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BEIERSDORF AG: EXPANDING NIVEA’S GLOBAL REACH
SYNOPSIS
By 2010, the German skin care producer Beiersdorf had experienced decreasing margins due to fierce
competition, a challenging economic environment, and an internationalization strategy that caused parts of
the company’s main brand (NIVEA) to proliferate beyond the efficiency threshold. The resulting
TEACHING OBJECTIVES
The case centers on three major teaching objectives:
• To illustrate that “multinational” or “transnational” companies do not simply materialize but
that the transition from one strategic focus to another takes effort and commitment. The case
describes how a range of internal and external factors forced Beiersdorf to realign its structure. The
structural, cultural, and personnel consequences this transition entails reflect the fact that companies
• To show that although a company may be doing well financially, it may be at risk for long-term
COURSE FIT AND POSITION
1. What were the building blocks of Beiersdorf’s success? How could a seemingly simple product
(NIVEA cream) become the foundation for the company’s international growth?
2. What were the internal and external factors that led to Beiersdorf’s decision to initiate a restructuring?
1. Christopher A. Bartlett and Paul W. Beamish, Transnational Management: Text, Cases, and Readings
2. Martin Dewhurst, Jonathan Harris, and Suzanne Heywood, “Understanding your ‘globalization
penalty,’” McKinsey Quarterly, July 2011, pp. 1-4. This study illustrates the notion that there may be a
3. Rita Gunther McGrath, “Beyond contingency: From structure to structuring in the design of the
contemporary organization,” in Stewart R. Clegg, Cynthia Hardy, Thomas B. Lawrence, and Walter R.
TEACHING PLAN
The case lends itself to several topics relevant to the management of MNEs. Consequently, there are a
number of starting points the instructor could choose.
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its implications. This approach enables students to develop their analytical knowledge to a point where
they are able to suggest recommendations for Heidenreich’s future actions as the new CEO.
A possible opening question is to ask: How many of you have heard of or used the brand NIVEA?
PART 1 - RECONSTRUCTING THE FOUNDATIONS OF BEIERSDORF’S PAST SUCCESS
1. What were the building blocks of Beiersdorf’s success? How could a seemingly simple product
(NIVEA cream) become the foundation for the company’s international growth?
At the heart of Beiersdorf’s international success are various internal and external factors. Students will
come up with a number of factors in a non-ordered way and it may be useful to jot them down on the
General internal factors
Factors specifically related to NIVEA
• The NIVEA brand easily attracted a mass market because it was the first of its kind and was available
for a low price.
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Externally generated factors
• The economic environment in the early decades of the 20th century created a high demand for a basic,
low-priced, yet efficient cream.
PART 2 - RECENT CHALLENGES
2. What were the internal and external factors that led to Beiersdorf’s decision to initiate a
restructuring?
Beiersdorf had been very successful financially until the tide suddenly turned in 2009. The company
Internal Factors
External Factors
With these points (the strengths and challenges) on the board, the instructor can now shift the focus to the
restructuring project, “Focus on Skin Care. Closer to Markets.”
3. How do you evaluate the components of the reorganization project? Are the aforementioned
factors satisfactorily addressed or are there alternative measures that could have been taken?
How does the project change Beiersdorf’s structure and strategy?
In order to start the evaluation of the project, the instructor could start the discussion with a consideration
of Beiersdorf’s reserve of €2.2 billion. Using this reserve may represent an alternative way to balance out a
It is important for students to realize that Beiersdorf was not merely restructuring, but was transitioning
from one strategic configuration (multinational) to another (transnational). The struggles in the process,
then, are a reflection of such a deep change. In order to make this point more transparent, the instructor
could project an overview of the different strategic configurations onto the wall (see Exhibit TN-1). For
this purpose, the instructor should take a moment to move away from the specific Beiersdorf example and
ask students about the benefits and challenges each configuration might entail (see Exhibit TN-2).
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company to strive towards an ideal-type configuration. One realization that should evolve out of the
discussion is the notion that companies are path-dependent and therefore not always able to be truly
Pros
• By refocusing on its core products, Beiersdorf can spend more resources and enhance the quality of
Cons
• Taking products out of the product range may lead some customers to switch to competitors’ products.
Once they have switched, it may be difficult to attract them back.
The goal of the discussion is not necessarily to reach a conclusion about whether downsizing is appropriate
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for its boots” and will be unable to sustain its current share against the large competitors in the long run —
or it can rely on its loyal customer base and reputation for quality in order to focus on its core industry and
continue to grow.
Others might argue that Beiersdorf’s intention was to benefit from C-Bons’s broad distribution network.
The fact that Beiersdorf now has the third-largest market share in the Chinese hair care industry might be a
reflection of success in the long run. At this point, no specific decisions should be agreed upon because that
will come at a later point in the teaching plan.
4. Even after Beiersdorf had announced its restructuring project, it reported losses, revenues
were slow to increase, employees were protesting due to layoffs, and investors remained
impatient. Had Beiersdorf’s strategy to downsize and restructure failed, or were these effects a
necessary part of the process? What are some of the elements that still need some
adjustment?
On the other hand, other contributions in the discussion might refer back to the notion that the alignment of
underlying structures is necessary for future performance and that the benefits of the restructuring may be
It should be clear, however, that there are elements in Beiersdorf’s strategic configuration that would need
5. On April 27, 2012, Heidenreich was appointed as Beiersdorf’s new CEO. Is he the right person
to lead Beiersdorf back to growth? What are the specific challenges that Heidenreich inherited
from his predecessor? What actions can he take to address them?
