RADEKI DE DOVNIC CASE STUDY Link to the case study:

https://drive.google.com/file/d/1f_AK4AVi9DFZ_BMxy3mssaz6u8qbUd0f/view

Radeki de Dovnice Manufacturing

IB Business Management

Paper 1 Case Study Analysis

Collaboration Document

2019

1

Table of Contents

Table of Contents

Table of Contents

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TABLE OF CONTENTS POTENTIAL QUESTIONS 8

Unit 1 - Business Organization & Environment 8 Unit 2 - Human Resource Management 9 Unit 3 - Finance & Accounts 10 Unit 4 - Marketing 11 Unit 5 - Operations Management 13 (Additional Information) - Section C - Possible Extra Stuff on the Paper 14 Mix Questions 14

STEEPLE Analysis of RDM - Detailed 18 Social 18 Technological 18 Economic 19 Ethical 20 Political 20 Legal 21 Environmental 21

SWOT Analysis of RDM - Detailed 21 Strengths: 21 Weaknesses: 22 Opportunities: 23 Previous/Present Threats: 24

SWOT Analysis of RDM - Condensed 24 Strengths 24 Weakness 25 Opportunities 25 Previous/Present Threats 25

Ansoff Matrix 26 Market Penetration 26 Product Development 26 Market Development 26 Diversification 26

Generalised Force Field Analysis (20) 27

Boston Consulting Matrix (BCG) to analyze ‘product portfolio’ 27

Terms & Definition 28

Organizational History 35

UNITS IN THE CASE STUDY: 39

Stakeholder Analysis 40

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May 2019: RDM Case Study Notes 45 POTENTIAL QUESTIONS

Unit 1 - Business Organization & Environment

1. Define the term corporate social responsibility (CSR) [2 Marks] 2. Explain one advantage for RDM of Implementing another project-based organizational

structure [4 marks] 3. Analyze the benefits of being a private company/family business. [6 marks] 4. Discuss the usefulness of a vision and a mission statement. [6 marks] 5. Explain the factors which forced RDM to invest in automation. [6 marks] 6. Explain the stakeholder conflict that would have emerged due to the changes made in the

production process. [6 marks] 7. Discuss the impact on RDM when 95% of private sector companies were nationalized by the

communist takeover. [8 marks] (hard one can anyone answer this:)))) 8. Evaluate the impact on RDM from being shifted to the private from the public sector in the

year 1989. [8 marks] 9. What motivation theory is applicable to the workers of RDM in 2019 (Pink

Motivation Theory) (NEW) 10.With the reference of the case study describe two advantages of democratic

leadership style (4 Marks) (NEW) 11. Discuss the use of a SWOT analysis to RDM [4 or 6 marks] 12. Prepare a SWOT for RDM. [8 marks] 13. Using the Ansoff Matrix, discuss the growth strategy of RDM. [8 marks] 14. Using the STEEPLE framework, examine the impact of the external environment of the

Czech Republic on RDM. [8 marks] 15. To what extent does CSR help RDM be successful? [8 marks] 16. Evaluate the decision of building a new production facility in another location in Europe. [8

marks] 17. Explain two key functions of management [4 marks] 18. Explain the importance of leadership at RDM [4 marks] 19. Explain two roles of mission statement [4 marks] 20. Discuss the appropriateness of share capital to RDM as a source of finance for the

construction of an additional production facility. (lines 11-117) [7 marks]

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Line 1 Line 9 Line 73 Line 100 Line 123

1.2 type of business. ● 100% owned by the Radeki de Dovnic family.

1.2 Privately owned 1.4 Stakeholder

● Relationship with stakeholder was profoundly changed by the move to automation. 1.3 Organisational objective

● CSR ○ Always a strong feeling for CSR before it even was a thing. ○ Paternalistic leadership for all the workers. ○ CSR in sourcing components to only work with companies who also have

good CSR and care Possible Questions:

● Mention a vision and mission statement for RDM ● Create a business plan for the future of the company ● Prepare a STEEPLE and Dealysis and the consequences it has on the business. ● Benefits of it being a large vs. small organization. ● Discuss further growth opportunities ● Impacts of globalization for the environment.

1.3 Mission statement ● No clear mission or vision statement.

Unit 2 - Human Resource Management

1. Explain the reasons behind RDM being hierarchical under Kristian. [6 marks] a. positives

1. facilitate decision-making b. negatives

i. Harder to communicate(?) c. external environment

i. political circumstance 2. To what extent do innovation, ethical considerations, and cultural differences influence

human resource practices and strategies in an organization? [8 marks] 3. Discuss the internal and external factors that influence HR planning. [8 marks] 4. Evaluate the impact of changing from a tall structure under Jans dad to a project based

structure under Jan. [10 marks] 5. Explain, with reference to RDM two common steps in the process of recruitment for [8

marks] 6. Discuss the suitability of a democratic style of leadership displayed by Jan to run RDM. [8

marks] 7. Identify and discuss Jan’s leadership style in comparison to his father’s leadership style. [10

marks]

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8. Using a relevant motivational theory, examine the impact of Jan’s leadership style. [8 marks]

9. Examine the changing role of trade unions in an organization like RDM. [8 marks] 10. To what extent will the automation influence motivation of employees? Discuss with

reference to one motivation theory. [8 marks] 11. Discuss the advantages and disadvantages of democratic and paternalistic style. 12. Discuss the advantages and disadvantages of RDM recruiting employees from across

Europe [6 marks] 13. Analyze the impact of RDM’s recruiting strategy on their possibilities for expansion. [10

marks] 14. Explain the appropriateness of paternalistic leadership style at RDM.[6 marks]

Line 88 Line 89 Line 95 Line 91 Line 99 Line 123

The business had a hierarchy now teams composed of individuals from all business functions. Jan the new Ceo since 2001 has a democratic leadership style which is different from his father's paternalistic style. Most involved in manufacturing are not skilled manual labourers but highly trained engineers and computer experts would manage the automated process.

● Jan fosters an atmosphere conducive to creativity, with teamwork, diversity, humour, and fun. But it seems chaotic sometimes.-Intrinsic motivation

○ Positive results ○ However, some employees complained that there is insufficient

guidance ■ Millennials want to learn new skills and develop from the job

Environment of Innovation Shift from depressing environment under Kristian due to redundancy. Strong sense of CSR and caring and paternalistic attitude towards their workers. Environment and fair pay are important to them now. Vision is clearly communicated to employees. coa Possible Questions:

● Name two leadership styles ● How does a democratic leadership style differ to a paternalistic style ● Name the differences in the intrinsic and extrinsic motivation of staff ● How does a hierarchy structure benefit RDM?

Unit 3 - Finance & Accounts

1. Define variable costs and identify 2 variable costs from the case study [3 marks]

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2. Evaluate the source of finance which needs to be used for the new production facility. [8 marks]

3. Discuss whether or not RDM should use loan capital or share capital to finance their additional production facility (possible 10 marker)

4. Justify why RDM should go public to\ raise finance (line 117) Maybe for Finance, they will add a table in the actual paper on the costs of investment of the new facility or related and make us do an investment appraisal. Seeming that there is no finance in the case study, maybe they will add a table in the paper with financial data.

Line 54 Line 105 Line 107 Line 115-116 Appendix 2 Line 117

Requiring capital expenditures for automation - Capital expenditures Delivery costs for the customers Competitive pricing - Pricing strategies Finance expansion through either share capital or loan capital - Financing strategies 700 km competitive pricing radius Private to public limited company to sell shares Possible Questions:

● Define share capital and Loan capital ○ Advantages and disadvantages

● Differences between public and private limited companies ○ Advantages and disadvantages

● Define competitive pricing ○ Advantages and disadvantages

● Profit and loss account ● Balance sheet

Unit 4 - Marketing

1. Explain the reasons which could have forced the company to come up with a kerosene stove. [6 marks]

2. Explain the usefulness of branding to RDM. [6 marks] 3. Explain which part of the marketing mix has been greatly focused upon. Justify your

answer. [6 marks] 4. To what extent do innovation, ethical considerations, and cultural differences influence

marketing practices and strategies. [8 marks] 5. Prepare a suitable marketing mix for healthcare devices manufactured by RDM. [8 marks 6. Examine the usefulness of STP as a tool for RDM. [8 marks]

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7. To what extent can e-commerce be used as a promotional and distributional strategy by RDM. [8 marks]

8. Evaluate whether all concepts of the marketing mix are equally balanced. Justify your answer. [8 marks]

9. Discuss the importance of market research in setting up the new production plant in another country in Europe.

10. Discuss two ways to extend the product life cycle of kerosene stoves? 11. Advise RDM on how to improve brand identity under the marketing perspective 12. Advise what marketing strategy can be adopted by Jan for RDM. 13. With reference to the case study, describe two advantages of RDM having a good brand

identity 14. Explain the role/usefulness of a marketing plan to RDM [6 marks]

