Contemporary Development in Business and Management

Beiersdorf


Research Paper (undergraduate), 2010
34 Pages, Grade: 73%

Excerpt

TABEL OF CONTENT

Task 1

1. Executive Summary

2. Introduction

3. Internal and external environment
3.1 Internal environment
3.1.1 History Development
3.1.2 Company’s Management Structure
3.1.3 Employees environment
3.1.4 Products
3.1.5 Corporate strategy- Passion for Success
3.1.6 Marketing
3.1.7 Future
3.2 External environment
3.2.1 PEST analysis
3.2.2 Porter’s five forces

Task 2

1. Demographic factors
1.1 Assumptions

2. Characteristics of the population in Germany
2.1 Population size
2.2 Fertility rates
2.3 Life expectancy
2.4 Gender, Religious affiliation

3. Influences on Beiersdorf
3.1 Ageing and decrease of working-age population
3.2 Changes in demographic age structure

4. Effectiveness of the Beiersdorfs response
4.1 Beiersdorfs response to the changes in demographic age structure
4.2 Beiersdorfs response to the ageing and decrease of working-age population
4.2.1 Health promotion
4.2.2 Trainee programs
4.2.3 Employee development & training
4.2.4 Ideas exchange
4.2.5 Occupational safety
4.2.6 Premiums
4.3 Beiersdorfs response to Gender, ethnic origin and race factors

5. Areas for improvement

6. Conclusion

Appendix

Life expectancy forecast graph:

Age structure forecast graph:

List of References

Task 1

1. Executive Summary

Nowadays the interface of the external and internal environments is of great importance. Company mostly can influence their internal environment, but they generally have less influence on the external environment. Furthermore, the demographic change is challenging most companies. On the one hand, they have to adjust to the changing customers' needs and on the other hand they have to deal with the decline of the workforce on the labour market. As an leading international branded consumer goods company Beiersdorf is influenced by external and internal factors in many ways.

This report is divided into two parts. The first part will evaluate the internal and external environment of Beiersdorf. Based on the Beiersdorfs history development- management structure-employees environment-products-corporate strategy-marketing strategy the internal environment will be analysed. Furthermore, the external environment will be presented within the scope of the PEST analysis and Porter’s five forces. The second part will show how demographic factors influence Beiersdorfs policies and how the company has responded in the past. At the end, areas of improvement regarding demographic factors will be proposed.

2. Introduction

The Beiersdorf, based in Hamburg, is with more than 150 subsidiaries and 22.000 employees a leading international branded consumer goods company. The company is split into two divisions. The first division Consumer with its comprehensive range of skin and beauty products is the major focus of the company. The second division Tesa is one of the world's leading manufacturers of self-adhesive product and system solutions for industry, trades, and end consumers. Tesa AG was formed in 2001 as an independent stock corporation within the Beiersdorf Group. Beiersdorf, which was founded in 1882 by Paul Carl Beiersdorf, has developed into a global company focused on the worldwide growth market of skin and beauty care. Beiersdorf is Germany’s largest cosmetic company and is growing worldwide faster than the market. Its success is based on successful brands and regions with above-average growth potential, a related strict orientation on local consumer wishes, an optimized supply chain, and management expertise in a lean organization. Beiersdorfs NIVEA brand family is the global market leader in the mass market, while its Eucerin brand is an international leader in the area of dermocosmetics and la prairie has a strong position in the premium cosmetics segment. These brands are generating double-digit sales increases annually. Other leading international and regional brands such as Labello, 8x4, and Hansaplast are also part of the portfolio, allowing Beiersdorf to cover the entire spectrum of skin and beauty care - from medical skin care to luxurious anti-aging products. In 2008, the company generated sales of around €5.97 billion.

3. Internal and external environment

The graphic below shows everyone who has either an external or an internal relationship with the company. The company can influence for example their Human Resources Policy by hire or fire employees (internal factor) but cannot influence the government decisions concerning for example law regulation (external factor).