Heidenreich is described in the case (and in the media) as a rather aggressive manager, especially when
compared to his predecessor. The discussion around this question might revolve around two different
perspectives.
On the other hand, however, students may suggest that the decision to appoint him as CEO marks a major
cultural change in Beiersdorf. In the past, all CEOs were recruited from within the company, consistent
The case discussion can be closed by a summary of the main points and an acknowledgement that
multinational and transnational configurations require concessions in many different areas of a company,
but that the incentive for this effort is the prospect of long-term performance and growth.
SUBSEQUENT EVENTS AND UPDATE
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Exhibit TN-1
INTERNATIONAL TO TRANSNATIONAL:
ORIENTATION AND ASSET CONFIGURATION
International
Multinational
Global
Transnational
Strategic
orientation
“Exploiting parent-
company
knowledge and
capabilities
through worldwide
diffusion and
adaptation”
“Building
flexibility to
respond to national
differences
through strong,
resourceful, and
entrepreneurial
national
operations”
“Building cost
advantages
through
centralized, global-
scale operations”
“Developing
global efficiency,
flexibility, and
worldwide
learning capability
simultaneously”
Configuration
of assets and
capabilities
“Sources of core
competencies
centralized, others
decentralized”
“Decentralized and
nationally self-
sufficient”
“Centralized and
globally scaled”
“Dispersed,
interdependent,
and specialized”
Source: Christopher A. Bartlett and Paul W. Beamish, Transnational Management: Text, Cases, and Readings in Cross-
Border Management, 7/E, Burr Ridge, Illinois, Irwin McGraw-Hill, 2013, Chapter 3.
Exhibit TN-2
INTERNATIONAL TO TRANSNATIONAL: BENEFITS AND CHALLENGES
International
Multinational
Global
Transnational
Benefits
Ability to “create
and leverage
innovations”
Self-sufficient and
locally
autonomous
subsidiaries; high
local
responsiveness
High global
efficiency due to
economies of scale
Simultaneous
benefits through
global integration,
local
responsiveness,
and worldwide
innovation
Challenges
“deficiencies of
both efficiency and
flexibility” due to
a low degree of
economies of scale
as well as local
responsiveness
Inefficiencies due
to lower
economies of
scale; “inability to
exploit the
knowledge and
competencies of
other national
units”
Lower levels of
flexibility and
learning; exposure
to “high sourcing
risks”
High level of
coordination
needed
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Exhibit TN-3
COMPARISON OF THE RESTRUCTURING PROJECT WITH
THE ELEMENTS OF A TRANSNATIONAL CONFIGURATION
Global integration
Local responsiveness
Worldwide innovation
Elements of the
current
restructuring
project
Reduction of overhead
New regional
responsibilities for most
board members
Main innovation center is
in Hamburg, Germany, in
collaboration with
international institutions
Definition of the global
strategy by the HQ in
Hamburg, Germany
More freedom for foreign
subsidiaries to choose the
local product range
The new project
Pearlfinder is an open
innovation project aimed
at generating new ideas
from distinct sources
Streamlining of the global
product range
Slightly reduced local
adaptation through fewer
location-specific
innovations
Elements that
would bring
Beiersdorf even
closer to an
“ideal”
transnational
configuration
Even more functions
could be decentralized,
excentralized or
recentralized
The interdependency
between subsidiaries
could be enhanced to
allow for synergies
The creation of a shared
knowledge base within
the company would foster
transnational learning;
subsidiaries should be
even more encouraged to
provide innovations as
well
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Exhibit TN-4
CHALLENGES AND POSSIBLE ACTIONS FOR STEFAN HEIDENREICH
Challenges
Possible actions
Possible future conflicts with the main shareholder,
Michael Herz, as well as with Quaas as a member
of the supervisory board
Close contact with Herz and Quaas and early
inclusion in decision-making processes
Possible conflicts of legitimacy arising from the fact
that Heidenreich is an outsider to the company
Increasing visibility, e.g. through direct e-mails to
the employees, articles in the employee magazine
Opposition from employees and the work council
due to recent layoffs
Negotiation with the work council about ways to
integrate all interests, e.g. through integration of
laid-off workers in other areas of the company or
payment of a higher dismissal compensation
Outstanding decision about future steps regarding
the Chinese investment
Divest by selling the shares of C-Bons and develop
a new market-entry strategy
Increasing impatience exhibited by investors
Maintaining a reasonable dividend as well as
transparency in communication about the progress
of the restructuration
Maintaining the right balance between global
integration, local responsiveness, and worldwide
innovation
Streamline the regional/functional responsibilities
of the board members and ensure that the transition
to regional responsibilities takes place seamlessly;
assess whether even more functions could be
decentralized, excentralized, or recentralized; search
for ways to enhance global innovation
Retention of young people as customers while
refocusing on Beiersdorf’s traditional brand values
Develop marketing strategies that translate the
traditional brand values to future consumers without
disregarding them
Increasing competitive pressure due to rapidly
growing competitors
Consider spending part of the €2.2 billion in
reserves on e.g. new acquisitions, innovation labs,
or production facilities
Very slow rate of recovery of the European
economy
Develop strategies to enhance the U.S. business and
to enter the BRIC countries more successfully
