Europe makes a fresh start - Roland Berger Strategy Consultants

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9 | Europe makes a fresh start 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
10 | Study 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
Page 1 and 2: Challenge Club 2005 Study Europe ma
Page 3 and 4: 2 | Study Contents Management summa
Page 5 and 6: 4 | Study Is Europe weak or strong?
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Page 13 and 14: 12 | Study Logically, therefore, di
Page 15 and 16: 14 | Study The interests of stakeho
Page 17 and 18: 16 | Study make sense (and can only
Page 19 and 20: 18 | Study Eastern Europe: Market e
Page 21 and 22: 20 | Study What happened in the int
Page 23 and 24: 22 | Study for offshoring projects
Page 25 and 26: 24 | Study The European management
Page 27 and 28: 26 | Study Most European firms alre
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Page 31 and 32: 30 | Study Such cooperation becomes
Page 33 and 34: 32 | Study Summary We have seen tha
Page 35 and 36: 34 | Study The project team An inte
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