Europe makes a fresh start - Roland Berger Strategy Consultants

Challenge Club 2005 Study
Europe makes a fresh start
The European management model

Challenge Club 2005 Study
Europe makes a fresh start
The European management model

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Contents
Management summary 3
Is Europe weak or strong? 4
> Growth gap in numerous EU countries 4
> Things are better than the mood suggests 5
Keeping Europe in shape for the future: the European
management model 9
> There are no "typically European" value chains
or revenue models 10
> Focus on new markets and unique products 10
> Characteristic leadership model 11
Outlook: Future challenges for European companies 21
The European management model: a forward-looking
perspective 24
> Building on existing strengths 24
> Evolving into trust-based organizations 26
> Fine-tuning innovative strengths 28
> Retaining distinctive characteristics while leveraging
best practices 30
Summary 32
The project team 34

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Europe makes a fresh start
Management summary
Comparisons of European companies with companies from other parts
of the world – especially the USA and Asia – often emphasize the former's
need to catch up. European production is too expensive. The Europeans'
profits are too low, and they pay too little attention to shareholder value.
These and similar criticisms are frequently leveled at firms on the Old
Continent. If one resists the temptation to "tar them all with the same
brush" and instead takes a closer, more analytical look at Europe's corporate
sector, however, a far more varied picture emerges – a picture in which the
Europeans are by no means cast in a dim light. The 25-member European
Union ("EU-25") constitutes the world's largest single market. The global
leaders in various key markets come from Europe. And a number of
European countries are enjoying excellent growth and maintaining
a keen competitive edge in the global arena.
Moreover, such impressive performance is actually attributable to these
companies' peculiarly European approach – what we call the "European
management model". This model comprises a set of characteristic features
that relate to value chains, the product/market combination, revenue
models, and a specific approach to management. It reflects the conditions
and constraints that prevail in Europe and provides a perfect fit with
Europe's domestic market, which remains a picture of diversity. By
highlighting differences relative to the management models applied by
companies in other regions of the world, this paper examines the positive
and negative impact of the European model on companies' international
competitiveness. This static analysis is followed by a look ahead in which
we analyze the challenges and opportunities that European companies will
encounter in future. We also explore necessary adjustments to the European
management model. The bottom line is that European companies do not
have to become "more American" if they want to remain successful. On
the contrary, they must become "more European".

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Is Europe weak or strong?
Right now, most pundits would not exactly portray Europe as a muscular,
successful economic area brimming with self-confidence. It is rather seen
as a kind of ancien régime whose many and varied problems cannot be
resolved overnight and will demand a concerted effort on all sides.
European policy alone finds itself confronted by tremendous challenges.
In particular, France's and the Netherlands' rejection of the European
constitution has noticeably slowed the process of political progress. To date,
insufficient grass-roots acceptance of the EU has effectively prevented the
latter's organizations from getting in shape for the future. At the same time,
the EU only recently swelled its ranks from 15 to 25 members, creating a
lumbering behemoth in which rapid-fire decision-making is difficult, to say
the least. Witness the discussions surrounding how the budget should be
spent: The Common Agricultural Policy still swallows almost half of the
EU's entire budget, preventing that money from being channeled into
forward-looking research. Europe is thus squandering significant growth
potential – potential it desperately needs to exploit if it is to keep pace with
the USA and Asia. Meanwhile, "eurocracy" is spreading relentlessly, while
the much-vaunted subsidiarity principle is taking more of a back-seat role.
Growth gap in numerous EU countries
The EU countries also lag behind in terms of economic dynamism. In the
period from 1994 through 2004, economic growth in 12 of the 15 "old"
member states trailed that of the USA. Gross domestic product (GDP) rose
faster than that of the USA only in Ireland, Luxembourg and Finland.
To make matters worse, the continent's three economic heavyweights –
France, Italy and Germany – are at the bottom of the table. Germany has
performed worst of all, with growth averaging barely half that of the USA.

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Europe makes a fresh start
EU-15 easily outstripped by US economy in the past ten years
Average GDP growth p.a., 1994–2004 [%]
7.7
IR
4.7
L
Source: EIU
3.7
FIN
3.4
US
3.4
GR
3.1
Is the EU in general – and its economy in particular – really a "sick man"?
At first glance, the diagnosis might appear to be accurate. The mood
prevalent among economic experts also seems to substantiate this view.
The ifo Institute regularly polls the opinions of experts from a variety of
countries. For some considerable time, the economic climate in Western
Europe has been marked down sharply relative to North America and Asia.
Taking 1995 as its base year (100) for all three regions, the ifo index for
the second quarter of 2005 stood at 104.2 for North America and 104.6 for
Asia, but only 83.6 for Western Europe. Moreover, this figure has dwindled
consistently since the third quarter of 2004.
Things are better than the mood suggests
E
3.0
UK
SWE
Despite all these problems, Europe is nevertheless in a strong position.
By and large, the current subdued mood reflects uncertainty rather than
weakness. Things are in fact better than the mood would suggest. Let us
look at just a few (of many) examples that show why Europe has every
reason to be upbeat about its economic future.
Largest single economic area in the world: GDP of EUR 10.9 trillion makes
the EU-25 the largest economic area in the world. This figure compares
with just under EUR 10.2 trillion for the USA, EUR 5 trillion for Japan,
a good EUR 1.5 trillion for China and a good EUR 600 billion for India
(all figures for 2004).
2.9
2.4
NL
2.4
P
2.4
DK
2.3
EU-15
2.3
B
2.2
A
2.1
F
1.7
I
1.6
D

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On the population side, the EU-25 (457 million) is exceeded by China
(1.3 billion) and India (1.1 billion), but ranks way ahead of the USA
(293 million) and Japan (127 million; all figures again for 2004).
Stable environment: Although Europe is a composite made up of so many
countries, it enjoys remarkable political and social stability, bearing in mind
the dynamics of recent accessions to the EU and the tremendous upheavals
of the past 50 years. By comparison, it took the federal states that today
constitute the USA 172 years to band together. It is also important to
remember the huge political, social and economic upheavals that followed
the fall of Communism in Eastern Europe. With the exception of the former
Yugoslavia, all of the conflicts that occurred after the Iron Curtain was torn
down have been resolved peacefully. All EU member states – and indeed
most other European countries – are stable, functioning democracies.
Compared to most non-European countries, the EU's social structures are
balanced enough and tolerance has sufficiently deep roots to ensure that
excessive tensions are few and far between. It is precisely this that upholds
the attraction of EU membership to further candidates for accession.
High level of education: The PISA study found that individual European
countries still have a lot of work to do to improve the school education they
provide. Notwithstanding, European education in general sets the standard
and continues to be a world leader. This is equally true of schooling, higher
education and vocational training. Among the continent's leading lights are
Finland (in school education) and Germany (in vocational training).
Social market economies: For all the reform processes that are currently
underway, Europeans remain committed both to the ideal of performance
orientation and to the principle of solidarity with the weaker elements of
society. Within Europe's existing social market economic structures, the
"social" component varies in nature and scope from country to country.
Yet not a single country wants to abandon the principle completely. This
too contributes to social stability which, via the agents of confidence and
security, drives consumption and positively impacts the economy.
Europeans are the strongest "global players": 14 of the 20 most globalized
countries are European countries – and 12 of them are in the EU. Four
European countries rank among the top five: Ireland (1st place), Switzerland
(3rd place), the Netherlands (4th place) and Finland (5th place).
The degree of globalization is measured in terms of economic integration,
the spread of network technologies, the international orientation of the
population at large, and the scope of international commitments on
the part of the political leadership.

