Joint Project - Economics Class [MBA]
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Transcript of Joint Project - Economics Class [MBA]
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The Hidden ChampionsGermany’s Secret Success
Team DeltaKatie AdgentPaige BighamMargaret DischlerMatt Farmer
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Outline
• Germany's Economic History
• Germany throughout the recession
• Mittelstand: A Definition
• Market Structure
o Profile of a Quasi-Monopoly
• Lessons Learned
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Germany's Economic History• Whiplash Extremes
o The Great Depressiono Nazi Germany - hothouse prosperityo Post-WWII: In Complete Ruins, Disastero '50s - A Business Boomo '60s - A Slowing of Growth, less spectacular
• "Social" vs. "Market" Balancing Act
o '70s "Laissez-faire" government controlo '80s Government Intervention and Controlo '90s A Slowing Down - "The Sick Man"
"Out of Germany or Out of Business" - President of GM Europe
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Dominating the Financial Crisis
• Experienced relatively short period of GDP contraction
• Huge Decrease in Exports• Still maintained a significant lead within the
European marketplace• Unemployment
o Able to minimize damage to the employment rate• Second highest Trade Surplus in the world
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Economy with largest growth
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Unemployment Rates
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GDP Growth
Began to shrink in the middle of 2008, but quickly moved back to earlier levels of growth by the middle of 2009.
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Germany: Trade Surplus Champs
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Mittelstand: The "Hidden Champions"
• What is the Mittelstand?o Hermann Simon
• Companies Prospered in the 50's and kept growing
• Came to Dominance in the '90s• Much like current economic situation
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Mittelstand: World Market Leading CompaniesNot in the Public Eye
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Mittelstand EconomicsStrategy:
Dominating global niche markets
Governance:"Enlightened family capitalism"
Operational effectiveness:World class in key processes
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Governance: Mittelstand Management
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Operational Effectiveness
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Strategy: Innovation and Differentiation
5.0%
3.6%
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Porter’s Five Forces Strategic Framework
Minimal Threat of Substitutes due to high-tech dominance
Minimal Threat of Entry due to: • high capital requirements in R&D • high switching costs• lack of access to distribution channels
Supplier Power due to niche product
Limited Bargaining Power of Customers
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Mittelstand Strategy: Niche Market
Quasi-Monopoly
High-tech Innovation
Differentiation________
The Industry Demand Curve is the Firm's
Demand Curve
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Conclusion
Strategy:Dominating global niche markets
Governance:"Enlightened family capitalism"
Operational effectiveness:World class in key processes
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Our Questions
• Optimal Size • Decreases in Demand
• Easily Imitated?
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Lessons Learned
•Value-oriented instead of price-oriented •Specialization •Innovation
•Corporate Culture
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Questions?
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References• How Germany’s Mid-sized Companies Get Ahead and Stay Ahead in the Global Economy, Prof. Bernd Venohr, 2008• “The Power of Uncommon Common Sense Management Principles – The Secret Recipe of German Mittelstand companies – Lessons for large and small companies”, Prof. Bernd Venohr, 2010•http://www.bloomberg.com/news/2010-09-30/german-mittelstand-gives-chilean-miners-economy-escape-route.html•http://www.economist.com/blogs/freeexchange/2010/08/europes_economies•http://www.nytimes.com/2010/02/27/business/global/27gcon.html•http://www.economist.com/node/17572160•http://www.businessweek.com/globalbiz/content/sep2010/gb20100929_905740.htm•http://www.globalpost.com/dispatch/germany/101111/mittelstand-german-economy-manufacturing•http://www.businessweek.com/globalbiz/content/sep2010/gb20100929_877580.htm