RADEKI DE DOVNIC CASE STUDY

Link to the case study:

https://drive.google.com/file/d/1f_AK4AVi9DFZ_BMxy3mssaz6u8qbUd0f/view

Radeki de Dovnice
Manufacturing
IB Business Management

Paper 1 Case Study Analysis

Collaboration Document

2019
(obviously not affiliated with the IB)
Screw IB :)

1
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
 TABLE OF CONTENTS
POTENTIAL QUESTIONS 8
Unit 1 - Business Organization & Environment 8
Unit 2 - Human Resource Management 9
Unit 3 - Finance & Accounts 10
Unit 4 - Marketing 11
Unit 5 - Operations Management 13
(Additional Information) - Section C - Possible Extra Stuff on the Paper 14
Mix Questions 14

STEEPLE Analysis of RDM - Detailed 18

Social 18
Technological 18
Economic 19
Ethical 20
Political 20
Legal 21
Environmental 21

SWOT Analysis of RDM - Detailed 21

Strengths: 21
Weaknesses: 22
Opportunities: 23
Previous/Present Threats: 24

SWOT Analysis of RDM - Condensed 24

Strengths 24
Weakness 25
Opportunities 25
Previous/Present Threats 25

Ansoff Matrix 26
Market Penetration 26
Product Development 26
Market Development 26
Diversification 26

Generalised Force Field Analysis (20) 27

Boston Consulting Matrix (BCG) to analyze ‘product portfolio’ 27

Terms & Definition 28

Organizational History 35

UNITS IN THE CASE STUDY: 39

Stakeholder Analysis 40

Table of Contents
May 2019: RDM Case Study Notes 45

POTENTIAL QUESTIONS

Unit 1 - Business Organization & Environment

1. Define the term corporate social responsibility (CSR) [2 Marks]
2. Explain one advantage for RDM of Implementing another project-based organizational
structure [4 marks]
3. Analyze the benefits of being a private company/family business. [6 marks]
4. Discuss the usefulness of a vision and a mission statement. [6 marks]
5. Explain the factors which forced RDM to invest in automation. [6 marks]
6. Explain the stakeholder conflict that would have emerged due to the changes made in the
production process. [6 marks]
7. Discuss the impact on RDM when 95% of private sector companies were nationalized by the
communist takeover. [8 marks] ​(hard one can anyone answer this:))))
8. Evaluate the impact on RDM from being shifted to the private from the public sector in the
year 1989. [8 marks]
9. What motivation theory is applicable to the workers of RDM in 2019 (Pink
Motivation Theory) (NEW)
10. With the reference of the case study describe two advantages of democratic
leadership style (4 Marks) (NEW)
11. Discuss the use of a ​SWOT ​analysis to RDM [4 or 6 marks]
12. Prepare a ​SWOT​ for RDM. [8 marks]
13. Using the ​Ansoff Matrix​, discuss the growth strategy of RDM. [8 marks]
14. Using the ​STEEPLE framework, examine the impact of the external environment of the
Czech Republic on RDM. [8 marks]
15. To what extent does CSR help RDM be successful? [8 marks]
16. Evaluate the decision of building a new production facility in another location in Europe. [8
marks]
17. Explain two key functions of management [4 marks]
18. Explain the importance of leadership at RDM [4 marks]
19. Explain two roles of mission statement [4 marks]
20. Discuss the appropriateness of share capital to RDM as a source of finance for the
construction of an additional production facility. (lines 11-117) [7 marks]

Table of Contents
Line 1 1.2 type of business.
● 100% owned by the Radeki de Dovnic family.
Line 9 1.2 Privately owned
Line 73 1.4 Stakeholder
● Relationship with stakeholder was profoundly changed by the move to automation.
1.3 Organisational objective
Line 100 ● CSR
○ Always a strong feeling for CSR before it even was a thing.
○ Paternalistic leadership for all the workers.
○ CSR in sourcing components to only work with companies who also have
good CSR and care
Possible Questions:
Line 123 ● Mention a vision and mission statement for RDM
● Create a business plan for the future of the company
● Prepare a STEEPLE and Dealysis and the consequences it has on the business.
● Benefits of it being a large vs. small organization.
● Discuss further growth opportunities
● Impacts of globalization for the environment.
1.3 Mission statement
● No clear mission or vision statement.

Unit 2 - Human Resource Management

1. Explain the reasons behind RDM being hierarchical under Kristian. [6 marks]
a. positives
1. facilitate decision-making
b. negatives
i. Harder to communicate(?)
c. external environment
i. political circumstance
2. To what extent do innovation, ethical considerations, and cultural differences influence
human resource practices and strategies in an organization? [8 marks]
3. Discuss the internal and external factors that influence HR planning. [8 marks]
4. Evaluate the impact of changing from a tall structure under Jans dad to a project based
structure under Jan. [10 marks]
5. Explain, with reference to RDM two common steps in the process of recruitment for [8
marks]
6. Discuss the suitability of a democratic style of leadership displayed by Jan to run RDM. [8
marks]
7. Identify and discuss Jan’s leadership style in comparison to his father’s leadership style. [10
marks]

Table of Contents
 8. Using a relevant motivational theory, examine the impact of Jan’s leadership style. [8
marks]
9. Examine the changing role of trade unions in an organization like RDM​. [8 marks]
10. To what extent will the automation influence motivation of employees? Discuss with
reference to one motivation theory. [8 marks]
11. Discuss the advantages and disadvantages of democratic and paternalistic style.
12. Discuss the advantages and disadvantages of RDM recruiting employees from across
Europe [6 marks]
13. Analyze the impact of RDM’s recruiting strategy on their possibilities for expansion. [10
marks]
14. Explain the appropriateness of paternalistic leadership style at RDM.[6 marks]

Line 88 The business had a hierarchy now teams composed of individuals from all business
functions.
Line 89 Jan the new Ceo since 2001 has a democratic leadership style which is different from
his father's paternalistic style.
Line 95 Most involved in manufacturing are not skilled manual labourers but highly trained
engineers and computer experts would manage the automated process.
Line 91 ● Jan fosters an atmosphere conducive to creativity, with teamwork, diversity,
humour, and fun. But it seems chaotic sometimes.-Intrinsic motivation
○ Positive results
○ However, some employees complained that there is insufficient
guidance
Line 99 ■ Millennials want to learn new skills and develop from the job
Environment of Innovation
Shift from depressing environment under Kristian due to redundancy.
Line 123 Strong sense of CSR and caring and paternalistic attitude towards their workers.
Environment and fair pay are important to them now.
Vision is clearly communicated to employees. coa

Possible Questions:
● Name two leadership styles
● How does a democratic leadership style differ to a paternalistic style
● Name the differences in the intrinsic and extrinsic motivation of staff
● How does a hierarchy structure benefit RDM?

Unit 3 - Finance & Accounts

1. Define variable costs and identify 2 variable costs from the case study [3 marks]

Table of Contents
 2. Evaluate the source of finance which needs to be used for the new production facility. [8
marks]
3. Discuss whether or not RDM should use loan capital or share capital to finance their
additional production facility (possible 10 marker)
4. Justify why RDM should go public to\ raise finance (line 117)
Maybe for Finance, they will add a table in the actual paper on the costs of investment of the new
facility or related and make us do an investment appraisal. Seeming that there is no finance in the
case study, maybe they will add a table in the paper with financial data.

Line 54 Requiring capital expenditures for automation - Capital expenditures

Line 105 Delivery costs for the customers
Line 107 Competitive pricing - Pricing strategies
Line 115-116 Finance expansion through either share capital or loan capital - Financing strategies
Appendix 2 700 km competitive pricing radius
Line 117 Private to public limited company to sell shares

Possible Questions:
● Define share capital and Loan capital
○ Advantages and disadvantages
● Differences between public and private limited companies
○ Advantages and disadvantages
● Define competitive pricing
○ Advantages and disadvantages
● Profit and loss account
● Balance sheet

Unit 4 - Marketing
1. Explain the reasons which could have forced the company to come up with a kerosene stove.
[6 marks]
2. Explain the usefulness of branding to RDM. [6 marks]
3. Explain which part of the marketing mix has been greatly focused upon. Justify your
answer. [6 marks]
4. To what extent do innovation, ethical considerations, and cultural differences influence
marketing practices and strategies. [8 marks]
5. Prepare a suitable marketing mix for healthcare devices manufactured by RDM. [8 marks
6. Examine the usefulness of STP as a tool for RDM. [8 marks]

Table of Contents
 7. To what extent can e-commerce be used as a promotional and distributional strategy by
RDM. [8 marks]
8. Evaluate whether all concepts of the marketing mix are equally balanced. Justify your
answer. [8 marks]
9. Discuss the importance of market research in setting up the new production plant in another
country in Europe.
10. Discuss two ways to extend the product life cycle of kerosene stoves?
11. Advise RDM on how to improve brand identity under the marketing perspective
12. Advise what marketing strategy can be adopted by Jan for RDM.
13. With reference to the case study, describe two advantages of RDM having a good brand
identity
14. Explain the role/usefulness of a marketing plan to RDM [6 marks]

Line 4 They changed their product life cycle, as they noticed that their product is declining
Line 36 “Template on RDM’s web page” - RDM is offering a website to target the audience
Line 42 The marketing team is telephonically in contact with the customers
Line 52-53 “Sold its products to wholesalers”
Line 53 “Fierce competition from Asian manufacturers, which had lower cost structure” -
different pricing strategies in the competition
Line 93-94 “Jan, however, is constantly seeking innovation in both RDM’s products and its
processes”
Line 107 “Competitive pricing in a 700-km radius of Lobjanec (Appendix 2)
Line 113 “Which would extend RDM’s market area” - By expanding, they reach new market
groups. In order to profit more.
Line They don't have a corporate strategic plan to achieve their vision.
119-125```````````````` “RDM has an outdated name, a weak brand identity, no relevant vision or mission
statement and no written operations management strategy or human resources plan.
The company makes good products at competitive prices and is responsive to
customers’ needs.”

