FS Casebook Volume 2 (2018)
Edited by YEVGEN BOGODISTOV
Frankfurt School of Finance & Management ProcessLab
Edited by Yevgen Bogodistov
[email protected]
Frankfurt am Main, 2018
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Acknowledgments I would like to thank all students of my “Strategy and Organization” course at Frankfurt School of Finance & Management who contributed to this casebook. I would also like to thank our research assistant Minh Anh Le Quoc and Hannah Schick for their help in layout preparation. I also thank our ProcessLab team: Professor Dr. Daniel Beimborn and Friedrich Holotiuk and especially Professor Dr. Jürgen Moormann, who supported this project from the very beginning. Thank you all for helping in writing, formatting, discussing, designing, and publishing the casebook!
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Preface Dear reader! For a second time we present you our small collection of business studies. This project arose from assignments prepared by students of “Corporate Design and Behavior” (nowadays “Strategy and Organization”) course at Frankfurt School of Finance & Management. Although I like theory, I wanted my students to go “into the field” and see, how the concepts we study work under real-life conditions. Thus, I proposed my students the following task: they had to find a firm, get in touch with the firm’s management, and conduct interviews in order to find out how certain topics are dealt with in practice. I noticed that many topics, such as path dependency, resource-based view, industry dynamics, core competencies, and dynamic capabilities can be understood much better if students talk directly to practitioners. I was fascinated by the positive feedback from the students. They not only understood the theoretical strategic management concepts better, but also conducted their first field research, faced entrepreneurs and managers, and collected experiences from practitioners. Furthermore, during our lectures, we also used business cases from other books. These cases usually deal with well-known companies like Amazon, Apple, Google, Starbucks, etc. They are known, but “too known” as students stereotype them and give “popular” and shallow answers. Moreover, these cases contain “survivor bias” since they are best practices. I doubt that they will all be employed by Google in the future. The business world is composed of many other firms of different sizes working in different industries. I suddenly understood that we need more simple cases, which we encounter in our everyday life: cases relevant for cafés, groceries, small IT firms, and big but less known enterprises. So, I decided to produce a small online “casebook” composed of different cases from my students. Please notice: First, you will find in this book only business cases from those students who allowed me to publish their case. Second, the students do not have experience in writing academic papers, so the cases are published “as is” (of course with little corrections mentioned below). Third, Frankfurt School is an international business school and not all students are native English speakers. So, if you encounter a mistake, please be merciful – I’m convinced that they did their best and they are becoming better with each day spent here at Frankfurt School. Fourth, although I asked my students to provide a case without analysis, some of them added their thoughts and visions. I deleted those paragraphs to allow for your own analysis of the case. Finally, (and very important), although the references look very simple, remember that each business case is grounded on at least one real-life interview with a manager or with the owner of the case firm. Consequently, the data might be more interesting than it appears at the first look. I hope you will like our small business cases! Feel free to use them, cite them, and apply them to your topics of study. Yours faithfully Yevgen Bogodistov
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Table of Contents
Acknowledgments .......................................................................................................................... 3 Preface ............................................................................................................................................. 4 Table of Contents ............................................................................................................................ 5 1.
Core competence ..................................................................................................................... 7
1.1.
Case „UE Paper Mill of GOZNAK “ ...................................................................................... 7
1.2.
Case „LÖWEN-Gruppe “..................................................................................................... 12
1.3.
Case „ Fairsicherungsladen Frankfurt Versicherungsmakler GmbH “ ............................ 20
2.
Dynamics ................................................................................................................................ 25
2.1.
Case „Wayss & Freytag“ .................................................................................................... 25
2.2.
Case „ Kronprinz Hotel Troisdorf “ ................................................................................... 31
3.
Emotions................................................................................................................................. 38
3.1.
Case „meetyoo conferencing“ .......................................................................................... 38
3.2.
Case „Fletcher’s Better Burger“ ........................................................................................ 43
3.3.
Case „ Acomodeo UG “ ...................................................................................................... 47
4.
LSS........................................................................................................................................... 52
4.1.
Case „ Gogoprint “ ............................................................................................................. 52
4.2.
Case „Deutsche Bank (Six Sigma)“ ................................................................................... 57
5.
Motivation .............................................................................................................................. 62
5.1.
Case „ Soufflet group “ ...................................................................................................... 62
5.2.
Case „Zeit für Brot “ ........................................................................................................... 66
5.3.
Case „Granny’s“ ................................................................................................................. 73
5.4.
Case „Bureau van Dijk – A Moody’s Analytics Company“ ............................................... 78
5.5.
Case „Reiner Dämon GmbH“............................................................................................. 82
5.6.
Case „World Vision Deutschland e. V. “ ............................................................................ 86
6.
Organizational Structures ..................................................................................................... 92
6.1.
Case „Elaine's Deli“ ............................................................................................................ 92
6.2.
Case „Deloitte DOO Skopje“ ............................................................................................. 95
6.3.
Case „GIATA “...................................................................................................................102
6.4.
Case „ ABC Corporation” .................................................................................................108
6.5.
Case „PETKUS“.................................................................................................................112
6.6.
Case „Creating Change @Semler Company“ .................................................................118 5
7.
Path dependence .................................................................................................................124
7.1.
Case “TimesValue“ ...........................................................................................................124
7.2.
Case „ Manakas Frankfurt “.............................................................................................130
8.
RBV........................................................................................................................................136
8.1.
Case „ Kiwis” ....................................................................................................................136
8.2.
Case „ WT EnergySystems” .............................................................................................140
8.3.
Case “Mangia Mangia” ....................................................................................................144
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1.
Core competence
1.1.
Case „UE Paper Mill of GOZNAK “
By Yuliya Sakovich Daniel Schafei Cristina Terescenco Please refer to this case using: Sakovich, Y., Schafei, D. & Terescenco, C. (2018). Case „UE Paper Mill of GOZNAK“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 7-11). Frankfurt am Main: ProcessLab.
Introduction “UE Paper Mill of GOZNAK” is a paper factory based in Borisov, Republic of Belarus. The enterprise employs 600 people and consists of two production lines: paper and polygraphic. Nowadays, the company produces 18 types of paper itself and more than 200 kinds of paper products, which include bond paper with different degrees of protection, envelopes, paper and school stationary goods, lottery tickets, labels and many other paper products. Today “UE Paper Mill GOZNAK” is a diversified company which uses the most advanced equipment and the latest technology. Its production volume increases annually by 15-20%. The company is not only capable to meet the requirements of the country’s bond paper, but is also a leader in the paper products market in Belarus. How does it manage to be present on the market for more than 100 years and be so successful? What are its core competencies that push the business forward? A short profile of “UE Paper Mill GOZNAK”
Product range: The final products of the company can be sorted into five main categories: rolled paper, bond paper, envelopes, paper and school stationary goods, and polygraphic products. The products can be purchased both in the company store and from the shelves of major retail chains, not only in Republic of Belarus, but also in countries such as Russia, Latvia, Lithuania, Ukraine, Poland, Azerbaijan, Moldova, Tajikistan, Turkmenistan and Uzbekistan. The exports amount to 10-12% of the total output.
Customer base: The end customers of “UE Paper Mill of GOZNAK” include the government, corporations and retail customers. Among corporate clients are large enterprises in food and pharmacological industries which buy baking paper and medical instruction inserts, and also other paper factories which buy the semi-finished paper products. The corporate customers are also the main buyers of envelopes and polygraphic products. The main product category purchased by the government is bond paper, which includes strict accountability forms, bank documents, excise 7
stamps and all kinds of documents of government importance. Retail customers can choose from a wide range of envelopes, paper and school stationary goods.
Suppliers and partners: The factory has a complete production cycle of paper - from raw material processing to direct deliveries of finished products to the customers. Therefore, the only supplies needed for the production of paper are raw materials and modern machinery. Main partners providing the necessary machinery and equipment are European companies, mostly from Germany and Italy. Raw materials are purchased from outside suppliers in Europe and Russia.
Competitors: The company is the biggest player on the paper market in Republic of Belarus and has a strong competitive position on the international market in countries to which it exports its products. The biggest competitors, both in terms of volume and price, are paper producers in the Russian Federation, for example “Ilim Group”, which is the leader of the pulp and paper industry in Russia and one of the leading industry players in the world. On paper protected with watermarks, the main competitor is “JSC Goznak St. Petersburg”, which only specializes on security products. As for printing, there is a huge number of competitors, both inside and outside the country. However, no single paper factory can compete with “UE Paper Mill of GOZNAK” in product assortment.
A brief history of “UE Paper Mill of GOZNAK” The company was founded in 1902 with the intention to produce yellow wrapping paper. Later, in the early twentieth century, a merchant from Minsk O. H. Cherny, who was selling round timber, decided to expand the business by processing the timber, in order to increase company’s profitability. He started using Belarussian woods to produce wood pulp and, later on, paper. After this, the company got its name “Papyrus”. In 1992 the Council of Ministers of Republic of Belarus wanted to set up a national facility for the production of protected paper and securities. In order to do this, paper and woodchemical departments were separated into distinct factories in Belarus. Consequently, “UE Paper Mill of GOZNAK” was separated from the company “Papyrus” and was put under the authority of the Committee of State Symbols with the Council of Ministers of Belarus. With the financial help from the state of Belarus and knowledge from scientists of the National Academy of Sciences and others, the paper mill’s specialists have developed their own technology of making bond paper and have launched a local printing production. With this they have become highly qualified and clear market leaders. Vision, Values, Corporate and Business Strategy The main objectives of “UE Paper Mill of GOZNAK” are to provide top quality products and the best personal approach to each customer. In order to achieve the best possible quality for its products, the factory switched over to only high standard raw materials from European suppliers. Also, it puts much emphasis on technical upgrading of production lines, which contributes to constant development and improvement of products and their quality. In addition, monthly and quarterly analyses of processes and production are conducted to improve the quality.
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In order to meet the various needs of the customers, the factory offers a large variety of products and services, including bulk mailing, which is a special offer for companies that need to regularly send standardized letters to their customers. The production director of “UE Paper Mill of GOZNAK”, Pavel Mironov, summarizes the goals and the business strategy of the company: “Flexibility, individual approach to the customer, a large product range, the development and production of new products and, of course, the quality of the products, are the main goals of our company.”1 Operating Model and Structure The structure of “UE Paper Mill of GOZNAK” is a steep hierarchy. There are five directors who report to the general director and are responsible for certain departments and divisions. The everyday processes of the company are supported by the reception desk, the bookkeeping, and the payroll division. The structure can be better seen in the graph below:
Source: “UE Paper Mill of GOZNAK” website, 2018.
Even though the factory consists of two production lines (paper and polygraphic), the overall management and organization is common for both lines and follows the structure described above. The company identified 9 processes necessary for the functioning of the quality management system, covering marketing activities, procurement, personnel 1
Translated from Russian by authors.
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management, pre-press processes, paper production, other paper products production, postal envelopes, polygraphic products and QMS analysis done by the management. Resources and Capabilities “UE Paper Mill of GOZNAK” has many resources which allow it to adapt quickly to the changing environment and needs of the customers. Human resources play a vital role for the successful development of the factory. The staff is highly qualified and experienced, which makes it even easier to introduce new products and technologies. For example, in the late 90’s, highly-qualified company specialists have developed their own technology of making bond paper and have launched the local printing production. The factory has a full production cycle, which means that it does all processes internally, without outsourcing. It has all necessary machinery and technology that is required for each step of the production. Also, as the factory focuses on constant modernization, it always has the latest technologies and machinery in use. As well, the company is continuously searching for new ways to improve the production. In 2017 “UE Paper Mill of GOZNAK” launched a production shop for recycling waste paper, which was then used to produce paper for writing and office equipment. This development became possible due to the large-scale project "Promoting the transition of the Republic of Belarus to the green economy", which was funded by the European Union and implemented by UNDP in partnership with the Ministry of Natural Resources and Environmental Protection. Core Competencies Being present in the market for more than 100 years, the factory has gained a significant insight about paper products production and paper processing. The factory pursues a policy of constant renovation and modernization. Over the years, a wide range of products has been developed, with which “UE Paper Mill of GOZNAK” entered new markets. The factory started with yellow paper production, then expanded to the school stationary goods market, bond paper market, and other different markets. In the next years, the factory will also expand its product range in the food packaging market. Also, having a modern high-mechanized production, and owning and managing the entire production and delivery processes, “UE Paper Mill of GOZNAK” is able to take orders with volumes ranging from very small to very large, and execute them in a short time, for example from 5 to 15 days. Sometimes, the factory can even provide the products to the customers directly after they make an order, as these products might be already available in the company's warehouse. This is not the case in other similar enterprises in the pulp and paper industry, where clients have to wait for at least one month to be put on the production schedule for their order. The focus on quality, customer individual approach, and many years of experience help the factory to remain successful in the market in the view of the Production Director of “UE Paper Mill of GOZNAK”, Pavel Mironov:
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“Availability of modern equipment and supplies, rich experience of workers and professionals, respect for customers, and quality make our company a reliable partner and allow us to remain successful in the market.”2 Future challenges and prospects At the moment, the factory has several plans that will be addressed simultaneously. Firstly, the goal is to modernize the production, in particular paper production, by replacing individual equipment units and drive mechanisms of the paper machines with more modern and energy efficient ones. This will be done in order to achieve higher productivity and lower energy costs. Also, another important plan is to increase the range of products, for example by producing paper for the food industry, such as packages for flour, sugar and other food products. Regarding the earlier plans, the production capacity of notebooks will be increased due to the acquisition of a new notebook production machinery from Germany in June 2018. The possible challenge that can arise is the increase in the production costs, due to uncertainty in interest rates and currency exchange rates. These factors are significant for input costs as all raw materials are imported. Also, all projects that are to be implemented have certain risks, however, particular risks for each individual project are too complex and unpredictable to be determined yet. References Mironov, P.V. (2018, April 25). Email Interview. Company Background – “UE Paper Mill of GOZNAK”. Retrieved April 20, 2018, from http://goznakpaper.by/eng/eng_history_factory/ BELTA (2017, November 21). GOZNAK Paper Factory first in Belarus started making office paper from waste paper – BELTA Belarus News. Retrieved April 20, 2018, from http://www.belta.by/newscompany/view/bumazhnaja-fabrika-goznaka-pervoj-v-belarusi-nachala-delatofisnuju-bumagu-iz-makulatury-276850-2017/
2
Translated from Russian by authors.
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1.2.
Case „LÖWEN-Gruppe “
By Adrian Heitzer Nick Helberger Philip Linhart Please refer to this case using: Heitzer, A., Helberger N. & Linhart, P. (2018). Case „LÖWEN-Gruppe “ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 12-19). Frankfurt am Main: ProcessLab.
Introduction Since the very beginning of humanity, people have been intrigued by the temptation of gambling. Despite having an image of being ethically questionable, the game of chance has become part of today’s society. “Entertainment, dispersion and self-determination are still the main reasons why people visit gaming centers today”3, states Dr. Daniel Henzgen, leader politics and foreign relations of LÖWEN-Gruppe (Dr. Henzgen, D., 2016). The modern history of the game of chance in Germany started in 1949, just like one of the oldest and most traditional enterprises, the LÖWEN-Gruppe. The industry is characterized by strong political restrictions as well as a massive image problem. The enterprise antagonizes this negative image by constant social responsibility and the support of regulation. Therefore, prevention of addiction and youth protection are a main part of its business. A short profile of LÖWEN-Gruppe
Turnover: In 2017 LÖWEN-Gruppe had a consolidated turnover of 579 million Euro.
Company size: The enterprise is currently employing about 3,800 employees which makes the company socially relevant as employer and tax payer.
Locations: LÖWEN-Gruppe, who is in possession of about 450 gaming venues in Germany, 17 further distribution establishments as well as 16 service establishments located all over the country, has its headquarter in Bingen since 1954.
CSR: As Germany’s leading operator and manufacturer of gaming machines, corporate responsibility is a huge issue for LÖWEN-Gruppe:
3
Translated from German by the authors
Legal, regulated and controlled game of chance is therefore standing in any regard in its focus of action at all levels. All together there are five spheres of activity characterizing the corporate responsibility claim of LÖWEN-Gruppe: 1. Responsible enterprise guidance 2. Youth protection 3. Employees 4. Social engagement 5. Energy and ecology
Economic structure of its industry: The game of chance industry is structured middle class involving about 5,000 small and medium-sized operating companies as well as 2 major manufacturing companies.
A brief history of LÖWEN-Gruppe The company can trace its roots back to 1949, when the enterprise was founded as “LÖWEN Automatendienste”, laying the foundation of today’s LÖWEN-Gruppe. The first electromechanical gaming machine “Rotamint” was invented and produced in 1952. In 1970, LÖWEN-Gruppe installed gaming centers for testing purposes of own devices under real market circumstances, which it later started to certify as one of the first companies in 2015. In 1979 the company introduced the world’s first electronic gaming machine, which in addition to its long tradition and other unique achievements (e.g. world market leadership in electronic dart in 1980 and market leadership for multi-gamers since 2006) led to an inimitable standing in the game of chance industry.
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Vision, Values, Corporate and Business Strategy Vision and values The vision of LÖWEN-Gruppe is to further prevalently shape the game of chance market introducing innovative games on high quality products. Furthermore, the company’s defined goal is to eliminate the illegal part of the industry by offering an attractive and safe gambling environment. As leading manufacturer and operator of gambling, LÖWEN-Gruppe sees itself as a regulative partner working in an open dialogue and close collaboration with political decision makers at all levels, which is based on the goal to prohibit illegal offers, ensure youth protection and the industry’s future. Having a high consciousness for the social sensitivity of its product, LÖWEN-Gruppe focusses on clear rules and their strict observance. Subsequently, the company formulated its values which can be summarized as being legal, controlled and regulated. With its entrepreneurial actions closely tied to these values, the company started in 2015 to certify each gaming center after the newest guidelines of quality management DIN EN ISO 9001:2015. Incarnating legality, control and regulation, the LÖWEN-Gruppe deals with the subjects of players’ protection and prevention of addiction. Hence, employees’ education and development are anchored in the enterprises DNA: “SPIELBEWUSST.DE” for instance is a campaign developed by LÖWEN-Gruppe with the goal to sensitize, reflect and protect the origin of problematic behavior. Another exemplary act is their foundation of “Gesellschaft für Spielerschutz und Prävention mbH (GSP)”, which separates the activities of protection and prevention from the sales responsibility as an independent corporation. Business and Corporate strategy LÖWEN-Gruppe is positioning itself against competitors by being up to date on market trends and technology changes through intense contacts with customers, local authority districts, politics, partners, suppliers and citizens. The business strategy is rather based on differentiation than on cost leadership since the enterprise offers many value added services to their customers (e.g. youth protection with their “clever entry” technology, developed from LÖWEN ENTERTAINMENT and LÖWEN PLAY, which automatically authenticates the players age). Another way of differentiating themselves from competitors is the rental model, in which the company leases their gambling machines on the basis of a more transparent and predictable pricing system (200 Euro per month and machine) than other market participants. The corporate strategy, in contrast is more focussed on obtaining a mix of business units that will allow LÖWEN-Gruppe to succeed as a whole enterprise in the long run. Therefore, LÖWEN-ENTERTAINMENT, as holding company of LÖWEN-Gruppe, is reducing risk of losses and increasing diversity by acquiring operating companies like Casino Royal in 2017, which allows them to share resources or to integrate vertically in order to obtain the maximum value and efficiency of the sum of its units.
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Structure and Operating Model Structure “Today, LÖWEN-Gruppe is stronger than the sum of the individual enterprises” 4 (Bargus, O., 2016), explained Oliver Bargus (Chief of strategic development of LÖWEN-Gruppe). The enterprise bundles innovation and competence of its single enterprises from production, development, distribution and service, as well as operating of gambling machines.
As proprietary company, LÖWEN ENTERTAINMENT combines the capabilities and expertise of five corporations: Two manufacturing enterprises “LÖWEN ENTERTAINMENT GmbH” and “Crown Technologies GmbH”, as well as the subsidiaries “EXTRA Games Entertainment GmbH”, “Admiral Play GmbH” and “BPA Freizeit- & Unterhaltungsbetriebe GmbH” that operate the gaming venues. Operating Model For the purpose of communicating their values, vision and strategy from the management to its units and employees, LÖWEN-Gruppe is using the so called “NOVOMATIC’s Code of Conduct”, a code of behavior as well as CR-instructions in order to transmit the company’s philosophy. These guidelines work as a bridge between its strategy and the day-to-day business as a means to implement the company’s strategy and vision. Another method to be innovative and to build a better connection between daily business and strategy is the quality suggestion scheme, which was introduced in 2014. Employees pass improvements and suggestions through the quality management, which then are evaluated and eventually implemented. Thus, 41 suggestions were accepted, rewarded and implemented last year, including an emergency plan for power breakdowns in the gaming venues or an optimization of the transportation process of devices.
4
Translated from German by the authors
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Resources, Capabilities Since individual resources do not contribute to competitive advantage, LÖWEN-Gruppe is combining its intangible, tangible and human resources in order to create organizational capabilities: Tangible Resources:
In addition to the headquarter, gaming venues, distribution locations as well as 16 service establishments, the enterprise mainly benefits from its two huge production halls located in Bingen as well as in Rellingen.
Intangible Resources:
Starting in 1949 to develop a unique technology, the company was able to receive several patents on their products and games. Being known for innovation, entertaining games as well as ethical responsibility, LÖWEN-Gruppe furthermore profits from its brand name and image connected to its inimitable expertise.
Human resources:
The greatest benefit results from the employee’s know-how and their service, which were transformed over time into organizational capabilities. The worldwide communication with its holding company NOVOMATIC Group further improves the enterprises capabilities to adapt to changes or to introduce products established in other countries.
LÖWEN-Gruppe is not only acquiring their resources e.g. CASINO ROYAL, they also work on developing them internally in their R&D department consisting of 70 employees and about 2,000 employees in the NOVOMATIC enterprise, being responsible for innovation. Routinizing and integrating resources and processes, the enterprise is creating its capabilities like innovative development of unique gambling machines and building a sustainable customer relationship due to its after sales organization and reliability provided by its employees. Core Competences Maintaining a leading position and being established in the gaming industry since its beginnings in 1949 is a result of developing competences which distinguish LÖWEN-Gruppe in its marketplace and make it unique. The know-how in development that keeps them innovative and meets the current regulations without losing the entertainment factor of gambling is one of the attributes that distinguishes them from competitors and that is very hard to imitate. Most competitors manage to meet the regulations of the “PhyisikalischTechnische-Bundesanstalt Berlin” (PTB), whereas keeping the “fun-factor” is a larger problem for market participants. This could be only achieved by shifting the focus from the hard- to the software. In the past a good quality of the gambling machines was crucial for 16
remaining competitive in the industry. Nowadays however, it is relatively easy to imitate and replicate the hardware, which made it evident to focus on providing good and entertaining software for sustaining a long-term competitive advantage (Arras, C., personal interview, 2018). Being part of the holding company “NOVOMATIC” that operates in more than 70 different countries, LÖWEN-Gruppe benefits tremendously from its experience in other markets, which enables LÖWEN-Gruppe to operate in wide variety of markets and to react fast to changing trends. A new regulation that was introduced in 2006 made this visible. Companies were allowed to produce computer based and animated gambling machines. Due to the mother company’s prior knowledge in other markets, LÖWEN-Gruppe was able to respond very quickly to this opportunity, which resulted in a monopolistic position for more than two years. “It is crucial to know about preferences and established products in other markets” 5, concludes Christian Arras, CEO of LÖWEN-Gruppe (2018). Additionally, the company’s goal of building long-term customer relationships, is primarily achieved by focusing on sustaining the entertainment factor through the development process, while still meeting the current regulations. The objective is “to maximize the players pleasure […] because it has positive long-term effects.”6, explains C. Arras (2018). These strengths enable the enterprise to balance the entertainment factor for the customer and the profitability of the company to an equilibrium in which both factors are optimally combined. Future challenges and prospects Being one of the most regulated industries, markets are majorly shaped by regulators rather than market participants in the game of chance industry. “Difficult years still approach the game machine industry, the legislator wants this in such a way”7, forecasts C. Arras (2018). For instance, on the 11th of November 2018 a new gaming ordinance comes to force in which about 220.000 gaming machines must be exchanged or altered all over Germany in order to meet the new regulations. This runs out to a complete redevelopment, prognosticates Arras, who sees these regulations and political restrictions as a result of the government’s aim to further improve players protection. However, the illegal market is constantly growing, which is mainly caused by the online market, running through server covering the whole world making a business worth billion, completely without blocking times and protection of children and young people. Almost one quarter of the game of chance market in Germany is unadjusted and illegal which is primarily due to the online market. A reason for that is the clientele being pushed away by increasing legislation for regulated gambling, stealthily towards illegality, looking for its luck on the Internet. Therefore, a confession of regulation is valid for the serious enterprises of the industry as a survival guarantee. Responding, Dr. Daniel Henzgen explained, that “we promote all legislative and regulative initiatives which are directed against the unlawful game of chance.
5
Translated from German by the authors Translated from German by the authors 7 Translated from German by the authors 6
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Vice versa the aim must be to create conditions that make legal and safe play accepted by guests.”8 (as cited in BCC Business Communications Consulting GmbH, 2017).
Forecast of the turnover of the game of chance industry (Statista, 2017)
Nevertheless, the regulated and legal game of chance industry is a market with high relevance as taxpayer and employer (comparable with the number of employees in the pharmaceutical industry of Germany with about 70,000 employees) and high potential. Digitalisation is also playing an increasingly important role, changing the market and business models by introducing new products and substitutes. This offers chances as well as challenges for suppliers and politics, that can immediately be capitalized by the enterprise, since it already started to think about products they can launch as soon as the legislation legalizes the online gambling market. All in all, “the game of chance in Germany has a future”9, emphasises Christian Arras, explaining that “where people play, we see our future”10 (as cited in Lang E. M., 2017).
8
Translated from German by the authors Translated from German by the authors 10 Translated from German by the authors 9
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References Arras, C. (2018, May 7). Personal interview. Lang, E. M. (2017, May 16). Löwen Entertainment Bingen: Der Spielautomatenindustie stehen schwierige Jahre bevor. Retrieved from http://www.allgemeinezeitung.de/lokales/bingen/bingen/loewen-entertainmentbingen-der-spielautomatenindustrie-stehen-schwierigejahre-bevor_17892888.htm Hofer, J. (2017, November 2). Völlig verzockt. Retrieved fromhttp://www.handelsblatt.com/my/unternehmen/die nstleister/gluecksspielbranche-voelligverzockt/20526764.html?ticket=ST-552002i9V9NwbMpCQN717AUKXj-ap2 Deutscher Nachhaltigkeitskodex. (2016). Retrieved from http://datenbank2.deutschernachhaltigkeitskodex.de/Pro file/CompanyProfile/12158/de/2016/dnk BCC Business Communications Consulting GmbH. (2016). Corporate Responsibility Bericht. https://www.loewengruppe.de/fileadmin/user_upload/Publikation/LO__WENCR-Bericht-2016-ES.pdf Kleibrink, J. & Köster, B. (2017, March). Der Glückspielmarkt in Deutschland – eine volkswirtschaftliche Betrachtung. Retrieved from http://research.handelsblatt.com/assets/uploads/Glücksspiel_St udie1_010417.pdf
Roseano, U.(2018).Retrieved from http://www3.novomatic.com/loewen/imagebroschuere/p age4.html#/4 LÖWEN-Gruppe. (2018). Retrieved from https://www.novomultigamer.de/unternehmen/ LÖWEN-Gruppe. (2016, October 12). Eine Minute mit…Oliver Bagus. Retrieved from https://www.youtube.com/watch?v=EucEZA6CGqU, Statista. (2018). Prognostizierte Umsatzentwicklung in der Glücksspielbranche in Deutschland in den Jahren von 2007 bis 2021. Retrieved from https://de.statista.com/statistik/daten/studie/248120/umf rage/prognose-zum-umsatz-in-der- gluecksspielbranchein-deutschland/ Deutscher Bundestag. (2017). Entwicklung des Glücksspielmarktes in Deutschland. Retrieved from https://www.bundestag.de/blob/516408/bcad7280614b5 448812150633e4c350f/wd-5-061-17-pdf-data.pdf LÖWEN-Gruppe. (2016, October 12) Eine Minute mit… Dr. Daniel Henzgen. Retrieved from https://www.youtube.com/channel/UClKoLvMFZHJsxSbB 1uH3q3Q DIN EN ISO 9001:2015. https://www.tuev-sued.de/managementsysteme/iso-9001
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1.3.
Case „ Fairsicherungsladen Frankfurt Versicherungsmakler GmbH “ By Maximilian Moraga de Mera Lukas Schmitte Christian zu Jeddeloh
Please refer to this case using: Moraga de Mera, M., Schmitte, L. & zu Jeddeloh, C. (2018). Case „Fairsicherungsladen Frankfurt Versicherungsmakler GmbH“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 20-24). Frankfurt am Main: ProcessLab.
Introduction In the 21st century the majority of the insurance market is vulnerable to disruptive and innovative technologies such as Big Data, Analytics and Artificial Intelligence (AI). Despite an emerging trend towards “Insurtech” (Fintech companies in the insurance market), one sturdy Frankfurt-based insurance broker called “Fairsicherungsladen” delivers a service which cannot be offered by the benamed competition: a very personal and fair consultation. In the insurance market, insurance brokers consult their clients regarding their insurance needs through offering a wide range of products for situations in life in order to protect them from incurring substantial losses – an insurance is therefore a hedge against an uncertain loss which could occur in the future. Fairsicherungsladen, a small and independent insurance company located in Frankfurt am Main, managed to establish itself as a reliable partner for its policyholders. Their consultation is tailored to their clients’ goals. They align their insurance products to the living conditions of their customers and thus were able to build a firm customer base over the past years.
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A short profile of Fairsicherungsladen Fairsicherungsladen offers its services to both corporate and private clients. The firm has specialized in small- to medium-sized companies with up to 100 employees with regards to its corporate customer base. After analyzing the risks and needs of their client, they offer a wide range of products such as cyber insurances, company pension plans and many more. In addition to that, they offer the whole variety of insurance products such as health care and pension plans to their private clients. Whereas other traditional insurance brokers visit their customers, Fairsicherungsladen follows a different approach: Their clients visit the firm in their office. This gives the clients the freedom to discontinue the conversation whenever they wish and in that way do not overburden themselves with a contract they do not want to sign on. Another point worth mentioning is the payment system of the firm. Due to the provision-based salary system used by lots of other insurance brokers, the employees working there might be inclined to sell products to their clients which they do not need or are even able to afford. This leads to lots of people distrusting brokers. To offer an alternative, more customer-centric model, Fairsicherungsladen pays its employees a fixed salary, independent from the number of contracts they conclude. This signals the customer that the broker truly wants what is in the customer’s best interest. A brief history of Fairsicherungsladen The company was founded in 1987 in Bornheim (Frankfurt am Main) by Peter Scherfise-Sehn. Back in the day, they started as a rather small “retail business” as customers would visit the company without an appointment in order to receive insurance consultancy. Given this rather untypical business model, the company attracted a mostly ‘alternative’ customer base from lower income classes. Over the past 30 years however, the company has continually shifted its focus: With the transition of their office to Kaiserstraße and the intention to professionalize its business, the company managed to exploit other groups of customers. Today, Fairsicherungsladen counts people from every social class as well as business customers among their clients. As a result, they have continuously increased in size over the past few years, both with regards to customers as well as their own employees. At this juncture, Fairsicherungsladen employs 15 workers of which 10 are permanent workers. Values and Corporate Strategy While lots of things changed over the past 30 years, the honest and personal consultation for their clients stayed the same. When asked about the firm’s core values, the commercial head of the company, Simon Schäfer, named four: Being fair, competent, reliable and independent. Fair, because they offer their clients the product which suits his or her needs and not the product with the highest provision for the broker. Competent, because the firm employs specialized professionals for each branch of insurance products. Reliable, because they do not only sell the insurance but also help their client when an event occurs for which an insurance has been provided. And finally independent, because they do not rely on one provider but rather have a wide network of insurance companies they work with. Overall, one can see that these values are heavily customer-concerned. Keeping in mind the payment 21
system of the firm, it becomes clear that Fairsicherungsladen tries to be a different kind of insurance broker, offering a highly customer-oriented consultation. In the near future, the insurance industry will see numerous changes. Within the next 15 years about 40% of insurance brokers will leave the market because of their age11. This offers a lot of opportunities to the remaining brokers as they can enlarge their market shares. On the other hand, the continuing digitization of the insurance market poses a threat to traditional insurance brokers. Fairsicherungsladen will focus increasingly on commercial customers and complex products tailored to the client’s needs. In order to do so the firm thinks about renting office space in the suburban areas around Frankfurt in order to reach more potential clients. Their intention is to be able to target the small- and medium-sized companies that need consultation in a lot of cases. According to Schäfer, the only way to compete with computers and algorithms is to offer the customer a benefit through personal consultation and to focus on the aforementioned values of the company. Core Competencies Core Competencies are the main strengths and strategic advantages of a firm that allow a business to be competitive in the market. According to the authors of the article “The Core Competence of the Corporation” which has been published in the Harvard Business Review, three conditions should be fulfilled in order for something to be considered a core competency. First, the activity must provide a benefit to the consumer. Additionally, a core competency should not be easily replicated or imitated by competitors and should lastly be widely leveraged across various markets and products. When we asked the commercial head of Fairsicherungsladen, Simon Schäfer, about the firm’s core competencies, he clearly emphasized their personalized consultation which is not influenced by any monetary incentives. What’s more, they have specialized professionals for every segment of insurance products. Thus, they can provide their customers with a very precise and professional consultation. This separates them from their peers, who employ one professional for multiple branches of insurance products. Therefore, they might not be able to give a perfect consultation due to the complexity of every single segment. Having a satisfied customer is the prerequisite for a long-term success of the company. Consequently, the approach of a fair consultation fulfills the criteria of a core competence and is in the centre of the business mission of Fairsicherungsladen. The need to adapt one’s core competencies to a changing business environment can also be seen by the example of Fairsicherungsladen: In the past, a unique selling point was the fact that the customers came to the office - now the company also visits their customers e. g. corporate clients to give them a more detailed consultation. Future challenges and prospects According to Mr. Schäfer, the constant implementation of new regulations such as Mifid II or IDD (Insurance Distribution Directive) causes additional costs for insurance brokers, making it hard to be profitable. Beyond that, the aforementioned market entrance of startups can 11
https://www.versicherungsforen.at/portal/de/wien/leistungen_1/studienundumfragen_4/nachfolgemanagement_im_versicherungsvertrieb_ 2/nachfolgemanagement_im_versicherungsvertrieb_3.xhtml
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be seen as both a threat and a possibility for the insurance industry. One thing is for sure though: Big changes seem to be inevitable. As shown in the graphic below, global investment in these companies, namely Insurtech companies, has increased by a staggering amount of 2500% within only 4 years. It is nowadays already possible to sign contracts for a car or liability insurance with an app on a smartphone. This trend will continue over the next years and insurance brokers will lose market shares through the digitization of the private customer segment.
