Phoenix Contact

Topics: Management, Board of directors, Crisis Pages: 30 (8076 words) Published: January 29, 2014
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Phoenix Contact 2013
Sustaining Energy in Fluctuating Times:
The Role of Leadership and Corporate Culture Development

This case study tells the story of Phoenix Contact, a medium-sized international manufacturer of industrial electrical and electronic technology based in Germany. The main focus is on developments that took place between 2000 and 2013. The world leader in its market managed to digest high-speed growth phases and overcome a severe economic crisis by intentionally developing, implementing and shaping its corporate culture and leadership within the company. The case illustrates these organizational developments, focusing on the challenges Phoenix Contact faced and how company leaders managed to overcome them successfully.

University of St. Gallen case study

Prof. Dr. Heike Bruch, Daniela Dolle

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Started by Hugo Knümann in 1923 as a small family-run business in Essen, Germany, Phoenix Contact had, by 2013, grown to more than 12.800 employees working in over 70 countries worldwide, generating revenues of over 1.59 billion € in 2012. In 90 years, the manufacturer of industrial electrical and electronic technology advanced to the world market leader, constantly digesting high-speed growth phases and increasing internationalization. In the late 1990s, company leaders developed an increasingly decentralized structure with high responsibility and scope of action in the units. In 2000, the management team decided to establish corporate principles that included a mission, vision and cultural guidelines. For 2020, the company’s overall strategic goal was to become excellent in all parts of the business and thus, to become the most trusted brand in the industry. At the worst point during the economic crisis, in 2009, Phoenix Contact faced a 19% decline in turnover. In order to reduce capacity and lower costs, short-time work was introduced but not a single employee was dismissed. The company managed to weather the crisis and come out on the other side healthier and more innovative than ever. As a result, the management team could confirm its commitment to the overall strategic goal for 2020. In 2010, the best year in the company’s history, the turnover growth rate hit a staggering 40%. However, since 2011, Phoenix Contact has been facing various major challenges, including coping with ongoing exceptional growth rates (about 40%), maintaining its medium-sized culture in the face of the increased internationalization and attracting as well as retaining qualified and motivated employees in the face of the war for talent and demographic change. In 2013, two of the biggest challenges for Phoenix Contact were to deal with comfortable inertia and maintain its position as the market leader.

University of St. Gallen case study

Prof. Dr. Heike Bruch, Daniela Dolle

3

Phoenix Contact’s path to world market leader
Extension of production base and increasing internationalization Knümann founded Phoenix Contact in 1923 as a “Handelsvertretung” of overhead line fittings for trams in Essen. Besides the development of the first modular terminal in cooperation with RWE (Rheinisch-Westfälische Elektrizitätswerke), the so-called Phoenix Elektrizitätsgesellschaft benefited strongly from the boom in electrified transportation. After the company’s headquarters were bombed in World War II, the production plant and stock were moved to Blomberg, North Rhine-Westphalia. At that time, the company had about 30 employees. In 1949, Knümann approached Josef Eisert, who held a range of patents for terminals. Eisert became technical director and, after Knümann’s death in 1953, took over management of the company. Eisert’s three sons – Klaus, Jörg and Gerd – joined the company in the 1960s and, in 1975, succeed their father in management. At this time, the company began to increasingly focus on expanding into international markets, which resulted in the foundation of numerous foreign subsidiaries. In 1982, the management...
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