Line 4 Line 36 Line 42 Line 52-53 Line 53 Line 93-94 Line 107 Line 113 Line 119-125````````````````

They changed their product life cycle, as they noticed that their product is declining “Template on RDM’s web page” - RDM is offering a website to target the audience The marketing team is telephonically in contact with the customers “Sold its products to wholesalers” “Fierce competition from Asian manufacturers, which had lower cost structure” - different pricing strategies in the competition “Jan, however, is constantly seeking innovation in both RDM’s products and its processes” “Competitive pricing in a 700-km radius of Lobjanec (Appendix 2) “Which would extend RDM’s market area” - By expanding, they reach new market groups. In order to profit more. They don't have a corporate strategic plan to achieve their vision. “RDM has an outdated name, a weak brand identity, no relevant vision or mission statement and no written operations management strategy or human resources plan. The company makes good products at competitive prices and is responsive to customers’ needs.” Possible Questions:

● Product ○ Mention the stages of the product life cycle ○ Draw the product life cycle ○ How could RDM expand their product portfolio

● Pricing Strategies ○ Mention the pricing strategy and future pricing strategies for RDMs ○ Mention the importance of pricing strategies for market growth

● Advantages and Disadvantages of using E-commerce with reference to RDM ● Discuss the importance of the company-customer relationship with reference to

RDM ○ How do the robots help RDM to build better customer relationships

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● Evaluate the marketing strategies RDM has in place and discuss a possible vision

● In reference to the RDM marketing strategies, apply the 4 P's business tool ● To what extent does RDM profit from expanding their production facility in

Europe ● How can RDM increase their market growth ● How can RDM achieve a competitive advantage

Unit 5 - Operations Management

1. Distinguish between labour and capital intensive method of production. [4 marks] 2. Discuss the usefulness of the method of production adopted by Jan. [6 marks] 3. Examine the usefulness of job production. [6 marks] 4. Explain the factors which forced RDM to invest in automation. [6 marks] 5. Explain the stakeholder conflict that would have emerged due to the changes made in the

production process. [6 marks] 6. Give one advantage and disadvantage of RDM of using a quality circle [4 marks] 7. Examine the benefit of manufacturing customized aluminium bottles. [6 marks] 8. Analyze the benefit of being a 100% family-owned business. [6 marks] 9. Examine the impact of changing from mass production to cell production. [8 marks] 10. Examine the impact of RDM’s relocation. [8 marks] 11. Examine the usefulness of the just in time technique followed by RDM. [8 marks] 12. ºExamine the use of process innovation to an organization like RDM 13. Discuss the impact on RDM when 95% of private sector companies were nationalized by the

communist takeover. [8 marks] 14. Evaluate the impact on RDM shifting from the public sector to private. [8 marks] 15. ???....production facility in another location in Europe. [8 marks] 16. Discuss the impact of RDM’s culture on various business functions. 17. Analyze the impact of RDM’s recruiting strategy on their possibilities for expansion. [10

marks] Possible (4 marks) question that we came up with:

1. List and explain two benefits for RDM introducing modern technologies in their production system

2. One advantage and disadvantage of having an automated business. 3. Outline one disadvantage and advantage from including customization to the company. 4. Outline an advantage and disadvantage of moving to a fully automated manufacturing 5. State two ways on how RDM can improve their brand identity. 6. Discuss the possible advantages and disadvantages that exist with the introduction of a new

product and entry into a new market? 7. Discuss the potential approaches to develop HR strategies

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Line 33-43 Line 105-117 Line 103-104

5.2 Production methods -> Job customized (mass customization) production - “For most orders, customers enter desired specifications…..”

Distribution Channels & Location of Operation -> Outsourcing -

5.4 Location -> outsourcing (depending on company CSR) - “

(Additional Information) - Section C - Possible Extra Stuff on the Paper

Balance Sheet for when they invested in the automated manufacturing process.

- Decision Tree - Sources of finance - Development indicators - More detail in ‘health care services’ - for marketing strategy - Any stakeholder conflict - Country A vs B (relocation) - BCG matrix on product position of products in the product portfolio - Force field analysis - Options for expansion with financial information (building vs buying the factory, starting

a joint venture) using ARR/NPV - Specific information about management structure at RDM - How has RDM used innovation? (Decline of kerosene stove, implementation of healthcare

devices.) - Explain all the ways RDM has achieved economies of scale? (Amongst others, line 51,

mass-produced stoves sold to wholesalers.) - SWOT Analysis - STEEPLE

Mix Questions

1. Explain one influence to RDM’s organisational structure [4 marks] 2. Explain the strategic and operational implications of RDM if they have to expand into other

International Markets [10 marks] 3. Discuss the impact of globalization on International marketing with reference to RDM [10

marks] 4. Compare paternalistic and democratic leadership styles as used by Jan and his father in

RDM [10 marks] 5. Outline one importance of RDM establishing a CSR [2 marks] 6. Analyze the benefits of being a 100% family-owned business. [6 marks]

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7. Discuss the usefulness of a vision and a mission statement. [6 marks] 8. Explain the factors which forced RDM to invest in automation. [6 marks] 9. Explain the stakeholder conflict that would have emerged due to the changes made in the

production process. [6 marks] 10. Discuss the impact on RDM when 95% of private sector companies were nationalized by the

communist takeover. [8 marks] 11. Evaluate the impact on RDM from being shifted to the private from the public sector in the

year 1989. [8 marks] 12. Discuss the use of a SWOT analysis to RDM [4 or 6 marks] 13. Using the Ansoff Matrix, discuss the growth strategy of RDM. [8 marks] 14. Examine the impact of the external environment of the Czech Republic on RDM. [8 marks] 15. To what extent does CSR help RDM be successful? [8 marks] 16. Prepare a decision tree/force field analysis as to whether Jan should use self-driven lorries or

continue using human-driven ones for delivery. [8 marks] 17. Draft a decision tree weighing up the 3 options of where to relocate RDM’s manufacturing

in Europe. 18. What is the Influence of human resource practices and strategies on an organization? [8

marks] 19. Discuss the internal and external factors that influence HR planning. [8 marks] 20. Evaluate the impact of changing from a tall structure to a matrix structure under Jan. 21. Explain, with reference to RDM two common steps in the process of recruitment for [8

marks] 22. Discuss the suitability of a democratic style of leadership displayed by Jan to run RDM. [8

marks] 23. Identify and Discuss Jan’s leadership style in comparison to his father’s leadership style. [10

marks] 24. Using a relevant motivational theory, examine the impact of Jan’s leadership style. [8

marks] 25. Examine the changing role of trade unions in an organization like RDM 26. To what extent will the automation influence motivation of employees? Discuss with

reference to one motivation theory. [8 marks] 27. Explain the reasons which could have forced the company to come up with a kerosene stove.

[6 marks] 28. Explain the usefulness of branding to RDM. [6 marks] 29. Explain which part of the marketing mix has been greatly focused upon. Justify your

answer. [6 marks] 30. To what extent do innovation, ethical considerations, and cultural differences influence

marketing practices and strategies. [8 marks] 31. Prepare a suitable marketing mix for healthcare devices manufactured by RDM. [8 marks] 32. Examine the usefulness of STP as a tool for RDM. [8 marks] 33. To what extent can e-commerce be used as a promotional and distributional strategy by

RDM. [8 marks] 34. Evaluate whether all concepts of the marketing mix are equally balanced. Justify your

answer. [8 marks]

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35. Discuss the importance of market research in setting up the new production plant in another country in Europe.

