Business Case Studies & Business Publications

Bertelsmann (B)

Liedtka, Jeanne M....

Case

Bertelsmann (B)

Liedtka, Jeanne M.; Gibbons, Emily Jean

BP-0419 | Published October 10, 2001 | 7 pages Case

Collection: Darden School of Business

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Bertelsmann, a global media company, whose holdings include television, books, music, and printing, is considering the purchase of the publisher Random House. The backdrop for the purchase, laid out in the A case (UVA-BP-0418), is a publishing industry showing decreasing profitability, with the rise of celebrity-author advances and powerful retailers like Barnes & Noble and Amazon. Further complicating the decision is Bertelsmann's recent emphasis on multimedia operations, the development of which may threaten Bertelsmann's traditional print operations. The B case describes Bertelsmann's purchase of Random House, and begins to make explicit the CEO's strategy for the purchase. As Bertelsmann makes a series of deals to become stronger in content delivery, difficulties with implementing new strategies under the current corporate structure are revealed. The B case leaves the reader considering where Bertelsmann should focus further investments and what structure will support a cultural shift. The C case (UVA-BP-0420) reveals Bertelsmann's decision to reorganize all e-commerce operations into one division.