Possible Questions:
● Product
○ Mention the stages of the product life cycle
○ Draw the product life cycle
○ How could RDM expand their product portfolio
● Pricing Strategies
○ Mention the pricing strategy and future pricing strategies for RDMs
○ Mention the importance of pricing strategies for market growth
● Advantages and Disadvantages of using E-commerce with reference to RDM
● Discuss the importance of the company-customer relationship with reference to
RDM
○ How do the robots help RDM to build better customer relationships

Table of Contents
 ● Evaluate the marketing strategies RDM has in place and discuss a possible
vision
● In reference to the RDM marketing strategies, apply the 4 P's business tool
● To what extent does RDM profit from expanding their production facility in
Europe
● How can RDM increase their market growth
● How can RDM achieve a competitive advantage

Unit 5 - Operations Management

1. Distinguish between labour and capital intensive method of production. [4 marks]
2. Discuss the usefulness of the method of production adopted by Jan. [6 marks]
3. Examine the usefulness of job production. [6 marks]
4. Explain the factors which forced RDM to invest in automation. [6 marks]
5. Explain the stakeholder conflict that would have emerged due to the changes made in the
production process. [6 marks]
6. Give one advantage and disadvantage of RDM of using a quality circle [4 marks]
7. Examine the benefit of manufacturing customized aluminium bottles. [6 marks]
8. Analyze the benefit of being a 100% family-owned business. [6 marks]
9. Examine the impact of changing from mass production to cell production. [8 marks]
10. Examine the impact of RDM’s relocation. [8 marks]
11. Examine the usefulness of the just in time technique followed by RDM. [8 marks]
12. ºExamine the use of process innovation to an organization like RDM
13. Discuss the impact on RDM when 95% of private sector companies were nationalized by the
communist takeover. [8 marks]
14. Evaluate the impact on RDM shifting from the public sector to private. [8 marks]
15. ???....production facility in another location in Europe. [8 marks]
16. Discuss the impact of RDM’s culture on various business functions.
17. Analyze the impact of RDM’s recruiting strategy on their possibilities for expansion. [10
marks]

Possible (4 marks) question that we came up with:

1. List and explain two benefits for RDM introducing modern technologies in their production
system
2. One advantage and disadvantage of having an automated business.
3. Outline one disadvantage and advantage from including customization to the company.
4. Outline an advantage and disadvantage of moving to a fully automated manufacturing
5. State two ways on how RDM can improve their brand identity.
6. Discuss the possible advantages and disadvantages that exist with the introduction of a new
product and entry into a new market?
7. Discuss the potential approaches to develop HR strategies

Table of Contents
Line 33-43 5.2 Production methods -> Job customized (mass customization) production
- “For most orders, customers enter desired specifications…..”
Line 105-117 Distribution Channels & Location of Operation -> Outsourcing
-
Line 103-104 5.4 Location -> outsourcing (depending on company CSR)
- “

(Additional Information) - Section C - Possible Extra Stuff on the Paper

Balance Sheet for when they invested in the automated manufacturing process.

- Decision Tree
- Sources of finance
- Development indicators
- More detail in ‘health care services’ - for marketing strategy
- Any stakeholder conflict
- Country A vs B (relocation)
- BCG matrix on product position of products in the product portfolio
- Force field analysis
- Options for expansion with financial information (building vs buying the factory, starting
a joint venture) using ARR/NPV
- Specific information about management structure at RDM
- How has RDM used innovation? (Decline of kerosene stove, implementation of healthcare
devices.)
- Explain all the ways RDM has achieved economies of scale? (Amongst others, line 51,
mass-produced stoves sold to wholesalers.)
- SWOT Analysis
- STEEPLE

Mix Questions

1. Explain one influence to RDM’s organisational structure [4 marks]

2. Explain the strategic and operational implications of RDM if they have to expand into other
International Markets [10 marks]
3. Discuss the impact of globalization on International marketing with reference to RDM [10
marks]
4. Compare paternalistic and democratic leadership styles as used by Jan and his father in
RDM [10 marks]
5. Outline one importance of RDM establishing a CSR [2 marks]
6. Analyze the benefits of being a 100% family-owned business. [6 marks]

Table of Contents
7. Discuss the usefulness of a vision and a mission statement. [6 marks]
8. Explain the factors which forced RDM to invest in automation. [6 marks]
9. Explain the stakeholder conflict that would have emerged due to the changes made in the
production process. [6 marks]
10. Discuss the impact on RDM when 95% of private sector companies were nationalized by the
communist takeover. [8 marks]
11. Evaluate the impact on RDM from being shifted to the private from the public sector in the
year 1989. [8 marks]
12. Discuss the use of a SWOT analysis to RDM [4 or 6 marks]
13. Using the Ansoff Matrix, discuss the growth strategy of RDM. [8 marks]
14. Examine the impact of the external environment of the Czech Republic on RDM. [8 marks]
15. To what extent does CSR help RDM be successful? [8 marks]
16. Prepare a decision tree/force field analysis as to whether Jan should use self-driven lorries or
continue using human-driven ones for delivery. [8 marks]
17. Draft a decision tree weighing up the 3 options of where to relocate RDM’s manufacturing
in Europe.
18. What is the Influence of human resource practices and strategies on an organization? [8
marks]
19. Discuss the internal and external factors that influence HR planning. [8 marks]
20. Evaluate the impact of changing from a tall structure to a matrix structure under Jan.
21. Explain, with reference to RDM two common steps in the process of recruitment for [8
marks]
22. Discuss the suitability of a democratic style of leadership displayed by Jan to run RDM. [8
marks]
23. Identify and Discuss Jan’s leadership style in comparison to his father’s leadership style. [10
marks]
24. Using a relevant motivational theory, examine the impact of Jan’s leadership style. [8
marks]
25. Examine the changing role of trade unions in an organization like RDM
26. To what extent will the automation influence motivation of employees? Discuss with
reference to one motivation theory. [8 marks]
27. Explain the reasons which could have forced the company to come up with a kerosene stove.
[6 marks]
28. Explain the usefulness of branding to RDM. [6 marks]
29. Explain which part of the marketing mix has been greatly focused upon. Justify your
answer. [6 marks]
30. To what extent do innovation, ethical considerations, and cultural differences influence
marketing practices and strategies. [8 marks]
31. Prepare a suitable marketing mix for healthcare devices manufactured by RDM. [8 marks]
32. Examine the usefulness of STP as a tool for RDM. [8 marks]
33. To what extent can e-commerce be used as a promotional and distributional strategy by
RDM. [8 marks]
34. Evaluate whether all concepts of the marketing mix are equally balanced. Justify your
answer. [8 marks]

Table of Contents
35. Discuss the importance of market research in setting up the new production plant in another
country in Europe.
36. Advise RDM on how to improve brand identity under the marketing perspective
37. Advise what marketing strategy can be adopted by Jan for RDM.
38. To what extent innovation, ethical considerations, and cultural differences may influence
marketing practices and strategies. [8 marks]
39. Prepare a suitable marketing mix for healthcare devices manufactured by RDM. [8 marks]
40. With reference to the case study, describe two advantages of RDM having a good brand
identity
41. Explain the role/usefulness of a marketing plan to RDM [6 marks]
42. Distinguish between labour and capital intensive method of production. [4 marks]
43. Discuss the usefulness of the method of production adopted by Jan. [6 marks]
44. Examine the usefulness of job production. [6 marks]
45. Explain the factors which forced RDM to invest in automation. [6 marks]
46. Explain the stakeholder conflict that would have emerged due to the changes made in the
production process. [6 marks]
47. Give one advantage and disadvantage of RDM of using a quality circle [4 marks]
48. Examine the benefit of manufacturing customized aluminium bottles. [6 marks]
49. Analyze the benefit of being a 100% family-owned business. [6 marks]
50. Examine the impact of changing from mass production to cell production. [8 marks]
51. Examine the impact of relocation To RDM. [8 marks]
52. Examine the usefulness of the just in time technique followed by RDM. [8 marks]
53. Examine the use of process innovation to an organization like RDM
54. Discuss the impact on RDM when 95% of private sector companies were nationalized by the
communist takeover. [8 marks]
55. Evaluate the impact on RDM shifting from the public sector to private. [8 marks]
56. the production facility in another location in Europe. [8 marks]
57. Discuss the impact of RDM’s culture on various business functions.
58. List and explain two benefits for RDM introducing modern technologies in their production
system
59. One advantage and disadvantage of having an automated business.
60. Outline one disadvantage and advantage from including customization to the company.
61. Outline an advantage and disadvantage of moving to a fully automated manufacturing
62. State two ways on how RDM can improve their brand identity.
63. Discuss the possible advantages and disadvantages that exist with the introduction of a new
product and entry into a new market?
64. Discuss the potential approaches to develop HR strategies
65. Recommend whether they should expand health devices to European markets or not
66. Evaluate the decision of moving to self-driving trucks to replace human-driven delivery.
67. Distinguish between Public enterprise and Private enterprise.
68. Why RDM changed from coal-burning stoves for residence
69. RDM is highly automated what is the difference between automated and mechanized
organization?
70. Capital intensive vs Labour Intensive

