The Grundig Story

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Case Details:

Case Code : BSTR200
Case Length : 15 Pages
Pages Period : 1980-2005
Organization : Grundig AG
Pub Date : 2006
Teaching Note :Not Available
Countries : Germany, United Kingdom
Themes : Failure of Strategy | Bankruptcy
Industry : Consumer Electronics

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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EXCERPTS Contd...

The New Owners

In July 2003, the district court of Nuremberg declared Grundig insolvent and initiated the insolvency procedure. Beck, who had earlier been chosen as the temporary insolvency administrator, was now appointed as the insolvency manager. It was announced that the profitable sections of the company such as its car radio, dictating machines etc would be sold to individual investors. The court also announced that there were prospective buyers even for the loss-making sections of Grundig...

ALBA

Alba Plc. (Alba), a UK based company was formed in 1963, and was originally called Harris Overseas Ltd. The company started operations in 1964 by sourcing products from Japan and Hong Kong.

It established its headquarters in Barking, Essex, UK in 1970. In 1982, the company was renamed Harvard International Ltd.

In the same year, the company acquired Alba Radio, a marketer of radios and other electronic products. In 1987, the company changed its name to Alba Plc. and was listed on the London Stock Exchange...

BEKO

Beko Electronik A.Þ (Beko) was founded by Vehbi Koc, in September 1966 in Istanbul, Turkey under the name of Bekoteknik Sanayi A.Þ. It was renamed in 1996. Over the years, Beko has grown to become one of the largest manufacturers and marketers of TV sets, DVD players, cash registers, satellite receivers, etc. in Europe.

In the early years of its growth, the company acted essentially as a supplier to other electronics majors. In the 2000s, the company intensified its efforts to popularize its Beko brand. It began to sell Beko branded TV sets and other electronic products in several countries in Europe and Africa. The brand was a market leader in countries like Botswana and Ivory Coast. In Europe too, the company has seen a steady increase in its exports. In all, the company was exporting its products to over 100 countries in the world. With a 125,000 sq meters modern facility at Beylikduzu in Istanbul, Turkey, Beko was widely considered a cost-effective manufacturer of electronic products...

Outlook

Alba reported that for the eleven-month period (May 01, 2004 - March 31, 2005), since it jointly took over Grundig, the turnover for the German company was € 197.8 million and profits before tax were € 3 million. Analysts were of the view that Alba's proven skills in logistics, product range planning, and marketing had made a measurable difference to the fortunes of Grundig, as evidenced by its profits. However, the consumer electronics market in Germany and the rest of Europe was gloomy...

Exhibits

Exhibit I: A Brief Note on Philips
Exhibit II: Sales Turnover of Grundig
Exhibit III: Alba's Brand Portfolio
Exhibit IV: The Award Winning LCD TV

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