BZU, BAHADUR SUB-CAMPUS

LAYYAH
DEPARTMENT OF BUSINESS ADMINISTRATION
MBA 2009-12, SEMESTER 7
COMPARATIVE MANAGEMENT

MANAGEMENT IN
DENMARK
SUBMITTED TO:
SUBMITTED BY:
CHUGHTAI

Mr. HASHIM ZAMEER

AKHTAR HUSSAIN
(MB-09-22)

DECEMER 14, 2012

Acknowledgeme
nts
I am very thankful to Almighty Allah Who has given me wisdom
and power to learn and seek. All praises and admirations to
Almighty Allah who is the creator of everything.
Thanks also to Hazrat Muhammad (PBUH) who is source of
knowledge and leadership for all mankind forever.
I am also very thankful to my beloved teacher Mr. Hashim Zameer,
who is prompting us towards professionalism. Tons of thanks for
his valuable support and consistent guidance.

AKHTAR
HUSSAIN CHUGHTAI

DEDICATION
This
Report
Is

Dedicated
To

OUR DEAR PARENTS

Who are always a source of love, affection and inspiration for us.
Whose love and prayers always accompanied us and guide us like
a shining star whenever we were in darkness and enable us to
reach this stage.

TABLE OF
CONTENT
HISTORY

06

MACROENVIRONMENT

08

CULTURE

11

DOING BUSINESS IN DENMARK

14

BEING A MANAGER IN DENMARK

15

ROLE OF MANAGER

15

CEO PAY

15

LEADERSHIP STYLE

16

FUNCTIONS OF MANAGEMENT

16

REFERENCES

18

DENMARK

HISTORY
The word Denmark dates back to the Viking age and is carved on the famous Jelling
Stone from around 900 AD. Today though Denmark is very different from its historical past.
Between the 13th and 17th centuries, Denmark was a superpower whose influence was as
powerful as that of the largest European countries. Today, the current size and influence of
Denmark is the result of 400 years of forced relinquishments of land, surrenders and lost
battles. For a small country though, Denmark still punches above its weight in many different
areas including design, architecture, farming, green technology and pharmaceuticals.

DANISH HISTORY IN 25 BULLETS POINTS

12500 BC Immigration of the first hunters

3900 BC Agriculture and animal husbandry

400-700 Incipient urbanization

866-867 Viking conquest of York

c.965 Introduction of Christianity

1015-1034 England under Danish rule

1397-1523 The Kalmar Union with Norway and Sweden

1479 Founding of Copenhagen University

1536 The Reformation. Incorporation of Norway in Denmark

1660-1661 Introduction of absolutism

1666 1917 Danish colonies in Caribbean

1807 Bombing of Copenhagen by the English navy

1814 Norways departure from the Union

1848 Abolition of absolutism

1849 First liberal constitution, the June Constitution

1864 Loss of the German duchies

1901 Introduction of cabinet responsibility

1914-1918 Danish neutrality during the First World War

1915 Constitutional reform, enfranchisement of women

1920 North-Schleswig vote in favor of re-union with Denmark

1940-1945 German occupation

1945 Founding membership of the UN

1949 Membership of NATO

1973 Membership of the EEC

1993 Membership of the EU

DENMARK AT A GLANCE
Population

5584758 (2012)

Area

43,098 Square Kilometres

Geogrhapic Region

Scandinavia

GDP Per Capita

DKK 300,241 (2011)

Capital

Copenhagen

Form of State

Monarchy

Government

The Socialist Peoples Party

Head of State

Queen Margrethe Ii (Since 14 January 1972)

Head of Government

Helle Thorning-Schmidt (Since 3 October 2011)

Life Expectancy

Women 81.62 Years, Men 77.3 Years (2012)

Language

Danish

Religion

90% Protestant

Currency

Danish Kroner, DDK 1 Kroner = 100 re (DDK

5.9=USD 1, 2012)
Membership

UN, OECD, EU, NATO, SCHENGEN, OSCE, IMF,

WTO and Others.

MANAGEMENT SYSTEM IN DENMARK

5

MACRO ENVIRONMENT
The major external and uncontrollable factors that influence an organization's decision
making, and affect its performance and strategies. These factors include the economic
factors; demographics; legal, political, and social conditions; technological changes etc.

