Expanding international business is more of a strategy for corporate success than ever before

When the internet started its triumphal march, it was not only the IT gurus who prophesied that the world would become a “global village”. We are, of course, all aware how the internet has changed, if not revolutionised, business processes and our private lives in the last ten years. Even if the world has not become a “village” where everyone knows everyone else – after all, capital and information are easy to transmit over the data highway, though production sites and people are not so easy – the image of everyday life and people’s awareness have become international to a great extent. The current buzzword for this is all around: globalisation. Roman Herzog, Germany’s former president, once described this process thus: “Globalisation has created an international market not only for goods and capital but also for ideas.”

This is particularly true of companies who are adopting an international focus in light of increasingly saturated domestic markets. Apart from the search for new markets and cost savings, other factors which play a role in this are the access to resources such as raw materials and energy, to technology and to know-how. For this reason the number of multinational companies has increased significantly in recent years. Experience shows, incidentally, that turning to production abroad does not necessarily spell job losses at home. Renowned economists have estimated that three new jobs abroad safeguard one job on the domestic market.

The route abroad is a gradual process

Bosch Thermotechnology and Buderus had a reputation for a long time for being strongly rooted in their respective regions. At the same time both companies, especially Bosch Thermotechnology whose parent company, Robert Bosch GmbH, has been a global player for a long time, realised at an early stage how important global business would be in future.

Getting to this stage is an incremental process. It usually starts from a strong position on the domestic market, generally associated with rising sales to neighbouring countries; a foreign company is then often acquired which fits in with the product portfolio, after which wholly-owned manufacturing sites are built abroad; finally, research and development can also take place abroad. This was also the path followed by Bosch Thermotechnology and Buderus.

Globalisation is part of Bosch Thermotechnology’s vision

Bosch Thermotechnology has come to a new dimension. In one of the vision statements drawn up at the management conference in Bad Brückenau in June 2004, the company explicitly states its desire to become “the world’s leading supplier of systems for a comfortable indoor climate and hot water”. A number of action fields or missions with an international focus are derived from this:

- We will achieve, as the European market leader, 30 % of our turnover and value added outside of Europe.
- We will achieve a regional management structure in North America, South America and Asia to drive our business.
- We are attractive to international-minded employees and encourage cultural diversity
- Internationally we communicate in English.
- Our business is independet from fluctuations in the leading currencies.

The new markets can be opened up profitably

One of the reasons for the synergy effects that the new company will enjoy is that there is hardly any overlap in the product portfolio and the sales channels serviced to date by Bosch Thermotechnology and Buderus Heating Technology. Thanks to the significantly expanded product portfolio, which extends from floor-standing and wall-hung heating appliances via solar energy systems to water heaters, Bosch Thermotechnology is a one-stop supplier of space and water heating solutions for almost every application. This means that the company has enhanced its profile as a systems supplier. However, neither the domestic nor the European Union market will enable full use to be made of this advantage as might be wished. Many countries in Europe have also reached a certain saturation point, with the result that any further expansion in these markets, though possible in principle, would be disproportionately expensive. The priority now, therefore, is to look towards capturing growth markets outside Europe. We currently achieve four per cent of sales and added value outside Europe, two in the US, two in Asia. The implementation of our mission to increase this share to 30 per cent will have a major impact on Bosch Thermotechnology. At any rate, Bosch Thermotechnology has the optimum prerequisites for opening up further future markets, especially in Asia and North America, thanks to its being part of the established international infrastructure of the Bosch Group.

It goes without saying that the reasons for operating on a global scale mentioned above also apply to Bosch Thermotechnology. It is not about maximising short-term profits but safeguarding our future. And it is precisely for that reason that the income earned is invested in the Bosch Group. The worldwide market potential is not only available, it can, according to regional sales director Klaus W. Kromm, also be developed, either organically or by means of acquisitions. In the European market this occurred earlier, e.g. by acquiring Worcester in the UK or Nefit in the Netherlands. “Diversification, i.e. expanding into different locations and products, is welcomed because you then become more independent of regional fluctuations and find out about competitors’ technical innovations at an earlier stage when you are operating directly in the relevant market,” Kromm continued. And by expanding overseas, this also restricts competitors there because a greater proportion of their capacity is then required to combat the fiercer competition and therefore less is available, or at least there is a delay in its availability, for the European market. Consequently, the domestic market is also afforded a certain level of protection in this way. It is also important to be manufacturing in a market in which the dollar is the key currency, such as in China, in order to reduce exchange rate risks for business in China and also in the US.

Renewable energies will also encourage growth

China is a special market in part because there is an interest there in renewable energies, and there is a determination in some parts to bypass the environmental pollution phase of industrial development as experienced in Europe. People are also starting to consider the consequential costs of industrialisation. “Solar technology will be a major issue in Shanghai in the future,” predicts Kromm and adds that the appropriate response to this is to ensure that condensing technology and solar technology are used from the very outset instead of conventional heating technology. This will, incidentally, permit two of Bosch Thermotechnology´s missions to be achieved at the same time, i.e. growth and responsibility for the environment. It is crucially important in this regard that the Chinese should increasingly adopt European solutions because experience with cheaper Asian products has been less than positive.

Regional status will be enhanced and identity maintained

How is globalisation of our business organised at present? There are four departments which share the world out among themselves. The Group’s own sales subsidiaries and independent import customers throughout the world are supported and serviced from three sites, i.e. Wernau, Wetzlar and Aveiro. The four central departments are points of contact for those responsible in the markets themselves and provide assistance in the strategic alignment and management of the business. Bosch Thermotechnology plans to make greater use of decentralised operations in the future. Those with responsibility for the regions in the future mostly come from the respective region, and ideally they can represent the views both from the centre and from the region. By taking on greater autonomy, and not just in terms of sales and operating profit, the status of the regions will be enhanced.

But how far can this autonomy extend? Could it be that the granting of autonomy to the regions could be (mis)understood to mean that they can do whatever they think fit? Does this very approach not represent a danger to the identity of the new company? Klaus Kromm sees no danger here: “The ties to the parent company in Germany are guaranteed. Central Product Management, for example, specifies in consultation with those responsible in the local markets what is to be marketed. These processes therefore operate within a framework which is set out by the parent company; however, they are merely no longer subject to centralised control. The same rapid and transparent processes and methods apply everywhere, and particularly the same quality demands. The vision and the related policy deployment process also back up the common identity.”

Bosch Thermotechnology will enable employees to further their careers abroad

With increasing globalisation there is, of course, a growing demand for employees who would like to work abroad for Bosch Thermotechnology. Particular requirements have to be met. Kromm advises against seeing a posting abroad as a means of enhancing career prospects later in Germany, even if the experience gained abroad will undoubtedly be useful in the future. “In general, it’s a question of people with a desire to go abroad putting themselves forward. We don’t try to dispatch anyone abroad against their will!” There must, of course, be a spirit of cultural open-mindedness as well as the ability to delegate because the ultimate aim is for local employees themselves to take over management duties in the medium term. Those wishing to work abroad must be capable of negotiating reliably in the relevant language. It has been the practice at Bosch Thermotechnology in the past not necessarily to post those people abroad who can already speak the local language; instead, part of the staff development process can often be to give employees the chance to learn a new language. Bosch Thermotechnology will therefore also offer such opportunities. One thing is absolutely certain: even on the domestic market managers at least will not be able to survive without a good knowledge of English: the one-and-a-half-day workshop on the economic planning process which took place immediately prior to the management conference in Bad Brückenau was run entirely in English.