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Europe has the benchmarks "in-house": Europe is a multi-faceted construct.
One advantage of this fact is that each country can learn from its neighbors.
One success story that has set an example for other countries is the development
experienced in recent years by Finland and Sweden. The economies
of both countries were still contracting as late as the early 1990s, putting
them at the bottom of the table in the EU as a whole. Today, however, they
are expanding at well above the EU average. Over the past decade, Finland
has even outstripped the USA, growing at an average of 3.7% per annum
and ranking third in the EU. Finland and Sweden occupy pole position and
third place respectively in the global macro-rankings published by the World
Economic Forum, and second and fourth place respectively in the microrankings.
The macro-rankings are calculated based on the following criteria:
technological innovation, quality of public institutions, macroeconomic
environment. The micro-rankings take account of the following criteria:
sophistication of operating practices and strategies of companies, quality of
the national business environment. There is a relatively simple explanation
for the success of these two Nordic countries: They have invested massively
in research and development and in education. At the same time, they
have created an optimal climate in which to cultivate their information
and communication technology sector (for example by promoting regional
clusters of universities and businesses).
European companies are strong: Native European countries are the leaders
in a number of key markets. The automotive industry (BMW, Porsche,
Renault, PSA), mobile communications (Vodafone, Nokia, Ericsson),
environmental technology (Vestas and Gamesa Eólica in the area of wind
energy, for example), business software (SAP), process technology (Trumpf,
Schneider Electric, Simoldes), fashion/lifestyle (Inditex, Luxottica, Bulgari)
are just a small selection of the many industries in which European corporate
groups play a dominant role. From the number of technology leaders
classed as midsized companies (German examples include Krones, Giesecke
& Devrient and Beru), it is evident that size is not the issue. The finishing
brush strokes are added to this fine picture by the large number of niche
markets in which European firms again occupy an outstanding position.
Be they successful heavyweights or "hidden champions", however, one
key success factor is common to all of them: a rigorous focus on highquality
technological products.
Europe has successfully demonstrated its ability to cooperate: Whenever
European companies or government organizations work together, many
critics argue that selfish national pride comes to the fore and hinders
collaboration. At best, this is a far too superficial judgment. And in most
cases, it is quite simply wrong. The global dominance of GSM as a mobile

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communications standard is, for example, the fruit of successful collaboration
between Europe's national telecoms authorities. Back in the 1980s,
these authorities agreed to accept GSM as the digital mobile communications
standard and to introduce it simultaneously across Western European
countries in the early 1990s. The standard's success in Western Europe
paved the way to its successful adoption worldwide. Airbus is another
excellent example of how well inner-European teamwork can turn out.
At the same time, Fujitsu Siemens Computers and Renault-Nissan clearly
show that Europeans also know how to cooperate with companies from
other cultural backgrounds.
In short, Europe has every reason to hold its head up high and look ahead
confidently to the future. This being the case, let us examine what makes
European companies so unique, and to what extent their management
model helps them secure competitive advantages.

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Keeping Europe in shape for the future: the European
management model
A management model comprises four elements:
The value chain: The value chain offers a systematic way to carve out and
enhance competitive advantages. It is made up of a series of activities that
add value. Each organization identifies those strategically important activities
or functions that add value for the customer (M. E. Porter, 1980). Each
is free to decide how best to execute every link in the value chain (with the
exception of the corporate management function itself): by keeping them
in-house, collaborating with external partners, or outsourcing certain links
in their entirety.
The product/market combination: According to Ansoff's strategies for diversification
(Harvard Business Review September-October 1957, pp. 113-124),
the key question here is whether the products on offer are designed to
service old or new markets.
The revenue model: This model determines how a company generates revenues.
A media company, for example, will generate most of its revenues by
selling products or placing advertisements. A bank, on the other hand, will
generate most of its revenues by levying charges and interest.
The leadership model: This model encompasses all aspects of company
management, i.e. management objectives, the way in which the company
is organized, managed and controlled, and the management culture.
The four elements that make up the European management model
Value chain
No typically European models
Revenue model
No typically European models
Source: Roland Berger Strategy Consultants
European
management model
Product/market combination
> Focus on new markets and new products
> Focus on high-quality products and
unique design
> Close link with regional or national
heritage
Leadership model
> Considers all stakeholders and is
committed to durable value growth
> Heterogeneous mangagement styles in
the five main European regions
> Empathizes with collaboration partners
and customers

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There are no "typically European" value chains or revenue models
A closer examination of these four elements reveals that no specific value
chains or revenue models can be described as "typically European".
Characteristic distinctions between Europeans and their American and
Asian counterparts can only be identified in isolated industries. Europe's
banking industry, for instance, is dominated by universal banks that operate
heavily integrated value chains. Interest income is their primary source of
revenues. Banks in the USA tend to have a narrower focus. Retail banks
and investment banks act separately. Investment banks earn their money
not from interest spreads, but from fees and commissions, as well as from
the profits (or losses) made on their stock and bond trading activities.
Differences of this kind naturally have their corollary in other industries
too. However, it is impossible to claim that European companies are more
heavily integrated than American or Chinese firms, say, or that European
companies typically prefer one particular revenue model whereas American
or Asian firms generally adopt a different one.
European firms do, however, have to be careful to ensure that their value
chains are highly efficient. This is because of their high labor costs. The
issue is not that European companies should strive for cost leadership –
which would be a futile exercise. Rather, they must endeavor to manufacture
their unique products (which we discuss in the section that follows)
as cost-efficiently as possible. Cost efficiency is, therefore, an imperative
for European companies.
Focus on new markets and unique products
Clear distinctions do exist, however, in the area of product/market
combinations. There are, of course, plenty of US firms with a global reach.
Exxon, Microsoft, Coca-Cola, McDonalds and Ford are only a few of the
most prominent examples. Yet there are also very many US companies that
concentrate heavily on the domestic American market. That is not the case
in Europe, where, especially in the smaller countries, inherently limited
national markets more or less dictate the need for an international orientation.
For companies such as Nokia and Ericsson, the markets of Finland
and Sweden very quickly became too small. They therefore had no choice
but to broaden their horizons and press into new markets. This principle
is by no means restricted to Europe's smaller nation states, however. Its
biggest economies play the same game – the prime example being Germany,
whose strengths as an exporter are well documented. In an age of globalization,
European companies therefore have a definite advantage. They are
used to bridging linguistic and cultural divides

