ANNUAL REPORT 2012
ARLA CASE
FINDING NEW PASTURES BY ROBERT GANTNER
Arla is owned by 12,256 dairy farmers
PERSPECTIVE TAKING THE LONG PATH The fast-paced changes permeating today’s business environment are ubiquitous facts repeated all over business media. Often, the changes serve as key arguments for proclaiming the futility of longterm strategic planning. In our view, however, that’s not entirely true. Long-term strategic planning is still relevant and should complement more frequent strategic reviews. Especially in cases where more
fundamental changes in the way of doing business or which strategic positions to claim are considered, for example when trying to enter a new market. Once the direction is defined, it still takes meticulous planning, analyses and steel-eyed execution to deliver success. This is also the case for PMI processes,
which are often key enablers and chances, but sadly more often pitfalls, for delivering the value that has been identified at the drawing board. Maintaining focus on how to best combine the relevant units is key.
QUARTZ+CO
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n 2008, Arla launched a new corporate strategy, Strategy 2015. One of its key elements was to establish Germany as a core market with a leading position. Through subsequent acquisitions, Arla had built the required foundation. But along with this came the need to create a coherent organisational structure to realise synergies and connect to the Arla organisation to create One Arla. First, Consumer Germany Netherlands (CGN) was established as a separate business unit and second, the newly established three-letter combination was to be given a physical expression in the form of a stringent organisation populated by the right people. This was the challenge Tim Ørting Jørgensen, EVP for CGN, was facing at the end of 2011. A new business unit
Creating CGN not only required a functioning organisation and management team, but also clarifications of the new business unit’s interfaces with corporate as well as other business units within Arla. CGN was organised and staffed to be able to absorb new acquisitions, which were worked on simultaneously. COMPANY FACTS Arla has production facilities in 12 countries, sales offices in an additional 30 countries and more than 18,000 employees. Arla products are sold in more than 100 countries, with core markets being Denmark, Sweden, the UK, Finland, Germany and the Netherlands.
In the spring of 2012, the existing unit with sales of EUR ~700 million merged with MUH, Europe’s largest longlife milk production unit, with sales of another EUR 700 million. Suddenly, setting up the new organisation to ensure optimal functioning and reaping of synergies took a whole new turn.
Strategy 2015 launched Autumn 2008
A thousand pieces in a jigsaw
When putting this kind of organisational puzzle together, a steady hand is required. Following the acquisitions, Tim Ørting Jørgensen had four complete organisations at hand. To create an efficient CGN, a rigid analytical structure for making the right design choices was established, ensuring clear objectives, efficient co-ordination mechanisms and precise allocation of responsibility. Making the organisation come alive, however, was the crucial next step, and Tim Ørting Jørgensen explains, “Creating a logiTim Ørting Jørgensen, EVP for CGN cal organisational structure was our main focus, but we always had in mind that organisations are made up of people so it’s not just a question of drawing lines in an organisational chart, but also of motivating and engaging everyone to implement the changes and make the new business unit come alive”. To begin with, the top level of the management team was brought on board. “After having defined the first level of the organisation, we held a workshop with the new management team in June 2012 to use their knowledge to create the right set-up, but also to engage the team and make sure they were on board for the journey ahead”, Tim Ørting Jørgensen explains.
As soon as the ACQUISITIONS were ratified, we could conduct a POWERFUL internal launch
15%
The virtue of timing
It takes three to six months for the acquisition of one or several comARLA’S TOTAL REVENUE HAS panies to be approved by the European Union. However, Arla began INCREASED BY 15% defining One Arla straight away. This enabled CGN’s management SINCE 2011 team, on the Monday after the ratification, to present One Arla at all sites in Germany. Already at this point, One Arla included a fully populated organisational structure that was operational and commercially integrated from day one, including invoice handling, orders, etc. “As soon as the acquisitions were Building the Supply Chain unit ratified, we could On paper, organisational design might seem a simple exercise, but conduct a powerful the organisational chart hides a complex reality of roles, interfaces internal launch with and people with dreams, ambitions and feelings. Integrating four a complete roll-out production sites in the Supply Chain division was indeed a chalof our future CGN lenge. The production managers, used to deciding much themorganisation. To me, selves, were involved in creating a coherent unit that also fitted in that was a big mo- the big picture. “We were aware that it meant less responsibility ment,” Tim Ørting for some, but we really wanted to show the advantages that the Jørgensen concludes. support from the rest of the Arla organisation could provide, and I believe we succeeded”, says Tim Ørting Jørgensen.
Merger between Arla and Hansa-Milch eG 2011
Arla bought a Dutch dairy in Nijkerk 2009
Consumer Germany Netherlands (CGN) established January 2012
Arla acquired AlloäulandKäsereien 2011
Merger with Milch-Union Hocheifel (MUH) May 2012
Merger with MUH approved. Organisation announced October 2012