Table of Contents
71. Stoves were mass produced whereas the healthcare equipment was customized according to
the needs and desires of the customers. (Mass production and Just In time?)
72. Impact of globalization on RDM. Lower costs in the Asian markets.
73. RDM to diversify into different product lines.
74. What motivation theory is applicable to the workers of RDM in 2019 (Pink Motivation
Theory)
75. What motivation theory is applicable to the workers of RDM in 1970
76. Advantages and disadvantages of job production
77. Qualities that make Jan a good manager
78. Capital intensive, what will be the advantages and disadvantages of using machinery
79. Advantages and disadvantages of mass production in relation to economies of scales
80. “The reasoning behind the move to manufacturing medical devices was that, with the baby
boomer generation soon to reach retirement age, the demand for goods and services in the
healthcare industry would be growing” How did RDM family feel that the demand for
goods and services in the healthcare industry be growing?
81. How does the extension strategy of introducing kerosene/oil burning stoves help the RDM
company?
82. Critically evaluate the introduction of an automation process
83. How does an integrated IT system help a business like RDM?
84. Analyze the impact of globalisation for RDM?
85. What impact did the change of leadership of Jan had on the stakeholder (employee) and the
company.
86. Why do you think RDM opted for CSR even before it became fashionable to the world.
87. Identify and explain the pricing techniques that RDM can offer other than competitive
pricing. Which pricing technique will be the best to use.
88. Justify the importance of having a written corporate strategy for RDM.
89. In your opinion, which source of finance should RDM use for expansion into the new
market (share capital or loan capital)
on RDM company.
90. With the reference of the case study describe two advantages of democratic leadership style
(4 Marks)
91. Should RDM open a new production facility in Europe? (Possibly with reference to a
decision tree)
92. Recommend sources of finance for RDMs expansion project
93. Discuss the impact of globalization on RDM’s workforce planning. (8 Marks)

Table of Contents
 STEEPLE Analysis of RDM - Detailed

1. Ageing population → more demand for healthcare products (Line 13)

Social 2. Demands for kerosene stoves have been declining for many years;end of
product life cycle. (Line 4)
3. Impact of tourism has aided the Czech economy. (Line 19)
4. Many Czech also speak German, this means that they have positive
relations with Germany - Europe’s largest economy. Which also impacted
the IT infrastructure, making Czech’s IT among the best in the world. (line
21)
5. Automation forces people to quit their job and not to have a job since all
functions of the business are done by robots. (Job redundancy) “Only
occasionally do humans have to intervene.” (Line 46)
6. ‘RDM’ progressively employs fewer workers as they move towards
automation (threat to workers).
7. Changing trends of products can also be considered in social
8. Educated and can speak German
9. The change from the paternalistic to the democratic style of leadership led
to complaints of lack of focus on the part of the management, which
depicts that there was some resistance to the change. (Line 97)
10. RDM liaised with a vocational school, which provided opportunities to
local workers to enhance their skills.
11. Their attitudes, aspirations and motivations differ significantly from the
workers who survived the Second World War and had worked under the
Communist regime. With the 76.6% reduction in, and transformation of,
RDM​’s labour force, the company no longer has the level of local
influence that it formerly had. The vocational school no longer liaises with
RDM ​regarding the required skills of worker after the significant reduction
in labour workforce.

12. Czech’s IT among the ​best in the world (line 21)

Technological 13. Potential widespread use of Computer Aided Manufacturing (CAM) and
Computer Aided Design(CAD) could drastically reduce manufacturing
costs for RDM.
14. Most ordering (purchasing) is done digitally and contacts between
customers and engineers are also done digitally - making this process
faster and more efficient
15. Demand for ergonomic/personalized healthcare devices grow.
16. Diversified into aluminum bottles. (Line 60-64)
17. The gradual growth rate of self-driving cars can be cost-effective. (line
48-49)
18. (line 21-22 “Czech”) potential for e-commerce & trading → , therefore,
don’t need a physical store, therefore reducing a lot of their expenses (both
Variable and Fixed)

Table of Contents
 19. ‘RDM’ has achieved all the technological economies of scale for
successfully implementing the up-to-date technologies such as AI, robots
etc.
- As demand for kerosene stoves had been declining for many years,
in 1993, Adriana decided to add health devices using ergonomic
designs to RDM’s product portfolio. (Line 10)
- The Czech Republic now has an IT infrastructure that ranks among
the best in the world.
- Jan began to introduce a highly automated manufacturing process in
2006 that was operational by 2009.
- Jan wonders whether it will be long before self-driving lorries will
replace current human-driven ones for delivery.
- In addition, digitized communication between robots allowed RDM
to be responsive to customers’ requirements. As RDM improved its
automation processes and integrated cloud computing, mobile
devices, big data, artificial intelligence and three-dimensional (3D)
printing, its ability to customize products improved dramatically
regardless of the size of the order.
- Given that the entire order/manufacture/delivery process could still
be performed in Lobjanec, this new facility would require limited
staff and most of the work will be done by robots.

20. Fierce Asian competition → In general, Asian companies can produce

Economic goods at a cheaper cost which are highly competitive to ‘RDM’
21. Lucrative markets in Europe i.e. Germany
22. The Czech Republic is one of the most stable economies in the world
23. Competitive pricing zone within a 700-km radius
24. The economic growth rate in Czech is 4.4%, ​making the Czech economy
the highest growth in Europe​.
25. Trade Bl§ocs
26. Recession in many European countries (Portugal, Italy, Greece, Spain)
may reduce RDM’s growth (which is a reason for their planned expansion)
27. Low levels of unemployment and inflation.
28. Communist takeover: 95% of private sector commercial enterprises were
nationalised in 1949
29. In 1989, Velvet Revolution: businesses went from state-owned to privately
owned
30. Czech economy had a smooth transition
31. Stable market economy and democracy
32. Prague is a tourism magnet
33. Positive trade relations with Germany
34. RDM employed a large unionized labour force

Table of Contents
 35. Because of globalization and fierce competition from Asian
manufacturers, which had lower cost structures
36. Free movement of labour throughout the European Union
37. Capital intensive business can be expensive to maintain
38. Euro still not used widely in the Czech Republic, exchange rates can still
impact costs and prices for RDM

39. Pioneering CSR activities to RDM stakeholders

Ethical 40. Fair wages (line 104)
41. Emphasis on the care of the environment (line 104)
42. Has relationships with suppliers that also maintain their CSR, and hence,
fosters community services

43. Free movement of labor in the EU allows highly specialized workers to be

Political recruited around Europe → RDM has a wide pool of applicants to choose
from
44. Czech used to be a communist state but has transitioned to a free market
45. Brexit may negatively impact the market growth of RDM.
○ Won’t be able to sell products to UK
○ Tariffs and other fees will increase their prices in the UK
○ A stable government in the Czech Republic is beneficial for the
market drivers in the economy
46. Globalization - forcing lower costs of production
47. In 1949, following the Communist takeover of what was then
Czechoslovakia, over 95 % of private sector commercial enterprises,
including RD, were nationalized. Following the Velvet Revolution of
1989, when Communism in Czechoslovakia collapsed, many companies
moved from being state owned to privately owned.
48. Post-revolution good Economic growth-stable market economy +
democracy post-communism.
49. Post-revolution tourism has surged and there is greater economic
integration within European countries.
50. democratic governance which facilitates stability in the country necessary
for business to thrive (line 18)
51. Part of this success stems from the relatively smooth transition, compared
to some other former Soviet bloc countries, to a stable market economy
and democracy.
52. For decades, ​RDM ​employed a large unionized labour force,
mass-produced stoves and sold its product to wholesalers. Because of
globalization and fierce competition from Asian manufacturers, which had
lower cost structures, in the early 2000s, Jan determined that European
manufacturers would have to lower costs.

