Danfoos Trata Case Study

9 September 2016

Why is Danfoss Trata an example of the transnational type of company? Please argument and provide some examples of where this is visible. A transnational company is an entity/corporation that is able to do business (provides the exchange of services and/or products) among lots of different countries and is also capable to manage its various business operations from different locations around the world in order to satisfy the necessities and objectives of consumers and/or other corporations.

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Analyzing the case study we can refer Danfoss Trata is definitely a multinational and transnational company that is operating worldwide. Thus Danfoss Trata not only has business interests in other countries, in a global basis, but also has a set of departments and activities (related to sales, production, leading, managing, distribution and so on) in different locations around the world to simply achieve efficiency and to obtain the maximum of global profit. This is possible because this type of company is able to reach a wide range of customers outside of its country’s headquarters.

With the purpose of finding information to clarify and explain all the sentences described above, we can easily see some passages in the case study related to them such as “(…) Danfoss is today with over 21,300 employees worldwide and operating in over 21 countries one of Denmark’s leading and biggest industrial organizations (…)” and “Being a true transnational company at heart, Danfoss’ success lies in its innate ability of striking a balance between centralization of certain common functions and best practices (e.g. sales), with external centralization (e. g. R&D) and decentralization of other functions and practices (e. g. production), enabling it to reap the rewards of global efficiency, while at the same time maintaining flexibility and facilitating worldwide learning, validating the concept of transnational companies as the most appropriate structures of contemporary multinational companies (…)”. 2. What role does flexibility play in Danfoss Trata and how does Danfoss Trata create flexibility within its organization?

Although Slovenia seems to be a country that is resisting to change, (in particularly, it has a low foreign direct investment), the country has been developing its flexibility regarding to the economic activities. Despite of the beliefs, Slovenia labor market is not that rigid and has some flexibility – “Linking this view of non-formalized flexibilisation with the allegedly inflexible and rigid Slovene labour market again shows that the Slovene labour market is not at all as rigid as it is thought to be, and that its flexibility again exists somewhere on the outskirts of the formalized economy”.

There are only two features that characterizes the Slovenian economy as a rigid labor market: payments and wages, and high degrees of job security. In what concerns to Danfoss Trata, the location of the different suppliers is not important. What really matters is the relation with relevant suppliers. Slovenia has a really good reputation on making mechanical tools and mechanical processing which makes this country an excellent supplier base for different products, such as plastic, metal works, cast-iron products and so on.

In fact, there is one big advantage of using Slovenian suppliers (like Danfoss Trata is doing): high flexibility in terms of quantity and speed of production. A strong evaluation of work and all the uncertainty avoidance are also seen like a great advantage “especially in the context of a transition to a market economy where firms no longer enjoy unlimited soft budget constraints and need to shed socialist inefficiencies, mainly in terms of over employment.

In this circumstances, finding workers who are willing to work for more hours per day can easily become a source of internal flexibility. The principal source of external flexibility is actually the use of temporary employment “with hired contractual workers for production and assembly activities in demand and production peaks” and also the hiring of students in summer. 3. What are in your opinion the key sources of competitive advantage in Danfoss Trata, and how are they linked to their transnational mentality?

In my opinion there are several keys sources that helps Danfoss Trata to have a high competitive advantage: it has a strong and unique organizational culture absent of hierarchy (every single worker knows what their role is in the company which results in a very stimulating and highly motivated environment); communication (and also constant feedback and rewards for the achievements) is very important for the success of the company; the enhance of the constant education, training programs and personal growth are also a requisite for its success.

Trata does not have a sales department or function which means that this business associate can focus on other areas that has clearly more advantages and finally, all the work and plans are designed to be organized and structured to respond the needs of every production line. Trata’s motto is basically all about flexibility, change and constant improvement – “Such a high focus on work processes and process management enables people to work flexibly, because they are familiar and integrated with many different processes” – which makes this company stand out and also capable to proliferate in such a competitive business market.

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