Liberating Entrepreneurial Energy @ Continental AG in De Wit & Meyer
Continental Case Study
The business environment that characterizes the world’s economy encourages and somewhat forces entrepreneurs to develop innovative solutions to the necessities and demands of the customers they intend to serve. As a consequence, innovation becomes extremely important in creating competitive advantage. The use of innovation by entrepreneurship is intended to sustain the growth of corporations.
Corporate entrepreneurship is acknowledged as the process used by individuals inside organizations in pursuing opportunities without taking into consideration the resources they possess at that moment. Technology plays a very important role in this process, given the fact that entrepreneurial managers connect small pieces of technological knowledge in order to respond to customers’ problems, requests, and needs (Ramachandran, 2010). Furthermore, such managers develop these opportunities and build business segments based on them that are intended to determine and support the growth of the company in case. In addition to this, the process of corporate entrepreneurship helps transform these companies.
The process of corporate entrepreneurship is consisted of several phenomena that must be taken into consideration. These phenomena refer to the generation of new business segments within existing companies, the transformation of such companies by reshaping the main ideas they are based on, and innovation. The generation of new business segments is sometimes referred to as intrapreneurship. The transformation of these companies is considered to be a form of strategic change at organizational level. In other words, corporate entrepreneurship represents the process through which an individual or a group of individuals collaborates with an existing company in order to strategically transform that company and determine innovation within the company in case.
Strategic leadership is a leadership style characterized by developing a vision and general direction that the company must follow. Also, in this case, leaders must make proof of their ability to implement the growth strategy, not just develop it. Such leaders are expected to ensure that the groups they manage become capable of implementing the change processes that their company requires.
Regarding the company’s strategy, leaders must ensure that the analytical dimension and the human dimension are addressed by the strategic implementation. The main functions of strategic leadership refer to achieving the common objective of workgroups within the company, developing and maintaining teams, and stimulating and developing employees. Specialists in the field have identified several skills required by strategic leadership: developing a strategic plan, focusing on continuous improvement, developing leaders at all levels, emphasizing stakeholder contributions (Ramey, 1992).
There are several differences between corporate entrepreneurship and strategic leadership. For example, corporate entrepreneurship focuses on encouraging innovation in order to transform and support the growth of the company, while strategic leadership focuses on developing and implementing a general strategy that the company should follow in order to ensure its growth and expansion. Also, corporate entrepreneurship deals with smaller projects, with identifying and developing new businesses that the company must address. In opposition with this situation, strategic leadership provides a larger image or strategic direction intended to help business units within the company to develop value.
Although Continental AG was one of the most profitable German companies and the leader of the rubber industry at the beginning of the 1990s, the decreasing demand for tires significantly affected the company’s situation. As a consequence, the company’s profits started to diminish, until the company actually started to report record losses. The declining situation of the company was also due to the management team that proved to be quite inefficient and unable to adapt to market changes. In other words, the company’s managers focused on fulfilling their administrative activities instead of developing and implementing strategies intended to expand the business segments these managers were in charge of.
The recession of the global tire industry determined Continental to take several measures. The development of the company was determined by the strengthening competition, but also by several internal factors, like poor profits reported by certain corporate divisions of Continental, the inability to integrate acquired companies within Continental’s growth strategy. The reasons behind this situation can be attributed to the company’s organizational structure and culture.
Continental’s organizational structure was a bureaucratic and centralistic one that did not allow for a flexible decision making process and for the development of business divisions in the direction required by market conditions. The company’s structure was mainly oriented towards responding to functional issues, instead of responding to the requirements of the market and of customers. This is also because this type of structure implemented by Continental reflected the company’s centralized control philosophy. Members of the board acknowledged the fact that the divisions within the company did not have sufficient autonomy, the decision making process was a centralized one, and the main characteristic of the company was represented by control.
This situation, combined with external factors, determined a series of issues that led to the decline of Continental, after the company enjoyed its position as a leader in the rubber industry. Such issues were identified by members of the company as the lack of awareness regarding the factors that determined the company’s declining situation, not properly managing internal competition, centralized innovative potential, the lack of entrepreneurial initiative from managers and employees. In other words, Continental was not characterized by corporate entrepreneurship. Even more, the company did not encourage such processes, given the centralized structure that did not allow for this type of practices to take place.
