FACULTY OF ECONOMICS

UNIVERSITY OF LJUBLJANA

Individual assignment Danfoss Trata

Course: International Business and Management

Lecturer: prof. Matev Rakovi
Student: Nikola Konjuak 19135721

Ljubljana, 18th March 2015

1. Danfoss Trata as an example of the transnational type of company

Danfoss Trata is a transnational type of company and that can be seen by analyzing key
features of their organization.
Firstly, we will analyze Danfoss according to 3 strategic goals (global efficiency, international
flexibility and world-wide learning) and how successful are they in this area. One of the main
strategic goals it is to have a global efficiency, and most of the companies very easily focus
on this goal and forget about other goals. In Danfoss that is not a case. Danfoss management
tries to maintain all three of them. In fact they are trying to learn from one subsidiary and
share this knowledge to other subsidiaries. I would say that world-wide learning and
education of workers is in the center of their culture. In Danfoss it is all about people. As it
says in case study: the successful fusion of the Danish pragmatist flatlands mentality and
the Slovene valley mentality., and: ...Dane makes a good planner, a Slovene is a master of
improvisation. Also, after the takeover they worked very hard on culture transfer from the
Danfoss headquarters to the Trata and it went very well: On the top management level,
everybody is sent to visit the Danfoss headquarters in Denmark to achieve greater cultural fit
and networking, and As one of the production workers said coming from her maternity
leave: Trata was a totally different firm when I came back. Everything was more organized
and tidy. Moreover, they also try to adapt to new market and it needs. For example:
Danfoss current R&D and production capabilities were only suitable for the Danish heating
market, comprised of small individual houses, a total opposite of the large socialist apartment
ghettos calling for large systems and components.
I would like to add a few more arguments and quotations from the case study that show that
Danfoss Trata is really a transnational type of company. In 2003 Trata was named one of
three most innovative Slovene companies which says much about their responsiveness to
market needs. Tratas biggest competitive advantage is flexibility based on well educated,
cooperative, adaptive and responsible workforce: cooperation that is based on knowledge
and skills of the employees. This industry has also highly unpredictable demand that
influenced Tratas orientation toward flexibility as I will argue in second answer. Trata is
organized as Danfoss group R&D and production center, in this sense it has a lot
independence and it is an important division within Danfoss group.

2. Flexibility in Danfoss Trata

In my opinion flexibility plays one of the most important role in Danfoss Trata. I would say
that flexibility is their key source of competitive advantages.
Slovenia has a special characteristics of labor market that Stanojevi and Vehovar (2005)
labeled as dual labor flexibilisation. Danfoss Trata also uses employment agencies and student
work in order to have more flexible workforce.
Danfoss Trata is using both external and internal sources of flexibility. External flexibility is
achieved by summer student jobs and temporary employed workers that make a good base for
recruitment. Internal sources of flexibility are more creative: flexibility is incorporated and
designed on a plethora of company levels. , Tratas matrix organization evolved as a natural
consequence of a focus on processes, not jobs and positions., the rules are there to guide
you, not limit you Their organizational structure encourages changes and flexibility:
organizational culture is all about change As they said: From the micro perspective
internal flexibility is achieved though workers being equipped and trained for several
processes and jobs()doing at least three different jobs. Trata also uses +/- 40 hours system
which provides them even more flexibility.

3. Key sources of competitive advantage

As I already said, flexibility is the most important competitive advantage because demand in
this market is highly unpredictable and it consist of small quantities of highly specific
products. Anyway, their flexibility allows them always to be one step ahead of the
competition and that is way procurement director said that demand in small quantities is one
of their advantages. Another advantage he said is good relationship with suppliers because it
enables them speed and flexibility.
Slovenia has a very favorable geographical position, as they said in case study: This is a
comparative advantage for us. We know this local environment ...important supplier pools are
near. Slovenia is somehow in the middle of everything. and there are lot of small
suppliers of cast-iron products in Sloveniathey are able to cover and satisfy our needs
Also, Slovenia has a very good logistical cluster as they said in case study: Compared to
Poland, Slovakia, Ex-Yugoslaviawe have a comparative advantage in the area of
Logistics.

4. Subsidiary role
According to the Berlett & Ghorshal subsidiary roles typology I would say that Danfoss Trata
within the Danfoss group plays a role of contributor. That means that Trata has a very high
competences in production and R&D: Danfoss evolved into an important centre of
excellence, but also Tratas local environment and Slovene market is not so important for
Danfoss group strategy. Mostly because Slovene market it is not big enough. However,
location of Slovenia as the middle of everything can pay a big strategic role for Danfoss
group in the future.