Emerging technologies and innovations are beginning to transform the insurance landscape as they enable new ways to measure, control, and price risk, engage with customers, reduce cost, improve efficiency, and expand insurability. In the following, we will give a few examples to show the tremendous consequences of new technologies in the insurance sector. Smart house monitoring systems will give homeowners and their insurers data on-, and control over major risks. This is assumed to lower premiums as claims and losses are minimized. “Ring”, a startup based in Los Angeles, builds HD video doorbells that help deter break-ins. Moreover, health and life insurance will also be transformed as wearable biometric sensors, such as FitBits, provide insurance firms with unprecedented data on the health of their clients. With more and more sensors providing ever-increasing valuable data on people’s exercise habits and vital signs, including their heart rate and blood pressure, the way health risk is assessed and underwritten will change. According to a report by PwC, wearables and similar technologies will help make health care “predictive, preventive and personalized,” and this will be reflected in insurance plans going forward. Technological innovation provides enormous opportunities for established insurers to modernize and create new insurance products and services. It has also led to the emergence of many new innovative startups seeking to significantly enhance the way insurance has traditionally been assembled, purchased, and experienced. This will likely fuel further innovation and transformation within the industry. At the same time, addressing issues surrounding comprehensive data regulation will grow in importance, and insurance regulators and data privacy rules will play a significant role in determining how insurers will be able to use data and also influence the level of product customization available to customers. 23
The question is, how can a small company like Fairsicherungsladen be sustainable in such a fastpaced environment? The answer lies within the core competencies and values the company promotes. While an algorithm may be efficient and fast, it does not give the customer the same feeling of concealment that a long-term relationship with a consultant holds. Clients who value a contact person who answers their questions instead of an anonymous FAQ will still prefer Fairsicherungsladen over an Insurtech in the future. References https://www.investopedia.com/terms/c/core_competencies.asp https://www.iif.com/system/files/32370132_insurance_innovation_ report_2016.pdf http://www.oliverwyman.de/content/dam/oliverwyman/europe/germany/de/insights/publications/2015/aug/ INS_Versicherungsvertrieb%202020_web.pdf https://hbr.org/1990/05/the-core-competence-of-the-corporation
Interview with the commercial head of the company, Simon Schäfer https://www.fairsicherungs-laden.de/ https://www.google.de/search?q=vertrag+abschlie%C3%9Fen&sour ce=lnms&tbm=isch&sa=X&ved=0ahUKEwiQg6qSjIbbAhXP KiwKHZh8AasQ_AUICigB&biw=1440&bih=781#imgrc=Cb5x4 l_bjEWqwM:
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2. 2.1.
Dynamics Case „Wayss & Freytag“ By Jae Wong Byun Klaus Hoerhammer Shufei Li
Please refer to this case using: Byun, J. W., Hoerhammer, K. & Li, S. (2018). Case „Wayss & Freytag“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 25-30). Frankfurt am Main: ProcessLab.
Introduction Civil engineering and construction industry has been one of the most traditional and significant industries both in Germany and all over the world. According to the statistics from the German civil engineering industry union, in year 2016, the construction investment has already reached 305 billion euros, which was 9.7% of Germany’s GDP that year. Apart from a majority of small to medium sized construction firms, there are also some big corporates and Wayss & Freytag is one of them. Wayss & Freytag Ingenieurbau AG is a subsidiary of the Royal BAM Group, a Netherlands-based European construction group. With a turnover of approx. € 300 million, the company is primarily active in the German civil engineering and international tunneling markets. Short profile of W&F
Date and place of founding: Neustadt, 1875 by Conrad Freytag Parent company: Royal BAM Group, a European construction company, which is based in the Netherlands and has a total turnover of over € 7 billion.
Divisions: northern Division with offices in Hamburg and Berlin. Central Division based in Düsseldorf. Southern Division which is based in Munich and has a branch office in Passau and in Stuttgart, also serves the clients in Austria and Switzerland. Main competences: tunneling, civil engineering, special foundation, infrastructure, refurbishment, environmental technology. Operating market: mainly in Germany and other European countries. There are also a tiny number of projects being carried out in other countries e.g. Singapore. Number of employees: ca. 1059 Number of current projects: ca. 100 Yearly revenue: ca. 441 Mio. €. In 2017 CEO: Jan Wierenga
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A brief history of W&F Dating back to ca. 140 years ago, the Freytag construction material firm was founded and soon expanded rapidly in their early stage with the help of the new techniques and the pioneering attempts (e.g. reinforced concrete structure). By year 1910, they already had 12 divisions in Germany and other offices globally, such as in Austria, Russia and Brazil. During the Germany’s post-war reconstruction period, they mainly focused on building high-rises and modern infrastructures using their deep- and high- building techniques. In year 1972, the firm renamed to “Wayss & Freytag Ingenieurbau AG”. After that they explored the new areas, such as consulting, construction conservation and environmental technologies. Meanwhile they exploited largely the shield technologies and achieved several patents. This helped them successfully occupy the tunneling market, which they rely heavily on, even until today. In year 2002, the company was acquired by the Hollandaise construction group Royal BAM and concentrate on the German civil engineering market and international tunneling market.
“Driven to maintain excellence”.12
Vision, Values, Corporate and Business Strategy W&F’s vision is to become one of the best and most sustainable German civil engineering contractors, to build long-lasting quality construction. “It is our declared aim to be one of the best and most sustainable German civil engineering contractors, well-known for our excellent know-how and expertise in the construction of demanding infrastructure projects. With our buildings, our tunnels, bridges and transport infrastructure, we build connections for our clients – and for life.” With the values being: Predictable performance: being reliable and building sustainable quality construction Scalable learning: learning from mistakes and actively improving Proactive ownership: Caring the health and safety of the employees and making use of digitalization. 12
Motto from the founder Conrad Freytag, translated from German by W&F webpage.
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Open communication: communicating with each other in a spirit of trust and transparency. Sharing the knowledge. Placing team success above that of the individual.
W&F shares the parent company Royal BAM’s strategy in corporate and business. For the corporate strategy, BAM is currently focusing on the project portfolio called “Doing Things Better” after a thorough analysis. The main drivers, scale and differentiation, are used to maximize the performance of the operating companies. In market segments that are characterized by price-led competition, BAM can achieve cost leadership through project bundling and industrialization. For projects that are demanding, BAM will use its knowledge leadership, innovation, and quality assurance as key differentiating factors. This focus will ultimately lead to a better planning and management of the fixed cost base. For the business strategy, BAM and W&F are sharing goal that they are trying to develop the new propositions in international markets by extending the projects along the lifecycle and leveraging specialisms. Investing in human resources, promoting the efficiency of system, and developing partnerships would play pivotal roles. The operational activities which do not offer sufficient success opportunities (i.e. cannot implement scale or differentiation) will be less reinforced or even terminated. To attract partners and clients, BAM is also devoted to creating a digital construction platform using cutting edge design and visualization tools, in order to offer a more appealing customer environment. Operating Model and Structure W&F competes with other construction companies to get projects from the government or other companies in the construction sector. Therefore, they present the client with their vision of the finished project and how much this would cost. If the client decides to give them the contract, W&F will assign the task to one of their six operational sectors, which are tunneling, civil engineering, special foundation engineering, infrastructure, refurbishment, or environmental technology. Normally, the client pays them a unit price, which means that they get paid a certain amount per cubic meter material that is used. W&F is part of the Royal BAM Group and has a strong company hierarchy. In addition to this, there are smaller companies who are hired by W&F to do some part of the work.
Company or government let companies apply for a project
W&F applies for the job and shows the client their vision of the finished project
The client gives W&F the job
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W&F gives the project to the respnsible sector of their company
W&F starts the construction of the project
Resources, Capabilities, and Core Competences The resources can be divided into three types: Tangible, intangible and Human resources. According to our interviewee, an employee in W&F, tangible resources of W&F are their nine office sites as well as most of the equipment that they use on construction sites (either owned or rented). Part of their intangible resources are their brand, which has been existing for a long time and won a lot of recognition in the industry. Also, unneglectable, the technologies, innovations and case experiences are core examples of intangible resource. W&F employs around 1200 people, who work on multitudes of projects in different sectors of the company which can develop different types of projects, including many civil engineers, drafting specialists, workers etc.
number of the different technologies used for tunneling 200 150
100 50 0 1974-1980 1981-1990 1991-2000 2001-2010 2011-2015 Hydroshield Groundpressureshield Hardstone-tunnel boring machine Development of the hydroshield technology in the tunneling industry (W&F,2017) (Translated from German by the author)
Capabilities in functional areas: Corporate-W&F supervises the activities of the strategic business units Research and Development-W&F is developing their own technologies and innovation patents, e.g. the hydroshield technology Operations- Tunneling: constructing tunnels using modern tunnel boring machines. They also operate the conventional tunneling, which requires qualified labor to build tunnels with the help of more conventional machines e.g. excavators. Civil engineering: the sector that works on projects, e.g. industrial construction for other companies, nuclear power plants, marine work. For instance, they build ports and bridges.
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Special foundation engineering: part of the company that realizes projects on grounds that are e.g. frozen or under a very busy street. Infrastructure: infrastructure describes so called PPP Projects (Public Private Partnership) in which the government gives a private firm the contract to construct a project e.g. a motorway. Refurbishment: construction in existing structures, dealing with modernization or rehabilitation of existing buildings. Environmental technology: the tasks of the specialists, who, for instance, work on the refurbishment of contaminated sites, or the renovation of building that partially consist of toxic materials or the complete dismantling of toxic constructions. Product Design-W&F designs the projects that they build for their customers with the help of their engineers. Marketing-W&F markets themselves through their name as well as advertising their company on exhibitions to appeal to their target groups. Core competence of W&F is its long history and their case experiences from that, which enables them to have a deep understanding of their work. Another core competence is their innovation ability, which enables them to be a pioneer in new technologies and in the industry, for instance, the hydroshield technology. Environmental dynamics Many figures are implying that German construction industry, moreover, European construction industry will expect a bright future. During 2017, the German building sector experienced a calendar-adjusted expansion of 2.5%. Also, German Construction Federation (ZDB) and German Construction Industry Federation (HDB) predicted growth of expected sales approximately 4%, which is equivalent to €117.2 bn. The last time German construction industry experienced such growth was back in 1995 when there were huge demands for construction due to reunification and financial recovery in Eastern Germany. There are several reasons for this such explosive growth. First, German government has adopted an aggressive approach regarding construction investment. German government intend to spend €32,900M solely on public infrastructure. Additionally, the European Central Bank has set the interest rates extremely low, which impacts people’s choices. Now, loan from the bank is very accessible and reasonable for people that this ultimately shifts people’s needs of house from renting to owning a house. Thus, the demand for a good quality raised. Moreover, population has been rising that the needs of construction will be rising. However, the price of construction is expected to rise to 3.5% which means in real-terms, the market only expects 0.5% of the growth. Reasons behind to these are mainly building wrong, and expensive. Great potential still lies in the German construction industry. However, a big strategic shift is urged: digitalization and development of technology. The Chairman of 29
Geniebelt, Klaus Nyengaard stated, “it’s well documented that construction is one of the biggest industries in the world and at the same time the one with the lowest investment in technology (Nyengaard 2017, Geniebelt).” The industry tries to gather the enormous data they have been wasting, approximately 90%, in order to maximize the efficiency and productivity (Koutsogiannis, 2017). On average a construction project spends 80% more than the construction was planned initially. Lagging construction productivity costs the global economy $1.6 trillion a year. Globally, the labor- productivity has been averaged to merely 1% for over past decades while growth of 2.8% of world economy and 3.6% of manufacturing. And if the construction sector productivity catches up with the total economy, there will be a rise of $1.6 trillion which is around 2% of the global economy (Woeztel, 2017). This emphasizes the important needs of change in market regarding technology. Leading companies e.g. W&F has implemented the new technology Building Information Modelling (BIM) to minimize the cost. Also, high technology machines, such as construction drones and self-driven vehicles, are coming out to the market. The market has been in dead-lock for the past decades, but it is facing a fundamental shift with process of digitalization to maximize the efficiency and minimize the cost that has been a constant problem of construction industry. The market has been changing drastically, and newly developed technologies are flowing into construction markets. Future challenges and prospects A challenge to almost all construction companies is the shortage of skilled and unskilled labor, which leads to higher prices and longer waiting time for the clients. Another reason for concern is the rise in price for raw materials and the need to follow new governmental restrictions in relation to sustainability. As our interviewee mentioned in our interview, W&F sees new prospects in the broadband setting market as well as in the usage of new technologies e.g. BIM building, which uses the new digitalized techniques to visualize buildings virtually. Another way how W&F wants to make the firm more efficient is the usage of lean management, and they are gradually introducing this to the company. References Hauptverband der Deutschen Bauindustrie e. V. (2017, October). Facts and Charts in English. Retrieved from https://www.bauindustrie.de/zahlen-fakten/statistikanschaulich/facts-and-charts-english/ Wayss & Freytag Ingenieurbau AG, Group Company of Royal BAM Group, 2016(last updated 16.04.18). Competence. Retrieved from https://www.wf-ib.de/en/focus-oncompetence/ Kramer, S. (2016, December). Bauboom sorgt für Fachkräftemangel. Retrieved from https://www.tagesspiegel.de/wirtschaft/berlinerbaubranche-bauboom-sorgt-fuerfachkraeftemangel/14985948.html Royal BAM (2018). Strategies. Retrieved from https://www.bam.com/en/about-bam/strategy
Development of the hydroshield technology in the tunneling industry. (2017, May 10). [W&F homepage]. Retrieved from https://www.wf-ib.de/en/focus-on-competence/ Koutsogiannis, A. (2017, October). Go mobile, Go cloud, but keep the data. Retrieved from https://geniebelt.com/blog/go-mobile-go-cloud-but-keepthe-data Woetzel, J. (2017, February). Reinventing construction through a productivity revolution. Retrieved from https://www.mckinsey.com/industries/capital-projectsand-infrastructure/our-insights/reinventing-constructionthrough-a-productivity-revolution Hausdorf, I. (2018, May). Personal Interview
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2.2.
Case „ Kronprinz Hotel Troisdorf “ By Janin Dreger Marie Silber-Bonz
Please refer to this case using: Dreger, J. & Silber-Bonz, M. (2018). Case „ Kronprinz Hotel Troisdorf “ In Dr.Y. Bogodistov (Ed.), FS Casebook (Vol. 2, p. 31-37). Frankfurt am Main: ProcessLab.
Introduction The “Kronprinz” hotel is a small hotel near Cologne. It is competing with many of the major hotel chains present in the city itself and takes advantage of the many events taking place in and around Cologne. Trying to differentiate itself from the already quite saturated market within the city, the “Kronprinz” puts its focus mainly on a very customer oriented service and individuality. Guests keep returning for the personal treatment they receive and the special feeling that can only be obtained in a place as unique in character as the “Kronprinz”. A short profile of “Kronprinz” Hotel Troisdorf The hotel “Das Kronprinz” is a hotel in Troisdorf, about 20 kilometers from downtown Cologne. It is a privately owned, family operated company uniquely found only in Troisdorf. Due to its location just outside Cologne it caters to a specific customer segment, different from high price touristic hotels in the city center. Its 48 rooms13 appeal especially to the price conscious guest and/ or business traveler who yet wants to be in proximity to the city and is looking for a place providing a certain standard. With regard to the business guests it is offering free of charge internet access in all its rooms. A brief history of “Kronprinz Hotel Troisdorf “ The hotel has been found in 1900, starting out with an even smaller number of rooms, but has since expanded to a total of 48 available rooms – reaching from single and double to comfort categories for both of them respectively. The property and interior design has had a refurbishment in the past years with the goals of keeping up with increasingly modern requests from their guests. Some of the measures that had to be taken include the implementation of Wi-Fi in all their rooms, more modern interior design and furniture as well as a broader variety of breakfast options. Despite being a very traditional and historical place to stay at, the team of staff makes every effort to ensure being up to date with more recent developments. The “Kronprinz” has been in private hand since its founding and has been led by family and close relatives ever since. Logo and name as found in main hall (https://www.booking.com/hotel/de/kronprinztroisdrf.de.html, 2017). 13
http://daskronprinz.de
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Vision, Values, Corporate and Business Strategy The success of the “Kronprinz” is not a result of a random process but instead it is based on a clearly defined strategy. When asking for the vision of the Hotel in an interview with K. Dodenhoff, one of the hotel managers, she explains: We want to provide our guests a place where they feel comfortable and comfort them with a welcoming service fulfilling all their desires. Concerning the Corporate Strategy it is obvious that the “Kronprinz” is competing in the hospitality industry, one that is constantly growing and expanding in number of competitors, whether it be long established major hotel chains and resorts or newly developing short time rentals, increasingly replacing the traditional hotel services. Hence, the quest for differentiation and a sophisticated business strategy are key factors to succeed. So how is the “Kronprinz” competing and what is their competitive advantage? K. Doddenhoff answers: We are only a single hotel and not part of a larger franchise or corporation with several international locations. The “Kronprinz” doesn’t have replicas around the globe, which really makes the experience you get here unique. What might be viewed as a disadvantage at first is what we have decided to turn into our most competitive advantage. Unprecedented care and attention given to each single customer, personal and individualized service and a familiar atmosphere together, is what makes people feel like they found another home away from home. We are focusing on quality rather than quantity. Operating Model and Structure So if the goal is to maximize familiarity and focus on every single guest individually, how is this done at the “Kronprinz”? When conducting our interview, we were given the example of the breakfast menu. What might be seen as a mundane requirement in any hotel trying to make the cut, the “Kronprinz” puts special attention on the most important meal of the day. “The small number of guests allows us to cater to everyone’s needs and wishes separately. We not only provide the basic items such as hot and cold breakfast options with several different juices and coffees, but we also offer unique care on the next level. For guests with special needs and wishes, we have gluten-free, lactose-free and even vegan options throughout our menu. Our staff is trained to remember those important details about our guests and implement that knowledge when serving the customer, i.e. when they return to breakfast in the morning during a longer stay. If any request falls out of our usual range of services and we are told ahead, we will not shy away from any efforts to allow for an amazing experience at our hotel. Another example is the hotel’s traditions regarding business travelers and birthdays that fall in the time frame of the stay. When this is the case, we automatically provide a surprise in their room (typically a mini cake and a small note) awaiting them when returning to the hotel. Additionally, to those small gestures that can make all the difference, we obviously also have a 24/7 reception desk ready to provide help and answer questions at any time of the day.” Resources, Capabilities, and Core Competences In an industry where change is inevitable and constantly present (refer to paragraph 2.7), focusing on sources of profit that lie within the organization is crucial. When the external environment is volatile and unstable, it is even more important to not let those changes disrupt 32
an internal constancy of direction. When distinguishing between resources and capabilities, the most important resources of the “Kronprinz” lie within the intangible and human section. Tangible resources, such as the property itself and any other assets listed on a company’s balance sheet are obviously important as well, but are not the factors leading to competitive advantage. Human and intangible resources, however, when deployed effectively have the potential to do so. Two of the most significant intangible resources are the location and the reputation of the hotel. Situated centrally in the midst of Troisdorf not far from Downtown Cologne and perfectly connected to public transportation (right next to train and bus station), the hotel is a perfect fit for the price conscious costumer looking to not pay the high prices that are typical in Cologne itself, but still enjoy proximity to the city when needed. Furthermore, by giving special attention to every guest the hotel enjoys a superior reputation on several booking and rating portals (most significantly on booking.com). This strong reputation leads to a number of returning guests and a positive word of mouth. Especially considering that the hotel corporation is only represented in one location, a strong brand reputation assures that there is constant demand and people keep coming back for the unique experience. K. Doddenhoff again explains “We’re doing a lot to keep our reputation high. We own a lot to our personnel, one of the main assets of our organization. Without staff that knows exactly what our guests are looking for and understand to implement our strategy accordingly, this place would have a completely different atmosphere.” As can be seen in this statement, another crucial resource for the “Kronprinz” are the skills, know-how and motivation provided by its employees. The management team makes sure to invest in this important resource by providing training and incentives to deliver to the customers’ expectations. It is obvious that those resources alone won’t do the task. It is about combining them and have them work together in order to maximize potential. Interaction of those resources is responsible for the unique capability of the “Kronprinz” to have guests return to their place whenever visiting Troisdorf. Their core competence is building a good reputation and catering to a specific niche of customers that otherwise wouldn’t be served in the area. Creating a familiar atmosphere while also living up to the highest standards of comfort is one of their core competencies. According to Doddenhoff, “It is important to focus on this distinctive capability in in the future to assure highly satisfied guests in the future.”. Industry dynamics – Travel and hospitality applied to The “Kronprinz” “Each year, the global traveler pool is flooded with millions of new consumers from both emerging and developed markets, many with rising disposable incomes and a newfound ability to experience the world. … Over the past two decades, the number of international travel departures across the globe has more than doubled from roughly 600 million to 1.3 billion (see figure 1).” As the graph above shows, air travel has become a lot more accessible to the wider public, with many low fare airlines entering the market and globalization contributing to that development as well. More people than ever are being given the opportunity to explore different countries and culture – with the majority taking advantage of this 33
option. However, this isn’t only followed by higher demand for air travel but also for housing - people who travel will not only need transportation but also a place to stay, hence overall demand for accommodation all over the world is destined to increase in the following years. So where do people want to stay? What are they looking for when choosing a place? What are customer preferences? Have they shifted, when do they occur and who do they apply to? Generally, there’s obviously many factors influencing the choice of hotel, or more generally, accommodation. Just as there are different types of travelers, there’s also different types of trips – ranging from family vacations to business trips and long term stays up to a couple of months. All these different types are likely to require a different way of housing and come with different expectations. The frequency of shifts in customer preferences is rather steady, as preferences do follow trends but aren’t made overnight. They are largely influenced by what’s available on the market and tend to change with each new generation. This is illustrated when taking a look at the case of Airbnb: “Airbnb patrons were described as adventurous, open and often younger travelers who are willing to take a risk booking a place in the hopes of having a unique, localized experience for a reasonably low price. By stark contrast, hotel guests are described as conservative, private and introverted. They value predictable processes and consistent amenities over location, and seek the trust that comes with staying with an organization rather than an individual.”14 The example shows that even though frequency of change in customer preferences might not be that high, the magnitude/ difference in expectations of those different customer groups is large. Whereas some travelers, especially business travelers who have a wider budget than for example students who are backpacking around the world, appreciate the organization and safety that long established large hotel chains can provide, others might be travelling for the experience looking to immerse into local culture as much as possible. The later option is obviously supported by being housed by a local. This trend has led to major hotel chains expanding to include “smaller, boutique brands with the potential to compete more directly with Airbnb by offering localized experiences and personal touches that break the mold of traditional hotel stays”15. Examples of this is the investment of Hyatt Hotels into Oasis, an international room-sharing service that offers private member’s clubs and a network of local employees available to guests 24/7, a bid to offer a more upscale Airbnb alternative. 14
Introduction and market outlook. (n.d.). Retrieved from https://www2.deloitte.com/content/dam/Deloitte/us/Documents/consumerbusiness/us-cb-2018-travel-hospitality-industry-outlook.pdf 15 Introduction and market outlook. (n.d.). Retrieved from https://www2.deloitte.com/content/dam/Deloitte/us/Documents/consumerbusiness/us-cb-2018-travel-hospitality-industry-outlook.pdf
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The competitive situation in the hospitality industry should not be underestimated. Not only has the number of market entrants increased immensely, especially since the introduction of Airbnb and alike companies, but also has comparison between brands become a lot easier for the consumer. Hotel comparison websites and services, such as booking.com, trivago, or Expedia compare prices, services and several other factors that might interest guests within seconds and offer this information to anyone from anywhere. Even the above mentioned online services are expanding their offers to include not only hotels but also apartment buildings or private housing, which seem particularly attractive for longer term stays. Those long term sub-lets not only appeal to price conscious travelers but also provide other advantages such as more equipment (i.e. kitchen facilities, laundry room etc.) and a better cost-benefit ratio. “The flood of capital investment into innovation across the global travel ecosystem should not be taken lightly. The potential for one of the many startups to completely change industry dynamics is likely not a matter of if, but a matter of when. We already have examples to point to in ground transportation and hospitality.”16 Already competing with a rise in private accommodation rentals, hoteliers aiming to keep their properties full must offer attractive rates. However, the increasing number of competitors makes it hard to survive for brands that are only competing in prices. Price competition alone without any other form of differentiation is a death sentence for today’s hotels. Hence, how they compete has become the new question within the industry – and technological change certainly plays a major role! “While the outlook for the hotel industry is generally positive, brands who fails to innovate risk losing market share. With just a few swipes in a travel app, today’s consumers can compare more hotel and private accommodation options than ever before.”17 Frequency as well as magnitude of change, from a technological point of view, has been immense. Not has technology taken over a huge part of the booking process, but it has also started to impact other areas in traveling. Technologies, such as AI, machine learning, and IoT (Internet of things) are coming of age and together share the potential to create a way more personalized travel experience. From rooms that automatically adjust temperature to personal preference over connected sensors, devices, and Marriott’s very first IoT hotel room. other machines that create a new form of dialogue with the physical world. Marriott has already teamed up with Samsung and Legrand to launch an Internet of Things hotel room, with the aim of inspiring the ultimate hotel experience of the future. “Customer expectations are high, and seemingly new hotel functionality such as mobile check-in and room selection, and digital room keys, for example, are quickly transitioning from cutting edge to commonplace.” 16
Introduction and market outlook. (n.d.). Retrieved from https://www2.deloitte.com/content/dam/Deloitte/us/Documents/consumerbusiness/us-cb-2018-travel-hospitality-industry-outlook.pdf 17 Introduction and market outlook. (n.d.). Retrieved from https://www2.deloitte.com/content/dam/Deloitte/us/Documents/consumerbusiness/us-cb-2018-travel-hospitality-industry-outlook.pdf
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Furthermore, online hotel booking growth continues to outpace offline – and online travel agencies (OTAs) continue to flex their strength in this space. For the first time ever, OTA hotel bookings now exceed total hotel website bookings. Online travel agencies such as booking.com, Expedia etc. continue to grow their customer reach and include further categories into their content system, expanding amongst others into accommodations, tours and activities and so on. Despite strong OTA growth, however, hotels are not powerless in the battle for distribution. They are doubling down on a mix of direct booking campaigns and member-only rates they hope will lure travelers to their websites. “Without OTAs, a customer acquisition strategy that relies heavily on paid search would still be equally as expensive, or potentially more expensive compared to OTA commissions.”18 Even though much of the above mentioned aspects focus heavily of the advancement of technology, this factor alone won’t be sufficient for travel brands and especially hotels to succeed in the future. “Too much focus on technology has the potential to create cold and robotic experiences and environments. At its hearts, travel is still very much a people-topeople experience.”19, and hence the human aspect of travel and overnight stays should not be underestimated – people and culture will always be a competitive advantage – especially for hotels in major touristic destinations. Future challenges and prospects The travel industry, and therefore also the international hospitality industry will continue to grow in the coming years and see immense technological change. As important as it obviously is to adapt to change and not miss out on the opportunities that arise with them, it is through its unique character that the “Kronprinz” hotel in our case has survived in these long years. As new startups and large international chains will continue to pose a threat, it will be essential to keep up with change and uprising trends in order not to lose a customer segment.
18
Introduction and market outlook. (n.d.). Retrieved from https://www2.deloitte.com/content/dam/Deloitte/us/Documents/consumerbusiness/us-cb-2018-travel-hospitality-industry-outlook.pdf 19 Introduction and market outlook. (n.d.). Retrieved from https://www2.deloitte.com/content/dam/Deloitte/us/Documents/consumerbusiness/us-cb-2018-travel-hospitality-industry-outlook.pdf
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References Airbnb Hurting Priceline, Expedia More Than Hotels. (n.d.). Retrieved from https://www.valuewalk.com/2015/11/airbnb-hurtinghotels/ Airbnb vs. Hotels: Study Reveals Consumer Preferences Behind Explosive Growth. (n.d.). Retrieved from https://www.hotelonline.com/press_releases/release/airbnb-vs.-hotelsstudy-reveals-consumer-preferences-behind-explosivegrowt Airbnb vs the hotel industry: Can the disrupted become the disrupter? (n.d.). Retrieved from http://www.marketinginteractive.com/airbnb-vs-the-hotel-industry-can-thedisrupted-become-the-disrupter/ Digital disruption in the hospitality industry reinforces customer experience. (n.d.). Retrieved from https://www.hospitalitynet.org/opinion/4086474.html
The Future of Hospitality – IoT will be the Next Big Thing. (n.d.). Retrieved from https://www.hospitalitynet.org/opinion/4087769.html Home Start Page. (n.d.). Retrieved from http://daskronprinz.de How disruption is driving change for hotels. (n.d.). Retrieved from https://www.jllrealviews.com/industries/hospitality/howdisruption-is-driving-change-for-hotels/ Internet of things. (n.d.). Retrieved from https://en.wikipedia.org/wiki/Internet_of_things Introduction and market outlook. (n.d.). Retrieved from https://www2.deloitte.com/content/dam/Deloitte/us/Doc uments/consumer-business/us-cb-2018-travel-hospitalityindustry-outlook.pdf The “Kronprinz” Troisdorf. (n.d.). Retrieved from https://www.booking.com/hotel/de/kronprinztroisdrf.de. html Marriott unveils IoT hotel room of the future. (n.d.). Retrieved from https://www.hospitalitynet.org/news/4085536.html
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3.
Emotions
3.1.
Case „meetyoo conferencing“ By Adina Sarah Kula Leonie Rebecca Kula Annabel Yasmin Hofbauer Sara Mascarenas
Please refer to this case using: Kula, A. S., Kula, L. R., Hofbauer, A. Y. & Mascarenas, S. (2018). Case „meetyoo conferencing“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 38-42). Frankfurt am Main: ProcessLab.
Introduction Modern technology enables communication across the world. meetyoo conferencing is a German service provider specialized in audio conferences, web conferences and virtual events for every kind of business customer. Their main objective is to make local and global communication as easy as possible and accessible to every company, regardless of their size. The highly motivated team Source: meetyoo website works relentlessly to offer an excellent service. For more than 3,000 customers across many business sectors meetyoo supplies over 10 million conference minutes each month running over their own servers and software. Every service, conference or virtual event meetyoo provides is tailored to its customer needs and expectations, as customer satisfaction is their highest priority. A short profile of meetyoo conferencing The privately owned company is based in Berlin and employs around 60 people. A major part of meetyoo´s communicating software, which is the main component of their service, is developed within the company by a team of specialists. They are constantly working on the program in order to adapt the latest technological changes. The management team consisting of 8 people is responsible for different sectors like marketing and sales, finance, product management as well as business and software development. Over time the company’s core activity evolved from mostly audio conferencing services to all kinds of virtual conferences and events. meetyoo owns four sub units to attract different target groups, which offer different levels of services at different prices. Ten years of TÜV
certification for quality and safety management is evidential for meetyoo´s successful position within the German as well as the international market. In fact, meetyoo is the only German company in the audio conferencing sector to ever achieve this certificate. A brief history of meetyoo conferencing meetyoo was originally founded in 1999 in Berlin by Tony Kula. In the same year the company hosted their first virtual live event with more than 1,000 participants from the entire world. In 2003 meetyoo acquired TWSC (Team World Service Center) from the Deutsche Telekom. Becoming a Microsoft partner for web conferencing in 2005 was a huge milestone for the than six year old company. In 2010 the meetyoo group launched the first completely free German conference service, which secured them the first mover advantage and a big market share in this service sector. Tevia (Munich based service provider) and Ubivent (Mannheim based software company for virtual events) were acquired by meetyoo in 2010 and 2016 respectively in order to further broaden meetyoo´s product range and most importantly follow the trends in the technology market. These acquisitions were necessary to stay profitable and not to lose market share to their American competitors. As of 2017, meetyoo started hosting web conferences and streaming services on their completely selfdeveloped software. Vision, Values, Corporate and Business Strategy The vision of meetyoo conferencing is to combine the most advanced level of software with outstanding customer service to guarantee consumer satisfaction. Their goal is to make communication via virtual conferences as safe and reliable as possible. That is why data security is essential to their business. Basically, the reason for meetyoo´s existents is the need to serve this market. meetyoo has four core values, which Tony Kula refers to as the “DNA of the company“. The first Source: https://www.easy-audio.de/einladungcore value states that the customer is always the webcast-onlinekommunikation-per-webinar main priority and should be treated likewise. Secondly, “make things simple and easy“. Why should things be complicated if they could be straightforward? This core value does not only refer to the customer related sector of the company but is also very important in the internal company environment as short communication channels are a key factor for success in a fast changing industry, for instance the technology sector. The third core value concerns the interaction of the meetyoo employees with one another and the major importance of teamwork within the company. They strongly believe that the quality of their service depends heavily on the interaction of the different departments. Lastly, the core value “we play to win“ regards the business side of the company and puts the focus on the profitability of meetyoo. This slogan is a leading principle within the company in order to enhance motivation. 39
These core values are deeply rooted into meetyoo´s company culture and guidelines to meetyoo´s business strategy. The corporate strategy of meetyoo is serving the need of all kind of companies for easy, safe and high standard communication channels. Operating Model and Structure meetyoo pursuits a flat business structure. As the company is rather small and only employs about 60 people, communication channels are short. Employees are divided into teams ranging from 4 up to 12 people. Every team has a team leader and is specialized on a different business sector. meetyoo consists of a sales, human resource, product management, software development, business development, operations, marketing and online sales, as well as a finance team. The team leaders are responsible for their team members and report to the managing team (some team leaders are even part of it) and the managing partner and director. The decision making process has changed over the last years. “I used to do more on my own but in the last years I thought that decisions get better if they are supported and understood by the team.” Now major decisions are discussed in a strategy council consisting of 6 seniors. This has led to more openness, increased efficiency and better results in the long run.
