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Continental Scorecard

In the following project, our intent is to discuss about this big international company,
Continental, and its strategy and implementation which determined this big development on the
market and a worldwide impact. We considered important in this approach to start with a short
presentation of the company, with its main values, mission and vision and to offer a little
description of the services Continental is providing on the market. An environmental analysis is
also mandatory in the context of a scorecard, as at this stage we learn about this company’s
investors, competition, special results and business strategies. For the next step, a SWOT
framework could be of much help to visualize the environment of the organization. The HR
metrics Becker militated for will also be taken into consideration. And for visualize the HR
deliverables and strategy, a scorecard will be realized, in order to see how the business strategy is
implemented and the outcomes registered. We believe this will be a good analysis and an
interesting view of a large company which recently developed in our country, too.

Presentation of Continental AG Company

Continental AG is fourth’s largest supplier of car parts. Continental is the Europe’s


second largest in the same industry. It produces and provides services on a wide range of
automotive parts, and as the years passed, it developed in so many countries over the years.

Continental AG was started in Hanover in Germany in 1871. The company is different


from its competitors and gives importance to the safety and comfort of the consumers. The
company is also aware about the reduction of environmental damage. Although the company
faced many obstacles in its path of growth, it has been effectively confronted and resolved and
continues to become one of the industry's giants.

Social responsibility and sustainable management are among their core values. They form
the basis of their work, it guides their corporate strategy and support their development on the
market. For the company Continental, acting in a sustainable and responsible way means:
preserving resources, respecting the law, and promoting climate protection, while at the same
time fulfilling the responsibilities to employees and society in general. As a signatory of the
Global Compact of the United Nations, Continental support human rights, labor standards,
women’s rights, environmental protection and the fight against corruption.

Continental is convinced that a responsible and a sustainable business enhance the ability
to innovate and meet the demands of the future – adding value to the company. Thus, they can
identify the risks and also the opportunities early and open the processes of changing the needs
of a major successful company. For these reasons, sustainability is an integral part of the
corporate strategy and corporate development. By combining financial and non-financial
performance indicators in a holistic approach, this Automotive Company makes a positive
contribution to employees, to the environment, and to society as a whole.

Continental AG focuses on the production, development and marketing of the automotive


and vehicle parts that help to improve driving safety, comfort, and driving dynamics. The
Continental AG is an innovative technology and has products and networks worldwide. The
organization of the company is divided in to two groups and each group is further divided into
three sections.

The main two groups include Automotive and Rubber

I. Automotive group include three sections namely Chassis and Safety, Powertrain, and
Interior
II. The Rubber group includes three sections namely Passenger and light truck tires,
Commercial vehicle tires, and Contitech tires.

The growing tree is the symbol of Continental’s entire business, by displaying such
majestic initiatives, strategic dimensions, vision, mission and values. To quote the organizational
perspective of this tree symbol: “Its trunk grows with the nourishment of our three value streams,
and its crown bears the fruit of our actions. We plan our strategy with a broad perspective so that
it is always consistent with our vision and our mission.” By aiming for satisfied customers,
Continental as an organization is making efforts to provide to people affordable access to safe,
clean, intelligent and convenient mobility.
The main vision of this company relates to providing the best solution for each and every
one of the markets and for each and every one of the customers. Three words to define this are:
efficient, effective and innovative. Continental believes that by acting holistically, systemically
and in a networked manner, they are faster than others when it comes to transforming ideas into
mass production.

The mission is much related to mobility. Mobility and transport are essential elements
regarding to Continental which is why their focus as a responsible, leading company and the
partner of choice, they are inventing, developing, producing market indispensable and pioneering
technological solutions. Their main concerns are information, safety, environment and accessible
mobility.

Continental’s core values are related to the employees and the fundamental things that
keep the company together. They form the roots of their corporate culture: Trust, Passion To
Win, Freedom To Act and For One Another.
Automotive Industry
The automobile industry is a wide range of companies and organizations involved in the
design, development, manufacturing, marketing, and selling of motor vehicles, some of them are
called automakers. It is one of the world's largest economic sectors by revenue. The automotive
industry does not include industries dedicated to the maintenance of automobiles following
delivery to the end-user, such as automobile repair shops and motor fuel filling stations.1

The industry is largely driven by growth in the sales of vehicles that are served with
various sensor applications. These applications are segmented as engine and transmission, safety
and security, body applications, chassis applications, and driver support. The US, Europe and
Asia Pacific, specifically China, India, and Japan, are found the major regions attaining global
growth for sensors in automotive applications.