36. Advise RDM on how to improve brand identity under the marketing perspective 37. Advise what marketing strategy can be adopted by Jan for RDM. 38. To what extent innovation, ethical considerations, and cultural differences may influence

marketing practices and strategies. [8 marks] 39. Prepare a suitable marketing mix for healthcare devices manufactured by RDM. [8 marks] 40. With reference to the case study, describe two advantages of RDM having a good brand

identity 41. Explain the role/usefulness of a marketing plan to RDM [6 marks] 42. Distinguish between labour and capital intensive method of production. [4 marks] 43. Discuss the usefulness of the method of production adopted by Jan. [6 marks] 44. Examine the usefulness of job production. [6 marks] 45. Explain the factors which forced RDM to invest in automation. [6 marks] 46. Explain the stakeholder conflict that would have emerged due to the changes made in the

production process. [6 marks] 47. Give one advantage and disadvantage of RDM of using a quality circle [4 marks] 48. Examine the benefit of manufacturing customized aluminium bottles. [6 marks] 49. Analyze the benefit of being a 100% family-owned business. [6 marks] 50. Examine the impact of changing from mass production to cell production. [8 marks] 51. Examine the impact of relocation To RDM. [8 marks] 52. Examine the usefulness of the just in time technique followed by RDM. [8 marks] 53. Examine the use of process innovation to an organization like RDM 54. Discuss the impact on RDM when 95% of private sector companies were nationalized by the

communist takeover. [8 marks] 55. Evaluate the impact on RDM shifting from the public sector to private. [8 marks] 56. the production facility in another location in Europe. [8 marks] 57. Discuss the impact of RDM’s culture on various business functions. 58. List and explain two benefits for RDM introducing modern technologies in their production

system 59. One advantage and disadvantage of having an automated business. 60. Outline one disadvantage and advantage from including customization to the company. 61. Outline an advantage and disadvantage of moving to a fully automated manufacturing 62. State two ways on how RDM can improve their brand identity. 63. Discuss the possible advantages and disadvantages that exist with the introduction of a new

product and entry into a new market? 64. Discuss the potential approaches to develop HR strategies 65. Recommend whether they should expand health devices to European markets or not 66. Evaluate the decision of moving to self-driving trucks to replace human-driven delivery. 67. Distinguish between Public enterprise and Private enterprise. 68. Why RDM changed from coal-burning stoves for residence 69. RDM is highly automated what is the difference between automated and mechanized

organization? 70. Capital intensive vs Labour Intensive

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71. Stoves were mass produced whereas the healthcare equipment was customized according to the needs and desires of the customers. (Mass production and Just In time?)

72. Impact of globalization on RDM. Lower costs in the Asian markets. 73. RDM to diversify into different product lines. 74. What motivation theory is applicable to the workers of RDM in 2019 (Pink Motivation

Theory) 75. What motivation theory is applicable to the workers of RDM in 1970 76. Advantages and disadvantages of job production 77. Qualities that make Jan a good manager 78. Capital intensive, what will be the advantages and disadvantages of using machinery 79. Advantages and disadvantages of mass production in relation to economies of scales 80. “The reasoning behind the move to manufacturing medical devices was that, with the baby

boomer generation soon to reach retirement age, the demand for goods and services in the healthcare industry would be growing” How did RDM family feel that the demand for goods and services in the healthcare industry be growing?

81. How does the extension strategy of introducing kerosene/oil burning stoves help the RDM company?

82. Critically evaluate the introduction of an automation process 83. How does an integrated IT system help a business like RDM? 84. Analyze the impact of globalisation for RDM? 85. What impact did the change of leadership of Jan had on the stakeholder (employee) and the

company. 86. Why do you think RDM opted for CSR even before it became fashionable to the world. 87. Identify and explain the pricing techniques that RDM can offer other than competitive

pricing. Which pricing technique will be the best to use. 88. Justify the importance of having a written corporate strategy for RDM. 89. In your opinion, which source of finance should RDM use for expansion into the new

market (share capital or loan capital) on RDM company.

90. With the reference of the case study describe two advantages of democratic leadership style (4 Marks)

91. Should RDM open a new production facility in Europe? (Possibly with reference to a decision tree)

92. Recommend sources of finance for RDMs expansion project 93. Discuss the impact of globalization on RDM’s workforce planning. (8 Marks)

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STEEPLE Analysis of RDM - Detailed

Social 1. Ageing population → more demand for healthcare products (Line 13)

2. Demands for kerosene stoves have been declining for many years;end of product life cycle. (Line 4)

3. Impact of tourism has aided the Czech economy. (Line 19) 4. Many Czech also speak German, this means that they have positive

relations with Germany - Europe’s largest economy. Which also impacted the IT infrastructure, making Czech’s IT among the best in the world. (line 21)

5. Automation forces people to quit their job and not to have a job since all functions of the business are done by robots. (Job redundancy) “Only occasionally do humans have to intervene.” (Line 46)

6. ‘RDM’ progressively employs fewer workers as they move towards automation (threat to workers).

7. Changing trends of products can also be considered in social 8. Educated and can speak German 9. The change from the paternalistic to the democratic style of leadership led

to complaints of lack of focus on the part of the management, which depicts that there was some resistance to the change. (Line 97)

10. RDM liaised with a vocational school, which provided opportunities to local workers to enhance their skills.

11. Their attitudes, aspirations and motivations differ significantly from the workers who survived the Second World War and had worked under the Communist regime. With the 76.6% reduction in, and transformation of, RDM’s labour force, the company no longer has the level of local influence that it formerly had. The vocational school no longer liaises with RDM regarding the required skills of worker after the significant reduction in labour workforce.

Technological 12. Czech’s IT among the best in the world (line 21) 13. Potential widespread use of Computer Aided Manufacturing (CAM) and

Computer Aided Design(CAD) could drastically reduce manufacturing costs for RDM.

14. Most ordering (purchasing) is done digitally and contacts between customers and engineers are also done digitally - making this process faster and more efficient

15. Demand for ergonomic/personalized healthcare devices grow. 16. Diversified into aluminum bottles. (Line 60-64) 17. The gradual growth rate of self-driving cars can be cost-effective. (line

48-49) 18. (line 21-22 “Czech”) potential for e-commerce & trading → , therefore,

don’t need a physical store, therefore reducing a lot of their expenses (both Variable and Fixed)

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19. ‘RDM’ has achieved all the technological economies of scale for successfully implementing the up-to-date technologies such as AI, robots etc.

- As demand for kerosene stoves had been declining for many years, in 1993, Adriana decided to add health devices using ergonomic designs to RDM’s product portfolio. (Line 10)

- The Czech Republic now has an IT infrastructure that ranks among the best in the world.

- Jan began to introduce a highly automated manufacturing process in 2006 that was operational by 2009.

- Jan wonders whether it will be long before self-driving lorries will replace current human-driven ones for delivery.

- In addition, digitized communication between robots allowed RDM to be responsive to customers’ requirements. As RDM improved its automation processes and integrated cloud computing, mobile devices, big data, artificial intelligence and three-dimensional (3D) printing, its ability to customize products improved dramatically regardless of the size of the order.

- Given that the entire order/manufacture/delivery process could still be performed in Lobjanec, this new facility would require limited staff and most of the work will be done by robots.

Economic 20. Fierce Asian competition → In general, Asian companies can produce

goods at a cheaper cost which are highly competitive to ‘RDM’ 21. Lucrative markets in Europe i.e. Germany 22. The Czech Republic is one of the most stable economies in the world 23. Competitive pricing zone within a 700-km radius 24. The economic growth rate in Czech is 4.4%, making the Czech economy

the highest growth in Europe. 25. Trade Bl§ocs 26. Recession in many European countries (Portugal, Italy, Greece, Spain)

may reduce RDM’s growth (which is a reason for their planned expansion) 27. Low levels of unemployment and inflation. 28. Communist takeover: 95% of private sector commercial enterprises were

nationalised in 1949 29. In 1989, Velvet Revolution: businesses went from state-owned to privately

owned 30. Czech economy had a smooth transition 31. Stable market economy and democracy 32. Prague is a tourism magnet 33. Positive trade relations with Germany 34. RDM employed a large unionized labour force

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35. Because of globalization and fierce competition from Asian manufacturers, which had lower cost structures

36. Free movement of labour throughout the European Union 37. Capital intensive business can be expensive to maintain 38. Euro still not used widely in the Czech Republic, exchange rates can still

impact costs and prices for RDM

Ethical 39. Pioneering CSR activities to RDM stakeholders 40. Fair wages (line 104) 41. Emphasis on the care of the environment (line 104) 42. Has relationships with suppliers that also maintain their CSR, and hence,

fosters community services

Political 43. Free movement of labor in the EU allows highly specialized workers to be

recruited around Europe → RDM has a wide pool of applicants to choose from

44. Czech used to be a communist state but has transitioned to a free market 45. Brexit may negatively impact the market growth of RDM.

○ Won’t be able to sell products to UK ○ Tariffs and other fees will increase their prices in the UK

○ A stable government in the Czech Republic is beneficial for the market drivers in the economy

46. Globalization - forcing lower costs of production 47. In 1949, following the Communist takeover of what was then

Czechoslovakia, over 95 % of private sector commercial enterprises, including RD, were nationalized. Following the Velvet Revolution of 1989, when Communism in Czechoslovakia collapsed, many companies moved from being state owned to privately owned.

48. Post-revolution good Economic growth-stable market economy + democracy post-communism.

49. Post-revolution tourism has surged and there is greater economic integration within European countries.

50. democratic governance which facilitates stability in the country necessary for business to thrive (line 18)

51. Part of this success stems from the relatively smooth transition, compared to some other former Soviet bloc countries, to a stable market economy and democracy.