Source: authors; information taken from meetyoo website
Resources, Capabilities, and Core Competences As a service providing firm meetyoo’s capabilities to offer excellent and distinct communication across the world are mostly based on intangible and human resources. Regarding intangible assets, meetyoo owns a software which is their most valuable resource as all services meetyoo provides are based on it. Their core competence is to have the sufficient knowledge and skill to constantly develop this program further in order to be able to cope with technological changes. The second competence is being fast. As Tony Kula states: „…it keeps us being fast. This is the most important if you are in a competing 40
environment, which is the technology environment.“ The way decisions are made in the company and the „know-how“ the employees gained through long year experience enables the team to react timely. meetyoo is highly capable of deploying and exploiting their main recourse the software in all areas of their business as it is the core part of the company and every conference they provide is running over this system. Nevertheless, meetyoo exists because of its workers. As Tony Kula, the CEO of meetyoo stated “I would always say our main resource are our human resources, our people.“ They are hardworking and passionate about what they are doing. When it comes to employing new people Kula states that attitude and motivation are extremely important. They need to offer that extra kind of effort so the company can model their competencies by identifying their skills knowledge and values. „…we hire more for attitude because you can teach the skills.“ On average employees of meetyoo stay for 7 years. This is necessary in order to develop the important competencies they represent. It is a mixture of knowledge and team spirit with which they face any type of tasks whether customer related or internal. The human resources of meetyoo are almost impossible to imitate as their „know-how“ is based on experience and their behavior is driven by the values meetyoo shares as an organizational culture. Emotions How to handle emotions at the workplace is a very important question for every company as they have an evidential impact on both, the company’s success as well as the behavior of employees. meetyoo supports the idea of an authentic emotional climate where workers are encouraged to display their true emotions in a mannered and appropriate way. Communicating problems within the company and being honest about each other’s work is key for meetyoo´s strategy. Founder Tony Kula talks about the importance of people addressing issues directly and not trying to hide them as this is Source: meetyoo website the only way conflicts can be solved or even avoided. meetyoo is pursuing a feedback culture believing that this is the most efficient way to keep employees motivated and at the same time establishing an environment where any kind of ideas for improvement are welcomed. No one should hesitate to raise concerns. “…nobody has to be afraid to get punished or get any kind of problems.” With this approach meetyoo ensures the well-being of its workers, which was proven to have led to greater productivity, creativity and innovation but also better teamwork. Because of the company’s size and the close connection among colleagues, meetyoo employees consider themselves as part of a big family. Supporting each other and having each other’s back as well as living this strong kind of team spirit is the foundation of meetyoo’s working environment.
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Future challenges and prospects meetyoo’s main goal for the next ten years is to become the leading provider of digital events in Europe. As this aspiration is far in the future meetyoo´s management team breaks down smaller goals for shorter periods. “We also have this big vision, it is for a longer time period but then we have to break it down because people want to understand what does that mean for my job, what does that mean for my work and what’s the part I’m playing in that.” Furthermore, it is a continuous aim to keep developing the software and staying up to date regarding the latest technology trends. As especially the technology industry is very fast moving this is one of the major challenges the company faces since the beginning. This is essential for the success; one could even say survival of the company. Also, meetyoo is continuously aiming to improve their services and develop strong and lasting customer relationships. To ensure this, employee development is a key factor and target that is being prioritized in the future. More precisely, this means in-house trainings and workshops to improve or even change the company’s working procedures. References Kula, T. (2018, May 10). Personal Interview
Kula, T. (n.d.). Retrieved from https://meetyoo.com
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3.2.
Case „Fletcher’s Better Burger“ By Paula Bantleon Katarina Coskovic Alexander Groh Nick Poluektov
Please refer to this case using: Bantleon, P., Coskovic, K., Groh, A. & Poluektov, N. (2018). Case „Fletcher’s Better Burger “ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 43-46). Frankfurt am Main: ProcessLab.
Introduction Fletcher’s Better Burger says it all. These burgers are not just any regular burger, that you can find (nowadays) at every corner on the street. The meat used for these burgers arrives daily from special chosen butchers and the bread buns are baked internally, allowing an extremely fresh and delicious experience of its one. Sam Kamran, founder of this Frankfurt fast food chain, has successfully combined quality fast food with an urban atmosphere in the various locations around the city. Will this concept however last in the long-run with a tendency to healthier fast food? How can the company gain a competitive advantage with so many other burger- and fast food chains available on the market? A short profile of Fletcher’s Better Burgers Fletchers Better Burger is a fast food chain that sells ten different burger styles with various free toppings and fries. With seven different locations, such as the famous Oederweg and Bergerstrasse, it belongs to the selection of most liked urban burger stores around Frankfurt. On Tripadvisor 45% of customers ranked it as perfect, 37% as very good and only 2% as not fulfilled. The sweat potato fries and sauces are especially praised in the comments around the Internet. Sam Kamran, founder of Fletchers Better Burger, is a well-known restaurateur in Frankfurt. Not only did he specialize in burgers, but he also owns various other locations such as the café Hauptwache, Mantis Source: Tripadvisor Roofgarden and the Pizzeria Montana in the well-known Bahnhofsviertel. His main competitors for Fletcher’s Better Burger are Jamy’s burger, Bully’s Burger, Burger Baby, Wiesenlust and Die Kuh die lacht, only to name a few. With so many similar burger restaurants nearby, it is clear that this is an extremely dense market.
A brief history of Fletcher’s Better Burgers Sam Kamran grew up in different places around the world (Germany, France, the U.S and Belgium) with an Iranian father and German mother. His mother was a teacher and his father a doctor. Coming from such an educated family, it is surprising that Sam quite high school at the age of seventeen. He then moved to Frankfurt to work as a banker for a couple of years. During this time, his love for the night life developed. To fulfill his dream, he was lent 20.000 D-Mark by his girlfriend at that time to open up his first ever pub in Sachsenhausen, with full success. In 2002, the city even asked him to take over the café Hauptwache, which can be seen as an honor. At 23-years, he already had 50 employees to deal with, which was a huge challenge and burden at first. After a long trip to California and years passing by, he opened up Fletchers Better Burger in 2013, which is inspired by the American burger fast food chains In-n-out and Five Guys. With his Americanized concept, he also proudly supports local companies such as the bakery Hartmann in Rödelheim, who provides the desserts and a Frankfurt furniture manufacture who provides the restaurants interior. Fletchers Better Burger has opened up seven locations since. Source: Fletcher’s Better Burger Website, 2018
Vision, Values, Corporate and Business Strategy To stay successful in this dense market of burger fast food chains, it is important to stand out with certain visions, values and strategies. These concepts must constantly stay flexible to adapt to demand changes in the market. Currently the trend lies in fastness and easiness. The Kitchen works under a very efficient strategy to produce burgers fast. Firstly, all burgers are based on the same ingredients (two salad pieces, one tomato, five gherkins, three onion rings, honey-mustard sauce and ketchup). This allows for a line production between five employees within a large kitchen. Also, Fletchers Better Burger’s interior design is clean and modern, however does not invite for hourlong stays like a cozy café might do. To withstand the vision of trendy fast food, several strategies are needed such as searching for the right locations to open up new restaurants, keeping the quality high as people are becoming more aware of health issues and friendly but fast service for customer convenience. As a corporate strategy, Sam Kamran is well diversified with various different restaurants and cafés, automatically entering different niches in the market. He quickly identifies food trends around the world, that are not yet present in Frankfurt. Misch Poké is such an example. Kamran has integrated the Hawaiian health food bowls consisting of rice, raw fish, fruit and vegetables into his Fletchers Better Burger stores. In many locations, it is now possible to eat burgers as well as healthy rice bowls under one roof, attracting a larger target group. As a business strategy, to stand out of competition, Sam Kamran has located all his restaurants in 44
Frankfurt’s hotspots (either near office complexes or busy shopping streets). With simplicity as a main goal, he uses his standard burger ingredients with free toppings, to ease the choice of the customers. Most burger stores have confusingly long lists of various burgers, which in turn complicates customers decisions. Operating Model and Structure
Resources, Capabilities, and Core Competences The most important resources Fletcher’s Better Burgers has, are their employees. Usually the store consists of five employees working in the kitchen, some employees working in the service area and one supervisor who acts as a restaurant manager. The kitchen is also equipped with products from the United States such as a special bun toaster. This toaster caramelizes the insides of the bun (leaving the outside soft), so that the sauces do not drain through the bun. The toaster is apparently also quite expensive and not used by many German burger chains. With its resources and competences in burger production, the chain is able to deliver delicious burgers and meet the expectation and reputation of the brand. Emotions Emotional labor is a relatively new concept that has attracted attention in recent years. Patrick, a long-time employee at Fletchers Better Burgers, does more than serve burgers with different toppings. He smiles politely and greets every single customer. Emotional labor for service-oriented staff means to manage their emotions, feelings and behaviors in the workplace. Sam Kamran knows that his employees have to deal with unpolite and angry customers, but he expects his staff to be stay friendly in order to convey positive emotions such as friendliness and kindliness to enhance customer loyalty and experiences. Individuals 45
vary in their ability to deal with inauthentic emotional expressions. Some workers may be unable to identify with the organization’s values of positive emotional communication. Suppressing emotions can lead to high levels of stress, job dissatisfaction, and burnout. Patrick reports excessive use of cigarettes and marijuana, particularly after a long and emotional ten-hour shift; addictions that are not uncommon among employees in the fastfood industry. Future challenges and prospects Demand for gourmet burgers and away from established fast-food giants such as McDonald’s and Burger King began to boom in Germany in 2015. The growth of the boutique burger industry in Germany has pushed the established chains under pressure. Germans are willing to spend more for a burger made of quality beef, often organic, creatively crafted and topped with exotic vegetables. New gourmet-burger joints are popping up across the country. With increasing competition in the gourmet-burger industry, innovation and change have become inevitable to keep the customer base in place. Innovations and trends that are influencing the fast food industry are for example speedier payment methods, revamped menu cards and automation in fast food. Although the future of the boutique burger industry looks promising, it is faced with some challenges. Over the years, the lucrative prospects in the fast food sector have attracted a large number of new gourmet-burger joints into this industry. Furthermore, a shift of consumers towards a healthy lifestyle is a major threat to the survival of the fast food industry. Fletchers Better Burgers will have to undertake measures to convince customers that the products they are offering are all healthy. References Rosendorff, Kathrin. “Hauptberuflich Bin Ich Raver‘.” Frankfurter Rundschau, 15 Feb. 2018. Möller, Andrea. “Hier Kommt Der Burger Frisch Auf Den Tisch.” Frankfurter Neue Presse, 26 July 2013.
Vogt, Jacqueline. “Auch Jüngere Wollen Nicht Mehr Zu McDonald’s‘.” Frankfurter Allgemeine, 17 Sept. 2017. Kabel Eins. “Mein Lokal, Dein Lokal.” Season 1, episode 7. VOLTA GASTRO GMBH. “Kein Schischi Kein Schascha.” Fletcher's Better Burger, 2018, www.fletchers-betterburger.de/.
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3.3.
Case „ Acomodeo UG “ By Beate Bruttger Madhur Chadha Ruiling Han Mandy Zheng
Please refer to this case using: Bruttger, B., Chadha, M., Han, R. & Zheng, M. (2018). Case „Acomodeo UG“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 47-51). Frankfurt am Main: ProcessLab.
Introduction In the booming market of hospitality and accommodation, serviced apartments have opened up a new phase of affordable long stays. Acomodeo brings the smart hotel booking experience into the emerging market of Serviced Apartments, connecting long-stay accommodation with the global travel market. The majority of competition in the real estate market is agency based which still runs on the manual platform. Acomodeo completely realizes the need of digitalization and is the first mover in digitalizing the serviced apartments sector in Germany clearly having an advantage of 2-3 years overs its competition. The customers in Germany are getting more and more aware of the use of serviced apartments for long official stays which is bringing a shift from hotels to the serviced apartment industry. This shift has enabled Acomodeo to act as a marketplace where demand and supply of serviced apartments interact. A short profile of Acomodeo Acomodeo covers the complete value chain of the niche market of serviced apartments. Apartments can either be booked via the online portal “acomodeo.com” or via company portals that are also operated by Acomodeo. Acomodeo also provides an individual agency service, through which it is possible to access a network of more than 500,000 apartments. Due to specific corporate services and exclusively managed accommodation, it stands out from its competition, which for example often are not usable for business travellers because they do not provide the necessary billing possibilities. Founded in 2015, the company is headquartered in Frankfurt am Main and currently employs more than 38 people. In 2017, it was awarded the "Best Practice Award" from the Travel Industry Club for its products and was named "Best Agent 2017" by International Hospitality Media for the global serviced apartment market. 47
A brief history of Acomodeo The preceding company of Acomodeo was EOS Project Service which was managed by David Wohde, who is currently working in the Business Logic, Apartment Sourcing and HR departments of Acomodeo. In November in 2012, EOS Project Service provided accommodation to broadcasters (eg. ARD, BBC, Reuter) and International service partners (eg. Level3 Communications, EVS Broadcasting) of the Olympic Games and the Football world cup. Long stays and high quality was provided. Compared to the hotels, service apartments were cheaper and more efficient. In the first 18 months, EOS Project Service had more than 12,000 overnight stays. During an investigation, they found out that service apartments were popular with the customers. However, these big events are held every two years, so it was found the cash flows were unstable. EOS Project Service wanted to have more customers from other sectors as well and not only the big events. Customers started asking them the accommodation in Singapore or Bangkok, the international search due to missing categorization, certification, definitions of terms (such as in the Hotel industry the categorization over a star system) so it is difficult to search it internationally, it took a long time nearly 40 hours for each booking. Hence, the need for technological advancements was felt. Then Eric-Jan Krausch along with Wohde developed a concrete business model named Acomodeo. Eric is currently responsible for the product development and Marketing. Krausch used his specialist knowledge from working experience and university to work out technological aspects. Vision, Values, Corporate and Business Strategy Ever since the founding in 2015, Acomodeo sets a clear vision of providing the world’s first global standardized direct booking system for serviced apartments (Acomodeo UG, 2015). Acomodeo’s values are striving to create reliability, security and quality for all their customers on a global scale while preserving individuality and transparency (Acomodeo UG, n.d.). Acomodeo’s First Mover Advantage within its market helped to design a clear corporate and business strategy. Challenging market dynamics induced the introduction of other products besides the original product, the Acomodeo.com online portal. This led to a diversification of products in different markets, which shaped their corporate strategy. Since Acomodeo covers more than one part of the value chain in this niche market, it competes in different competitive markets simultaneously. One of the market Acomodeo is competing in, is the market of OTAs (online travel agencies). Being advantageous in having a wide customer and supplier base, they provide travellers with a wide range of offerings. On this matter, Acomodeo sees its unique selling proposition by providing bookings longer than 30nights. On the technical level GDSs (global distribution system) are the competitors next to Acomodeo. By aggregating suppliers, they have the same advantages as OTAs but supply higher prices, making it cost ineffective to distribute on this channel. Compared to them Acomodeo has a cost advantage, by covering the whole value chain and providing exclusively only serviced apartments. Aiming at helping smaller apartment providers with managing their properties, Acomodeo provides them with the Acomodeo Apartment Management System(AMS). Through this central and scalable platform, it is possible for 48
small and large apartment providers to market themselves directly to business customers. With the Acomodeo Internet Booking Engine(IBE) Acomodeo also covers the range of big customers who already have existing booking machines which facilitate the integration of inventory (Krausch, 2018). By creating, maintaining and using their competitive advantages in all markets, the goal of their business strategy is to digitalize the market and its customers by creating a technical infrastructure which Acomodeo is aiming with all their products (Krausch, 2018). Operating Model and Structure Acomodeo operates on a simple 3-way procedure to book the apartments which consists of these simple steps on the website.
Acomodeo operates on a simple 3-way procedure to book the apartments which consists of these simple steps on the website. Acomodeo aims at a digital operating platform with automating most of its tasks rather than the old manual mailing system. It currently operates with a more flexible and centralized model. Currently having around 38 employees, there is an emerging need for middle management, but it would become necessary when Acomodeo reaches 50-60 employees to make tasks more efficient. Resources, Capabilities, and Core Competences Core competence can be composed of resources and capabilities, Acomodeo’s core Competence can be evaluated by looking at the Human resources, Financial and Technological resources of a company. For human resources, Acomodeo is made up around 42 current employees, they come from 12 different countries with different job backgrounds and education, they are divided into 8 teams, which covered everything from development, purchasing and administration to marketing and support, everything they need right now. The average age in the company is 27, so the company is very young, energetic. At the beginning of start-up, they need around 30 people in the first year, firstly they need the job description including job role and domain, and then plan the incentive system and salaries aiming different jobs, the last step is the process and norm of recruiting employees. The application of graduates or potential rivals’ employees can bring advantages to the company. For Financial resources, Initial start-up capital is from bootstrapping and angel project. Since 2016 Aleksandar Vucak, the founder of weg.de and former CEO of TUI.com, an investor and 49
shareholder on board, who knows the travel industry through and through and also helps Acomodeo very well in strategic issues, he also bundles communication and decision-making with the private equity vehicle, which has been invested them since 2016. So far, the financial plan has completed its largest initial work. The current business case draws up detailed plans from 2015 to 2019, including profit and loss. And plans for sales and profitability for each sales channel. Not only for the German market, but also for international market. For technological resources, they have four different markets. For the customers, they have OTA (Online Travel Agency), they deliver overnight solutions for the travellers. They have advantages more than hotels if travellers want to have long stayed more than 30 days because hotels are not allowed to stay more than 30 nights. For the technological base, they use GDS (Global Distribution System), which aggregates different suppliers and push them to different resellers. In the meantime, this is an important part of the value chain. On the supplier side, they use AMS (Apartment Management System) to help them manage their inventory online. The forth is Integrated Engine System, which has huge capabilities for the suppliers. They are the first mover of serviced department specialized for businessmen in Germany, so they have a unique advantage and also require many resources and the whole market. Until now they have more than 170.000 apartments in 106 countries, this makes them become Acomodeo, providing not only the professionally serviced apartments but also technology and software. Management of Emotions at Acomodeo Acomodeo is very interested in creating a good working climate. For this reason, they regularly have individual feedback groups with all their employees. Originally these feedback groups where every quarter year, but they now have increased the time between each feedback to half a year. It is important for them to manage the happiness index of their employees. They keep in mind that because they have a high percentage of young employees, these employees often are not able to distinguish between a bad personal mood and a bad business mood. This might lead to an employee picking up on the bad mood of a colleague and could potentially harm the working climate. These young employees also are more interested in getting praised for their work. The feedback therefore often includes a wish for more praise by the employees. This can also bring about the problem of how to react when they do not meet the expectations of the company for a project. Acomodeo is always trying to find the right balance between ensuring a good working climate, by making sure its employees are happy and putting a sufficient amount of pressure on its employees to ensure that the employees are working to their full potential. But if the pressure is too high, the employees might think they are given a task, that is impossible to fulfil, and this can damage motivation and the working climate. If the pressure is too low on the other hand, this might mean that the task is too easily fulfilled, and the working climate will be very good, but this includes the danger of the not leading to an advantage for the company.
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Acomodeo made the experience, that due to the young age and little experience of many of its employees, that they did not work as efficiently as their more experienced colleagues. This then could lead to frustration because they did not finish their tasks. Therefore, they are working on improving their communication, so the employees can work more efficiently together. They are also trying to improve the personal responsibility of each employee for their own task, instead of the employees trying to help with their colleague's tasks, which means that their own task is not worked on sufficiently and can lead to conflicts among the employees and damage the working climate. Future challenges and prospects “I see the Challenge of a shift from supply driven to demand driven market during the next years.” Since the original idea of “service apartment” emerged in 1997 in Australia, the awareness increases rapidly (Warnken, Guilding, & Cassidy, 2008). According to The Global Serviced Apartments Industry Report (2016) “42% of operators regard increased competition as the greatest challenge to their business (…)”. Having an inventory of more than 500,000 apartments worldwide (Acomodeo, 2018), Acomodeo still focuses on sourcing to increase market share. However, due to the increasing awareness of service apartments on the demand side Eric-Jan Krausch, CEO and Founder of Acomodeo, predicts that “the market will shift from supply driven to demand driven market during the next years”. This challenge will call for more standardization, transparency and comparability in this market, where Acomodeo as a First Mover is heading to now. To be able to maintain their competitive advantages, Acomodeo tries to reach the maturity stage of a start-up. Hence shifting from the Intern-based structure to fulltime employees bringing their own expertise on board. This will make Acomodeo prepared for bigger changes in its competing markets (Krausch, 2018). References Acomodeo. (2015). Business plan. Krausch, E. (2018, May 02). Personal interview. Warnken, J., Guilding, C., Cassidy, K. (2008). A review of the nature and growth of multi-titled tourism accommodation complexes. International Journal of Hospitality Management. The Service Apartment. (2016). The Global Service Apartments Industry Report 2016/17 About us. (2006). Acomodeo. Retrieved from https://company.acomodeo.com/en/aboutus
Frankfurter Start-up hat die Alternative zum engen Hotelzimmer (nicht Airbnb). (2017) Gründerdaily. Retrieved from https://www.fuer-gruender.de/blog/2017/08/acomodeo/ Eric-Jan Krausch von Acomodeo: „Unsere Leidenschaft ist es, die uns antreibt“. (2017). Rhein-Main Startups. Retrieved from https://rhein-main-startups.com/2017/08/24/eric-jankrausch-von-acomodeo-unsere-leidenschaft-ist-es-dieuns-antreibt/ Acomodeo. (2006). Acomodeo. Retrieved from https://www.acomodeo.com/en
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LSS
4.1.
Case „ Gogoprint “ By Leopold Geuther Julian Primer Jonas Strunk
Please refer to this case using: Geuther, L., Prime, J. & Strunk, J. (2018). Case „Gogoprint“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 52-56). Frankfurt am Main: ProcessLab.
Introduction & short profile of gogoprint "Gogoprint is an online printing start-up in South East Asia, with the mission to disrupt the inefficient printing industry in the region. Venture Capital backed in 2015, gogoprint is currently operating in 3 countries (Thailand, Malaysia and Singapore) and in the process to expand to Indonesia, with main offices in Bangkok and Kuala Lumpur and more than 100 employees. It is our goal to provide high quality printing, fast delivery and efficient customer service at the lowest price https://www.gogoprint.co.th/en/?___from_store=th possible, to constantly improve our website user experience, product range, and product prices", that's how Alexander Süß, Managing Director and Co-Founder of Gogoprint, describes his own company. The most sold products of gogoprint are business cards, posters, flyers and leaflets. The founders are originally from Germany and had the idea to bring established German startups such as Flyeralarm and Saxoprint to new markets in South East Asia (SEA), they estimated the market size of printing to $25 billion.
A brief history of gogoprint Alexander Süß and David Berghäuser, who are the Founders of gogoprint, know each other from their studies at Mannheim Business School, the best business school in Germany according to the Financial Times (2017). Early on they decided to found a startup together and fulfilled this dream with their first startup "DAS internet solutions" an online retailer for home appliances, which they founded in 2012. "DAS internet solutions" was already based in Bangkok. According to Alexander they chose Thailand because the markets in SEA are not very mature compared to markets in western countries, hence the conditions for a business idea like this were far more promising in. After that they chose to found their second startup gogoprint in 2015. Headquarters in Bangkok, Thailand they started to develop their network of printers and adapt to the Thai market. With the help of several venture capitalists they managed to grew quickly and saw their opportunity to expand to other SEA markets, namely Malaysia, Singapore and recently also Indonesia. Vision, Values, Corporate and Business Strategy Vision
The number one customer-friendly, convenient online printing company in whole SEA
Values
Best prices, fast delivery, best customer experience, best printing quality
Corporate strategy
Gogoprint wants to serve the SEA B2B printing market
Business strategy
Gogoprint wants to establish a renowned and recognized brand that builds trust within the customer base
Operating Model and Structure Gogoprint is a B2B e-commerce that sells printing goods to other companies. It consists of three main departments. Sales, Marketing, IT. We asked Alexander what typical steps a product has to go through. It all starts with marketing. Gogoprint gains its traction mainly from two sources. Firstly, via Google. That’s why they have a whole team working on SEO, partnering with other startups to increase each other's Google ranks. Secondly via Facebook marketing. When looking at their Facebook site, you will find professional pictures of their products often presented by models or their previous customers. This ensures their trustworthiness and shows the quality of their product. Also, those pictures are used in Facebook ads generating thousands of clicks on gogoprint's website each month. Eventually the customer will be directed to the website maintained by the IT department. The customer will see the vast product portfolio with dozens of different items to choose from. After that he can decide between three different options either creating and uploading 53
their own design, choosing from one of the templates available or handing the work over to gogoprint, that employs several designers, who can do the work for the customer. If the customer needs any help in the process, he can contact the sales team. The sales team of gogoprint is divided into two teams, the so-called closing team and the prospecting team. In its supportive role the prospecting team is responsible for lead generation together with the marketing department. They reach out to various different businesses around Thailand and present gogoprint's products to them in order to acquire new customers. The closing team however manages existing clients. That means they reach out to businesses that already ordered from gogoprint and sell them more or other products. These main departments are supported by two minor departments. The support team helps the customer with any questions they could possibly have and the partner management team makes sure that gogoprint always have the printing partners to maintain the capability to print every incoming order and offer the cheapest price on the market. Resources, Capabilities, and Core Competences The main resource of gogoprint is taking the excellent German education and bringing an idea to emerging markets to disrupt the printing market in SEA. The company has many core competences as described by co-founder David Berghäuser in a guest contribution to Gründerszene.
Service Mentality Because of the low wages a lot of jobs that are done by computers and robots in the western society are not yet replaced in Thailand. This leads to customers being used to be served by other humans, for example you still buy train tickets from a human being. To fulfill this need for a good service, gogoprint has a big sales and customer service department and train their employees to fulfill every customer's need.
Customer Trust The trust in e-commerce or doing business online is very low in Thailand. That’s why gogoprint established trust-winning policies e.g. free return or satisfaction guarantee and keeps up a professional Facebook site. Also, it is possible for every customer to visit gogoprints headquarters and speak with real human beings before they order.
Urbanization and Logistic Because the big cities in SEA are huge economic hubs and the population is most often concentrated in the capital, logistics is very time and cost efficient. It is fairly easy to serve a big share of the country's market power by just serving one town.
Online Payment Credit cards are not common in Thailand due to a lack of trust in companies. To tackle this problem, gogoprint accepts bank transfers and even offer cash-on-delivery as a payment method, which is hardly used in the western economies.
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https://techcrunch.com/2016/05/18/gogoprint-wants-to-modernize-online-printing-in-southeast-asia/
Gogoprint: Six Sigma and DMAIC In our interview with Gogoprint, Alexander Süß stated that he is familiar with Six Sigma and the DMAIC approach since he learned about this concept during his studies at Mannheim University. According to him, his business in Thailand, due to cultural differences, is relying more on a big sales department. He hence thought about it and stated that “[he] already kind of did [DMAIC]”: The work done by his salespeople could not be recorded due to a lack of proper software which made any analysis hard to comprehend. Moreover “[This] lead to a big volatility in the sales output and made incentivization difficult.” Regarding the improvement and implementation “[Gogoprint] upgraded the equipment to make each and every phone call trackable [and] [...]connected this data together with our CRM data and made a thorough analysis with them.” After that daily and monthly targets were designed depending on the salesperson’s experience, for example a senior salesman could have to make 100 calls per day. This enabled them to track every phone call down to each salesperson and compare them to the set targets, which made the whole work transparent, thereby enabling a better understanding of the team’s effort. After testing that, they linked those targets to monetary incentives. They set bonuses for salespeople that achieved their targets and rewarded extra work above the targets done. This led to a “a big increment in sales” and stabilized the process in general, which means it was a huge success! 55
As stated by Alexander Süß the error rate would not need to be as strict as in six sigma though and “some of the set targets like the conversion [are] somewhat hard to influence [by the salespeople].” He suggests lowering the expectations to maybe three sigma. Future challenges and prospects For the future gogoprint wants to be the number one player for printing goods in SEA, as stated by Alexander Süß in our interview. Furthermore, that includes step-by-step copying the business model onto other countries in the region. By establishing a team in every country and building up logistics, they maintain their fast delivery and cheap prices in every new market. References Süß, A. (2018, April 28). Personal interview. Berghäuser, D. (2017, July 25). https://www.gruenderszene.de/ Retrieved from https://www.gruenderszene.de/allgemein/startup-marktsuedostasien-thailand-tipps European Business School Ranking 2017. (2017 December 3). https://www.ft.com/ Retrieved from http://rankings.ft.com/businessschoolrankings/europeanbusiness-school-rankings-2017 Gogoprint website (2018, April 28). https://www.gogoprint.com/ Retrieved from
https://www.gogoprint.co.th/en/?___from_store=th Russel, J. (2016, may 19). https://techcrunch.com/ Retrieved from https://techcrunch.com/2016/05/18/gogoprint-wants-tomodernize-online-printing-in-southeast-asia/ LinkedIn profile Alexander Süß (2018, April 28). https://www.linkedin.com/in/adsuess/ LinkedIn profile David Berghaeuser (2018, April 28). https://www.linkedin.com/in/berghaeuser/
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4.2.
Case „Deutsche Bank (Six Sigma)“ By Isabella Kapahnke Jonathan Merien Jonas Kottmeyer Ivan Iotov
Please refer to this case using: Kapahnke, I., Merien, J., Kottmeyer, J. & Iotov, I. (2018). Case „Deutsche Bank (Six Sigma)“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 57-61). Frankfurt am Main: ProcessLab.
Having its headquarters in Frankfurt, one of the biggest financial centers in Europe, Deutsche bank is the 16th biggest bank in the world. Founded as early as the 1870s, Deutsche Bank has helped Germany establish its own banking foreign trade distinguishing it from the then leaders, France and England. Currently the financial giant has more than 100,000 employees in over 70 countries worldwide. It has significant presence in Europe, the Americas, the Pacific rim and Asia, and also in developing markets. The main area of expertise of the bank are investment banking but it also excels in mergers and acquisitions, risk management, trading and others. In 2003 Deutsche Bank introduces a new method of process optimization in its firm called Lean Six Sigma. It is the combination of two different but coherent processes. “Lean” focuses on streamlining processes by eliminating unnecessary actions or steps while Six Sigma aims at perfecting an operation by reducing errors and inconsistencies. Together they help Deutsche Bank in improving its efficiency. Its main applications are in loan processing and also customer services. Brief History of Deutsche Bank The history of Deutsche Bank dates back to the year 1870 when the bank was founded by Adelbert Delbrück. On the 10th of March, Deutsche Bank was officially licensed as a bank and a month later opened its first premises in Berlin. The name “Deutsche Bank” is significant because it showed that Germany now had its own bank to finance its foreign trade and had to no longer use the British and French banks. Later on, the bank opened other branches in Germany: Bremen in 1871, Hamburg in 1872 and Frankfurt in 1886. It also expanded outside of state to major cities like Shanghai, Yokohama and London. With its growth, in the beginning of the 20th century under the Weimar Republic rule, Deutsche Bank started expanding via mergers with other banks: Hannoversche Bank in 1920, Württembergische Vereinsbank in 1925, Lübecker Privatbank in 1927. By the end of the second world war though, Germany was 57
split and so was the Deutsche Bank. It was divided into 10 different banks and none of them could keep the “Deutsche Bank” because it was forbidden by law. With the formation of the Federal Republic (West Germany), the Deutsche Bank Group was reformed into the now known Deutsche Bank AG with head office in Frankfurt. In 1989, Deutsche Bank acquired the British merchant bank Morgan Grenfell and the New York investment bank Bankers Trust opening its market to the US and later to China, India and Russia. “Today Deutsche Bank is a leading client-centric global universal bank. Its businesses encompass a wide range of products and services in investment, corporate and retail banking as well as in asset and wealth management. The Group operates in all regions of the world” (Deutsche Bank). Corporate Divisions and Strategy 2020 In April 2015, Deutsche Bank announced, “Strategy 2020” a new strategic plan with four main strategic goals:
To become simpler and more efficient by focusing on the markets, products, and clients where Deutsche Bank is better positioned to succeed, thus leading to greater client satisfaction and lower costs. To become less risky by modernizing technology and withdrawing from higher-risk client relationships. To become better capitalized by reducing Risk Weighted Assets (RWAs) by approximately €90 billion to approximately €310 billion by 2020 To run the bank with a more disciplined execution through the establishment of a fully accountable management team with all businesses and functions represented.
However soon the strategy was struck by several headwinds, modernizing and getting more efficient technology and operating systems proved difficult, furthermore the threat of a 14 US billion dollar fine by the US department of justice (which was then halved to 7,2 billion) made it impossible for a time to raise capital from the markets. Deutsche Bank didn’t fully recover from this crisis and the investment banking division lost some market share. One of Deutsche Bank’s response was to hire a new CEO in the person of Christian Sewing to refocus on its core competences and on the European and especially German market. As part of its Strategy 2020 vision, the bank decided to reorganize and focus on three core corporate divisions to target specific growth opportunities and align cost and operations: Corporate and Investment Banking (CIB), Private Wealth and Commercial Clients (PW&CC) and Deutsche Asset Management (DeutscheAM). Corporate and Investment Banking (CIB), the investment banking division created in 2016 by combining Global Markets, Corporate Finance and Transaction Banking businesses aims to regain the top position in Europe. However, its future in APAC and especially North America 58
remains uncertain and cuts are expected. In North America, the bank has fallen behind its US rivals and has an excessive exposure to institutional clients rather than corporates. Private Wealth and Commercial Clients (PW&CC): the division created in 2016 combining Private & Commercial Bank with Wealth Management pursues a strategy of creating a leading, digitally enabled advisory bank with a strong focus on growth in Private Banking, Commercial Banking and Wealth Management. By retaining Postbank, it aims to create the largest Private and Commercial Bank in Germany where economic conditions have improved and improve profitability by targeting economies of scale. Furthermore, Deutsche Bank wants to selectively grow global wealth management in particular by an expansion of services to Ultra High Net Worth clients in Asia. Deutsche Asset Management (DeutscheAM): Deutsche Bank wants to reposition its Deutsche Asset Management division for growth through a minority IPO to level playing field with standalone asset managers and allow it to grow independently thus raising cash while retaining a majority ownership. Capabilities and Resources Banks nowadays need to have a set of core competencies and capabilities in order to secure their place in the industry and gain the flexibility to respond to changes in the marketplace to achieve competitive advantage. Customers, and even better satisfied customers are one of the main goals any company should thrive for. The most important capability that a bank must have in order to evaluate and improve their communication with its customers is a comprehensive customer relationship management (CRM). Deutsche Bank was recognized at the highest level for its work on an easily accessible CRM system called “Client First”. This system is used by over 5000 employees worldwide and is three times faster than its predecessor to provide better access to corporate client data. “It brings together sales, global relationship managers, and senior investment bankers across the organization.” (Deutsche Bank) Deutsche Bank is even marketing this system to other companies within and outside the industry. However, the most important resource of the Deutsche Bank is, as stated on their website the Human Resource. In order to fulfil their goal of becoming “a stronger, safer bank that is well positioned to pursue growth opportunities” (Deutsche Bank Homepage), a set of motivated, skilled and experienced employees is needed. Therefore, the Deutsche Bank continues to invest in resources and capabilities to improve their Human Resources. One of those resources is the bank’s HR Connect system, a portal that offers tools and services for all bank employees globally. Addressing and working with new emerging trends is crucial, especially now in a time of digitalization and demographic change. These trends not only happen in society at large but also in the working environment. The Human Resource Department of Deutsche Bank therefore started a “Future of Work@DB” initiative. The intention here was to create a 59
flexible procedure to career and leadership problems, such as transitioning into retirement and new models of organizational structures. This can definitely be counted as a competence of Deutsche Bank, since it improved many internal procedures and structures. Six Sigma in the Deutsche Bank One of the concepts that helped Deutsche Bank improve their quality of processes and helped them reduce defects is Six Sigma. Six Sigma is a tool used in different sectors of a firm which follows the DMAIC methodology. A Six Sigma project is started by defining the intended improvement and collecting relevant data. After that the measured data is being analysed and solutions are implemented by reducing or eliminating the problem. The outcome in being controlled on a long run and compared to the defined improvement. For a successful implementation, Six Sigma must be a permanent part of the business strategy and at the core of a management’s vision with the full support of the upper management. Furthermore, the most important resource are people. A sufficient training at the executive level is necessary and a set of Master Black Belts that have a leadership ability and knowledge of the company’s operations. Deutsche Bank started to invest into Six Sigma in 2002/2003 and uses it to optimize and standardize processes. For its successful implementation, a set of skilled people was needed. One of them was Dr. Penger, who started his black belt training in 2005. He is now one of the leading master black belts of the company and also trains others to achieve higher belts. People trained in Six Sigma can reach different skill levels, the so called “belts”. It is being distinguished between four belts: the “Yellow”, “Green”, “Black” and “Master Black” belt. “Black” and “Master Black” belts also train the other skill levels by leading their projects. However, according to Dr. Penger Six Sigma is not a core competence of the Deutsche Bank. It is mostly used to change the mind-set and working habits of employees, to make their decisions more standardized and fact based. Six Sigma is therefore not a career question since no one at Deutsche Bank works on Six Sigma projects exclusively. “Six Sigma is part of the evolution of employees that start with the green belt by doing a project (…) and then under certain circumstances do more following projects. If they do more projects successfully and become more independent while doing them, they then get registered as a black belt to take the next steps.” (Dr. Penger, 2018) An example of a successful implementation of a Six Sigma project lead by Dr. Penger at Deutsche Bank is the optimization of “new customer processes”. “Additionally, Six Sigma helped to get the topic “transparency” a more important view in the banking industry and also many things that we did in projects became part of the everyday life. The tool and method of Six Sigma became part of the company and was not only used for specific projects. People are also using its tools continuously and in every aspect (…).”