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(a singularly important issue discussed below in the section on "Empathizing
with collaboration partners and customers"). They also master the art of
analyzing new markets – and know which tools they need to conquer
those markets.
European companies also exhibit common characteristics in terms of the
products they sell. They generally tend to market very high-quality products
that boast unique designs and are closely linked to their regional or national
heritage (Swiss watches, German cars and French wines, for instance).
Luxury brands, of which a large majority are indigenous to Europe, provide
a classic example. The high quality and unique nature of European products
rank as two valuable assets that are well received on the markets of the
world. By analogy, customers around the globe naturally tend to associate
Europe with diversity. In light of its high labor costs, Europe is effectively
condemned to rolling out extremely high-quality products. The EU's eastward
expansion will not do anything to change this. On the contrary, opting
for lower-quality products at lower prices just because companies now have
access to nearby low-wage countries would be a serious mistake. Instead,
production processes in Eastern Europe must be brought up to Western
European quality standards – which is indeed already the case at many
Eastern European companies.
Characteristic leadership model
More so even than in their product/market combinations, European and
non-European companies differ sharply in the leadership models they apply.
At first glance, this statement may well raise an eyebrow or two. In the age
of globalization, is it not safe to assume that corporate management styles
all over the world have long since converged? That there is no longer any
major difference between the way, say, a Belgian company is run and the
way a US American or Japanese company is managed? Has the crossfertilization
spawned by globalization not leveled out the differences that
used to exist? By no means. Deep-rooted perceptions and practices that
have grown up over many decades are extremely resilient. In all probability,
they will likewise stand up even to the radical changes that the future holds.
In the context of leadership models, these perceptions and practices notably
include different views on which groups of stakeholders management must
bear in mind when taking entrepreneurial action. Other issues include
the nature of the goals that guide a company, the precise manner of leading
people, and accepted behavior in dealing with collaboration partners –
especially those that hail from other cultures. Many of these perceptions
and practices naturally derive from cultural values and attributes.

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Logically, therefore, differences in the history of Europe, America and Asia
also explain many of the differences between the companies that these
regions have brought forth.
Europe as a notional frame of reference
From the days of the Ancient Greeks and Romans through medieval
Europe to the Europe of the Modern Age, people's understanding of
cultural, geographic and political borders has experienced constant
change within what we today call Europe. Aside from language,
architecture and developments in art, one thing has nevertheless
always bound the peoples of Europe together down through the ages:
A set of values that transcended the principality, kingdom or nation
state, and that still shapes our image of Europe to this day.
The right of Roman citizenship, extended to all free subjects of the
Roman Empire by Caracalla in 212 AD, also laid down a standard
for acceptable values: virtue (virtus), freedom of thought and action
(libertas), honor (gloria), reverence and piety (pietas), faithfulness
and reliability (fides), and public position and dignity (dignitas).
After the fall of Rome, Christian values spread throughout the whole
of the former Roman Empire by about 600 AD. Almost everywhere in
Europe, Christian values rooted in Roman Catholic doctrine became the
formative element throughout the Middle Ages. Crusades, pilgrimages,
the construction of monasteries and cathedrals, and even the inquisition
all testify to a profound piety that transcended the borders of worldly
kingdoms.
Beginning in the 14th century, Italy was once again the epicenter
from which tremors reverberated at irregular intervals across much
of Europe, as the Renaissance understanding of mankind accompanied
the transition from the Middle Ages to the Modern Age (by about 1600
AD). The spirit of humanism now placed man as an individual at
center-stage.
Another example of cross-border values in Europe is found in the
spiritual ideals of the Enlightenment. Reason, the courage to voice
criticism, spiritual freedom and religious tolerance were to overcome
tradition, religious dogmatism, ecclesiastical and state authority
(absolutism) and both moral and feudal prejudices.

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Modern Europe paints the following picture. Any sense of explicit identification
with Europe is very limited indeed. Even so, shared religious,
family, democratic and other values are still held in high esteem. Contrary
to the assumption of a completely secularized modern world,
for example, 75 percent of Europeans today refer to themselves as
"religious". Shared historical developments have thus brought forth
a kind of canon of common values that have, however, not (yet)
caused the continent's inhabitants to see themselves first and foremost
as "Europeans".
(Atlas of European Values, University of Tilburg. See
http://www.atlasofeuropeanvalues.com/English_press.html)
Let us turn our attention to the distinguishing characteristics of the
European management model. In doing so, let us analyze the advantages
and drawbacks of this model relative to other models practiced in the
arena of global competition.
1. Consideration for all stakeholders and a commitment to durable value
growth
Companies operate within a web woven by different groups of stakeholders.
Owners, employees, creditors, customers, suppliers, the government,
society at large and even the media all pursue their own interests and
objectives. These objectives are condensed into the claims and expectations
they place on companies.
Shareholders, for example, expect the value of the capital they have
invested to grow. They are therefore interested in stock price gains and
dividend payouts. Employees seek job security and are keen to maximize
their quality of life and work. They therefore judge the company by different
criteria: How safe and interesting is their job? How much do they earn?
How much leisure time do they enjoy? What career prospects lie ahead of
them? How do they rate management performance? And what say can
they have in the affairs of the company? This list can be extended to
include other groups. Figure 3 summarizes the interests of the main
groups of stakeholders.

