issue 1 - Roland Berger

DOSSIER #01 The formula for growth
nSYMANTEC
The US manufacturer of security software
is the global market leader and manages
its sales via excellent relations with over
600 international corporate groups.
32.5%
Symantec increased
its profit margin from
20.3 to 32.5 percent.
SOURCE: SPEAR SECURITY INDUSTRY ANALYST NEWS
»We intend to achieve
massive growth by
visibly outperforming
the market.«
JOHN W. THOMPSON,
CEO, SYMANTEC
OPERATING PROFITS (in $ million)
136
32
CAGR: 58 %
357
532
2000 2001 2002 2003
Symantec handled the 2001 slump
well. Despite the setback of 2000 to
2003, its midyear operating (CAGR)
results increased by 58 percent. The
reason: continuous acquisitions and a
consistent brand-name strategy.
be noted, however, that five years of intensive research
went into the designer food. It is therefore not surprising
that Nestlé is looking for strong joint-venture partners
to help shoulder the load. Jointly with the French
cosmetics group L’Oréal, in which Nestlé holds a 26.4
percent stake, it is developing beauty tablets that slow
down the visible effect of aging on skin, hair and nails.
The financing for such research projects comes from
the “Life Ventures” risk capital fund.
IN ADDITION, Brabeck-Letmathe is counting on
specific purchases to reap increasing economies of
scale and scope in the core businesses. In June 2003
Nestlé acquired Dreyer’s, the second largest US ice
cream producer, for $2.8 billion. Just a short time earlier,
Nestlé had purchased the German company Schöller
Group and the Swiss ice cream brand Mövenpick. For
Brabeck-Letmathe, who very early in his career delivered
ice cream by truck, expansion is by no means an
end in itself. “We’re not looking to be the largest company,
rather the most competitive one.” His personal
motto expresses the desire both to grow and to improve
margins. “The art of good management consists of
achieving both simultaneously,” emphasizes the Nestlé
CEO. Keeping these in balance sometimes also necessitates
that Brabeck-Letmathe repeatedly divest parts of
the company. Although 29 new plants were opened in
2003 alone, 26 existing ones were also sold or closed,
always with the overall objective of optimizing the
group’s portfolio in a value-oriented manner.
THE FACT THAT THE GROWTH curve looks different
for various sectors also holds true for different regions,
as exemplified by the electronics giant Siemens. While
the figures for Germany’s domestic market in the
slumping sectors of communications and transportation
systems point to consolidation, Siemens is on an
expansion course in the United States with its “Siemens
One” program. The growth strategy was conceived by
the designated chairman of the board, Klaus Kleinfeld,
who headed the company’s US operations and will
replace Heinrich v. Pierer as chairman in January 2005.
Kleinfeld’s successor, George Nolen, now can reap the
fruitful outcome of this endeavor. By 2006, he is
expecting additional business of at least €2 billion
from established accounts alone. His cross-selling
strategy aims to provide large-scale customers such as
hospitals, sports arenas and rail companies with complete,
one-stop infrastructure solutions. Siemens just
received a contract worth up to $1.37 billion to install
high-tech explosives-detection systems at all commercial
airports in the United States. “We won the bid
because we have the necessary experience in airport
logistics, building security, baggage handling and X-ray
scanning,” emphasizes Nolen.
THE COMPANY ALSO has an advantage in that
Siemens is increasingly perceived as a domestic entity
in the United States. After all, the company employs
70,000 people there, almost all of them Americans.
Siemens is pursuing its decentralization strategy also
for another reason. In a monolithic organization, mental
barriers and cultural differences can end up inhibiting
growth. “In the past, we did not always understand the
needs of our customers,” notes Nolen. In order to minimize
such conflicts, Siemens depends almost exclusively
on “locals” in all countries, who usually better
understand the regional market and its particular customer
requirements. For v. Pierer, Siemens is, as a
result, “a German company in Germany, a US company
in the US and a Chinese company in China.”
THE SIGNIFICANCE OF “soft” growth factors, especially
during periods of change situations, can hardly be
overestimated. Subcultures often crop up, especially
after mergers and larger-scale organizational change
projects. These can influence employees more than the
actual corporate culture, and can cause divisions to
insulate themselves from one another or even prevent
their integration after a merger. Open communications,
a willingness to discuss matters and corporate management’s
competence to make decisions with the
employees’ backing prevent this type of drift. Successful
growth companies find their identities less in their
products, but in their group-wide set of values. Even if
the wording is similar in many companies, the important
thing is that values are openly agreed upon and
actually put into practice on a daily level. Siemens CEO
v. Pierer considers the integrity of both its business
policies and its responsible employees the core value of
the company. From this he derives principles such as
decency, honesty, sincerity, openness and tolerance.
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think: act