Busines Strategies of Dr. Von Gronberg - Essay Example

Strategy Success is the main objective to any given business enterprise. This will only be achieved where various business strategies are well applied to suit the various business requirements. The strategies that were well laid down by Dr. Von Gronberg are enough proof that continental company can achieve a continuation of its change process. Besides, the new C.E.O has worked closely with Gronberg for some years therefore acquiring experience on how to successfully effect change in an organization. Dr. Von had adequately applied the growth strategy as from the beginning of 90's when the company faced a serious recession. That was marked by considerable overcapacities thus resulting to a reduced vehicle registration. Baker 1993 pointed out that in a rapidly changing environment vertically integrated companies will end up being both highest-cost manufacturers and less flexible than their more agile competitors. As a move to step up the change process, he intensively used internal competition. Amongst corporate units of the company. Corporate headquarters were started which continued to define targets which served as a framework of expected pursuit. The new CEO should continue with this change process as one of his evolutionary strategies According to Porter 1980 a vertically integrated company can be at a competitive disadvantage because its component manufacturers this will make it lack flexibility because its capital investment in establishing methods forms a barrier in technological change. Kr. Van never ignored the idea of technology in his change process it has been said that to manage a business well is to manage its future, and to manage the future is to manage information. He realized that if your competitor has access to the same information as you, then the question becomes one of the speed and the skill with which you use the information. He knew that ht equality of information analysis and how to use technology to integrate the business around the customer was very critical to the future success of continental (Ohmae, 1982) In the early period of his chairmanship of the executive Board he called for the company to actively strive for the leading positions in technology which was to be on the basis of innovative capability of each individual employee in every department of the company. Though the tire areas innovative potential seemed exhausted he continues to count on further product and process innovations saying that the company was looking for access to fields of technology that were not occupied. Technology brings about competitive advantage a thing that favourably distinguishes a company or its products form those of a competition in the eyes of the customers. This can be enhanced with information technology such as reduced cost, better service through speed of response or information provision, or a feeling by customers that the manufacturer understands their needs and values them because of flexibility and responsiveness (schon, 1983) technology has helped the marketing manages in achieving the objective of getting close to customers and integrating the total marketing system. Hammer and Mangorian (1987) suggested an impact/value framework for understanding the way in which technology can create business opportunities. The potential impact of information technology is classified into three areas. Compression of time, overcoming the restrictions of geography and the restructuring relationships. Time compression takes place through clear communication links between organization units or between parts of the business process. IMPACT/VALUE FRAMEWORK Efficiency Effectiveness Innovation Time Accelerate business process Reduce information Float Create service excellence Geography Recapture scale Ensure global management control Penetrate new markets Relationships By pass intermediaries Replicate scarce knowledge Build umbilical cords. Marketing is concerned with satisfying customers needs by providing products and services which give benefits to the customers value technology allows new benefits and enhanced value to be incorporated into products and services. More effective selling means capturing supplier's agents and customers I an information net such that it becomes hard to tell whether customers buy the product or the information layer surrounding it. The new CEO, Dr Stephan Ressel, knows that sweeping re-organization of work is required to gain advantage from technology which is frequently called Business process design. Dr. Von severally effected sweeping changes in the organizational structure on continental a thing that his successor will borrow from him. He dismissed managers and board members who failed to adhere with the laid down policies, for example, in 1993 he fried Gunter H. Sieber who was a board member for the passenger's cars/marketing and tire sales again in 1997 Klaus-Dieter a board member in change of commercial vehicle, tire, research and environment was shown the door. Although his actions has a shock effect for continental which has been more accustomed to a consensus- oriented corporate culture it greatly contributed to the continuity of the company by assuring the responsibility for profit and loss therefore manifesting itself into negative and positive personnel consequences. Dr. Stephan will also effect evolutionary strategy in his chairmanship following the experience he has gathered during Dr. Van chairmanship. He put into consideration the idea that many industries contain one firm that acknowledged the market leader. He therefore applied market leader strategies for