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The interests of stakeholders
Stakeholders
Shareholders Increase in the value of
invested capital
Employees Job security, quality of
life and work
Capital backers Interest on/repayment of
invested capital
Key interest Claims and expectations placed
on the company
Source: adapted from S. Bötzel, A. Schwilling, Erfolgsfaktor Wertmanagement.
Unternehmen wert- und wachstumsorientiert steuern, Munich 1998
> Stock price gains
> Dividend payouts
> Influence on company management
> Optimized income/leisure ratio
> Job security/quality, personal development
> Information and co-determination
> Interest income/punctual capital repayment
> Information
Customers Satisfaction of needs > Good value for money
> Good service
Suppliers Profitability and value
growth
Government/society Healthy macro-economy,
social equity
> Acceptable margins
> Independence
> Secure, long-term relationship
> Information, possibly also co-determination
> Economic growth, jobs
> Taxes and other charges
> Environmental protection
When studying the different groups of stakeholders, it is important to
understand one principle: Long-term shareholder orientation and stakeholder
orientation are not mutually exclusive. Precisely the reverse is
true: When a company focuses its actions on sustainably increasing its
value, this serves both the interests of the shareholders and those of all
the other stakeholders.
This combination – reconciling the need to increase company value in
the long term with consideration for the interests of all stakeholders – is
a typically European approach. The belief that private ownership begets
an obligation to act in a socially responsible manner is far more widespread
in Europe than, say, in the USA, where the primary focus is on maximizing
profits in the interests of the shareholders. As can be seen from the many
investment companies that buy up firms, carve them up and then quickly
resell the "choice cuts", this kind of approach can often have a very shortterm
orientation. To relativize this statement somewhat, it must be said
that US companies do tend to be heavily involved in charitable activities.
Even here, however, they only hand out "what is left over at the end".
This cannot be equated with a stakeholder orientation.

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The European model manifests itself in the following ways, for example:
New work models are developed in collaboration with employee councils
and trade unions in order to protect jobs and company sites, e.g. the
"Flexicurity" model (see http://www.euractiv.com) In other words,
employee councils and trade unions do not merely seek to defend their
"acquired rights" and represent short-term interests. Instead, they play an
active part in crafting solutions that will affect the future of the company as
a whole. European companies leverage the creative potential of employee
councils and trade unions to arrive at solutions that are based on consensus.
Management compensation is tied more closely to long-term company
performance than in the USA. Board members in Europe have significantly
longer tenures than their counterparts in the USA. In addition, the ratio of
fixed compensation components to performance-linked bonuses and shortterm
stock option programs is more balanced in Europe than in the USA. In
the USA, packages containing millions of stock options often constitute the
principal component of top management compensation. Since they appear
neither on the income statement nor on the balance sheet, however, they
are beyond the control of shareholders. Accordingly, stock options with a
short-term focus have made numerous US American managers rich while
plunging the companies they led into deep crisis only a short time later.
Companies take criticism from consumer protection and environmental
activists seriously. They do not merely react to such criticism, but also
proactively address issues such as product safety and environmental impact.
Compared with companies in other parts of the world, European firms
attach greatest importance to the subject of corporate responsibility. This
contention is substantiated by the "Accountability Rating 2005", a global
study of corporate responsibility (see http://www.accountabilityrating.
com). The rating found that 88 percent of European companies agree
with internationally recognized standards of human rights and environmental
protection – against only 24 percent in the United States. Moreover,
American companies evidence little inclination to align their policies
with the needs of other stakeholders. It therefore comes as no surprise
that European companies – BP, Shell Group, Vodafone, HSBC Holdings
and Carrefour – occupy the top five slots in the published ratings.
Conflicts of interest between different stakeholders can, of course, occur.
In such cases, companies are forced to weigh up these divergent interests.
Yet it is precisely here that the focus cited above – a commitment to longterm
company value growth – provides the best yardstick against which
to measure conflicting interests. Long-term value growth programs only

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make sense (and can only truly be quantified) if the company can operate
within a stable context. And one key factor that determines this stability
is the extent to which stakeholder interests are astutely managed and
balanced.
Roland Berger Strategy Consultants is convinced that the European model
holds out the promise of greater success. We believe that a focus on sustainability
and the willingness to factor all stakeholders' interests into corporate
strategy will pay dividends in the long run.
Job placement agencies – stakeholder orientation breeds success
Around the world, the market for commercial job placement is growing
at an impressive rate of some eight percent per annum. The market
leader in this sector is Switzerland's Adecco, which reported net income
of around EUR 330 million in 2004. One of the keys to Adecco's success
is its pronounced stakeholder orientation, which is reflected in the
company's code of conduct in particular. Equal importance is attached
to employees, customers, shareholders, suppliers and society at large in
the countries in which the company does business. Substantial evidence
proves that this commitment is more than just empty words. Witness
Adecco's ongoing programs for disabled employees and for former
Olympic athletes, as well as the company's lead role in producing
a sustainability report for this industry.
In the same market, Manpower – which ranks number three in the
world – is a good example of how US companies can do well in Europe
if they too adopt a stakeholder-oriented approach. Manpower generates
80 percent of its sales in Europe and is committed to values very similar
to those of Adecco: an entrepreneurial spirit, cultural diversity, and a
focus on all its stakeholders. A glance at the company's web presence is
very revealing. In place of the customary American "one-dot-com-fits-all"
approach, Manpower has taken the trouble to develop country-specific
websites. It also runs an international partner program with non-profit
organizations that have a strong focus on Europe.
2. Heterogeneous management styles
Different companies are run along very different lines even within Europe.
The following statements are based on an MRG Research Group study

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("Going global: What U.S. and European leaders need to know about each
other", 2003) and on analyses performed by Roland Berger Strategy
Consultants. These differences are largely attributable to the varying
corporate structures and cultures that prevail in different parts of Europe.
Broadly speaking, distinctions can be drawn between five main European
regions:
Scandinavia: Hierarchies tend to be less important in Scandinavian
countries than in any of the other regions. Team orientation and collaboration
are emphasized far more strongly. Given the relatively small
size of Scandinavia's domestic markets, large companies cultivate a very
powerful international outlook. This is often reflected at board level: It is
not unusual to find non-natives among the top management of companies
that have international operations.
The UK and Ireland: Of all European companies, British and Irish ones
traditionally exhibit the greatest similarities with US American firms. This
is true both of their structures (many companies are publicly traded) and
of their corporate goals (shareholder value is often an article of faith in this
region). Cultural differences do show through in the way companies are
managed, however. Hierarchies play a more important role in the USA than
in Britain, for example. Also, decision-making at American companies tends
to be based more strongly on top management decrees, while input from
the lower ranks is less significant. UK companies fiercely defend the
independence of each hierarchical level and strive to win employee
commitment to management decisions.
Central Europe (in particular France and Germany): Hierarchies are of
moderate significance in France and Germany. Managers in these countries
pay a lot of attention to communicating with their people. Feedback from
superiors to their staff – and vice versa – can be very open and direct,
especially in Germany. This may appear rather unusual to people from
other cultural backgrounds. Written rules play an important part in
corporate France and Germany, as in all walks of life in these countries.
In both countries, however, companies have become adept at making
such bureaucracy work in their favor.
Southern Europe: Family businesses are very common in Southern Europe
in general and in Italy in particular. Long-term goals are also the norm.
Family businesses adopt a paternalistic approach, and hierarchies are very
important. The strengths of Southern European managers derive from
their communication skills and their ability to motivate others and get
employees to buy into their ideas.