POLITICAL SYSTEM IN DENMARK

Denmark is a member of the European Union. However, Denmark, along with the United
Kingdom, obtained special opt outs from the Maastricht Treaty, which allowed them to not
adopt the euro unless they wish.
While Denmark does not use the euro as its currency, the Danish krone is pegged to the
euro.
The Danish government recently rolled out the 2020 Economic plan which aims to create a
balanced budget by 2020 through lower local and regional government spending and spur job
growth.

LEGAL SYSTEM IN DENMARK

Denmark shares with the rest of Europe and the Western World in the way in which
their legal system is designed. Their citizens have a say in the workings of the government,
and they have a very free society based around the rights of the inhabitants. Taking a look at
the components of the legal system allows one to see how the Danish fit into the overall
European picture.

Administration/Leadership:
The Danish administration has three main tasks; make and grant services to citizens,
establish and regulate duties and taxes, and take part in the legal controls of society. The
Administrative Procedure Act ensures citizens that they may participate in matters concerning
them, and outlines rules for the government.

Courts:
Denmark does not have a special or separate constitutional court as in other European
nations. They do however follow a similar hierarchy to the United States; starting at city
courts at the bottom, going next to district courts, and ending in the countrys Supreme Court,
known as the Hjesteret. There are investigative courts known as Undersgelsesretter, and
also permanent Maritime and Commercial courts for dealing with trade and international
issues.

Laws:
5

Danish law is primarily divided into two types, consisting of Public Law and Civil
Law. Public Law is broken into three parts. First there is constitutional law, which pertains to
all matters of state. Second there is international law, which deals with all matters of
interacting with other nations. Finally there is criminal law, which deals with all legal matters
and crimes which are punishable. Civil laws main components are the law of contracts and
torts, the law of property and the law of capacity, family law and the law of wills and
succession (Legal System). These are the laws which most directly deal with businesses and
individuals. Another component of Danish law to consider is the idea of Case Law and
Customary Law, which can also pertain in a business setting in Denmark. Case laws are the
standard legal process yielding a precedent for other case to follow in the future, similar to
the United States. Customary Laws are something which is similar to English fathered
countries Common Laws. These are customs and practices that become the norm in an area,
and subsequently become laws of the land. The courts do however ultimately have a say in
their legality.

Relation to the European Union:

Denmark considers themselves a major part of the European Union, and the laws and
policies of the Union often times factor into the lives of Danish Citizens. The rules of the EU
often times pass through Danish legislation, and are then imposed onto the people of that
state. The courts interpret this legislation ahead of time, and the way in which it is passed
onto the people is decided. Trade in the EU is regulated by the Sale of Goods Act and the
Consumer Act, and the people in Denmark are obligated to follow these laws. They are a log
standing member of the EU, and subsequently tend to be very supportive of the EU and its
ideals.

Trade
Denmark is a member of the EU (European Union) and has a strong stand against
non-tariff barriers. It has a no-barrier policy and has no unilateral trade barriers against the
United States. As a member of the EU, Denmark is required to apply external duty tariffs to
all products entering the country from non-EU members. After the goods have entered the
country and the necessary duties have been paid on them they are free to circulate throughout
the other countries of the EU since it is a free trade zone. The duties for non-EU members are
relatively low for manufactured goods with a 4.2% general rate. The duties increase however
with textile, clothing, and food-processing sectors reaching as high as 17.3% and facing many
tariff quotas. A Value-Added tax of 25% is added to all goods sold in the country.

 ECONOMIC SYSTEM IN DENMARK

Denmark has a wealthy, well-balanced, and globally competitive economy. The government
employs extensive welfare measures, where government spending accounts for over 50% of
GDP, and there is limited income disparity.
Denmark, however, was far from immune from the global recession, with the economy
contracting in 2008 and 2009. Recovery has been slow with sub- 1% growth expected
through 2014.
Immigration laws have recently been eased allowing for Danish firms to more easily hire
workers from outside the EU, bringing them more in-line with the rest of the Eurozone. The
Danish Financial Supervisory Authority, which is an institution under the responsibility of the
Minister for Economic and Business Affairs, regulates the entire financial sector in Denmark,
including the insurance industry.
The banking sector has improved since 2009, benefitting from government stabilization and
recapitalization efforts.
Banks that participated in the DKK100- billion rescue package are now required to lend
preferably to small and mid-sized businesses, and have agreed to management compensation
caps and increased.

