Danfoss Trata: A Slovene Case Study

University of Ljubljana – Faculty of Economics

International full-time Undergraduate Study

Studying year: 2017/2018

DANFOSS TRATA: Slovene Case Study

authors:

Matevž Rašković, PhD candidate

Marko Jaklič, PhD

Hugo Zagoršek, PhD

Aljaž Hribernik, MSc

TRANSNATIONAL TYPE OF COMPANY

According to United Nations Conference on Trade and Developement (UNCTAD), transnational company is an enterprise, consisted of a parent company and their foreign affiliates. Under normal circumstances, a parent company controls the assets of the other entities, usually by owning a certain equity capital stake. One significant advantage of a transnational company is that they are able to maintain a greater degree of responsiveness to the local markets where they maintain facilities. Undoubtedly, Danfoss Group is satisfying the standards of a transnational company. For them, it’s all about transnational learning, and its success lies in its ability to find a good balance between centralization (of certain common functions such as sales) with external decentralization (R&D).

When a sinking Slovenian company Trata joined The Danfoss Group, they’ve completely re-shifted the socialistic mindset of its workers, to a newer, globally orientated one. Danfoss introduced so-called “transnational learning”, which is based on a collaboration of equals. As the authors of the study case described it – Danish flatlands (openness) meets the Slovene valley mentality. In this case, Danish organizing and planning, mixed with Slovenian (Balkan) sense of improvisation and high work flexibility, creates a good harmony.  

Danfoss Trata's success lays in its transnational approach to the specifics of the Slovene environment, and leveraging them in a way that boosts their success, and not hinder it. Location can also be considered as one of them. Though, not directly connected to the concept of a transnational company, central location of Slovenia does significantly contribute to the implementation and serves as an excellent logistics crosspoint. Other evidenes of being an transnational company also reflect in their distribution system – production sites are localized, but the enterprise is using a centralised sales system. Next, in order to maintain organizational standards – in other words, Danish management styles projected onto Slovenian environment, top management employees must participate in annual trainings in Danfoss HQ in Denmark. By words of Bojana Zupančič (Leadership Developement Manager), the goal of this is to achieve greater cultural fit and networking. This mutual, transnational concept is also visible among other, lower level employees, as Danfoss puts high priority on personal developement, trainings, and future wishes regarding their job (i.e. every employee should change at least three positions during their time in Trata, so they learn more about how job is done, and how this reflects on their personal goals and wishes). As visible from previous statements and examples, Danfoss is in charge of setting the mindset of the whole organization and it's subsidiaries, and taking over responsibilities such as Sales Department. This allows Trata to focus solely on R&D and production, which allows them to focus on what they're best at, and therefore, will give them competitive advantage in those fields. And in fields of sales, their competitive advantage is Danfoss brand, which stands for quality and reliability and has an excessive sales and delivery networks (Finance, 2016).

FLEXIBILITY

Flexibility plays a crucial role in Danfoss Trata. The demand tends to be highly unpredictable in its key Eastern markets. For example, there are orders which include around 4000 different parts and components, but small orders allow them flexibility and speed. Trata devided flexibility into two parts: external and internal.

Manufacturing flexibility reflects in quantity and speed. Due to historical factors and geolocation, there are lots of small suppliers. In case of an increased demand, they are very flexible and willing to work as much as possible to meet the norms.

The most important source of external flexibility comes from the use of a temporary employment. During periods of an increased demand and when workers normally take a vacation (May-September), around 30% of all workforce consists of temporary workers, incuding. student workers (Danfoss Trata internal newsletter, January 2007). The flexibility of temporary workers in incredible, as they can be called-in within a day's notice.

Internally, big emphasis on flexibility lies within their matrix organizational structure. As representatives of trata claim, they do not punish mistakes, but rather, they encourage changes. They're constantly trying to come up with new ways to improve productivity and efectiveness, and also prepare for unplanned changes. That's why, for example, they want their workers to be trained to do at least three different jobs within the company (that way, if somebody quits, gets ill etc. it doesn't disrupt the normal procedues as much as it otherwise would).