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Eastern Europe: Market economic structures have only been around in
Eastern Europe for 15 years or so. Accordingly, the corporate landscape is
nowhere near as stable as it is in Western Europe. Hierarchies are important
in large companies, but less so in new startups. Advanced management
techniques are less widespread than in the West. In this region, individual
leadership talent takes precedence.
Diversity is thus a characteristic feature of corporate management in
Europe. At first glance, this might appear to put Europe at a disadvantage
compared to other regions of the world – for instance when companies
from different parts of Europe seek to collaborate or even merge.
Contrasting corporate cultures and management styles can easily lead
to frictional losses in such situations. Well-managed collaboration can
nevertheless turn this diversity to its own advantage. Precisely this
constellation allows companies to learn from each other, to pick out
the best leadership practices, and thereby to create a new corporate
entity that is better than the sum of its predecessors. Needless to say,
that demands a great deal of openness, the will to change, and time.
This issue is explored in greater depth in our discussion of the European
management model (see below).
3. Empathizing with collaboration partners and customers
For all the differences in the way they go about internal management,
European companies have one crucial factor in common in the way they
approach the outside world: They are all accustomed to working with
companies from different cultural backgrounds and with different
languages. Back in the days when national borders were perhaps more
important than they are today, this skill was vital if companies were to
realize economies of scale and put cross-border clusters to profitable use.
These clusters are themselves one of the reasons why European firms so
readily engage in cooperation. According to one recent meta-study, Europe
has upward of 450 such clusters, against barely 150 in the USA (Cluster
Meta-Study 2002, Dr. Claas van der Linde. Institute for Strategy and
Competitiveness, Harvard Business School).
The ability to empathize with all kinds of different collaboration partners
naturally benefits European companies not only "at home" in Europe, but
also throughout the globalized economy. One need only think of the importance
of China as a cooperation partner – and of the cultural challenges
raised by negotiating with Chinese businessmen.

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Empathy is an invaluable tool in the European management toolbox.
It builds on experience and is integral to the behavior of managers and
employees alike. It is not something that can be copied or learned at short
notice. In other words, companies that possess this soft skill have a competitive
advantage in the medium to long term.
Suppliers, joint venture partners, resellers and end customers all stand to
benefit – as the company does itself – when people are able to collaborate
smoothly. The benefits do not stop there, however. Empathy is also tremendously
important when acquiring and integrating other companies. Here
again, European companies have repeatedly demonstrated a sensitive
approach that carefully avoided placing too-heavy demands on the staff
of newly acquired companies, for example. One case in point is Vodafone's
pan-European shopping spree. The mobile communications network
operator continued to trust national management teams even after their
companies had been acquired. In the same vein, national brands were only
gradually migrated to "Vodafone" over an extended period. An example
from the oil industry tells a similar story: When BP recently acquired
Aral, the name Aral was deliberately retained. In its advertising, BP even
trumpets this fact as evidence that is allowing the company to stay true
to its heritage.
Who invented it? And who got everybody using it?
Motorola can rightly be regarded as the inventor of the mobile phone.
Yet Nokia, not Motorola, became the world's leading telecommunications
company and largely gave this branch of industry the shape we
know today.
In 1983, Motorola launched the Dynatac, the first commercial mobile
phone to appear in a "modern" format. By 2004, however, Nokia's
market share (30 percent) was around twice that of Motorola, while its
brand value (sixth in the 2005 Interbrand rankings) was streets ahead
of its US rival (73rd). Today, Nokia owns 41 percent of all major GSM
patents and 27 percent of all third-generation (UMTS) patents. Again,
both figures are way ahead of Motorola, which manages just 4 and 12
percent respectively. Nor has the gap been closed: In 2004, Nokia was
again out in front with 805 new patent applications.

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What happened in the intervening 20 years?
It would be easy to conclude that innovation is the key driver of market
success, and that Nokia was simply more innovative. That is true as far
as it goes – but it does not go far enough. Because Nokia did something
very European in order to become much more than merely the innovation
leader. Instead of wielding its patents like cudgels to keep competitors
down and corner a huge market share for itself, Nokia worked hard
to increase the size of the market itself. It did this although it could
easily have trod the path of a Microsoft. A recent study conducted by
market research company Informa shows that, given fair market prices
for licenses (the strategy pursued by Qualcomm, for example), the fees
for third-party manufacturers could easily reach 25 to 30 percent of the
selling price.
The key to Nokia's success was (and still is) its practice of selective
collaboration. Suppliers, partners, customers and even direct competitors
are involved as far as possible. The company only resorts to direct
confrontation if all else fails. (The patent and copyright violation lawsuits
against Vitelcom and Sagem are the first of their kind to be launched
by Nokia.) Its policy of networking and its open source projects enabled
Nokia to make optimal use of its own R&D budget to improve its technology.
The Finnish company grew big itself, but also birthed a whole
cluster of partner firms. This network is now accelerating innovation
in an open climate. Clearly, Nokia's claim – "connecting people" –
applies not only to its customers, but also to the company's strategy
of working very closely with its partners.

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Outlook: Future challenges for European companies
Europe's companies therefore have no reason whatsoever to be pessimistic
about where they are at today. But can the same be said of their future? To
answer this question, we must examine those trends that will largely shape
the future development of Europe's economy. As we will see, these trends
do not split neatly into black and white. Some of them at once constitute
threats and opportunities.
China and India – a source of both competition and potential for Europe
Companies from China and India will increasingly compete with European
firms. One reason is the persistently vast differential in wage costs: In 2004,
an hour's work cost a good EUR 27 on average in Germany, over EUR 19
in France and EUR 18 in the UK – against just 80 cents or so in China and
as little as 70 cents in India. Another reason is the speed with which both
countries are closing in on Europe's technology lead. China and India are
benefiting both from collaboration with foreign companies and from their
own size: Huge numbers of engineers graduate from either country's
universities every year.
Conversely, China and India also help European companies to establish a
global footprint. Europe should therefore regard both countries more as a
source of potential than as a competitive threat. The two sprawling nations
are already popular offshoring targets for Western firms – a position both
sides are eager to ramp up in future. Moreover, both countries are also
becoming increasingly important as sales markets. In the past, European
companies mostly exported capital goods to China and India. As purchasing
power grows, however, demand for consumer goods is likewise swelling
in these countries.
EU expansion – tremendous opportunities
We have often said that the expansion of the EU will place added demands
on the incumbent member states. Far more substantial, however, are the
opportunities that the new member countries afford the European economy.
Eastern European countries give Western European firms a chance to optimize
their value chains by nearshoring certain parts of them. Although local
labor is often very highly trained, average labor costs remain considerably
below Western levels. Close geographic proximity, plus the fact that
contacts predated the EU's expansion in many cases, constitute further
powerful arguments in favor of Eastern European countries. Interestingly,
the fact that more and more Western European companies are also now
considering the new Eastern European EU members as potential targets