Government Supervision.
Denmark has a diverse economy, but one that relies almost entirely on human
resources, as there are few natural resources available. Denmark's main exports are: industrial
production/manufactured goods 73.3% (of which machinery and instruments were 21.4%,
and fuels, chemicals, etc. 26%); agricultural products and others for consumption 18.7% (in
2009 meat and meat products were 5.5% of total export; fish and fish products
2.9%). Denmark is a net exporter of food and energy and has for a number of years had
a balance of payments surplus while battling an equivalent of approximately 39% of
GNP foreign debt or more than 300 billion DKK. Within the European Union, Denmark
advocates a liberal trade policy.

CULTURE OF DENMARK
The Danish Language

Over 98% of the population speaks Danish. German is recognised as an official regional
language in the Nord-Schleswig region that borders Germany, where it is spoken by 23,000
people, about 0.4% of the 5.2m Danish population. Greenlandic, an Inuit language, is spoken
by 0.1% of the population.

Danish Society & Culture

Denmark is an egalitarian society.
. Interestingly this is reflected in their language, which employs gender-neutral words.
. Most Danes are modest about their own accomplishments and are more concerned about the
group than their own individual needs.
. Maternity and paternity leave provisions are particularly generous in Denmark.
. Men are more actively involved in child-rearing activities than in many countries, although
the division of domestic chores is similar to other developed countries.

Danish Family Values

. Most families are small.
. The nuclear family is the centre of the social structure.
. Children are raised to be independent from an early age.
. Most are put in day care centres at about 1 year old.
. Marriage is not a prerequisite to starting a family. Many couples live together without
legalizing the arrangement with marriage.

5 Dimentional Model
If we explore the Danish culture through the lens of the 5-D Model, we can get a good
overview of the deep drivers of Danish culture relative to other world cultures.

Power distance
This dimension deals with the fact that all individuals in societies are not equal it
expresses

the

attitude

of

the

culture

towards

these

inequalities

amongst

us.

Power distance is defined as the extent to which the less powerful members of institutions
and organisations within a country expect and accept that power is distributed unequally.
With a score of 18 points Denmark is at the very low end of this dimension compared to other
countries. This matches perfectly with what many foreigners in Denmark express: Danes do
not lead, they coach and employee autonomy is required. In fact, Denmark ranks highest
amongst the EU27 countries in terms of employee autonomy. With a very egalitarian mindset
the Danes believe in independency, equal rights, accessible superiors and that management
5

facilitates and empowers. Power is decentralized and managers count on the experience of
their team members. Respect among the Danes is something which you earn by proving your
hands-on expertise. Workplaces have a very informal atmosphere with direct and involving
communication and on a first name basis. Employees expect to be consulted.

Individualism
The fundamental issue addressed by this dimension is the degree of interdependence a
society maintains among its members. It has to do with whether peoples self-image is
defined in terms of I or We.
In Individualist societies people are supposed to look after themselves and their direct
family only. In Collectivist societies people belong to in groups that take care of them in
exchange for loyalty. Denmark, with a score of 74 is an Individualistic society. This means
there is a high preference for a loosely-knit social framework in which individuals are
expected to take care of themselves and their immediate families only. It is relatively easy to
start doing business with the Danes. Small talk is kept at a minimum and you do not need to
create relationships first. Danes are also known for using a very direct form of
communication.

Masculinity / Femininity
A high score (masculine) on this dimension indicates that the society will be driven by
competition, achievement and success, with success being defined by the winner / best in
field a value system that starts in school and continues throughout organisational behaviour.
A low score (feminine) on the dimension means that the dominant values in society are caring
for others and quality of life. A feminine society is one where quality of life is the sign of
success and standing out from the crowd is not admirable. The fundamental issue here is what
motivates people, wanting to be the best (masculine) or liking what you do (feminine).
Denmark scores 16 on this dimension and is therefore considered a feminine society. In
feminine countries it is important to keep the life/work balance and you make sure that all are
included. An effective manager is supportive to his/her people, and decision making is
achieved through involvement. Managers strive for consensus and people value equality,
solidarity and quality in their working lives. Conflicts are resolved by compromise and
negotiation and Danes are known for their long discussions until consensus has been reached.
Incentives such as free time and flexible work hours and place are favoured.

