RDB Business Case Study

2013
 2020
Valdemar’s Counterproposal [Culture]
-“Happy European Family”
Anna vs. Valdemar = Conflict!
-Remain as private limited company
-Anna unsatisfied;
-Change name to ‘Green Bearings, an RDB company’ [Re-branding]
Valdemar’s proposal is too short-
-Divide Factories per region
term
-Form strategic alliances with Brazilian, Chinese, Indian companies
-Find major investor

RDB 2020 [Vision Statement (?)]

-Globalization and ‘green’ approach
-Become PLC: Frankfurt stock exchange
-Sell megafactories: Offshore 12 smaller factories in Brazil, China, India [Organizational Structure]
-Improved marketing: E-Zines + Internet/Online presence 2008 – Collapse of Icelandic banks;[Crisis management]
-Lost funds, but recovered
2005 – Anna Holstein joins. Presents ‘RDB 2020’ [Cash flow problems, Sources of finance]

1970s – Unaffected by energy crisis due to contingency planning

2000s – Avoid ‘millennium bug’ (technological disaster)
-Japanese companies implement JIT production = More competitive
[Marketing – Production]
1965 – Valdemar Holstein becomes CEO of RDB
-Implements TQM, Benchmarking, Kaizen
-RDB: lower profit margins, but remains profitable
-Eco-Campaigners protest against RDB pollution
1951 – Valdemar Holstein starts working at RDB
[External environment, stakeholder conflict]
1945 – Japanese competitors enter.
- BUT RDB maintains market share
[Competitive Analysis]

1930s – Competes with UAB (medium quality/price)

& FIB (low quality/price)
- Maintains market position: High quality high price
[Pricing Strategies, Market Analysis]

1915 – RDB Founded by Henrik Holstein

- Private Limited Company
[Organizational Structures]
 Case Study Glossary

Key: U – Unit
Words with a * have Internet definitions

Contingency plan (U 1.6): a plan outlining what the entrepreneur plans to do in case the business does not
go as well as planned (A back-up plan).

Brand loyalty (U 4.3): is seen when customers buy the same brand of product time and time again (they must
therefore have brand preference)

Benchmarking (U 5.4): is the process of identifying best practice in an industry, in relation to products,
processes and operations. It sets the standards laid down by the best business in the industry for the
organization to emulate.

Total Quality Management (TQM) (U 5.4): is the process that attempts to encourage all employees to make
quality assurance paramount to the various functions (production, finance, marketing &personnel) of the
organization.

Economies of Scale (U 1.7): refer to the lower average costs of production as a firm operates on a larger scale.
Benefits include easier and cheaper access to finance, marketing economies, division of labour and
technological economies.

Market Share (U4): measures the value of a firm’s sales revenues as a percentage of the industry total. Hence,
a business with 35% market share means that for every $100 sold in the industry, the firm earns $35 of the
sales revenue.

*Regional Trading Blocs:

A regional trading bloc is a group of countries within a geographical region that protect themselves from
imports from non-members. Trading blocs are a form of economic integration, and increasingly shape the
pattern of world trade.
OR
In general terms, regional trade blocks are associations of nations at a governmental level to promote trade
within the block and defend its members against global competition.

Just-in-time Production (U 5.7): is a stock control system that originated in Japan. Under a JIT system,
materials & components are scheduled to arrive precisely when they are needed in the production process.

Downsizing (U 2.2): is when the size of the core workforce is reduced. This is often associated with Delayering
(removing one more levels in the hierarchy in order to flatten out the organizational structure).

Globalization (U 1.9): is the integration of economic, social, technical and cultural issues of the world’s
economies. This has taken place largely due to the expansion of multinational corporations and governments
advocating freer international trade.

Offshoring (U 2.2): is a form of outsourcing that involved relocating business functions and processes to
another country.

*Artificial intelligence: Artificial intelligence is the intelligence of machines and robots and the branch of
computer science that aims to create it.
Unique Selling Point (USP) (U 1.7): This is the technique that makes one product stand out from other
products that are available on the market.

Autocratic Leadership Style (U 2.4): Autocratic refers to managers and leaders that adopt an authoritarian
style by making all the decisions rather than delegating any responsibility to their subordinates. Instead, the
autocratic simply tells others what to do.

Paternalistic Leadership Style (U 2.4): Paternalistic managers and leaders treat their employees as if they
were family members by guiding them through a process of consultation. In their opinion, they act in the
best interest of their workers.

Primary Sector (U 1.1): refers to business involved in the cultivation or extraction of natural resources, such
as farming, mining, quarrying, fishing, oil exploration & forestry.

Secondary Sector (U 1.1): refers to the section of the economy where business activity is concerned with the
construction & manufacturing of physical products. Automation and mechanization in modern societies has
seen this sector decline in terms of employment.

Internal/Organic Growth (U 1.7): occurs when a business grows internally, using its own resources to
increase the scale of its operations and sales revenue. Also known as internal growth, it occurs through a
firm’s effort to sell more of its own products by using its own resources.

External/Inorganic Growth (U 1.7): occurs when a business grows by collaborating wit, buying up or merging
with another firm. It is a more expensive but quicker method of growth than organic growth. External growth
is also known as inorganic grown or amalgamation.

*Kanban Approach: The name 'Kanban' originates from Japanese, and translates roughly as "signboard".
Kanban is a method for developing software products and processes with an emphasis on just-in-time
delivery while not overloading the software developers.

Kaizan Approach (U 5.4): Kaizan is the Japanese term for ‘continuous improvement’. It is a philosophy
followed by those who strive for a quality culture. /Kaizan is where people in the workplace are constantly
trying to find ways to improve work process and task. The concept of Kaizan is therefore a process of
productivity and efficiency gains within a firm that comes from a small and continuous improvements being
made by the workforce, rather than a large one off improvement.