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for offshoring projects means that China and India now face competition.
For Western Europe, that can only be beneficial.
Corporate responsibility – even more important for firms in future
Today's companies can no longer afford to ignore the world around them
and concentrate solely on maximizing their profits. Public opinion and the
influence of the media have grown too powerful: The impact of such
corporate action would no longer go unnoticed. Defective products,
pollution of the environment, injuries to employees caused by the
production process, the manipulation of balance sheets and other forms
of managerial malpractice are brought to light very quickly and can do
enormous damage to a firm's reputation. Attempts to obscure the truth
or consciously circulate disinformation can make matters even worse.
The only thing that helps is transparency and collaboration in respect of
all a company's stakeholders. We have already noted how important such
collaboration is – and the enviable position enjoyed by European companies
on this score. We also believe that corporate responsibility will become even
more important in future. As technology becomes ever more difficult to
understand and interlocking corporate groups grow ever more complex,
the public will take an even longer, harder look at commercial enterprises.
Regions – gaining in significance
The importance of regions is growing even as the significance of national
borders is eroded by supranational organizations such as the EU itself. There
is no inherent contradiction in this development. On the one hand, regions
convey a sense of identity. On the other hand, many regions – such as the
Euregio around Maastricht, which takes in parts of the Netherlands,
Germany and Belgium, the Basque region (Spain and France) and the Polish-
German border area around Frankfurt/Oder – already cut across national
borders. Companies will discover greater opportunities to collaborate within
such regions, probably leading to the formation of new regional clusters.
The EU's structural programs and trans-European networks actively support
the development of clusters. The aim is explicitly for structural collaboration
to promote innovation and greater efficiency. In other words, the focus is
no longer on R&D per se, but on more efficient R&D of the kind modeled
by Nokia within its cluster (see above).
Business models – ever more short-lived
The validity of this statement is closely bound with the speed at which
today's markets mature. Let us take the example of mobile communications.
This market has only existed for a little over 10 years, yet the underlying
business model has already changed several times. To begin with, mobile
communication was intended for corporate customers. Call charges were

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correspondingly high, and long-term contracts had to be signed to allow
staff to make calls within the mobile provider's network. The business
model was initially varied to tap retail customer potential. In particular,
prepaid cards were marketed that allowed customers to use mobile phones
with no contractual commitment. Rates were also lowered in order to target
the mass market. The advent of UMTS then introduced a new variation on
the business model theme. To recoup the money they have invested in this
new technology, mobile communication providers are now trying to sell
content (information, pictures, videos, games, etc.) – so far with limited
success. The most recent changes to the business model include the launch
of low-cost providers with very simple rate structures and the introduction
of flat rates.
In the case of mobile communications, it was primarily the revenue model
and the choice of target group that varied in short order. Yet business
models are exposed to changes on other levels too. The practice of outsourcing
links in the value chain – even as far as creating a virtual company
– is naturally of singular importance in this context. Puma is a good example
of a company that, 15 years ago, looked completely different than it does
today. Then, it was an integrated manufacturer of sportswear and sports
equipment. Today, it is a network company that concentrates on development
and marketing as its core competencies. Other activities are farmed
out to cooperation partners.
Obviously, major business challenges lie ahead of Europe's companies. Yet
precisely these challenges also open up new opportunities. The question is:
Are Europe's companies armed and ready to exploit these opportunities? To
find an answer, let us examine the European management model in light of
what the future holds.

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The European management model: a forward-looking
perspective
We have seen that the European management model offers advantages
that pay dividends especially in today's globalized world. Even so, just as
Europe's politicians are called on to improve the conditions within which
companies operate, the companies themselves must go forward and
sharpen their competitive edge.
Roland Berger Strategy Consultants sees the four recommendations that
follow as essential ways for Europe's companies to become competitive,
stay competitive, or extend their competitive advantages. They must:
1. Build on their existing strengths
2. Evolve into trust-based organizations
3. Fine-tune their innovative strengths
4. Retain their distinctive national or regional characteristics
while leveraging best practices
Building on existing strengths
The European company of the future will need a strong stakeholder orientation,
a long-term focus on increasing company value, and the ability to
empathize with its collaboration partners.
Let us begin with stakeholder orientation. After the shareholders, a
company's employees are one of its most important stakeholder groups.
On this front, systems of monetary incentives must be adapted more
extensively than in the past. Only then will firms be able to attract and
retain the talent they need to compete on technological development and
experience sustainable growth. Dedication must pay off, and must be
linked more directly to corporate performance.
To date, collective bargaining has focused almost exclusively on wage rises.
These, however, have become too rigid an instrument. Should profits fall
below expected levels during the negotiated period, agreed wage rises can
weigh heavily on the company. Conversely, should the company be more
profitable than expected, this static tool robs employees of their share in
corporate earnings. Not only managers' compensation packages, but also
the wage rises determined for "normal" workers should therefore also
include a substantial profit-linked component.

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A fixed (i.e. profit-independent) standard wage should guarantee the work
force a reliable source of income, while a profit-linked component provides
an incentive for them to optimize corporate performance.
European companies are also strong on customer orientation. The main
selling points for their products are high quality, tailor-made functionality
or service, and unmistakable design. European cars and appliances provide
two excellent examples. As a unique selling proposition, this strength must
be reinforced in order to justify the necessary premium markup. Service
delivery – one area in which Europe still has room for improvement –
also needs to be ramped up.
Companies should see themselves as selling packages of benefits. Alongside
the physical product, these packages will always also contain a service
component and a "user experience". As with product functions, it should
be possible for customers to mix and match these individual components.
IKEA, Sweden's furniture giant, presents a good example of this strategy.
Most IKEA customers put the furniture they buy in the back of the car,
drive it home and assemble it themselves. That is one of the reasons why
IKEA can sell at such low prices. In return for an added fee, however,
customers can also have furniture delivered to their home, obtain professional
advice on assembly, and even have their purchases assembled from
start to finish. Customers themselves therefore determine the exact nature
of their service and "user experience" components. This kind of modular
service component is an ideal way to satisfy varying customer needs while
exploiting as much customer potential as possible with a single product
platform.
Similarly, European companies must continue to invest in their relationships
with other stakeholders. Suppliers, financial backers and the media, for
example, will all tend to carry even more weight in future. Above all, close
attention must be paid to the one factor that unites all these groups: their
interest in a sustainable increase in the value of the company.
Portfolio managers must therefore concentrate on forward-looking areas.
Due consideration must thus be given both to future shifts in demand and
to new technology trends. One focal area for capital spending focuses on
issues that themselves play a part in ensuring sustainability: renewable
energy, environmental technology and organic farming, for example. Other
possible areas include those that will benefit from demographic developments:
medicine, healthcare systems and nursing care, for example.
Technological potential is also very considerable in the fields of genetic
engineering, nanotechnology, new materials and information technology.