The company’s situation started to change when Hubertus von Grunberg became the company’s Executive board chairman in 1991. He stated that the main objective that the company had to reach consisted in stabilizing its profitability and encouraging sustained improvement. He considered that the company’s growth was inefficiently based on acquisitions instead of innovations. The program developed by Grunberg included the following points: growth through internal development and profitable production structures, investments in sales revenues, strategic alliances, reduced acquisitions, technological leadership, expansion of the company’s market position on European level, pro-active environmental protection, rescue operation for the company’s tire division, decentralizing responsibility, increasing sales.
In addition to this, Grunberg installed two main perspectives that were to be followed by managers in the company and their employees. Therefore, Grunberg changed the profit orientation as a growth support, in comparison with the company’s initial strategy that focused on increasing sales. Also, Grunberg insisted that the solution to the company’s problems was represented by innovation.
In order to achieve the objectives established by Grunberg, it seemed necessary to increase productivity in all of the company’s divisions, especially in those that did not rise to satisfactory standards. As a consequence, it was necessary to implement a transparency of Continental’s revenues and expenditures. Also, Grunberg was aware of the fact that in order to implement a flexible decision making process it was necessary to decentralize the responsibility of managers. This allows for the informational flow to be characterized by a lower number of errors.
The decentralization of each business division of Continental allows to observe them more efficiently and to easily identify the problems that interfere with their activity. This type of business management has proven to be efficient in the case of other companies in this industry. Therefore, Grunberg’s decision makes sense from this point-of-view.
The company’s management understood that in order to ensure Continental’s growth it was necessary to encourage innovation. The management of the company developed a strategy based on the following steps:
Reaching for technological leadership
Developing and sustaining an innovative force
Organizing research-development-engineering meetings
Developing the company into becoming a systems supplier for the automotive industry
Acquiring several companies
Reaching for technological leadership
This strategic direction was established by Grunberg in order to create competitive advantage. His intention was to transform the company’s capabilities into becoming the leader regarding technological aspects in the industry in case. He considered that this objective can be achieved through the innovative capability of Continental’s employees on individual level. This strategy was applied in all business areas of the company.
Although the tire industry and the technological developments in the field seemed to discourage other progresses on technological level, Grunberg’s perseverance led his employees to think that the technological potential of the industry has not been reached, and that certain innovations regarding products and processes were possible for the company to benefit from. In order to prove its intensions in this direction, Grunberg made significant investments in the company’s research and development process and also allocated some of the sales revenues for this activity. The results of these investments proved its efficiency. For example, the company was able to develop a new tire line and a one-stage tire building machine.
Developing and sustaining an innovative force
However, Grunberg did not consider himself satisfied with the level reached by the company. He considered that Continental could increase the efficiency regarding the use of its resources, and also the innovative capability of the company. As a consequence, Grunberg and the company developed a technology center. The reason behind building this center was represented by the fact that it was intended to supply the innovations needed by the company.
Organizing research-development-engineering meetings
Such meetings were organized by Continental in order to focus around researchers and developers within the company and to grant them an entrepreneur value, in order to directly confront them with the demands expressed by the managers in charge of divisions that worked with the market and with customers. These meetings were in the favor of both the company and the researchers and developers. This is because the company benefitted from the ideas and brainstorming of these employees, while researchers and developers had the chance to express their knowledge and skills and to present their innovative ideas.
Developing the company into becoming a systems supplier for the automotive industry
This strategic direction can be explained through Grunberg’s ambition and belief in Continental’s capability of developing cutting-edge technology and therefore creating the competitive advantage needed by the company in order to become the leader in the market in case. Also, given the fact that the market demands required certain modification regarding the company’s strategy, Grunberg decided to reorient Continental’s strategic activities towards producing several systems used in the automotive industry. The main aspect that the company focused on was represented by technical chassis components introduced in the company’s product line.
This was considered to encourage and support the expansion of the product range offered by Continental, as this was thought by Grunberg to be the strategic solution to the problems that affected the company’s activity. As a consequence, it was expected that Continental would increase its market share by introducing a series of new products on the market. The development of the automotive industry and the increasing demand for such products allowed for such an improvement in the company’s position.
Acquiring several companies
The acquisition of smaller companies is sometimes a good idea in order to expand the production capacity and the line of products of the company, given the fact that such smaller companies have the advantage of being able to produce goods that the acquiring company does not produce. Such an example is Teves ITT Industries. Grunberg decided to acquire it because of brake and chassis operations that were necessary for expanding Continental’s product line and improving its position on the market.