Uncertainty avoidance

The dimension Uncertainty Avoidance has to do with the way that a society deals with
the fact that the future can never be known: should we try to control the future or just let it
happen? This ambiguity brings with it anxiety and different cultures have learnt to deal with
this anxiety in different ways. The extent to which the members of a culture feel threatened
by ambiguous or unknown situations and have created beliefs and institutions that try to
avoid these is reflected in the UAI score.
With a score of 23 Denmark scores low on this dimension. This means that that Danes
do not need a lot of structure and predictability in their work life. Plans can change overnight,
new things pop up and the Danes are fine with it. It is a natural part of their work life.
Curiosity is natural and is encouraged from a very young age. This combination of a highly
individualistic and curious nation is also the driving force for Denmarks reputation within
innovation and design. What is different is attractive! This also emerges throughout the
society in both its humour, heavy consumerism for new and innovative products and the fast
highly creative industries it thrives in advertising, marketing, financial engineering.
At the workplace this low score on UAI is also reflected in the fact that the Danes
tells you if you are in doubt or do not know something. It is ok to say I do not know and the
Danes

are

comfortable

in

ambiguous

situations

at

the

workplace.

Long term orientation

The long term orientation dimension is closely related to the teachings of Confucius
and can be interpreted as dealing with societys search for virtue, the extent to which a
society shows a pragmatic future-oriented perspective rather than a conventional historical
short-term point of view.
The Danes score 46, making it a short term orientation culture, though very close to
the middle. Societies with a short-term orientation generally have a strong concern with
possessing and if A is true then B must be false. Focus in business life is very much on what
is happening now instead of in ten years time. Priority is therefore given to abstract
rationality and analytical thinking. Western societies are typically found at the short-term end
of this dimension, as are the countries of the Middle East.

DOING BUSINESS IN DENMARK

Denmark has a long colonial history throughout which it has maintained a certain
level of wealth, despite not having experienced an industrial revolution or many raw
materials. A founding member of NATO, Denmark has also been a member of the EU since
1973. Denmark has very high standards in the fields of education and environmental
protection. Danes pay very high taxes, but these are invested well and are the main reason for
Denmarks high quality medical and customer service, standard of living, childcare,
infrastructure and IT. Denmarks important position in international trade, values of equality
and efficiency as well as high standards of living make it an attractive place for foreign
investment.

Working practices in Denmark

Punctuality is very important in Denmark. If you are going to be delayed, its
important you call your Danish counterpart to let them know.
Appointments should be arranged well in advance. However, avoid scheduling
meetings during the holiday months July and August.
The dress code in Denmark is relatively casual and places emphasis on comfort.
The working day starts and finishes early, from 8:00am to 4:00pm with a short lunch
in the middle of the day. Danes will spend more time taking lunch when they go for
business which they do quite often.
The family and home are placed before work. There is a strict distinction between
work time and social time. Danes work hard during the 40-hour work week, but they
expect free weekends, lunch breaks and holiday in return for their time spent working.
Taking work home in the evenings, however, is becoming increasingly common.

Structure and hierarchy in Danish companies

Danish businesses tend to have flat hierarchies. Employees rely less on personal
power and authority and managers are seen more as team leader or coach.
Social barriers between managers and their employees are regarded as unnatural and
undesirable.
Career opportunities are linked to a persons accomplishments, but also to a modest
and socially responsible behaviour.
Flexibility, tolerance, work ethic, social justice and equality for women form the basis
of Danish lives and business environment.

BEING A MANAGER IN DENMARK

Effective cross cultural management will bear in mind that the Danes like to treat all
people with equal respect and deference. Avoid "hard sell" techniques and use direct
communication without hyperbole or superlatives. Focus on arriving for meetings punctually
and making the most productive use of the available time. Danes like to get down to the
business at hand as swiftly and efficiently as possible. They generally say what they think and
expect others to do the same.

THE ROLE OF A MANAGER

Cross cultural management needs to recognize that Danes value the specialized knowledge
that employees at all levels bring. In Denmark, as in most egalitarian cultures, positions of
authority are earned largely on the basis of individual achievement and people at all levels of
the organization, while respecting authority, are free to aspire to those positions. The role of
the leader is to harness the talent of the group assembled, and develop any resulting
synergies. The leader will be deferred to as the final authority in any decisions that are made,
but they do not dominate the discussion or generation of ideas. Praise should be given to the
entire group as well as to individuals.

CEO PAY
Average CEO salaries for job postings in Denmark, IN are 4% lower than average CEO
salaries for job postings nationwide.
Danish CEOs are:

paid (a little?) less than their international peers

receive more in fixed salary

and have an even lower pay-for-performance

relationship

LEADERSHIP STYLES
5

Hierarchy
Hierarchy does not reject individuals. Employees involved in decision-making process.

Private and Professional Life

Private time is more important than business. Clear separation between private and
professional life.

