provided better infrastructure. Coloplast had no blueprint to navigate through the expansion process, and had to learn and develop best practises by trial and error. By 2004 the management team in Tatabanya had advanced the production system to the point where it was outperforming the longer established Danish facilities.
In 2005 Coloplast revealed an aggressive plan of Strategy 2008. In this plan the company states it will strive to achieve a profit margin of 18% while maintaining 10% organic growth. A key pillar of this plan is the continued relocation of volume production to Hungary and further expansion to China.
Coloplast is at crossroads, it needs to decide if it has learned enough from its first international expansion that it can duplicate and improve its success in new locations, or if it should delay new locations and focus on fine tuning its operations in Denmark and Hungary.
Issues
Coloplast 's expansion into Hungary was executed with no prior international expansion experience to draw from. Eventually over time, it proved to be a successful operation which surpassed quality levels of its Danish facilities . The company believes it can successfully take the
Executive Summary
Coloplast has been in operations in Denmark for nearly 60 years. The company specializes in producing medical devices such as disposable ostomy bags, antifungal cremes cleansers and moisturizers. For 42 years, all Coloplast operations were contained within Denmark, however 97% of its revenue was generated by exporting its products beyond its national borders. In 1999 the company changed its philosophy and began to investigate off shoring its production facilities. In 2001 the first Coloplast production facility opened its doors outside of Denmark. The expansion took place in Tatabanya Hungary. This location was chosen because of cheaper labour and land rates, as well as a more favourable tax rate. The city is located in the Western region of the country which provided better infrastructure. Coloplast had no blueprint to navigate through the expansion process, and had to learn and develop best practises by trial and error. By 2004 the management team in Tatabanya had advanced the production system to the point where it was outperforming the longer established Danish facilities.
In 2005 Coloplast revealed an aggressive plan of Strategy 2008. In this plan the company states it will strive to achieve a profit margin of 18% while maintaining 10% organic growth. A key pillar of this plan is the continued relocation of volume production to Hungary and further expansion to China.
Coloplast is at crossroads, it needs to decide if it has learned enough from its first international expansion that it can duplicate and improve its success in new locations, or if it should delay new locations and focus on fine tuning its operations in Denmark and Hungary.
Issues
Coloplast 's expansion into Hungary was executed with no prior international expansion experience to draw from. Eventually over time, it proved to be a successful operation which surpassed quality levels of its Danish facilities . The company believes it can successfully take the