52. For decades, RDM employed a large unionized labour force, mass-produced stoves and sold its product to wholesalers. Because of globalization and fierce competition from Asian manufacturers, which had lower cost structures, in the early 2000s, Jan determined that European manufacturers would have to lower costs.

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Legal 53. Cost of transition from private limited to public involves legal formalities

and structural changes 54. Many countries have their own consumer and employee protection

legislation. RDM is at an advantage here since they have one. 55. Different consumer protection laws across Europe in non-EU countries. 56. There might be restrictions on health product in different countries. 57. Labor laws in an integrated system like the EU allow for easier

mobilisation of labor 58. Import and export restrictions are greatly reduced within the EU, allowing

for goods to be competitively priced with domestic ones.

Environmental 59. Pollution from delivering products in using of lorries can result RDM in

negative CSR 60. Coal burning and kerosene stoves (previously) 61. The carbon footprint from production methods as Euro Standards are high

for pollution 62. Medical devices are based on the cradle to cradle method of production,

which can protect the environment. 63. Use of AI (robots) leads to minimum wastage of scarce resources (e.g.

metals), and hence, optimising the production process.

SWOT Analysis of RDM - Detailed

Strengths:

● Lines (1-2) Company is 100% owned by the Radeki de Dovnic family (Private Limited Company) ● Line (11) They are able to utilize ergonomic designs towards the production of a variety of goods, hence

widening their product portfolio ● Line (17) stable Trading bloc ensures that there is an elimination of tariffs and exports of RDM products

will drive down the cost of imports. ● Lines (34-35) Highly automated manufacturing process that was operational by 2009 ● Lines (35-36) Customers could enter their desired specification for healthcare devices and RDM could

proceed with their specialized order… Ability to meet consumer needs ● Line (38) RDM developed several minor adaptations to customers’ products that allowed them to produce

the desired orders at a cheaper cost (and more stable) ● Line (45) Higher efficiency due to the robotic configuration of the tooling (highly automated machinery) ● Line (46) Highly trained engineers monitor the highly automated processes, to ensure the products meet the

quality standards as allocated by consumers ● Line (54) The highly automated system lowers costs in the long run, despite significant capital expenditure ● Line (55) Digitized communication between robots allowed RDM to be responsive to customers’

requirements ● Line (57) Improved their automation by integrating cloud computing, mobile devices, big data, artificial

intelligence, and three-dimensional printing improved the customization of products, regardless of size.

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● Line (61) Not restricted to manufacturing healthcare services due to the integration of technologies. (easy retooling to the manufacturing of other products)

● Line (67) They were able to quickly and inexpensively produce the customized bottles (even though it was not the product they initially produced as a company)

● Line (77) They have highly trained engineers and computer experts who manage the automated processes in 2019.

● Line (83) RDM recruits engineers from universities across Europe, which means a wider selection of potential employees with appropriate skills for RDM

● Line (87-88) Teams composed of individuals from all business functions manage orders. This is a project-based organizational structure

● Line (89) Jan changed the leadership style from paternalistic to democratic. This motivates employees, who’d now have more say. The CEO is also more engaged with his employees

● Line (90) Jan introduced many changes to practices at RDM to create an environment of innovation, constantly seeking innovation in both RDM’s products and services.

● Line (94) Jan fosters an atmosphere conducive to creativity, with a heavy emphasis on teamwork, diversity, humor, and fun which employees love (increased motivation) (this has aided in the production of positive results).

● Line (100) The de Dovnic family had long held a caring and paternalistic attitude towards the people who worked for them, including workers in their factory.

● Line (104-105) Always display a strong sense of CSR, including source components from businesses who have good CSR practices, paying fair wages and having a strong emphasis on care for the environment (this leads to worker motivation, improved brand image, and customer loyalty)

● Line (113) The new facility would extend their market area. It would require limited staff and most work will be done by robots since the order/manufacture/delivery process can still be done in Lobjanec

● Line (125) RDM makes good products at competitive prices and is responsive to customer needs.

Weaknesses:

● Line (28-29) unprepared CEO takeover: Dr. Kristian Radeki did not have professional training and experience that hardly prepared him for the task and position of CEO

● Line (27-29) Kristian was CEO despite being untrained and inexperienced in business or engineering, having studied history. He also lacked local knowledge due to the political events that occurred during his absence. This weakness was defused when Jan became CEO because he had a very good engineering mind helping in the production processes of RDM.

● Line (39-42) Pricing is made by human accountants and marketing executives. This is at a disadvantage to automated pricing because it is more efficient and less time-consuming.

● Line (51) Previously employed a very large unionized labor force (500 workers), which is difficult to manage and supervise. They also represented huge expenses in terms of wages. This was solved by having an automated manufacturing process that Jan introduced.

● Line (54-55) Automation requires a lot of capital expenditures to purchase and revenue expenditures to maintain them.

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● Line (74-76) Letting hundreds of workers leave the company can cause demotivation to the workers in the business.

● Line (80-81) By transforming the labor force and decreasing it RDM does not have as much influence on the local community and this makes them less powerful

● Line (89) Constant changes in leadership style can be very confusing and demotivating for RDM employees. Line (89) the change in organizational structure from Hierarchical to project-based and the change in the management style from paternalistic to democratic: this can lead to demotivation amongst the workers in the company.

● Line (91-94) When Kristian headed the company, there was a negative environment within the work environment was depressing, orderly, and dull. This could lead to demotivation of workers. company as employees were being made redundant due to the fall in kerosene stove sales. This was not the case with Jan, as he always sought innovation. This was solved when Jan introduced a new leadership style.a

● Line (95-98) Although Jan’s leadership style is fun, it is sometimes chaotic and workers feel there are insufficient guidance and help by their managers and that the business lacks focus.

● Line (99) CSR incurs higher costs for RDM which makes them have fewer profits and well as operate under very strict ethical rules.

● Line (105-110) They cannot offer competitive pricing beyond the 700-kilometre radius which reduces European market share and affects the m being price competitive in lucrative markets. This causes them to miss out on a huge pool of price elastic customers across Europe.

● Line (118-120) They have no marketing strategy. This makes RDM employees confused about pricing, promotions, distribution, and production.

● This also causes another weakness for RDM, such as a weak brand identity. Thus, RDM is not very reputable because they fail to make themselves reputable. This also makes RDM unable to reach their target audience.

● Line (123) Having an outdated name means RDM is not memorable for customers. By failing to have a marketing strategy they do not compensate for their outdated name.

● Line (121-123) No written corporate strategy even though there is a vision communicated by Jan. This lack of organization can lead to confusion for the employees. RDM lacks focus.

● Line (123-124) No written operations management strategy can lead to confusion within the operations sector which can cause lower quality products.

● Line (124) No human resources plan can cause employees to feel insecure in the workplace as there is no set of procedures for the dismissal of workers.

● Initially, by moving towards automation, RDM will not make a profit, since capital expenditure will outweigh sales revenue (Jan is forced to lower price due to competition)

Opportunities:

● Line (5-10) Demand for goods and services in the healthcare industry would be growing as the baby boomer generation reaches retirement age.

● Line (15-20) Prague is a magnet for tourists as it is one of the most beautiful cities in Europe which has aided the economy of Czech.

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● Line (15-20) Educated Czech’s speak German in addition to Czech which facilitated positive trade relations with Germany, which is Europe’s largest economy.

● Line (60-70) Success of the order for water bottles lead to the executives at RDM encouraged Jan to manufacture customized aluminum bottles.

● Line (75-80) Free movement of labor throughout the European Union lead to RDM recruiting engineers from universities across Europe.

● Jan having Westernized innovative ideas ● Line (106-107) They have the opportunity to lucrative markets where the demand is high in countries

such as the Netherlands, Scandinavia, Belgium, and France. ● Utilizing job production method in the production of aluminum bottles, ensures that no aluminum would

be wasted - environmentally friendly. ● With IT infrastructure ranked amongst the best in the world (line 22), there could be many more

e-commerce opportunities for RDM

Previous/Present Threats:

● Line (5-6) the communist takeover: because the RDM became nationalized after being owned 100% by the Radeki family

● Line (10) change in social trends/preferences: demand for Kerosene stoves declined so RDM had to change their product.

● Line (31-32) the division of Czechoslovakia into the Czech Republic and the Slovak Republic which is a threat to the economic situation of the country as well as the market in which RDM operates

● Line (34-36) possibility of technological issues, depreciation, the problem with the system can lead to delay in production altogether and can be time-consuming and expensive to repair

● Line (45-46) the automation of production methods: laying off workers can cause them to formulate pressure groups or revolt and this is not beneficial for the company’s reputation in the community

● Line (53) Due to globalization, the fierce competition increased with the Asian manufacturers, causing Jan to lower cost structures by automation.