Corporate governance at Continental AG
In the case of Continental, the Corporate Governance Principles serve to create a responsible management of the company that is based on creating value through its innovative product and services (Continental, 2010). The main objectives of these principles are represented by increasing the transparency level regarding the boards’ activity and to help stakeholders understand the mission, vision, and strategy of the company. In addition to this, the corporate governance principles are intended to increase the confidence level of investors, customers, and employees in the management and control of the company.
Corporate Social Responsibility at Continental AG
The current global economic environment requires the sustained support of companies and their involvement the problems of the community. This means that it does not suffice to provide high quality products and services, but it is also necessary to get involved in aspects that concern the environment or the community, with all of its components. Most companies, especially large corporations are intensely involved in such activities. Continental makes no exception.
In order to prove its commitment towards supporting the community, Continental sustains corporate social responsibility activities by developing a constructive dialog with several interest groups (Degenhart, 2010). In other words, the company aims at treating people and the environment in a responsible manner. This means that the company intends to intensify its efforts into improving resource-saving products. In this activity, employees play a very important role. Their skills and motivation is intended to help achieve the objectives of the company.
Corporate Governance at Goodyear
The presentation of Goodyear’s guidelines seems to be more formal than that of Continental. The document refers to the size and composition of the board, the term limits, the responsibilities of the board, the selection of directors, the majority election of directors, board meeting agenda, their interaction with investors, strategic planning, shareholder proposals, and several standards (Goodyear, 2010).
Corporate Social Responsibility at Goodyear
The main aspects that the corporate social activity is based on at Goodyear is represented by the company’s focus on consumers, engaging the company’s associates within such practices, respecting the environment, supporting the communities, supporting the company’s employees (Goodyear, 2009). As one may observe, there is not much difference between the corporate social responsibility at Continental and that at Goodyear. Such practices are similar in most companies. The difference between the activities implemented by these companies is represented by the organizations they collaborate with.
There are two theories regarding to corporate social responsibility that are taken into consideration when companies establish their involvement in such aspects: the shareholder theory and the stakeholder theory. The shareholder theory assumes that the company’s main objectives is to generate profits for its shareholders, with no interest regarding matters of the society (Smith, 2003). The stakeholder theory assumes that the company must involve in the problems of the community and in taking into consideration different categories of stakeholders (Phillips, 2003).
Regarding the company’s functional structure and its modification by Grunberg, the main aspect that can reveal its effectiveness is represented by the fact that he tried to decentralize the structure of the company, especially where the decision making process is concerned. Grunberg’s intention consisted in allowing more power to division managers, in an effort of stimulating their initiative and, therefore, encouraging the innovation that was required by the company’s processes. In other words, Grunberg tried to impose the division managers to implement an entrepreneurial manner in their activities.
His plan proved to be successful, given the fact that the process in case led to unleashed mobilization of entrepreneurial potential in each division of the company. Therefore, one may consider that Continental was characterized by corporate entrepreneurship as a result of Grunberg’s plan. The managers and employees at Continental were encouraged to direct their activity towards increasing profits.
Grunberg also modified the company’s organizational structure. This is because he considered that the initial organizational structure of the company did not allow for a flexible decision making process and satisfactory informational flow. The organizational structure that Grunberg implemented focused on decentralization. This type of structure allowed to the company to focus on the production process and on including innovation within the activities of the company, rather than on administrative aspects. The improvement of the company’s position on the market reveals the efficiency of this strategy.
As a result, the corporate structure of Continental also modified. Grunberg and the managers made certain modifications to the initial corporate structure that allowed more independence to certain divisions. In addition to this, the modified corporate structure supported better communication and collaboration between divisions. This way, the company was able to encourage the entrepreneurial potential of managers and employees.
Stephan Kessel took over Continental when the company was on a good global position, given the significant improvements made by Grunberg. However, Kessel was aware of the fact that the company had to continue to implement similar strategies in order to maintain its position on the market. The company benefited from the opportunities created by the automotive industry growth.