Pressure Group (U 1.4): is a type of special interest group which consists of individuals with a common
concern who seek to place demands on organizations to act in a particular way or to influence change in their
behavior. Examples include Greenpeace and People for the Ethical Treatment of Animals (PETA).

*Environmental Campaigners:
NOTE: I couldn’t find the exact definition but it’s quite straightforward, however this is one of the statements
made by an actual environmental campaign, so you have something to work around.

“Arouse public’s awareness of environmental issues and encourage the active contributions of various
sectors towards a better environment.” (Definition of the campaign itself rather than the campaigners)

*Job Security: the probability that an individual will keep his or her job; a job with a high level of job security
is such that a person with the job would have a small chance of becoming unemployed.
OR
Assurance (or lack of it) that an employee has concerning the continuity of gainful employment for his/her
work life.
*Technological Disaster: Can’t find a proper definition.

Flow Production (U 5.1): is a form of mass production whereby different operations are continuously and
progressively carried out in sequence.

Batch Production (U 5.1): involves producing a collection of identical products (known as a batch). Work on
each batch is fully completed before production switches to another batch. It is used where the level of
demand for a product is frequent and steady.

Job Production (U 5.1): is a method of production that involves the production of a unique or one-off job.
The job is entirely completed by one person (such as a tailor) or by a team of people (such as architects).

Corporate Social Responsibility (CSR) (U 1.3): refers to the consideration of ethical and environmental issues
relating to business activity. A business that adopts CSR will act morally towards its various stakeholder
groups.

Working Capital (U 3.1): also known as net current assets, is the day-to-day money that is available to a
business. It is calculated as the difference between a firm’s liquid assets (the value of cash, socks and debtors)
and its short-term debts (such as creditors, tax and overdrafts).

Innovation (U 5.6): means the commercial development, use and exploitation of an invention or creative
idea that appeals to customers.

Redundancy (U 2.1): occurs when the employer can no longer afford to employ the worker or when the job
ceases to exist. Redundancies are often referred to as retrenchments or lay-offs.

Outsourcing (U 2.2): is the act of finding external people or businesses to carry out non-core functions of a
business, such as cleaning and ICT maintenance.

E – Commerce (Electronic commerce) (U 4.6): is the trading of goods and services via the Internet.

B2B (U 4.8): stands for business-to-business and refers to online trade conducted directly for the business
customer rather than the end-user, such as Amazon.com supplying books to other book retailers.

B2C (U 4.8): stands for business-to-consumer and refers to online business conducted directly for the end-
user (the consumer), such as Amazon.com selling books directly to private individuals.

Primary Research (U 4.2): also known as field research, involves data being collected by the researcher since
the information does not currently exist.

Collective Bargaining:- is the negotiation process whereby trade union representatives and employees
representatives discuss issues with the intention of reaching a mutually acceptable agreement.

Business Angel (U 3.1):- are wealthy and entrepreneurial investors who risk their money in small to medium
sized business that have high growth potential.

Joint venture (U 1.7):- this occurs when two or more businesses decide to split the costs, risks, control and
rewards of a business project.

Industrial Park:- A portion of a city that is zoned for industrial use (as opposed to residual or commercial use).
Industrial parks may contain oil refineries, ports, warehouses, distribution centres etc.
Retrenchment:-the act of reducing expenditures in order to improve financial stability.

Budget (U 3.4):- refers to a financial plan for expected revenue and expenditure for an organization for a
given period of time.

Synergy (U 1.7):- is the whole being greater than the sum of parts, 1 + 1 = 3.

Corporate Culture (U 2.6):- Describes the traditions and norms within an organization, such as dress code
etc.

Democratic Leadership style (U 2.4):- is a leader who prefers to discuss with and involve employees in
decision making.

Narrow Span of Control (U 2.2):- means that there are fewer subordinates who are accountable to a manager.

Wide Span of Control (U 2.2):- Occurs when a manager has many people under his/her control.

Tall Organization structure (U 2.2):- it has many layers in the organization hierarchy. Therefore, it is likely that
each manager will tend to have a narrow span of control.

One-off special order:- it is when a product is unique either by shape, size, colour or price or age, modern
or antique.

Organization structure (U 2.2):- Organizational structure refers to the hierarchy of an organization and how
the components of this hierarchy work together to achieve the objectives of the company. For example, in a
particular area, there are staff reporting to manager, who may report to another manager, or directly to a
CEO (depending on the complexity of the structure or the size of the organization).

Multinational Company (U 1.9):- A multinational corporation (MNC) or multinational enterprise (MNE) is

a corporation that is registered in more than one country or that has operations in more than one country. It
is a large corporation which both produces and sells goods or services in various countries.

Company Town:-A company town is a town or city in which much or all real
estate, buildings (both residential and commercial), utilities, hospitals, small businesses such as grocery
stores and gas stations, and other necessities or luxuries of life within its borders are owned by a
single company.

Gross Profit (U 3.5):- the net sales minus the cost of goods and services sold.

Net Profit (U 3.5):- net profit is calculated by subtracting a company's total expenses from total revenue,
thus showing what the company has earned (or lost) in a given period of time (usually one year).

Homogeneous environment:- Organizations operating in homogeneous environments can specialize in

producing one good or service to be distributed to the market.

Supply Chain Management (U 4.6):- is the art of managing and controlling the sequence of activities from
the production of a good or service to its delivery to the end customer, in a cost effective way.

Global Workforce:- refers to the international labor pool of immigrant workers or those employed by
multinational companies and connected through a global system of networking and production.

Social Contract:- An implicit agreement among the members of a society to cooperate for social benefits.
Global Identity:- The occurrence of international recognition of a firm.

Demographic Changes (U 1.5):- demographic change is a change in the average age, income, gender etc in a
market.

