Harvard Business Case:
October 20, 1995
Rudi Gassner and the Executive Committee of BMG International (A)
1. What was Gassner's original strategy for BMG-I? Why did he change it?
2. How does the change affect the various divisions of BMG-I?
3. How would you evaluate Gassner as a leader?
4. Is the Executive Committee Meeting (ECM) working? Why or why not?
5. What should Gassner do about the bonus issue?
BMG International is a division of the corporation, Bertelsman AG, an international conglomerate of media. The German company owns companies that sell music, books, CD's, movies, and other media. In the late 1980's and early 1990's the company became one of the largest media companies in the world. It bought out such American institutions as "The Book of the Month Club," RCA records, The Literary Guild to name a few. RCA joined companies such as Arista Records under the umbrella of BMG International. The CEO of BMG I was Rudi Gassner.
The BMG International division that Gassner created was focused on not only selling music, but developing local talent and launching them on the international stage and also introducing international stars into local markets. This gave the company an ongoing supply of new and upcoming talent and the worldwide recognition of marketing big act musicians such as Whitney Houston. The company was developed into a group of regional divisions that could work with each other to spread popular acts into new markets. The regions could develop local acts to maintain interest of local music buyers with fans able to buy local favorites.
The head of the company, Gassner would get with each managing director to create a budget with aggressive goals. Each year the directors and Gassner met to create the business plan for the upcoming year. The managing directors would have input in the creation of the goals for their division and would gain bonuses by meeting and exceeding those goals. The bonus programs were generous and for those who met them, successful. The directors who did not meet the criteria of management, recognizing and fitting into the company, there would be a counseling session where Gassner would explain how the company worked and in many cases, this lead to the management official being fired.
An essay on BMG International's leader, vision, creation, and success based on questions asked by assignment. Included are the importance of executive committee, leadership skill, and changing strategy.