Every three years, Freudenberg Sealing Technologies (FST) issues a strategy that is in force for the following three years. But how is it developed? What is it based on? And who takes part in the process? Melanie Kessler, Senior Vice President, Strategic Business Development & Corporate Communications, offers insights into these activities.
In all, the planning process takes place over twelve to eighteen months. The starting signal comes from Freudenberg & Co. That was in late 2019 for the current strategy period. The people in charge of Corporate Strategic Planning had previously reviewed long-term economic indicators and the market trends and drivers that have an impact on the Freudenberg market environment. FST alone operates in more than 20 market segments. Regional economic developments are an example of another focus. They are the basis for a framework that is forwarded to the subgroups,” Kessler said.
The framework describes the concepts and goals that the board of management is setting for the individual Freudenberg business groups for the subsequent three years. “For FST in the current strategy period, for example, this means shaping the transformation toward electric mobility, expanding the battery and fuel cell business, and balancing the product portfolio. It includes a disproportionate strengthening of the industrial business to cushion the effects of the automotive sector’s in-depth transformation, among other objectives,” Kessler added.
Building on these goals, with an eye for the entire business group, FST’s senior management develops the “guardrails” for the individual divisions through which the individual division strategies are supposed to flow. The Lead Centers then create detailed, targeted strategies for their respective markets and segments.
“We see ourselves as supporters and ‘sparring partners’ for the different organizational units at FST. It is certainly true that the processes are set and the managers are familiar with them, but questions and a need for clarification keep coming up.”
Melanie Kessler | Senior Vice President
Strategic Business Development & Corporate Communications
What contributes to success?
When they are complete, Lead Center and divisional managers present the key financial metrics, strategic initiatives, innovations and much more to FST’s senior management. “This includes many individual aspects: for example, how the employment figures are trending in the facilities, where the managers think their areas will be in three years. Which markets and which materials are crucial for success,” Kessler said.
The sales channels provide another important facet of the company strategy, making their market data available for the planning process. They point out how sales in their segments and regions are developing and forecast trends. Some of the corporate lead functions also contribute information. For example, the strategy has an impact on personnel planning, among other effects. The requirements for future applicants are changing in view of the auto industry’s transformation, Kessler said. Fewer graduates from the classic disciplines such as mechanical engineering could be required, according to Kessler. In turn, more applicants could come from the electronics field and electrical and systems engineering.
All of the planning and fact-based forecasts are ultimately consolidated across the entire FST business group and assembled into an overarching strategy document. Volker Fluhr, Senior Vice President, Finance & Controlling, Kessler and Rita Conti, Strategic Board Projects, are in charge of the process. “We see ourselves as supporters and ‘sparring partners’ for the different organizational units at FST,” Kessler said. “It is certainly true that the processes are set and the managers are familiar with them, but questions and a need for clarification keep coming up.”
Once the overall FST strategy is complete, FST’s senior executives present it to the Freudenberg Board of Management. In parallel, the division managers also present their strategies to the board. If it accepts the strategy, the shareholders committee is notified: The next strategy period can begin. The current one began in 2021 and ends in 2023.
