Adam Tomar
Strategic Management Final (Prof. Spinello)

1.) Following WWII, fifth-generation Reinhard Mohn took over operations and slowly began to rebuild the company. Reinhard and Fritz Wixworth came up with the revolutionary idea to form a “book club,” a strategy that would remain the centerpiece of Bertelsmann for the next 50 years. Mohn and Wixworth believed that there would be significant demand by readers for books that “came to them,” especially since so many personal libraries had been destroyed during the war. Their strategy exceeded all expectations, as the book club had 100,000 members within 12 months and more than a million members within three years. Six years later, Bertelsmann expanded their revolutionary concept of personal clubs into the realm of music. Within a year, Bertelsmann built its own record-press plant and started its own music label, Ariola. By the early 1960s, the rapid growth experienced by Bertelsmann meant that the company had outgrown its existing organizational structure.
Consequently, Mohn introduced a decentralized, divisional corporate structure with multiple independent profit centers. All divisions would be allowed to operate autonomously as long as their profits exceeded a hurdle rate, a strategy that Mohn coined “leadership from the center.” At the same time, Mohn created a set of principles and values called the “Bertelsmann Essentials” on which the organization should be based. With these values in mind, Bertelsmann continued to expand and diversify its portfolio throughout the 1960s. Beginning in 1962, Bertelsmann introduced its book club model in Spain, Portugal, the UK, the Netherlands, and Italy. Bertelsmann also entered the emerging television industry by acquiring UFA, a Berlin-based film production company, in 1964. Then, in 1969, Bertelsmann purchased a 25% minority stake in Gruner+Jahr, one of Germany’s