Brand awareness:-The likelihood that consumers recognize the existence and availability of a company's
product or service. Creating brand awareness is one of the key steps in promoting a product.

Cell production:- Cell production has the flow production line split into a number of self-contained units.
Each team or ‘cell’ is responsible for a significant part of the finished product.

Strategic Objectives (U 1.3):-refer to the longer term aims of a business organization.

Tactical Objectives (U 1.3):-these are short – term objectives that affect a segment of the organization, such
as a department.

Operational Objectives:- Short-term goal whose attainment moves an organization towards achieving
its strategic or long-term goals. There are also called tactical objective.

Going Public (1.2):- when a firm decides to convert its company into a public limited company.

Shareholders (U 1.4):-these are people who own a part of the shares in a company.

External Stakeholders (U 1.4):- A party such as a customer, supplier, or lender that influences and is
influenced by an organization but is not a member of it.

Internal Stakeholders (U 1.4):- Individuals who reside inside the company as board members,
executives, managers, employees, and trade unions and who benefit directly from their contributions to
the growth of the company.

Relocation:- When a business moves to or establish in a new place.

Public Private Partnership:- Involvement of private enterprise (in the form of management expertise and/or
monetary contributions) in the government projects aimed at public benefit.

Business Plan (U 1.2):- A business plan is a formal statement of a set of business goals, the reasons they are
believed attainable, and the plan for reaching those goals. It may also contain background information about
the organization or team attempting to reach those goals.

Secondary Research (U 2.4) :-Secondary research(also called desk research) involves collecting data which
already exists. This includes using information from reports, publications, Internet research and company
files.
 Unit 1 Unit 2 Unit 3 Unit 4 Unit 5
Business Organization and Human Resources Accounting and Marketing Operations Management
Environment Finance
Primary sector – 1.1 Redundancy – 2.1 Working capital – 3.1 Primary research – 4.2 Flow production – 5.1
Secondary sector – 1.1 Downsizing – 2.2 Business angel – 3.1 Brand loyalty – 4.3 Batch production – 5.1
Going public – 1.2 Offshoring – 2.2 Budget – 3.4 E – commerce – 4.6 Job production – 5.1
Business plan – 1.2 Outsourcing – 2.2 Gross profit – 3.5 B2B – 4.8 Benchmarking – 5.4
Corporate Social Responsibility Narrow span o f Net profit – 3.5 B2C – 4.8 Total quality management
(CSR) – 1.3 control– 2.2 (TQM) – 5.4
Strategic objectives – 1.3 Wide span of Kaizan Approach – 5.4
Tactical objectives – 1.3 control– 2.2 Innovation – 5.6
Pressure group – 1.4 Tall organization Just-in-time production – 5.7
Shareholders – 1.4 structure– 2.2 Supply Chain management – 4.6
International shareholders – Organization
1.4 structure– 2.2
External shareholders – 1.4 Secondary research
Demographic changes – 1.5 – 2.4
Contingency plan – 1.6 Autocratic leadership
Economies of scale – 1.7 style – 2.4
Unique selling point (USP) – 1 Paternalistic
.7 leadership style – 2.4
Internal/organic growth – 1.7 D e m o c r a t i c
External/inorganic growth – leadership style – 2.4
1.7 Corporate culture –
Joint venture – 1.7 2.6
Synergy – 1.7
Globalization – 1.9
Multinational company – 1.9
 SWOT Analysis
Internal
Strengths: Weaknesses:
- Held in high-esteem both locally and - Workforce are too localized and thus not
regionally by stakeholders (good reputation). very culturally understanding of newer
- Very highly-skilled local workforce in each customer base.
mega factory. - RDB holds very little focus towards being
- Workforce is very loyal to RDB. eco-friendly with very little ‘green’
- High quality ball-bearings (product). approaches to their production of ball-
- Implementing Total quality management and bearings considering high pollution of
Kaizen as well as benchmarking techniques. mega-factories. Leads to lower perceived
- Strong contingency planning allowing for Corporate Social Responsibility.
effective crisis. Management in the past and - Very small budget allocated to the
thus likely in the future. marketing department with easy to achieve
- Strong co-operation with the local objectives leading to ‘sleepy’ department
governments (German and Danish and small promotion that could potentially
governments). increase awareness.
- Certain technological upgrades being
delayed as well as maintenance of
machinery getting outdated.
External
Opportunities: Threats:
- Outlook of ball-bearing industry remains - Japanese companies continuing to use Just-
promising as continued major use of In-Time production making them more
mechanical devices for making vehicles, jets, efficient and thus more competitive due to
space shuttles etc. this Unique Selling Point.
- Demand of ball-bearings increasing greatly - Demand of the ball-bearing industry is
mainly in developing countries such as Brazil lowering in Europe where the company’s
and India. China being another major mega-factories are based due to expansion
customer. of high-tech industries.
- Improvements in ICT and wide-spread use of - Pressure groups demonstrate against RDB
the internet have led to marketing/promotion due to the high-pollution being emitted by
opportunities through the use of e-zines. factories.
- Public-private partnerships with the Danish - The continued demographic changes in
and German governments. Europe caused by globalization undermine
- Potential of implementing green practices to RDB’s values of a “European Happy Family”.
improve reputation and CSR. - Labour costs in Europe continue to increase
- Changing from a private limited company to a leading to higher costs and collective
public limited company listed on the Frankfurt bargaining can hinder the business.
stock exchange with the floatation period
allowing generation of capital and funds.
- Major external investor can be found to
generate funds and remain family controlled.
- Strategic alliances with companies in China,
India, and Brazil can be completed to allow for
closer location to main customer as well as
lower labour costs in these countries.
 PEST-G ANALYSIS

