This paper will analyze how Oticon, a Dutch hearing assistance company, transformed its lucks by undergoing a extremist alteration. The administration restructured its operations to run into the altering environmental demands in the industry and put in topographic point schemes to implement the alteration.

It will discourse the principle for the alteration and cover the direction and organizational issues motivating the alteration and how direction ensured that the alteration was accepted by the organisation’s employees, therefore enabling Oticon to increase its fight.

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The chief issues raised by Oticon’s instance survey associating to the administration and direction are:

  • Business scheme
  • Restructuring Oticon
  • Pull offing alteration

Each will be looked at in bend in footings of their effectivity.

Business Scheme

Oticon’s direction realised in the late eightiess that their ability to vie in the hearing assistance industry was being badly threatened and in order to increase fight it developed a new concern scheme.

Business scheme is concerned with “making determination within an administration and the finding of what an administration demands to make in order to accomplish its ends and objectives” ( IFS, 2005, 65 )

It involves explicating programs and implementing alteration. The activities that Oticon would hold undergone to develop a new concern scheme include:

  • Analyzing its external environment
  • Analyzing its internal environment
  • Determining and measuring strategic options
  • Choosing scheme
  • Pull offing and implementing chosen scheme

External Environment

This involves holding a clear apprehension of the hearing assistance industry and the degree of fight within it.

Oticon’s analysis of the external environment will constantly intend carry oning a PESTEL & A ; Co. analysis. The mnemotechnic bases for:

  • Political
  • Economic
  • Social
  • Technological
  • Ethical/Ecological
  • Legal
  • Competition

Factors within each of these elements will impact Oticon’s concern scheme, public presentation and direction policies. It will uncover which of these factors are menaces to or chances for the concern.

The elements frequently overlap. For illustration, under technological, Oticon would hold realised that the outgrowth of ‘in the ear’ hearing AIDSs has resulted in reduced market portion, doing the concern less competitory, as customers’ demands and therefore their purchasing power alteration ( societal and competition ) . This outgrowth of ‘in the ear’ assistance therefore provided a important menace to Oticon.

The analysis will give

Internal Environment

An analysis of Oticon’s internal environment involves understanding what an administration is peculiarly good at in comparing to its rivals ( Pugh & A ; Hickson, 1996 ) .The organisation’s strengths and failings can be explored as portion of this analysis and will affect transporting out an audit of internal resources which can be badged under what is regarded as ‘8Ms’ , i.e. :

  • Selling
  • Money
  • Methods of production
  • Materials available
  • Machines/equipment
  • Management
  • Work force
  • Management information

Oticon will necessitate to understand whether each of these are strengths or failings in footings of lending towards accomplishing concern aims.

The analysis would hold revealed that Oticon’s money place was under menace due to:

  • Decreased market portion and reduced net incomes
  • Increased costs – hence their desire to do the concern 30 % more efficient in 3 old ages

After analyzing both environments, a SWOT is derived ( i.e. strengths, failings, chances and menaces ) . The SWOT analysis in the context of Oticon means measuring the relevant importance of the factors impacting it.

Examples include:

  • Strength: strong trade name ( selling )
  • Failing: IT literacy among employees ( work force )
  • Opportunity: developing ‘in the ear’ trade names ( engineering )
  • Menace: increased competition due to companies taking the ‘in the ear’

Segment ( competition )

The SWOT analysis would hold helped the concern to understand its concern place before the readying of a long-run strategic program. It helps in explicating new schemes.

Oticon would now be in a place to measure the different strategic options and accordingly, select the best option that fits with its concern ends and aims.

Oticon opted for a market development scheme and the method they have chosen to accomplish this scheme is through internal development, i.e. utilizing its internal resources, for illustration, employees.

The last measure in the strategic procedure is implementing the chosen scheme. The other two issues in the instance survey falls under scheme execution, i.e. :

  • Restructuring
  • Pull offing and implementing alteration

Restructuring Oticon

Oticon’s scheme was based on making a service administration with the single employee playing a important function.

In order to make this, the administration felt they needed to alter the bing functional construction, which implies that it was non appropriate to present the chosen scheme.

Management opted for a undertaking or matrix construction which has the advantage of being more flexible than a functional 1.

Another advantage of the undertaking construction is that it allows the focal point to fall on the demands of the client and it clarifies who is responsible for success ( Mullins, 2005 )

This mirrors the way Oticon opted to take. Therefore, it can be said that Oticon chose the right construction to implement its scheme.

The undertaking construction would usually “combine sidelong and perpendicular communicating and authorization so there is the efficiency of the hierarchy construction, with describing lines to undertaking directors and patrons, but the informality of the organic construction in working across merchandise lines and functional areas” ( IFS, 2005, 48 )It encourages directors to understand their part and functions.

