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Bertelsmann’s primary objective is continuous growth of the company’s value through a sustained increase in profitability (see the “Value-Oriented Management System” section).

Bertelsmann aims to achieve a faster-growing, more digital and more international Group portfolio. As well as investments in existing activities, new business segments that provide a broader overall revenue structure are being increasingly explored. The further development of the portfolio is subject to clear investment criteria. Businesses in which Bertelsmann invests should have long-term stable growth, global reach, stable and protectable business models, high market-entry barriers and scalability. In the medium term, the two main pillars at present, media content and services, will be supplemented by the education business. Group strategy comprises four strategic priorities, which again constituted the key work aspects for the Executive Board in 2014: strengthening core businesses, driving forward the digital transformation, developing growth platforms and expanding in growth regions.

In financial year 2014, Bertelsmann made significant progress in all four strategic priorities. Strengthening the core businesses resulted in the establishment of new TV channels and growing distribution revenues of platform operators within RTL Group, the acquisition of the Santillana trade-publishing companies by Penguin Random House as well as the full takeover of Gruner + Jahr. A number of structurally declining businesses were sold off, such as the US print business Brown Printing, the Italian print businesses and the club businesses in Spain, the Czech Republic and Slovakia. Furthermore, a decision was made to close the German-language club and direct marketing businesses by the end of 2015. At the same time, profit-improvement measures at divisional and Group level are helping to strengthen the core businesses. These include the ongoing integration of Penguin and Random House, the transformation program at Gruner + Jahr and the profitability improvement program at Arvato as well as the Group-wide “Operational Excellence” efficiency program for optimizing the business support functions, particularly in the Accounting, IT and HR departments. The expected earnings potential of these measures in the medium term is around half a billion euros in total.

As part of the digital transformation, RTL Group’s digital businesses were significantly expanded through the expansion of existing nonlinear TV offerings, increasing the share of the multichannel network StyleHaul and through the majority shareholding in the online video advertising technology platform SpotXchange. Penguin Random House reinforced its leading market position in the e-books segment and Gruner + Jahr expanded its range of digital content and digital advertising marketing. Arvato grew its services for companies in the IT/high-tech sector and its e-commerce services.

In the growth platforms, the acquisition of the US online education provider Relias Learning marked an important step in developing the education business into the Group’s third pillar. The RTL Group subsidiary Fremantle Media acquired the majority of the TV production company 495 Productions and Arvato acquired the e-commerce service provider Netrada, while BMG made various acquisitions, including the music publishers Talpa and Union Square as well as the rights catalogs of Montana and Hal David.

In the growth regions, the Bertelsmann Asia Investments fund expanded its shareholdings in leading digital companies in China. In India, Bertelsmann acquired shares in the e-commerce platform Pepperfry and the education provider iNurture. In Brazil, Bertelsmann established an education technology fund in conjunction with the Brazilian investment company Bozano Investimentos. In addition, the business activities of the divisions in the growth regions were further expanded.

Bertelsmann will push ahead with its transformation into a faster-growing, more digital and more international Group in 2015 in line with the four strategic priorities. Compliance with and achievement of the strategic development priorities are continuously examined by the Executive Board at divisional level through regular meetings of the Strategy and Business Committee and as part of the annual Strategic Planning Dialog between the Executive Board and the Supervisory Board. In addition, relevant markets and the competitive environment are analyzed on an ongoing basis in order to draw conclusions concerning the further development of the Group’s strategy. The Executive Board is also supported by the Group Management Committee (GMC) on issues of corporate strategy and development. This Committee is composed of executives representing key businesses, countries, regions and selected Group-wide functions.

The Group’s content-based and entrepreneurial creativity will remain very important for the implementation of its strategy. Bertelsmann will therefore continue to invest significantly in the creative core of the businesses. In addition, Bertelsmann needs to have qualified employees at all levels of the Group to ensure its strategic and financial success. This will also be supported by the Human Resources Board department, which was established on January 1, 2015.