Through the most important automotive sensor companies, we found a top five that is
accomplished by organizations as: Continental, Desco, Delphi, Honeywell and TRW
Automotive.

Fig.1

Following the chart that was presented above, we can see that Continental company is
considered one of the most important organization on the market.

1
https://en.wikipedia.org/wiki/Automotive_industry
However, Continental AG is known as the fourth-largest global supplier of car parts. The
company is the second largest in Europe in the same industry. Produces and provides services on
a wide range of auto parts.

The top 10 competitors of Continental AG in the automobile manufacturers field are:


Delphi Technologies, Bosch, Harman, Johnson Controls, Siemens, Goodyear, Valeo,
MagnetiMarelli, ZF TRW and Bose. Together they have raised over 1.3 bilion dollars between
their estimated 1.2 milion employees.

As the presentation made on the official page, Continental AG is focusing now on six
important trends in the automotive industry: automated driving, electric mobility, safety,
digitalization, inform and entertain and lightweight design. The company is also conscious about
reducing the harm to the environment.
Corporate Strategy
Following the vision of the company (your mobility, your freedom, our signature), the
corporate strategy is reflected in seven strategic dimensions: value creation, regional sales
balance, top market position, in the market for the market, balanced customer portfolio,
technological balance and great people culture. These seven strategic dimensions complement
one another and follow to ensure sustainably creating value and future viability of the company.

Fig.2

1. Value creation – the company wants to enhance its values for a long term period,
having sustainable success and taking into consideration the cost of capital
2. Regional sales balance – through globally balanced distribution of sales
3. Top market positions – among the three leaders suppliers in all relevant markets
4. In the market for the market – through a high degree of localization
5. Balanced customer portfolio – balance between automotive and other industries
6. Technological balance – combination of establishing and pioneering technologies
7. Great people culture – through a culture of inspiration2

Business Strategy
Every employee in the continental AG has the full responsibility of all his actions and he
is ready to perform it all the time. Constructive criticism and suggestions are welcomed from the
employees to increase their activities and role in the management process and to develop their
own ideas. Another important characteristic of the leadership in the Continental AG is that they
provide and encourage continuous education for all the employees. By this process their
knowledge will be improved and they can contribute more significantly for the organization. It
also help them to adapt to the quickly changing environments in the industry. The management
and leadership is keen to make sure the exchange of knowledge between the external and internal
environment of the organization.

2
http://report.conti-online.com/2017/en/report/corporate-profile/strategy.html
Balanced scorecards
Following Becker’s structure of the balance scorecards we have:

Financial Cost Consciousness - Balance Value creation – Technological


Production in Best- distribution of sustainable balance
Cost Countries sales value creation

Customer Growth driven by the Balanced In the market for


innovative software for customer the market (554
systems solutions portfolio locations in 61
countries)

Internal Processes The leading quality and


technology company in
their industries

Learning & Soft skills trainings Communication Passion to win Free decision

Growth making
Environmental analysis
As far as the external environment is concerned, the macro environmental factors which have
an impact on Continental were observed using the PESTEL analysis published in July, 2018.

1. POLITICAL
Political stability in most of the markets. It is well known that political tension can
hinder the growth of companies. This is not the case for Continental AG since the
company managed to attain political stability on major markets. It is supported by the
majority of states to produce eco-friendly products in order to achieve the environmental
expectations.
Trade protectionist policies implemented by Trump
The general global trade is greatly influenced by protectionism policies which are the
result of political issues. In the case of this company, the forecast suggests that the U.S.
new regulations will affect foreign companies, making it difficult for them to operate in
the USA. Continental AG being a German organisation is prone to be directly impacted
by these changes (i.e., SUA withdrawal from the Trans-Pacific Partnership trade
agreement3).
Governmental support for Eco-friendly products
2. ECONOMICAL
Impact of macroeconomic conditions prevailing in operating regions
Rapid growth and opportunity in BRIC nations4

