Reference-2.ppt

1、UNILEVER A TROUBLED GIANT,SOURCE : UNILEVER.COM, 2009,MANAGEMENT,SOURCE : UNILEVER.COM, 2009,SOURCE : UNILEVER.COM, 2009,SOURCE : UNILEVER.COM,SOURCE : UNILEVER.COM,BACKGROUND NOTE,UNIE,In 1872, two Dutchmen, Jurgens and Van Der Bergh had ventured into the margarine business In 1927, they decided to

2、 merge to form two companies, Margarine Unie NV, based in the Netherlands and Margarine Union Ltd, based in the UK,STRATEGY : GROWTH TOOL : MERGER,LEVER,William Hesketh Lever founded Lever Brothers in 1885 By 1887, introduced SUNLIGHT, the worlds 1st packaged laundry soap Lever & Co. was making 450

3、tons of Sunlight soap a week He expanded his business from UK to Australia, North America and other parts of Europe In 1890, Lever & Co became a limited company LEVER BROTHERS LTD, by 1894, they went PUBLIC Diversified into other businesses, acquired Pears soap and Walls Launched its innovative prod

4、uct , VIM,STRATEGY : GROWTH TOOL : ACQUISITION,UNIE,LEVER,Unilever GROUP,UNILEVER PLC,UNILEVER N.V.,B.O.D.,B.O.D.,PROBLEMS WITH THE STRUCTURE,Unable to sustain the great depression Incapable of striking a balance between British and Dutch interests Lack of co-ordination between the board of director

5、s of the two holding companies Two Masters - Confused Followers (Coalition Governance),1930 to 1979,In 1937 , acquired Thomas J. Lipton In 1944, acquired Pepsodent In 1957, acquired Birds Eye In 1961, acquired Good Humor In 1978, acquired National Starch and Chemical Corporation,STRATEGY : rigorous

6、GROWTH TOOLS : integration ( fwd & back) acquisition Diversification ( related & unrelated),ORGANIZATIONAL STRUCTURE,(1930 to 1979) Concept of strategically independent units- local initiative and decentralized control A special, 3-member committee was formed in September 1930, above the two boards

7、of directors of the company Matrix organizational structure was opted,UNILEVER PLC,UNILEVER N.V.,B.O.D.,B.O.D.,SPECIAL COMMITTEE (3),PROBLEM WITH THE STRUCTURE,Concept of strategically independent units led to high cost structure from duplication of manufacturing facilities at various locations,1980

8、 to 1995“the sleeping giant”,Rationalized manufacturing approach Product divisions established to co-ordinate regional operations Focus on the following four industries, as a part of core strategy Foods, Personal Care, Home Care and Specialty Chemicals, divesting from all other businesses Between 19

9、92-1996 , Unilever made around 100 acquisitions, during 1995 alone the company acquired 38 companies The company decided to target D&E markets,STRATEGY : FOCUSED GROWTH TOOLS : DIVESTMENT ACQUISITION,List of acquisitions 1984 - BROOKE BOND 1986 - NAARDEN INTERNATIONAL 1987 - CHESEBROUGH- PONDS 1989

10、- FABERGE 1989 - ELIZABETH ARDEN 1989 - CALVIN KLEINS FRAGRANCE BUSINESS 1990 - NORDSEE FAST-FOOD 1993 - EMPIRE OF CAROLINA INC. 1993 - PHILIP MORRIS KRAFT GENERAL FOODS UNIT,List of Divestments 1980 - SERVICE ( TRANSPORT) & ANCILLARY BUSINESS 1985 - PALM LINE, SHIPPING COMPANY 1990 - PLANT BREEDING

11、 & OTHER AGRICULTURAL PRODUCTS 1990 - PACKAGING & PROFESSIONAL CLEANING PRODUCTS,BEFORE,after,BUSINESSES,BUSINESSES,FOOD,HC,PC,SC,PROBLEMS WITH THE STRUCTURE,The unending acquisitions made the operations cumbersome and the company became inflexible to adapt to the market dynamism Performance drift O

12、rganizational fatigue Excess of bureaucracy Confusion of accountability and responsibility Conflicting priorities in the special committee Decision making became constipated Structural detritus , accumulated over decades Absolute chaotic condition Extra levels of complexity were imposed on an alread

13、y convoluted structure,1996 TO 1999breakthrough restructuring,3- Member special committee which existed since the birth of Unilever got dissolved , to give way to a 7- Member Executive committee The company appointed its 1st Chairman (Niall FitzGerald, an Irishman) not carrying a British or a Dutch

14、passport Two layers of the organizational structure consisting of the world- wide business coordinators and the network of Regional Directors were swept away to form a single team of 14 business Presidents Companys operations were grouped by product , instead of geographical regions From Centrally D

15、riven expansion to branched expansion,STRATEGY : SUSTAINABILITY TOOL : restructuring,Unilever wanted to grow as much by local pull as by global push Focus on Companys Core Competences Introduction to the new management incentive system (Variable Pay),ACQUISITIONS,1996- HELENE CURTIS INDUSTRIES, INC.

