Beiersdorf - how does culture impact on a small German multinational

Content

2. Executive Summary

3. Company description: Beiersdorf (BDF)

4. Cultural Framework: Hofstede
4.1. Measuring culture
4.2. Four dimensions
4.3. France - A High power distance culture
4.4. UK - The village market
4.5. Germany - The well oiled machine

5. Cultural values, beliefs and norms
5.1. The efficiency factor
5.2. Setting standards worldwide
5.3. Strength from within: the Beiersdorfers
5.4. What about growth policy?
5.5. Thinking globally, acting locally
5.6. Learning company

6. Analysis of Practices
6.1. The organization in practice
6.2. Beiersdorfers in practice
6.3. A learning company in practice
6.4. Quality in practice
6.5. BDF-checklist for business success in different cultures

2. Executive Summary

This work deals with the way Beiersdorf’s does business in Europe. It considers the German impact of this particular culture on local practices, such as the organisational structure, human resource issues, team working or employee reward systems. First we introduce you to the firm behind Nivea, a product that is well known worldwide. Beiersdorf, though a relatively small company, is present around the world and therefore worth analysing. We than picked a cultural theory to base our analysis on. We chose the cultural framework as discussed by Hofstede, which is accepted throughout the scientific world as a useful tool. We will explain what is meant by the four considered dimensions and say how the UK, Germany and France fit into this framework.

Then we outline BDFs values, beliefs and norms, as integral part of the Beiersdorf culture and how they partly reflect German values. In the end we will show how these values are set into practice in general and on a day-to-day basis.

3. Company description: Beiersdorf (BDF)

Beiersdorf was originally established in Hamburg, Germany in 1882. In 1911 Oskar Troplowitz invented a chemical formula and Nivea was born. Nivea is still the strength of Beiersdorf’s product portfolio. But soon other products followed and today Beiersdorf consists of three departments: cosmed (e.g. Nivea, Labello, Atrix), tesa (produces and markets adhesive products for industrial and private customers) and medical (e.g. Hansaplast, Elastoplast, Eucerin). Their products are always regarded as high-quality products.

It then followed a step by step growth until it became the leading international consumer goods company we are all somehow familiar with today. Indeed the 11 brands included in the company have in common few outstanding features, such as offering products for everyday use, with a very wide target market .Who has never heard of or used the blue pot of Nivea cream ?

Since 1994 Beiersdorf, when Rolf Kunisch, a former Procter & Gamble Manger, became CEO the internationalisation process of Beiersdorf has accelerated. Today Beiersdorf sells its products in over 100 countries and has become a cornerstone of health- and personal care in many different cultures, often being regarded as a native rather than a German product. But Beiersdorf is not internationally known just because of the type of its products. Merging into people’s daily life on an international scale is one of Beiersdorfs main objectives.

With only 17500 employees worldwide Beiersdorf has a turnover of 4.7 Billion Euros worldwide and profits of 460 Million euros. The company is not yet represented in all countries and all market segments. Plenty of room is left for expansion. Beiersdorf therefore follows a strategy called “growth in three dimensions”:

- creating dynamic sales opportunities by establishing new product categories ( e.g. Nivea brand extension “Nivea Beaute”, cosmetics)
- continuing to expand the company brands in leading positions to increase market shares (e.g. Nivea Sun , +3,5% in France)
- opening up new markets (e.g. establishment of a new affiliate in Croatia in 2000, joint venture with KAO in Japan)

The worldwide company growth, the sales and profit are given for each region:

- Germany: Sales up 3.2% , 1256 million ( 27.7% share of group sales)
- Europe excluding Germany: Sales up 17.6% , 1927 million (42.3% share of group sales)
- Americas: sales up 8.4% , 903 million (19.9% share of group sales)
- Africa/Asia/Australia: sales up 6.4%, 456 million (10.1% share of group sales)

Beiersdorf invests highly in research and development. Indeed, spending on this sector came to 92 million euro. As for environmental protection, Beiersdorf pursues a plan that starts with product development ends with the production process and is integrated in all business workflows. Investments made in that area are 40 million euros a year. Safety for their employees is very important therefore safety audits are conducted on the basis of international standards.

Today in their 120th year in history of the Beiersdorf Group, the reflection on core values and strengths is vital to face growing competition in a globalizing business environment.

4. Cultural Framework: Hofstede

4.1. Measuring culture

So how are we going to measure culture within Beiersdorf? In order not to remain on an anecdotal level of descriptions of different attitudes and practices within the Beiersdorf concern, we chose to use Hofstede as a framework. His framework not only serves well to identify differences between cultures but also differences that might arise within organisations. Hofstede’s studies are based on intensive research within IBM in more than 50 countries where IBM is located.

Hofstede identified major cultural patterns between countries, that helped to distinguish different beliefs and norms. The cultural dimensions he identified were “Power Distance”, “Uncertainty Avoidance”, “Individualism / Collectivism”,

“Masculinity / Femininity” and “Long- vs. Short-term Orientation”. Later on he added another dimension, “Confucian Dynamism”. We will omit the last two one though as the other four factors already outline the differences rather well.

So what is behind those four dimensions and more important how might those cultural values reflect in organisations?

First of all Hofstede makes an important subdivision. He distinguishes between values of societies and practices within organizations. He states that within organizations practices are usually shared and represent rather superficial manifestations of culture. When it is therefore nowadays often concluded that cultures converge, that is barely the recognition of similar practices that more and more become the same, mainly due to the dominance of the US. The underlying cultures did not necessarily change and the opinions on those practices can still differ widely.

Secondly recognising that culture primarily affects values and norms of individuals, and that the link between culture and recognisable structures and practices within specific companies is indirect at best, the important part therefore becomes to find out which values dominate within the company and which nationality influenced them the most.

The analysis of an organization should perhaps therefore follow three steps:

1. Which culture dominates a company’s values, its beliefs and norms?
2. How do these values influence and affect the actual practices of that company?
3. How are those practices seen from employees of this company who are from a different cultural background? Only afterwards will we try to see how culture affects the “way of doing business” in BDF.

4.2. Four dimensions

Let us start with the two dimensions that are most important for organizational structures:

- “Power Distance” (PDI) is probably one of the easier to identify parameters.

Hofstede defines it “as the extent to which the less powerful members of institutions and organizations accept that power is distributed unequally.” In other words people in high power distance cultures are much more comfortable with a larger status differential than low power distance cultures.

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- “Uncertainty Avoidance” (UAI) refers to the extent to which individuals feel threatened by ambiguous, uncertain situations and try to avoid them by establishing more structure. It therefore also includes the view towards competition and volatile markets. Are they seen as chance or as threat? Examples:

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The two other dimensions affect management issues more strongly:

- “Individualism / Collectivism” (IDV) describes the degree to which a society relies more on the individual or the group. A question particular important in this context is whether a single persons rights should be as important as those of the group or even the collective. It affects many different parts of management from motivational approaches to evaluation methods.

Examples:

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- “Masculinity / Femininity” (MAS) is probably the most difficult dimension as it associates stereotype gender roles with behaviours like assertiveness, achievement, acquisition of wealth or caring for others, social supports and the quality of life.

Examples:

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Before we start to describe the particular Beiersdorf culture, which is explainable through its history is certainly influenced by the German culture, we would like to show the importance of the above mentioned differences in three European countries that show very different tendencies.

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