Rudi Gassner And Bmg
...provided 80% of the worldwide music sales. In this industry, competition is fierce for new repertoire and market share. To become successful globally, it was important to have a presence in key markets, and to have an efficient A&R Marketing strategy to keep attracting new repertoire. But with being global, it is always a challenge for the company to set up the right organization to be able to operate efficiently in a global scale.
Bertelsmann AG, the parent company of BMG International, is one of the largest media enterprises. It has subsidiaries that do business in several different areas from Music to Printing and Manufacturing. It promoted autonomous and entrepreneurial business divisions. We can say the Bertelsmann AG runs its company as a "Decentralized Federation", which means that the organization pattern is a loose federation of independent national subsidiaries, each focused primarily on its local market. Each business had performance linked compensation as a source of motivation to meet their target. By 1992, Bertelsmann became the second largest media enterprise in the world.
After creating Bertelsmann Music Group (BMG) in 1986, Michael Dornemann, CEO of BMG, divided the company in two divisions, creating BMG International led by Rudi Gassner. Unlike its parent company, BMG International was mostly set up as a "Coordinated Federation". Even though Rudi Gassner thinks that he adopted to run BMG International the same way as the parent company, he still adopted to keep a centralized control of its subsidiaries. Exhibit 2 of the case gives us an organizational chart of BMG International. The Managing Directors had the freedom to decide on the strategy to adopt for the local market they were responsible for, however, the regional directors were used as a control system to make sure that Rudi Gassner's decisions were followed....
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