Continental AG Corporation

In 2019 Continental is planning to install three divisions.

1 – The Automotive Group, 2 – the Rubber Group, 3 – the Powertrain Division
(the present Powertrain division is to be turned over into a listed stock company with majority still at the holding corporation).

Continental is a very technological oriented company. All divisions have (very) many different end products. From outside it is hard to see how many and how much production processes overlap. The economy of scale probably cannot work to full extent and as logical consequences the costs will not be at lowest possible level. In regard to product line production more, maybe 5 (?), divisions might be sensible. If however the output volume for products is not high enough the more complex (and more expensive) batch production has to be set to work.

The number of customers obviously is not as high as in mass markets, so revenue and earnings are achieved by extensive and intensive services to the customers (car makers etc.). In special cases the service obviously starts with research and development – e.g. at electric powered and self driving cars. To cover all aspects of products research and development is not restricted to divisions, it is also working as central service.

In large companies, as Continental, to perform sales and procurement either as central services or in divisions are important organizational problems.

Just one sales unit can assemble much information about the needs of the customer (-groups), decentralized sales can transmit the special features of products more efficiently and if customers are affiliated just to one division they are served better by that division.

Central purchasing usually reduces costs, decentralized procurement is closer to special requirements of the products. It looks as if Continental has no straight forward solution to these problems and before listing Powertrain as stock company these problems have to be reconsidered.

– This first view probe, superficial to a certain degree, is based on public information only. If the taken assumptions prove to be different in detail, other conclusions might to be taken.

—  More? See: Business Organization System Theory 
—  Comments ?  See: “About”.

Overview of present organizational structure
(details see Site Continental AG):

Production units
1   Automotive Group
– Chassis and Safety Division
– Interior Division
2   Powertrain Division
3   Rubber Group
– Tire Division / Corporate Purchasing
– ContiTech Division

Central services
A.  —  Corporate Communications, –Corporate Quality and Environment
— Continental Business System, — Automotive Central Functions
B.  — Human Relations, — Director of Labor Relations, — Sustainability
C.  — Finance, — Controlling, — Compliance, — Law, — IT