Political Economical Social Technological Green/Environmental

 Offshoring to 12  Collapse of  “Company towns”:  Growth of the  “High pollution” claims
smaller factories Icelandic banks local workforce automotive sector made by environmental
 European labour  List RDB on and employers  “High-tech campaigners
costs: too Frankfurt Stock  Valdemar’s moral industries”:  Energy crisis
expensive and Exchange obligation to computer software  Competitors make
‘collective provide jobs in and artificial strategic alliances
bargaining’ in the Denmark intelligence  ‘RDB 2020’ = CSR
long term  Japanese: ‘just-in-
time’ production
 Millennium bug
 Use of ICT in
communications
 CHARACTER ANALYSIS:

HENRIK HOLSTEIN
Traits:
Founder of Royal Danish Bearings
Founder: Starting with a blue-collar job, he appreciates and understands hard work- in order to succeed. That
hard work allowed him to develop a certain wisdom that neither his son nor his granddaughter have.
RDB founded in 1915: Very traditional and old school in terms of his values
Mechanist: He has a methodical and logical mindset
Visionary: Innovative and is a risk-taker, willing to delve in to the unknown

Leadership skills:
Paternalistic, due to his rise in the corporate world and not instant success he stays very in touch with his
employees and guides them whenever guidance is asked for.

Motivational theories:
How he motivates his employees is not clearly stated however according to his character and leadership skills
we would assume that he could be using the following:
Taylor McGregor’s theory Y- because it’s a relatively disciplinary all the while motivating his employees
Vroom and Mayo (HL Students)
He could also be using financial motivational theories to help him motivate his employees, because as an
entrepreneur; money is a major source of motivation as well as inspiration – Piece rate could be a possibility.

VALDEMAR HOLSTEIN
Traits:
CEO of Royal Danish Bearings
Whole career spent at RDB- Very dedicated and devoted to his job.

Leadership skills:
Tall organizational structure- possibly autocratic
Empowers employees- Paternalistic, since he remains to be quite authoritarian due to the tall organizational
structure.
Somewhat of a perfectionist as he has adopted TQM
Takes pride in the family business thus enhancing the prestige of RDB
Remains to be quite traditional and is less innovative than his father as he overlooks certain things that could
potentially threaten the success of RDB due to his bureaucracy
Very traditional in his ways, the fact that he spent his whole career at RDB shows that he knows nothing else
except how to run this family business.
Motivational theories:
Pretty much the same as his father, except more autocratic.

ANNA HOLSTEIN
Traits:
CEO of Royal Danish Bearings
No experience of a mechanist, had RDB handed to her with no actual hard work. She is very distant from the
employees due to the absence of any common things to relative to each other with.
Anna completed the IB Diploma – meaning that she is a lot more multicultural and modern than her father
or even her grandfather, both being very traditional men. The IB learning profile could be very relevant to
identifying her characteristics as a person.
Education: All in big cities (Copenhagen & New York)- Very modern mindset.
She cares for the environment she has studied ‘green’ engineering and has tried to implement her ‘green’
values in RDB.
International Experience
Cares for brand image and likes to keep up appearances.

OFFSHORING:
RELEVANT VOCABULARY:
Offshore Company: Firm registered or incorporated outside the country where it has its main offices and
operations, or where its principal investors reside.

Offshore Outsourcing: Work done for a company by people in another country that it typically done at a
much cheaper\ cost. Outside of costs, offshore outsourcing may be used to complete tasks that the company
may not be equipped to handle in-house. Call centers are a popular service that is often outsourced to other
countries. Offshore outsourcing is often blamed for increasing unemployment in a specific country due to
the lack or elimination of jobs.

Offshore Production: Manufacturing or assembly in another country, typically one with lower wages or less
strict labor regulations, of products for domestic sale or use. Many businesses use offshore production to
take advantage of wage gaps between developing and developed nations, keeping prices low and profits high
by lowering labor costs.

CASE STUDY APPLICATION:

Anna Holstein wishes to expand RDB by off shoring in countries that are thriving in industrialization.
By doing so Anna would have to:
Downsize the mega factory in Denmark
Sell 2 mega factories (Germany/Sweden)
Thus causing an extremely high rate in redundancy, people of her country would be losing jobs and the whole
ideology of ‘family’ will be forgotten about once expansion is carried out internationally.
Anna (as mentioned earlier) cares for brand image and likes to keep up appearances, however off shoring as
a whole could be very contradictory to Anna’s values as offshoring as a whole could be seen as cheap labor
exploitation, this is not compatible with her eco-friendly ideals and could potentially threaten her brand
image due to cheap labor.

GLOBALIZATION:
RELEVANT VOCABULARY:
Globalization: The worldwide movement toward economic, financial, trade, and communications
integration.
Globalization implies the opening of local and nationalistic perspectives to a broader outlook of an
interconnected and interdependent world with free transfer of capital, goods, and services across national
frontiers. However, it does not include unhindered movement of labor and, as suggested by some economists,
may hurt smaller or fragile economies if applied indiscriminately.

Anti-Globalization: (Valdemar Holstein)-Movement whose participants are opposed to capitalism and

globalization. The philosophy of the movement is based on the belief that individuals and organizations can
achieve social, personal and economic goals without the negative consequences associated with capitalism.
The anti-globalization movement places more emphasis on economic efficiency and human decency versus
corporate competition and profits at any cost.

Pro-Globalization:(Anna Holstein)-In favor of policies that encourage increased trade, open communication,
and the unrestricted movement of people among nations. Pro-globalization companies, organizations, and
individuals support policies such as free trade, off-shored manufacturing, and open borders, and oppose
limitations such as tariffs, embargos, and other internationally restrictive economic and political actions by
national governments.

Anna has proposed to expand RDB in strategic areas in the world where:
- There is cheap labor
- High rate of unemployment
- Could help improve the economy of the countries she wishes to expand in
- She has spread out the expansion in all areas of the world, even in different continents.