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(Dr. Penger, 2018) Conclusively, the core thesis is to develop tools and procedures that are permanently used in the company and not only while working on specific Six Sigma projects. Conclusion Deutsche Bank laid the basis for German foreign trade and has ever since been one of the largest banks worldwide. Despite experiencing a few crises throughout its history, Deutsche Bank should benefit from its decision to refocus on its core market: Germany and Europe, as economic growth is expected to rise steadily. This growth should help Deutsche Bank maintain and strengthen their strong position in their home market, however the possibility of an abrupt “Brexit” remains a threat. Nevertheless, the expected economic growth should result in a favorable environment for all of Deutsche Bank’s business segments. Furthermore, it is of crucial importance for any bank to have a set of capabilities and resources that help the internal environment to function properly. Deutsche Bank, for instance, makes use of their internally created technological programs, to help improve in various segments of the bank: the “Client First” system helps to improve the CRM and their HR Connect system to improve the Human Resource aspects. However, Six Sigma is still one of the concepts that helped Deutsche Bank improve their quality of processes and helped them reduce defects the most. After investing into Six Sigma in 2002/2003 and successfully implementing it, it optimized many processes, such as the newcustomer processes. However, it is not a core competence of the Deutsche Bank but mostly used to change the mind-set and working habits of employees and to make their decisions more fact based. All in all, Deutsche Bank is still one of the most influential banks in the world but bad decisions have prevented it from being at the top. With the introduction of new methodologies like Six Sigma, Deutsche Bank has found a new and modern way to approach problems in order to regain its leading position in the financial market. References Besnoy, C. (2016, January 20). Six core competencies for a new retail bank. Retrieved May 14, 2018, from Bai: https://www.bai.org/banking-strategies/article-detail/sixcore-competencies-for-a-new-retail-bank Deutsche Bank. (n.d.). Deutsche Bank History, Chronicle from 1870 until today. Retrieved May 14, 2018, from Deutsche Bank: https://www.db.com/company/en/media/DeutscheBank-History--Chronicle-from-1870-until-today.pdf HR’s priorities for a better Deutsche Bank. (n.d.). Retrieved May 14, 2018, from hr-report.db: https://hrreport.db.com/2017/en/hr-strategic-agenda/hrs-prioritiesfor-a-better-deutsche-bank.htmlhttps://hrreport.db.com/2017/en/hr-strategic-agenda/hrs-prioritiesfor-a-better-deutsche-bank.html Interim Report. (2018, March 31). Strategy. Retrieved May 14, 2018, from Deutsche Bank: https://www.db.com/ir/en/strategy.htm
Luxoft’s Financial Industry Expertise. (2007, October 27). Deutsche Bank Receives Innovation Award For Breakthrough CRM System Built With Luxoft. Retrieved May 14, 2018, from Luxoft: https://www.luxoft.com/pr/deutsche-bank-receivesinnovation-award-for-breakthrough-crm-system-builtwith-luxoft/ Team, T. (2017, March 6). Understanding The Impact Of Deutsche Bank's New Reorganization Plan On Its LongTerm Value. Retrieved May 14, 2018, from Forbes: https://www.forbes.com/sites/greatspeculations/2017/03/ 06/understanding-the-impact-of-deutsche-banks-newreorganization-plan-on-its-long-termvalue/#776ad06e2a28
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5.
Motivation
5.1.
Case „ Soufflet group “ By Robin Bolder Pablo Franco Janos Thomas Finn Zielinski
Please refer to this case using: Bolder, R., Franco, P., Thomas, J. & Zielinski, F. (2018). Case „Soufflet group“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 62-65). Frankfurt am Main: ProcessLab.
Introduction In one of the most important industries, the agriculture market, Soufflet, a French, family owned food group, have become the largest firm in Europe. It operates mainly with barley, wheat and pulse. It has 28 plants in Europe, Asia and South America dedicated to malt, making it a major operator worldwide. It is also one of Europe’s top wheat millers, with mills across Belgium and France. They also dedicate themselves to plant bakery goods, as well as work in fast food markets. Additionally, with Soufflet Biotechnologies, the group invests in increasing their value for agricultural resources. Throughout eighteen countries, the group employs 7441 employees. Soufflet Malthouses
Soufflet is a family owned Malthouse Company that operates within Germany, Europe and the Asian market. Due to the high expertise in transforming barley into malt, high quality can be achieved and therefore client’s wishes can be fulfiled. Due to family ownership, decision making is spread between few people and therefore decisions are made rapidly what secures efficiency.
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A brief history of Soufflet Group
Key takeaways:
1900 - Funded by Pierre and Lucie Juchat 1950 - Company exported cereals for the first time 2002 - Overtaking of Tchecomalt
Vision, Values, Corporate and Business Strategy Under the mission statement of the Soufflet Group “We give value to the earth´s potential” is the Group operating in the wider field of agriculture and the food industry. They are fitting in the global markets by sustaining their family owned role as a company. The company has a high demand on themselves regarding ethics, competitive behavior and the corporate social responsibility (CSR). The company is according to their own statements committing themselves to the highest ethical standards and respecting the right of every individual regardless of “race, religion, sex, age or any form of disability”. Moreover, they pay special attention on the work conditions, hygiene and safety of the employees. They also have the demand to work towards the fulfilment of their employees. They also follow the idea of a fair and free market. Therefore, they introduced the competition compliance program which insures the use of good business practice by the employees of the company. This program was established in the year 2012. In addition to all of these, the Soufflet Group commit themselves to a CSR Policy regarding the topics of environmental, economic and social responsibilities. The strategy of the Soufflet group is to use its expertise in the field of agriculture in order to create synergies between their departments. Additionally, they invest in their global network of producers and partners as well as in their internal departments to sustain the synergies in 63
their company. This gives the Soufflet Group the ability to stay competitive in the market while conducting ethical and responsible business strategies. Operating Model and Structure
*(2018 Soufflet Group organigram|https://www.soufflet.com/en) As can be seen above, Soufflet interacts in many different markets but all related to agriculture, therefore they can keep their business smart and efficient. Within the group each sub sector has an own division authority and therefore own responsibilities. In some way all departments are combined to make processes between divisions smoother. This is due to the family ownership of the Soufflet group. Probably the family ownership is one of the main reasons that every department is working smoothly with the others. Furthermore, it can be said that size as well as revenue do not play a role in the internal importance of each department. Therefore, each division has the same importance and therefore same motivation. Resources, Capabilities, and Core Competences Due to Soufflet´s big resources within the agricultural sector, they are able to provide their malt houses and other raw material producers with the best quality raw material. Therefore, a core competence would be the over average quality and distribution. Their capabilities are within the agricultural and raw material sector. They provide high quality malt to breweries 64
or high-quality grain to bakeries. It can also be seen that a key resource and competence are skilled workers within the organization. Furthermore, Soufflet was able due to their family ownership to overtake many malt houses within Europe, and therefore became the biggest malt producers within the world. Due to their huge size it can be seen at a key competence that they can dump prices within the market. How does the Soufflet Group handle employee motivation? We have talked to Mr. John Bolder who is the managing director of a malthouse plant which he built on his own and then sold to the Soufflet Group and for which he is now working for almost 5 years. He agreed on doing a questionnaire with us in order to help us with our case study. On his site he is committed to the policies of the Soufflet Group and supervised in his actions. For Mr. Bolder there are several key factors for the motivation of employees. 1. A connection to the work and the product 2. Appreciation of the results and the work that is done by the employees though the management 3. An attractive payment. In particular Mr. Bolder mentioned that he praises good work from his staff and gives small bonuses. From these points we learned what the Soufflet Group´s management is doing in order to motivate their employees but also the management is employed in the company, so we also asked about the motivation of Mr. Bolder as well. There he answered that it is the intrinsic wish of becoming the leader of a production site in the group of Soufflet and improving the production site which he built up by his own, so it becomes the best in the group. Future challenges and prospects Soufflet has identified several challenges for the years to come. Current changes in the financial environment has made access to funding more difficult. As a consequence, Soufflet will work on optimizing the usage of external financing. New technologies force Soufflet to adapt, but also provide room for higher sales, which they will be aiming for. They expect their revenues to keep increasing as they have in the previous years, and to broaden their program of developing in foreign markets. Logistic costs also are expected to grow, the company will react by reviewing them and making sure they don’t exceed their revenues whilst at the same time ensuring the constant quality of their product. References Soufflet Group - website (effective 3.5.2018) Link: https://www.soufflet.com/en
Soufflet Group - Activity Report (2011-2012) John Bolder – Questionnaire (April, 2018)
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5.2.
Case „Zeit für Brot “ By Pablo Behrens LuAnn Buck Lena Burkhard Leo Hoos
Please refer to this case using: Behrens, P., Buck, L., Burkhard, L. & Hoos, L. (2018). Case „Zeit für Brot“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 66-72). Frankfurt am Main: ProcessLab.
Introduction Zeit für Brot is a bakery and a café with locations across Germany. It´s product assortment, which is the same at all branches, consists not only of different kinds of bread and a wide range of pastries, but they also offer their customers sandwiches, organic drinks as well as various sorts of coffees and some other products. In 2016, additionally inedible products such as baking books have been introduced. When walking down Oeder Weg in Frankfurt-Nordend, one could overlook the inconspicuous bakery which does not exceed the size of a mid-sized parlor, if it would not be for the bunch of people which is not uncommonly already waiting on the curbstone to be served. Especially in the morning and at home times, the queue of customers starting at the counter usually lasts until far outside of the shop. Even though Zeit für Brot is a relatively young company and although competition with other bakeries and cafés in Frankfurt is quite intense, Zeit für Brot is already considered as one of the best bakeries in the region. Customer reviews and valuations on various travel and restaurant websites like TripAdvisor, Yelp, or Three Best Rated indicate the popularity and the excellent reputation of the company and not only in Frankfurt, but also in all the other cities where Zeit für Brot is present too. A short profile of Zeit für Brot Zeit für Brot operates in the baking industry within the bio-food segment as it uses exclusively regional organic ingredients to manufacture its products. As already mentioned in the introduction, the company offers its customers a variety of edible, inedible, baked and unbaked goods and that seven days per week. The customers are invited to enjoy the Baked goods produced and offered by Zeit für Brot. (ZEIT FÜR BROT Website, 2018) food in the café 66
area or for take away. Additionally, Zeit für Brot supplies retailers, such as Alnatura, with goods for reselling purposes. A compressed overview over the products:
Baked goods: pastry packages, breads, buns (sweat and salty), croissants, sandwiches, quiche, rolls (sweet), cakes, other sweet pastries
Unbaked goods: spreads, yoghurt, cereal mixes, salads, soups
Beverages: water, iced tea, tea, coffee and cocoa
Inedlible goods: books
The products are available at every location of Zeit für Brot, one being positioned in Frankfurt, two in Berlin, one in Köln and one in Hamburg. A brief history of Zeit für Brot Björn Schwind, the founder of Zeit für Brot, originally grew up in a baker family, “in the bakehouse itself” as he tells us in a personal interview, in Seeheim-Jugenheim where the family business is located. After finishing his apprenticeship and doctrine as a master baker in Göttingen, he studied business economics in Hamburg and started working at a consulting firm in Berlin afterwards. Two main reasons finally brought him to set up his own business in the baking industry. Firstly, his employment at the consulting firm lacked autonomy of decision. Secondly, wherever he searched he could not find good bread in Berlin. So it was that Schwind decided to produce bread himself. According to Schwind, producing good bread takes time, which finally led to the name of his company. He opened the first branch of “Zeit für Brot” (English: “Time for bread”) in 2009 in Oeder Weg 15 in Frankfurt. The company started with three employees. Schwind himself as baker working in the bakehouse, one saleswoman at the counter and a working student as auxiliary. The focus of the product assortment offered in the beginning, lied on the bread itself and was much more sandwich orientated as it is today. Many products which are offered nowadays, didn´t exist at the time. Zeit für Brot had a tough start. When Schwind opened, he and his team were competing with nine other bakeries located in close proximity. Another obstacle was the financial crisis which had started in 2007 and which had a significant impact on consumer behavior. Consequently, competition for customers was even more intense. However, Zeit für Brot managed it to establish itself against the competitors. While many other bakeries and cafés had to close their business, the popularity of Zeit für Brot increased and it took only three years until the second branch opened in Berlin. As time passed by Schwind expanded the product assortment by adjusting his supply to whatever was demanded by customers. More different sorts of sandwiches were introduced and more sorts of bread. Soon they started to offer also soups and salads for lunch, to attract customers not only in the morning and in the evening, but also to be able to serve customers during lunchtime. In 2015 Zeit für Brot expanded to Köln, and just one year after it also to Hamburg. Cinnamon buns, one of the products Zeit für Brot is known for today, were introduced randomly when Schwind and his colleagues were thinking about launching a sweet product. As soon as they noticed that the demand for cinnamon buns is huge, they 67
started developing more flavors. Today the customer can choose between a wide range of sweet rolls as displayed on the left product picture in the introduction. The rolls became so popular, that even a baking book was launched in 2017 called “Heute is Schneckentag” (English: “Today is roll day”). Just before Christmas in the same year, the second baking book “Zeit für Brot” was launched, containing recipes for common bread. Not only the product mix has grown rapidly, but also the number of employees. In Frankfurt, the number of employees increased more than tenfold, counting 38 at the present day. Nine bakers are working in the bakehouse producing the required products, while the remaining 29 employees are concerned with selling and delivering products. Within nine years, Zeit für Brot achieved it to grow from only one branch to five in total. Vision, Values, Corporate and Business Strategy Vision: When Schwind founded the company, he had the Vision of “breathing new life into the baker´s trade by combining tradition and Zeitgeist in order to serve today´s necessities”20. He wanted to offer his customers bread according to his own imagination. Good and fresh bread which he could not find when he had been working in Berlin. Now that this vision is fulfilled, he has formulated a new vision for the future: Further growth, so that he can watch his own company operate more independently from himself. The reason for stating such a vision is that Schwind has to cope with a tremendous workload in order to run his business properly. Someday he would like to see his company work as a whole entity without facing bottlenecks. Values: “If you want to manufacture an awesome product, there is no easy way” 21. Thus, the corporate philosophy after which the products are produced is never to choose the easy way and to get the best out of the traditional baker trade. According to Schwind, a well manufactured bread consists out of simple ingredients such as flour, leaven, sourdough, a little salt and water. The rest is hard work to transform all those ingredients into a proper leaf of bread, mainly done by handcraft with the help of a few machines only. Business strategy: Already being reflected in the vision and in the values, the strategy of Zeit für Brot is based on their own products, on customer needs and additionally on its personnel. As all of the products need to be freshly produced each day, Schwind and his team need to plan in advance how much to produce each day. Especially because the dough for the bread needs to repose for 20 up to 36 hours. Every day from 1am until 6pm the bakers produce the products freshly. By comparing the Inventory at the beginning of the day with the remaining inventory at the end of the day, the daily production can be adjusted frequently and at the same time. Products can be identified which sell well and products which do not. By additionally monitoring at what times the clients demand which products, Zeit für Brot sees at what times of the day they still have capacities where new products may be introduced in order to be working to capacity at every time of the day, every day. New products are then introduced by developing own new recipes and then testing if the customers adopt it (trial and error). 20
Cited from the Zeit für Brot Website 2018. Translated into English by the authors. Schwind, B. (2018, Mai 09). Personal interview. Translated into English by the authors
21
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As the production process of all products Zeit für Brot offers requires a certain level of knowhow, especially referring to the bakers, high-skilled employees are required. To attract those people, Zeit für Brot offers a good salary and a certain degree of employee empowerment in order to give them the opportunity to show complete commitment. Additionally, Zeit für Brot offers young people the opportunity to do their apprenticeship in different fields. Afterwards these people are often offered a permanent position. Putting so much effort on their products and on their personnel, Zeit für Brot has fierce cost disadvantages than many of their competitors. Still, this effect is countered by ensuring that each location is consequently working to full capacity as far as possible. Operating Model and Structure Even though the concept and the product assortment is the same at every location, each city Zeit für Brot is present at has its own management. Schwind himself is manager of Zeit für Brot Frankfurt and co-manager of Zeit für Brot Hamburg, which he manages together with Dirk Steiger, Co-founder of Zeit für Brot Hamburg. That enables each location to work faster and more independently. While Zeit für Brot Köln is connected by a franchise system, all the other locations are connected to each other by corporate relationships and affiliated into the Zeit für Brot Holding company, overall leaded by Björn Schwind. Moreover, each location is divided into three departments. Firstly, the baking house, which is responsible for the production. Secondly the sales department, which serves the customers at the counter and thirdly, the customer management which takes orders and takes care of the delivery. The manager himself at each location is responsible for ordering the ingredients required and to take care of all three departments. In order to increase efficiency, the accounting process has been digitalized and only needs to be monitored by the manager. Each location operates totally independent from each other. “Frankfurt produces for Frankfurt, Berlin for Berlin, Köln for Köln and Hamburg for Hamburg. There is no central production facility”, as Schwind explains in the personal interview. Resources, Capabilities, and Core Competences Resources: Tangible: Financial resources such as cash and borrowing capacity. Subsequently, using these financial resources, Zeit für Brot acquired modern Equipment in order to properly conduct their business. Intangible: Patents for their product recipes which are based on high quality organic ingredients, due to Zeit für Brot could establish a strong reputation and relationships to expand. Human: The skills and know-how required to craft the products and which is forwarded to their employees. It is based on tradition which is partly tens of years old and to some extend captured on the recipes. Furthermore, Zeit für Brot attaches importance on keeping its employees motivated in order to deliver excellent work every day.
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Capabilities and Core competences: In fact, according to Schwind, what distinguishes Zeit für Brot from its competitors is the complexity which can be found in each edible good. Each product went through a traditional production process, but addresses modern customer preferences and abuts on modern trends like the ongoing health trend for example, because it uses exclusively naturally organic ingredients. While the majority of other bakeries uses ready-made baking mixes for their products in order to decrease costs and to simplify the production process, Zeit für Brot is doing the exact opposite. It holds on to traditional bakers trade and uses it to develop new products. Each product from the simple bread up to the spread is self-made in the bakehouse, just a couple of meters away from the counter where the customer can buy it. Zeit für Brot wants their customers to taste the quality and all the baker traditions which are incorporated into their products. To do so and to show that the customer gets exactly the product he thinks he is buying, Zeit für Brot glazed each bakehouse in each branch. Thereby, the customer is enabled to observe the bakers how they are crafting the products and which ingredients they are using. Another interesting aspect is that the only advertising Zeit für Brot relies on, is word-of-mouth advertising. They pay not one cent for marketing. Their intention is to persuade their customers with the product itself only. Accordingly, 80% of Zeit für Brot bakehouse in one of the branches in Berlin. (Anne the customers have become Liwest Blog, 2014) steady customers22. Motivation In order to investigate the working motivation of the personnel of Zeit für Brot, we conducted a survey which comprises statements pertaining to five different sources of motivation going by John E. Barbuto JR and Richard W. Scholl. Each motivational source consists out of six statements, in which the respondent had to indicate his or her positioning by stating whether he strongly agrees or disagrees with each statement on a scale from one to seven (1 = disagree; 7 = strongly agree).
22
http://www.allgemeine-zeitung.de/lokales/rhein-main/baeckerei-in-frankfurt-gutes-brot-braucht-seinezeit_18579645.htm
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After evaluating the results of the survey, we were able to compile the following average motivational profile of an employee at Zeit für Brot:
Average motivational profile of an employee working at Zeit für Brot. (Survey, 2018)
According to the results of the survey, the motivation of an employee consists to 21% (rounded up) out of intrinsic process motivation, 12% out of instrumental motivation, 18% out of external self-concept-based motivation, 30% out of internal self-concept-based motivation and to 19% out of global internalization motivation. In other words, the survey indicates that the strongest motivation of an employee at Zeit für Brot is to achieve personally set standards of values and competencies (internal self-concept-based motivation). Furthermore, the motivational source that motivates an employee least is being rewarded with extrinsic tangible outcomes for his or her work (instrumental motivation). Motivational sources like engaging in work for the sheer fun (intrinsic process motivation), working and behaving in a way to gain status (external self-concept-based motivation) and working for Zeit für Brot because the values or the cause of the firm is congruent with the personal values, contribute in a similar amount to the overall motivation (18%-21%). Future challenges and prospects "... the art is to maintain and sustain an extremely high level and to deliver it every day ..." 23 .This is one of the toughest challenges Zeit für Brot is facing and which might become even tougher in the future. Their whole concept is based on their products which require well trained staff. However, the labor market has been producing less and less well-educated bakers for more than ten years now. The number of people who choose an apprenticeship as a baker is constantly and rapidly decreasing and it is likely that this number will decrease even further prospectively (see number of trainee bakers, 2007 to 2016). As a consequence, attracting new qualified employees will become harder and harder in the future for Zeit für Brot. In addition, Schwind says that Zeit für Brot in Frankfurt has a drastic capacity problem. They have far too much workload for this small location in Frankfurt. For the volume 23
Schwind, B. (2018, Mai 09). Personal Interview. Translated into English by the authors
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demanded by the customer, the space is not sufficient. They will have to introduce delivery stops in order to throttle the demand, if they cannot find a second location soon. The challenge will be to a find a second location and to staff it quickly. Similar problems are arising in Hamburg.
Number of trainees
Number of trainee bakers, 2007 to 2016 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
years Number of trainee bakers from 2007-2016 (Statista, 2018)
References Zeit
für Brot GmbH (2018). Retrieved from http://www.zeitfuerbrot.com/ Stehle, C. (2018, March). Bäckerei in Frankfurt: Gutes Brot braucht seine Zeit. Allgemeine Zeitung, retrieved from http://www.allgemeine-zeitung.de/lokales/rheinmain/baeckerei-in-frankfurt-gutes-brot-braucht-seinezeit_18579645.htm Romlewski, J. (2015, March). Bioland: “Wir haben nichts zu verstecken“. Bioland, retrieved from http://www.bioland.de/imfokus/interviews/detail/article/wir-haben-nichts-zuverstecken.html Saadi, N. (2016, December). Björn Schwind setzt Maßstäbe am Backofen. Frankfurter Neue Presse, retrieved from
http://www.fnp.de/lokales/frankfurt/Bjoern-Schwindsetzt-Massstaebe-am-Backofen;art675,2393884 Liwest, A. (2014, August). Zeit für Brot Berlin. Personal Blog, retrieved from http://anneliwest.blogspot.de/2014_08_01_archive.html? m=1 Barbuto, J. E, JR and Scholl, R. W. (1998). Motivation Sources Inventory: Development and Validation of New Scales to measure an integrative Taxonomy of Motivation. Schwind, B. (2018, Mai). Personal Interview. Behrens, P (2018, Mai). Survey about the motivational sources of the personnel at Zeit für Brot.
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5.3.
Case „Granny’s“ By Ting Ting Lai Mircea Popescu Elena Victoria Redlich Bastian Zimmermann
Please refer to this case using: Lai, T. T., Popescu, M., Redlich, E. V. & Zimmermann, B. (2018). Case „Granny’s“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 73-77). Frankfurt am Main: ProcessLab.
Introduction “Granny’s” is a small café in Frankfurt that is under the ownership and management of Tugba Rovkmaz and Valentino Tomic. Despite being relatively young, “Granny’s” has managed to acquire a stable and loyal customer base that frequents it relatively. Its fresh food and a welcoming atmosphere give it an edge that it has managed to hold on to very well. “Granny’s” prides itself on its utilization of old passed down recipes, the quality of its food and the friendliness of its staff. That this is a working concept can be seen each day, when the lines during lunch are going through the door onto its forecourt where guests can enjoy their meal when the weather permits. “Granny’s” is also famous for its marketing which consists mainly of a chalkboard outside with changing Figure 1. „Granny’s entrance“ („Granny’s“, 2018) humorous messages written on it. A short profile of “Granny’s”
Food: “Granny’s” serves pastries, drinks and also a changing, warm, lunch menu based on recipes created by the owner’s grandmother and mother.
Employees: “Granny’s” employs six people besides the owners, who work full time as well.
Location: “Granny’s” is located in the student-oriented temporary housing/apartment building “The Flag”. It is situated in the Nordend area of Frankfurt. (“Serviced apartments in Frankfurt”, 2018)
Suppliers: “Granny’s” currently utilizes one whole-sale supplier.
Competition: “Granny’s” does not have a direct competition, since it servers a niche market consisting of freshly sourced and freshly produced meals compared to the other 73
comparable establishments like the canteens. Another factor is also its location, since “Granny’s” is not located downtown, the availability of alternatives is small.
Targeted Customers: “Granny’s” targets all customers, despite being located in a building frequented by students. The offers provided are supposed to appeal to people in every age and financial group.
Operating hours: Weekdays 08:30-18:00, closed on Saturdays, Sunday 10:00-18:00.
Ratings: o Google: 4.5 out of 5 stars (“Granny’s”, 2018) o Facebook: 5 out of 5 stars (Granny’s”, 2018)
A brief history of “Granny’s” “Granny’s” was founded in 2016 by Tugba Rovkmaz and Valentino Tomic. Neither of them had a background in the hospitality industry, with her working as an architect and him as a consultant, but in 2016 they decided to fulfil Mrs Rovkmaz dream of owning a restaurant that would serve her mother’s and grandmother’s recipes. The plan was set in motion in mid-2016 with a competition of the building “The Flag”, which was looking for a restaurant. After winning the competition, the owners applied for, and received a grant from the “Wirtschaftsbank” using the help of the “Kompass Zentrum für Existenzgründung” incubator. The original, more conservative concept was changed a bit to favour the general, more modern style of “The Flag”, and designed and realized by the owners themselves. Due to most of the work being done in-house, the occurred cost was only 1/6 of the normal cost of funding a café, which was estimated by the owner to be at around 300.000€. In the beginning, “Granny’s” served only snacks and drinks, but due to a demand by many of its clients, “Granny’s” offers now a full lunch menu, called “Mittagstisch” which is being prepared every morning and changes weekly, based on the customer's reception, new recipes and available produce. (Rovkmaz et. al., personal interview, 2018) Vision, Values, Corporate and Business Strategy According to the owners their most important value is friendliness and happiness, not only towards guests, but also towards employees and by guests toward their servers. This is also accompanied by a strong desire to make guests feel at home with some actually staying, despite just wanting something “to-go”. Interesting is also, that their vision aligns with what they are already doing, serving fresh food, creating a welcoming and relaxing atmosphere and keeping the tradition alive. Business-wise those values are also well implemented. Their corporate strategy consists or targeting everybody, not only the students of the surrounding universities. Mr Tomic even remarked during the interview that some guests were stating that the whole “Hessischer Rundfunk” would go to their café, leaving the broadcast unattended. By looking at their business strategy, one can clearly see this concept being followed through. The price is set at an average of the surrounding shops, all of the food is cooked by the owners themselves, both work fulltime in the shop, which has the unfortunate negative consequence that the shop has to be closed if one falls ill or has to be otherwise absent, thus resulting in a financial 74
burden. In the beginning the food was even bought by themselves from regional retailers but they now have a whole-sale supplier that provides them with all their produce and beverages. (Rovkmaz et. al., personal interview, 2018) Operating Model and Structure The most important thing about Granny’s operating structure is having personnel that can convey the values and home-like atmosphere to the customers. Keeping that in mind, they always look for likeability and reliability when selecting their employees in order to have a good climate within the organization, but also with the customers. Since the owners are also actively working at the café, it’s important to them to have personnel with whom they can imagine working with. Granny’s is a single shop in which the owners put all their effort into and focus on. Over social media, they inform customers about their menu for the upcoming week and show other impressions of the café. Besides that, Granny’s does not have any active marketing, so they mostly rely on guerrilla marketing. As mentioned, Granny’s also changed their model from an only snack focused shop to a café with hot meals which was very successful. The “Mittagstisch” now accounts for roughly 70% of the overall sales and “Granny’s” is continually growing. (Rovkmaz et. al., personal interview, 2018) Resources, Capabilities, and Core Competences Granny’s Café core competencies and therefore key to success lies in their friendliness, sense for detail and in their commitment for their store. Since the owners work together and are always present in the café, they know all of their guests. That way they can observe their needs and, for example, tailor menus to customer preferences or recognize any flaws in their business first hand by talking to customers and asking for feedback and improvement suggestions. As opposed to many other chain cafés, every employee and customer is valued as a human being and should feel comfortable at Granny’s. This goes as far as remembering customers names. The happy and casual atmosphere is therefore one thing that can’t be easily copied by others. Even though the owners had no experience in the food service industry, they had the courage to drop their education and quit their jobs to follow their dream. This was the first step towards the Granny’s that nowadays scores above average on every customer satisfaction website. Through hard work, ambition and perseverance the owners managed to establish the café and make “one of the best cafés in town”, according to the owners. “Everything is freshly cooked every day. We always start the preparation in the morning, the cakes are baked in the morning, the food is made in the morning. Everything is always done every day”, states Tugba Rovkmaz. (Rovkmaz et. al., personal interview, 2018)
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Motivation When asking the owners about their motivation for running the business, it’s not about money or financial success, it’s more about their dreams, that they have always wanted to open a café and about keeping a family tradition alive. Since all the recipes are family recipes, the biggest motivation is to see satisfied and happy customers. “Those compliments and the smiling faces, this is the greatest motivation” emphasizes Tugba Rovkmaz, owner of the Granny’s Café. Meeting new customers every day and getting in contact with them is another aspect that motivates the owners. “You get to know so many people, so many personalities, you meet each other privately now, you also made so many friendships that is nicer than when I sit in the office and constantly somehow do the same”, explains Valentino Tomic, the second owner of the Granny’s Café. Being able to allow the customers a comfortable stay in their café and to keep the customer satisfaction is what drives and motivates the owners to continuously improve, just like Tugba Rovkmaz confirmed in our interview, “you always have to come up with new ideas, with different designs, so that there's more and more and continues to change. It's like an ongoing circle, so more and more people can feel at home”. (Rovkmaz et. al., personal interview, 2018) „Granny’s owners“ (Popescu, 2018)
Future challenges and prospects The biggest future challenge that Granny’s Café faces is the sustainability. Since the two owners have a position at the café that is unreplaceable during an usual workday, especially Tugba Rovkmaz, who is responsible for baking the cakes and pastries, it becomes complicated when one of them gets sick. “If she is sick then there is no cake, and there is no food, there is nothing […] we had to close for 8 days once”, explains Valentino Tomic. Therefore, their biggest goal at the moment is to have a steady cash flow that results in a more comfortable buffer, thus allowing for days off due to illness or holidays. Furthermore, another challenge that Granny’s faces is also the personnel. For various reasons, they often lack staff and as already mentioned before, the owners set great emphasis upon friendliness and 100 percent reliable personnel which is hard to find and they often have young employees that still need to be trained. This exacerbates the future recruitment process. But the Granny’s owners are staying positive. Their rising sales numbers indicate that they must be doing something right, according to the owners. They want to keep doing what they are doing and even improve their restaurant by thinking of introducing a food delivery service and coming up with other new food and decoration ideas. (Rovkmaz et. al., personal interview, 2018)
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References Serviced Apartments in Frankfurt – Wohnen auf Zeit bei THE FLAG. (n.d.) Retrieved May 13, 2018, from https://theflag.de/serviced-apartments/frankfurt/ Start (n.d.) Retrieved May 13, 2018, from https://www.grannys.cafe Granny’s (n.d.) Retrieved May 13, 2018, from https://goo.gl/maps/j2gaMMYA2Ko
Granny’s (n.d.) Retrieved May 13, 2018, from https://dede.facebook.com/GrannysFrankfurt/ Redlich, E. V. & Lai, T. T. (2018, May) personal interview with Rovkmaz, T & Tomic, V. [audio file] Popescu, P. (Photographer). (2018, May). Interior of “Granny’s” [digital image]
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5.4.
Case „Bureau van Dijk – A Moody’s Analytics Company“ By Yuxin Cheng Lisa Gao Christian Harms Duong Nghiem
Please refer to this case using: Cheng, Y., Gao, L., Harms, C. & Nghiem, D. (2018). Case „Bureau van Dijk – A Moody’s Analytics Company“ In Bogodistov Y. (Ed.), FS Casebook (Vol. 2, p. 78-81). Frankfurt am Main: ProcessLab.