Table of Contents
 53. Cost of transition from private limited to public involves legal formalities
Legal and structural changes
54. Many countries have their own consumer and employee protection
legislation. RDM is at an advantage here since they have one.
55. Different consumer protection laws across Europe in non-EU countries.
56. There might be restrictions on health product in different countries.
57. Labor laws in an integrated system like the EU allow for easier
mobilisation of labor
58. Import and export restrictions are greatly reduced within the EU, allowing
for goods to be competitively priced with domestic ones.

59. Pollution from delivering products in using of lorries can result RDM in
Environmental negative CSR
60. Coal burning and kerosene stoves (previously)
61. The carbon footprint from production methods as Euro Standards are high
for pollution
62. Medical devices are based on the cradle to cradle method of production,
which can protect the environment.
63. Use of AI (robots) leads to minimum wastage of scarce resources (e.g.
metals), and hence, optimising the production process.

SWOT Analysis of RDM - Detailed

Strengths​:

● Lines (1-2) Company is 100% owned by the Radeki de Dovnic family (Private Limited Company)
● Line (11) They are able to utilize ergonomic designs towards the production of a variety of goods, hence
widening their product portfolio
● Line (17) stable Trading bloc ensures that there is an elimination of tariffs and exports of RDM products
will drive down the cost of imports.
● Lines (34-35) Highly automated manufacturing process that was operational by 2009
● Lines (35-36) Customers could enter their desired specification for healthcare devices and RDM could
proceed with their specialized order… Ability to meet consumer needs
● Line (38) RDM developed several minor adaptations to customers’ products that allowed them to produce
the desired orders at a cheaper cost (and more stable)
● Line (45) Higher efficiency due to the robotic configuration of the tooling (highly automated machinery)
● Line (46) Highly trained engineers monitor the highly automated processes, to ensure the products meet the
quality standards as allocated by consumers
● Line (54) The highly automated system lowers costs in the long run, despite significant capital expenditure
● Line (55) Digitized communication between robots allowed RDM to be responsive to customers’
requirements
● Line (57) Improved their automation by integrating cloud computing, mobile devices, big data, artificial
intelligence, and three-dimensional printing improved the customization of products, regardless of size.

Table of Contents
● Line (61) Not restricted to manufacturing healthcare services due to the integration of technologies. (easy
retooling to the manufacturing of other products)
● Line (67) They were able to quickly and inexpensively produce the customized bottles (even though it was
not the product they initially produced as a company)
● Line (77) They have highly trained engineers and computer experts who manage the automated processes
in 2019.
● Line (83) RDM recruits engineers from universities across Europe, which means a wider selection of
potential employees with appropriate skills for RDM
● Line (87-88) Teams composed of individuals from all business functions manage orders. This is a
project-based organizational structure
● Line (89) Jan changed the leadership style from paternalistic to democratic. This motivates employees,
who’d now have more say. The CEO is also more engaged with his employees
● Line (90) Jan introduced many changes to practices at RDM to create an environment of innovation,
constantly seeking innovation in both RDM’s products and services.
● Line (94) Jan fosters an atmosphere conducive to creativity, with a heavy emphasis on teamwork, diversity,
humor, and fun which employees love (increased motivation) (this has aided in the production of positive
results).
● Line (100) The de Dovnic family had long held a caring and paternalistic attitude towards the people who
worked for them, including workers in their factory.
● Line (104-105) Always display a strong sense of CSR, including source components from businesses who
have good CSR practices, paying fair wages and having a strong emphasis on care for the environment
(this leads to worker motivation, improved brand image, and customer loyalty)
● Line (113) The new facility would extend their market area. It would require limited staff and most work
will be done by robots since the order/manufacture/delivery process can still be done in Lobjanec
● Line (125) RDM makes good products at competitive prices and is responsive to customer needs.

​Weaknesses:

● Line (28-29) unprepared CEO takeover: Dr. Kristian Radeki did not have professional training and
experience that hardly prepared him for the task and position of CEO
● Line (27-29) Kristian was CEO despite being untrained and inexperienced in business or engineering,
having studied history. He also lacked local knowledge due to the political events that occurred during his
absence. This weakness was defused when Jan became CEO because he had a very good engineering mind
helping in the production processes of RDM.
● Line (39-42) Pricing is made by human accountants and marketing executives. This is at a disadvantage to
automated pricing because it is more efficient and less time-consuming.
● Line (51) Previously employed a very large unionized labor force (500 workers), which is difficult to
manage and supervise. They also represented huge expenses in terms of wages. This was solved by having
an automated manufacturing process that Jan introduced.
● Line (54-55) Automation requires a lot of capital expenditures to purchase and revenue expenditures to
maintain them.

Table of Contents
● Line (74-76) Letting hundreds of workers leave the company can cause demotivation to the workers in the
business.
● Line (80-81) By transforming the labor force and decreasing it RDM does not have as much influence on
the local community and this makes them less powerful
● Line (89) Constant changes in leadership style can be very confusing and demotivating for RDM
employees. Line (89) the change in organizational structure from Hierarchical to project-based and the
change in the management style from paternalistic to democratic: this can lead to demotivation amongst
the workers in the company.
● Line (91-94) When Kristian headed the company, there was a negative environment within the work
environment was depressing, orderly, and dull. This could lead to demotivation of workers. company as
employees were being made redundant due to the fall in kerosene stove sales. This was not the case with
Jan, as he always sought innovation. This was solved when Jan introduced a new leadership style.a
● Line (95-98) Although Jan’s leadership style is fun, it is sometimes chaotic and workers feel there are
insufficient guidance and help by their managers and that the business lacks focus.
● Line (99) CSR incurs higher costs for RDM which makes them have fewer profits and well as operate
under very strict ethical rules.
● Line (105-110) They cannot offer competitive pricing beyond the 700-kilometre radius which reduces
European market share and affects the m being price competitive in lucrative markets. This causes them to
miss out on a huge pool of price elastic customers across Europe.
● Line (118-120) They have no marketing strategy. This makes RDM employees confused about pricing,
promotions, distribution, and production.
● This also causes another weakness for RDM, such as a weak brand identity. Thus, RDM is not very
reputable because they fail to make themselves reputable. This also makes RDM unable to reach their
target audience.
● Line (123) Having an outdated name means RDM is not memorable for customers. By failing to have a
marketing strategy they do not compensate for their outdated name.
● Line (121-123) No written corporate strategy even though there is a vision communicated by Jan. This
lack of organization can lead to confusion for the employees. RDM lacks focus.
● Line (123-124) No written operations management strategy can lead to confusion within the operations
sector which can cause lower quality products.
● Line (124) No human resources plan can cause employees to feel insecure in the workplace as there is no
set of procedures for the dismissal of workers.
● Initially, by moving towards automation, RDM will not make a profit, since capital expenditure will
outweigh sales revenue (Jan is forced to lower price due to competition)

Opportunities:

● Line (5-10) Demand for goods and services in the healthcare industry would be growing as the baby
boomer generation reaches retirement age.
● Line (15-20) Prague is a magnet for tourists as it is one of the most beautiful cities in Europe which has
aided the economy of Czech.

Table of Contents
● Line (15-20) Educated Czech’s speak German in addition to Czech which facilitated positive trade
relations with Germany, which is Europe’s largest economy.
● Line (60-70) Success of the order for water bottles lead to the executives at RDM encouraged Jan to
manufacture customized aluminum bottles.
● Line (75-80) Free movement of labor throughout the European Union lead to RDM recruiting engineers
from universities across Europe.
● Jan having Westernized innovative ideas
● Line (106-107) They have the opportunity to lucrative markets where the demand is high in countries
such as the Netherlands, Scandinavia, Belgium, and France.
● Utilizing job production method in the production of aluminum bottles, ensures that no aluminum would
be wasted - environmentally friendly.
● With IT infrastructure ranked amongst the best in the world (line 22), there could be many more
e-commerce opportunities for RDM

Previous/Present Threats:

● Line (5-6) the communist takeover: because the RDM became nationalized after being owned 100% by
the Radeki family
● Line (10) change in social trends/preferences: demand for Kerosene stoves declined so RDM had to
change their product.
● Line (31-32) the division of Czechoslovakia into the Czech Republic and the Slovak Republic which is a
threat to the economic situation of the country as well as the market in which RDM operates
● Line (34-36) possibility of technological issues, depreciation, the problem with the system can lead to
delay in production altogether and can be time-consuming and expensive to repair
● Line (45-46) the automation of production methods: laying off workers can cause them to formulate
pressure groups or revolt and this is not beneficial for the company’s reputation in the community
● Line (53) Due to globalization, the fierce competition increased with the Asian manufacturers, causing
Jan to lower cost structures by automation.
● Line (75-77) Due to globalization leading to automation, the business had to lay off some of the
employees which could be a threat to the business as it caused trouble with the local community which
can lead to damage of the business’s reputation.
● Line (80) Due to the reduction and transformation, the business no longer has the level of local influence
that it had.