Anna is pro-globalization because she is young, therefore will be quite modern in her way of thinking and will
be aware of all the technological advances and how that could benefit RDB on the long-term due to
economies of scales.
This also will be a good chance for RDB to widen their customer base, not only in Europe but globally and
risks will be spread in regards to production because small factories will be built all around the world instead
of having mega factories in a concentrated areas of

Anna must be aware of the:

-Increasing rate of competition when thinking of globalizing RDB
-Increasing rate in demand due to popularity
 RDB Leadership analysis:

Leadership: is the process of influencing and inspiring others to achieve a goal, from completing a task to
achieving corporate objectives. The way people lead differs from individual as will be analyzed below.

Henrik Holstein: Can be viewed to have a paternalistic leadership styled as it mentions in the case study (line
45) that he had a paternalistic leadership style, relating to Likerts four styles of leadership. (HL) Autocratic
(SL)

Valdemar Holstein: Valdemar Holstein based on Likerts four styles of leadership theory would lie between
the Benevolent Autocratic leadership style and exploitative autocratic leadership style (Likert, HL) as the case
study refers to how he is paternalistic like his father but at the same time is autocratic with his employees
when it comes to collective bargaining agreements were being renegotiated. Situational leadership (SL)

Anna Holstein: Anna Holstein can be viewed as to have an autocratic leadership style because upon taking
her job in the engineering department, she seems to make decisions without any input from the employees
themselves nor does she delegate her tasks to expand to any of her subordinates. It can also be potential
that she does have a situational leadership style as she does attempt to change the corporate culture of RBD.

Blake and Mutton Grid: (HL)

The Blake and Mutton Grid is a graph, which shows a range of various leadership styles across an x and y-axis
with the X-axis representing the concern for production and the Y axis representing the concern for the
people.

Henrik Holstein: May potentially lie in the (9,9) co-ordinates of the grid indicating that he has a Team
management style where there is a high concern for the people and the task given. This may be potentially
because of the fact that he maintained high quality goods as well as having a concern for his workers by
adopting a paternalistic leadership style.
Valdemar Holstein: Valdemar could lie in the (6,8) co-ordinates of the grid as mentioned he does become
more slightly autocratic hence a lower concern for his people as well as a drop in the focus of task as the
quality of the bearings could not be further improved due to technological delays.

Anna Holstein: Based on the profile analysis above, Anna may lie in a (9,1) co-ordinate in the grid, hence
adopting an Authority Obedience management as the case study mentions how she has very little regard to
the people and focuses more on the products becoming greener and environmentally friendly.

* Analysis of the 3 characters on the Blake and Mutton Grid is subject to opinion provided with evidence
from the case study.
 Motivation Theories
Vroom’s Expectancy Theory
Victor Vroom suggested that people will only put effort to do a task when they expect that their role will help
to achieve the required result. If workers feel they lack the ability, expertise or skill to achieve a target, then
their level of effort will be lower.
 Instrumentality: people hold the perception that if they meet performance expectations, then they
will be rewarded accordingly. Managers need to ensure that promises are upheld.

 Valence: people place different values on different rewards. In tackling a task, they will think about
whether it is worth the extra effort.

 Expectancy: People have different expectations about their ability and different perceptions of the
difficulty of a task.

In terms of the case study, such motivation theories can only be applied to the managers and current /
potential workers of RDB.
- Currently, workers can be seen as motivated through using Vrooms expectancy theory as they feel
loyal to the firm considering they work in such large industries and can directly see the results of
their work in the production of ball-bearings.
- However, it is in the managerial positions that vrooms expectancy theory can be applied more
effectively as previously, the marketing department would not have felt motivated due to the low
budget allocated to them and thus low results expected. The managers in the marketing
department would thus be motivated by the planned increase in budget allocated to their
department and greater objectives to market through online presence. The workers in this
department would theoretically work harder.
- Moreover, it is stated that Valdemar empowered middle managers. The managers would then feel
that their role plays a greater importance to the firm and be motivated to work harder.

Adam’s Equity Theory

John Stacey Adam’s equity theory suggests that workers will naturally compare their efforts or rewards to
those of others in the workplace.
Therefore, if each worker should receive a remuneration package that reflects his or her efforts, Adams
argued that workers will only be motivated if their package is seen to be fair in relation to others in the
workplace. There is inequality to those who put in more effort and are paid lower salaries.
As for Adam’s Equity Theory, it is evident that it would apply to if the company decides to follow with Anna’s
plans and open smaller factories in Brazil, China, and India. The workers in these countries would be paid less
than the European workers sent to the offshored factories which may cause demotivation as both workers
or managers may have the same responsibilities or put in the same effort. Therefore, RDB must be careful
when implementing their salaries to the workers of lower developed countries.
 Market and Product Analysis for RDB
Ball bearing:- A ball bearing is a type of rolling-element bearing that uses balls to maintain the separation
between the bearing races.
The purpose of a ball bearing is to reduce rotational friction and support radial and axial loads. It achieves
this by using at least two races to contain the balls and transmit the loads through the balls

1915: - the market of ball bearings was anticipated to be promising; according to the Boston Matrix the
product is considered to be a rising star. This means that the product is considered to have a high market
share and a market growth. And the product is still considered to be promising, as it is predicted that its
market size will increase over the next decades.

According to the Ansoff’s Matrix, Henrik Holstein’s move to a new market of an existing product such as a
ball bearing, this strategy of his could be considered as market development.

RDB prefers to operate in a business-to-business market. One of the prime benefits of operating in such a
market is that RDB will benefit from a higher transaction as it will be able deal with several companies and
wholesalers.

The company is able to maintain customer loyalty and brand loyalty, as the product is of such good quality.