What is Bureau van Dijk – A Moody’s Analytics Company? Bureau van Dijk - A Moody’s Analytics Company, is first known as Bureau van Dijk Electronic Publishing. Its main business operates in the business information sector. Over the year, Bureau van Dijk (BvD) has developed private company data programs and offers software for corporate valuation and analysation (Bloomberg, 2018). BvD has become a major publisher in this sector with offices in more than 10 cities across the globe. In 2017, BvD officially became a Moody’s Analytics company. The products from Bureau van Dijk range from corporate finance and mergers and acquisition (M&A), procurement and supplier risk, credit risk, academic research and business development (BvD, Bureau van Dijk - About, 2018), such as: Orbis, Zephyr, Amadeus, etc... A Brief History of BvD In the 1970s, a Belgian businessman Marcel van Dijk found a company focusing on information systems called “Bureau Marcel van Dijk.” BvD business expanded to management consulting, auditing and IT support after Professor Bernard van Ommeslaghe and Alain Liedts came into management as a result of Marcel van Dijk’s retirement. The company’s two main divisions are now separated into “Bureau van Dijk Electronic Publishing” with operations in updating and expanding database; and “Bureau van Dijk Ingénieur Conseils” with operations in consulting. Bureau van Dijk’s performance has a large impact on other businesses as it acts as a solution to data analysing, especially in M&A. “Bureau van Dijk aggregates, standardised and distributes one of the world’s most extensive private company datasets, with coverage exceeding 220 million companies. [...] Bureau van Dijk’s solutions support the credit analysis, investment research, tax risk, transfer pricing, compliance and third-party due diligence needs of financial institutions, corporations, professional services firms and government authorities worldwide.” (Moody's, 2017) In May 217, Moody’s Analytics announced that it had agreed to acquire Bureau van Dijk (Reuters, 2017). The acquisition is completed in July 2017 as Moody’s had received clearance under the EU Merger Regulation from the European Commission (Wire, 2017) 78
Vision, Values and Business Strategy With information on more than 280 million businesses worldwide, Bureau van Dijk increases the certainty of decision making through providing information derived from rigorous processes, various sources, and processing it to simplify the comparison of companies internationally, which conforms to its slogan “The business of certainty.” (BvD, Bureau van Dijk - About, 2018) Value: At Bureau van Dijk - A Moody's Analytics Company, the most important goal is to provide customers with the highest quality data. The culture of Bureau van Dijk is one of the true passions and motivations: they are committed to providing the best service to their clients. With their certain-oriented attitude they endeavour to improve the data and services provided by them. A leading information industry analyst, Chris Porter of Porter Walford Consulting also sent his compliments to Bureau van Dijk, "Bureau van Dijk has always been known for the quality and depth of its data.” (BvD, Bureau van Dijk - About, 2018) Strategy: Product base: Bureau van Dijk at first captures the data from regulatory and other sources such as industry research, agency ratings or patents. Then they treat data to add value in the way of, e.g. applying data verification, standardizing financials and ratios, integrating M & A deals and rumours, which in the end leads to user interface, data visualisation and integration. There are mainly three key product ranges: comprehensive company database, catalyst which can speed up the research and analysis, as well as custom team which develops customised and bespoke solutions. Customer base: The free trials offered by Bureau van Dijk before making a purchase can make customers be sure of the quality they receive. The company also provides an advisory approach. They help clients get the best out of the data about the products as well as the information they already have about their customers, suppliers or prospects to achieve their goals in risk management, efficiency, and revenue growth. Through combining the company’s data with their customers’, great solutions can be created. Innovation: Bureau van Dijk is challenging the status quo that many companies are satisfied with substandard data, the company is upsetting the market with data in a different league through constant innovation and exploration. Internationality: Bureau van Dijk now has 900 employees working in more than 30 offices around the world. The research teams, which collect both global M&A data and intelligence around corporate ownership structures, are based in Manchester, Brussels and Singapore. Resources, Capabilities, and Core Competences Products: Bureau van Dijk’s main resource is its products to provide processed information, in cooperation with the “Information Specialists” (Interviewee, 2018), in order to enhance the client’s decision-making abilities. First of all, it provides a range of products, such as Orbis or Mint Global, which are able to process and provide data on corporate structures and M&A 79
deals (BvD, Bureau van Dijk - About, 2018). Bureau van Dijk also engages in purpose-built platforms to help the client use the gathered information for specific business areas. Lastly, the company can provide tailor-made programs for the client via the so-called fact framework. These products are unique and can be customized extensively to provide best-in class solutions. Human Capital: The company has approximately 700 employees, which are a tremendous resource for the company, because they drive the company forward with the development of new products and customer solutions. Organizational Capital: Since Bureau van Dijk is part of the Moody’s Analytics network, it possesses great organizational capital. Primarily, the company has a wide array of offices in 35 locations which allows Bureau van Dijk quick access to its customers on a global scale. Additionally, its strong reputation for high-quality information, especially in the financial industry, provides Bureau van Dijk with a strong ongoing customer base which is a prerequisite for further steady growth. Core competences: Bureau van Dijk core competence is its network of partners (Interviewee, 2018). We consider these to be the firm’s core competence because it is very hard to intimate. The scope and size of the network makes intimation of such incredibly hard. Motivation in Corporate Environment Bureau van Dijk motivates its employees in different ways. As a part of the Moody’s environment, BvD has access to a huge variety of different activities. Since the company views itself as being responsible for the environment, it engages in many charity events. “We donate every December some money for charity organization, and this is now backed up, and even professionalized by our parent company which has the huge sense for responsibility, both for the employees, but also for the overall environment” (Interviewee, 2018). By doing this, BvD believes that the employees are encouraged to perform well, not just for the company’s business or themselves, but also for the community that they are operating in. Furthermore, BvD also motivates its employees to participate in activity-based corporate events such as the yearly J.P. Morgan Corporate Challenge. It not only boosts the employee morale, but also adds team spirit among the employees. (Interviewee, 2018) Future Prospects and Challenges When asked about the future prospects, Bureau van Dijk believes in a positive outlook for the company. With strong evidence that the demand for data is not decreasing, more specifically, people are demanding more data, connecting data and improving cloud services. Bureau van Dijk’s business, thus far, has managed to establish a reputation in storing and interpreting millions of data from hundreds of partners, now with the back-up of the parent company Moody’s Analytics, is positive to expand. In order to maintain this success, they 80
have to make sure that the product development stays in line with the demand of the market. Moreover, since after the acquisition by Moody’s, there would be some changes within Bureau van Dijk. “Now with the back-up of Moody’s, which has functionality that we’ve never used to have in our organization, like product, strategy specialists or functions that will take off [...] admin burden for the managers.” (Interviewee, 2018) According to BvD representative, they have an opportunity to share the responsibilities, which were entirely inhouse before, as well as to take on new research projects “AI, Artificial Intelligence, and how to combine that with tremendous amount of data.” (Interviewee, 2018) Bureau van Dijk, for the last twenty years, has built an easy-accessible platform for businesses and corporations. They have “more than 285 million company records. They all link to each other. There is an ownership relation, we will be on top of it, and we see globally, a tendency for more.” (Interviewee, 2018) In conclusion, with an established reputation and a professional team behind product and key account management, Bureau van Dijk - A Moody’s Analytics Company is positive for the future with its current business model. References Bloomberg. (2018, April 21). Bureau van Dijk Electronic Publishing BV: Private Company Information. Retrieved from Bloomberg.com: https://www.bloomberg.com/research/stocks/private/sna pshot.asp?privcapId=1983755 BvD. (2018). Bureau van Dijk - About. Retrieved from BvD: https://www.bvdinfo.com/en-gb Moody's. (2017, July 21). Moody's Completes Acquisition of Bureau van Dijk. Retrieved from Moody's Analytics: http://ir.moodys.com/news-and-financials/pressreleases/press-release-details/2017/Moodys-CompletesAcquisition-of-Bureau-van-Dijk/default.aspx
Reuters. (2017). Moody's Corp to buy Bureau van Dijk for about $3.3 billion. Retrieved from Reuters.com: https://www.reuters.com/article/us-bureauvandijk-m-amoody-s/moodys-corp-to-buy-bureau-van-dijk-for-about3-3-billion-idUSKCN18B1CZ Wire, B. (2017). Moody's Completes Acquisition of Bureau van Dijk. Retrieved from Businesswire.com: https://www.businesswire.com/news/home/20170810005 500/en/Moody%E2%80%99s-Completes-AcquisitionBureau-van-Dijk
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5.5.
Case „Reiner Dämon GmbH“
By Constantin Boden Jacques Botha Jorge Hamilton S. F. dos Santos Selina Dämon Please refer to this case using: Boden, C., Botha, J., dos Santos, J. H. S. F. & Dämon, S. (2018). Case „Reiner Dämon GmbH“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 82-85). Frankfurt am Main: ProcessLab.
Introduction Reiner Dämon GmbH is a family business from Butztbach well-known for providing tailored solutions in roofing and carpentry for households and industries. Founded in 1988 by Reiner Dämon, the company takes his name and is specialized in services for renovations of buildings, houses and warehouses. Present in a high-skilled demanding market, Reiner Dämon GmbH benefits from its previous works and its customer relationship management (CRM) to defend its leadership position in the region. Along with word-of-mouth marketing the company also counts on its 6-trucks fleet with the painted motto “Ihr Dach aus einer Hand”, which means “Your roof from one provider” in German, to increase their brand awareness and establish themselves as the hidden champion of the region. As a traditional family business, what are the core competences of Reiner Dämon GmbH and how was the company established in their market? How does Mr. Dämon motivates his team and what are the key factors that may influence their business in the future? A short profile of Reiner Dämon GmbH
Foundation: Reiner-Dämon GmbH was founded in 1988 in Butztbach after the acquisition of his first truck by Mr. Dämon.
Services: carpentry, roofing, scaffolding, timber restoration, plumbing, loft conversion and framing of dormers
Structure: Mr. Dämon runs the entire business and oversees the operations with contractors and household customers. His team consists in an administrative assistant, technicians and apprentices. Besides, Reiner Dämon GmbH partners with other companies, such as the property developers like H&R and the energy provider OVAG for example, to provide a tailored and unique solutions to their customers.
Resources: A fleet of trucks, crane trucks and a forklift enables Reiner Dämon GmbH to be flexible and efficient to execute their services.
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A brief history of Reiner Dämon GmbH In pursuit of his independence, the German entrepreneur Reiner Dämon left his family’s agribusiness in Hoch-Weisel to find his own endeavor. He decided to receive training to become a carpenter and roofer in 1978, then decided to seek specialization in these very skills demanding professions. Bearing in mind to have his own business one day and, Mr. Dämon worked hard to gain practical experience in other firms during the day and studied at night to achieve the master level of his profession. Hence, he became very well-known for his skills and decided to found his own business in 1988, conquering his own independence. Back then, he started his business with only 1 truck but already offering services in roofing and carpentering for the whole region of Butztbach. 30 years later, Reiner-Dämon GmbH is a well-known successful family business in the region with 6 trucks and 14 employees and apprentices. The company offers a wide range of services in roofing and carpentry, providing solutions not only to private customers in new constructions and home-renovation, but also to corporates like construction firms and energy providers. Figure 1. Dämon’s first advertisement publication in the local newspaper (April, 1988).
Vision, Values, Corporate and Business Strategy The vision of Reiner Dämon GmbH is expressed by their slogan “Ihr Dach aus einer Hand” or as translated from German “Your roof from one provider”. The vision is closely connected to providing a unique solution and to Dämon’s personal endeavor to achieve independence, success and self-fulfillment. Mr. Dämon started the company with one small truck and a small warehouse after completing his training in the professional and years of experience. He managed to build a hidden champion doing what he loves and aiming to provide this same kind of fulfillment, Mr. Dämon tries to offer a great buying experience to his customers, starting from the planning of the projects to the execution of tailored solutions. Thus, Mr. Dämon considers a project only successful when the customers are satisfied with the service and when they further recommend his company to another prospects. Beside customer satisfaction, Mr. Dämon is puts a lot of efforts to ensure his employees´ well-being. He emphasizes that his concerns reach beyond business-related issues, as he has established an open channel to address private problems whenever necessary. The company values having a good atmosphere because they believe this is essential for the overall performance of their employees and their results. Customer centricity is key-success-factor and to achieve their satisfaction Mr. Dämon tries to motivate his employees through various events, gatherings, training and recognition. The most important values in the Reiner Dämon GmbH are reliability and honesty, as the company reflects the family values in their business. As a measure of their success and their competences, Reiner Dämon GmbH has a very low rate of employee turnover, as the employees are often recognized for their achievements. 83
Operating Model and Structure As a traditional family business, Reiner Dämon GmbH considers personal contact one of the most important keys for their success. The company’s operating model relies on a structure, where the customer’s needs come at the first place and whenever necessary, Mr. Dämon Dämon will get in the operations himself and work on the development of a project. His role consists primarily in ensuring the company’s financial performance and in coordinating the operations with technicians, suppliers and other stakeholders as these activities often relies on his know-how and experience. In every construction site he delegates the responsibility to a manager, while he focuses on personal interactions with key-accounts and generating new leads. A part of the operation managers, technicians and the apprentices, Reiner Dämon GmbH counts on an administrative assistant, who takes care of the most important tasks, such as making sure that bills are paid, issuing invoices and ordering materials. Resources, Capabilities, and Core Competences Understanding the customer needs and providing the right solutions require not only good planning but also the capability to deliver the necessary materials and workforce tailored to each project. Mr. Dämon forecasted the importance of his mobility since he founded the company and purchased his first truck enabling him to transport the equipment and the materials from warehouses to the operations site. Nowadays, the company still believe that having the right tools, the appropriate equipment and his own transportation capability are key resources. A part of having the right tools, Mr. Reiner also makes sure that his employees receive the proper training before going to operations and takes care himself of the apprentices’ development. By having a great level and consistency of good work, Reiner Dämon GmbH provides solutions not only to households when they are renewing their homes but also to energy companies and contractors whenever there is a big project in the region. Thus, generating new leads is supported by word-of-mouth marketing and the brand awareness in the region. Figure 2. Dämon’s fleet (2013).
Money as a motivational factor to the employees Money is a key factor to keep the business afloat, yet having fun at work and a healthy environment are also of great value. The utility of having money is lower than having good health conditions and Mr. Dämon shares this view on money as a secondary motivation factor. Nevertheless, driving a nice car, buying new machines or trucks are tempting but receiving a positive feedback from your customers is more self-fulfilling to Mr. Dämon. Being recognized as an excellent service provider and further recommended to other customers 84
are the key goals. Therefore, Reiner Dämon’s employees are often motivated with training, events and receiving new responsibilities in the constructions sites. Whenever possible, Mr. Dämon also gives away to his team consumer goods and fuel vouchers and old equipment in good shape. Future challenges and prospects Family businesses often come across to the question of how will be the succession of the management and right momentum for this change. In case of Reiner Dämon GmbH, this is already a solved issue. Robin Dämon, Mr. Dämon’s younger son will take over of the management in a few years after completing his training in carpentry. He has been already working in different areas of the company to gain a deep understanding of the values and the core competencies. Mr. Reiner Dämon expects that Robin will already run part of his responsibilities in the next 5 years and then take over the whole company, as Reiner will shift his focus to a strategic consulting role. As the succession of the firm for the next generation is clear, the successful entrepreneur and his son are already looking into the future. They await different and though challenges as fewer young people are expected to get involved in handcraft professions and, ergo, salaries for these professionals will increase significantly. Thus, they believe technology will play a major role in keeping their competitiveness. It will be harder to find high-skilled professionals to meet their demand. The company is still looking forward to using digitalization as a key tool and to implement new technologies in their processes, such as drones to scan and inspect roofs. References Herzberg, Frederick (1987, September-October). "One More Time: How Do You Motivate Employees?". Harvard Business Review. Dämon, Reiner. (2018, May). Personal Interview. Dämon, Robin. (2018, May). Personal Interview.
Robbins, S. P., Judge, T.A. (2012). Organizational Behavior. Figure 1. (2013). Retrieved from Reiner Dämon’s personal archive. Figure 2. (2017, May 10). Retrieved from http://www.daemonzimmerei.de/
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5.6.
Case „World Vision Deutschland e. V. “ By Alena Neun Benita Schmidt Elena Wagner Hannah Wagner
Please refer to this case using: Neun, A., Schmidt, B., Wagner, E. & Wagner, H. (2018). Case „World Vision Deutschland e. V.“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 86-91). Frankfurt am Main: ProcessLab.
Introduction In a world with growing humanitarian crisis and an increasing gap of rich and poor, many people are dependent on help from others. More and more people are aware of the importance of social balance and this is why World Vision attempts to solve these Source: World Vision e. V. inequalities at their root core. Website It connects people with shared values and goals and commits itself on helping others in need. It focuses on vulnerable children, who are easily forgotten in humanitarian catastrophic times. The organization aims to have a stable impact on the children’s quality of life and the creation of a better future. World Vision is one of the biggest international humanitarian organizations with many locations around the world. The German headquarter, World Vision Deutschland e. V. is located in Friedrichsdorf, near Frankfurt am Main in Hesse. They also have a smaller office in Berlin. A short profile of World Vision Deutschland e. V.
World Vision: World Vision is a Christian humanitarian organization that is active in 99 countries of the world. The organization is working to create lasting change in the lives of children, families and communities living in poverty and injustice. It serves all people regardless of religion, race, ethnicity, or gender. World Vision Deutschland e. V., founded in 1979, is part of the worldwide World Vision partnership and is one of the biggest humanitarian organizations in Germany. In 2016 World Vision Deutschland e. V. carried out 327 projects in 52 countries with a financial volume of more than 89,4 million Euro.
Project Work: Main focus of World Vision is the development of regional projects financed by private sponsorship. These donations are not given directly to the children, but to the local community who use these funds for example for clean water systems, education and medical care. 86
Another focus is the provision of disaster- and humanitarian aid for war- and famine refugees. Furthermore, peace-promoting measures as well as the development of early warning disaster systems. New is the “Start Helper” programme which places a special focus in healthy nutrition and health care for babies, young children and pregnant women.
World Vision Deutschland e.V., Website (2018)
A brief history of World Vision Deutschland e. V. After the foundation of World Vision International in 1950, Dr. Manfred W. Kohl established World Vision Deutschland e. V. (WVD) in Oberursel on November 15, 1979. Due to the mass starvation in Ethiopia in 1985, World Vision took part in emergency relief measures. Consequently, one of the first regional development projects, “Al Buko“, emerged. On January 1, 1994, Günther Bitz was named the new director of World Vision Deutschland. Two months later, the company’s headquarters relocated to Friedrichsdorf. During the same year, WVD was actively engaged after the Rwandan Genocide. In 2000, World Vision Deutschland took part at the Expo Hannover with the “Pavilion of Hope“, which was later elected as the exhibition’s landmark. Three years later, ten Human Aid organizations, including WVD, decided to found “Aktion Deutschland Hilft“.
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Figure 2. Timetable World Vision Deutschland e. V. (2018).
Following the Tsunami in South-East Asia in December 2004, the international World Vision partnership is involved in their most extensive aid project so far, helping approximately four million people. In the same year, World Vision Deutschland is a founding partner and member of “Gemeinsam für Afrika“. A new office focusing on advocacy work related to development policy was opened in Berlin in 2006. Two years later, Christoph Waffenschmidt and Christoph Hilligen made up the new board, making Waffenschmidt the chairman. Furthermore, the World Vision foundation was established in 2009, concentrating on the support of children in need, their families and environment. Two million people were reached by World Vision International’s help in Haiti after the earthquake in 2010, one million subsequent to the Philippine typhoon 2013 and ½ a millionpeople following the earthquake in Nepal. Currently, over six million Syrian refugees have been helped since 2011. Vision, Values, Corporate and Business Strategy As a Christian organization, it is the company’s aim to create a better future for children. The Christian values include the acknowledgement of god, the identification with the poor and love for all people without discrimination or condition. Their commitment to the poor serves people in greatest need around the world and relieves their suffering. It is not only about giving but also about learning and receiving. World Vision Deutschland e. V. sees themselves as partners with shared goals and a spirit of openness. Furthermore, they value people who are all created by god and equally loved. As the world’s resources are not our own, the organization’s acting is always protecting the environment and trying to restore whenever it is possible. “As Christians with different confessions we try to ease physical, psychological and mental misery trough active benevolence. We are united in the hope of a better future and the responsibility for the people’s wellbeing.”24 Building brighter futures for vulnerable children and to give them the possibility to live an abundant life, is the company’s goal for 2022. They are planning on succeeding with the help of new child sponsorships, innovative donation possibilities and great skilled expertise. 24
Translated from German by authors
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“World Vision serves all people, regardless of religion, race, ethnicity, or gender.”25 Operating Model and Structure World Vision Deutschland e. V. is partner of World Vision International, where each support office is governed by their own boards. Its partnership is bound together in independence through a common mission statement and shared common values. The Christian organization has a functional structure with different departments responsible for their subunits International Development, Marketing, Finance and Administration, IT, People and Culture (HR) and Advocacy. The Board has one chairman Christoph Waffenschmidt and one deputy Christoph Hilligen. They are responsible for the operative management of the charitable organization and report to the Supervisory board. Organizational structure is a hierarchy-based line structure. The supervisory board is responsible for the strategic visions of the association. They audit the board of management and agree on the yearly budgets.
World Vision Germany e.V. Associat ion General Assem bly Supervisory Board
Head of the campaign „It takes a world to end violence against children“ Nathalie Huguet
Executive Board
Medien HeadSilvia of Press Media Holten SilviaMedien Holten & Leiter Secretary Pressesprecherin
Christoph Waffenschmidt Chairman)
Christoph Hilligen
Controlling Sabine Lins
Head of political affairs and expertise Gudrun Schattschneider
World Vision Institut
Director Technical Advisory Group Stefan Sengstmann
IPD Martin van de Locht Senior Director
Director Corporate Engagement Sudhir Schröder
Marketing Dirk Scherer Senior Director
Director Project Development Caroline Klein
Director Project Management Albrecht Hartmann
Director Advertising & Publications Dirk Jacobs
Inbound Eric Reißig Team Leader Outbound Duje Vrdoljak Team Leader Individual Sponsor Care Daniela Herweg Team Leader General Sponsor Care Volkhard Michel Team Leader
Latin America & Caribic/ Middle East & Eastern Europe Hannes Reuter Team Leader South Asia Pacific/ East Asia Anja Gold Team Leader
Internal Source (2018)
Director Customer Service Sabina Pahlke
West Afrika/ South Africa Ursula Messner Team Leader East Africa Halina Weyers Team Leader
Director Finance & Administration Anja Krieg
Director People & Culture Beate Eberhardt
Director Fundraising Dirk Scherer (Interim)
Support Engagement Rafael Schwarze Team Leader
E-Marketing Constanze Oelighoff Team Leader
Director IT & Systems Bernhard Geis
IT Projects Marc Weyer-Menkhoff Team Leader
Finance Barbara Dornheim Team Leader International Finance Management and Risk Controlling Maren Burtoft. Team Leader
Sponsorship Operations Daniela FortuneMensah Team Leader
Legend: Disciplinary and technical responsibility Reporting
World Vision Germany e.V. Personalised organisational chart Dezember 2017
Resources, Capabilities, and Core Competences World Vision Deutschland e. V. is a non-profit association and the origin of income lies nearly 2/3 on sponsorship contributions. The rest of the income is funded by other donations, public grants and cooperating partners. Their core competence and at the same time competitive 25
World Vision (2018, May 10). Retrieved from https://www.wvi.org/structure-and-funding
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advantage is the focus on helping children who live in poverty and have less access to education, health care and sanitation as well as providing aid for disaster victims. Tangible assets include mainly office equipment, computer hardware and lease-hold improvements while intangible assets are mostly licenses and computer software. In current assets, the inventories are important for rapid deployment in case of disasters. The liabilities in the balance sheet cover program contributions by public donors, donations that are not spend yet as well as liabilities to associate relief organizations. While tangible and intangible assets have to do financial, physical and technological assets, the human assets are of important relevance, too. Human assets cover the motivation of the employees, their know-how and skills. The organisational culture is a mixture of shared Christian beliefs, values, rituals as having prayer and symbols like the humanitarian heart. The capabilities, which are by definition the representations of a firm’s capacity to deploy resources for a desired end result, are represented among others by helping as fast as possible after a catastrophe and using the philanthropic method by showing the society how to support themselves with education, sanitation, housing and medical care in a sustainable way. Employees are directly available in the projects all over the world to keep track of the development and to be a helping hand. Money is not the only motivation for good work! Working for a child relief organization might not be as well paid as working for some banks or industry, nevertheless the employees’ motivation is very strong. Talking to the CEO of World Vision Deutschland (WV), Christoph Waffenschmidt, he stated what motivates employees to work for a non-governmental organisation. The motivation is based on the Christian commitment to help people who have less opportunities and live in poverty. There is a strong spirit of community and philanthropic intentions to not only give people in developing countries education, medical care and water and sanitation but to show them how “to overcome poverty, hunger and injustice in the long term in a sustainable way. In addition, World Vision also carries out operations to relieve and prevent suffering in crisis areas. To achieve these goals, World Vision works in three areas: sustain- able development cooperation, humanitarian aid and development policy advocacy.”26 Payment is an important benefit that the employees can cover their basic needs based on Maslow’s hierarchy of needs like housing, living and paying their bills etc. However, for WV’s employees it is an important value to work in an environment where your work makes “sense” – to help children is the motivation. During their work, the employees at WV Deutschland have the time to live their Christian belief through a weekly prayer, once a year “Gebetstag” or workshops. Part time jobs, home 26
World Vision External Report (2014)
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office, secondments and sabbaticals are tools to create a positive work/live balance. Development of employees is also very important. Training and coaching on a regularly basis is part of the core values of World Vision. The benevolence of helping not only children around the world but each other makes a good motivation. Employees can talk to each other, live the Christian culture as well as show their humanitarian heart. Future challenges and prospects The world is facing dramatic changes such as climate changes, (drought in Africa and rising global warming), worldwide conflicts and terrorism. Therefore, World Vision makes new commitments for the future. As they are still millions of children living in extreme poverty, World Vision will pursue the vision that in future every child will live a life in good health and protected from disease. Furthermore, World Vision has the vision that every child will receive proper education and will be cared for, protected and participating. In the future World Visions plans are to give hope and perspectives by providing better education and training. In view of “water shortage” World Vision also plans to raise the priority for water and sanitation. In order to achieve this mission, the organization has launched a Strategy Realization Program. This strategy is a promise of Word Vision to change themselves. World Vision’s promise for 2030 is about building a brighter future for vulnerable children. The organization aims to focus on the most vulnerable children by shifting their priorities to places, where help is most needed. They try to achieve more, together with others, who share the same goals and values. They will mobilize the organization, supporters and partners by offering a variety of ways to engage. World Vision will focus on raising the right funds from the right people and spending them in the right places. With sharing the love of god and living out Christian faith, the organization is committed to delivering high quality sustainable funding. References Waffenschmidt, C. (2018, May 08). Personal Interview World Vision Deutschland e. V. (n.d.). Retrieved May 12, 2018, from https://www.worldvision.de/informieren/ueberworld-vision/vision-und-werte World Vision Strategy. Our promise 2030: Building Brighter Futures For Vulnerable Children- Overview Video (2017, April 28). Retrieved May 13, 2018, from https://vimeo.com/215198104 Policy Brief World Vision- Water and Sanitation in Asia and the Pacific (Prepared by World Vision Australia December 2017). Retrieved May 6, 2018, from https://www.worldvision.com.au/docs/defaultsource/publications/health/water-and-sanitation-in-asiaand-the-pacific.pdf?sfvrsn=2
World Vision Australia (n.d.). Retrieved May 10, 2018, from https://www.worldvision.com.au/docs/defaultsource/publications/health/water-and-sanitation-in-asiaand-the-pacific.pdf?sfvrsn=2 Waffenschmidt, C. & Hilligen, C. (2016) „Jahresbericht“ 2016. Retrieved May 6, 2018, from https://www.worldvision.de/sites/worldvision.de/files/pdf /World-Vision-Jahresbericht-2016.pdf Waffenschmidt, C. & Hilligen, C. (2014) Annual Report 2014. Published by World Vision Deutschland e.V. World Vision Australia blog (n.d.). About Us. Global Issues. Retrieved May 6, 2018, from https://www.worldvision.com.au/aboutus?source=WVA_Blog
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6.
Organizational Structures
6.1.
Case „Elaine's Deli“ By Nourdin Addou Pascal Herrmann Jannik Konrad
Please refer to this case using: Addou, N., Herrmann, P. & Konrad, J. (2018). Case „Elaine's Deli“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 9294). Frankfurt am Main: ProcessLab.
Introduction Elaine’s Deli is located in the TaunusTurm, which is right in the center of Frankfurt. It is a small café, that offers a great variety of products ranging from coffee to cupcakes and from wine to soups and wraps. Customers come by the café from 7:30 am – 6:00 pm and sometimes even later if customers still enjoy being around or calm down after a stressful day at work. One may not find any website, but people like to follow the place on Facebook and Instagram. Elaine’s Deli and its offerings are described as very “instagramable”. The following is an outline of the key drivers of their success and the story behind the business. Source: Facebook
Elaine's Deli and its origin The café first opened its doors in May 2016 by three founding partners. Prior to opening their own café they worked as waiters to save enough money to start their own business. In the beginning of their entrepreneurial journey they started a pastry service, which they called “Cakering”. The idea behind “Cakering” is to offer customers an easy way to order cupcakes and similar products for small events (i.e. starting at a new job or birthdays). The service, that began as a part time job from their own kitchen, grew up to the point at which they needed to outsource the production to be able to follow up all customer orders. Once the opportunity occurred to open their own shop in a prime location to sell their products - the foundation for Elaine’s Deli was laid. A limited liability company (GmbH) was founded to run Elaine’s Deli. The team convinced the landlord of the TaunusTurm with their concept pitch and could soon open their doors in order to vitalize the atmosphere in the tower. The name was chosen in honor to the American artist Elaine Stewart, which is suitable as the museum of modern art (MMK2) is right next door.
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Vision, Values and Business Strategy Right from the beginning the concept was not to simply start another new coffee shop, but to create a place where people love to come, spent time and take some minutes apart from their desktops. The idea was to create a schoolyard-like destination for the nearby workforce. The main challenges are very typical for a Start Up, as in the beginning leadership and employee management both were new topics, which constantly develop over time. Further areas, such as accounting, taxation and legal are complex and difficult to handle correctly. Also the pressure of paying all expenses on time and especially knowing that other people rely on the performance of the business is a situation the founders needed to keep up with. The founders started with only their own savings and never financed their progress externally, but invested their profit right away into the development of new offerings or upgrading their café’s equipment. Following this path, they were able to keep their independence. Independence is one important factor of being and maintaining who they are and what values define the Elaine’s Deli. Source: Facebook
An essential point for the success of Elaine’s Deli is its vibe. All day long chilled music is played and from time to time they even host little parties. The café can also be rented for private celebrations. With this orientation towards a certain lifestyle - certain kind of people are attracted to the café. In the first months nearly all customers came from the direct surrounding area. Today most customers still work in the offices nearby, but on weekends people like to visit Elaine’s Deli even though they do not have any connection through their work life. They are mostly led to the café due to positive customer reviews and feedback. Recurring customers are another important point. Many regular guests come by several times a day and are certainly known by the employees. They often do not need to order, but automatically get their coffee in the morning and an espresso when they stop by after lunch. “I do not care who you are as long as you pay your coffee.” (Anonymous) Everybody is welcome in Elaine’s Deli and everyone is treated the same. The team does not care if you are a Managing Director at a big Investment bank or an art student. Customers enjoy this mix of various types of people and everybody is simply perceived as a human being. Especially customers from more formal environments appreciate the casual atmosphere. The core competence of the café is hospitality - the smile from the vendor and the better mood afterwards are always on the house. Operating Model and Structure Two of the founders are operationally running the business, which not only includes management in terms of financial decisions or human resources, but also coming in every day and serving coffee or washing the dishes. As of May 1, 2018, the team consists of 22 persons, working on a rotating basis. The two managing partners (“Geschäftsführende Gesellschafter”) both have unlimited power of representation and decision-making authority. One of the most crucial points for 93
the young business is that they know each other since the earliest days of their childhood and have immense trust in each other. Focusing on their individual strengths allows them to naturally split areas of management. For instance, one is concentrated on procurement of machines and ingredients, while the other is working on the marketing side. There is no strict decision or a written guideline on focus areas. Both partners always discuss significant topics as human resources or accounting. Further, this setting allows them to push each other’s boundaries or absorb possible downtime. “There is no task around here that I would not do myself.” (Anonymous) In addition, they declared two people as shift supervisor who run the café in the rare cases when none of the two is directly working. That leaves the rest of the team with a very flat and organic hierarchy. Some people work more towards serving food and maybe creating new food ideas and others on beverages or embellishment of the shop. For a young and relative small team they believe, that this is the best way of operating efficiently. Fixed structures will not benefit them in a business environment that often needs immediate actions or is subject to fast adjustments. Source: Facebook
Future challenges In the future the company is looking to expand its operations. Currently the exact path and the concrete execution are still to be defined. Possible options are opening further sites of Elaine’s Deli or going in a different direction - maybe opening a restaurant or a bar. By doing so the firm would keep their core concept and focus on food & beverage services but would also diversify their opportunities for the future. “As a rule of thumb one can say that in catering one notices mistake for the first time three months after they were actually made and sales start to decrease.” (Anonymous) The founders know only through their hard work on a daily basis the business is growing and that this is a long-term process, which is why they are always looking for opportunities to advance their company and strive to fulfill their self-inflicted tasks perfectly. References Anonymous (2018, May 1). Personal interview
All pictures retrieved on May 2, 2018 from https://www.facebook.com/pg/elainesdeli/photos/
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6.2.
Case „Deloitte DOO Skopje“ By Fabian Braun Violeta Duduloska Boris Iliev Frederick Krauss
Please refer to this case using: Braun, F., Duduloska, V., Iliev, B. & Krauss, F. (2018). Case „Deloitte DOO Skopje“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 95-101). Frankfurt am Main: ProcessLab.
