Bertlesmann: Before, during and after Middelhoff|Business Strategy|Case Study|Case Studies

Bertlesmann: Before, during and after Middelhoff

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Case Details:

Case Code : BSTR061
Case Length : 18 Pages
Period : 1994 - 2003
Organization : Bertlesmann
Pub Date : 2003
Teaching Note :Not Available
Countries : Europe
Industry : Media and Entertainment

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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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Background Note - Building Bertelsmann

Bertelsmann is one of the oldest and largest German companies. It was founded by Carl Bertelsmann (Carl) as a publishing house named C Bertelsmann Verlag in 1835. Bertelsmann's first bestseller was Theomele, a book of Christian hymns and songs. The company also published books on education and two newspapers.

In 1849, Heinrich Bertelsmann (Heinrich), Carl's son, took over the management of the publishing house. Heinrich added fiction and non-fiction books to the existing theology publications. He also launched the 'Konservative Volksfreund' newspaper in 1862. After Heinrich's death in 1887, Johannes Mohn, his son-in-law, took over Bertelsmann. Through the early decades of the twentieth century, Heinrich Mohn, who succeeded Johannes Mohn, took the company to great heights in the publishing business. He published all sorts of literature, from classical literature to mass-market fiction. He later added entertainment literature to the company's publishing range. Heinrich Mohn also developed novel methods of selling and distribution.

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During the Second World War, most of Bertelsmann's assets were destroyed. Reinhard Mohn, who took over the company after Heinrich Mohn, rebuilt the company and made it one of the leading printing and publishing media companies in the world.

In 1950, the company began direct distribution of its publications under the phenomenally successful 'Bertelsmann Lesering' venture.5 In the 1950s, Bertelsmann entered into various other businesses such as offset printing and music recording. To manage the rapidly growing company effectively, Reinhard Mohn created a decentralized corporate structure in 1959. He believed that managers worked better when given complete charge of their divisions (as if they were the owners). Under the decentralized setup, each division of Bertelsmann operated as a distinct profit center. The managers of these profit centers were given high levels of autonomy and the freedom to diversify and expand the operations of their centers. Bertelsmann also offered high performance-based compensations to managers of these independent profit centers...

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5] 'Bertelsmann Lesering' was renamed 'Der Club' during the late 1900s. It had over 40 million members (through its media clubs across the world) in the early 2000s.


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