Business Case Studies Sample Paper on Competitive Strategy

Competitive Strategy

Introduction

In August 2012, Axel Springer, the head of corporate sustainability and EU affairs Florian Nehm were being faced by a situation that threatened their newly implemented strategy of offering digital content on electronic reading devices that had contributed to boosting their revenues. There had been an increase in attention in the manner in which electronic reading devices were produced and certified for use. A number of issues were being raised concerning the raw materials for these products, which included working conditions, environmental issues and other issues affecting human rights in the country like Congo where the minerals were extracted. The multimedia company had so far managed to generate revenues totaling to £3,184.9 million in 2011 with more than 12,800 employees (Holfmann, Muller and Bhattacharya 2).

It was the responsibility of Nehm to ensure sustainability in the company and he had to come up with solutions that would handle the emerging challenges and risks that would affect the company’s success and its sustainability. The company’s digital expansion relied on electronic devices whose producers faced scrutiny for use of contested resources, which could lead to stigmatization of Axel and Springers products. Nehm was therefore pressed to find an appropriate solution that would ensure their products were not stigmatized resulting to collapse of revenues from the digital content (Holfmann, Muller and Bhattacharya 5).

The major issue was how he would handle this situation, which proved to be more difficult to almost another similar situation he sorted back in the 1990s relating to the sources of papers they used for their magazines and newspapers. In this case, the electronic devices they relied on to offer digital content were not purchased or sold by the company unlike the papers. Nehm was faced with the predicament of involving the CEO in coming up with a viable solution, finding the urgency and impact of the situation, the courses of action he could propose and whether he had an obligation to take any step himself. He also had to find out the relationship of the problem and the company’s social obligation and whether the issue should be left to those greatly involved in the minerals trade to solve it. He had to be aware of how much influence the company could have on creating an impact on the digital devices supply chain, which was not well put together.

Analysis and description

Axel Springer is a limited company that was founded in 1946 by Hinrich Springer and his son Axel. The company started publishing in 1952 and by 2011 it was the most popular daily newspaper in Germany and highly circulated in Europe. The publishing company was the third largest magazine publisher in Germany and one of the biggest in production of new papers. The industry change to that saw the adoption of new technology prompted the company to explore new and creative ways to gain revenues through digitization (Holfmann, Muller, and Bhattacharya 11).

Axel Springer had various strategies from its inception to the current period that ensured it remained highly competitive in the industry. It acquired other media as early as in 1953 like Die and Welt, which enabled it to have new magazines and newspapers in Germany. It made a political statement in 1966 by moving its headquarters to Western Berlin near the Wall that had been constructed only five years earlier. The company was not afraid to pass across any messages for instance and provoked rows through the type of journalism it practiced (Holfmann, Muller, and Bhattacharya 12). Nevertheless, the company was able to maintain its values, business model, and a unique way of doing things. Axel Springer had strong commitment to social and environmental responsibility, which was in accordance to the corporate values. Credible journalism was a major concern, motivation of employees their reputation among others.

The company issued an initial public offer in the year 1985 where it sold 49.23 percent of its shares and the remaining share was left in the control of Springer family. Its economic performance was one of those doing very well in Germany by mid 1980s. In the 1990s, the company was able to come up with an initiative that tracked the source of paper and then collaborated with several stakeholders to ensure that it remained committed in safeguarding environmental and social issues that were raised in production of paper (Holfmann, Muller, and Bhattacharya 12).

In the turn of the millennium Alex Springer was facing a decline in their main circulated media like Bild which dropped to 2.84 million from 4.56 million between 1998 and 2011 and paper based turnovers reduced to £1.63 billion from £1.88 billion between 2007 and 2011. To control the effect of this the company through its CEO Mathias Dopfner announced the new strategy that included becoming market leader in German language as main business, expanding internationally, and adopting digitization. To achieve these, the company was to be guided by creativity, entrepreneurship and integrity as their corporate values.

International expansion resulted to revenues of 32.9 percent being generated abroad in 2011, which was an increase from £383 million in 2006 to £1.05 billion. Axel and Springer was able to minimize risks and costs in its international expansion strategy through joint ventures with partners publishing locally. Since 1996, the company had become an international media company due to cooperation with media located in other countries outside Europe and paper circulation in countries like Mexico and China (Holfmann, Muller, and Bhattacharya 13).

In digitization, the company came up with the strategy of first offering some of its contents that was in print freely to internet users. This was meant to increase traffic and fetch some revenue from advertising. With time, some content was slowly introduced through innovative paid subscriptions to internet users. They also came up with apps like “iKiosk” and “Apple-ization” that continued to promote the digitization of their content. Culture changes initiated by the CEO saw the success of digitization and apple products contributed to increasing creativity, innovation, as well as productivity that increased Axel and Springer competitive edge. The company managers could also easily monitor the sale of the company’s products through iCockpit app; this ensured transparency and contributed to success of the company (Holfmann, Muller and Bhattacharya 14).