the future success of the company. A market leader leads the other firms in price changes new product introductions, distribution coverage and promotional intensify (Kanter, 1984). Unless a dominant firm enjoys monopoly its life is not altogether easy, it most maintain constant vigilance. A product innovation many come along and hurt the leader (Nokia's and Erickson's digital cell phones taking over from Motorola's analog models) the leader might misjudge its competition and fund itself left believed (as sears did when it underestimated k-mart and wall-mart. (Levitt, 1960) to achieve this there was acquisition of Teves by continental in 1998. This acquisition was the first time that Dr. Von went outside the corporation in pursuit of systems supplier status. He has worked to position the company in the new systems field which was strictly on the basis of its own entrepreneurial strength and innovation potential. The 1.9 billion dollars invested in of competency, sales and revenue in chooses technology. This enabled continental to play a major vote in development of world wide automotive industry. The applied mobile defence made the company stretch its domain over new territories which can serve as future centres for defence and offence. Continental positioned itself as a global systems and technology partner in automotive industry a motive that ensured its survival. The total market share expansion for example, acquisition of Teves (1998) was a more aimed at increasing sales hence assuring future survival of the company. A company can improve its profitability by increasing the market share. In many markets one share point is worth ten of million dollars, a one share profit gain in coffee is worth 848 million and in soft drinks, two million no wonder normal competition has turned into marketing welfare. A study by the strategic planning institute (called profit impact of market strategy (PIMS) found that a company's profitability measure by prefix return on investment (ROI) rises with its relative market share of its served market as shown below. Average perform on investment for business with under 10% market share was about 11% a difference of 1% ten percentage point in market share is accompanied by a difference of about five profits in prefix ROI. The PIMS study shows that business with market share of 40% earn an average ROI of thirty percent or three times those with shares under ten percent. These findings led may companies to pursue market share expansion amend leadership as their object for example general electric decided it most be number one or two in each market or else get out (Hakansson, 1987). He professionally employed retrenchment strategy in the year 1995 and 1996 by closing those plants whose production quantities were economically small. He embarked on a permanent review strategy which served as the basis for deciding which plant was to be shut down Another revolutionary strategy to be applied Dr. Stephen is the Kizan approach a strategy applied to minimize business risk. This is done through communicating with customers so as to know what they need; determining future expected growth and assessing the network design. The process is upgraded without the knowledge of the organization outside the department of information technology. The approach ensures a smooth running of operations in the company free from interruptions Recommendations Dr. Kessel should continue with the retrenchment strategy by ensuring that production capacity of workers is well monitored. Those who will not be productive should be laid down to pave for more productive workers. To achieve continuity the new CEO should ensure successful innovations by the company based on its own strength and through its own entrepreneurial forces making sure that he continues decentralization in a series of steps. He should apply the Kizan approach to ensure processes are applied without interfering with the company operations. He should set targets for those in autonomous divisions and units of the organisation through holding meetings aimed at encouraging the corporation's manager to adopt entrepreneurial mindset and act in entrepreneurial manner. The new CEO should put Managers in decision-making situations a thing that was well demonstrated by his predecessor. With acquired skills and developed experience of its new CEO Continental will successfully keep changing itself. The new chairman will combine both the new strategies and continuous strategies discussed above for better results. Self Assessment Card Tick appropriate rating Excellent Very Good Good Satisfactory Marginal Fail Clear Fail Analysis: Depth of understanding of topic and adequacy of topic analysis including knowledge demonstrated 30% Argument: including coherence of argument, breadth of argument and evaluation 40% Acknowledgement: of sources, range and relevance of sources, use of Harvard system, citation accuracy, appropriateness of bibliography 20% Communication & presentation 10% General Comment on performance References Alderson, W. 1957 - Dynamic Marketing behaviour, Irwin, Homewood Hakansson, H. 1987 - Industrial Technological Development, London, Croom Helm Kanter, R. 1984 - The Change Master. Allen and Unwim, London. Levitt, T. 1960 - Marketing Myopia Harvard Business Review Ohmae, K. 1982 - The mind of the strategist, London, Penguin Porter, M.1980 - Harmondsworth Competitive advantage, New York: Free Press Schon, D. 1983 - Reflective Practioner: How professionals think in Action, London, Temple Smith Hammer, M. and Mangurian, G. 1987 - The changing value of communication Technology Sloan Management Review. Read More