BEIERSDORF AG: EXPANDING NIVEA’S GLOBAL REACH

Introduction:
Beierdorf is a global consumer goods group engaged in the producing and marketing of
cosmetics, toiletries and adhesive tape businesses.

In 201, 16,345 employees with the majority of 59% working in Europe, controlled by
‘Maxingvest AG’ with 125 years of expertise.

Their vision is to be the number one in skin care in their markets and categories. Their compass
is their Blue Agenda. Introduced in 2012, it defines the course they are adopting to face the
challenges of the future and with which they intend to reach their goals.

In 2013, Beiersdorf started basing an open integrative corporate culture that encourages high
performance, and on employees who take responsibility and who think like entrepreneurs. They
need to be right up close to their markets and consumers and to be as efficient and flexible as
possible.

 Courage and openness

 Flexibility and speed
 Responsibility and Teamwork
 Transcending boundaries and borders

Differentiation Focus Strategy:

Beiersdorf differentiate its brands and products from their competition by being innovative and
providing the best quality through in-depth research on the local market concentrating on
geographic markets and buyer groups.

Focus Strategy:
A focus strategy is tailored for a market, unit of the product line or target group.

Challenges that the new CEO of Beiersdorf AG has to address:

1.Liabilities of being an Outsider:
When a new Chief Executive Officer (CEO henceforth) takes charge of a firm, he is going to
encounter a wide variety of challenges that will span mainly across areas such as leadership
and strategic management. The new CEO – Stefan Heidenreich (who was appointed in April
2012), it is possible to see that he was going to face a large number of organizational challenges
in order to return Beiersdorf AG to their previous levels of success and high profitability.

The current position and status of the company were crucial to help him realise how to move
Beiersdorf AG to a better place financially. Thus, the Heidenreich can make an analytical
decision to choose an appropriate strategic choice to achieve Beiersdorf’s organisational goals.
However, to be effective, he needs to quickly adapt to new colleagues, environments and, of
course, the competitors of the company. It is believed that an outsider can bring in innovative
ideas and technology, while people within the company replicates to the ongoing process
adopted previously by the company. This can enhance the efficiency of the production and
processes. This was expected from Heidenreich.

Another major challenge that Heidenreich faced when joining Beiersdorf, was what kind of
approach to leading the firm he should take.

2.Innovative Organizational Approach:

The management of Beiersdorf was divided into two committees, the executive board and the
supervisory board. Changing administration is a huge challenge in any organization as it
directly implies testing the strength of the organizational structure. Implementing such changes,
may help Heidenreich to assess what areas of the structure are solid and which areas require
re-evaluation. He can then implement changes that can make Beiersdorf more efficient and
better prepared for the daily tasks of business. Heidenreich should involve people from the
region by placing local workers into important management positions. However, trust is critical
for leaders as it entails risk but lacking trust, leadership is unattainable. Employing local
managers might bring diverse perspectives, different views and different ways of doing things,
plus they should be familiar with what doing successful business in the local region requires
the firm to do. This can reduce risks and possibly increase interaction with the target market;
the local managers must be given certain powers, so that they can execute plans when the right
opportunities arise.

3.Financing
The high flow of income from Nivea Brand has kept the liquidity of Beiersdorf AG at a
satisfactory level. Part of the $2bn reserves can be used for promotion of the brand in China
and the United States where Beiersdorf needs to work hardest to gain market share. Beiersdorf
also invested in opening a new research and development (R&D henceforth) centre in Wuhan,
China. Because of this investment, the company is able to react more rapidly to local demands
and make use of the raw materials and labour available in that part of the world. In order to cut
down costs Beiersdorf has been cutting back on unprofitable merchandise. This gives them
scope for expanding the product line by innovating certain products that may be profitable.
This will shape its markets and set new trends. Heidenreich should that R&D expenses of the
company would however definitely increase following this.

4.Sustainability
Furthermore, Heidenreich should focus on supply chain sustainability. The company have
introduced recycling and waste reduction projects in many countries. For instance, In Argentina
and Spain, the company’s production facility decreased the volume of waste resulting in a
reduction of 40% in waste costs. Similarly, in Spain, Italy, and Indonesia reprocessing has been
adopted. Due to this, in the long run, cost will be reduced; meaning Heidenreich can propose
similar investments at other manufacturing units all over the world in order to reduce the overall
production costs incurred by the firm.
5.Competition
Heindenreich also has the challenge of defeating the global competitors in the market.
Beiersdorf’s competitors mainly include Procter & Gamble, Unilever, L’Oreal, Henkel, and
Johnson & Johnson. These companies are all highly established companies that have been
trading and developing for years. To convert these challenges into opportunities, there are
several recommendations for Heidenreich. First of all, one of the most significant factors to
successfully compete with other brands is to develop R&D for Beierdorf’s existing and new
products. To illustrate, the researchers need to improve the existing products based on
customers’ behaviours’ and needs in the present and create new products adherent to new
technologies and innovations of manufacturing cosmetic products. In addition, in a context of
marketing strategy, Beiersdorf should also use an interesting and attractive communication in
order to convince customers and compete with other brands. For instance, the company may
use celebrity endorsement as an advertising method by inviting a famous actor or actress to be
a brand ambassador to help promote the products. They can make a decision to use other
different types of communication to advertise each product such as social networking, printed
advertising, radio spots, in-store marketing, and promotional activities. However, an efficient
and effective communication may lead to high cost to the organisation. Beiersdorf can beat the
others by correctly identifying its main issues and solving them in appropriate directions
corresponding to the research information and the consultants’ advice.