Ball bearings had a high demand in the market, as RDB produce the product in three different ways. The
product goes through flow production, for standard sized ball bearings, it goes through batch production for
consumers who use non-standard sized products, and job production takes please for one-off special orders.

Present time:- As years passed, the product demand in Europe had started to decline. RDB could see the
potential market growth in countries such as Brazil, China and India. Therefore the target market and the
demographics of the market are most likely to change.

The company had changed their brand image to ‘Green’ bearing to sustain in the market and adapt to the
change occurring in the market. This is an extension strategy taken by RDB to increase the life span of their
product.
Product life cycle
RDB has to redo their market research and apply all the steps taken for the marketing mix. The product has
to be relocated since the demand of the ball bearings has started to rise in different countries such as Brazil,
China etc. These steps will be taken to increase their product’s life. The different extension strategies which
could be used by RDB would be rebranding their product into being more environmentally friendly to attract
more consumers into their products and maintaining a good reputation in the market.
RDB will have to promote their product globally in order to raise awareness. One of the best methods to
promote their products is by using e-commerce or e-zines(online magazines) this will allow RDB to reach a
larger audience in a shorter period of time. RDB could use the mass media to promote their product to a
wider audience, this could be done by advertising ball bearings on television. A more effective method of
promoting ball bearings for RDB would be that the CEO of RDB could meet in person with the responsible
entities in the government of Brazil, China and India, this would have a larger impact and face to face
interaction eliminates the chances of misunderstandings and miscommunication.

The product life cycle of ball bearings, and the extension strategy taken place to increase the life span of the
product.
 Globalization of RBD:

Globalization is the growing integration and interdependence of the world’s economies.

In reference to RBD, because RBD factories are located in the Europe and are apart of the EU (a regional
trading bloc), it encourages business such as RBD to expand into more parts of Europe as there are no tariffs
included as well as easier transportation methods. This may serve an advantage to RBD because competitors
outside the EU competing against RBD would be at a competitive disadvantage due to the tariffs imposed on
foreign businesses. It also seems that throughout each generation of the Holstein family, globalization seems
to become an adopted technique by RBD as Anna wants to expand globally as opposed to Valdemar who
wants to keep the business in the European region, creating potential conflict. (Stakeholder conflict)

With Anna’s continued interest to expand globally, there are a few things that need to be taken into
consideration such as the lack of knowledge Anna may have on new countries such as Brazil, India and China
(countries where factories she plans to set up are to be located).

Offshoring:
Offshoring is an extension of outsourcing that involves relocating business functions and processes overseas.
In reference to RBD, Anna’s plans are to use product offshoring in countries like India, china and Brazil.
Reasons for Anna to want to locate there are because of the economic climate in these countries and hence
be able to save on variable costs such as wages by paying them less than their European Counterparts due
to laws such as the minimum wage act.

Stakeholders:
A stakeholder refers to any person or organization that has a direct interest in and is affected by the
performance of a business.

Lists of Stakeholders:
Employees
Managers
Anna
Valdemar
Henrik
Pressure groups
Government (for taxation purposes)
Suppliers and consumers
Stakeholders differ based on their affiliation with the business. Stakeholders who work for the business are
referred to as internal stakeholders. The other forms of stakeholders are external stakeholders, which do not
form part of the business but have a direct interest in the company.

In the case study, there has been conflict amongst key stakeholder such as conflict in business ventures
between Anna and Valdemar. Another example of stakeholder conflict would be between pressure groups
and RBD the company itself. Pressure groups are a form of a special interest group, which are organizations
that advocate certain issues. Pressure groups in reference to the case study have expressed concerns over
high pollution levels by RBD’s mega factories.

To resolve stakeholder conflict, it depends on the relative bargaining power that each of the conflicting
stakeholders has. For example, to prevent pressure groups from protesting RBD could start acting ethical as
proposed by Anna or could pay the group to stop protesting. The way to resolve stakeholder conflict is
dependent on the Level of power and Level of interest. (HL)
Keywords and relevance to RDB
Multinational: A corporation that has its facilities and other assets in at least one country other than its home
country. Such companies have offices and/or factories in different countries and usually have a centralized
head office where they co-ordinate global management. Very large multinationals have budgets that exceed
those of many small countries. Nearly all-major multinationals are American, Japanese or Western European,
such as Nike, Coca-Cola, Wal-Mart, AOL, Toshiba, Honda and BMW. Advocates of multinationals say they
create jobs and wealth and improve technology in countries that are in need of such development. On the
other hand, critics say multinationals can have undue political influence over governments, can exploit
developing nations as well as create job losses in their own home countries. This is what RDB will do if they
follow Anna’s plan.
Business to Business – B2B: A type of commerce transaction that exists between businesses, such as those
involving a manufacturer and wholesaler, or a wholesaler and a retailer. Business to business refers to
business that is conducted between companies, rather than between a company and individual consumers.
This is in contrast to business to consumer (B2C) and business to government (B2G). A typical supply chain
involves multiple business-to-business transactions, as companies purchase components and other raw
materials for use in its manufacturing processes. The finished product can then be sold to individuals via
business to consumer transactions. An example that illustrates the business-to-business concept is
automobile manufacturing. Many of a vehicle's components are manufactured independently and the auto
manufacturer must purchase these parts separately. For instance, the tires, batteries, electronics, hoses and
door locks may be manufactured elsewhere and sold directly to the automobile manufacturer. In the context
of communication, business-to-business refers to methods by which employees from different companies
can connect with one another, such as through social media. This type of communication between the
employees of two or more companies is called B2B communication. This is what Anna is trying to do.
Organic Growth: The growth rate that a company can achieve by increasing output and enhancing sales. This
excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and
mergers do not bring about profits generated within the company, and are therefore not considered organic.
Organic growth represents the true growth for the core of the company. It is a good indicator of how well
management has used its internal resources to expand profits. Organic growth also identifies whether
managers have used their skills to improve the business. Valdemar has done this well. Line 13
Premium Pricing: Practice in which a product, such as high-end perfumes, jewelry, clothing, or cars, is sold at
a price higher than that of competing brands to give it snob appeal through an aura of 'exclusivity.' Also called
image pricing or prestige pricing. This is how RDB held its ground against UAB and FIB (competition). Lines
19-20
Secondary Sector: The portion of an economy that includes light and heavy industrial manufacturers of
finished goods and products from raw materials. Businesses that make up the secondary sector of industry
often require substantial machinery to operate, and they create waste that can contribute to environmental
pollution. RDB are part of this sector and provide their ball bearings to other companies in this sector.
Just-in-time: Production processes based on JIT inventory system which allows faster response to customer
demands without large finished goods or goods-in-process inventories. Japanese competition uses this
production method. Lines 25-30
Unique Selling Point (USP):Real or perceived benefit of a good or service that differentiates it from the
competing brands and gives its buyer a logical reason to prefer it over other brands. USP is often a critical
component of a promotional theme around which an advertising campaign is built. Anna could focus on a
new USP for here “2020” plan. Lines 110-112