SWOT Analysis of RDM - Condensed

Strengths
● 100% family owned business full control
● Innovation and automation
● Customization and product development
● Democratic leadership style- Jan
● Qualified CEO
● Production system and supply chain
Table of Contents
 ● Organizational structure- matrix (except for aluminum water bottle - a new division
(hierarchical)
● Skilled workforce
● CSR- fair wages, sourcing raw materials from local suppliers, sustainable
● Consistent profits
● Just in time

Weakness

● The high cost of innovation and automation

● Working capital issues
● Stakeholder conflict due to the change in the production process
● High dependency on technology
● Workers complain about the leadership style
● Poor marketing strategy
● Lack of a strategic direction
● Outdated marketing mix

Opportunities

● Velvet revolution and its impact

● Relocation
● Globalization (Market penetration/diversification)
● Stable economy
● Favourable trade relations
● Political stability
● Major tourist centre- Prague
● Growing information technology
● Germany: Europe’s largest economy
● Increasing ageing population- growing demand
● Free movement of labour within the european Union

Previous/Present Threats

● Division of the country

● Rising competition from the Asian market
● Expensive factors of production
● Healthcare product regulation

Table of Contents
 Ansoff Matrix

Market Penetration Product Development

Coal Stoves (doesn’t sell anymore)
Kerosene Stoves
(lowers price in the long term, in quality to
compete internationally) (although demand for
them is decreasing)
RDM has successfully carried this out through the:
- Implementation of Ergonomic Design
- Different Colours/Designs/Etc
→ RDM has successfully done this before, with
going from coal/kerosene stoves to ​healthcare​ -
machinery is flexible regarding the production of
products.
→ water bottle, ​as water bottles cater for a wider
market (not only baby-boomer generations) and are
a different product than healthcare devices or
stoves

Market Development Diversification

Expanding their healthcare products/kerosene RDM doesn’t do this now but it would involve a
stoves to potentially lucrative markets in new product in one of their lucrative markets. E.g.
Scandinavia, and elsewhere ​in Europe ​ (only Kitchen hardware in France (marketing
700m radius) ​(105, appendix 2) implementations would be weak)
- machinery is flexible regarding the production of products.
- batch production is the current type of production, as they have been manufacturing aluminum
bottles for individual businesses, and have not reached large scale production.
- mass production would probably be the preferred type production due to potentially high levels of
demand.

Table of Contents
Generalised Force Field Analysis (20)

Boston Consulting Matrix (BCG) to analyze ‘product portfolio’

Dogs: ​Coal-burning and kerosene stoves
Problem Child: ​Aluminum customizable bottles
Stars: ​Ergonomic healthcare products
Cash Cow: ​Healthcare products​ ​(​Launched a long time ago, earns a
healthy profit for the company)

Table of Contents
Terms & Definition

Term Definition

Private Sector Part of the economy that is not under the control of the
government.
Unincorporated/Incorporated

Public Sector Government enterprise.

Nationalized Private assets transform into public assets.

Automation(line 50) Technique, method or system of operating or controlling a

process by highly automatic means to reduce human
intervention.

Unionized Belonging to or having workers belonging to a trade union

Downsizing Reducing the level of the workforce in the business.

Tall hierarchical structure 1. Many levels of hierarchy

2. Narrow span of control
3. There are opportunities for promotion
4. Lines of communication are long - making firm
unresponsive to change

Paternalistic leadership A fatherly, or familial environment. Leaders treat employees

like sons and daughters.
-guidance provided to employees

Democratic leadership Everyone has a vote in the production and functions of the
business.

Matrix structure Organizational structures combine with traditional departments

seen in a bb structure with project teams. Example - A task
team established to develop a new product might consist of
those from operations, marketing, and finance to make it
happen.

Organizational culture Norms, values, attitudes, and beliefs

1. Mission statement
2. Vision statement
3. Org. structure
4. Leadership style
5. Corporate objectives
6. Dress code

Table of Contents
 7. Company policies
8. Pay and salary, motivation methods used

Add on to the below terms and definitions:

No Term Definition Line No.

1. Product life cycle - Typical process that products go through from their initial design 4
and launch to their decline and eventual withdrawal.
- Different products undergo each of the six stages (development,
introduction, growth, maturity, saturation, and decline) at varying
speeds.
- Measured over time in terms of sales revenue.
- A cycle that shows the lifespan of a product going through the
initial phases to its eventual withdrawal.

2. Chief Executive The highest-ranking executive in a company, and their primary 9

Officer (CEO) responsibilities include making major corporate decisions

Trade Bloc - a trade bloc is a type of intergovernmental (between states) 17

agreement, where barriers to trade (tariffs and other protectionism
policies) are reduced or eliminated among the participating states
- Soviet bloc in RDM ensures smooth transportation and delivery of
goods across Europe without paying more to export.

3. Hierarchical - Type of organizational structure in which items are ranked 85

according to levels of importance.
- In a corporate environment, hierarchies depend upon structure,
rules, and top-down control to guide business practices and
activities.

4. Capital Money a company spends to buy/maintain/improve its fixed assets (long 54

expenditure term)

5. Integrated cloud A system of tools and technologies that connects various applications 57
computing

6. Product portfolio Refers to the range of products or strategic business units owned and 11
developed by an organization at any one point in time.

7. Automation A process of managing information, data, and processes to reduce costs, 54

resources and investment. Also, a process is seen in Daniel Pink’s theory
of motivation (anatomy, mastery and purpose).

8. Commercial A​ ​business that engages in buying and selling activities on a large scale, 6
enterprises for the purposes of making a profit and gaining market share.

9. Demand Is the quantity of a good or service that consumers and businesses are 13

Table of Contents
 willing and able to buy at a given price in a given time period.

10. Division of labor Dividing a job into many specialized parts, with a single worker or a few 68
workers assigned to each part. Division of labor is important to mass
production.

11. Economies of Refer to lower average costs of production as a firm operates on a larger N/A
scale scale due to gains in productive efficiency, e.g. easier and cheaper access
to finance.

Diseconomies of refers to the cost disadvantages a business faces due to an increase in

Scale firm size or output, resulting in the production of products, goods or
services at an increased cost per unit. e.g cost of truck operation
(expanding the business means more trucks required to deliver their
products, thus more money)
- graph is cost vs. output
- show a downward peak (lowest point is the optimal level of output)

12. Economic growth measures changes in the Gross Domestic Product of a country over time. N/A
It occurs if there is an increase in real GDP for two consecutive quarters.

13. Inequality Refers to the difference between the rich and poor, the haves and N/A
have-nots – it is shown by people's different positions within the economic
distribution – wealth, pay and income. Inequality is large in a society
where few people own a disproportionate amount of economic pie.

14. Fiscal policy is the use of ​taxation​ and ​government​ ​expenditure​ policies to influence N/A
business activity. The government spends the tax revenue that it raises, in
addition to other sources of government revenue, on a number of areas
including social security, health care, education, transport and
infrastructure.
● deflationary fiscal policy
● expansionary fiscal policy
○ tax cuts and increased public sector spending

15. Consumption In economics, the use of goods and services by households. Consumption N/A
is distinct from consumption expenditure, which is the purchase of goods
and services for use by households.

16. Corporate Social A business approach that contributes to sustainable development by 99

Responsibility delivering​ economic, social, ethical and environmental benefits for all
stakeholders.

17. Scarcity Refers to the basic economic problem, the gap between limited – that is, N/A
scarce – resources and theoretically limitless wants.

18. Private limited The part of the economy run by ​private individuals and businesses, 6
rather than by the government, e.g. sole traders, partnerships, companies,
and cooperatives. Limited liability.

Table of Contents
19. Price elasticity of Measures the responsiveness of quantity demanded for a product to a N/A
demand change in price.

20. Opportunity cost A benefit, profit, or value of something that must be given up to acquire or N/A
achieve something else.

21. Productive Is the maximum possible output of an economy. According to the United N/A
potential Nations Conference on Trade and Development (UNCTAD), no
agreed-upon definition of maximum output exists.

22. Wholesalers The intermediary entity in the distribution channel that buys in bulk and 52
sells to resellers rather than to consumers.

23. Globalization The growing integration and interdependence of the world's economies, 52
causing consumers around the globe to have increasingly similar habits
and tastes.

24. Unionized labour The process of organizing the employees of a company into a labor union 51
force which will act as an intermediary between the employees and company
management. In most cases, it requires a majority vote of the employees
to authorize a union.

25. Paternalistic The managerial approach that involves a dominant authority figure who 89
leadership style acts as a patriarch or matriarch and treats employees and partners as
though they are members of a large, extended family.

26. Democratic Involves a team guided by a leader where all individuals are involved in 89
leadership style the decision-making process to determine what needs to be done and
how it should be done. The group's leader has the authority to make the
final decision of the group.

27. Motivation Internal and external factors that stimulate desire and energy in people to 78
be continually interested and committed to a job, role or subject, or to
make an effort to attain a goal.

