VW Law. All in the family as Porsch/VW consider wedding plans


Update [Aug 2009]

[This post offers background to the eventual merger between Porsche and Volkswagen. The original post follows ]

No-one was surprised when the so-called VW law was declared illegal. The ruling had been anticipated for a long time by Porsche through skillfully increasing its stake in VW. The stage was set for an official announcement of a merger between two German industrial dynasties which already had close family ties

European commentators had been discussing the merger for some while, as the so-called VW Law was tested in the courts. The general view was that the law contravened EU principles on competition grounds. The possibility of non-German control would encourage a ‘friendly’ takeover, with Porsche a front-running candidate.

There are strong links between the companies

Dr Ferdinand Porsche designed the original Beetle in 1936, and his grandson, Ferdinand Piech, is chairman of VW and the controlling shareholder in Porsche. Wendelin Wiedeking, chief executive of Porsche, is a member of the supervisory board of Volkswagen.

Anticipating the ruling will go against the VW Law after the advisory opinion, fellow German automaker Porsche AG increased its holding in Volkswagen to 31 percent while Lower Saxony raised its number of shares to 20.36 percent. That means the bloc of Porsche and Lower Saxony can now stop any takeover themselves with more than 51 percent combined

Frits Bolkestein was the EC commissioner for the internal market, and had no doubts about the ruling. Writing in The Financial Times, he points to Article 56 of the Treaty on the Economic Community, which states that

“All restrictions on the movement of capital between member states and between member states and third countries shall be prohibited.” This is one of the four fundamental freedoms of the European Union the freedom of movement of capital, movement of goods, services and persons.

Rumors of wars

There is a case for stating that Germany demonstrates an alternative mode of capitalism. The much-lauded strength of its industrial sector is backed by a complex governance system. Funds tend to be provided by banks rather than the financial institutions of the city. News seems to trickle through to the financial press, increasing the proportion of speculative comment over hard facts.

In November 2007, rumors suggest that Porsche intends to acquire VW, and incorporate the models under the Porsche brand through a holding company. VW declines to respond to such rumors. The powerful unions at Volkswagen sent a signal of discontent, with work stoppages, including 40,000 workers at the main Wolfsburg plant on Wednesday October 30th.

What’s going on?

Shares in VW have moved steadily upward this month. News coverage in the rest of Europe has been low. My suspicion is that plans towards securing that dynastic merger are in place. Whether the happy day is near remains to be seen.

One Response to VW Law. All in the family as Porsch/VW consider wedding plans

  1. Caroline O'Connell says:

    Harvard Business School book offer…

    Dear Tudor,

    We’d like to send you a copy of CRUCIBLES OF LEADERSHIP – How to Learn from Experience to Become a Great Leader (Harvard Business School Press; publication date, March 24, 2008) for possible coverage in your blog. Could you please send us your mailing address?

    In this book, author Robert J. Thomas explains that what matters most is what one makes of experience, particularly the traumatic and often unplanned crucible events that challenge one’s identity as a leader. Like accomplished athletes or artists, they practice as strenuously as they perform. And because the line between performance and practice is often hard to discern, they learn how to practice while they perform.

    Thomas offers a practical, actionable guide to devising a Personal Learning Strategy through self-assessments, exercises (including videotaping yourself at work), and Setting an Agenda to move forward. In addition, he includes lessons to alert to the “warning signs” of an impending crucible and identify the skills necessary to cope, respond, and learn. “The goal of this book is to render that process visible and practical,” Thomas continues.

    Much of the data analyzed in Crucibles of Leadership comes from interviews with leaders in business, government, the performing arts, non-profits, and sports (from organizations as diverse as Marriott International, the U.S. Marines, and the Mormon Church). Many of the interviewees’ crucibles, that led to a new or altered sense of identity, were based in family life, wartime trauma, athletic competition, or personal loss, rather than in work-related situations.

    There were Four Major Findings from this research:

    Crucibles contain two lessons – one lesson is about leadership and the other is about learning. When addressed in a disciplined way, lessons can accelerate learning in the future – not just in learning from crucibles, but in learning from everyday experiments.

    Practice can trump talent in leadership just as much as in sports and the performing arts. In business as well as in the arts, outstanding performers are remarkably attentive to the opportunities for polishing basic skills – and testing new ones – that crop up in the midst of crucible experiences and day-to-day work.

    Outstanding leaders, consciously or unconsciously, devise a personal strategy for recognizing and transforming crucible experiences into lessons that keep them refreshed and responsive.
    Organizations can grow more leaders, and grow them faster, by helping individuals learn from their experiences. Thomas examines innovations being used in a number of organizations “to leverage experience to grow leaders” – including Toyota, General Electric, Accenture, and Boeing.

    “Nearly three decades of teaching, consulting, coaching, and leading have brought me to the conclusion that the ability to learn is the all-purpose tool, the Swiss Army knife, that leaders need to carry at all times if they hope to fulfill the expectations they’ve set for themselves and that others have of them,” Thomas explains.

    What distinguishes men and women who grow through a crucible experience is their approach to learning. Crucibles of Leadership is about leaders who are skilled at transforming crucible experiences into lessons that make them personally more effective and that result in improved performance on the part of the organizations they lead.

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