3. SOCIAL
The use of e-commerce in order to sell tyres

3
Twelve countries that border the Pacific Ocean signed up to the TPP in February 2016, representing roughly 40%
of the world's economic output. The pact aimed to deepen economic ties between these nations, slashing tariffs and
fostering trade to boost growth. Members had also hoped to foster a closer relationship on economic policies and
regulation. The agreement was designed so that it could eventually create a new single market
4
BRIC is a grouping acronym that refers to the countries of Brazil, Russia, India and China, which are all deemed to
be at a similar stage of newly advanced economic development
E-commerce has become one of the main channels of selling, offering the possibility to
compare between products. Continental AG has the chance to have a larger consumer
base using these electronic platforms not only to sell tyres but also spare parts of a car.
Consumers’ choice in matter of tires
Tire industry is influenced by demographics. When it comes to choosing the perfect tires,
young buyers are more interested in the value proposition rather than brands. Their
buying habits are influenced by price, brand, and longevity of tire, maintenance, and
safety. By selling tires at various price brackets, with high safety standards, continental
ensures that it is the most preferred provider across different types of customers. The fact
that the segments of customers who buy ultra performance vehicles are young and mostly
interested in status boosts the selling of premium tires. This is sustained by a survey
conducted in 2017. Results say that 38% of American bought the same tires that the
vehicle had, 31% looked for the best price, and 31% took into consideration the dealers’
recommendation. As far as the brand is concerned, the brand affects tire choice for 1 in
every 3 customers (36%). As a result, both brand and pricing can help Continental can
become the market leader.

4. TECHNOLOGICAL
Digitalisation of business process
Business processes in different industries have been digitalised, which guarantees the
efficiency of the information flow and the supply chain. Continental aims at achieving a
share of 10% of driver assistance systems sales by 2020. Their technological balance
supports this aim.
Prevalence of fibre network
Continental adopted Optic Fibber communications. Compared to Copper, the Optic
Fibber increases scalability, speed, it can be used by multiple users on multiple devices,
low attenuation loss, electrical insulation, and the security of information.
5. LEGAL
Continental aims at improving Intellectual Property and consumer protection laws
Continental’s products and services are highly dependent upon its technological know-
how and the scope and limitations of its proprietary rights therein. Even though
continental has obtained and applied for a large number of patents and industrial
propriety rights, a major part of its know-how and secrets are not patented and, as a
result, cannot be protected. Being unprotected, these practices risk to be transferred to
those with who the organization collaborates. (Annual Report 2017)

6. ENVIRONMENTAL
Sustainable practices for future
Continental, being an organisation which operates at a global level (both USA and EU),
runs the risk of not respecting the safety regulations. Since they are continually changing
and they are not universal, Continental must ensure that it respects a large number of
regulatory systems, particularly those related to environment, chemicals, hazardous
materials, and health regulations.

Reduction in CO2 emissions


SWOT analysis

STRENGTHS
1. Strong brand portfolio showing great product variety, specialized divisions in order to
differentiate products (offer several types of remoulded tires for any kind of vehicle)
2. Global company (Africa, Asia, Europe, America, Asia, and Australia) with great
performance in new markets (currently it is acquiring companies from Malaysia and
India)
3. Good brand image (it sponsored FIFA World Cup)

4. Automation of activities brought consistency of quality to Continental products and


has enabled the company to scale up and scale down based on the demand conditions
in the market.
5. High level of customer satisfaction

6. Strong Free Cash Flow – Continental has strong free cash flows that provide
resources in the hand of the company to expand into new projects.
7. Strong dealer community – It has built a culture among distributor & dealers where
the dealers not only promote company’s products but also invest in training the sales
team to explain to the customer how he/she can extract the maximum benefits out of
the products.
WEAKNESS
1. The company is new on the emerging markets
2. The diversification can create problems related to brand image, the production
3. The process of remoulding is complex and much more expensive in comparison
to other companies
4. The production process is complex and the staff needs special formation in order
to test the tires conscientiously
5. Financial planning is not done properly and efficiently. The current asset ratio and
liquid asset ratios suggest that the company can use the cash more efficiently than
what it is doing at present.

6. Not very good at product demand forecasting leading to higher rate of missed
opportunities compare to its competitors. One of the reasons why the days
inventory is high compare to its competitors is that Continental is not very good at
demand forecasting thus end up keeping higher inventory both in-house and in
channel.

