Oticon A/S: Spaghetti Organization and Beyond

            
 
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Case Details:

Case Code : BSTR318
Case Length : 23 Pages
Period : 1988-2008
Pub Date : 2009
Teaching Note :Not Available
Organization : Oticon A/S
Industry : Hearing aid
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Putting People First Contd...

According to Soren Nielsen (Nielsen), who was appointed as the President (Portfolio: R&D, Marketing, and HR) at Oticon, as part of the new executive board appointed in September 2008, the challenge was to spur further growth in the face of the changing dynamics in the hearing aid market.

Around two decades ago, Oticon was faced with a far more drastic situation. One of the world's foremost developers, manufacturers, and wholesalers of hearing aids till the 1970s, its position in the hearing aid industry was severely challenged in the late1980s.

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Experts felt that the advent of technologically advanced In-the-Ear (ITE) hearing aids models along with market domination by corporations having large research and development (R&D) facilities and financial strength during this era, were the key factors behind the company's downfall.

Oticon failed to understand the consumer's demands at this juncture, and this led to a crisis situation marked by a drastic fall in its sales and a resultant loss of market share.

On August 8, 1991, the company began a process of overall transformation, in an attempt to regain its position in the hearing aid industry. This transformation had its roots in a memo issued by its new Chief Executive Officer (CEO) Lars Kolind (Kolind), on January 1, 1990, titled "Cogitate Incognita". Oticon's radical makeover was lauded in business circles and by management experts. It was said to be a 'novel innovation' in management concept, style, and process and organization structure...

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