Responsibilities
Individual responsibilities. Negotiation orientation.

Rewards
Rewarding individual achievements. Avoiding conflict and confrontations.

FUNCTIONS OF MANAGEMEN IN DENMARK

Planning
Three general principles play an important role in Danish emergency preparedness
planning and crisis management, namely; the principle of sector responsibility i.e. that the
department or agency which has the daily responsibility for a given sector retains
responsibility for that sector during crisis; the principle of similarity stating the importance of
maintaining the largest similarity possible between the daily setup and the crisis management
setup in order to minimise the extent of organisational re-arrangements when activating the
crisis management organisation; and subsidiarity which means that emergency management
and crisis management activities should be handled at the lowest organisational level
possible.

Organizing
In Denmark, as in some other countries, there has been a trend in the 1980s and 1990s
for collective bargaining in the private sector to shift from the multi-industry level to the
individual-sector level. This has taken place, in particular, through enhanced autonomy of the
employers' associations at sectoral level from control exerted by the central employers'
confederations (sometimes referred to as "centralized decentralization"). The process has,
however, been accompanied by a significant increase in the regulation by statute of various
aspects of the individual employment relationship.

Chinese maritime delegation in Denmark:

China and Denmark share many interests as major shipping nations, and today
Chinese and Danish shipowners are among the worlds largest carriers of goods by sea. Our
meetings with the Chinese maritime authorities are inspiring and fruitful and give us an
opportunity to get the Chinese view on international maritime developments and on topical
issues of common interest.
Management control in Denmark

Danish Control tradition

The management and control traditions which, until recently, were predominant in Denmark
fit with duty ethics and the ideal of unassuming behaviour. Thus business relations are often
characterised by group discussions, or negotiations, and group decision-making in which the
allocation of resources is managed through negotiations among decision-makers (Ramstad,
1991; Schramm-Nielsen, 2001). For example, negotiation, dialogue and consensus are very
important in the budgeting process (Melander, 2003). This is also true when new systems
such as the balanced scorecard are to be introduced (Nielsen and Srensen, 2003) and reflects
the systemic balancing of the interests of various social groups. Further, the ideologies of
duty ethics and unassuming behaviour have the effect of embedding self-monitoring and
social monitoring naturally in the control traditions of the Danes, who seem to have relied
extensively on such monitoring on the basis of the principle of responsible autonomy
(Schramm-Nielsen, 2001). This means that, traditionally, Danes are largely left with room for
autonomy in work-related decision-making but, at the same time, are expected to live up to a
similar degree of responsibility in relation to the actions taken (Schramm-Nielsen, 2001). As
a result, Danish managers believe, or have believed, that their employees do not need
monitoring, an instrument perceived as negative. Monitoring is viewed as a sign of lack of
confidence in the person subjected to it, and as an expression of doubt that he is doing his
duty. In addition, Danes are judged on the basis of their ability to cooperate collectively
rather than of their individual performance (Ramstad, 1991). By contrast, decentralised
management control based on financial key figures and involving corresponding performance
remuneration had not until recently gained much ground in Denmark.

REFERENCES
5

E. Thuesen, D. Tamm, T. Latrup-Pedersen, B. Christensen, Gyldendal Leksikon,

(April 25, 2007). Legal System. Retrieved October 27, 2008, from Denmark.dk
Fivesdal E. & Schram-Nielsen J., 1993; Egalitarianism at work: Management in
Denmark in David J. Hickson (ed) Management in Western Europe: Society, Culture and
Organization in Twelve Nations, New York. Walter de Gruyter.
AMB COUNTRY RISK REPORT OCT 26, 2012, IMF, Axco, Swiss Re and A.M.
Best
NET SORCES
http://www.heritage.org/index/country/denmark
http://www.kwintessential.co.uk/resources/global-etiquette/denmark-countryprofile.html
http://www.cowi.com/menu/jobs/jobvacancies/Pages/hrmanager-denmark.aspx
http://www.cbs.dk/en/News-Press/News/2011/Oktober/Are-Danish-top-executivesunderpaid-or-overpaid
http://www.kwintessential.co.uk/intercultural/management/denmark.html
http://www.eurofound.europa.eu/emire/DENMARK/DECENTRALIZATIONDN.htm
http://geert-hofstede.com/denmark.html
http://denmark.dk/en/society/history/
http://www.eurofound.europa.eu/emire/DENMARK/DECENTRALIZATIONDN.htm