28. Nationalization The transfer of a major branch of industry or commerce to state ownership 7
or control.

29. Promotion A type of marketing communication used to inform target audiences about 40
a firm’s production or service

30. Budget deficit When expenses exceed revenue, and it is an indicator of financial health. N/A

31 Current account A measurement of a country's trade where the value of the goods and N/A
deficit services it imports exceeds the value of the goods and services it exports

32 Progressive tax A tax in which the average tax rate (taxes paid ÷ personal income) N/A
increases as the taxable amount increases.

33 Regressive tax Taxation that takes a larger percentage of a lower-income and a smaller N/A
percentage of a higher income.

Table of Contents
34 Distribution The chain of businesses or intermediaries used to get the product to the N/A
channels consumer, including wholesalers, retailers, distributors, etc.

35 Scarcity Refers to the basic economic problem, the gap between limited – that is, N/A
scarce – resources and theoretically limitless wants.

36 Private sector The part of the economy run by private individuals and businesses, rather 6
than by the government, e.g. sole traders, partnerships, companies, and
cooperatives.

37 Price How much the business set’s it’s products to consumers. 40

38 Cost of products How much a product cost 47

The costs incurred by a company in order for them to create a certain
good or provide a service.

39 Mission A company’s objectives that set a clearer path to its decision making. For 123
Statement a deeper understanding, A mission statement underlays the purpose for
the existence of the business and their core values.

40 Vision Statement Summary of aims and values of a company. What the business wants to 123
be in the future. A vision statement outlines the distant aspirations of a
business. For example Adidas' vision statement is to be the leading sports
brand in the world.
Vision statement is more long term.

41 Productive Is the maximum possible output of an economy. According to the United

potential Nations Conference on Trade and Development (UNCTAD), no
agreed-upon definition of maximum output exists.

42 Excess supply A situation that can occur in a market or business where the amount of a N/A
product provided or material obtained exceeds the amount required or
demanded.

43 Supply Is a fundamental economic concept that describes the total amount of a N/A
specific good or service that is available to consumers.

44. Demand Is the quantity of a good or service that consumers and businesses are 10
willing and able to buy at a given price in a given time period.

45. Market Area The geographic zone containing the people who are likely to purchase a 113
firm's goods or services.

46. Production Foundation of a product life cycle and the execution plan for further N/A-
Strategies development. The product strategy allows the business to zero in on
specific target audiences and focus on the product and consumer
attributes.

Table of Contents
47. Research and Refers to the work a business conducts for the innovation, introduction, N/A
Development and improvement of its products and procedures.

48. Market Economy an economic system in which economic decisions and the pricing of 17
goods and services are guided solely by the aggregate interactions of a
country's individual citizens and businesses.

49. Democracy A political system that is run and controlled by citizens of the country. 18
Democracies are made up of elected representatives and require that
governmental measures be voted on by these elected representatives or
the people.

50. Infrastructure the transportation, communication and support networks in a certain area. 22

52. Accounting It reveals profit or loss for a given period and the value and nature of a 40
firm's assets, liabilities and owner's equity.

53. Innovation The process of translating an idea or invention into a good or service that 91
creates value or for which customers will pay.

● Product Innovation: New products/services are created or

improvements to current products
● Process Innovation: Parts of manufacturing or service delivery
process are improved
● Positioning Innovation: Use or perception of a new/existing product
or service
● Paradigm Innovation: Innovation so important, it may change the
industry itself. Focus on impacts for short and long term of new
products/services

54. Marketing Management process of predicting, identifying and meeting the needs and 40
wants of customers in a profitable manner.

55. Big data extremely large data sets that may be analyzed computationally to reveal 57
patterns, trends, and associations, especially relating to human behavior
and interactions.

56. Artificial Software technologies that make a computer/robot to perform better than 57
intelligence normal human computational ability inaccuracy, capacity, and speed.

57. Teams 6A group of people with a full set of complementary skills required to 87
complete a task, job, or project.

58. Strategy Plans of action that businesses use to achieve their targets 121

59. Economic Trends The overall direction in which a nation's economy is moving. Most 15
business managers need to be aware of the prevailing direction of the
economic trend for the product markets and countries in which they
operate in order to make more accurate and effective plans for their

Table of Contents
 company.

60. Products Refer to both goods and services 85

61. Creativity Characteristic that allows a person to think outside of the box, which 94
results in innovative or different approaches to a particular task.
● Adaptive creativity: transfers and applies existing forms of thinking
and problem solving to new scenarios or different situations
● Innovative creativity: generates new forms of thinking, addressing
problems from an unusual perspective

62. Fair wages Trade and public work wages paid to the majority of workers in a specific 104
area. The prevailing wage is usually an hourly wage and determines
overtime pay as well as benefits for laborers in that field.

63. Competitive The process of selecting strategic price points to best take advantage of a 107
pricing product or service based market relative to the competition.

64. Share Capital money raised from selling shares in a limited liability company, from its 115
initial public offering (IPO) and any subsequent share issues.

65. Loan Capital Medium to long-term sources of interest- bearing finance obtained from 116
commercial lenders.

66. Private Limited The company that cannot raise share capital from the general public. 117
Company Instead, shares are sold to private family members and friends.

67. Public Limited able to advertise and sell its shares to the general public via a stock 117
Company exchange.

68. Brand Identity How a business presents itself and wants to be perceived by its 123
consumers.

69. Raw materials Materials or substances used in the primary production or manufacturing 45
of goods.

70. Chief Financial Responsible for financial control and planning of a firm or project as well 111
Officer (CFO)w as all the accounting functions including such as:
- (1) credit control
- (2) preparing budgets, financial statements
- (3) coordinating financing and fundraising
- (4) monitoring expenditure and liquidity
- (5) managing investment and taxation issues
- (6) reporting financial performance to the board
- (7) providing timely financial data to the CEO.

71. Labour intensive An industry where a larger portion of total costs is due to labor 51

72. (Business) A business strategy in which growth is obtained by increasing the number 115
Expansion of stores in which customers can buy a company's products and services.

Table of Contents
73. Relocation A change in the physical location of a business. A business might relocate 116
because of rising costs at the current facility, better tax breaks in a
different location, changes in its tarot other reasons.

74. Profit the positive difference between a firm's total sales revenue and its total 126
costs of production.

75. Capital Intensive The manufacturing or provision of a product relies heavily on machinery
and equipment.

75 Capital Finance spent on fixed assets 49

expenditure

76. Training process of providing opportunities for workers to acquire 29

employment-related skills and knowledge.

77. Corporate A corporate strategy is a long-term plan of action which will be used to 121
Strategy complete or satisfy the corporate aims for a business.

78. Privatization The term used to describe the transformation of businesses when they 8-9
change from public ownership to private ownership.

79. Marketing A Marketing Strategy is a business’s overall game plan for reaching 199
Strategy people and turning them into customers of the product or service that the
business provides

80. Human Management function of using and developing people within a business to 124
Resources meet its organizational objectives.
Planning

81. Operations Providing the right goods and services in the right quantities, at the right 124
management quality level, and the right time in a cost-effective and timely manner

82. Baby boomer The term "Baby Boom" is used to identify a massive increase in births 12
following World War II. Baby boomers are people born between 1946 and
1964.

There are lots of quizlets with the definitions:

https://quizlet.com/371592401/ib-paper-1-2019-radeki-de-dovnic-manufacturing-flash-cards/
https://quizlet.com/ca/370494861/radeki-de-dovnic-manufacturing-ann-flash-cards/
https://quizlet.com/367225373/radeki-de-dovnic-manufacturing-flash-cards/

Organizational History

● 1873
- founded
-100% family owned
Table of Contents
 -located = Lobjanec (Small city in the Czech Republic)
-original product = manufacturing of coal-burning stoves for residences
● 1949
-followed by the communist takeover, of what was then Czechoslovakia
-became nationalized, as over 95% of the private sector commercial enterprises became
nationalized
● 1970s
-500 workers
-The largest single employer in Lobjanec
● 1989
-followed by the Velvet Revolution
-No more communism, privately owned again
- move from communist economy (not much choice in terms of products) to market
economy/ free market (determines products to produce based on the market demand, or
reliant on invisible hand for pricing)
● 1990
-Adriana took over as CEO
● 1993
-Adriana added healthcare devices using ergonomic designs to RDM’S product portfolio-
the demand for stoves was declining
- Since the Velvet Revolution
-not immune to broader economic trends in Europe
-After the revolution, the Czech economy has fared well
-thus, making it a stable market economy and democracy
-The fact that the capital, Prague, is one of the most beautiful cities of Europe magnets
tourism - aiding the economy
-traditionally, educated Czechs speak German and Czech = facilitating positive trade
relations with Germany (largest European Economy)
-small city in the Czech Republic- great in IT infrastructure - ranking among the best in the
world
● 1995
-Adriana retire as CEO
-Kristián took the role of CEO = giving the opportunity to return to his home country and
take on the role of CEO of the family business
-accepted even though his profession and his experience had hardly prepared him for the
task
Kristián
- was for many years the head of RDM
-earned a Ph.D. in history and became a professor at an American University

