Module 2: Organizational Purpose and Structural Design
Case Study: Dansk Design, Ltd
1971 Dansk Advertisement
MGMT 5135
Fall 2012
Team 2
September 5, 2012
Team Members:
Conway, Ashley
Heasty, Mark
Johnson, Laura
McDonald, Adrian
Sarkis, Christine
Mod 2 Team 2
Mgmt 5135
Dansk Designs Ltd was founded in 1955 by Ted Nierenberg and was a leader in high quality products for
anything for the” top of the [dining room] table”. In 1971, Nierenberg set three business goals: 1)
maintain 20% annual growth rate in profits by entering a new market area: housewares, 2)
organizational change from entrepreneurial to professional management, and 3) personal goal of
withdrawing as chief executive officer by 1973. An analysis of Dansk is presented in this paper.
S.W.O.T. Analysis
The following SWOT analysis captures the key strengths and weaknesses within the company and
describes the opportunities and threats facing Dansk.
Strengths

Marketing/Strong brand recognition – Strong advertising, an exceptional sales force, and a clear
and concise mission statement to make anything for the “top of the table”, have made Dansk a
household name synonymous with quality and luxury.

Product development - Dansk has a significant competitive advantage over its competitors
chiefly because of its’ key designers. They have dramatically different design styles, and are able
to see a need and create a product that will fulfill that need and be marketable.

Strong consumer loyalty – Known as “Dansk club members”, almost 50,000 consumers of Dansk
wrote to the company in 1970 asking questions about the products and giving suggestions.

Industry leader – High quality and priced accordingly with sales exceeding $10,000,000 and after
tax profits of $755,000.
Weaknesses

No manufacturing operations/ constrained by capacity of current suppliers – Dansk’s products
are made by contract manufacturers.

Informal business practices/no research of market segment – Dansk had never done any market
polling or research. They only relied on what their sales force was able to sell.

Handcrafted products on semiautomatic machinery – With the help of Dansk’s principal supplier
of wood products, Dansk is able to create hand crafted products using semi automatic
machinery.

Communication channels – Telephone and face-to-face meetings being conducted
internationally between few managers.

No standard operating procedures – Dansk lacks standard operating procedures due to the tight
upper management control of the company. Many of the activities and responsibilities were not
delegated down to middle and lower management.
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Mgmt 5135

Aging corporate officers/Leadership – The founder of Dansk, Ted Nierenberg, ran the company
as a one man show in the beginning then tried to start delegating many responsibilities. The
other leaders of the company found it hard to fill the shoes of the founder in many areas.
Opportunities

Expand market segment with new housewares product line, Dansk Gourmet Designs Ltd – Dansk
plans to triple their current product line of 8 categories with the introduction of the new
housewares product line. Conduct feasibility studies with new products.

Recruitment of formally educated management – see Exhibit 2 for background credentials of
management team.

New materials and technology - Enhance internal efficiency with inventory management and
factory ordering procedures, advancement in manufacturing technology

International expansion – Dansk currently operates internationally but with little efficiency.
They hope with the help of the new vice president of overseas operations, Keld Rosager-Hansen,
they will be able to expand the international market and become more efficient.
Threats

New suppliers for raw materials and manufacturing to handle expansion – move from small and
medium sized known suppliers to new production supervision office in Paris to handle
manufacturing outside of Scandinavia.

Financing resources/ Public offering of stock/equity resources – had been 100% owned by
Nierenberg, but expansion will require new debt/equity sources of funding.

Rivalry among existing competitors in new pricing market and customer segments – new
product line to appeal to a new mass market, including hotels and less exclusive department
stores requiring new advertising media to reach this market (TV, newspaper, pamphlets).