● Line (75-77) Due to globalization leading to automation, the business had to lay off some of the employees which could be a threat to the business as it caused trouble with the local community which can lead to damage of the business’s reputation.

● Line (80) Due to the reduction and transformation, the business no longer has the level of local influence that it had.

SWOT Analysis of RDM - Condensed

Strengths

● 100% family owned business full control ● Innovation and automation

● Customization and product development ● Democratic leadership style- Jan ● Qualified CEO ● Production system and supply chain

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● Organizational structure- matrix (except for aluminum water bottle - a new division (hierarchical)

● Skilled workforce ● CSR- fair wages, sourcing raw materials from local suppliers, sustainable ● Consistent profits ● Just in time

Weakness

● The high cost of innovation and automation ● Working capital issues ● Stakeholder conflict due to the change in the production process ● High dependency on technology ● Workers complain about the leadership style ● Poor marketing strategy ● Lack of a strategic direction ● Outdated marketing mix

Opportunities

● Velvet revolution and its impact ● Relocation ● Globalization (Market penetration/diversification) ● Stable economy ● Favourable trade relations ● Political stability ● Major tourist centre- Prague ● Growing information technology ● Germany: Europe’s largest economy ● Increasing ageing population- growing demand ● Free movement of labour within the european Union

Previous/Present Threats

● Division of the country ● Rising competition from the Asian market ● Expensive factors of production ● Healthcare product regulation

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Ansoff Matrix

Market Penetration

Coal Stoves (doesn’t sell anymore) Kerosene Stoves (lowers price in the long term, in quality to compete internationally) (although demand for them is decreasing)

Product Development

RDM has successfully carried this out through the: - Implementation of Ergonomic Design - Different Colours/Designs/Etc

→ RDM has successfully done this before, with going from coal/kerosene stoves to healthcare - machinery is flexible regarding the production of products. → water bottle, as water bottles cater for a wider market (not only baby-boomer generations) and are a different product than healthcare devices or stoves

Market Development

Expanding their healthcare products/kerosene stoves to potentially lucrative markets in Scandinavia, and elsewhere in Europe (only 700m radius) (105, appendix 2)

Diversification

RDM doesn’t do this now but it would involve a new product in one of their lucrative markets. E.g. Kitchen hardware in France (marketing implementations would be weak)

- machinery is flexible regarding the production of products. - batch production is the current type of production, as they have been manufacturing aluminum bottles for individual businesses, and have not reached large scale production. - mass production would probably be the preferred type production due to potentially high levels of demand.

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Generalised Force Field Analysis (20)

Boston Consulting Matrix (BCG) to analyze ‘product portfolio’

Dogs: Coal-burning and kerosene stoves Problem Child: Aluminum customizable bottles Stars: Ergonomic healthcare products Cash Cow: Healthcare products (Launched a long time ago, earns a healthy profit for the company)

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Terms & Definition

Term Definition

Private Sector Part of the economy that is not under the control of the government. Unincorporated/Incorporated

Public Sector Government enterprise.

Nationalized Private assets transform into public assets.

Automation(line 50) Technique, method or system of operating or controlling a process by highly automatic means to reduce human intervention.

Unionized Belonging to or having workers belonging to a trade union

Downsizing Reducing the level of the workforce in the business.

Tall hierarchical structure 1. Many levels of hierarchy 2. Narrow span of control 3. There are opportunities for promotion 4. Lines of communication are long - making firm

unresponsive to change

Paternalistic leadership A fatherly, or familial environment. Leaders treat employees like sons and daughters. -guidance provided to employees

Democratic leadership Everyone has a vote in the production and functions of the business.

Matrix structure Organizational structures combine with traditional departments seen in a bb structure with project teams. Example - A task team established to develop a new product might consist of those from operations, marketing, and finance to make it happen.

Organizational culture Norms, values, attitudes, and beliefs 1. Mission statement 2. Vision statement 3. Org. structure 4. Leadership style 5. Corporate objectives 6. Dress code

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7. Company policies 8. Pay and salary, motivation methods used

Add on to the below terms and definitions:

No Term Definition Line No.

1. Product life cycle - Typical process that products go through from their initial design and launch to their decline and eventual withdrawal.

- Different products undergo each of the six stages (development, introduction, growth, maturity, saturation, and decline) at varying speeds.

- Measured over time in terms of sales revenue. - A cycle that shows the lifespan of a product going through the

initial phases to its eventual withdrawal.

4

2. Chief Executive Officer (CEO)

The highest-ranking executive in a company, and their primary responsibilities include making major corporate decisions

9

Trade Bloc - a trade bloc is a type of intergovernmental (between states) agreement, where barriers to trade (tariffs and other protectionism policies) are reduced or eliminated among the participating states

- Soviet bloc in RDM ensures smooth transportation and delivery of goods across Europe without paying more to export.

17

3. Hierarchical

- Type of organizational structure in which items are ranked according to levels of importance.

- In a corporate environment, hierarchies depend upon structure, rules, and top-down control to guide business practices and activities.

85

4. Capital expenditure

Money a company spends to buy/maintain/improve its fixed assets (long term)

54

5. Integrated cloud computing

A system of tools and technologies that connects various applications 57

6. Product portfolio Refers to the range of products or strategic business units owned and developed by an organization at any one point in time.

11

7. Automation A process of managing information, data, and processes to reduce costs, resources and investment. Also, a process is seen in Daniel Pink’s theory of motivation (anatomy, mastery and purpose).

54

8. Commercial enterprises

A business that engages in buying and selling activities on a large scale, for the purposes of making a profit and gaining market share.

6

9. Demand Is the quantity of a good or service that consumers and businesses are 13

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willing and able to buy at a given price in a given time period.

10. Division of labor Dividing a job into many specialized parts, with a single worker or a few workers assigned to each part. Division of labor is important to mass production.

68

11. Economies of scale

Refer to lower average costs of production as a firm operates on a larger scale due to gains in productive efficiency, e.g. easier and cheaper access to finance.

N/A

Diseconomies of Scale

refers to the cost disadvantages a business faces due to an increase in firm size or output, resulting in the production of products, goods or services at an increased cost per unit. e.g cost of truck operation (expanding the business means more trucks required to deliver their products, thus more money)

- graph is cost vs. output - show a downward peak (lowest point is the optimal level of output)

12. Economic growth measures changes in the Gross Domestic Product of a country over time. It occurs if there is an increase in real GDP for two consecutive quarters.

N/A

13. Inequality Refers to the difference between the rich and poor, the haves and have-nots – it is shown by people's different positions within the economic distribution – wealth, pay and income. Inequality is large in a society where few people own a disproportionate amount of economic pie.

N/A

14. Fiscal policy is the use of taxation and government expenditure policies to influence business activity. The government spends the tax revenue that it raises, in addition to other sources of government revenue, on a number of areas including social security, health care, education, transport and infrastructure.

● deflationary fiscal policy ● expansionary fiscal policy

○ tax cuts and increased public sector spending

N/A

15. Consumption In economics, the use of goods and services by households. Consumption is distinct from consumption expenditure, which is the purchase of goods and services for use by households.

N/A

16. Corporate Social Responsibility

A business approach that contributes to sustainable development by delivering economic, social, ethical and environmental benefits for all stakeholders.

99

17. Scarcity Refers to the basic economic problem, the gap between limited – that is, scarce – resources and theoretically limitless wants.

N/A

18. Private limited The part of the economy run by private individuals and businesses, rather than by the government, e.g. sole traders, partnerships, companies, and cooperatives. Limited liability.

6

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19. Price elasticity of demand

Measures the responsiveness of quantity demanded for a product to a change in price.

N/A

20. Opportunity cost A benefit, profit, or value of something that must be given up to acquire or achieve something else.

N/A

21. Productive potential

Is the maximum possible output of an economy. According to the United Nations Conference on Trade and Development (UNCTAD), no agreed-upon definition of maximum output exists.

N/A

22. Wholesalers

The intermediary entity in the distribution channel that buys in bulk and sells to resellers rather than to consumers.

52

23. Globalization

The growing integration and interdependence of the world's economies, causing consumers around the globe to have increasingly similar habits and tastes.

52

24. Unionized labour force

The process of organizing the employees of a company into a labor union which will act as an intermediary between the employees and company management. In most cases, it requires a majority vote of the employees to authorize a union.

51

25. Paternalistic leadership style

The managerial approach that involves a dominant authority figure who acts as a patriarch or matriarch and treats employees and partners as though they are members of a large, extended family.