● 2001
-Kristián died in 2001
-Jan took over CEO
Jan

Table of Contents
 - Kristián's son
- born and grew up in the US
- studied engineering at school the University
- had wanted to live in the Czech Republic
● 2002
-RDM produced its last kerosene stove and now primarily manufactures healthcare devices
● 2006-2009
-Jan introduced highly automated manufacturing in 2006 and it became operational in 2009
● The early 2000s
-For decades, RDM employed a large unionized labour force, mass producing stoves and
selling its products to wholesalers. Today it’s highly automated.
-due to globalization and fierce competition from Asian manufacturers (lower cost
structures) - Jan determined that European manufacturing would have lower costs
automation → requires significant capital expenditures & long run - lower costs
-digitized communication between robots = allowed RDM to meet consumer’s requirements
- improving automation processes and integrating cloud computing, mobile devices, big
data, artificial intelligence, 3D printing = enhanced RDM’s ability to customize products,
regardless of the size of the order
● 2019 (Labour force and relationship with the stakeholders)
-Today: 117 people involved in manufacturing (small number)
-not skilled manual
-but highly trained engineers and computer experts - managed the automated process
-their attitudes, aspirations, and motivations = significantly different from the
workers who survived WWII and were under the Communist regime
- a more democratic leadership style is therefore required
-This reduction and transformation in RDM labor force - company has no longer
local influence. Vocational school no longer liaises with RDM regarding the skills of
worker
-now: experiencing the free movement of labor throughout the European Union.
RDM recruits engineers across European universities

Table of Contents
Table of Contents
 brand identity - brand awareness, brand development, brand loyalty, brand value
UNITS IN THE CASE STUDY:

Business HRM Finance Marketing Operations

Organization Management

-CSR (Corporate Social -Leadership styles (from -Cost of -Product life cycle -Outsourcing
Responsibility) paternalistic to Production -CSR (Corporate Social -Lean
-Family owned democratic) (decreased over Responsibility) - -USP - production-JIT
-​Private Sector -Structure- hierarchical time because of expose brand- -Cellular
(commercial Enterprise) -Redundancies (Job automation - customizable products manufacturing
- used to be state owned losses)- changing the achieving better -Weak ​Brand identity -Automated
-Stakeholders location would require economies of -Design Specification machinery
-Growth and evolution less staff scale) (USP - through research) -most by
(Enter new markets, -Recruitment Local - the -Loan Capital -Location? machine, yet still
Expansion → Europe. whole of Europe -Competitive -Target market: Baby some by
Growth = Internal) -Lack of guidance and Prices Boomer Generation engineers
-Types of Organization structure - because the -going Public -Innovation -Offshoring​/
-Vision/Mission leader is very (Source of -Competition relocation-​ the
Statement democratic finance) -Market Share costs- build a
-The first state-owned -Job losses - -Investment -Ergonomic Design production
then private sector Redundancy appraisal- costs -Globalization- facility in
because of the -Automation of expansion competition from Asia Europe
revolution -Large Unionized (ARR, PBP, caused the company to -Raw material
-IPO Labour Force- trade NPV) decrease its production -Highly trained
-STEEPLE- external unions -New sources of costs- automation Engineers
environment -Restructure revenue -4Ps- dealing with a -Costs of
-SWOT Analysis- about -The culture within the (Revenue product Production (high
growing, expanding and business (organizational streams) -Artificial intelligence initially to get
opening a new location structure) -Healthy profits -Ansoff Matrix and the machines)
-Strategies -Motivation - Share capital BCG -Technology

Table of Contents
 Stakeholder Analysis

Name of person or group of Stakeholder Category Explanation of Stakeholder

people Internal​ or ​external​? Interests

Radeki de Dovnic Family Managers Long term aspirations for

running their business. Reaping
profits, need for power.
Aristocratic family​ started RDM
in 1873. Regained control of
RDM in 1990 after it was
nationalised in 1949 by the
communist.

Residents in 1873 Customers Provided demand for

coal-burning stoves.

Communists (1949-1989) Government Wanted to nationalize private

sector companies including
RDM.

Adriana Radeki de Dovnic (CEO) Managers Fondness of Czech Republic.

in 1990 An opportunist wanting to work
in Prague. She added Healthcare
product with ergonomic designs
to the product portfolio.

Baby boomer generation Customers Need for

healthcare products as they age.

Educated Czechs ​Employees Monthly wages, respect of their

opinions in a democratic
leadership, fear of being made
redundant.

Czech Republic Government Government National firm with plans to

diversify into other countries
leading to increased national
reputation, the larger the firm
higher the corporate tax, carbon
tax. An increase in the amount of
jobs in the Czech economy,
although a higher inflation rate
due to the possible increase in
taxes/government revenue.

Table of Contents
Dr. Kristian Radeki de Dovnic
(CEO in 1995)
Managers Professor in history, Austro
Hungarian baron born in 1920.
Fled Czechoslovakia in 1944 to
the USA with only the money in
his pocket. Becomes CEO when
Adriana retires and was not
prepared to be a CEO. Leadership
style made environment dull and
depressing.

Jan (CEO in 2001) Managers Son of Kristian, democratic

leadership style. Born in USA
studied engineering at uni. CEO
at age 38. seeking product
innovation and process innovation
to compete with asia. Wants fun
and humour in the workplace. No
mission statement, no strategic
plan, no HR plan.

Customers Customers

Engineers in RDM Employees likely to be highly paid,

democratic leadership style
appeals to them, matrix structure
might appeal as well as they are
highly-skilled and therefore might
prefer to have some degree of
autonomy (Pink’s motivation
theory).

Human accountants in RDM Employees May not fear redundancies as

RDM prefers to keep their
accounts compiled by humans
instead of machines.

Lorry drivers Employees Fear of redundancy, loss of jobs

due to possibility of self-driven
trucks

Asian manufacturers Competitors Upcoming stiff competitions,

prospects of mergers and
acquisitions, higher chances of
inter-firm benchmarking

Table of Contents
European Manufacturers ​Competitors Higher competition if RDM
expands and starts a production
facility in some other EU country

Workers in the factory Employees Loss of jobs due to automation.

Employees Employees

Computer experts Employees Likely to be highly paid and in

high demand. May be an increase
in demand for them if RDM does
expand into e-commerce.

The vocational school Potential​ employees, local Was favoured under Kristian but
community not under Jan after he
implemented automation. Loss of
information from a company that
had previously allowed them to
fine-tune the skills of their
students and prepare them for the
current employment sector.

Universities across Europe Society RDM is a possible employer for

graduates.

New facility staff Employees Highly paid staff, specialised in

automated machinery
maintenance, reduces the amount
of workers needed for the new
facility.

CFO Managers In charge of finance. Will have to

cost everything to obtain an
accurate prediction of total costs
for products, manufacturing,
delivery, relocation. Have to
determine sources of finance for
all of this.

Table of Contents
Stakeholders Current / History Weaknesses Opportunities Other
Previous Information
Position

Adriana Radeki CEO in 1990 Was Possible gap in

de Dovnic till 1995 responsible the market as
for product kerosene
development stoves’
into product life
oil-burning cycle was in
stoves which decline.
were a
successful
venture.

Dr Kristian Head of the Former Under his ‘’Profession Paternalistic

Radeki de family(1920-2 Austro-Hungar leadership al training leadership
Dovnic 001) ian Baron the and style.
CEO (low-level environment experience
(1995-2001) royalty) who was orderly had hardly
Died in 2001 fled prepared
Czechoslovaki him for the
a in 1944. task.’’
Escaped to the Environment
US, and earned at RDM was
a PhD in dull.
history and
became a Environment
professor at an was orderly,
American Uni. even dull.
(Depressing
because
workers
being made
redundant)

Jan (son of CEO Born in 1963, Fosters an —> Democratic

Kristian) (2001-now) he was born atmosphere employees Leadership
Introduced and grew up in conducive to complained style.
highly the US. creativity, there is

Table of Contents
 automated Studies with a heavy insufficient Wonders if
manufacturing engineering at emphasis on guidance and self-driving
processes in university, teamwork, the business lorried will
2006, always wanted diversity, sometimes replace
operational in to live in humor and lacks focus. lorries for
2009 Czechoslovaki fun. Has not delivery.
a. Divided into written a
the Czech Create an mission —>
Republic and environment statement employees
Slovak of innovation No corporate love
Republic on both strategy plan innovative
the 1st of products and env.
January 1993 processes Although
Is open to sometimes
change seems chaotic
(Which is
good for
businesses)

CFO Proposed
RDM build an
additional
production
facility
elsewhere in
Europe.
Extending
market area.