OPPORTUNITIES
1. New environmental policies may help Continental to create new technology
and gain market share in the new product category
2. The company can start to expand the principle of franchising by selling
licenses to produce remoulded tires on behalf of Continental
3. Growth opportunity in hybrid and electric vehicle market

4. New customers from online channel – Over the past few years the company
has invested vast sum of money into the online platform. This investment has
opened new sales channel for Continental. In the next few years the company
can leverage this opportunity by knowing its customer better and serving their
needs using big data analytics.

5. Government green drive also opens an opportunity for procurement of


Continental products by the state as well as federal government contractors.

THREATS
1. Rising prices due to conflicts and political issues in the areas where the
company has franchises. Civil wars happening in the Arabian countries.
2. Competition with other remoulding companies.
3. The markets from Japan and USA have become mature.
4. Pollution control: people use other means of transport (underground,
trains).
5. The prices for raw materials that the company uses are high.
6. The remoulding process is now also done in China at a cheaper price.

HR plan
“Our people, our culture, our future”

The Human Relations (HR) team actively supports employees in their professions and
careers and encourages them to develop their talents. Continental tries to create tangible value:
for the employees, for the company, the customers and all other stakeholders.

Continental’s HR policy is holistic and based on working with and for one another. They
seem to attach great importance to relationships with one another and to ensuring that the shared
corporate values – Trust, Passion To Win, Freedom To Act and For One Another – are put into
practice. These values are the basis of their corporate culture and shape the way employees
interact with each other and with customers and partners. Continuous development of corporate
culture means increasing Continental’s values.

This HR policy is founded on two strategic pillars within which they want to implement
different HR projects and initiatives. Based on these two pillars, Continental’s HR is preparing
for the future strategy:

 With “Industrialize Best Fit,” we are developing HR management in the context of our
“best fit” concept in order to meet our considerable need for employees with the right
skills and abilities – now and in the future.
 “Enable Transformation” supports digital transformation at Continental so that we can
make the most of the opportunities of digitalization throughout the corporation.
“Industrialize Best Fit” – meeting staffing needs with precision

Upon their testimonies, the HR of this International Company is working on a number of


closely related projects in the context of improving the HR data and systems, HR planning and
recruitment, and employee development. In the medium term, what they are looking for at
Continental is not somebody for a job, but rather the right position at the company for a
particular candidate. What counts is the person who is the best fit for a vacant position. This
means the person with exactly the right skills, abilities and values for the job and for Continental.
The better the fit between employees and their jobs at Continental, the more satisfied and
motivated the employees will be, which are the key factors for productivity and quality. This best
fit is becoming increasingly important in light of the growing need for suitable employees.

Strategic HR planning

In view of future growth and increasingly short innovation cycles, Continental is trying to
identify and secure future personnel requirements. This is why the HR teams around the world
are involved in the product development process at an early stage, in close collaboration with the
business units.

They rely on strategic HR planning that further increases the level of detail in our plans while
also creating a uniform and reliable HR strategy. In this context, we understand that their
purpose is the development of their current workforce based on factors such as retirements and
staff turnover and, secondly, the personnel requirements that are needed in order to successfully
achieve the business goals. By comparing these two factors, we can identify the quantitative and
qualitative requirements at an early stage so that they could build up the required expertise in
good time. These results will help them to identify how the challenges of digital transformation
will affect the requirements for individual employees, so that corresponding training measures
can be initiated on a preparatory basis in the next step.5

To further improve the best match between applicants and vacancies and thus improve the
quality of the recruitment processes, they have developed and intensified various diagnostic
projects. Extensive online and on-site tests and work samples were used to select employees for
Continental’s factories. The unique feature of this process is that candidates for salary roles do
not apply to specific posts, but rather give advice on the positions that are most appropriate for
them. The main objective of these pilot projects is to establish a standardized selection, global
process for salaried employees.

For payroll (salaried positions), human resources have introduced validated scientific and
standardized online processes, that they want to use to gain an impression of the applicant’s
skills at an early stage of the demand. The international implementation of the Continental’s
online assessments for salaried positions is close at hand.

