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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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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Introduction Contd...

Together, they were seen as a force which could unleash the potential of the Grundig brand and ensure profitability too. The joint venture would try to capitalize on Grundig's proven R&D capabilities as well. The deal could save the Grundig brand and could continue to make available cutting-edge electronic products for which the Grundig brand was famed, even if under non-German ownership. The joint venture would also be likely to expand the brand's horizons beyond Europe.

Background Note

Grundig was set up in 1945. The Second World War had thrown the German economy into disarray. There was immense damage to property and equipment of all types, including household radio sets. In the period after the war, there was a huge demand for repair services. Max Grundig (Max) was until this time, a radio dealer. He sensed that there was a lot of money to be made in repair and started production of devices used to repair radios from a makeshift workshop in Regnitz, a small village in West Germany. He launched Tubatest tube tester and Novatest testing device under the Grundig brand. The devices were instant hits and Max shifted into a new workshop at Jakobinerstraße in the town of Fuerth.

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In the post-war years, Germany was under the full control of the Allied forces4 and the production and sale of radios was not permitted. In 1946, Max launched the Hienzelmann - a radio kit which customers could put together (technically, the Hienzelmann was not a radio and hence evaded the ban).

The path-breaking product was a huge success with the public. By 1947, the demand for Hienzelmann was so high that production had to be shifted to larger premises at Kurgartenstraße. In 1948, Grundig launched a complete radio - Weltklang5 which was appreciated for its first-rate reception. By 1949, the company was firmly on the growth path and shifted to its new premises which included a new office building and a three-storied factory complex. In the same year, the Grundig Boy - a portable cabinet radio - was launched, and it was a runaway success. In 1950, Very High Frequency (VHF) was introduced in Germany. Responding to the demand for VHF receivers, Grundig launched the 380W which had seven AM and eight FM circuits...

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4] During the Second World War, UK, France, and later the US formed the allied forces that fought against the Axis powers - Germany, Italy, and Japan.

5] Weltklang had four tubes and six circuits, as opposed to its earlier model which had only one circuit. The additional tubes and circuits enabled better reception.


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