This undertaking construction is non nevertheless, without its drawbacks. Potential struggles can originate when it comes to allocating resources. As per the instance survey, the employees who are perceived to lend the best thoughts are given undertakings to run. Furthermore, undertaking directors choose undertaking squad members based on their path record. This will potentially increase inter-group struggle ( undertaking groups contending for limited resources ) and cut down motive ( employees being dissatisfied as they may be ignored for high profile undertakings due to miss of a path record ) .

Harmonizing to the instance survey, there is an absence of a deficiency of a line of bid, no formal organizational hierarchy and a deficiency of leaders for employees to describe to under the new construction.

In the UK, the Financial Standards Authority ( FSA ) requires controlled functions within administrations in its regulative government devising this undertaking merely construction unrealistic. Administrations do non usually have a reciprocally sole construction.

One thing that could be said in favor of Oticon’s undertaking construction is that there is a deficiency of divided truenesss which may be apparent in administrations that combine a functional and project construction as an employee is expected to work for both a undertaking and a functional director. However, this is offset by a sensed deficiency of leading. Employees benefit from inspirational leaders – it is arguable whether single undertaking directors can supply this quality as their accent will be on managing and presenting undertakings. Furthermore, as undertaking directors are non chosen based on these qualities, it is questionable whether Oticon are an effectual administration. An effectual administration is one that ‘does the right things’ alternatively of making things right ( which is a definition of efficiency )

Pull offing Change

Change in Oticon was transformational. It was besides necessary as to procure the long term involvements of the concern.

It is expected in any administration that people resist alteration. This opposition, in the context of Oticon is chiefly due to uncertainness about their future chances with the administration bearing in head that these employees were expected to go forth their comfort zones in footings of a new construction and larning new accomplishments.

It is evident that Oticon’s direction analysed and understood the possible opposition to alter and sought to turn to it utilizing attacks which mirrors those of Kotter and Schlinger’s ( IFS, 2005 )

  • Education and committedness
    • Oticon kept their employees informed about the alterations 3 old ages before execution. This is of import as a deficiency of information on the alterations would hold brought opposition if the alteration was sprung on employees
  • Engagement and engagement
    • The employees were involved in implementing the restructuring
    • Oticon would hold analysed who the chief stakeholders were in footings of the alteration and based their alteration direction scheme on maintaining those with high power and involvement good informed.
  • Facilitation and support
    • The free usage of Oticon’s PCs at place would rush up their ability to utilize them before the alteration was to the full implemented

The glare of Oticon’s alteration direction was apparent in their low staff turnover despite such a transformational alteration. Despite their being some opposition, Oticon demonstrated that they were able to do such employees accept the alteration.

Another arrow of their success in this facet of direction was they did non necessitate to fall back to manipulative tactics to guarantee the alteration was accepted. Kotter and Schlinger besides identified other attacks which Oticon did non necessitate to utilize as follows:

  • use and co-option
    • use involves showing partial or deceptive information to people who resist alteration, in order to win them round
    • co-option agencies purchasing off opposition or supplying sweetenings so the alteration could be accepted
  • explicit and inexplicit coercion
    • this involves the menace or usage of force to implement the execution of alteration
    • it could be necessary if the people involved have cardinal dissensions about the alteration
    • this attack is unwanted as legal and/or ethical jobs could result doing the state of affairs worse.


Three issues can be derived from the instance survey that show how Oticon attempted to alter its lucks around.

These are:

  • Oticon developing a new concern scheme
  • Oticon implementing the chosen scheme through:
    • Restructuring the administration
    • Pull offing the alteration procedure

Overall, Oticon handled all these countries good. Its concern scheme was ideal for the altering concern environment it was runing under. The restructuring of the company was a really of import component in accomplishing the chosen scheme.

Oticon managed the alteration procedure commendably, establishing its alteration direction scheme on cut downing the opposition to be expected from such a extremist alteration.



  • Adam-Smith, D & A ; Peacock, A 1994, ‘Cases in Organisational Behaviour’ , Pitman Printing
  • Begg, D et al 1997, ‘Economics’ 5Thursdayedition, McGraw-Hill, Maidenhead
  • Buckle, M & A ; Thompson, J 1999, ‘The UK Financial System’ , 2neodymiumedition, Manchester University Press, Manchester
  • Howells, P & A ; Bain, K 1998, ‘The Economicss of Money, Banking and Finance’ Addison Wesley Longman, Essex
  • Mullins, 2005, ‘Management and Organisational Behaviour’ , 7th Edition, Pitman
  • ‘Organisations and Individuals’ , 2005, Institute of Financial Services, Kent
  • Pugh & A ; Hickson, 1996, ‘Writers on Organisations’ , 5Thursdayedition, Penguin

Internet Beginnings

  • www.dti.gov.uk
  • www.fsa.gov.uk
  • www.hm-treasury.gov.uk
  • www.nationwide.co.uk
  • www.palgrave.com
  • www.statistics.gov.uk
  • www.wikipedia.org

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