3.1 Internal environment

The internal environment involves everything within the organization, such as the organization’s structure and culture, its human relations policies and procedures, the skills and experiences of the staff, and so on. (University of Sunderland, 2005, p.4)

3.1.1 History Development

The history of Beiersdorf begun in March 1882 with a patent owned by the pharmacist Paul Carl Beiersdorf which describes a new method of manufacturing medicinal patch for percutaneous administration. This date is regarded as the actual date of the foundation of the company. In 1890, Oscar Troplowitz has taken over the company. In 1911, he introduced the first moisturizing cream of the world under the name Nivea onto the market. Today the Beiersdorf AG is a multinational corporation based in Hamburg, which is controlled by Tchibo Holding AG. Members of the Herz family hold Tchibo Holding. Please see appendix o find a detailed history timetable.

3.1.2 Company’s Management Structure

As an international Aktiengesellschaft (German Stock Corporation) domiciled in Hamburg, Beiersdorf is subject to the provisions of the German stock corporation, capital market and co-determination law, and the Company’s Articles of Association. The two executive bodies, the Executive Board and the Supervisory Board, provide Beiersdorf with a dual management and supervisory structure. Efficient corporate management is based on in-depth, continuous dialog between these two bodies. In addition, the Annual General Meeting serves as a decision-making body for shareholders and enables them to express their wishes and to participate in fundamental decisions to be made by the Company. Together, these three bodies are equally committed to promoting shareholder interests and the Company’s well being. (Beiersdorf, 2009.Corporate Governance, www.beiersdorf.com/investor Relations/Corporate­Governance/Management Structure.html, Date accessed 4/1/10.)

With more than 150 subsidiaries Beiersdorf is also globally present. You can find a detailed list of all countries the company is operating in the appendix.

3.1.3 Employees environment

As an employer, Beiersdorf is extremely conscious of its responsibilities to its workforce of about 22,000 people. After all, it is primarily the Company's employees who determine its success and, accordingly, who are also the driving force behind its social commitment. This respect has a long tradition. Back in 1912 Dr. Oscar Troplowitz was one of the first businessmen in Hamburg to introduce a 48-hour week, paid vacation, and breast-feeding rooms. Today, Beiersdorf offers its employees a wide range of high-quality voluntary benefits. These include a company kindergarten and other measures for combining working and family life, intercultural exchange pro-grams for employees’ children, professional development and training measures, as well as a wide range of cultural, sport, and preventive health activities.

Furthermore the company’s personnel policy is based on the following assumptions:

- Well trained employees expect challenging tasks in which they are able to demonstrate their ability to handle task using their expertise
- An adequate income isjust as important as the safety of the workplace
- Employees want to be fairly treated. This includes equal opportunities for both sexes and strict opposition to discrimination on the grounds of ethnic or national origin, religion, or age.
- Responsible employees want to be independent and want to make their own decisions. They expect open and fair discussions on the results of its work and the recognition for outstanding achievements.

(Beiersdorf Sustainability Report, 2009, p.124)

Intensive employee qualification was another Human Resources focus in 2008. Practically oriented measures ensured targeted initial training and further education for specialists and managers. The most important measures in 2008 included: “Integrated Innovation Management”, “INTOUCH with Consumers”, “INTOUCH with Shoppers”, and “Winning with Shopper Marketing”. (Beiersdorf Annual Report, 2008, p.55)

3.1.4 Products

NIVEA is a brand icon with a massive global appeal and an unparalleled success story that began in Hamburg, where NIVEA, the first-ever industrially produced oil-and-water-based cream, was launched in December 1911. Today, NIVEA is the largest skin and beauty care brand in the world, and is available in over 200 countries. In 2009 23,000 male and female consumers from 16 European countries voted NIVEA the most-trusted skin care brand for the ninth year running. NIVEA has always stood for reliable quality, user-friendliness, and good value for money. Security, trust, closeness, and credibility are the brand’s core values.

NIVEA is the most important and valuable of all Beiersdorf brands. NIVEA products contributed just under €3.7 billion to the Beiersdorf Group’s total sales (€5.971 billion) in 2008. Other successful products of Beiersdorf are: Labello, Hansaplast, Eucerin, 8*4, La Prairie, etc.

(Beiersdorf Sustainability Report, 2009, p. 55-82)

3.1.5 Corporate strategy- Passion for Success

The goals of the company are clearly defined: to continuously increase the market share in all areas through qualitative growth and to further improve our strong earnings situation. Beiersdorfer is aiming for a global market share in the skin and beauty care segment of 5.5% by 2010. In order to achieve these objectives the company’s “Passion for Success” Consumer Business Strategy has to be implemented successfully.