Global marketplace - Because of the industry Dansk operates in, it can be drastically effected by
the economic climates in the countries it operates in regarding sales, manufacturing, and its’
suppliers.
Root Causal Analysis
After 16 years as a steadily growing, sole ownership company specializing in high quality dinnerware,
flatware, and glassware, Ted Nierenberg was ready to restructure the Dansk organization. The critical
issues that need to be faced are noted below.
Problem #1 – Geographic separation of Headquarters in New York and Company in Denmark (Exhibit 2
and text of case)
Causes
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1.
CEO and Founder always resided in New York and created company after meeting Jens
Quistgaard in Europe who lived in Denmark.
2. Manufacturers located in European counties – Denmark, Norway, Sweden, Finland, Belgium,
Holland, France and Germany.
3. Hiring of new designers furthered the geographic spread – Gunnar Cyren in Sweden, Ritva
Puotila in Finland, and Niels Refsgaard in Denmark.
4. Hiring of formally trained business managers from the U.S. and operating from Mt. Kisco, NY
headquarters except for VP overseas operations, Keld Rosager-Hansen, who was located in
Denmark.
Problem #2 - Entrenched Leadership
Causes
1. Founders – Ted Nierenberg, Jens Quistgaard, and Ed Lubell.
2. Fixed areas of specialty – Nierenberg (marketing and manufacturing sources), Quistgaard
(design), and Lubell (general administration and financing).
3. Resistance to change as tasks were delegated to new hires – Quistgaard threatened to quit
if new designers were hired; when they were ultimately hired, he was “decidedly negative”
about them.
4. Overdependence on Jens Quistgaard
Problem #3 – Informal business practices
Causes
1. Contracts with suppliers – Contracts executed by handshakes with small sized family owned
businesses
2. Lack of standard operating procedures
3. Telephone and Face-to-Face meetings
4. No clear direction of company ownership regarding Nierenberg’s retirement.
Problem #4 - Unfamiliar with customer base/market segments
Causes
1.
Lack of Research
2. Lack of funding for research/polling
3. Lack of knowledge of importance of getting to know your customer base
Questions and Assumptions
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Due to the limitation of this analysis based on one paper from 1973, the recommendations will be made
on the following assumptions and remaining areas of question.
1.
What are the financial statements of the company? We will assume that the company has
positive cash flows and/or access to external sources of funding to support a 20% annual growth
rate.
2. Focus of the paper was from the perspective of the internal operations of Dansk. As such, there
is little information regarding the external environment of the company. Critical to any strategic
planning is an understanding of Porter’s competitive forces and strategies. These include the
threat of new entrants, the power of suppliers, the power of buyers, the threat of substitutes,
and rivalry among existing competitors. Numerous questions exist in terms of each of these
marketplace parameters. We will assume that Dansk will maintain its competitive edge in
marketing and product development as well as customer loyalty. Similarly we will assume that
the strong brand recognition will diminish the power of suppliers as Dansk seeks new suppliers
that can handle the increased capacity needs as it expands as well as maintain its competitive
edge as an industry leader as it expands into new market segments.
Recommendations
Ted Nierenberg has expressed three business goals toward which our recommendations will be based.
These are : 1) maintain 20% annual growth rate in profits by entering a new market area with the
expansion of a housewares product line, 2) organizational restructuring from entrepreneurial to
professional management, and 3) retirement of Ted Nierenberg by 1973.
According to our textbook, the primary responsibility of top management is to determine an
organization’s goals, strategy and design, therein adapting the organization to a changing environment.
Middle managers do much the same thing for major departments within the guidelines provided by top
management. CEO and founder Ted Nierenberg set three clear goals towards which his strategy would
be based. The challenges would be having middle management, Quistgaard in Denmark and Lubell in
New York, embrace the structural change moving Dansk from entrepreneurial to professional
management. Nierenberg wanted to effect this change over a 2 year period before his retirement while
maintaining a 20% annual growth rate in profits by expanding into new product and pricing segments.
Two models for formulating strategies are the Porter model of competitive strategies and Miles and
Snow’s strategy typology. As discussed above, we do not have a clear understanding of the forces in the
housewares industry environment. According to Porter’s four competitive strategies, Dansk has been
operating with a focused differentiation strategy. Dansk has concentrated on a specific buyer group in a
specific market, namely the high quality, high priced department stores/customers. Dansk has also
reduced rivalry with competitors and fought off the threat of substitute products with its loyal
customers and strong brand recognition as an elite product line. This strategy requires strong marketing
abilities and creative employees which is the competitive advantage of Dansk. Our recommendation
would be to continue this strategy, recognizing that for this strategy to be effective, Dansk will have to
incur the additional high costs of product and market research and extensive advertising. Furthermore,
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with no research on customer needs and desires, the power of the buyer is severely undermined. This
places greater reliance and pressure on the designer to tell the customer what they want and poses the
potential to eventually lose customer base if a product is ever released that is out of sync with the needs
of the consumer. With the entrenched leadership in design, specifically Jens Quistgaard, efforts can be
made to enhance the research and marketing divisions of the company without interfering with design.
As Nierenberg attempts to restructure the company into a professionally managed corporation, the
horizontal coordination of the various management teams needs to be enhanced. A consistent and
efficient system is needed to integrate the internal operations with the external manufacturing and
distribution systems. We would recommend initiating standard operating procedures to articulate the
international management centers of the company. We would also recommend looking into different
suppliers. The current Dansk suppliers are at full capacity and cannot take on more work. Competitors
could capitalize on this limitation by having manufacturing operations or access to different or larger
capacity suppliers. Dansk should also look into the possibility of finding a supplier who could automate
the crafting process more with machinery. It will give the supplier a greater advantage when
negotiating prices with Dansk since the supplier to pay the specialized personnel who work the
machines a higher wage. It will also increase productivity for Dansk.
In order to reach the goal of Nierenberg’s retirement in two years, Dansk will need to put a strong
emphasis on employee development. This will be a far reaching endeavor at all levels of the
corporation. Dansk has operated as an entrepreneurial business with tight control at the top.
Delegating duties among the management, design and administrative teams will only be executed well if
there is an enhanced learning environment cultivated within the organization. Creating a mission
statement for the company would also help create an environment of unity and create a focused goal
for the entire company. As discussed above, new divisions for research, advertising, and sales will need
to be created. The design division is constrained by only having 3 designers responsible for the entire
product line (Exhibit 3) and Quistgaard is responsible for the vast majority. Recording his designs and
techniques are needed to ensure that the division does not suffer if anything detrimental should happen
to his health. The other designers need to be cross-trained in the various techniques or new designers
need to be hired that have a broader range of talents.
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