89

26. Democratic leadership style

Involves a team guided by a leader where all individuals are involved in the decision-making process to determine what needs to be done and how it should be done. The group's leader has the authority to make the final decision of the group.

89

27. Motivation

Internal and external factors that stimulate desire and energy in people to be continually interested and committed to a job, role or subject, or to make an effort to attain a goal.

78

28. Nationalization

The transfer of a major branch of industry or commerce to state ownership or control.

7

29. Promotion

A type of marketing communication used to inform target audiences about a firm’s production or service

40

30. Budget deficit When expenses exceed revenue, and it is an indicator of financial health. N/A

31 Current account deficit

A measurement of a country's trade where the value of the goods and services it imports exceeds the value of the goods and services it exports

N/A

32 Progressive tax A tax in which the average tax rate (taxes paid ÷ personal income) increases as the taxable amount increases.

N/A

33 Regressive tax Taxation that takes a larger percentage of a lower-income and a smaller percentage of a higher income.

N/A

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34 Distribution channels

The chain of businesses or intermediaries used to get the product to the consumer, including wholesalers, retailers, distributors, etc.

N/A

35 Scarcity Refers to the basic economic problem, the gap between limited – that is, scarce – resources and theoretically limitless wants.

N/A

36 Private sector The part of the economy run by private individuals and businesses, rather than by the government, e.g. sole traders, partnerships, companies, and cooperatives.

6

37 Price How much the business set’s it’s products to consumers. 40

38 Cost of products How much a product cost The costs incurred by a company in order for them to create a certain good or provide a service.

47

39 Mission Statement

A company’s objectives that set a clearer path to its decision making. For a deeper understanding, A mission statement underlays the purpose for the existence of the business and their core values.

123

40 Vision Statement Summary of aims and values of a company. What the business wants to be in the future. A vision statement outlines the distant aspirations of a business. For example Adidas' vision statement is to be the leading sports brand in the world. Vision statement is more long term.

123

41 Productive potential

Is the maximum possible output of an economy. According to the United Nations Conference on Trade and Development (UNCTAD), no agreed-upon definition of maximum output exists.

42 Excess supply A situation that can occur in a market or business where the amount of a product provided or material obtained exceeds the amount required or demanded.

N/A

43 Supply Is a fundamental economic concept that describes the total amount of a specific good or service that is available to consumers.

N/A

44. Demand Is the quantity of a good or service that consumers and businesses are willing and able to buy at a given price in a given time period.

10

45. Market Area The geographic zone containing the people who are likely to purchase a firm's goods or services.

113

46. Production Strategies

Foundation of a product life cycle and the execution plan for further development. The product strategy allows the business to zero in on specific target audiences and focus on the product and consumer attributes.

N/A-

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47. Research and Development

Refers to the work a business conducts for the innovation, introduction, and improvement of its products and procedures.

N/A

48. Market Economy an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's individual citizens and businesses.

17

49. Democracy A political system that is run and controlled by citizens of the country. Democracies are made up of elected representatives and require that governmental measures be voted on by these elected representatives or the people.

18

50. Infrastructure the transportation, communication and support networks in a certain area. 22

52. Accounting It reveals profit or loss for a given period and the value and nature of a firm's assets, liabilities and owner's equity.

40

53. Innovation The process of translating an idea or invention into a good or service that creates value or for which customers will pay.

● Product Innovation: New products/services are created or improvements to current products

● Process Innovation: Parts of manufacturing or service delivery process are improved

● Positioning Innovation: Use or perception of a new/existing product or service

● Paradigm Innovation: Innovation so important, it may change the industry itself. Focus on impacts for short and long term of new products/services

91

54. Marketing Management process of predicting, identifying and meeting the needs and wants of customers in a profitable manner.

40

55. Big data extremely large data sets that may be analyzed computationally to reveal patterns, trends, and associations, especially relating to human behavior and interactions.

57

56. Artificial intelligence

Software technologies that make a computer/robot to perform better than normal human computational ability inaccuracy, capacity, and speed.

57

57. Teams 6A group of people with a full set of complementary skills required to complete a task, job, or project.

87

58. Strategy Plans of action that businesses use to achieve their targets 121

59. Economic Trends The overall direction in which a nation's economy is moving. Most business managers need to be aware of the prevailing direction of the economic trend for the product markets and countries in which they operate in order to make more accurate and effective plans for their

15

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company.

60. Products Refer to both goods and services 85

61. Creativity Characteristic that allows a person to think outside of the box, which results in innovative or different approaches to a particular task.

● Adaptive creativity: transfers and applies existing forms of thinking and problem solving to new scenarios or different situations

● Innovative creativity: generates new forms of thinking, addressing problems from an unusual perspective

94

62. Fair wages Trade and public work wages paid to the majority of workers in a specific area. The prevailing wage is usually an hourly wage and determines overtime pay as well as benefits for laborers in that field.

104

63. Competitive pricing

The process of selecting strategic price points to best take advantage of a product or service based market relative to the competition.

107

64. Share Capital money raised from selling shares in a limited liability company, from its initial public offering (IPO) and any subsequent share issues.

115

65. Loan Capital Medium to long-term sources of interest- bearing finance obtained from commercial lenders.

116

66. Private Limited Company

The company that cannot raise share capital from the general public. Instead, shares are sold to private family members and friends.

117

67. Public Limited Company

able to advertise and sell its shares to the general public via a stock exchange.

117

68. Brand Identity How a business presents itself and wants to be perceived by its consumers.

123

69. Raw materials Materials or substances used in the primary production or manufacturing of goods.

45

70. Chief Financial Officer (CFO)w

Responsible for financial control and planning of a firm or project as well as all the accounting functions including such as:

- (1) credit control - (2) preparing budgets, financial statements - (3) coordinating financing and fundraising - (4) monitoring expenditure and liquidity - (5) managing investment and taxation issues - (6) reporting financial performance to the board - (7) providing timely financial data to the CEO.

111

71. Labour intensive An industry where a larger portion of total costs is due to labor 51

72. (Business) Expansion

A business strategy in which growth is obtained by increasing the number of stores in which customers can buy a company's products and services.

115

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73. Relocation A change in the physical location of a business. A business might relocate because of rising costs at the current facility, better tax breaks in a different location, changes in its tarot other reasons.

116

74. Profit the positive difference between a firm's total sales revenue and its total costs of production.

126

75. Capital Intensive The manufacturing or provision of a product relies heavily on machinery and equipment.

75 Capital expenditure

Finance spent on fixed assets 49

76.

Training

process of providing opportunities for workers to acquire employment-related skills and knowledge.

29

77. Corporate Strategy

A corporate strategy is a long-term plan of action which will be used to complete or satisfy the corporate aims for a business.

121

78. Privatization

The term used to describe the transformation of businesses when they change from public ownership to private ownership.

8-9

79. Marketing Strategy

A Marketing Strategy is a business’s overall game plan for reaching people and turning them into customers of the product or service that the business provides

199

80. Human Resources Planning

Management function of using and developing people within a business to meet its organizational objectives.

124

81. Operations management

Providing the right goods and services in the right quantities, at the right quality level, and the right time in a cost-effective and timely manner

124

82. Baby boomer The term "Baby Boom" is used to identify a massive increase in births following World War II. Baby boomers are people born between 1946 and 1964.

12

There are lots of quizlets with the definitions: https://quizlet.com/371592401/ib-paper-1-2019-radeki-de-dovnic-manufacturing-flash-cards/ https://quizlet.com/ca/370494861/radeki-de-dovnic-manufacturing-ann-flash-cards/ https://quizlet.com/367225373/radeki-de-dovnic-manufacturing-flash-cards/ Organizational History

● 1873

- founded -100% family owned

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-located = Lobjanec (Small city in the Czech Republic) -original product = manufacturing of coal-burning stoves for residences

● 1949 -followed by the communist takeover, of what was then Czechoslovakia -became nationalized, as over 95% of the private sector commercial enterprises became nationalized

● 1970s -500 workers -The largest single employer in Lobjanec

● 1989 -followed by the Velvet Revolution -No more communism, privately owned again - move from communist economy (not much choice in terms of products) to market economy/ free market (determines products to produce based on the market demand, or reliant on invisible hand for pricing)

● 1990 -Adriana took over as CEO

● 1993 -Adriana added healthcare devices using ergonomic designs to RDM’S product portfolio- the demand for stoves was declining - Since the Velvet Revolution -not immune to broader economic trends in Europe -After the revolution, the Czech economy has fared well -thus, making it a stable market economy and democracy -The fact that the capital, Prague, is one of the most beautiful cities of Europe magnets tourism - aiding the economy -traditionally, educated Czechs speak German and Czech = facilitating positive trade relations with Germany (largest European Economy) -small city in the Czech Republic- great in IT infrastructure - ranking among the best in the world