Axel Springer was able to handle an almost similar case in the year 1990 with what it was currently undergoing in 2012 when source of paper issue was raised. It was able to demonstrate its corporate responsibility through immediate courses of action taken at the time. Nehm was at that time actively involved and concerned about the environmental problems that could be caused by the paper they used as a raw material. He therefore sought to know more about the value chain of their final product which was from raw materials, production, the consumption and finally disposal or recycling. From then on, the publisher in collaboration with other stakeholders like Greenpeace came up with innovative ways that ensured their final products were achieved through a process that adequately protected the environment and social aspects involved. It was able to establish a transparent way in the chain of wood, pulp, and paper, as well as printing and recycling. They put effort in identifying all those responsible and involved as well as environmental organization to come up with projects that saw management and procurement of wood and raw materials. The company had control and power over their suppliers since they were a major customer of paper, which allowed them make contributions in managing a different sustainable resource (Holfmann, Muller, and Bhattacharya 9).

The major challenge that currently existed was how to find means of solving the risk faced by digital media due to the issues rising in use of digital devices. Some of these issues were gas emissions, deforestation, global warming, and pollution of air, soil, and water contamination by poor disposal of these devices. Nehm was already aware about the dangers posed by these devices to the environment and individuals and it was even likely that use of paper could be less destructive than digitization. The process of procuring the materials necessary for production of the devices was also another major challenge (Holfmann, Muller, and Bhattacharya 15).

The minerals necessary for the production of these devices were extracted in some countries like Democratic Republic of Congo, which held part of copper deposits considered to be the largest in the world. Despite having such huge resources the country is still poor and underdeveloped, violence is also very high in Eastern Congo regions. Other problems existing are child labor, recruiting children as soldiers, using land illegitimately, poor rights in property, causing damage to the environment, and lack of transparency in revenues as well as presence of illegal weapons trade. These among others pose a serious problem in ethics for those conducting trading activities with such countries to acquire raw materials for the production of electric devices (Holfmann, Muller and Bhattacharya 13).

Several initiatives and legal frameworks had so far been established to look at the conflict minerals that led to devastation of human beings. Institutions that include the government, NGOs, industries, and companies were actively being involved in tackling the issue. Pressures were mounted on consumers to trace their supply chains ensuring there was due diligence. It was therefore not possible to escape confrontations and cooperation at various levels. For instance, some of the key initiatives and legal frameworks comprise Extractive Industries Transparency Initiative (EITI) which advocated for increased transparency in transactions involving extractive industries between government and companies (Holfmann, Muller and Bhattacharya 12).

Due to raised awareness by some other means like the movie Blood diamond people also became skeptical about the origin of some of the products that they may be consuming. An immediate strategy was therefore necessary to improve the state of the world and people as well as enable Axel Springer will be in a position to meet their standards of sustainable value chain and protect its credibility as an investigative company in the media industry. Efforts in solving this conflict in affected regions and individuals were likely to be hindered by politics and economic factors forces that were not ready to accept changes since they would not benefit as much (Holfmann, Muller and Bhattacharya 12).

Alternatives

Florian Nehm had a number of alternatives in that could assist in finding an appropriate solution. They included involving the wider public in initiatives that were already set to curb the problem. Communicating to the CEO of Axel and Springer so that if any major decisions were needs he could receive the right support. He could use the company’s media to raise awareness in all parts of the world. Communicate with other stakeholders and encourage them to be involved as well in raising awareness. Involve more international efforts in controlling the issue, ensure audits and certification are performed before buying of products utilizing these conflict minerals as raw materials (Vallaster et al., 39).

Recommendations

 The recommendation in solving conflict mineral problems would first support the existing initiatives that are already fighting the problem. The company can do this by raising more awareness through their print and digital media in different countries targeting different stakeholders to rally them behind the already established frameworks. The other would be involvement of the CEO who is the top management to ensure that any required resources will be provided since he would be taking part in coming up with a solution. The CEO would also provide advice and authorize some of the initiatives that the company would undertake in solving the problem. It is also recommendable that Nehm come up with a strategy as soon as possible to prevent the company sustainability and success from being susceptible to risk. The company can come up with ways that can to influence stakeholders through control such that they end up complying with the necessary requirements to solve the problem (Vallaster et al., 44).

Work cited

Holfmann Anna, Muller Urs, and Bhattacharya CB. “Axel Springer and the boundaries of corporate responsibility”. ESTMT Case Study. (2014) 1-18.

Vallaster, Christine, Adam Lindgreen, and François Maon. “Strategically leveraging corporate social responsibility to the benefit of company and society: a corporate branding perspective.” California Management Review 54.3 (2012): 34-60.