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Most European firms already have proven strengths in these areas. They
therefore need to extend their lead or, where appropriate, make up lost
ground.
Again, European companies must make better use of their strength in
collaborating with firms from other cultural backgrounds. They must step
up their foreign expansion. Today's most dynamic markets are right on their
doorstep – in Eastern Europe – and in Asia. And although European companies
have had a foothold in these regions for some time, they could still
do considerably more. They likewise have deep roots and close contacts
elsewhere in the world too – in South and Central America, in Africa and
in Australia. In the long run, stronger commitments in these regions will
pay off handsomely.
Evolving into trust-based organizations
European companies need to reconcile two conflicting objectives: growth
and restructuring. To do so, they require integrated models with which both
internal employees and external players can readily identify. A trust-based
organization is just such a model, laying down norms that provide clear
guidance and are lived out in the behavior of management and staff. The
trust-based organization thus brings to life the principles that motivate
people. This shows itself in three areas in particular:
> Heavier demands will be placed on leaders. The need is for managers
whose trust, optimism and (by no means least) courage are infectious –
managers who authentically and credibly practice what the company
preaches, who are visible and available within their company. Essentially,
managers must serve as role models.
> Corporate governance must become even more transparent. Sooner or
later, the steps so far initiated by public debate and appointed commissions
in almost all Western countries will be regarded as the minimum.
> Internal and external communication must be reviewed and revamped
from the ground up. Regardless of whether a company is addressing its
investors, employees or customers, honesty and credibility will become
the focus of attention – and will crucially influence whether a company
succeeds or fails.
A company does not become a trust-based organization automatically or
effortlessly. In light of its many compelling benefits, however, there is no
real alternative to this model. Companies that realize this and move swiftly

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to change their organization will benefit the most and gain a clear
competitive advantage.
There are four reasons why the move to a trust-based organization is vital:
> Employees who are more deeply integrated also become
more dedicated
> Highly motivated employees perform better
> Genuine trust means that less control is necessary, which
reduces transaction costs
> Direct, open dialog stimulates creativity
These arguments have far-reaching implications for the European economy.
Why? Because, in light of their skill sets and cost position, European firms
have little choice but to focus on high-level functions such as R&D, production
planning, quality management and marketing – all of which demand
highly qualified staff. Fostering trust-based organizations is, however, an
excellent way to recruit, motivate and cement the long-term loyalty of
precisely these people. In a trust-based setting, people – be they superiors
or subordinates – are the most important corporate resource. That is very
definitely a European-style approach.
The principle of trust filters down through every level. It strengthens the
company's relationships with all other stakeholders, such as customers
and investors. As such, consistently building trust-based organizations will
allow European companies to extend the lead they already have over firms
in other regions thanks to their already deeply ingrained stakeholder
orientation.
Leadership is pivotal to the success of a trust-based organization. This belief
was once again confirmed by a corporate survey we conducted as part of our
"Leading for growth" study in 2004. 42 percent of respondents stated that
leaders and their personalities are critical to successful growth.
Trust-based organizations are also instrumental in making companies more
flexible. Doing without heavy-handed controls and decentralizing organizational
forms are two powerful ways to help enterprises respond swiftly
and relatively smoothly to changing market conditions. This is very
important, because the challenges discussed above all have one thing
in common: None of them can be mastered successfully with a static
management model. Flexibility, therefore, is the order of the day.

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As an example, let us refer back to the offshoring potential of China, India
and Eastern Europe. Domestic (European) locations will only survive in the
long term if the entire company remains keenly competitive. That will only
be the case if the company optimizes its value chain configuration. And that
in turn requires very fast, agile responses on the part of top management.
The earlier offshoring opportunities are spotted and put to good use, the
better things will be for the company as a whole and, hence, also for the
company's "home base". Seen from this angle, Western European firms'
attempts to exploit offshoring potential in no way contradict their claim
to stakeholder orientation.
We find a similar situation with regard to the development of regional
clusters. Here again, the important thing is not to establish networks as
fast as possible, but to be able to reconfigure and even dissolve them again
swiftly without incurring prohibitive "switching costs". The emergence of
new business models will likewise demand greater management flexibility –
naturally coupled with strong analytical and forecasting skills – if opportunities
are to be seized and risks appropriately assessed.
Most firms are aware of the positive aspects of trust-based organizations.
Actually building such an organization, however, requires professional
change management within which employees must be deeply involved in
decision processes. In other words, this "initializing" process must reflect
the way the trust-based organization is supposed to operate later on. It
takes a concerted effort to get this kind of organization off the ground.
The effort is worthwhile, however, as it will give the company a competitive
advantage at least in the medium term. Like empathy, trust too cannot
simply be copied at short notice. It takes time to nurture a culture of trust.
Accordingly, trust-based organizations need something stronger than, say,
an attractive product portfolio, to protect them from rivals.
Fine-tuning innovative strengths
There are two reasons why Europe needs innovation. One is to compensate
for its inherent disadvantage in production costs by improving efficiency
(through innovative processes and structures). The other is to repeatedly
stoke up fresh demand in mature markets and to carve out new markets
(through innovative products and services).
The process of innovation itself contains three steps: initial invention;
development of a marketable product; and the marketing of that product.
In the last two disciplines in particular, the Europeans still have a lot of
ground to make up.

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Let us first take a brief look at the discipline of invention, however, which
can be measured in terms of the number of patent applications and patents
granted. As regards patents granted by the European Patent Office in 2004,
European companies still had the edge over the rest of the world: 53.6
percent of all patents were granted to European countries, 24.2 percent
to the USA, 17.8 percent to Japan, and 4.4 percent to other countries.
However, a different picture emerges when one examines patent applications
in the same year: Europe accounted for 49.6 percent, the USA 24.2
percent, Japan 16.6 percent, and other countries 7.5 percent. Patent
applications are more critical as a forward-looking measure, because –
roughly speaking – tomorrow's patents will emerge from today's applications.
And precisely on this score, Europe is in danger of falling behind
relative to the rest of the world, and especially relative to the USA. This
first link in the innovative chain is of paramount importance, however.
Countries and regions that stumble at this hurdle can scarcely hope to
catch up when it comes to product development and marketing.
European companies are therefore called on to ramp up – or at least
improve the efficiency of – their research and development work. Nokia
furnishes tangible evidence that this circle can indeed be squared. The
Finnish company continually increases its patent output while reducing
its R&D spend. How does it do this? By adopting a typically European
approach: Nokia cooperates extensively with other companies, rivals,
suppliers, customers and employees, as well as with university and
non-academic research establishments.
The gulf that separates Europe from other regions is even wider in the
development of inventions into marketable products. Europe is the home
of many ground-breaking inventions: the computer, the fax machine, the
Internet, the principle by which MP3 compression works, to name but
a few. Yet others have been the first to get these inventions to market.
This first-mover advantage has enabled American and Japanese firms
to control lucrative markets and earn a lot of money – money they have
then plowed back into new inventions and developments. So what can
the Europeans do better in future?
First, they must become more adept at estimating the potential of inventions.
And second, they must transform these inventions into products
more quickly. Both goals can be met if R&D units collaborate more closely
with Marketing departments. In some cases, it is even advisable to let
Marketing take the lead. Motorola's new series of mobile phones illustrates
just how successful this strategy can be.