● 1995 -Adriana retire as CEO -Kristián took the role of CEO = giving the opportunity to return to his home country and take on the role of CEO of the family business -accepted even though his profession and his experience had hardly prepared him for the task Kristián - was for many years the head of RDM -earned a Ph.D. in history and became a professor at an American University

● 2001 -Kristián died in 2001 -Jan took over CEO Jan

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- Kristián's son - born and grew up in the US - studied engineering at school the University - had wanted to live in the Czech Republic

● 2002 -RDM produced its last kerosene stove and now primarily manufactures healthcare devices

● 2006-2009 -Jan introduced highly automated manufacturing in 2006 and it became operational in 2009

● The early 2000s -For decades, RDM employed a large unionized labour force, mass producing stoves and selling its products to wholesalers. Today it’s highly automated. -due to globalization and fierce competition from Asian manufacturers (lower cost structures) - Jan determined that European manufacturing would have lower costs automation → requires significant capital expenditures & long run - lower costs -digitized communication between robots = allowed RDM to meet consumer’s requirements - improving automation processes and integrating cloud computing, mobile devices, big data, artificial intelligence, 3D printing = enhanced RDM’s ability to customize products, regardless of the size of the order

● 2019 (Labour force and relationship with the stakeholders) -Today: 117 people involved in manufacturing (small number)

-not skilled manual -but highly trained engineers and computer experts - managed the automated process -their attitudes, aspirations, and motivations = significantly different from the workers who survived WWII and were under the Communist regime - a more democratic leadership style is therefore required -This reduction and transformation in RDM labor force - company has no longer local influence. Vocational school no longer liaises with RDM regarding the skills of worker -now: experiencing the free movement of labor throughout the European Union. RDM recruits engineers across European universities

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brand identity - brand awareness, brand development, brand loyalty, brand value UNITS IN THE CASE STUDY:

Business Organization

HRM Finance Marketing Operations Management

-CSR (Corporate Social Responsibility) -Family owned -Private Sector (commercial Enterprise) - used to be state owned -Stakeholders -Growth and evolution (Enter new markets, Expansion → Europe. Growth = Internal) -Types of Organization -Vision/Mission Statement -The first state-owned then private sector because of the revolution -IPO -STEEPLE- external environment -SWOT Analysis- about growing, expanding and opening a new location -Strategies

-Leadership styles (from paternalistic to democratic) -Structure- hierarchical -Redundancies (Job losses)- changing the location would require less staff -Recruitment Local - the whole of Europe -Lack of guidance and structure - because the leader is very democratic -Job losses - Redundancy -Automation -Large Unionized Labour Force- trade unions -Restructure -The culture within the business (organizational structure) -Motivation

-Cost of Production (decreased over time because of automation - achieving better economies of scale) -Loan Capital -Competitive Prices -going Public (Source of finance) -Investment appraisal- costs of expansion (ARR, PBP, NPV) -New sources of revenue (Revenue streams) -Healthy profits - Share capital

-Product life cycle -CSR (Corporate Social Responsibility) - -USP - expose brand- customizable products -Weak Brand identity -Design Specification (USP - through research) -Location? -Target market: Baby Boomer Generation -Innovation -Competition -Market Share -Ergonomic Design -Globalization- competition from Asia caused the company to decrease its production costs- automation -4Ps- dealing with a product -Artificial intelligence -Ansoff Matrix and BCG

-Outsourcing -Lean production-JIT -Cellular manufacturing -Automated machinery -most by machine, yet still some by engineers -Offshoring/ relocation- the costs- build a production facility in Europe -Raw material -Highly trained Engineers -Costs of Production (high initially to get the machines) -Technology

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Stakeholder Analysis

Name of person or group of people

Stakeholder Category Internal or external?

Explanation of Stakeholder Interests

Radeki de Dovnic Family Managers Long term aspirations for running their business. Reaping

profits, need for power. Aristocratic family started RDM

in 1873. Regained control of RDM in 1990 after it was

nationalised in 1949 by the communist.

Residents in 1873 Customers Provided demand for coal-burning stoves.

Communists (1949-1989) Government Wanted to nationalize private sector companies including

RDM.

Adriana Radeki de Dovnic (CEO) in 1990

Managers Fondness of Czech Republic. An opportunist wanting to work in Prague. She added Healthcare product with ergonomic designs

to the product portfolio.

Baby boomer generation Customers Need for healthcare products as they age.

Educated Czechs Employees Monthly wages, respect of their opinions in a democratic

leadership, fear of being made redundant.

Czech Republic Government Government National firm with plans to diversify into other countries leading to increased national reputation, the larger the firm

higher the corporate tax, carbon tax. An increase in the amount of

jobs in the Czech economy, although a higher inflation rate due to the possible increase in

taxes/government revenue.

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Dr. Kristian Radeki de Dovnic (CEO in 1995)

Managers Professor in history, Austro Hungarian baron born in 1920. Fled Czechoslovakia in 1944 to the USA with only the money in his pocket. Becomes CEO when

Adriana retires and was not prepared to be a CEO. Leadership style made environment dull and

depressing.

Jan (CEO in 2001) Managers Son of Kristian, democratic leadership style. Born in USA

studied engineering at uni. CEO at age 38. seeking product

innovation and process innovation to compete with asia. Wants fun

and humour in the workplace. No mission statement, no strategic

plan, no HR plan.

Customers Customers

Engineers in RDM Employees likely to be highly paid, democratic leadership style

appeals to them, matrix structure might appeal as well as they are

highly-skilled and therefore might prefer to have some degree of autonomy (Pink’s motivation

theory).

Human accountants in RDM Employees May not fear redundancies as RDM prefers to keep their

accounts compiled by humans instead of machines.

Lorry drivers Employees Fear of redundancy, loss of jobs due to possibility of self-driven

trucks

Asian manufacturers Competitors Upcoming stiff competitions, prospects of mergers and

acquisitions, higher chances of inter-firm benchmarking

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European Manufacturers Competitors Higher competition if RDM expands and starts a production

facility in some other EU country

Workers in the factory Employees Loss of jobs due to automation.

Employees Employees

Computer experts Employees Likely to be highly paid and in high demand. May be an increase in demand for them if RDM does

expand into e-commerce.

The vocational school Potential employees, local community

Was favoured under Kristian but not under Jan after he

implemented automation. Loss of information from a company that had previously allowed them to

fine-tune the skills of their students and prepare them for the

current employment sector.

Universities across Europe Society RDM is a possible employer for graduates.

New facility staff Employees Highly paid staff, specialised in automated machinery

maintenance, reduces the amount of workers needed for the new

facility.

CFO Managers In charge of finance. Will have to cost everything to obtain an

accurate prediction of total costs for products, manufacturing, delivery, relocation. Have to

determine sources of finance for all of this.

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Stakeholders Current / Previous Position

History Weaknesses Opportunities Other Information

Adriana Radeki de Dovnic

CEO in 1990 till 1995

Was responsible for product development into oil-burning stoves which were a successful venture.

Possible gap in the market as kerosene stoves’ product life cycle was in decline.

Dr Kristian Radeki de Dovnic

Head of the family(1920-2001) CEO (1995-2001) Died in 2001

Former Austro-Hungarian Baron (low-level royalty) who fled Czechoslovakia in 1944. Escaped to the US, and earned a PhD in history and became a professor at an American Uni.

Under his leadership the environment was orderly

‘’Professional training and experience had hardly prepared him for the task.’’ Environment at RDM was dull. Environment was orderly, even dull. (Depressing because workers being made redundant)

Paternalistic leadership style.

Jan (son of Kristian)

CEO (2001-now) Introduced highly

Born in 1963, he was born and grew up in the US.

Fosters an atmosphere conducive to creativity,

—> employees complained there is

Democratic Leadership style.

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automated manufacturing processes in 2006, operational in 2009

Studies engineering at university, always wanted to live in Czechoslovakia. Divided into the Czech Republic and Slovak Republic on the 1st of January 1993

with a heavy emphasis on teamwork, diversity, humor and fun. Create an environment of innovation both products and processes Is open to change (Which is good for businesses)

insufficient guidance and the business sometimes lacks focus. Has not written a mission statement No corporate strategy plan

Wonders if self-driving lorried will replace lorries for delivery. —> employees love innovative env. Although sometimes seems chaotic

CFO Proposed RDM build an additional production facility elsewhere in Europe. Extending market area.

Employees Occasionally humans intervene usually if there is an issue.

