Case Study on Oticon a/S
Danish company that specializes in the manufacturing of hearing aids. The company celebrated many years of success and a number one ranking but slowly began to experience a drop in sales and shortly fell to a number three ranking. With questions looming whether Diction could survive the decline, Diction’s Foundation Board made a decision to bring in new management to try and overcome the crisis before them. A new CEO was brought in and former management remained with the company.
Lars Kaolin, the new CEO, came in with no experience in the industry but caught the attention of the Foundation’s board with their shared values. Kaolin immediately started with crisis management and began a cost cutting mission that would reduce expenses by reducing any unnecessary overhead costs and cut any unprofitable product lines. About 10-15% of the employees located at headquarters ended up losing their Jobs. A short six months later and Diction ASS had bounced back and profits were once again recorded. Once profits returned,
Kaolin decided to create a program that would help the company combat any additional losses.
Long term restructuring and new procedures were important for Diction ASS to once again be successful and remain that way. Because being high cost and high quality weren’t giving the company the competitive advantage any longer, Kaolin decided the company should become the preferred partner with hearing clinics and hearing aid dealers all over the world. Kaolin stated, “Until 1988, our strategy was to be the biggest, the best, to do everything for everybody.
Clearly, this didn’t work for us. So, In 1989, we refocused our business toward those dispensers or retailers who were most Interested In providing end-user satisfaction.
We decided to concentrate our entire business on the professional end of the retailing business?that Is, those dispensers who were concerned about their end users. That was the basis for all the reductions and changes. Our aim was to develop and maintain those activities that fostered customer satisfaction and to eliminate the rest. We are doing the exact same thing today (Growth, 2003).