Basically there are four key points of the strategy as followed:

Superior Brands: Beiersdorfer aims to offer their consumers tailored, high quality products, working continuously on innovations. Excellent point of sale displays, advertising, and the efficient use of marketing and sales expenditures strengthen brands and clearly distinguish them from the competition.

Superior Supply Chain: The Company manages their global activities centrally in a global Consumer Supply Chain, which is tailored to their structure, partners, and markets. This makes Beiersdorf fast, flexible, and cost-effective. Furthermore Beiersdorf offers retail partners tailored solutions and deliver products to consumers even faster.

Clear Geographical Focus: Beiersdorfer stays close to their markets in which the company operates in worldwide and assign clear priorities. In addition to Western Europe, the activities focus in particular on regions with above average growth rates. These include Asia, Eastern Europe, and Latin America - and especially the countries of China, India, Russia, and Brazil.

Superior Talent in Lean Organization: Beiersdorfer demands and encourage performance, innovation, and optimization at all levels of the Company. Furthermore Beiersdorfer's strengths include efficiently aligned, central decision-making and management structures.

(Beiersdorf, 2009.Business Strategy, www.beiersdorf.com/about us/business strategy.html, Date accessed 4/1/10.)

3.1.6 Marketing

The brand name „Nivea“ meaning „white as snow“ accompanied many people since they are born. The most famous cosmetic cream of the world in the blue aluminum can is the basis for the economic success of the family brand „Nivea“. According to Interbrand „Nivea“ is one of the most valuable brands in the world and more than 2 billion euro worth. This is due to a very successful marketing strategy. Furthermore Beiersdorf launched an advertising campaign targeting mostly customers who are over 50 years old picture. Instead of using a young beautiful woman for the campaign Beiersdorf was the first company who uses an older women. Because of the success of the campaign many advertising agencies have specialized in advertisement for the 50 plus generation.

3.1.7 Future

The organic growth of the company is expected to continue to exceed the market growth in the future. One of the strategic goals will be the increase of the EBIT margin. But in the case of a significant slowdown in the economy, the company will maintain current earnings power in the best case. Nevertheless Beiersdorf still has opportunities for business development. These are based on the internationally oriented strategic positioning of the company, and particularly on the increased focus on the brands and increasing presence in growth markets. This process combines sales growth, long-term earnings power, a solid financing structure, and the stabilization of the innovation lead through the extensive research and development activities. The sustainable development of the company’s brands plays also a crucial role in establishing consumer trust in the products: NIVEA was again voted the “Most Trusted Brand” by Reader’s Digest in 2009 - a competitive advantage that offers particular opportunities given current sector developments. (Beiersdorf Annual Report, 2008, p.63)

3.2 External environment

The external environment affects every work team in the business, and also affects the business as a whole. Based on the “PEST analysis” and the “Porter’s five forces model” the external environment of Beiersdorf will be analyzed.

(University of Sunderland, 2005, p.4)

3.2.1 PEST analysis

A company exists within an external environment consisting of the actions of other players such as the government and competitors who are outside the business. A PEST analysis is a useful tool for understanding the ‘big picture’ of the environment in which an organization is operating. According to PEST the external environment is divided into the following forces:

- Political:

Trade restrictions, tax policy, employment laws, environmental regulations, tariffs, imports/ exports, taxation etc

- Economic:

Economic growth/ decline, interest rates, exchange and inflation rates, wage rates, minimum wage, working hours, credit availability

- Sociological:

Cultural norms, health consciousness, population growth rate, age distribution, global warming

- Technological:

Technological innovations, changes to financial decisions like outsourcing and insourcing

Political forces:

Political and legal forces influence the companies when laws and regulations are changed by governments in which the company is operating. They play a large role in the industry of cosmetics. They are mostly helpful for domestic but threatening for foreign companies. Beiersdorf is subject to many regulations and laws introduced by the German government but also by foreign governments. In 2005, for example, the French government forced all retailers to reduce their price by 2 %. This had a negative impact on the company meaning a return on sales. In 1989 the German government introduced the product liability law in which companies are fully liable for defective products. This also affects especially Beiersdorf with its wide range of products. In July 1976 the European Economic Community introduced an amendment to the directive on cosmetic products. It contains a list of identified substances which a company is strongly prohibited to use and a list of permitted preservatives, colorant and UV filter. Because of this Beiersdorf is limited in the production and development of their products. Furthermore Beiersdorf must fulfil the labelling regulations by the German government which demand Package label with easily read information. The information must contain manufacturer data, the purpose of the finished product, ingredients, and any warnings and instructions for its use. The legislation in Germany also gives Beiersdorf the opportunity to protect its inventions from abuse and copy by patent laws. Beiersdorf tries to find a dialog with policymakers and administration in order to prevent conflicts. The company does not view the government as a regulator but more as a partner. Therefore the company is a member of several institutes such as the „B.A.U.M.“ (German Environmental Management Association) or the „Centrum für Corporate Citizenship Deutschland".

Economic forces:

The global economy initially appeared to be relatively resistant in 2008 regarding the creditworthiness of financial market products and institutions in the USA and Europe. However, rising commodity prices and the extremely weak dollar increased growth risks. Concerns regarding price stability prompted many central banks, including the European Central Bank, to increase interest rates in the summer. In the late summer, increasing tensions on the financial markets led to speculation regarding liquidity problems at some financial market institutions in both the USA and Europe. Governments and central banks then immediately issued guarantees for financial institutions and savings deposits running into the billions and provided the money markets with liquidity. (Beiersdorf Annual report, 2008, p. 35)

The economic downturn had a negative effect on investor and consumer activity in the real economy. This was enhanced by restrictive lending policies of the banks. Due to this Beiersdorf had to register a decline in revenue and profit. The slowdown in growth also led to a recession in almost all developed economies. Despite the crises the unemployment rate in Germany has not significant changed. In 2009 3,432 million people were unemployment. This is just 155.000 more that last year. The combination of a recession in the real economy, a growing financial market crisis, and emerging fears of deflation prompted central banks to make large interest rate cuts. The European Central Bank (ECB) has reduced the base rate on an historic low of 1 %. Continental European economies were badly hit by these developments, recording significantly lower growth rates. At the same time, inflation increased, fuelled in particular by the rocketing oil and energy prices.

Sociological forces:

The selling of Beiersdorfis products depends on chain reactions. If there is a growing population rate worldwide or in local markets, the need for cosmetic products increases. Today approximately 82 million people live in Germany. But according to „Bundesamtes für Bauwesen“the population will decrease until 2025 by 1, 8 %. An important role plays the average age of the population. The average age of the German population is increasing (current status 43 years). Therefore Beiersdorf is forced to develop new products such as anti­aging creams for older target groups. Income distributions are also strongly interconnected with the consumers’ buying behaviour and lifestyle. If demands are made for high or low quality cosmetic products, the sales volume of the corresponding mid-range or high-end cosmetics products increase. In terms of global warming many people has changed their attitudes and buy more environmentally friendly products. As a consequence Beiersdorf uses less harmful substances for their products and is a member of several environmental organizations such as the Hamburg Eco-Partnership. Social responsibility becomes more and more important. Nowadays companies are responsible for their consumers and employees but also for the community in which they operate in. Companies build for example kindergartens or support sports clubs.

[...]

Excerpt out of 34 pages

Details

Title
Contemporary Development in Business and Management
Subtitle
Beiersdorf
College
University of Sunderland
Grade
73%
Author
Year
2010
Pages
34
Catalog Number
V173673
ISBN (eBook)
9783640939916
ISBN (Book)
9783640940103
File size
716 KB
Language
English
Notes
70%(engl. Notensystem) entspricht einer 1,0 lt. dt. Notensystem
Tags
SIM 337, Internal and external environment analysis, PEST analysis, Porter’s five forces, Demographic factors, Beiersdorf, University of Sunderland, Characteristics of the population in Germany, marketing strategy, Management Structure, Employees environment, Corporate strategy
Quote paper
Alexander Berger (Author), 2010, Contemporary Development in Business and Management, Munich, GRIN Verlag, https://www.grin.com/document/173673

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