Introduction Combining the skills and work in teams across borders to deliver an unbeatable client service experience and to create and sustain regulatory and operating frameworks that contribute to the well-functioning markets are only a few examples of the fundamental components that make Deloitte Touche Tohmatsu Limited (“DTTL”) recognized as a global leader in key consulting and advisory professional services. “Deloitte” is the brand under which thousands of experts in member firms, in more than 150 countries, collaborate to provide audit and assurance, consulting, financial advisory, risk advisory, tax and other related services to clients. ("About Deloitte", n.d., para 6-7). With its’ reported revenue of US $38.8 billion in 2017, Deloitte aspires to become the world’s undisputed leader in professional services. (Steve Dutton, 2017). What makes Deloitte different from its’ competitors PwC, E&Y and KPMG is “our drive to make an impact that matters in the world". (Strauss,2016). As they say,” We aim to be the best at all that we do to help clients realize their ambitions, to make a positive difference in society, and to maximize the success of our people. This drive fuels the commitment and humanity that run deep through our every action.” ("About Deloitte", n.d., para 4-5). A short profile of Deloitte DOO Skopje
Leadership and governance: As a global network, Deloitte has a governance and management structures in place at both the global and member firm levels. The Deloitte Global Executive is composed of 25 senior leaders which are responsible for embedding Deloitte’s Purpose and advancing its aspirations and priorities. The Deloitte Global Operating Committee, composed of leaders from Deloitte Global and certain member firms, provides a vital link between strategy formulation and implementation that helps the company perform efficiently. Furthermore, The Deloitte Global Board of Directors is the highest governing body with 31 members and deals with the most important issues such as global strategies, election of CEO and major transactions. (Global Report, 2017)
About Deloitte Central Europe: Deloitte Central Europe (DCE) is a regional organization of legal entities under Deloitte Central Europe Holdings Limited, and member companies of Deloitte Touche Tohmatsu Limited. The services are provided by member companies or affiliates with Deloitte Central Europe Holdings Limited, which are independent legal 95
entities. In Macedonia, Deloitte operates under the name Deloitte DOO Skopje, a member company of Deloitte Central Europe Holdings Limited. (Republic of Macedonia. Council for Advancement and Oversight of the Audit of the Republic of Macedonia, 2016)
Corporate responsibility: The Deloitte network is committed to driving societal change and promoting environmental sustainability. It promotes high levels of ethical behavior, advance education and culture and advocate sustainable use of natural resources and respect for the environment. This is demonstrated through investment in employees, advice and services which are provided to clients and commitment to local communities and wider society. ("Corporate Responsibility and Sustainability", n.d.)
Performance: Deloitte is serving in more than 150 countries, with the highest revenue in US $ 20.4B in the Americas. The total headcount is made of 44% (116,668) women and 56% (147,256) men. By business, Deloitte reports its highest revenue from Consulting, $14.3B, followed by Audit and Assurance of $9.4B. (Deloitte Performance Metrics, 2017)
Office directory: With more than a hundred locations around the world – there's probably a Deloitte office near your location. ("Global office directory", n.d.)
Ownership structure of Deloitte DOO Skopje: Founders and shareholders are: 1. Deloitte Central Europe Holdings Limited, located in Cyprus – 24% share 2. Deloitte d.o.o Belgrade, located in Belgrade- 25% share 3.Lidija Nanush, Certified Audior from Skopje, 30% share 4. Aleksandar Arizanov, Certified Auditor from Skopje- 21% share
(Republic of Macedonia. Council for Advancement and Oversight of the Audit of the Republic of Macedonia, 2016) A brief history of Deloitte In 1893 when the economic depression in the United States began, democratic politician A. M. Dockerey appointed the two accountants Charles Haskins and Elijah Watt Sells to investigate. In the next years, they revolutionized the way the US government did their business. They went from department to department and found ways to simplify work and increase process efficiency. In 1895, they opened up their first office and started offering accounting services to the public. Around the same time the accountants William Welch Deloitte and George A. Touche tried to help met the demand of skilled people who could understand and solve complex business problems after the boom in joint stock companies in England. After two years they followed the stream of money to the United States where after the new income tax resolution, the need for accountants grew even further with the need for a correct accounting system. In 1933 independent audits for public corporations became mandatory. In the 50s the information revolution affected the accounting industry more than most other professions. Data processing became faster and brought computer technology to audits. In the 1980s Touche and Deloitte had merged with multiple other accountants (Deloitte with Haskins and 96
Sells) who opened up businesses in the past years. The reputation and infrastructure of the two could not be met by any other. But it wasn’t until 1989 that Deloitte and Touche merged. In 1995 the partners created Deloitte Consulting to better serve their multinational clients but their goal remained the same as 100 years ago: " To simplify work so that it can be done more rapidly and more effectively". Today they are split into Deloitte & Touche LLP, Deloitte Consulting, Deloitte Financial Advisory Services LLP and Deloitte Tax LLP.("A timeline of our history",n.d., para 1-22) Today they are represented in more than 150 countries and started financial services as a pioneer in the Serbian market where its company Deloitte Central Europe (DCE) opened an office in Skopje the capital of Macedonia 1994. Vision, Values, Corporate and Business Strategy The Shared Values of integrity, outstanding value to markets and clients, commitment to each other and strengths from cultural diversity serve as a basis upon which the people of Deloitte bind and trust each other, thus enabling the network to achieve its vision. “We aspire to be the Standard of Excellence, the first choice of the most sought-after clients and talent.” ("Vision, Values and Strategy", n.d.) As nothing is more important than the reputation, Deloitte practices sustainable and responsible business processes by helping the financial markets and their member firm clients to operate more efficiently. The culture and borderless collegiality is one of the many competitive advantages Deloitte possesses, which brings individuals of diverse backgrounds, different skill sets and different ways of thinking to solve the toughest and most complex problems and help clients rise above complex business challenges. Deloitte's strategy- across the global network- is rooted in true leadership. The strategy which is driven by the constantly changing clients, industries, markets and businesses is built on the leading capabilities, trusted reputation, multidisciplinary services and national and international reach. Its business strategy centers around the ability to create outcomes for their clients and driving to bottom-line profits to ensure business are sustainable. (Making an Impact that Matters, 2014). Operating Model and Structure “An operating model is the sum of strategic choices by which a company carries out its business model.” (Consumer Business Predictions & Priorities, Seminar. 2013, May 23). Its key purpose is helping to achieve the strategic vision of a company. An important feature of the operating model is the ability to provide information on both current and future operations of the company to its stakeholders. (“Target Operating Model”, n.d., para 1). Deloitte DOO Skopje offers its clients optimization of the operating model they have in their companies in order to maximize profits, minimize costs and create the required structure for achieving the business view. In addition, the wide range of specialties such as location strategy, real estate, global business services, enterprise model design, outsourcing and cost transformation create a greater client base for Deloitte which makes it a leader in this sphere. (“Target Operating Model”, n.d., para 1). 97
Global navigation Today there are already well-established and developed global markets, but their expansion is falling behind in the aim to reach the next billion customers. Operations on a global scale that can easily maintain output between different markets are in the basis of success. This ship-based model helps companies to move around the “harbors” (markets) which gives them a first-mover advantage in newly established markets. Scalable orientation The vast changes in markets makes it harder for the companies to adapt. A successful operating model is able to respond to these shifts by introducing new concepts and increasing the efficiency of the company. Workforce mobility Mobility is the key factor of providing work style flexibility and collaboration between employees. In addition, it is also useful to find the best talent all across the globe. Digital enablement Digital technologies today offer a variety of opportunities for the businesses. Some examples are analytics, mobility, social outlets, cloud computing. Therefore, the most successful operating models have widely spread digital strategy. Configurable design Market leaders are often required to a singular model in their sphere of business. Being a part of an alliance or a joint venture is the key to market success. An exceptional operating model is able to maintain decentralized decision-making in order to fit in the macro environment as well. Regulatory strategy The most effective operating models are able to adapt to changes in regulators of each country’s government. Therefore, they are able to meet the regulatory demand and adapt a company’s capabilities. (Kuder, Locker, Schreibeis & Wittenberg, n.d.)
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Figure 1. Illustration shows where the operating model of a company is positioned (Consumer Business Predictions & Priorities, Seminar. 2013, May 23)
Resources, Capabilities, and Core Competences As Deloitte DOO Skopje is essentially a subsidiary of the Deloitte Group, their resources, capabilities and core competences can be explained with Deloitte Group´s approach towards these matters. Over the years, Deloitte has gathered multiple specialized teams within the consulting industry, i.e. the Additive Manufacturing division. Additive Manufacturing is the process of e.g. 3d-printing certain elements or even finished goods, made entirely out of one particular material (Additive Manufacturing Definition, n.d.). Deloitte´s Additive Manufacturing division is a good example to show its resources and capabilities, whereas the firm´s experts in supply chain topics, human resources and information technology develop strategies and unique capabilities for external companies that are in need of consulting. With this approach, Deloitte focuses particularly on a firm´s secondary activities within the value chain analysis (Deloitte´s AM Capabilites, 2016). Deloitte DOO Skopje's core competences include the use of their own human resources as knowledge pools within the fields of Consumer Business, Energy & Resources, Financial Services, Life Sciences & Public Healthcare and the Public Sector. Deloitte uses its experts in these fields to provide enhanced consulting and audit services and thus develop unique knowledge capabilities (Interview Deloitte DOO Skopje Spokesperson, 2018). Annual reports are remarkable sources of information because they can reveal strategies and expose risks faced by companies and industries. Squeezing out the juiciest data, though, can be either tedious or expensive, depending on whether a company does its own research or pays for third-party analyses. A team of data scientists from Deloitte Netherlands had a better idea. “We wanted to create fast, simple, easy-to-read, fact-based reports for everyone—reports that offer insights into an almost infinite amount of data, but allows readers to draw their own conclusions,” says Ewout Bolhuis, Deloitte Netherlands’ director of Innovation. The team’s solution is DeloitteSmartReports.com, software that uses artificial intelligence (AI), natural-language processing and advanced analytics to review more than 100,000 annual reports and provide exactly what the client requests—in less than a minute. And, at an affordable cost. (Mapping a route to success, n.d.) 99
Internally and externally, Deloitte is using the concept of knowledge management as one of their core competences, structuring the way knowledge is shared within and outside their organization, leading to an increased efficiency, productivity and a lower employee turnover rate (Benefits of knowledge management, n.d.). With this approach, Deloitte uses the human resources given, shares their knowledge and creates a capability in value-adding through knowledge dispersion (Knowledge Management, n.d.). Organizational Structure of Deloitte DOO Skopje As a part firm of DTTL, the structure of each member firm around the world has to be in line with the politics and principles prescribed by DTTL. They do not only have to follow the structure but also assure that they act in a way to sustain the Deloitte member firm networks reputation. As well as aligning their plans strategies and goals in consultation with DTTL. At Deloitte DOO Skopje 25 – 30 people are employed. The organizational structure in which they are coordinated is mainly specified by DTTL. There is a clear and general hierarchy. The board consist of two managers. The structure is controlled and maintained by close and continuous supervision. When a new employee is joining the firm, he is constantly supervised but through that also has the opportunity to learn and gain knowledge from supervisors one or two levels superior to him in the hierarchy. Through its global member firm network DTTL can offer its employees to be part of that knowledge network and actively contribute by transferring and sharing their own knowledge. Employees are able to work with the newest technologies and are offered continuous trainings in their field of expertise as well as mandatory trainings with regard to ethical topics like modern slavery and empowerment to speak up about ethical concerns. ("Deloitte Modern Slavery and Human Trafficking Statement: FY17",2017, page 3) Overall the work carried out in the member firms is arranged in teams which are built around a specific project or client. These teams are specially constructed for every individual case and consist of employees of different departments. Working hours are proposed by the politics of Deloitte as well and are stated to be from 9am to 5pm. However, there is a certain degree of flexibility which is not seen in any negative respect. In addition to the constant supervision, performance of employees is measured through evaluation forms which are conducted on a quarterly and year basis. (Interview Deloitte DOO Skopje Spokesperson, 2018). Future challenges and prospects One of the main challenges Deloitte is facing is globalization and how to effectively operate global technology. As the company operates on very different ends of the spectrum in terms of scale, it creates imbalance in need and affordability. The issue that needs to be resolved is how to serve the needs of the clients with technology all across the world and with environments which are extremely different. Another important challenge Deloitte is focused on is the expanding scope of cyber security and ensuring that the appropriate balance between security and productivity is implemented in the workspace. (Russell Sarder, 2016)
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Deloitte DOO Skopje is planning to implement a 'Continuous Improvement Program' including courses organized within Deloitte as well as external trainings, which would facilitate improvement of knowledge in accounting and auditing. Every auditor will have to attends training for at least 120 hours and at least 20 hours of elective training as part of the continuing professional education. As the company is focused on professional excellence and constant improvement as basis for achieving lasting quality of the services offered, it would enable employees to adjust the trainings to their own personal needs and share the knowledge among each other. Looking ahead, Deloitte is exploring how to use its innovation capabilities to enable educators and businesses to deliver the skills individuals really need to meet future job demands. References A timeline of our history. (n.d.). Retrieved from https://www2.deloitte.com/us/en/pages/aboutdeloitte/articles/about-deloitte-history-timeline.html About Deloitte. (n.d.). Retrieved from https://www2.deloitte.com/global/en/pages/aboutdeloitte/articles/about-deloitte.html Additive Manufacturing Definition (n.d.). SPI Lasers. Retrieved from https://www.spilasers.com/application-additivemanufacturing/additive-manufacturing-a-definition/ Are you ready for Industry 4.0? (2017). Global Impact Report. Retrieved from https://www2.deloitte.com/global/en/pages/aboutdeloitte/articles/global-reports-download.html Are you ready for Industry 4.0? (2017). Performance Metrics. Retreived from https://www2.deloitte.com/global/en/pages/aboutdeloitte/articles/global-reports-download.html Benefits of knowledge management (n.d.) Retrieved from https://www2.deloitte.com/lu/en/pages/strategy/articles/ benefits-knowledge-management.html Corporate Responsibility and Sustainability. (n.d.). Retrieved from https://www2.deloitte.com/global/en/pages/aboutdeloitte/articles/about-corporate-responsibilitysustainability.html Consumer Business Predictions & Priorities, Seminar 2013, Future Operating Model break out. (2013, May 28). Retrieved from https://issuu.com/deloittenl/docs/deloitte_cb_predictions _seminar_-_b_cfa9da0a2d1749/3 Deloitte´s AM Capabilities: An Overview (2016). Retrieved from https://www2.deloitte.com/content/dam/Deloitte/us/Doc uments/public-sector/us-fed-deloitte-federal-amcapabilities.pdf Deloitte DOO Skopje Spokesperson (2018, May 11). Interview. Deloitte Modern Slavery and Human Trafficking Statement: FY17. (2017). Modern Slavery and Human Trafficking Statement. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/uk/Doc uments/about-deloitte/deloitte-uk-modern-slaverystatement-fy17.pdf Global office directory. (n.d.). Retrieved from https://www2.deloitte.com/global/en/getconnected/global-officedirectory.html?icid=usefullinks_contactus_office-locator Knowledge Management (n.d.) Retrieved from https://www2.deloitte.com/lu/en/pages/strategy/solution s/knowledge-management.html
Kuder, D. Locker, M. Schreibeis, M. Wirrenberg, A. (n.d.). Operating models that navigate business volatility. Retrieved from https://www2.deloitte.com/us/en/pages/operations/articl es/operating-models-that-navigate-businessvolatility.html Making an Impact that Matters. (2014). Global Report. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/global/ Documents/About-Deloitte/gx-gr14-main-final.pdf Mapping a route to success- "SMART" Strategies enable an inclusive, personalized and efficient future (2017). Retrieved from https://www2.deloitte.com/content/dam/Deloitte/global/ Documents/About-Deloitte/Deloitte-2017-Global-ImpactReport-Strategy.pdf Republic of Macedonia. Council for Advancement and Oversight of the Audit of the Republic of Macedonia. (2016). Transparency Reports for 2016 of Deloitte DOO Skopje. Retrieved from http://www.sunr.mk/images/transparentnost-2016drustva/9.%20%D0%94%D0%B5%D0%BB%D0%BE%D0%B8%D1 %82%20%D0%94%D0%9E%D0%9E%20%D0%A1%D0%BA%D0%B E%D0%BF%D1%98%D0%B5.pdf Steve Dutton. (2017, September 17). Deloitte announces record revenue of US$38.8 billion [Press release]. Retrieved from https://www2.deloitte.com/global/en/pages/aboutdeloitte/articles/global-revenue-announcement.html Strauss, K. (2016, April 15). The Best Accounting firms in America in 2016. Forbes. Retrieved from https://www.forbes.com/sites/karstenstrauss/2016/04/15/ the-best-accounting-firms-in-america2017/#78fca859354c Russell Sarder. (2016, October 10). What are the technology challenges you're facing today? By Larry Quinlan, CIO at Deloitte. Retrieved from https://www.youtube.com/watch?v=E1qrTc4SyXo Target Operating model. (n.d). Retrieved from https://www2.deloitte.com/mk/en/pages/operations/solu tions/target_operating_model_deloitte_macedonia_ope rations_services.html Vison, Values and Strategy. (n.d). Distinguishing the Deloitte Culture. Retrieved from https://www2.deloitte.com/bg/en/pages/aboutdeloitte/articles/vision-values-strategy.htm
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6.3.
Case „GIATA “ By Ahmad Y. R. Bacha Nima Namadchi Julian Posmeck Max Zheng
Please refer to this case using: Bacha, A. Y. R., Namadchi, N., Posmeck, J. & Zheng, M. (2018). Case „GIATA“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 102-107). Frankfurt am Main: ProcessLab.
Introduction Throughout the last decades, more and more newly emerging companies adapted the organizational structure of flat hierarchies in contrast to the traditional, mechanistic and pyramidal form of management. The trend of establishing organic structures is predominantly observable in companies of smaller sizes or individual units within larger organizations and has the objective to elevate the employee’s personal responsibility as well as the integration in the process of decision-making. The organic structure encourages horizontal communication between employees and other teams or departments, but it also leads to the facilitation of vertical communication because various levels of middle management are eliminated in favor of a flat and broader hierarchy and span of control. Moreover, the more equal treatment of the employees compared to the traditional structure and the lack of vertical positions, which lessens the incentive for promotions, cause a more determined commitment of the employees toward the company’s ambitions and goals. One company that follows the organic structure is GIATA, a provider for non-bookable content for touristic companies, which was founded in 1996. A short profile of GIATA GIATA is a specialized leader in the tourism industry and the acronym can be derived from the German “Gesellschaft für Entwicklung und Vermarktung interaktiver Tourismusanwendungen”. The innovative and pioneering company provides its partners with a broad spectrum of products and services regarding non-bookable elements. Products and services: GIATA’s products and services can be grouped into four different sections: Online solutions, counter solutions, mobile solutions and content services.
The online solutions compromise a vast access to over 8,900 accumulated HD-videos; a real-time catalogue which is a web-based content management system; an internet hotel guide; “MultiCode” which is a database for hotel mappings that detects and corrects false datasets that until now conducted 46 million mappings of 520 suppliers for over 675,000 unique objects; a multilingual hotel guide which offers and updates 102
hotel descriptions in 24 languages; the “TOURIAS” travel content which utilizes information packs regarding geography, culture, weather and current visa regulations
The counter solutions are all compromised in one application called “Extranet Hotel Guide” which is a frequently updated database with over 3.1 million catalogue deals from 237 tour operators. The hotel descriptions, destinations, names, ratings etc. are all part of the booking process on either the own website or on a partner’s website.
The mobile solutions, precisely the “TOURIAS” mobile app, enable the direct communication between the providers and its customers but also hold more than 200 destination guides in Germany.
The content services transfer the catalogue data and content into the GIATA database as well as connected sales channels without charges and in a short period of time.
Partners: GIATA is working with many well-known companies in the tourism industry. They have close ties to online travel agencies like Alltours, Thomas Cook and TUI. Moreover, they provide services to comparison portals like Kayak, tripadviser, HolidayCheck and momondo which use their database for more than 263,000 hotels worldwide. Also, computer reservation systems such as SABRE for American Airlines and Amadeus for European airlines which allow the electronic booking of plain tickets, hotels and the like are closely linked to GIATA. In the future, the company aims to continue expanding into new countries and develop further partnerships in the touristic branch. A brief history of GIATA In the early 1990s, Ms. Posmeck worked at an US investment bank and was responsible for putting together hedge fonds. Due to the nature of his work, he had to frequently travel between Europe and South America but he had little to no insight of his stays because an American express agency within the bank was in charge of his travels. Nevertheless, Mr. Posmeck wished to get an overview of the properties for instance by pictures or descriptions of the hotel. Back when the Internet was in early development and the only communication between customers as well as employees was text-based and pictures were stored in CD-ROMs, the access to hotel information was thus difficult to obtain. In order to solve this problem, he and his business partner, who was already familiar with the tourism industry, founded GIATA in 1996 with its headquarters situated in Kassel. At first, the ownership was equally split between these two. A developer joined them shortly afterwards who then held 16% of the ownership and they developed their first product, a CDROM containing hotel information, in 1998. GIATA’s first customer was a travel agency in Kassel and they installed the CD-ROM but also asked the agency to set it up on their own to check whether the installation process proceeds smoothly. In 2000, GIATA was the first European tourism company to commence the data transfer from the CD-ROMs to the Internet. During that time, SABRE bought 26% of the ownership. By 2005, GIATA moved its headquarters to Berlin and hit the milestone of 10,000 licenses. Nowadays, the company has customers in over 72 countries and passed over 20,000 licenses. Moreover, around 150 people are employed in the Berlin headquarter, 42 employees are in India and there are a few in China as well as in Poland. Additionally, GIATA employs developers in Cluj-Napoca, 103
Romania. The current ownership is split in four parties namely the two founding partners with 30% each, the first developer with 14% and SABRE with 26%. Vision, Values, Corporate and Business Strategy Accuracy, Expertise and Knowledge are the key values of GIATA. Boasting over 21,000 clients, Google amongst others, they are looking to further expand their innovative technologies and large distribution channels by offering unique solutions. GIATA’s business strategy is to be first in market, fast growth and sustaining market leadership in their industry. In order to maintain their role, GIATA does not shy away being an aggressive actor when competition arises by dexterously undercutting the given prices. Mr. Posmeck also clarifies their corporate strategy by mentioning GIATA’s strict focus on one industry. In 2002, Karstadt and Metro asked for implementing the homemade software for their mail-order house products. GIATA declined the request since they did not desire to enter a new industry which, in retrospective, might have been the right decision considering the current circumstances of those two. Operating Model The Operating Model mainly depicts the value delivery chain but generally consists of the six core elements: Process, Organization, Location, Information, Supplier and Management System. The value delivery chain of GIATA describes the different steps prior to reaching the client. Evidently, a solid, tested and verified database is needed in order to serve the targeted audience. After building client relations through successful products, GIATA can expand and stabilize. The value proposition are the unique non-bookable contents which aim to increase the conversion rate, more precisely the number of customers on online travel sites who actually book offered content. The company has a very modern working atmosphere where everyone can approach every position with any productive concerns. GIATA’s headquarter is located in Berlin because of two fundamental facts: Firstly, Berlin is a major city in Germany where experts can be reached very easily and secondly because of the convenient accessibility for international clients. The information system they are using consists of the unique GIATA database which is constantly updating the contents. Resources, Capabilities, and Core Competences GIATA’s fundamental resource is the large database which has been increasing for more than 20 years. Starting in 1996 with only 2 editors, namely Mr. Posmeck and his business partner, the excel spreadsheet which in the beginning only maintained the 7000 most sold hotels in the last-minute sector has grown to a comprehensive database including millions of properties and hotels. As mentioned in the interview, the database served by hundreds of suppliers keeps itself up-to-date due to the so called “network-effect“, meaning GIATA’s 20,800 customers worldwide notify the production department if they detect an error, for instance a hotel that stopped operating. As a consequence, the data is updated and corrected for every OTA, leading to an accuracy of 99.997%. Furthermore, GIATA’s international staff plays an essential role when it comes to developing new products, translating descriptions and distributing them to customers in more than 70 countries. Also, the office located right in one of the hippest areas in Berlin helps GIATA to label itself not 104
only as a young and dynamic enterprise, but also making it convenient for international business partners to visit the company. Coming to GIATA’s capabilities, years of expertise in the touristic branch have led to a fundamental understanding of customer needs. Consequentially, the production department continues to add more and more content to the database such as geocodes and reviews of different rating sites. Moreover, GIATA has not only listed properties in their databank but also hotel complexes. The increased accuracy of their databank caused Google to stop developing their own system and led to a contract in 2017. Lastly, the highly trained development team was able to adapt agile software development which means that single code “containers“ later merge into a big program. This reduced the development times from 6 months to single sprint phases of 2 weeks and increased the motivation of the coders. Coming to GIATA’s core competences, every single new product is evaluated by a A/B-testing procedure in order to ensure that additional data increases the conversion rate of their customers. Finally, GIATA’s accurate databank including many licensed pictures, videos and descriptions is very time consuming and costly to copy, even for big tech giants like Google. Organic structure of GIATA
GIATA’s organizational structure is characterized by short and flat communication paths. In general, from the figure above one can observe that the company is subdivided into six divisions each led by a head of department and his assistant. They all come together on a weekly basis and explain Mr. Posmeck as well as the other department-heads their agenda and goals for the current week. Everybody is welcomed to express concerns regarding the projects or include ideas if the activities affect their department. During the interview Mr. Posmeck stresses that he let the head of departments speak and prefers to take a moderating role during these weekly meetings. However, organic structures are not only established between the different departments and the management but also within each department. As an example, Mr. Posmeck mentions the 105
process of determining the required man-hours for a new program within the development department. Not the head of development decides how much time is allocated for each project but the whole development team after a carefully gathering different opinions and reach a consensus. The idea of a flat hierarchy and short communication paths were also considered when designing the office. Mr. Posmeck and his partner focused on creating an open office in order to increase horizontal communication and supervision. Therefore, the office contains a lot of glass surfaces and only a few single offices. Even the offices of the CEOs are located right in the middle of the space surrounded by glass walls which he also highlights: “I always have an open door for my employees“. On top of that, daily discussions during the lunch break in restaurants nearby are very common, involving different heads of departments and/or normal employees. The Christmas party play another crucial role which ironically takes place during summer. GIATA rents elegant locations in Berlin and provides an extensive buffet and drinks to thank its staff members for their hard work and loyalty. Everybody is welcomed to talk to the management in a relaxed atmosphere about their concerns or propose improvements. As GIATA is not only based in Berlin but an internationally operating company with production divisions in India and China, a development division located in Romania as well as an external sales team based in London and Mallorca GIATA has to coordinate the communication between the single international divisions. In order to keep every international division up to date and decrease the information asymmetry, meetings via Skype take place on a regular basis. Furthermore Mr. Posmeck and the head of the departments visit the international divisions and vice versa. Especially during the crucial period when they established the first international offices a high exchange of information was needed to familiarize the new staff with GIATA’s working processes and standards. All in all, despite Mr. Posmeck being considered as a straight forward superior, GIATA is characterized by dynamic and fast interactions between divisions and individuals. Future challenges and prospects The travel industry has always been one of the most innovative and fastest adapting industries in the world. When the Internet was invented one of the first products offered were flight tickets, car rentals and hotels. Consequently, GIATA is always seeking for new technologies to increase its database and gain a higher accuracy of the data provided to its customers. Just in 2016 they started to use an AI provided by a Canadian company that helped GIATA to tag and categorize pictures of receptions, hotel rooms, pools, restaurants etc. automatically, which in the past has been done manually. Although the AI had a higher error rate in the beginning (4%) compared to humans (2.3%), due to GIATA’s big database of millions of pictures they were able to train the AI and bring its error rate down to 0.71%. Asking Mr. Posmeck what is going to change in the touristic branch in the next 5-10 years he answered „What will come next? Nobody really knows […], therefore, it is very important that you are open-minded and listen to people“. In recent years OTAs and hoteliers have discovered the power of influencers and started to establish different types of cooperation with famous bloggers who have a big user base to promote their travels and hotels. Also, GIATA has observed that social media plays an increasing role in the lives of 16-25 year olds. 106
Therefore, GIATA observes the usage of social media platforms such as Facebook, Instagram and Snapchat and analyzes if one could use them as a distribution channel for the industry. If this is the case, the next step is to analyze whether it requires changes in the format of their provided data or the creation of new content for these distribution channels. Thanks to GIATA’s big network of information suppliers they have established and the big databank GIATA has accumulated in the past 20 years they don’t face big competition. Even huge tech companies such as Google realized that it is time consuming and costly to build up a network comparable to GIATA’s. Nevertheless, in order to sustain this competitive advantage GIATA has to continue to observe and shape the changes in the touristic industry by providing its customers with relevant data References Posmeck, A. (2018, May 11). Personal interview GIATA GmbH. (2018, May 12). Retrieved from https://www.giata.com/ GIATA GmbH. (2018, May 12). Product Brochure. Retrieved from https://www.giata.com/fileadmin/Redakteure/Bilder_PDF _Videos/Produktbroschuere/giata_brochure_2018.pdf GIATA GmbH. (2018, May 12). Newsletter. Retrieved from http://newsletter.multicodes.giatamedia.com/newsletter /latest GIATA GmBH. (2018, May 13). Retrieved from https://www.giata.com/hd-videos/ GIATA GmBH. (2018, May 13). Retrieved from https://www.giata.com/real-timecatalogue/
GIATA GmBH. (2018, May 13). Retrieved from https://www.giata.com/multicodes/ GIATA GmBH. (2018, May 13). Retrieved from https://www.giata.com/multilingualhotel-guide/ GIATA GmBH. (2018, May 13). Retrieved from https://www.giata.com/tourias-travelcontent/ GIATA GmBH. (2018, May 13). Retrieved from https://www.giata.com/extranet-hotelguide/ GIATA GmBH. (2018, May 13). Retrieved from https://www.giata.com/tourias-travelguide/ GIATA GmBH. (2018, May 13). Retrieved from https://www.giata.com/data-processing/
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6.4. Case „ ABC Corporation” By Valery Ivanov Lukas Prinz Benedikt Schindelar Rohit Sinha Please refer to this case using: Ivanov, V., Prinz, L., Schindelar, B. & Sinha, R. (2018). Case „ABC Corporation“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 108-111). Frankfurt am Main: ProcessLab.
Company profile, customers & services In the scope of this case study we were able to conduct an interview with the Managing Director and co-owner of a Value-Added Reseller in the IT-industry from Vienna, Austria. The company and its 20 employees act mainly in the Austrian market. However, Frank, the Managing Director, told us about projects in Germany and Switzerland in the last few years. IT Security, Document Management, Risk & Compliance and SIEM (Security Information and Event Management) are the four core areas the firm is operating in by offering complex IT solutions to their clients. Financially, the firm managed to collect revenues of ten million Euros in the past year. Typically, the ideal customer would be a company with an already established IT department and a need for specific IT solutions within the aforementioned areas. Sophisticated IT departments are usually to be found in rather large organizations. Thus, the company follows a top down approach in the customer acquisition process, meaning that clients of larger scope are preferred to smaller ones. Services offered include evaluation & design of solutions, followed by customized implementations. Additionally, the company supports selected cases and offers training. Operational solutions regarding the day-to-day business are not offered, solely those of supportive nature. Frank noted, that his firm is not focusing on any industries and that the solution is neutral (Frank, 2018) since the need for the offered solutions is widely spread and does not vary across industries. Nevertheless, the majority of their clients are governmental institutions, health care organizations or firms in the utilities sector. The fact that Frank described the most recent client acquisitions of educational institutions as his “hobby” (Frank, 2018) marks his passion about the company. Development and Trends The company initially started as a distributing seller. Yet, recognizing an increased competitiveness, especially a geographical one, created a need for competitive differentiation. Hence, after Frank took over the company, they started to specialize in reselling customized solutions by adding value through add-ons and customizations. 108
Computerization and digitalization of operational processes are today omnipresent trends which have been observable for the last 30 years among many industries. Consequently, particularly in the face of recent globally and locally relevant cyber-attacks, IT security and cyber security developed to play a key role for various businesses. Figure 1, once again demonstrates the urge of IT security for companies. Thus, Frank’s company has been able to satisfy this need as an early stage competitor in that market. A strong financial position which has been built up in the last few years has allowed a lot of flexibility in the development of products to react to trends which, according to Frank, certainly brought more success for the company. He also admitted, that finding the right products for specific markets always incorporated certain amounts of luck. Figure 1: Data from Microsoft on the need for IT security
Competitiveness Due to several factors, the market Frank’s company is operating in is highly competitive. First, not only local resellers but also larger German companies contribute to competition. Those German companies founded sales units and placed additional locations in Austria. There they have been imposing heavy discounts on their services and thereby increasing competition extraordinarily. Additionally, as the Austrian market makes up only a percentile of the German one, the density of competitors is very high. Second, whereas in Germany there are a lot of medium size cities, roughly 80% of all Austrian citizens live in the Viennese region (Frank, 2018). As a result, one office allows one to receive access to almost the entire Austrian market. Competences and Resources In order to withstand those challenges, Frank has developed several valuable resources and competences, of which he highlighted the most essential ones. Human capital he described as his most important resource. Since reselling products and services is very much dependent on human relationships, his consultants are the most crucial part of his firm. On the one hand, they can offer specified technical knowledge. On the other hand, they also serve as salesmen. The former also constitutes the core competence. Due to a rather small product portfolio compared to their competitors the consultants have gained very concentrated knowledge on specific cases. Especially, when similar services are demanded repeatedly in small time frames, the consultants develop routines, which then creates capabilities. Also, their customers’ needs can be discovered and satisfied more accurately. 109
As mentioned before, Frank’s consultants not only act as technical consultants but simultaneously as salespersons. Thereby a lot of costs can be saved and the client is served more conveniently. Further, the consultants maintain relationships to the suppliers, which they can strengthen by concentrating on a small number of suppliers. Due to fact that the main operations are performed by the consultants, they account for 13 of 20 employees in total. Another competence is the regional factor. The company has been present in the market since the very beginning. Thus, they were able to foster and maintain valuable relationships. Moreover, their location allows their consultants to be “on site in less than two hours” (Frank, 2018), which takes many competitors half a day or even more. Organizational Structure When asked about the organizational structure within his firm, Frank admitted having made mistakes in the past. Until twelve months ago, he tried to keep the hierarchical structure somewhat flat and organic. His main reason for this lied in preventing the company from failing. By being involved in all processes directly, he was able to control the company while influencing operations and decision-making processes constantly. Looking backwards though, he described this as a mistake. He therefore implemented a lower management team whose members were assigned to the following responsibilities: IT security, sales, risk management & purchasing. In his opinion, this new structure is more pleasant for the CEO, himself, and also lays the ground for further growth of the company. In his mind, in general, a manager should be responsible for a maximum of six to eight people in order to be successful. Outlook: Opportunities & Challenges In the future, according to Frank, his business should concentrate on developing add-on solutions for products, as they did in the past for security products. Those create a huge commercial advantage in the purchasing process since they can offer customized products which their competitors cannot. In order to be capable of creating such add-ons he formulated the need to invest in further technical knowledge. What is more, investments in industrial knowledge could be of importance, too. So far, such knowledge has not been built up, however Frank sees a lot of potential for healthcare, utilities or production industries, as those represent the markets of his main customers. As a potential response to recent trends and developments, he mentioned plans to offer cloud-based solution, particularly in the areas of risk and compliance. Yet, Frank described the direct cloud offerings of some of his suppliers like Adobe or Microsoft as possible threats. Although there “is a little window opened for local resellers [..] in the bitter end, there is not much margin left” (Frank, 2018). In accordance with many other companies across various sectors, Frank plans to expand the cybersecurity team. He believes there will be more need for preemptive measures as cyberattacks are becoming more frequent and detrimental. The main challenges will be large outsourcing companies. When those organizations outsource their IT departments to other companies, it will be a major threat to Frank’s business. Because then those IT companies will most likely discontinue the existing 110
contracts. Additionally, potential acquisitions of customers without IT departments would be more challenging. Since human capital is Frank’s most valuable resource he is worried about maintaining his workforce and finding qualified consultants. First, in the light of his recent structural changes, Frank has worries that some of his employees might quit and change to another companies, as many IT firms incorporate flatter hierarchies. Second, specialized IT consultants might not always be available. Similar to managers in other industries, Frank is concerned about current and future regulations entailed by Austrian or European authorities. In particular, he seems to dislike regulations regarding purchasing processes which cause difficulties and additional work for all involved parties. References E., Frank. (2018, May 1). Managing Director and Co-Owner of ABC Corporation. Phone
Figure 1: Mason, J. (2018, March 29). 21 Interesting Cyber Security Statistics (2017-2018). Retrieved from https://thebestvpn.com/cyber-security-statistics-2018/
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6.5.