Highly trained engineers - review specs, contact the customer if questions arise or engineers have a way of improving design. Then sent to accounting and

Some have complained that Jan’s leadership has caused a lot of uncertainty and lacks focus

RDM was once (1970) the largest single employer of workers (500) but now only has 117 employees Automation has directly affected the number of employees

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marketing to determine price, marketing contacts customer to ask if they want to proceed with the order. Currently, staff enjoy the corporate culture

and the sector they work in Engineers are recruited from universities across the EU

Customers Customers enter desired specifications for healthcare devices into template on webpage. Confirm design specs.

May 2019: RDM Case Study Notes

● Lines (1-2) Company is 100% owned by the Radeki de Dovnic family (Private Limited

Company) ● Line (11) They are able to utilize ergonomic designs towards the production of a variety of

goods, hence widening their product portfolio ● Line (17) stable Trading bloc ensures that there is an elimination of tariffs and exports of

RDM products will drive down the cost of imports. ● Lines (34-35) Highly automated manufacturing process that was operational by 2009 ● Lines (35-36) Customers could enter their desired specification for healthcare devices and

RDM could proceed with their specialized order… Ability to meet consumer needs ● Line (38) RDM developed several minor adaptations to customers’ products that allowed

them to produce the desired orders at a cheaper cost (and more stable) ● Line (45) Higher efficiency due to the robotic configuration of the tooling (highly automated

machinery)

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● Line (46) Highly trained engineers that monitor the highly automated processes, thus ensuring that the products meet the quality standards as allocated by consumers

● Line (54) The highly automated system lowers costs in the long run, despite significant capital expenditure

● Line (55) Digitized communication between robots allowed RDM to be responsive to customers’ requirements

● Line (57) Improved their automation by integrating cloud computing, mobile devices, big data, artificial intelligence, and three-dimensional printing improved the customization of products, regardless of size.

● Line (61) Not restricted to manufacturing healthcare services due to the integration of technologies. (easy retooling to the manufacturing of other products)

● Line (67) They were able to quickly and inexpensively produce the customized bottles (even though it was not the product they initially produced as a company)

● Line (77) They have highly trained engineers and computer experts who manage the automated processes in 2019.

● Line (83) RDM recruits engineers from universities across Europe. ● Line (87-88) Teams composed of individuals from all business functions manage orders. ● Line (89) Jan changed the leadership style from paternalistic to democratic. This motivates

employees, who’d now have more say. The CEO is also more engaged with his employees ● Line (90) Jan introduced many changes to practices at RDM to create an environment of

innovation, constantly seeking innovation in both RDM’s products and services. ● Line (94) Jan fosters an atmosphere conducive to creativity, with a heavy emphasis on

teamwork, diversity, humor, and fun which employees love (increased motivation) (this has aided in the production of positive results).

● Line (100) The de Dovnic family had long held a caring and paternalistic attitude towards the people who worked for them, including workers in their factory.

● Line (104-105) Always display a strong sense of CSR, including source components from businesses who have good CSR practices, paying fair wages and having a strong emphasis on care for the environment (this leads to worker motivation, improved brand image, and customer loyalty)

● Line (113) The new facility would extend their market area. It would require limited staff and most work will be done by robots since the order/manufacture/delivery process can still be done in Lobjanec

● Line (125) RDM makes good products at competitive prices and is responsive to customer needs.

● Line (28-29) unprepared CEO takeover: Dr. Kristian Radeki had professional training and experience that hardly prepared him for the task and position of CEO

● Line (27-29) Kristian was CEO despite being untrained and inexperienced in business or engineering, having studied history. He also lacked local knowledge due to the political events that occurred during his absence. This weakness was defused when Jan became CEO because he had a very good engineering mind helping in the production processes of RDM.

● Line (39-42) Pricing is made by human accountants and marketing executives. This is at a disadvantage to automated pricing because it is more efficient and less time-consuming.

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● Line (51) Previously employed a very large unionized labor force (500 workers). This made them hard to manage and supervise. They also represented huge expenses in terms of wages. This was solved by having an automated manufacturing process that Jan introduced.

● Line (54-55) Automation requires a lot of capital expenditures to purchase and revenue expenditures to maintain them.

● Line (74-76) Letting hundreds of workers leave the company can cause demotivation to the workers in the business.

● Line (80-81) By transforming the labor force and decreasing it RDM does not have as much influence on the local community and this makes them less powerful

● Line (89) Constant changes in leadership style can be very confusing and demotivating for RDM employees. Line (89) the change in organizational structure from Hierarchical to project-based and the change in the management style from paternalistic to democratic: this can lead to demotivation amongst the workers in the company.

● Line (91-94) When Kristian headed the company, there was a negative environment within the company as employees were being made redundant due to the fall in kerosene stove sales. The work environment was depressing, orderly, and dull. This could lead to demotivation of workers. This was not the case with Jan, as he always sought innovation. This was solved when Jan introduced a new leadership style.

● Line (95-98) Although Jan’s leadership style is fun, it is sometimes chaotic and workers feel there are insufficient guidance and help by their managers and that the business lacks focus.

● Line (99) CSR incurs higher costs for RDM which makes them have fewer profits and well as operate under very strict ethical rules.

● Line (105-110) They cannot offer competitive pricing beyond the 700-kilometer radius which reduces European market share and affects them being price competitive in lucrative markets. This causes them to miss out on a huge pool of price elastic customers across Europe.

● Line (118-120) They have no marketing strategy. This makes RDM employees confused about pricing, promotions, distribution, and production. This also causes another weakness for RDM, such as a weak brand identity. Thus, RDM is not very reputable because they fail to make themselves reputable. This also makes RDM unable to reach their target audience.

● Line (123) Having an outdated name means RDM is not memorable for customers. By failing to have a marketing strategy they are not able to compensate for their outdated name

● Line (121-123) No written corporate strategy even though there is a vision communicated by Jan. This lack of organization can lead to confusion for the employees. RDM lacks focus.

● Line (123-124) No written operations management strategy can lead to confusion within the operations sector which can cause lower quality products.

● Line (124) No human resources plan can cause employees to feel insecure in the workplace as there is no set of procedures for the dismissal of workers.

● Initially, by moving towards automation, RDM will not make a profit, since capital expenditure will outweigh sales revenue (Jan is forced to lower price due to competition)

● Line (5-10) Demand for goods and services in the healthcare industry would be growing as the baby boomer generation reaches retirement age.

● Line (15-20) Prague is a magnet for tourists as it is one of the most beautiful cities in Europe which has aided the economy of Czech.

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● Line (15-20) Educated Czech’s speak German in addition to Czech which facilitated positive trade relations with Germany, which is Europe’s largest economy.

● Line (60-70) Success of the order for water bottles lead to the executives at RDM encouraged Jan to manufacture customized aluminum bottles.

● Line (75-80) Free movement of labor throughout the European Union lead to RDM recruiting engineers from universities across Europe.

● Jan having Westernized innovative ideas ● Line (106-107) They have the opportunity to lucrative markets where the demand is high in

countries such as the Netherlands, Scandinavia, Belgium, and France. ● Utilizing job production method in production of aluminum bottles, ensures that no

aluminum would be wasted - environmentally friendly. ● Line (10) change in social trends/preferences: demand for Kerosene stoves declined so

RDM had to change their product. ● Line (31-32) the division of Czechoslovakia into the Czech Republic and the Slovak

Republic which is a threat to the economic situation of the country as well as the market in which RDM operates

● Line (34-36) possibility of technological issues, depreciation, the problem with the system can lead to delay in production altogether and can be time-consuming and expensive to repair

● Line (45-46) the automation of production methods: laying off workers can cause them to formulate pressure groups or revolt and this is not beneficial for the company’s reputation in the community

● Line (53) Due to globalization, the fierce competition increased with the Asian manufacturers, causing Jan to lower cost structures by automation.

● Line (75-77) Due to globalization leading to automation, the business had to lay off some of the employees which could be a threat to the business as it caused trouble with the local community which can lead to damage of the business’s reputation.

● Line (80) Due to the reduction and transformation, the business no longer has the level of local influence that it had.

1. (a) Explain the following:

(i) working capital cycle (Appendix 1) [4 marks]

Working capital (or net current assets) is the amount of finance available to a business for its daily operations. It is calculated by current assets minus current liabilities. HOWEVER, the working capital cycle refers to the time interval between cash outflows for costs of production and cash inflows from customers who receive their finished goods and services.

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*If anyone’s school mentioned anything about guerrilla marketing please share with us!!

it's basically a low cost marketing strategy which businesses use to advertise for a specific product, where they usually do something big and attention grabbing. An example in RDM’s case would a giant aluminum water bottle in downtown Ctech. Pros: low cost, effective, and takes a short time to be recognized with the improvements in technology (pictures and social media). Cons: it is only effective in certain places, redundant, ethics are involved, takes a long time to set up.

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