Kessel’s idea was to transform the company from a high quality manufacturer if several products required in this industry to an expert in automotive chassis. This allowed the company to gain competitive advantage in a narrow field, therefore establishing the company as a leader in this market segment. In other words, Kessel decided to address a smaller market segment, but of high importance, and specialize in that segment of products, rather than addressing a larger market dot not allow for significant development of the company, with large players already established on that market, and with difficulties in gaining market share.
Although the idea made sense, it was not easy to integrate chassis production into the company’s operations. The integration of such components assumed that a series of collaboration activities between the company’s divisions had to be developed and implemented. The focus of the company regarding this aspect consists in creating value in all of the company’s business activities. In order to achieve these objectives it is necessary that the company develops and implements an organizational culture of high performance.
Reference list:
1. Ramachndran, K. (2010). Corporate Entrepreneurship: How? Indian School of Business. Retrieved January 13, 2011 from http://www.hajarian.com/esterategic/tarjomeh/balo.pdf.
2. Ramey, D. (1992). Leading Strategic Organizations. The Leading Edge. Retrieved January 14, 2011 from http://www.strategicleadership.com/images/Resources/leading%20strategic%20organizations.pdf.
3. Corporate Governance Principles of Continental AG (2010). Continental AG. Retrieved January 16, 2010 from http://www.conti-online.com/generator/www/com/en/continental/portal/themes/continental/download/governance_principles_2010_09_29_en.pdf.
4. Degenhart, E. (2010). Corporate Social Responsibility Report. Continental AG. Retrieved January 16, 2011 from http://www.conti-online.com/generator/www/com/en/continental/csr/themes/letter_ebc/letter_ebc_en.html.
5. Corporate Governance Guidelines (2010). Goodyear Tire and Rubber Company. Retrieved January 16, 2011 from http://www.goodyear.com/investor/pdf/corp_gov/corpgovguidelines.pdf.
6. Corporate Responsibility Report (2009). Goodyear Tire and Rubber Company. Retrieved January 16, 2011 from http://www.goodyear.com/corporate/about/responsibility/pdf/gy_corp_resp_rpt_2010_fullpage_smallersize.pdf.
7. Smith, J. (2003). The Shareholders vs. Stakeholders Debate. MIT Sloan Management Review. Retrieved January 16, 2011 from http://sloanreview.mit.edu/the-magazine/articles/2003/summer/44411/the-shareholders-vs.-stakeholders-debate/.
8. Phillips, R. (2003). Stakeholder Theory and Organizational Ethics. Retrieved January 16, 2011 from http://www.bkconnection.com/static/stakeholdertheorypr.pdf.
Get Professional Assignment Help Cheaply
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Why Choose Our Academic Writing Service?
- Plagiarism free papers
- Timely delivery
- Any deadline
- Skilled, Experienced Native English Writers
- Subject-relevant academic writer
- Adherence to paper instructions
- Ability to tackle bulk assignments
- Reasonable prices
- 24/7 Customer Support
- Get superb grades consistently
Online Academic Help With Different Subjects
Literature
Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.
Finance
Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.
Computer science
Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!
Psychology
While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.
Engineering
Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.
Nursing
In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.
Sociology
Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.
Business
We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!
Statistics
We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.
Law
Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.
What discipline/subjects do you deal in?
We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.
Are your writers competent enough to handle my paper?
Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.
What if I don’t like the paper?
There is a very low likelihood that you won’t like the paper.
Reasons being:
- When assigning your order, we match the paper’s discipline with the writer’s field/specialization. Since all our writers are graduates, we match the paper’s subject with the field the writer studied. For instance, if it’s a nursing paper, only a nursing graduate and writer will handle it. Furthermore, all our writers have academic writing experience and top-notch research skills.
- We have a quality assurance that reviews the paper before it gets to you. As such, we ensure that you get a paper that meets the required standard and will most definitely make the grade.
In the event that you don’t like your paper:
- The writer will revise the paper up to your pleasing. You have unlimited revisions. You simply need to highlight what specifically you don’t like about the paper, and the writer will make the amendments. The paper will be revised until you are satisfied. Revisions are free of charge
- We will have a different writer write the paper from scratch.
- Last resort, if the above does not work, we will refund your money.
Will the professor find out I didn’t write the paper myself?
Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.
What if the paper is plagiarized?
We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.
When will I get my paper?
You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.
Will anyone find out that I used your services?
We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.
How our Assignment Help Service Works
1. Place an order
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
2. Pay for the order
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
3. Track the progress
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
4. Download the paper
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!