RDB has a tall organizational structure:

In its simplest form a tall organization has many levels of management and supervision. There is a “long chain
of command” running from the top of the organization e.g. Chief Executive down to the bottom of the
 organization e.g. shop floor worker. However, tall structures rarely exceed 8 levels of management. This is
firstly because the number of layers (i.e. management levels) decreases the span of control. Secondly the
disadvantages of the tall structure begin to outweigh the advantages of a tall structure.

Advantages of tall Organizations Disadvantages of tall Organizations

• There is a narrow span of control i.e. each manager • The freedom and responsibility of employees
has a small number of employees under their (subordinates) is restricted.
control. This means that employees can be
closely supervised.
• There is a clear management structure. • Decision-making could be slowed down as approval
may be needed by each of the layers of
authority.
• The function of each layer will be clear and distinct. • Communication has to take place through many
There will be clear lines of responsibility and layers of management.
control.
• Clear progression and promotion ladder. • High management costs because managers are
generally paid more than subordinates. Each
layer will tend to pay its managers more money
than the layer below it.

The last disadvantage is not necessarily true. The cases study states that employees are happy with their
current wages as well as proud to be part of the organization due to its success and family-like corporate
culture.Lines48-50
 RDB Structure

The business is a family run organization, headed by Henrik Holstein, and passed on throughout the
generations to Valdemar Holstein and Anna Holstein. This “family” mentality was passed on throughout the
business to all its employees who also felt like they were “joining a family”.

In line 13, it states that RDB expanded by internal (organic) growth. This occurs when a business grows
internally, using its own resources to increase the scale of its operations and sales revenue. Internal growth
is typically financed through the profits of the business.
In relevance to RDB: in order for a company to expand internally, it needs to have enough resources and cash
to fuel its own growth. The fact that RDB grew internally gives insight into the fact that it was successful prior
to its growth and was run well and organized by Holstein.

Benefits of organic growth:

 Better control and coordination: It is often easier to grow internally than to rely on external
sources. For RDB, the fact that it was a family owned business strongly suggests that the internal
understanding of the company was shared as they were all family and understood the easiest ways
in which to make the business successful.
 It is also relatively inexpensive to grow internally, as the source of organic growth comes from
retained profit. Since the business was already highly successful and had a good reputation, and
was well organized and managed, there would have been a large amount of retained profit
meaning that RDB would have had enough retained profit to organically grow quite efficiently.
 Through organic growth, the business also maintains corporate culture, and so no new company
cultures will have an effect on the way the company is run. In addition to this, since it is a family run
business there will be an even stronger maintenance of corporate culture.

There are also limitations of organic growth:

 Diseconomies of scale
 A need to restructure: When a firm grows in size, there is a need to change its management and
personnel structure.

Organizational structure:
The CEO/Chairperson: Henrik Holstein, followed by Valdemar Holstein, followed by Anna Holstein.
The CEO is the Chief Executive Officer, or the managing director. Henrik Holstein represented the head of the
Board of Directions of RDB.
The main roles of his job were:
The act as a figurehead or ambassador for the organization
Lead the team of directors
Represent the desires, ideas and beliefs of the BOD
Formulate organizational objectives and policies with the BOD
Communicate with the directors regarding any problems, concerns and decisions that they need to be aware
of
Devise and implement corporate strategy

B-2-B structure:
RDB operates in a B2B market, meaning that all transactions of commerce by the company occur between
businesses rather than between consumers or the government. Most B2B products are purchased by
companies to be used in their own manufacturing, producing goods and services to be sold on. The value
added product can then be either sold to yet another company; or to the consumer, which shows that ball-
bearings are products which are used mostly by other businesses rather that used for personal consumption.
There are certain risks involved with B2B transactions: if Holstein buys products in bulk from another business
at a lower price (economies of scale) and the product is not suitable for the business, it puts the entire
business at risk.

The company consists of 3 mega-factors spread across Europe: The business slowly seems to be looking to
globalize. In addition to this, Anna recruits a workforce from India, Asia and South America in order to
resemble the business’ customers.
Globalization: is the integration of economic, social, technical and cultural issues of the world’s economies.
This has taken place largely due to the expansion of multinational corporations and governments advocating
freer international trade.

CSR for Royal Danish Bearings

Due to RDB manufacturing in three mega-factories, the amount of pollution that the factories would produce
is quite substantial.

External pressure has been put on Valdemar by some environmental campaigners due to the high pollution
levels in the vicinity of the RDB factories. Valdemar has ignored these claims and has not tried to reduce the
amount of pollution being emitted by the factories.

