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What better place to turn for lessons in how to prosper in adverse conditions than Germany? Germany has been hobbled by the EU's tough fiscal-policy regime, by rigid labour laws, and by the cost of integrating the former East Germany. The country has also been in and out of recession for the past three years.
One of the most striking examples of a company thriving despite weaknesses and rigidities in its home economy is Germany's Volkswagen. With the state of Lower Saxony owning a fifth of its shares. VW could not react to the weak car market in the mid-1990s by slashing jobs. That would have been deeply unpopular with the local government, grappling then (as now) with high unemployment. Forbidden to apply the brakes, VW slammed hard on the accelerator, launching new models (all based on a small number of chassis and engines) and ramping up production. It reestablished its lead in the European mass market and enjoyed a revival in America with the new Beetle model that it launched in 1998 and that it manufactures in Mexico. The other big German car companies have also played the global card well. Daimler-Benz took over Chrysler to gain economies of scale and deeper access to the American market and, after a shaky start, that deal now seems to be paying off. Likewise, BMW emerged from its botched purchase of Rover in Britain with the consolation prize of the British company's Mini brand which
has helped lift BMW's production volume up to a million.Buying Chrysler meant that Daimler-Benz made a spectacular U-turn The company had previously tried to diversify by turning itself into a conglomerate involved in all forms of transport.Jurgen Schrempp, its boss since 1995 opted instead to return to its core car business, but to be more global. Many of the non-car businesses were sold or closed down, although there are some leftovers, such as DaimlerChrysler's stake in EADS, Europe s biggest aerospace company.
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Deep in the heart of Germany's famous Mittelstand of medium-sized companies, there are many less-well-known cases of German enterprise surviving a sclerotic home economy. One example is Knorr-Bremse, a Munich based manufacturer of braking systems for trains and lorries. Since a management buyout in 1985, the company has grown steadily away from its German roots and now has 70% of its 11,000 staff abroad. As Heinz Hermann Thiele, its boss and owner, observes: "when I bought the company, sales were €200m and the balance sheet
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was very weak. So I had to find a new strategy and reshape the business."He decided to focus on braking systems, then a part of the company with good potential. The market for the systems was fragmented, but the main customers big engineering groups and makers of commercial vehicles were increasingly global. So Knon-Bremse set about becoming a global supplier. It has integrated no fewer than 28 acquisitions since 1985 and its latest big deal has made it the market leader in lorry brakes in America Knorr-Bremse now commands 40% of the world market for braking systems used on trains and lorries. Last year's tumover of €2.1 billion was three times that of 1996 "We are now a global company.' says Mr Thiele.
1) Knorr-Bremse's customers
A. have all recently acquired other companies.B. tend to be based in different parts of the world.
C. now own a market share of around 40%.
D. have a total turnover of about €2.1 billion.
2) One benefits of the BMW takeover of Rover was that A. there were advantages in economies of scale.
ABCD BMW was able to enter the American market.Rover had access to a larger global market.
BMW acquired the profitable Mini brand.
3) What is the key factor that contributed to Knorr-Bremse's growth and success?
A. Selling off non-core businesses.
Establishing partnerships with local firms.C. Becoming a global supplier in a fragmented market.
D. A series of management buyouts.
4) In order to survive in the mid 1990s Volkwagen
