SweDigi Case Study
SweDigi Case Study
SweDigi is a manufacturing company in the south of Sweden. Previously owner-managed it was sold to a group that consists of seven similar companies four years ago. Today the company has 543 employees. The present CEO (also the previous owner) who has been with the company for 15 years is due to retire within the next few months.
The company operates as a sub-contractor to the digital music industry and has shown decreasing sales figures over the last three years. Turnover 3 years ago decreased by 13% vs previous year, 2 years ago by 16% and last year by 17%, with the forecast for the current year alarming. Twenty employees have been made redundant and the forecast indicates that further staff reductions may be needed.
The board of SweDigi and the board of the parent company have had lengthy discussions about the future of the company. The parent company believes that the latest developments (the downturn) are due to poor management, but also that new products are needed to turn the company around. They have appointed a new CEO, Jan, an entrepreneur who started his own company 10 years ago, manufacturing digital equipment for the car industry. Jan is an engineer, in his 40s and recently sold his company with a fairly healthy profit, despite a declining market. During a previous recession he also managed to adjust production to avoid redundancies being made. Jan is very enthusiastic about taking up the role of CEO at SweDigi.
To turn the company around within 12 months, by finding new niches for the present product range, but primarily by introducing a new product – a high tech simulation game for use in training in the media industry.
The management team has assumed that the new product can be produced in the existing production plant, with only minor changes to production equipment needed. Jan is unsure that this will prove to be the case, but is keen to avoid too much disruption, due to the turbulence that has existed over the past few years.
During the first quarter of production of the new product Jan encounters a number of problems. It is harder than the management team expected to customise the new product in the production plant, and sales are not taking off as forecast. While the sales agents around the world are trained in the new product they seem to be having problems accessing important prospective clients. The management team has different opinions on how to progress development and quality assurance processes are also taking too long. Added to this, the marketing manager has quit and the production manager is threatening to resign and go with him, to a multinational in the same city. He accuses Jan of not working with his management team or listening.
Jan starts to realise that the people within the organisation are not “with him”, that they mistrust the whole project and are stuck in old habits, failing to fully appreciate the risks they face and the increase in competition within their industry. The risk of ending up with a loss by the end of the period Jan has been given by the board is obvious.
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