Case „PETKUS“ By Felix Burlein Philipp Drescher Ben Gebert Isabel Kroeger
Please refer to this case using: Burlein, F., Drescher, P., Gebert, B. & Kroeger, I. (2018). Case „PETKUS“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 112-117). Frankfurt am Main: ProcessLab.
Introduction According to estimates, more than 30% of the grain produced for the food industry is lost during processes that follow the actual harvest, such as storing, drying or cleaning. This can be translated to about 1.3 billion tons per year, which are worth one trillion US dollars. Infestation, insects, and toxins can lead to these losses if the harvest processing is deficient. In order to ensure quality, modern technologies are essential. Supervising every seed and constantly examining its condition is necessary for guaranteeing exceptional quality. Imagine being able to analyze every grain or kernel in real time. Further imagine being able to individually dry, clean, sort and coat each and every source: PETKUS one of them – grain by grain. In the agriculture industry, this thought was considered almost revolutionary. However, PETKUS set out on a mission to use its innovative technologies to help farmers achieve a harvest of which 1/3 will not be lost in the following process. A short profile of PETKUS PETKUS Technology: Since PETKUS was founded in 1852 it has constantly focused on improving agricultural processes through seed and grain processing technology. The firm’s technological philosophy stands for planning, production, and construction of complete seed-cleaning plants. New technologies are developed and integrated into existing plants while existing technologies are refined. PETKUS’ technology leads to harvest intake supervision, grain cleaning, sorting, inspection, and treatment, as well as final product packaging. The complex machines used ensure automated processes without remnant grain.
PETKUS Innovation: As one of the leading firms in their industry, innovation is crucial in ensuring competitiveness for PETKUS. Thus, the ROEBER Institute, named after the company’s founder, was set up within the PETKUS Group as an innovation and expansion driver. Research and development is performed with the help of external experts in areas of enhancing components and products, as well as rendering processes more efficient.
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PETKUS Engineering: PETKUS’ engineering philosophy consists of unique agricultural consulting known as the Turnkey-Concept. PETKUS’s knowledge in project development (concerning flexibility, optimization, and sustainability) combines technology with economics by analyzing key aspects, such as return on investment, while assisting in procedures such as site searches, approval procedures, logistics concepts, construction, and installation.
PETKUS Service: PETKUS Service shows the interface between product distribution and customer relations. According to the firm, “the capital ’S’ [in PETKUS] stands for customer ’service’, for individual ’solution’ concepts and for intensive ’support’ worldwide.”27 Service encompasses not only the span of the project, but also intensive support post-completion, for example when delivering spare parts.
A brief history of PETKUS Understanding the complexity of the process chain related to grain processing lead PETKUS founder Christian Friedrich Roeber to begin developing agricultural machinery in 1852. His corn-screening machine was the first to be produced worldwide. In 1883, when the sons Carl and Rudolf Roeber took over their father’s business, the company started growing actively. Countless patents were registered, many of which are still in place today. A few years later, the firm started expanding internationally. Sales to Russia and other neighbouring countries increased. By the early 20th century, machines aiding the post-harvest process were delivered to more than 30 different countries.
source: http://www.petkus.com/organisation/history
Due to its unique technology, the company managed to survive some of the most turbulent times in German history. After the second world war they were expropriated, as were all private companies, and restructured into the nationally owned enterprise “LBH Landmaschinenfabrik Wutha” in East Germany, which was later renamed “VEB PETKUS Landmaschinenwerk”. In West Germany, a pendant called “RÖBER GmbH” was launched by Albert Scholze and Paul Roeber, which expanded the technology to Asia and Africa in the late 1960s. In 1994, Mark Scholze and Luca Celeghini decided to carry on the tradition of the company by reuniting the two firms RÖBER and PETKUS. The company is now located in Wutha-Farnroda, 27
www.petkus.com/services/overview-services
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Thuringia. Over the past 40 years, the company installed over 200.000 cleaning machines and 2.000 complete seed-lines. Today, PETKUS has a double-digit average growth rate and employs over 350 staff. Vision, Values, Corporate and Business Strategy Processing the crop is, according to PETKUS, just as important as the harvesting process itself. Since grain is processed for food consumption, the firm strives to provide technologies and develop machines which procure that the grain remains clean and ‘healthy’. Furthermore, since seeds are becoming more expensive on the market, PETKUS recognized the importance of every seed sprouting. Seeds with a strong vigour and good genetic predispositions are less susceptible to fungi, bacteria, insects, or other contaminants. The ability to identify these seeds through technology and thus realize their aphorism of “Strong Seed. Healthy Grain.” summarizes their vision. To achieve this vision, the company requires a clear strategy. PETKUS produces end-to-end solutions in the agricultural machinery industry. These solutions are oriented along the customer’s value chain. It starts with the reception of the crop and ends with the final product of strong seed and healthy grain. Along the way, cleaning and sorting machines are needed. Warehouses for drying and storing must be constructed. Furthermore, the customer’s employees must be trained. By providing these solutions and tailoring them to customers, they differentiate themselves from competitors, which often focus on developing products, rather than processes. Since the different business divisions must cooperate closely to ensure that the designed solution is developed, marketed, financed, and implemented effectively, good communication is an essential value. Furthermore, transparency in- and outside the firm is needed to ensure customer satisfaction. The relevance of transparency is emphasized by the firm since they operate in many different regions, some of which are prone to corruption. According to the company, their employees are furthermore committed to the responsibility they have towards their customers. For example, staff members are highly international and have often worked for the customers before coming to PETKUS. Therefore, they can sense the essence of customer’s expectations and wishes, which vary according to their nationality, accurately. The second strategy PETKUS follows is prioritizing innovation. The ROEBER institute was founded to continue the firm’s history of novelty technologies, dating back to the first cornscreening machine of 1852. As Mark Scholze, PETKUS’ CEO describes: “We are our industry’s ‘Apple’”28 Scholze explains that they release the highest yearly number of new products worldwide in their segment. Since the agricultural industry is characterized by technological advances and automation trends29, PETKUS sees this as a central competitive advantage they hold towards competitors.
28 29
Scholze, Mark (2018) (Translated from German) Wiesendorfer, Gerd (2013)
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Operating Model The operating model explains how value is delivered to customers. At PETKUS, once a customer is acquired in one stage of the value chain process the responsible employees inform the other parts of the value chain other about these potential new customers. The aim hereby is to provide an entire solution including various products to a single customer who is already satisfied with a PETKUS product. A lot of focus is being put on the development and selling of Turnkey systems. Those systems consist of a wide range of products which are designed, produced, and installed on the client’s grounds. Therefore, service doesn’t end with the delivery of a product. An extensive range of services is offered to the client to ensure customer satisfaction. Customers are guided before, during and after their projects. Whatever challenges the customers face – from plant operator training to upgrading an installed product – is part of the end-to-end solution provided by PETKUS. Resources, Capabilities, and Core Competences PETKUS’ success is driven by their human resources. Their over 350 employees are what allows the firm to maintain their competitive positioning in the industry. The human capital consists of both highly experienced professionals who have worked at PETKUS for decades and newly employed personnel. This mixture of keeping up with the firm's tradition and still taking new ideas into account is what distinguishes PETKUS. As the products increase in technological advancement and complexity, the applicant’s qualifications need to stand the pace as well. Additionally, the firm frequently acquires staff that previously worked for a potential client to further get to know customer preferences. The company headquarter of PETKUS, located in Wutha-Farnroda, six regional headquarters and 23 sales & service centers operating worldwide constitute the firm’s tangible resources. But distinctly more crucial for PETKUS’ development is the firm’s organizational, or intangible capital. Expertise and more importantly experience are the company’s long-term assets that enable it to “challenge old ways and breathe life into new ones.” 30 Furthermore, being part of the German ‘Mittelstand’ that is internationally renowned for quality, PETKUS has benefitted in terms of reputation, that enabled them to compete successfully on the world stage. Early ties with trade partners, like Russia, continuous improvement in production and R&D as well as worldwide patents have created a tradition that supports their competitive advantage even more. Only through these resources can the firm's capability of providing custom fit solutions be realized. According to Vincent31, competence is the quality or state of being functionally adequate or having sufficient knowledge, strength and skill. Therefore, seeing as PETKUS is one of the globally leading firms in their industry, they have sufficient experience and knowledge to use their resources to achieve success. Their core competences are displayed in the Turnkey solutions they provide. Through their Technology-Innovation-Engineering-Service strategy the customer’s whole business process can be attended to.
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www.petkus.com/organisation/philosophy Vincent, Lanny (2008)
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Organizational Structure PETKUS’ goal is to offer comprehensive service that does not end with product offerings. Rather, the firm aims to equip complete factories by developing Turnkey solutions. This induces a complex organizational structure to ensure effective operation. The PETKUS group consists of eight strategic business units (SBUs). Six of them contribute directly to the client’s aggregate value. This allows offering solutions in the fields of technology, innovation, engineering and service. The firm operates in seven regions, however, each SBU is only active in selected countries. Each of the eight SBUs is overseen by a manager, who is responsible for the general SBU management. Additionally, regional managers are appointed. Furthermore, a manager is assigned to each of the firm’s corporate functions, such as marketing or finance.
source: PETKUS
Historically PETKUS’ structure displayed a regional focus. This allowed the regional manager to be in a position of fully controlling products and services. Later a matrix structure was introduced that shifted responsibilities towards the SBU managers and required coordination between SBUs and the regional management. With regard to the highly technologically advanced products that PETKUS offers they eventually decided to assign the SBU managers the most influence because the focus of competence lies in the specific function of the value chain, not in the geographical region. The firm assessed that SBU managers were better informed about details concerning the offered products and hence could improve customer service. Each of the SBUs function like a standalone firm, however within those PETKUS decided not to establish a strictly hierarchical organizational structure but rather decided on assigning the employees to various functions. Consequently, every SBU is responsible for example for their own product development and marketing whilst taking the company’s corporate identity guidelines into account. By choosing this structure PETKUS wants to attain a combination of an effective hierarchical order and the possibility for each employee’s individual contribution. Despite the distinctive autonomy of each branch, the firm considers effective communication to be essential. PETKUS’ strategy to establish this goal is to allow overarching dialogue in task forces. These consist of a changing set of employees from different SBUs and regions. This morphological construct aligns interests while preventing and solving conflicts, according to the firm. Furthermore, due to the concept of a widely spread hierarchical structure, employees communicate with their corresponding manager directly, allowing shorter response times and promoting a pleasant working atmosphere, while ensuring that decisions are supervised by managers, who are skilled in the specific area.
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Future challenges and prospects A central future challenge for PETKUS lies in securing consolidating firms as customers. Through significant mergers, such as that of Bayer and Monsanto, key customers grow vastly larger and thus frequently become slower in decision making. However, since these large firms continue to operate diligently, this can also be seen as a prospect. As PETKUS is a highly innovative company, new, larger deals could arise. On the other hand of the spectrum, consolidations lead to the creation of small, dynamic, regionally operating spin-off companies, which provide the opportunity of gaining new customers. These firms strive to operate more quickly and seek more low-priced solutions. For PETKUS the challenge lies in meeting both ends of the spectrum: providing agile solutions to the smaller spin-off firms at a possibly lower profit margin, whilst monitoring large customers until lengthy proceedings reach a deal, often substantial in size. References J. Jordan, J. and M. Grant, R. (2012). Foundations of Strategy. 2nd ed. Knoerzer, D. (2018). CROP CLEANING: Professional crop cleaning as an essential contribution to grain hygiene management. [online] Millingandgrain.com. Available at: https://www.millingandgrain.com/entrada/cropcleaning-professional-crop-cleaning-as-an-essentialcontribution-to-grain-hygiene-management18195/ [Accessed 13 May 2018]. J. Leavitt, H. (2003). Why Hierarchies Thrive. [online] Harvard Business Review. Available at: https://hbr.org/2003/03/why-hierarchiesthrive [Accessed 12 May 2018].
Petkus.com. (2018). [online] Available at: http://www.petkus.com/ [Accessed 12 May 2018]. Scholze, M. (2018). PETKUS Interview. Vincent, L. (2008). Differentiating Competence, Capability and Capacity. Innovating Perspectives, [online] 16(3), pp.1-2. Available at: http://innovationsthatwork.com/images/pdf/June08n ewsltr.pdf [Accessed 11 May 2018]. Wiesendorfer, G. (2013). [publication] Available at: https://publikationsserver.tubraunschweig.de/servlets/MCRFileNodeServlet/dbbs_der ivate_00033837/jahrbuchagrartechnik2013_landtechnikm arkt.pdf [Accessed 13 May 2018
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6.6.
Case „Creating Change @Semler Company“ By Johnston Chen Afrem Shemunkasho Carina Von Riegen
Please refer to this case using: Chen, J., Shemunkasho, A. & Von Riegen, C. (2018). Case „Creating Change @Semler Company“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 118-123). Frankfurt am Main: ProcessLab.
Introduction What makes incumbent firms act like start-ups and rethink their organizational habits and structures more than anything else these days? The answer is simple and yet complex: digitalization. The chart below shows an excerpt of the results of a survey executed by Russell Reynolds Associates, asking more than 2,000 executives on the impact of digital technologies. The numbers indicate the percentages of executives surveyed in the respective industry who responded that their business would be moderately or massively disrupted by digital development in the next twelve months. BUSINESS & PROFESSIONAL SERVICES
51%
CONSUMER PRODUCTS
52%
RETAIL
57%
CONSUMER FINANCIAL SERVICES
61%
TELECOMMUNICATION
64%
MEDIA
72% 0%
20%
40%
60%
80%
Digitization offers a wide range of opportunities whilst at the same time imposing inescapable alterations to businesses. While some entities even tried to ignore this development in the past altogether, surveys as the one above indicate that - even when trying - most firms do not know how to properly deal with the digital changes of today.
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This is where Semler Company comes in by not only providing knowledge but also guidance and training with respect to digital transformation through its three branches which will be examined in the following. A short profile of Semler Company Semler Company aims to support businesses, especially through their digitization journey, by providing
Consulting along the entire value chain. Semler Company especially offers expertise in six fields: purpose development, organizational structure, process optimization, change management, strategic communication, and top management coaching. Operating in an ecosystem with IT management, marketing and other more specialized consultancies allows Semler Company to deliver the entire range of management consulting.
Leadership Coaching: Semler Company is accredited by the International Coach Federation, the largest international association of coaches, and specializes on three topics: executive and manager coaching, change and strategy coaching, and finally, sustainability of change. Their approach is described as “potentialoriented”, e.g. by integrating psychological and brain research findings.
Figure 1: Semler Company’s three branches
Semler Company Campus: Semler Company’s most innovative platform. It offers a curriculum with nine modules ranging from Digital Culture and Digital Marketing to Ethics in the Digital World. In order to obtain a Digital Professional Certificate (in cooperation with well-known universities), the obligatory course Digital Strategy as well as two selective modules have to be completed successfully.
A brief history of Semler Company The history of Semler Company is very much connected to its founder Dr. Theresa Semler. Semler describes her career path as “rather atypical”. Having lived abroad in the United States for around seven years during her twenties, she has, inter alia, studied and obtained her PhD in Comparative Literature at the University of Chicago. Everything seemed to have been set up for a highly successful academic career, including a competitive stipend. Nonetheless, she has always been business-minded and soon realized that she was not going to reside in the United States permanently.
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Semler learned from early on that success is built by other factors beyond what is externally imposed and generally appreciated by society. Leaving her academic career and following her inner notions, she decided to use her energy and talents to transform and optimize businesses, first at Capgemini Consulting as Senior Consultant and later as Head of Change Management for Commerzbank AG. However, she felt that her various interests could not be met by simply being an employee in a company. Semler wished to further expand her knowledge regarding management leadership and team coaching – what better Figure 2: Semler Company's logo: way to do this than by founding her own business? The "S" for Semler consists of two Hence, Semler Company was born in 2016 and from the interlinked C's which stand for beginning it was clear to Theresa, that the focus of her "creating change" company was not going to be merely consulting, but also leadership coaching and management training. During the following months, this idea resulted in a well-rounded concept that intertwines these three branches in a unique way. Although Semler Company was founded only two years ago, they already advised wellknown entities such as KfW, Deutsche Vermögensberatung, Saint-Gobain, and Samsung. Vision, Values, Corporate and Business Strategy Semler Company’s vision is to be “an enabler of working well in the digital age”. This is to be achieved through the following factors: 1. Corporate strategy Semler Company’s scope in terms of industries is broad since nearly all kinds of businesses are affected by digital transformation. However, they have a specifically strong standing in the financial sector and life science since many members of the firm have a finance background and/or considerable expertise in the industry, especially in Germany. In the future, more resources will be allocated to expand “Semler Company Campus” and Semler’s coaching practice. Since consulting is often considered a saturated industry and due to the fact that there is a consolidation of the consulting market (global consultancies buying up agencies and boutique firms), Semler sees “Semler Company Campus” as an opportunity to be competitive and distinguish themselves from other advisory firms. 2. Business strategy A holistic approach ranging from team enablement and purpose development to top management coaching: Over her many years of experience in extensive projects and programs, Theresa Semler has encountered more than once that transformations cannot be successful if processes are not set up conscientiously. The organizational design has to comply with the developments and new ideas in a business. Moreover, a number of strategic 120
decisions have to be made which in turn require a comprehensive and overarching understanding of the status quo. Thus, Semler knew that she would not be entering the market offering specialized capabilities only. Providing a holistic approach with respect to transformation management is a key factor of Semler Company’s business strategy. Offering innovative and up-to-date advice and methods such as agile ways of working, Design Thinking, hypno-systemic advisory, digital toolkits and “Theory U” (a change management method developed by Otto Scharmer).
Semler Company’s core values lie in their commitment to innovation and quality as well as in their deep understanding of people. Operating Model and Structure Semler Company’s products are highly customized with respect to the clients. Nevertheless, a process of four main phases has proven successful when it comes to transformation processes. Phase 1: Analysis This phase includes group interviews as well as various analyses regarding the stakeholders and structures of the client. Phase 2: Design During the second phase, the target vision is defined and an action plan is created. This includes the definition of measurable objectives as well as the set-up of a transformation team. Phase 3: Implementation A number of interactive as well as innovative methods are used, such as business simulations, innovation labs as well as digital tool boxes in order to implement the ideas. Phase 4: Anchorage The last phase includes regular “health” checks, the definition of follow-up activities, and enabling peer coaching. Semler Company follows a highly collaborative approach and involves the client all the way. Although some brainstorming is done internally, the methods significantly rely on the participation of the client’s team. Resources, Capabilities, and Core Competences Tangible resources Offices: Being located in two interesting and unique German cities, Frankfurt and Berlin, was a so-called “lifestyle decision” as Semler explains. Berlin is ideal for its vibrant atmosphere and the potential of networking opportunities with corporations and start-ups alike, and Frankfurt is “the place to be” for projects in the financial services industry. For their workshops, Semler Company uses seminar rooms in Wickstadt near Frankfurt which serves as a unique and beautiful location right outside the busy city life. 121
Human resources Culture / Skills: As a small company, Semler recruited the team by herself and therefore was able to make sure that there is a match in terms of quality and mindset between her and her co-workers. During this process, she was also drawing on already established relationships with people she had previously worked with for quite some time, thus being able to rely on them. Experts from various fields (such as Human Resources, Information Technology, etc.) with professional and international experience now work at Semler Company. Organizational capabilities Creating change: By offering Leadership Coaching and establishing Semler Company Campus besides the Consulting expertise, Semler Company’s strategy does not only rely on general consultancy but also of the aforementioned operating areas. Those can only be offered to clients due to the various specialization and expertise topics that are covered by the employees. Organizational Structures: Organic vs. Hierarchical Semler Company currently employs four full-time employees and, depending on their need, between seven to ten freelancers. Theresa Semler takes every opinion into consideration and also values the suggestions of part time employees and freelancers when it comes to questions of strategic positioning. As a seemingly young and rather small company, Semler was convinced that artificially creating structures would be superfluous and cost-intense. Nonetheless, there are clear guidelines coming from the founder herself: businesses with a certain number of partners and equal shares and rights are not her idea of a company formation. She has seen too many of those end up in failure, hence preferring a leadership structure that allows her to make ultimate decisions. This is enabled through Semler Company’s legal structure GmbH & Co. KG which stands for a limited partnership with, typically, the sole general partner being a limited liability company. On the other hand, the firm follows the Management by Objectives (MBO) technique that allows employees to have their own defined space in which they can make their own decisions. This output-oriented structure is aimed to increase motivation and ensure compliance as well as unity amongst the colleagues. Moreover, Theresa Semler is a strong believer in “form follows function” – a principle that is widely known in the context of architecture which states that the shape of an object (in this case the organizational structure) should primarily relate to its intended purpose. Future challenges and prospects The high level of competition in the consulting industry is not likely to decline in the upcoming years. Therefore, Semler Company sees one of its strengths and advantages over its competitors in the innovative Semler Company Campus practice which qualifies and certifies managers and other interested parties for the digital age. In the short term, Semler aims to create demand for the comprehensive platform. As Semler Company expands, processes will be of higher complexity and in order to guarantee perpetual efficiency, an increased level of organization and standardization will be 122
needed. Moreover, company growth inevitably leads to increased communication and reporting, therefore an additional layer of management will be implemented in the long run. Considering the possibility that the economy enters a period of economic downturn, companies are likely to stop spending money on the “softer” side of consulting (e.g. leadership management), even though “they are massively in need of it” according to Semler. If this is the case, Semler Company wants to be prepared to have the other parts of their business “up and running”. References Chen, J., Shemunkasho, A., von Riegen, C., (2018, May 11). Personal interview with Dr. Theresa Semler. Grossman, Rhys (2016, March). The Industries That Are Being Disrupted the Most by Digital.
Harvard Business Review. Retrieved from https://hbr.org/2016/03/the-industries-that- are-beingdisrupted-the-most-by-digital Internet representation of Semler Company (as of 2018, May 10), https://www.semlercompany.com
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7.
Path dependence
7.1.
Case “TimesValue“ By Athena Baermann Julie Bradini Sara Jachnik
Please refer to this case using: Baermann, A., Bradini, J. & Jachnik, S. (2018). Case „TimesValue“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 124129). Frankfurt am Main: ProcessLab.
Introduction The history of watches began in the 16th century in Europe, where watches evolved from portable spring-driven clocks to the on electricity running quartz watches that revolutionized the industry in the 1960’s. Today the quote ‘Time is money’ seems to dictate our lives, where globalization is of fundamental importance and digitalization is key to every topic. People strive for faster communication, real-time transactions and better process of information. Consequently, new innovations arise frequently. The multifunctioning smart watch again changed the game for the existing portfolio of models. Nevertheless, traditional watches are technological marvels on their own right, luxurious features and eye-catching design provide a visual appeal. This timelessly beautiful object inspired a young entrepreneur from near Stuttgart to enter the market of high-end watches. According to his passion of collecting watches, he buys and sells second-hand watches. A luxury watch is unique, special and long-lasting, that’s why the business of traditional watches is still important even though we are living in the frame of constantly growing globalization. A short profile of TimesValue Samuel H. Kahn founded TimesValue in Frankfurt am Main in 2008 following his passion for collecting unique and valuable watches. The Event-Management graduate does not only sell watches, but his business consists of him buying exclusively luxury items he appreciates, meaning either mechanical marvels or a piece of jewelry in his eyes. Furthermore, he does not only offer watches but also gives customers the possibility to dispose of old pieces. TimesValue is not a classic retail store, it is more like a showroom which can be entered by a customer after he made an appointment.
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A brief history of TimesValue The Entrepreneur created a business that depicted his need of a skilled and customized expert. To his opinion, there existed too few vendors for luxury watches that closed the gap between austere or distrusted contact persons. To that time customers either visited a brickand-mortar or an online store to find the right choice. Samuel Harry Kahn combined both methods to give the customer the special service of providing individual profiling and direct implementation. Over the course of the decade the business was further optimized to ensure clients satisfaction and to foster trust. Nowadays only reservation is possible over the website, the initial online sales service was excluded due to legislator regulations.
Figure 1. retrieved from TimesValue homepage (2018, May 12) “For me it is important to have the personal contact to our customers.”32 Vision, Values, Corporate and Business Strategy TimesValue works in the industry of purchasing and selling second-hand watches, which means that customers do not want to buy the newest watch, instead they are searching for good quality watches that are unique and rare and probably dated to a specific year. The company’s task is then to find this specific watch and sell it to a proper price to the customer. Secondly, the company buys watches from their customers that they do not use or wear anymore. Samuel H. Kahn describes the perfect customer as the one that buys a watch from the company but later on sells it again, and maybe not only the watch the customer has bought from TimesValue but instead all the watches he still owns and never uses. This would be the perfect procedure the company is aiming for. Working in the industry of retailing luxury goods, the company has set its competitive advantage in the fields of honesty, loyalty, trust and fairness in the treatment of their customers, which depict the values of the firm. TimesValue has a special and individual relationship with every single client and pays special attention to them while trying to find out what they are aiming and searching for. Often, customers do not know what they want 32
TimesValue - Über uns (n.d.). https://www.timesvalue.de/wer-ist-timesvalue.html. Translated from German by authors.
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until you show it to them. This is also a special task the company must implement in order to recruit customers. Another important aspect is that the employees are very authentic and genuine in their appearance and do not use the customers as a mean to their end, consequently they do not wear a suit when meeting customers, instead they are dressed casually so that the meeting is based on honesty and sincerity and the business is being discussed in a more relaxed atmosphere. Concerning his vision, Sam decided 10 years ago to make his passion a job. He wanted to become an entrepreneur and fulfill his childhood dream, while becoming independent. Operating Model and Structure To understand how TimesValue delivers value to the customer, the generic organizational model breaks down its structure into three single interdependent components, that create a unique customer experience:
Customer aquaintance
First contact • • •
via website word-of-mouth advertisement
• •
individual meetings realizing what the customer wants
Wind- up • •
seach and sale of requested item bundling products
The key aspect of all stages, the blueprint of the company, is the direct contact with the client. Naturally, the initial One-Man Business underwent continuous changes and transformation to manage strategic sustainability. With two talented and equally passionate employees he widened his scope to serve the needs of his steadily growing network of clients. Resources, Capabilities, and Core Competences In the watch-dealing industry cash is king. A prerequisite for any spontaneous and maybe unique opportunity to acquire a new piece to the collection is to hold the necessary capital. Another key resource is the inventory of already purchased watches that is equally 126
fundamental. Besides this, there are quite a few other capabilities and competences that are needed to succeed: One of his main capabilities is Samuel H. Kahn’s ability to sell, which he improved especially since he made his passion to a business concept. Since he only sells the watches he actually appreciates himself, this elevated the sensitiveness with which he brings his products to the customer. „The trading in luxury watches is both a passion and a job to me. The fascination of mechanical watches has always impressed me. ‘Timeless value’ which is the motto of my company, describes the world of luxury watches in its best way”.33 Samuel H. Kahn can precisely identify the customers hidden desires and successfully satisfy their demand. His target group consists of clients having an upper-range income who like to invest in exclusive objects, such as jewelry and watches. The determined entrepreneur uses especially the first appointment as a way to understand and to connect to his customer in a casual environment. Purchasing a watch does not mean going into a store, buying the watch and never coming back. It is more like a long-term relationship which is built around a dinner to network on a more private level. The client should develop a special kind of trust towards the seller. Samuel H. Kahn puts a lot of effort in good customer relationship, he wants them to come back and goes the extra mile in order to increase the likelihood for positive recommendation. The well-being of his customers is his main focus and therefore the most important core competence of his business. The superior performance of the company is ensured by the capability to select its customers properly in order to build up a good and sustainable relationship. He determines the customers profile due to their personality, behavior and their attitude with regard to the collaboration. Another very important skill is the selection of the right watches, which means on the one hand to provide a value to the company and on the other hand to find exactly the watch the customer is searching for. Path dependency Path dependency explains how exactly the set of decisions somebody makes for a given circumstance is limited by the decision one has made in the past or by the events that one has experienced, even though past circumstances might no longer be relevant. The most distinctive capabilities can be traced back to the circumstances that prevailed during the founding. All organizational capabilities are path dependent which means every capability a company has today is a result of the decisions made in the past. In the case of the company TimesValue, such a capability would be the fact that the owner Samuel H. Kahn has developed a special skill in his ability to sell. Another important role is the network of customers and suppliers he has developed over time.
33
TimesValue Homepage (n.d.). Retrieved from https://www.timesvalue.de/home.html. Translated from German by authors.
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During the founding of the company, Samuel H. Kahn already chose a special segment, which is the field of watches, but nevertheless kept specializing in it by adding things like secondhand, luxury and exclusiveness into his business. Watches are not necessarily needed today as every person has a smartphone with which the time can be checked whenever needed. But TimesValue is not selling watches just for this kind of function. Moreover, the watches serve as a status symbol and a lifestyle that clients like to have. Altogether, this makes Kahn’s business extremely dependent on the decisions he has made in the past. Since the firm is based on buying and reselling second-hand watches, the customer’s needs and expectations are very precise. Often, the customer is looking for a special kind of watch of a special year for example a banker who is looking for a unique watch dated to the birth of his son in order to make him a special graduation gift. The use of the watches sold by Times Value are relatively specific. Samuel H. Kahn chose his path in the second-hand luxury watch segment which makes it really hard to get out of. Since his customers are focused on exclusivity and this special kind of watches, the dependency becomes even clearer. Since his customers are targeted towards classic luxury watches, clients of TimesValue are not in need to catch on the growing trend of smartwatches. In fact, most of the clients are of the opinion that smartwatches are too complicated and have quite a few unnecessary functions, which increases the attractiveness of traditional watches. The luxury watches offered by the firm are pieces of jewelry and jewelry has always been in style. The classics have to stay simple and basic. Smartwatches might be a nice thing to have but “the average banker prefers to show off his classic Rolex when he is out in the clubhouse than his new apple watch”.34 Future challenges and prospects TimesValue probably isn’t facing the biggest challenges of the whole industry. In fact, most watches Samuel H. Kahn sells are coming back in style, especially the watches dated to the 1950’s and 60’s. The probability of old-fashioned watches being unattractive in the future is pretty low since it’s less about the capacity or function of the watches but more about the status they express. People are more envied for the luxury they possess than the new technology they wear around their wrist. The smartwatch is obviously the biggest challenge the whole segment has to face. Most people, especially the company’s target-group-clients, are rather looking for exclusiveness and something more unique than a new high-tech gadget, whose extras are often seen as unnecessary. Going beyond this fact, the purchase of a traditional luxury watch can be seen as an investment since its value mostly increases over time. Watches can be turned into a positive cash flow in the future. To put it all in a nutshell, Samuel H. Kahn isn’t fearing future challenges, instead he is convinced of the company’s good market position not only nowadays but also in the future.
34
Samuel H. Kahn (2018, May 9). Interview with authors. Translated from German by authors.
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References Samuel Harry Kahn (2018, May 9). Personal interview. Robert M. Grant, Judith Jordan (2012). Foundations of Strategy, Second Edition. Jörg Sydow, Georg Schreyögg, Jochen Koch (2009). Academy of Management Review, Vol. 34, No. 4, 689-709. Organizational path dependence: opening the black box.
Paul A. David (1985, May). Clio and the Economics of QWERTY. (2018, May 12). Retrieved from https://www.timesvalue.de/home.html
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7.2.
Case „ Manakas Frankfurt “ By Kireev Arseniy Manakas Alexandros Vural Mert
Please refer to this case using: Arseniy,K., Alexandros, M. & Mert, V. (2018). Case „Manakas Frankfurt“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 130-135). Frankfurt am Main: ProcessLab.
Introduction “Manakas Frankfurt” is a company specializing on wholesale, manufacturing and production of fur garments. As the name suggests the firm’s headquarters and the main operational base is located in the heart of Germany, in Frankfurt am Main. The organization has multiple international partners and therefore its product range appears in countries like France, Spain, Italy, Dubai, Hong Kong, Russia, China and others. Given current global trend of the conservation of wildlife, the firms in the fur industry are facing multiple legal and ethical complications. So how does Manakas Frankfurt manage to sustain its consistent operations and remain profitable? The following case study is aiming to answer this question. A short profile of “Manakas Frankfurt”
The Brand: The name “Manakas” is well known in the fur fashion industry. The brand imposes trust on product quality for the retail partners. “Manakas Furs” sustains brand awareness by fashion shows, exhibition podiums and having their own stands during trade fairs around the world.
Products: “Manakas Frankfurt” offers a wide range of products to its retail partners. The product portfolio of the company mainly consists of mink and chinchilla fur garments.
Customers/Partners: The company works together with numerous retail partners around the world. A vast majority of customers of “Manakas Frankfurt” are originated from the countries where the demand for our products is high (i.e. Russia and China). The company cooperates with Loro Piana, involved in joint venture partnership, where “Manakas Frankfurt” adds fur elements to the cashmere Loro Piana jackets. 130
Location: The headquarters of “Manakas Frankfurt” is situated in Frankfurt am Main, Germany. Operating from the Center of Europe makes it convenient for the fashion company to attend exhibitions or having their stands integrated in the trade fairs in the leading fashion cities like Paris or Milan. Moreover, the company has an additional office in Hong Kong, which monitors production. Lastly, “Manakas Frankfurt” possesses two production plants in Kastoria and Quindao and a dressing factory in Malasya.