As part of Continental’s top quality initiative, human resources also continues to be able to
grow “from career changers to career climbers” – especially if they have specific skills in
technology and software. Continental, in 2017 has expanded its education and training program
for software experts to include an additional module. An advanced qualification for automotive
software technicians provides to the employees a three-year course ending in an officially
recognized qualification. Also, in the selection process, they are not only based on formal
educational qualifications but have confidence in their abilities and skills. A good software
developer or technician does not necessarily need a diploma. Thus, the human resource
department wants to use the education and training program to counter the general lack of
qualified IT staff from the start. Personalized educational formats make them less dependent on
the labor market and, therefore, are more competitive.

Digitalization, at the same time, it offers to the company a wealth of opportunities – both in
terms of access to new markets and in terms of training employees. For this reason, the Human
Relations team actively contributes in shaping digital transformation. Competitive advantages

5
http://report.conti-online.com/2017/en/report/corporate-profile/employees.html
arise if both the company and its workforce adapt to the new conditions more quickly and
flexibly than others. Regarding this context, they are promoting four key areas:

 Diversity management – essential requirement for creative ideas and alternative solution
strategies.

 Flexible working conditions – enable employees to maintain a healthy work-life balance.

 Inspiring leadership culture – increases the enjoyment derived from commitment and spurs
people on to perform well.

 Lifelong learning and intensive exchange of knowledge between our employees – give rise to
the best solutions for the customers.

In this new perspective of human resources, we can understand why Continental as an


Organization is one of the best in Europe.6

6
http://report.conti-online.com/2017/en/report/corporate-profile/employees.html
HR SCORECARD

Explanations:

1. The aim of the company is to be a top market leader. From the perspective of an HR
consultant, this aim can be achieved by hiring highly qualified people whose knowledge
and proficiency can be verified through tests and interviews. In this process of finding the
right candidates, the HR can determine the average time to find a hire, the percentage of
candidates remaining after each round of elimination in the hiring process. A low
percentage might indicate the need to update an unclear or unattractive job posting, and a
high percentage indicates a larger number of qualified candidates with whom to continue
the hiring process. By hiring 'professionals', the company can increase the customer
satisfaction index and, finally, achieve its main goal, gain competitive advantage by
delivering high quality products.
2. Continental aims at respecting the safety rules and at protecting the environment. By
keeping up to date with the latest changes in terms of rules and regulation, the company
ensures that it does not break the law. It is difficult to always keep an eye on what
happens, globally speaking, considering the fact that the company has many subsidiaries.
Even though the concept of Corporate Social Responsibility is relatively new, the HR
should focus on this aspect by informing both suppliers and employees. By knowing the
resources available at hand, the company can manage its resources efficiently. The
impact of informing and promoting CSR can increase the differentiation on the market.
3. Continental promotes the 'great people culture', aiming at promoting creativity and
collaboration. The Hr department can help attain this aim by encouraging employees to
participate in decision making processes, by trainings which focus on skills which help
collaboration (soft skills which are hard to master). Collaboration can also be increased
through team building. The results of such practices can be measured by the Net
Promotor Score, by ESAI.
4. Continental's aims at achieving a technological balance – combination of established and
pioneering technologies can be achieved by hiring people from different generations (a
mixture between Centennials and Millennials).

In conclusion, we hope that the steps suggested for the HR department can help the
organization achieve its goal. The balanced scorecard acts as a driving force that motivates the
change in the organization. The scorecard function is not just a measurement system.
It can also act as a strategic management system. In this way, we can determine the HR
role exactly and can always fight for new outcomes, for new challenges and development.
Bibliography
1. http://fernfortuniversity.com/term-papers/swot/1433/1348-
continental.php?fbclid=IwAR0KFDrkZDF9yB6M_L5scIuqcWKXGRS4K-
_aJ4BXijO8ONP0sp2Tem5dN7c

2. https://www.swotandpestle.com/continental-ag/

3. https://www.clearpointstrategy.com/human-capital-kpis-scorecard-measures/

4. https://www.continental-corporation.com/en/company/corporate-strategy/our-seven-
strategic-dimensions-57170

5. Phillips, J. J. / Stone, R. D. / Phillips, P. P. (2001): The Human Resources Scorecard:


Measuring the Return on Investment, Boston

6. https://en.wikipedia.org/wiki/Automotive_industry

7. http://report.conti-online.com/2017/en/report/corporate-profile/strategy.html

Realized by:

Bratosin Daniela

Puiu Ecaterina

Stăcescu Loredana

Axinte Ana-Maria