Harvard Case - Defining the Purpose for Borussia Dortmund GmbH & Co. KGaA
"Defining the Purpose for Borussia Dortmund GmbH & Co. KGaA" Harvard business case study is written by Urs Mueller, Ulrich Linnhoff, Bernhard Pellens. It deals with the challenges in the field of Business Ethics. The case study is 14 page(s) long and it was first published on : Feb 19, 2013
At Fern Fort University, we recommend Borussia Dortmund GmbH & Co. KGaA (BVB) adopt a comprehensive purpose statement that goes beyond mere sporting success. This statement should encompass a commitment to corporate responsibility, ethical leadership, and sustainability across all aspects of the organization. This will serve as a guiding principle for decision-making, ensuring alignment with BVB's values and fostering trust with stakeholders.
2. Background
Borussia Dortmund is a prominent German football club facing a crossroads. While enjoying significant sporting success, the club is grappling with the need to define its purpose beyond winning trophies. The case study highlights the internal debate regarding the club's direction, with some advocating for a purely performance-driven approach while others push for a broader focus on social responsibility and community engagement.
The main protagonists are Hans-Joachim Watzke, CEO of BVB, and the club's board members, who are tasked with navigating this complex issue and formulating a purpose statement that resonates with both internal and external stakeholders.
3. Analysis of the Case Study
The case study can be analyzed through the lens of Stakeholder Theory, which emphasizes the importance of considering the interests of all stakeholders, not just shareholders. BVB's stakeholders include fans, players, staff, sponsors, local communities, and the broader football industry. Each group has unique expectations and concerns that must be addressed in the purpose statement.
Furthermore, the case study highlights the need for ethical decision-making in the context of a highly competitive and commercialized industry. BVB must navigate potential conflicts of interest, ensure transparency in its operations, and uphold ethical standards in its dealings with stakeholders.
4. Recommendations
BVB should adopt a purpose statement that encompasses the following key elements:
- Sporting Excellence: BVB remains committed to achieving sporting success, both domestically and internationally.
- Community Engagement: The club will actively engage with its local community, promoting social inclusion, diversity and inclusion, and supporting local initiatives.
- Sustainability: BVB will implement green business practices, prioritize environmental stewardship, and promote ethical sourcing in its operations.
- Ethical Leadership: The club will uphold the highest ethical standards in all aspects of its operations, including transparency, fair trade, and anti-corruption measures.
- Corporate Governance: BVB will implement robust corporate governance practices, including a clear code of conduct, strong data privacy policies, and mechanisms for whistleblowing.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: The proposed purpose statement aligns with BVB's core competencies in sports and community engagement while expanding its focus to incorporate ethical and sustainable practices.
- External Customers and Internal Clients: This approach addresses the expectations of BVB's diverse stakeholders, including fans, players, sponsors, and the local community.
- Competitors: BVB can differentiate itself from competitors by demonstrating its commitment to corporate responsibility and sustainability, attracting fans and sponsors who value these principles.
- Attractiveness: The proposed purpose statement enhances BVB's brand image, attracting talent, sponsors, and fans who value ethical and sustainable practices.
6. Conclusion
By embracing a purpose statement that emphasizes corporate responsibility, ethical leadership, and sustainability, BVB can solidify its position as a leading football club that prioritizes values beyond sporting success. This approach will foster trust with stakeholders, enhance the club's brand image, and create a positive impact on the community and the broader football industry.
7. Discussion
Alternative approaches could include focusing solely on sporting success or adopting a more generic purpose statement. However, these options fail to address the complex challenges facing BVB and its stakeholders.
The proposed approach carries risks such as potential backlash from those who prioritize short-term sporting success over broader social and environmental concerns. However, these risks can be mitigated through effective communication, stakeholder engagement, and a commitment to transparency.
8. Next Steps
BVB should implement the following steps to integrate the new purpose statement into its operations:
- Develop a detailed plan: Define specific actions and initiatives to implement the purpose statement across all departments.
- Communicate the purpose statement: Clearly communicate the purpose statement to all stakeholders, including fans, players, staff, sponsors, and the local community.
- Establish accountability: Develop mechanisms to track progress and ensure accountability for achieving the goals outlined in the purpose statement.
- Monitor and evaluate: Regularly monitor the impact of the purpose statement and make adjustments as needed.
By taking these steps, BVB can ensure that its purpose statement serves as a guiding principle for decision-making, fostering trust with stakeholders and creating a positive impact on the world.
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Case Description
In its 100th year of existence in 2009, Borussia Dortmund (BVB) was the only German soccer club listed on the stock exchange. With three days to go before the annual shareholders' meeting on November 24 of that year, the club's managing directors, Thomas Tress and Hans-Joachim Watzke, went through the year-end figures one more time. Although the situation had improved since 2005, when the club was on the brink of insolvency, the closing accounts once again showed a negative net income. After nine years as a publicly traded company, the BVB had to report its fifth loss, this time for 5.9 million Euro, which added up to a cumulative loss of more than 145 million euros. After the passing of a century, many stakeholders were concerned about the way forward. What was the organization's purpose? What was more important, finally making a profit and meeting shareholders' expectations, or playing for the fans and the club's honor? What could the managing directors offer to their shareholders, who had seen the value of their shares drop from 11 euros at the IPO to less than 1 euros in November 2009?
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