A brief history of “Manakas Furs” Although “Manakas Frankfurt” was created in the year 1950, it wouldn’t be possible to talk about the company’s history without mentioning the significant events previously to that year. Four generations back, there was a family living in Kastoria, a small town located in the north of Greece. All members of this family and also the majority of the citizens in this town were involved in the production of fur. This can be traced back to the Byzantine time where this place was known for the art of fur processing. Ever since, the place has become the fur processing centre of Europe. Two generations later, in 1950, one of the 3 sons of the Manakas Family found a way to escape this dead-end carrier that was common at that time, by traveling to Germany. There he started selling persianer lamb plates that his other two brothers would produce. This proved to be profitable and so 12 years later he opened a 25 square meter shop in Frankfurt on the Niddastraße that was named after his last name - “Manakas”.
First “Manakas” shop on the Niddastraße.
Production Plant in Kastoria, Greece.
The company’s growth was very stagnant until the year 1987 where the current CEO of the firm entered the family business representing the 4th generation. Owning just 30% of the firm, Mr. Manakas introduced a new collection that was only sold in Tokyo Osaka and Hong Kong. This collection consisted of Fox jackets that were hand-made in Germany. Although the demand for German products was high in the Asian-Pacific fur industry the relative cost of these goods was tremendous compared to the low-priced Asian products. Nevertheless, the company was able to achieve the set growth benchmark and it was enough to create a CMT purchasing strategy in both Kastoria and Quindao. This meant that only the labour131
intensive portion of production was outsourced and the rest was done internally. This turned out to be very effective since the brand managed to keep the quality of German furs and strongly reduce production costs. Just a few years later in 1993 “Manakas Frankfurt” sold furs to large German department stores including Peek und Kloppenburg and slowly started expanding in European countries such as Spain, Italy and Switzerland through agents and showrooms. Furthermore, in 1998 the company entered the Russian market which proved to be one of the best choices Mr. Manakas has made in his carrier. This made the number of customers rise exponentially making it difficult for the company to adapt to the new demand. In the next years the company moved its Headquarters 3 times, eventually increasing the initial 25 square meters into a bit more than 2600. Additionally, the firm started building up larger factories in Kastoria, Shin Zhien and Quindao as well as a personal dressing factory in Malaysia. Vision, Values, Corporate and Business Strategy The core conception of “Manakas Frankfurt” is the will to supply the most recognized stores in the main fashion-significant cities of the world. The company has been successful with its intention by working together with the retail stores in the fashion-capital cities like Paris and Milan. It is important to realize that “Manakas Frankfurt” pays very close attention to the social and environmental responsibility which plays great importance for the brand image in the industry where firms are working with animals. For this reason, the company values and truly believes in animal welfare and supports it fully by sourcing from farms that strictly follow prescribed welfare regulations. Moreover, the organization is always trying to pursuit environmental sustainability. Since fur is a natural product, it is fully bio degradable in contrast to other synthetic substitutes and plastic materials. It can be argued that this responsible and ethical behaviour of the company creates competitive advantage and puts them ahead of its peers. “The we ll -bei ng of animals i s a top p riori ty for us. We source furs from farms that stri ctly follow the bree di ng re gulati ons and are p a rt of the i nd ustrie s´ certification p rog rams whi ch are based on i ndepe nd ent scie ntifi c te sti ng and i nsp ec tion”35 With regards to the corporate strategy of “Manakas Frankfurt”, the company aims at providing a luxury brand and high-quality products that will appeal to both, the distinct group of consumers with the desire to purchase exclusive products and an average person wearing fur. In other words, the firm is striving to satisfy as many customer groups as possible whilst at the same time keeping its luxury brand image. Furthermore, the business strategy of “Manakas Frankfurt” is to provide high end fur garments at affordable prices. The emphasis on the affordable prices again illustrates the will of the company to reach average income customer group.
35
Manakas Frankfurt Website (2018, May 5)
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Operating Model and Structure “Manakas Frankfurt” implements the most common design of the organizational structure – the functional structure. Therefore, the company functions in a hierarchy, with the CEO, Mr. Manakas himself, managing and planning the main organizational operations.36 The chief executive resides in the head office in Frankfurt and is working together with the financial, sales and marketing departments. Therefore, the head office is mainly responsible for the selling, general & administrative operations. Additionally, the company possesses a production office in Hong Kong, where the productional manager of “Manakas Frankfurt” resides. This office is responsible for the transportation and processing of the fur garments. Since the main focus of the company is wholesale and competing against its own customers (retail partners) would be irrational, “Manakas Frankfurt” has their own stores only in these three locations: Hong Kong, Dubai and Kastoria. The operating model of “Manakas Frankfurt” consists of multiple stages. First of all, the CEO
Headquarters (Frankfurt) Sales Department Marketing Department
Hong-Kong Office Production Department
Financial Department
designing process is outsourced. The company hires a constant freelancer designer team for the new collections every year. The customer then orders a desired quantity of the fur garments and 30% of upfront payment is required to initialize the production process. As soon as the entire bill is paid by the customer, the products are then delivered. “Manakas Frankfurt” works together with UPS and LOGWIN which in turn overtake the responsibility for further logistical operations. Resources, Capabilities, and Core Competences “Manakas Frankfurt” has numerous tangible, intangible and human resources under its possession. Apart from financial production assets and equipment, the company owns two production plants in Kastoria and Quindao as well as a dressing factory in Malasya. Moreover, the brand name is another very important intangible asset of “Manakas Frankfurt”. Over the years the brand has earned high recognition within the fur industry and 36
Grant, M. R., Jordan, J. (2015), p. 315
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as a result it now serves as a proof of quality for the customers. Regarding the human resources, the organization has 233 dedicated employees all over the world assisting the daily operations of the company. Apart from the plentiful capabilities of “Manakas Frankfurt”, the design and the pattern making of the fur elements, the ability to process raw skins, the dressing of the skins and finally the creation and selling of the finished garments are particularly important since these competences differentiate the company from its competitors. Therefore, the firm is seeking a competitive advantage by exploiting its creative and innovative capability. Finally, the core competence of “Manakas Frankfurt” and its main competitive advantage is the reduced cost in the processing and transportation of mink garments. Unlike its peers, the company has established the network which allows them to purchase raw materials directly from the suppliers and not through the auction house. Thus, this creates a significant cost advantage which puts the company ahead of its contestants. Additionally, the strategic positioning of the office in Hong Kong allows for supervision and therefore increased efficiency of the production processes in the Asia-Pacific region. Path Dependency of “Manakas Furs” Path dependency is a theory explaining the continued use of a product or practice even though better or more profitable alternatives are available. The process of becoming path dependent consist of three phases: the preformation phase, the formation phase and finally the lock-in phase. “Manakas Frankfurt” will be analyzed by cross examining the decisions that the company has made with the phases of path dependency. Linking specific historical decisions of the company with the phases of path dependency will show to what extent the company is bound to a specific path. 37 As mentioned earlier the founder of the company worked with fur from an early age. This meant that time and effort was invested in order to learn the art of processing fur. This can be linked to the preformation phase, where the person or organization involved has a broad scope of action, not knowing the consequences of any decision. Just like in our example the brothers have started working with fur without knowing that this would limit their future alternative decisions. The next significant decision in the “Manakas Frankfurt” history was moving to Germany and opening a fur shop in Frankfurt. This action required a lot of investment into capital, time and effort. This decision can be linked to the beginning of the formation phase since the scope of actions began to narrow down. Consequently, a path started to form. Given that most of the resources under the company’s possession were utilized, reallocation to another field was close to impossible. However, there was still flexibility since the small workshop was producing fur in general and had no specialization in any specific type of fur yet. In the last couple of years, the company’s production spectrum started to gradually converge to a mink bound production. This specialization in mink can be associated with the third stage of path dependency - the lock-in phase. In this stage further constriction leads to a so-called lock-in which doesn’t allow for any flexibility in decision making. It is in this stage where the consequences of path dependency start becoming visible. Although more 37
Sydow, J., Koch J. (2005).
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profitable alternatives such as the production of lynx exist, the company is bound to the production of mink. Based on the discussion with Mr. Manakas, moving to another animal such as lynx would be difficult since the workforce would be very inefficient at first but also the entire dressing factory would become redundant. Future challenges and prospects “Manakas Frankfurt” operates in a turbulent environment where the future of the fur industry remains unclear. Therefore, the company must take the threats and challenges under serious consideration when considering a future course of action. First of all, the world is becoming more concerned about the preservation of the environment and the wildlife, with many species being on the verge of extinction. Therefore, a rapid development and growing demand for synthetic fur is taking place. This alternative is changing the traditional ways of the fur industry and brings an intense competition to its participants. Moreover, there exists a problem with animal activist groups such as Greenpeace and PETA who halt the development and damage the brand name of the firms in the fur industry. The groups have made use of the rising of the social media to spread the fur industry cruelty propaganda. This has negatively influenced the perception of people towards the fur products. Finally, the greatest demand for fur products is coming from Russia. The country has faced immense criticism after the Crimea crisis. Some of the trade partners imposed sanctions on the Russian Federation which caused the Ruble (local currency) to surge and decrease in value. Consequently, the fur industry is suffering from the decreased demand of Russian customers.38 References Grant, M. R., Jordan, J. (2015). Foundations of Strategy. Wiley. HauteAcorn. (2017, Oct. 13). “What Is the Future of Fur Industry:” Retreived from https://www.hauteacorn.com/what-is-the-future-of-fur-industry/ Manakas, J. (2018, May 2). Personal interview. Sydow, J., Koch J. (2005). Organizational Path Dependence: Opening the Black Box. Manakas Frankfurt (2018, May 5). Retrieved from https://www.manakas.com/de/
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HauteAcorn, (2017, Oct. 13).
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8.
RBV
8.1.
Case „ Kiwis” By Lukas Mohr Sukhpal Multani Daniel Wägner
Please refer to this case using: Mohr, L., Multani, S. & Wägner, D. (2018). Case „Kiwis“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 136-139). Frankfurt am Main: ProcessLab.
Introduction Kiwis is a New Zealand Bar and Restaurant located near Zeil in Frankfurt. In the vicinity of the Kiwis there are many other restaurants and several nightclubs, as it is located in the city centre. For that reason, it is a very crowded and popular area. The Kiwis has excellent reviews on google, Facebook etc. On Facebook, nearly 90% of the ratings are 4 stars or above. In the reviews the cocktails, music and location are extolled above all. Source: Facebook
A brief history of Kiwis The Bar and Restaurant Kiwis exists since September 2017. Before that, the bar was called Willie James, but was renamed due to a change of ownership. The old owner was a passionate DJ and gastronome, who was forced to sell his beloved restaurant, due to family and financial reasons. Since the bar was named after his deceased father, the owner was looking for an equally passionate and creative successor. The bar was accordingly bought up by Mr. A in September. Thereupon followed massive changes to the food and drinks on offer, as it used to be an American kitchen and is now a New Zealand kitchen. After the change of ownership, the kitchen was renovated, and the bar was completely renewed. The quality of the food and drinks has also increased, as the current owner studied business administration with a focus on hotel business and already had professional experience, whereas the previous owner had no previous knowledge of gastronomy. Since the bar has only existed for 8 months, the full potential of the location and the bar itself has not yet been fully exploited. But a solid customer base has developed, and many companies are planning their events in Kiwis such as Accenture, Rothschild and Sparkasse.
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Vision and Values Since it is still a relatively young restaurant, the potential has not yet fully developed. Many gastronomes have a similar vision, namely that everything ultimately depends on the quality of the food and drinks and how its delivered by its employee. The goal or vision is therefore to increase the quality once again, but also to maintain a good relationship with the guests. Operating Model, Structure and Business Strategy Kiwis is a classic restaurant, opened from Monday to Saturday, which means that it offers a lunch menu on the days, as there are a lot of banks nearby and the stock exchange is right around the corner. In Kiwis, it is accordingly possible to dine and drink, as it has a remarkable selection of liquor on offer. From Thursday to Saturday Kiwis turns into a nightclub with restaurant elements, which means that you can still dine in the Kiwis until 11 pm. Afterwards, kiwis becomes a combination of a bar and nightclub. The location also plays a major role since the restaurant is located near the Zeil, a street located in the northern city centre of Frankfurt. Since the 19th century, it has been one of the best-known and highest-turnover shopping streets in Germany. In 2017, a counting of JLL was carried out, which measured the number of pedestrians in Germany at popular locations. According to this, the Zeil was in first place in 2017 in terms of the number of pedestrians per hour, which amounted to approx. 14,000 in 2017. On some days of the week, the Kiwis is completely booked out in the evenings by certain companies (mostly banks and consultants), so there is are private parties on these days. These events are usually very similar in structure and a common dine takes place. Usually a DJ is booked for such events and thus a party takes place afterwards. The target groups of Kiwis is as diversified as the operating model of Kiwis, therefore each operating model has its own target group. The target group for Monday to Saturday, when Kiwis operates as a restaurant are Business people, since there are a lot of firms nearby, for example the “Deutsche Börse AG” and since its located near Zeil, there are a lot of walk-in customers. The target group for Thursday to Saturday are younger people, for example students but also people who work nearby, since the Thursday is titled as the after-work party day. Resources, Capabilities, and Core Competences The most valuable resource, which nearly every restaurant has and also in this case Kiwis, are their employees. The employees deliver the quality and are partly responsible if the customer likes the restaurant. The restaurant has 2 working shifts and at each shift there is a supervisor, who is the owner himself or someone he trusts very much. Trust is very important, since Willie James (former restaurant) has been robbed by his own workers and as a result has also gone bankrupt. The bar where all the alcohol is stored is also very valuable, since some bottles have a purchase price of about 1000€. The totally new upgraded kitchen is also very valuable and necessary for being able to provide high quality food. Everything had to be upgraded, since the old owner couldn’t afford an upgrade anymore. As explained before, the most important resources of the business are the employees. In this case it can be said that particularly the cook and the barkeeper are of a very high importance. 137
This is because they are mainly responsible for creating the output, that costumers receive, which is the service. Nevertheless, also the waiters are of high importance, since they are the link to the costumers. The waiters are kind of a sales department of a restaurant. To achieve a high quality, Kiwi’s especially trains the employees. This ensures that the resources use all of their capabilities and further enhances the core capabilities. Core competences can be broken done to cooking, making drinks, delivering a good service and providing a pleasant ambience. Resource Based View The Resource Based View is a managerial framework that highlights the role of resources and capabilities as the principal basis for a firm’s strategy, in order to gain and sustain competitive advantage. As mentioned in the paragraph before, Kiwis most important resources are the employees and the restaurants ambience. In addition to that, the restaurants location is of a very high importance. Since Kiwi’s is located optimally in the center of Frankfurt, they manage it to acquire a lot of costumers that just pass by. The restaurant is located very close to the “Zeil”, which is Germanys most visited shopping street. The combination of the restaurants human resources which have high capabilities, the newly renovated rooms and the central location help Kiwi’s to achieve a competitive advantage. Future challenges and prospects The Kiwis is a rather young restaurant and hasn’t fully developed yet so there is a lot of potential, but also a lot of challenges. Competition: There is also a lot of competition nearby. In a radius of 400 meters there are about 2 Starbucks, 3 Steakhouses, 3 Fast Food Chains and 8 restaurants. There is high number of restaurants located nearby, but the number of restaurants stayed relatively constant over the last three years, as nearly nobody tries to open a restaurant there, due to massive competition and very high costs. According to statista.com over the last 8 years the median renting prices increased about 40% and if you rent a place you have to invest a tremendous amount to renovate it, furthermore according to Mr. M a restaurant needs one to two years to establish Source: JLL itself, therefore there is huge capital requirement.
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But According to statista.com the consumption in terms restaurant will increase in the following 3 years. Which means, if the numbers of restaurant stays constant and the consumption increases the revenue of nearly every restaurant in this area, including the Kiwis, should increase.
Source: Statista
Customers preference: Todays customers have higher standards than ever, due to overall higher level of education. Even for fast food restaurants, for example McDonald’s, the expectation of the customers did increase. According to the employees of Kiwis the consumer expectations of a restaurant concerning allergy issues, nutrition, sourcing and quality have changed considerably over the last few years. Therefore, also the preference of dishes customers order did change. Since customers' preferences are changing, the restaurant must also change, so the restaurant can keep up with its competition. This means Kiwis has to slightly change the menu card every year or even every six months. References JLL. (2017). Entwicklung der Angebotsmieten in Frankfurt am Main vom 1 Halbjahr 2009 bis zum 2. Halbjahr 2017 I Statistic. Retrieved Mai 03, 2018, from https://de.statista.com/statistik/studie/id/24681/dokumen t/gewerbeimmobilien-in-frankfurt-am-main-statistadossier/ JLL. (2007). Passantenfrequenzen 2017 Retrieved Mai 03, 2018, from http://www.jll.de/germany/dede/passantenfrequenzen Statista. (2017). Prognostitierte Umsatzentwicklung in der Gastronomie in Deutschland in den Jahren von 2007 bis 2021 (in Milliarden Euro) I Statistic. Retrieved Mai 03,
2018, from https://de.statista.com/statistik/studie/id/24681/dokumen t/gewerbeimmobilien-in-frankfurt-am-main-statistadossier/ The information used for the completion of this paper was taken out of various sources. The base for this case study is an interview with one of the owners of Kiwis GmbH, who wants to stay anonymous and provided us with an overview of the company and its operating model, as well as several outlooks on the future of the company. We also asked employees of this company to expand our insight in the company.
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8.2.
Case „ WT EnergySystems” By Carolin Tietz Handa Hua Simon Himmelstoss
Please refer to this case using: Tietz, C., Hua, H. & Himmelstoss, S. (2018). Case „WT EnergySystems“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 140-143). Frankfurt am Main: ProcessLab.
Introduction In the past years the demand for renewable energy has vigorously increased not only within Germany but in the whole of Europe. According to a survey conducted by the Renewable Energies Agency, the German population is in favour of further expanding into environmentally friendly energy. WT EnergySystems, a German consultant and planner for solar power and power engineering, is continuously gaining importance in this market. Within the next 12 months, WT EnergySystems will present their business and new technology to potential clients in multiple international exhibitions, for example the upcoming Industry Fair at Hannover Messe, WindEnergy Hamburg and the Middle East Electricity Dubai. A short profile of WT EnergySystems WT EnergySystems is a small sized company based in Riesa, Germany, that specializes in building electrotechnical plants. The venture started with the idea of supplying high voltage substations and medium voltage distribution stations for wind, biogas and solar energy plants. Till the end of 2016, they have undertaken the planning, installation and maintenance of 70 high voltage substations. In 2017 WT EnergySystems realized a total output of 21.5 million Euros with 27 employees. Within the last three years WT EnergySystems has constructed 25% of all built substations for wind and solar parks in Germany and has gained the position as market leader.
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A brief history of WT EnergySystems WT EnergySystems was conceptualized and founded in 2002 by Mr. Tietz and Mr. Weber starting off with two more employees. Before WT EnergySystems was incorporated, both its founders have already worked in the industry. Mr. Weber, who at that point owned another company “Elektroindustriemontagen”, had the necessary experience about the installation of substations within the energy and steel sector. Mr. Tietz worked in a sales office which distributed products for prominent firms in the electrotechnical industry. Not only did he have base to potential clients but also access to a major part of the equipment necessary for the building of their first substations. According to Mr. Tietz WT EnergySystems profited from substantial experience of its founders, which was crucial for their goal - the planning, building and commissioning of substations in the renewable energy sector. In order to grow WT EnergySystems employed more workforce, especially more engineers as well as installation workers. Since 2012, the company grew from 6 to 40 employees in 2017 and cooperated with selected electricity distributors within Germany, such as E-ON and RWE. Vision, Values, Corporate and Business Strategy The firm’s corporate strategy is to maintain the position as a successful player in the renewable energy industry. As market leader WT EnergySystems has used the potential of the sector and is further expanding into other sectors, such as building their own control and safety cabinets for third-party-clients. WT EnergySystems also set up their business strategy in order to align with its corporate strategy. The business strategy of WT EnergySystems is very client-oriented. They tailor their projects in order to meet the specific demands of their clients. Moreover, they include the clients and their requests in every phase, from generating the ideas until the final delivery of 141
the projects. Involving the client in every step assures that the client will get the desired result. “Once an offer is proposed to the clients, we adhere to our commitments regarding price and delivery date under every circumstance, every circumstance!”, said Mr. Tietz. The strict commitment and engagement is a unique selling point and of value to the company attracting many new clients and building strong relationships with current clients. Using the corporate and business strategy, Mr. Tietz visualizes the company’s spread into the global renewable energy market as well as a strengthened market position in other industry sectors that the company operates in. Operating Model and Structure WT EnergySystems is a service company, hence the best way to explain its operating model is by the basis of undertaking a project and providing service to the client. After the order is received, the first step is to create a team which includes a project leader and planners for the different phases of the project. A concept is created to display the structure of the job. For the details WT EnergySystems needs to get in touch with the local energy supplier to make plans on how the new plant can be connected to the power grid. Only then the necessary forms for the construction request will be handed in to get the go from the local authorities. Once it is approved a construction schedule will be created to set deadlines for the different phases but more importantly to get the ordered material delivered at the right time to the construction site. Six weeks before putting the new station into operation, contact will be made with the energy supplier and the customer to set the exact date of launching the station. The construction schedule, Mr. Tietz points out, is crucial to keep deadlines and the customer informed about the whole process. With that, the customer can understand the ongoing work and the different phases of the project until it is finished. Resources, Capabilities, and Core Competences WT EnergySystems possesses various tangible, intangible and human resources on which it bases its capability to provide distinct services in the renewable energy field. Tangible Resources: Currently the company owns a middle-sized office in a building, a large fleet and a big property in Riesa. The company plans on using the terrain as their new operating place by June 2020. Next to an office building they plan on building a fabrication plant to produce parts of their substations and safety cabinets directly on-location. WT EnergySystems reinvests about 40% of their yearly Income in new cost intensive acquisitions, namely software and testing apparatus. Since the company is still young and growing it lacks the ability of forming reserves, according to Mr. Tietz. Intangible Resources: WT EnergySystems has built up a strong brand reputation within its industry. Being reliable in every aspect possible it was able to build a stable customer relationship.
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Human Resources: Valuable resources of the company are the firm’s employees, their knowledge and knowhow. The team of 40 people mainly consists of graduate engineers, technicians and specialists. The management always refers to the workers as colleagues, never “its employees”. Respect between colleagues is as present as the employees’ identification with the company and its values. Several trainings and different types of further education such as language courses and Safety-Inspection certifications are offered and paid by the company to keep the employees motivated. Mr. Tietz pointed out that this kind of further education is a big motivation for the employees and makes them long term assets to the company. Resource Based View The resources possessed by a company can be sources of sustained competitive advantage if they fulfil the VRIN criteria. As already mentioned, WT EnergySystems is market leader within the industry and can maintain a sustained competitive advantage due to its distinguished resources. For example, the knowledge and connection of and among the workers of WT EnergySystems. Team spirit is highly valued within the company. The managers do not want the employees to form small individual groups and neither want them to be solitary in order to create a feeling of unity, so the firm acts as one big team to the outside. Experienced employees and young talents work close together to share and pass on experience. Future challenges and prospects Though the renewable energy market is still growing, new enforcements in Germany have restricted and drastically downsized the number of wind power stations to be build. Generally, the economy is in an uncertain state and changes can affect especially the midsized companies such as WT EnergySystems. Looking forward, WT EnergySystems is to further expand as a company and increase its market share. While it currently has sites in Riesa, Dresden and Northern Sweden it plans to add new locations in Bremen and south of Stockholm within the next years. Next to adding new locations, it will open a R&D department to improve battery storage and quick charging stations. While WT EnergySystems is currently in the renewable energy section the plan is to focus even more on supplying the industrial sector. References Interview with the CEO of WT EnergySystem[MP3]. (2018). Dresden: Carolin Tietz. (2018) WT EnergySystems. (n.d.). Brochure as PDF file (English)[Brochure]. Author. HANNOVER MESSE Event. (n.d.). Hannover Messe - WT EnergySystems. Retrieved May 07, 2018, from http://www.hannovermesse.de/aussteller/wtenergiesysteme/N739394 Renewable Energies Agency. (n.d.). Acceptance of renewable energy in Germany. Retrieved May 06, 2018, from
https://www.unendlich-vielenergie.de/english/acceptance-of-renewable-energy-ingermany THINKPROGRESS. (2008, June 9). VA-11 and Transit. Retrieved May 13, 2018, from https://thinkprogress.org/va-11-andtransit-da13f0f95e03/ W. (n.d.). WT Energiesysteme. Retrieved May 13, 2018, from http://www.wt-energiesysteme.de/ Umsätze WT [E-mail to C. Tietz]. (2018, May 14). Information about the total output of WT EngerySystems
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8.3.
Case “Mangia Mangia” By Michael Lovas Sebastian Selke Bjoern Thieme
Please refer to this case using: Lovas, M., Selke, S. & Thieme, B. (2018). Case „Mangia Mangia“ In Bogodistov, Y. (Ed.), FS Casebook (Vol. 2, p. 144148). Frankfurt am Main: ProcessLab.
Introduction Culinary delight meets aesthetic bliss at “Mangia Mangia”, where dining and design form the ultimate union. As one of the first of its kind in its proximity, the restaurant serves modern versions of classic Italian favorites in a casual ambiance. The restaurant “Mangia Mangia”, located in the small city Kronberg am Taunus, a surrounding of culinary abundance, has managed to overcome its predecessor’s problems operating with a renewed and avant-garde concept. But what exactly makes “Mangia Mangia” so special and innovative, so that it has been able to build up a reputation of serving Source: Mangia Mangia Website high-quality food for a reasonable price in a mellow atmosphere? Is the restaurants distinctive concept a phenomenon of authenticity and originality as its owner claims? A short profile of “Mangia Mangia” The restaurant “Mangia Mangia” is situated on one of the main streets of Kronberg am Taunus, which is in Frankfurt am Main’s distant surroundings. The trattoria, grill and pizzeria restaurant opens six days a week, serving lunch and dinner. It offers capacity for 120 guests, that can choose from a wide selection of appetizers, salads, pizzas, pastas, meat, seafood dishes and burgers. The interior design merges the aspects of a fine and classy traditional Italian restaurant and those of a modern and trendy casual restaurant. The concord of black, shiny seating accommodations and noble wine cabinets and the, not like common white, but checked tablecloth allays the guest’s fears of an uncomfortable formal atmosphere, creating a merry and unforced dining setting. Therefore, “Mangia Mangia” does not only count business people, but also families, among its customers. In fact, the restaurant hosts several birthdays, where young and elderly jointly experience the culinary offerings.
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A brief history of “Mangia Mangia” At the same location where “Mangia Mangia” is so successful today, its owner inaugurated the restaurant “Lucullus” ten years ago. The predecessor was also a fine Italian restaurant, which served lunch and dinner seven days a week. However, “Lucullus” was of a higher price segment and therefore, was confronted with the problem of almost entire vacancy during lunchtime. Its price-intensive menu attracted exclusively affluent businessmen for dinner and was more of traditional Italian nature. To escape this problematic situation, the owner decided to develop a new concept and to open a new restaurant at the same location. “Mangia Mangia” is the exact counterpart to the less successful “Lucullus”. Extending the capacity to 120 guests, the main idea was to offer less price-intensive choices and to attract thereby more customers. Here, the menu was supposed to be the main factor for the price difference, including less expensive options. In fact, the inauguration was a complete success. The redesigned restaurant now has a more casual and mellow ambience, attracting a broader range of customers. Several new dishes, such as burgers, were added to the menu, which perfectly display the cutting-edge concept. The “Italo Burgers”, burgers constituting of Italian focaccia bread, arugula salad and a supreme-quality patty, exhibit the unification of traditional Italian kitchen and the casual modern restaurant. But not only the food served goes along with the contemporary concept. Starting from the fact, that the menu is already on the table entering the restaurant, to the informal, but chic, clothing of the waiters, it all goes hand in hand with the owner’s plan to enlighten the path, and to Source: Mangia Mangia Website convert “Mangia Mangia” into an iconic Italian restaurant. Each and every month the menu is adapted, older and less successful choices are removed and new options are added, so that the restaurant experiences a constant process of development. Vision, Values, Corporate and Business Strategy The vision of “Mangia Mangia” is easily summarized by stating the owner’s attempt to create “The new Italian restaurant”39. Constituting of moving away from serving only traditional Italian dishes, such as pasta all’ arrabiata, the restaurant’s approach is to include modern choices and to integrate Italian ingredients and culinary delight. This vision has been incorporated into the business strategy and blended with other factors needed in order to achieve an extraordinary and comfortable dining experience. The corporate strategy also includes offering a superior and exceptional service to the guest, so that he feels complacent. “The goal hereby is to create a family atmosphere”40. The
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restaurant’s motto and slogan “Who does not dine in company must be either a thief or a spy”41 takes up the latter target of the business strategy and assimilates it. For this reason, it is of great importance that the restaurant’s team members embody shared values, such as teamwork and a strong work ethic towards the utter satisfaction of the guests. Furthermore, dependability and responsibility are of crucial significance, regarding the fact that each team member is independent in his or her work and contributes to the success of the whole team. As a matter of fact, the team constitutes a core value of the company. Operating Model and Structure “Mangia Mangia” is operated by a staff which is comprised of 16 members. The employees are to the largest extent permanent employee and thus, regular members of the team. But since the owner possesses three additional restaurants, some members are shifted back and forth arbitrarily between the four. The owner is in charge of the personnel matters and functions as restaurant manager as well. Furthermore, the main cook and head chef plays an important role in the operating structure. In consultation with him, the owner decides whether to remove choices from the menu or not, and which new creations should be added to it. Lastly, the restaurant operates six days a week, serving lunch and dinner. On Mondays it remains closed, thuswise, the restaurant manager and master chef can plan the upcoming week. Resources, Capabilities, and Core Competences The main resources of “Mangia Mangia” are the ingredients of its dishes. The restaurant is catered twice each day with fresh ingredients, so that the cooks can assemble the creations on the menu with the best possible elements. “The main parameter when ordering the ingredients is to ensure, that they can be utilized in at least three dishes”42. The owner declares the Italian cheese burrata as an example epitomizing this idea. It is used as an appetizer, integrated in dishes with pasta and also added to pizzas. The team constitutes, apart from the ingredients, another highly valuable resource of “Mangia Mangia”. Each member delivers benefit to the restaurant in an individual way, no matter as in function of being the cook or waiter. Every employee is set to deliver high quality service to the guest and therefore, their capabilities have to be outstanding. For this purpose, the owner is in control of the hiring of new personnel, which he handles by inviting interested candidates to stimulating rehearsal Source: Google work. Hereby, he ensures, that the potential team member embodies the set of capabilities and competences required to fit the restaurant’s concept and image. For example, the cooks must have the capability to deploy the firm’s resource for a desired end result, in order to satisfy the guest by delivering high-quality food,
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enriched by culinary delight and taste. Waiters must also deliver a distinct service and gratify the customer’s needs and wishes, that go beyond flavor. The core competence of “Mangia Mangia” lays in the cutting-edge concept. The consonance of modern and traditional Italian kitchen meets culinary delight and aesthetic bliss, so that dining and design form the ultimate union. It not only provides a unique benefit to the customer, but, the degree of imitability is restricted. Competitors might try to emulate the style and the creations of the menu. However, the quality cannot be easily and conveniently copied. Moreover, the essence and substance of the restaurant and its concept collude and offer a remarkable and outstanding experience. This has led to a great success-path over the last two years, which has been rewarded with a marvelous reputation and reviews by the guests. “Mangia Mangia” from a resource-based view The resource-based view model can be utilized to take a closer look at the restaurant’s resources. Its core statement depicts resources as the key to superior firm performance, and thus, enabling a company to gain and sustain competitive advantages. Firstly, “Mangia Mangia” possesses numerous resources of eminently differentiated nature. On the one hand, the restaurant holds tangible resources, such as the food, its ingredients, and location in its portfolio. These resources can easily be bought in the market and thus, grant only little advantages to the firm on the long run. On the other hand, the restaurant also counts various intangible resources, hence, with no physical presence, including the supreme quality of the food and service and the associated experience. The enumerated assets are the main source of the sustainable competitive advantages, which have culminated in the restaurant’s outstanding reputation. Secondly, the model offers a framework to determine, whether a resource is a source of sustainable competitive advantage. To serve as basis for such, a resource must be valuable, rare, inimitable and non-substitutable. The owner applies this framework to the restaurant’s set of resources and identifies two resources, having a major role in helping “Mangia Mangia” to achieve a higher organizational performance. First off, he depicts the staff members as one of the most valuable resources of the restaurant. “Without doubt, they help to increase the value offered to the customers, are because of their individuality rare and therefore, only hardly imitable”43. Furthermore, the degree of substitutability is restricted, which stems from the fact, that there might be strategic equivalent valuable employees, but to ultimately copy their capabilities and competences is impossible. Next in order, the restaurant’s owner emphasizes the importance of a unique and exceptional resource, in form of a wine machine. Having been confronted with the difficulty to sell expensive wines per glasses, and not per bottle, like it is common in restaurants, “Mangia Mangia” has developed a machine, which solves this problem. Its nitrogen-based operation preserves open bottles of costly wines, without letting the liquid oxidize and ruining the taste over time. “Therefore, the restaurant can offer to serve expensive wines per glass and keep them in storage for several days”44. The owner describes this resource, as fulfilling all characteristics of the applicable framework. “Having high costs to imitate for 43 44
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rivals and thus, having a high level of non-substitutability, the wine machine is of rare nature”45. The selling of wine making up to 50% of the restaurant’s weekly revenue, accentuates the valuable character of this resource. Consequently, the owner considers the wine machine as being the decisive main source of the restaurant’s competitive advantage. Future challenges and prospects For the future, “Mangia Mangia” plans to constantly improve the quality of the food served and the service offered and thus, to continue convincing with its associated experience. This, the owner hopes to achieve by maintaining its structure and stability, and to further enhance the menu with extraordinary innovations. For this purpose, the restaurant’s owner has always, and will continue, to travel the world gathering impressions and inspiration. Notwithstanding, he believes, “that one must have been gifted with creativity to successfully develop extraordinary creations”46. Additionally, “Mangia Mangia” aims at increasing its online presence via marketing. An improved website and an increment in online advertising has been chosen to attract the attention of new guests. The owner sees to keep up this pioneering, progressive character of the dishes and to always stay ahead of other restaurants as a potential challenge. He has observed, that many Italians in the proximity of “Mangia Mangia” also serve burgers now, starting to copy the fusion and harmony of traditional Italian kitchen and modern casual restaurant. Nevertheless, the owner does not perceive those other Italian restaurants as real competitors, since “Mangia Mangia” is with its iconic concept ten years ahead47 of them. Moreover, the restaurant has kept myriad options open, hence design freedom and flexibility exist48, and contribute to the creation of further dishes, which will delight the guest over and over again. References Gallo, C. (2018, May 9). Personal interview. Provoluptate GmbH. (n.d.). Retrieved from http://mangiamangia.de/Bildergalerie/
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Translated from German by authors. Translated from German by authors. 47 Translated from German by authors. 48 Translated from German by authors. 46
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