Employees Occasionally Highly Some have RDM was

humans trained complained once (1970)
intervene engineers - that Jan’s the largest
usually if there review specs, leadership single
is an issue. contact the has caused a employer of
customer if lot of workers
questions uncertainty (500) but
arise or and lacks now only has
engineers focus 117
have a way employees
of improving Automation
design. Then has directly
sent to affected the
accounting number of
and employees

Table of Contents
 marketing to and the sector
determine they work in
price, Engineers are
marketing recruited
contacts from
customer to universities
ask if they across the EU
want to
proceed with
the order.
Currently,
staff enjoy
the corporate
culture

Customers Customers
enter desired
specifications
for healthcare
devices into
template on
webpage.
Confirm
design specs.

May 2019: RDM Case Study Notes

● Lines (1-2) Company is 100% owned by the Radeki de Dovnic family (Private Limited
Company)
● Line (11) They are able to utilize ergonomic designs towards the production of a variety of
goods, hence widening their product portfolio
● Line (17) stable Trading bloc ensures that there is an elimination of tariffs and exports of
RDM products will drive down the cost of imports.
● Lines (34-35) Highly automated manufacturing process that was operational by 2009
● Lines (35-36) Customers could enter their desired specification for healthcare devices and
RDM could proceed with their specialized order… Ability to meet consumer needs
● Line (38) RDM developed several minor adaptations to customers’ products that allowed
them to produce the desired orders at a cheaper cost (and more stable)
● Line (45) Higher efficiency due to the robotic configuration of the tooling (highly automated
machinery)

Table of Contents
● Line (46) Highly trained engineers that monitor the highly automated processes, thus
ensuring that the products meet the quality standards as allocated by consumers
● Line (54) The highly automated system lowers costs in the long run, despite significant
capital expenditure
● Line (55) Digitized communication between robots allowed RDM to be responsive to
customers’ requirements
● Line (57) Improved their automation by integrating cloud computing, mobile devices, big
data, artificial intelligence, and three-dimensional printing improved the customization of
products, regardless of size.
● Line (61) Not restricted to manufacturing healthcare services due to the integration of
technologies. (easy retooling to the manufacturing of other products)
● Line (67) They were able to quickly and inexpensively produce the customized bottles (even
though it was not the product they initially produced as a company)
● Line (77) They have highly trained engineers and computer experts who manage the
automated processes in 2019.
● Line (83) RDM recruits engineers from universities across Europe.
● Line (87-88) Teams composed of individuals from all business functions manage orders.
● Line (89) Jan changed the leadership style from paternalistic to democratic. This motivates
employees, who’d now have more say. The CEO is also more engaged with his employees
● Line (90) Jan introduced many changes to practices at RDM to create an environment of
innovation, constantly seeking innovation in both RDM’s products and services.
● Line (94) Jan fosters an atmosphere conducive to creativity, with a heavy emphasis on
teamwork, diversity, humor, and fun which employees love (increased motivation) (this has
aided in the production of positive results).
● Line (100) The de Dovnic family had long held a caring and paternalistic attitude towards
the people who worked for them, including workers in their factory.
● Line (104-105) Always display a strong sense of CSR, including source components from
businesses who have good CSR practices, paying fair wages and having a strong emphasis
on care for the environment (this leads to worker motivation, improved brand image, and
customer loyalty)
● Line (113) The new facility would extend their market area. It would require limited staff
and most work will be done by robots since the order/manufacture/delivery process can still
be done in Lobjanec
● Line (125) RDM makes good products at competitive prices and is responsive to customer
needs.
● Line (28-29) unprepared CEO takeover: Dr. Kristian Radeki had professional training and
experience that hardly prepared him for the task and position of CEO
● Line (27-29) Kristian was CEO despite being untrained and inexperienced in business or
engineering, having studied history. He also lacked local knowledge due to the political
events that occurred during his absence. This weakness was defused when Jan became CEO
because he had a very good engineering mind helping in the production processes of RDM.
● Line (39-42) Pricing is made by human accountants and marketing executives. This is at a
disadvantage to automated pricing because it is more efficient and less time-consuming.

Table of Contents
● Line (51) Previously employed a very large unionized labor force (500 workers). This made
them hard to manage and supervise. They also represented huge expenses in terms of wages.
This was solved by having an automated manufacturing process that Jan introduced.
● Line (54-55) Automation requires a lot of capital expenditures to purchase and revenue
expenditures to maintain them.
● Line (74-76) Letting hundreds of workers leave the company can cause demotivation to the
workers in the business.
● Line (80-81) By transforming the labor force and decreasing it RDM does not have as much
influence on the local community and this makes them less powerful
● Line (89) Constant changes in leadership style can be very confusing and demotivating for
RDM employees. Line (89) the change in organizational structure from Hierarchical to
project-based and the change in the management style from paternalistic to democratic: this
can lead to demotivation amongst the workers in the company.
● Line (91-94) When Kristian headed the company, there was a negative environment within
the company as employees were being made redundant due to the fall in kerosene stove
sales. The work environment was depressing, orderly, and dull. This could lead to
demotivation of workers. This was not the case with Jan, as he always sought innovation.
This was solved when Jan introduced a new leadership style.
● Line (95-98) Although Jan’s leadership style is fun, it is sometimes chaotic and workers feel
there are insufficient guidance and help by their managers and that the business lacks focus.
● Line (99) CSR incurs higher costs for RDM which makes them have fewer profits and well
as operate under very strict ethical rules.
● Line (105-110) They cannot offer competitive pricing beyond the 700-kilometer radius
which reduces European market share and affects them being price competitive in lucrative
markets. This causes them to miss out on a huge pool of price elastic customers across
Europe.
● Line (118-120) They have no marketing strategy. This makes RDM employees confused
about pricing, promotions, distribution, and production. This also causes another weakness
for RDM, such as a weak brand identity. Thus, RDM is not very reputable because they fail
to make themselves reputable. This also makes RDM unable to reach their target audience.
● Line (123) Having an outdated name means RDM is not memorable for customers. By
failing to have a marketing strategy they are not able to compensate for their outdated name
● Line (121-123) No written corporate strategy even though there is a vision communicated
by Jan. This lack of organization can lead to confusion for the employees. RDM lacks focus.
● Line (123-124) No written operations management strategy can lead to confusion within the
operations sector which can cause lower quality products.
● Line (124) No human resources plan can cause employees to feel insecure in the workplace
as there is no set of procedures for the dismissal of workers.
● Initially, by moving towards automation, RDM will not make a profit, since capital
expenditure will outweigh sales revenue (Jan is forced to lower price due to competition)
● Line (5-10) Demand for goods and services in the healthcare industry would be growing as
the baby boomer generation reaches retirement age.
● Line (15-20) Prague is a magnet for tourists as it is one of the most beautiful cities in Europe
which has aided the economy of Czech.

Table of Contents
 ● Line (15-20) Educated Czech’s speak German in addition to Czech which facilitated
positive trade relations with Germany, which is Europe’s largest economy.
● Line (60-70) Success of the order for water bottles lead to the executives at RDM
encouraged Jan to manufacture customized aluminum bottles.
● Line (75-80) Free movement of labor throughout the European Union lead to RDM
recruiting engineers from universities across Europe.
● Jan having Westernized innovative ideas
● Line (106-107) They have the opportunity to lucrative markets where the demand is high in
countries such as the Netherlands, Scandinavia, Belgium, and France.
● Utilizing job production method in production of aluminum bottles, ensures that no
aluminum would be wasted - environmentally friendly.
● Line (10) change in social trends/preferences: demand for Kerosene stoves declined so
RDM had to change their product.
● Line (31-32) the division of Czechoslovakia into the Czech Republic and the Slovak
Republic which is a threat to the economic situation of the country as well as the market in
which RDM operates
● Line (34-36) possibility of technological issues, depreciation, the problem with the system
can lead to delay in production altogether and can be time-consuming and expensive to
repair
● Line (45-46) the automation of production methods: laying off workers can cause them to
formulate pressure groups or revolt and this is not beneficial for the company’s reputation in
the community
● Line (53) Due to globalization, the fierce competition increased with the Asian
manufacturers, causing Jan to lower cost structures by automation.
● Line (75-77) Due to globalization leading to automation, the business had to lay off some of
the employees which could be a threat to the business as it caused trouble with the local
community which can lead to damage of the business’s reputation.
● Line (80) Due to the reduction and transformation, the business no longer has the level of
local influence that it had.

1. (a) Explain the following:

(i) working capital cycle (Appendix 1) [4 marks]

Working capital ​(or net current assets) is the amount of finance available to a business for its daily
operations. It is calculated by current assets minus current liabilities. HOWEVER, the working
capital cycle r​efers to the ​time interval between cash outflows for costs of production and cash
inflows from customers​ who receive their finished goods and services.

Table of Contents
*If anyone’s school mentioned anything about guerrilla marketing please share with us!!

it's basically a low cost marketing strategy which businesses use to advertise for a specific product,
where they usually do something big and attention grabbing. An example in RDM’s case would a
giant aluminum water bottle in downtown Ctech. Pros: low cost, effective, and takes a short time to
be recognized with the improvements in technology (pictures and social media). Cons: it is only
effective in certain places, redundant, ethics are involved, takes a long time to set up.

Table of Contents