Anna Holstein has graduated with a “green” engineering degree in university, therefore being more aware of
the environmental impact that the business has. In 2005, Anna began implementing “green” approaches to
the business.

Anna believed the business should significantly increase its spending on research and development, as well
as its impact on the environment and on its customers’ carbon footprint.

Anna’s main goal is to save energy. She hopes this will be done by selling two of the mega-factories in
Northern Germany, Sweden as well as significantly downsizing the factory in Denmark.

Furthermore, Anna hopes to open twelve small factories around the world, mainly in Brazil, China and India.
New workers would be recruited locally and on lower wages. The costs would be significant in the short term.
However, labour costs would be lowered in the long term. This would benefit RDB by having more money to
spend on research and development on the “green” ideas that Anna had hoped to implement in the business.
Valdemar utilizes the following;

TQM: A holistic approach to long-term success that views continuous improvement in all aspects of an
organization as a process and not as a short-term goal. It aims to radically transform the organization through
progressive changes in the attitudes, practices, structures, and systems.
Total quality management transcends the product quality approach, involves everyone in the organization,
and encompasses its every function: administration, communications, distribution, manufacturing,
marketing, planning, training, etc.
(1) Commitment and direct involvement of highest-level executives in setting quality goals and policies,
allocation of resources, and monitoring of results.
(2) Realization that transforming an organization means fundamental changes in basic beliefs and practices
and that this transformation is everyone's job.
(3) Building quality into products and practices right from the beginning.
(4) Understanding of the changing needs of the internal and external customers, and stakeholders, and
satisfying them in a cost effective manner.
(5) Instituting leadership in place of mere supervision so that every individual performs in the best possible
manner to improve quality and productivity, thereby continually reducing total cost.
(6) Eliminating barriers between people and departments so that they work as teams to achieve common
objectives.
(7) Instituting flexible programs for training and education, and providing meaningful measures of
performance that guide the self-improvement efforts of everyone involved.

Kaizen: Japanese term for a gradual approach to ever higher standards in quality enhancement and waste
reduction, through small but continual improvements involving everyone from the chief executive to the
lowest level workers.

Benchmarking: A measurement of the quality of an organization's policies, products, programs, strategies,

etc. and their comparison with standard measurements, or similar measurements of its peers.
The objectives of benchmarking are:
(1) To determine what and where improvements are called for.
(2) To analyze how other organizations achieve their high performance levels.
(3) To use this information to improve performance.

Paternalistic Leadership: A type of fatherly managerial style typically employed by dominant males where
their organizational power is used to control and protect subordinate staff that are expected to be loyal and
obedient. A manager with a paternalistic leadership style might be appropriate for a business with a more
formal and hierarchical structure where creative thinking is not required of staff. This is the optimal
leadership style for RDB. OCCASIONALLY AUTOCRATIC, just to keep things in check. Lines 45-46. Page 250-
251 Hoang

MAYBE MORE Situational Leader (contingency management)

The right person, using the right style for the right situation.
Anna is more situational. Changing according to aims and objectives of the company.
E.g. Flow, batch and job production take place according to the type of ball bearing and the customer’s
needs and wants. Lines 63-65

Private limited (LTD):

A type of company that offers limited liability, or legal protection for its shareholders but that places certain
restrictions on its ownership. These restrictions are defined in the company's by laws or regulations and are
meant to prevent any hostile takeover attempt.
The major ownership restrictions are:
(1) Shareholders cannot sell or transfer their shares without offering them first to other shareholders for
purchase.
(2) Shareholders cannot offer their shares to the generalpublic over a stock exchange.
(3) The number of shareholders cannot exceed a fixed figure (commonly 50).

Note: Anna intends to shift to PLC mainly to raise finance via the issuing of shares. Lines 123-125. Page 31-
34 Hoang.

Public Limited: A company whose securities are traded on a stock exchange and can be bought and sold by
anyone. Public companies are strictly regulated, and are required by law to publish their complete and true
financial position so that investors can determine the true worth of itsstock (shares). Also called publicly held
company.

Blake and Mouton: Authority Obedience

Not Middle-of-the-road because they do not listen to all stakeholders. Valdemar cares about internal
stakeholders but not external ones. Lines 40 – 43. Page 254 Hoang
Discuss the importance and role of branding for RDB when changing their name
from “Royal Danish Bearings” to “Green Bearings, an RDB Company”
1) Branding as a legal instrument gives lawful ownership of the product and protects it against
imitation. RDB are in an industry that is all about technology and innovation. If they change their
name the new brand will protect their innovations against imitations from rivals UAB and FIB,
especially important in such a competitive and growing industry such as RDB’s
2) Branding as a risk reducer suggests that existing customers will still stay loyal if RDB keep “RDB” as
part of their brand name. There is always a risk when changing brand names of alienating existing
customers so it will be important to keep the high quality brand image and keep customers
informed that Green bearings is still RDB. This will help avoid the possible risk of failure when
changing company names.
3) Branding as an image enhancer will encourage customers to pay premium prices for the “feel good
factor”. It will enhance the image of the company to now be associated with the word ‘green’.
However, if they are going to rebrand to this name they need to ensure that they make customers
aware of why they have rebranded with this name. If Valdemar says the company will be ‘green’ in
name only, then existing clients may feel the company is trying to fool them in to paying a premium
price for products that are not socially responsible to the environment at all.

1) However it could be said the role of branding when changing company names is not as important as
the quality of the product itself – if the company is going to rebrand they need to justify doing it
with a quality product/service. RDB are doing it to try and increase sales, but if the product is not
any better in terms of quality then the rebranding in the long term may prove useless if customers
perceive the company as providing the same product/service
2) Conclusion – it is very important in attracting new customers and keeping existing customers loyal
however the quality of the product/service must also justify the rebranding for customers or in the
long term they may not continue to pay premium prices