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Such cooperation becomes easier if the employees on either side gain a
better understanding of the other department. Employees who have both
engineering and economic qualifications can play a key role in bringing
the two sides together. Companies should therefore give preference to
recruiting such candidates. At the same time, personnel development
can also help engineers get a handle on economic decision-making while
transferring technical knowledge to business staff. Once again, a working
trust-based organization can be invaluable in this context.
Lastly, the Europeans can also learn lessons about how to market innovations
from the Americans and Japanese. Incumbent heavyweights such as
Microsoft, Apple and Sony regularly demonstrate how novel developments
can be successfully launched on the market, even if they sometimes only
constitute marginal improvements on existing products. One secret of
their success is their focus on communicating the perceived or experienced
benefit of a product, coupled with aggressive advertising. In particular,
innovative marketing techniques such as buzzing, customer-made strategies,
story telling and branded brands must more quickly find their way to
Europe. If European companies can improve the way they market their
innovations, this will also reinforce their brands, which still often tend to
be weak in comparison with US brands. Of the world's 50 most valuable
brands, only eleven are of European origin (see the 2005 Interbrand Study).
Retaining distinctive characteristics while leveraging best practices
To adopt best practices and learn from recognized regional strengths is to
benefit from Europe's rich diversity. Today's large numbers of pan-European
and multinational companies make this an eminently workable strategy.
The organization as a whole should analyze the strengths of its local companies
in different countries and compare them with each other. If one
company delivers outstanding performance in one area, this "best practice"
should be adopted throughout the organization. Alternatively, the one
outstanding local company should handle certain operations on behalf
of the entire group. Typical examples include marketing in France, design
in Italy, development in Germany and production in Poland.
If they are to succeed, best practice models require close attention from top
management. Cultural barriers and internal rivalries must be overcome,
while staff deployment must be made more flexible. This is yet one more
area in which trust-based organizational forms are extremely useful.

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Of course, if it works in Europe, it will also work throughout the world.
Once the best practice model is working properly on their domestic market,
European companies should apply this experience as they also seek to
integrate non-European companies. Taking this model still further, one
ultimately arrives at a virtual or networked company whose value chain
is spread efficiently around the globe. Here again, European companies
such as Puma (sports equipment and fashion products; see above) have
already mastered this challenge – and shown others the way forward.

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Summary
We have seen that Europe's companies need not fear comparison with
firms from other regions of the world. On the contrary, certain aspects
the European management model give the region's indigenous companies
a clear advantage in international competition. Even more importantly,
Europe already has enterprises that possess the skills they need to enjoy
lasting competitive success. Many of these skills are either specifically
European capabilities, or they are hard to copy. Either way, they constitute
a competitive advantage that works in Europe's favor. As market conditions
continue to change, European companies must nevertheless consistently
develop and improve in order to consolidate and build on their lead. If they
do so, Europe's firms will continue to play a prominent role on the world's
economic stage for a long time to come.

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Additional Reading
More business insights on related topics from Roland Berger Strategy
Consultants are available upon request:
Growth through trust: In this study, we describe how organizations based
on trust offer their employees direction through clear norms and standards,
and why ever more companies will turn themselves into trust-based
organizations in the coming years.
A straightforward look at China: China is part of every strategy and on
everyone's lips. But precisely because so much is written about China and
because everyone has something to say, only one message emerges loud
and clear: China is important. The country offers most companies opportunities
for profitable business. But not for all companies. And there is no
standard strategy for entering the Chinese market.
For these and other RBSC publications, please send your request to:
info@rolandberger.com

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The project team
An international Roland Berger project team carried out a range of extensive
analyses on the different aspects of the European Management Model. The key
findings are presented in this brochure.
The following contributors worked on this brochure
Dr. Stefan Bötzel, Hamburg (project coordinator)
Kai Engelmann, Munich (project coordinator)
Florian Huber, Munich (project coordinator)
Dr. Christoph Kleppel, Munich (project coordinator)
Dr. Christian Krys, Munich (project coordinator)
Tao Chen, Bejing (team leader)
Oliver Knapp, Stuttgart (team leader)
Frigyes Schannen, Budapest (team leader)
Jeroen Vugts, Amsterdam (team leader)
Björn Waldow, Berlin (team leader)
Marcelo Aude, São Paulo
Christoph Auerbach, Munich
Georgy Babilashvily, Moscow
Arne Bayer, Düsseldorf
Julius Bender, Berlin
João Carapeto, Lisbon
Oliver Conze, Frankfurt
Manuela Diviach, Milan
Alexis Gardy, Paris
Marcin Godlewski, Warsaw
Carolin Griese, Düsseldorf
Simon Hauswirth, Zurich
Benoit Hennion, Paris
Andrew Horncastle, Munich
Fabian Huhle, Munich
Simon Jones, London
Ichiro Kaku, Tokyo
Timo Kamp, Berlin
Stephan Keese, Munich
Tobias Kleiner, Munich
Olga Klotchko, Moscow
Philippe Knüsel, Zurich

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Dirk Kohlen, Düsseldorf
Veronika Kvarda, Vienna
Anna Linden, Düsseldorf
Arnauld Mesqui, Paris
Alexandra Meyer, Munich
Daniel Milleg, Munich
Patrick Müller-Sarmiento, Munich/Hamburg
Yuzuru Ohashi, Tokyo
Jose Carlos Ortega, Madrid
Patrik Ott, Munich
Maik Piehler, Berlin
Bruno Poschmann, Paris
Nils Reinhardt, Frankfurt
Dr. Matthäus Rimpler, Berlin
Andreas Scharff, Munich
Tobias Schönberg, Düsseldorf
Kamil Szczudlik, Paris
Andreas Überschär, Stuttgart
Bernd Van Beek, Brussels
Dr. Tanja Wielgoss, Hamburg
Yipeng Yang, Shanghai

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© Roland Berger Strategy Consultants, Germany
01/2006, all rights reserved
www.rolandberger.com