How one owner avoids the 'economic rape' of his workers

Article Abstract:

Frank Stronach, CEO and main shareholder of Canada's Magna International Inc., credits himself with creating a fourth economic model dubbed 'fair enterprise'. This model is based on a system which encourages intrapreneurship, while at the same time keeping close ties between labor and management. Stronach moved to Canada from Austria in 1954, and in 1957 opened a one-man workshop as a tool-and-die maker. The business was successful and, by 1970, had annual sales of about $5 million. Stronach's success took a quantum leap when his company merged with Magna and he assumed control of the combined company. Magna is now North America's fastest growing automotive supplier. The company is unique in that it publishes a corporate constitution with guaranteed rights for employees, management, and investors. The constitution guarantees management operating control and the employees equal (but not dominant) economic participation.

Motor vehicle parts and accessories, Canada, Human resource management, Economic policy, Magna International Inc., Incentives (Business), Frank Stronach

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Porsche's U.S. backfire

Article Abstract:

Declining US sales and profits have contributed to recent economic problems for sports car manufacturer Porsche AG. Chmn Peter W. Schultz has been replaced by Heinz Branitzki, who had been Porsche deputy finance director and deputy chair. The company peaked on 120.4 million deutschemarks (DM) in profits on 3.175 billion DM in sales in 1985, but profits fell to 51.9 billion DM in 1987 on 3.4 billion DM in sales. It is suggested that the slump in US demand for the Porsche stemmed from the Oct 1987 stock market crash, the weakening US dollar, and Porsche's failure to make product improvements in the face of competition from Mazda, Toyota, and Nissan.

Marketing, Porsche AG, Sports cars

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Volkswagen goes back to the drawing board

Article Abstract:

Volkswagen AG's Dec 1987 announcement that it would close its Westmoreland, PA manufacturing plant represents a victory for Japanese competitors who have been struggling over US territory for the last nine years. Some analysts foresee Volkswagen retreating from North and South American markets and concentrating on Europe. Volkswagen now holds just a two percent US market share. It is suggested that Volkswagen's refusal to modify its products to meet US consumer preferences put it at a competitive disadvantage with its Japanese competitors.

Foreign operations, Plant shutdowns, Pennsylvania, Volkswagenwerk AG

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