16、, PERSONAL CARE PRODUCTS 1996- NORTHBRROOK DIVERSEY CORP., CHEMICAL CLEANSER & SANITIZER 1999- KIBON S.A. INDUSTRIES ALIMENTICA, ICE-CREAM COMPANY,DIVESTMENTS,1996- CATERPILLAR INC., HEAVY EQUIPMNET, U.K. FRANCHISEE 1997- NATIONAL STARCH & CHEMICAL CORPORATION 1998- PLANT BREEDING INTERNATIONAL CAMB

17、RIDGE LTD.,UNILEVER PLC,UNILEVER N.V.,BPs,BPs,EXECUTIVE COMMITTEE (7),PROBLEMS WITH THE STRUCTURE,Unilevers Market Capitalization of about 51 Billion ( $ 82 Billion) in June 1999 shrank to 20 Billion by January 2000 (Stock prices Plunged) Companys Existing brand structure had lost its Focus (Too man

18、y Brands) Unilever was criticized for spending large amounts of funds due to frequent restructuring over the years Unilevers market share was taking a big time hit (Dip) There was no Fit between the companys organizational structure and its strategies (Persil Power shook the giant to its foundations

19、) It was believed that, every big organization that is running into trouble needs a crisis to convince it of the necessity for fundamental change, and that for Unilever this situation had already arrived long ago,2000 TO 2004PATH TO GROWTH STRATEGY,In February 2000, the company announced a 5 Billion

20、 Five Year Growth Strategy Unilever was “Shrinking to Grow” Laying off over 25, 000 employees ( 10% of the employee base) Unilever was split into two, separate global units : Foods and Home & Personal Care (HPC), headed by two executive Directors separately Unilever reorganized its 300 operating com

21、panies into 10 Regional Groups Unilever Further Decentralized its Control over its subsidiaries Unilever Shut down more than 100 manufacturing units for cost reduction,STRATEGY : CONSOLIDATION TOOL : restructuring,More than half of its Top Executives were replaced with young blood Brand Portfolio of

22、 1, 600 was pruned to 400 (For better focus on leading brands) Company came up with a Brand Focus Strategy “Nourishing the Core” Unilever started to exploit brands within the existing product categories but outside their scope,UNILEVER- REGIONAL GROUPS,SOURCE: WWW.UNILEVER.COM, 2009,ACQUISITIONS,In

23、2000 - BESTFOODS , U.S.A. In 2000 - GROUPO CRESSIDA CENTRAL AMERICA FOODS CORPORATION, CENTRAL AMERICA In 2000 - AMORA MAILLE, CULINARY PRODUCTS, FRANCE In 2000 - JABONERIA NA, FOODS & HPC In 2000 - BEN & JERRYS HOMEMADE INC., ICE CREAM In 2000 - CRESSIDA, FOODS, SOAPS & DETERGENTS In 2000 - CODEPAR

24、/SPCD , HPC In 2000 - SLIM FAST, SLIMMING PRODUCTS , U.S.A In 2000 - ENGLEWOOD CLIFFS, FOODS, NEW JERSEY,BEFORE,after,BUSINESSES (FOOD & HPC),BUSINESSES,FOOD,HPC,ED,ED,BENEFITS OF THIS STRATEGY,Focused and Effective streamline decision making Sales shot up by 16 % Unilevers Share price had recovered

25、 by 30 % Companys Turnover rose from 40, 977 Million in 1999 to 47, 582 Million in 2000 Supply Chain Restructuring saved 1.75 Billion Annual Top line Growth of about 4 % to 5 % was achieved Average Earnings Per Share increased by 9 %,UNILEVER FINANCIALS (IN MILLION) BY GROUP,Source : Unilever Annual

26、 reports 1998 - 2002,BY GEOGRAPHIC REGIONS,Source : Unilever Annual reports 1998 - 2002,BY OPERATIONS,Source : Unilever Annual reports 1998 - 2002,2003UNWELCOME LOSS OF WEIGHT FOR UNILEVER,Sales dropped by 15 % Profits fell by 13 % Annual Top line Growth of about 4 % to 5 % came down to 3 % Share Pr

27、ice fell by 7 % Company was unable to cope up with the Competitive Market Dynamics,2004 to 2010growth to vitality strategy,Brand Portfolio of 400 Brands would be reduced to 40 Mega World Brands, the retained ones would have sales in excess of a Billion Dollar High Concentration on Developing and Eme

28、rging markets (D & E) 3 to 5 % of Organic Growth was targeted Margin Enhancement through portfolio mix Business on strict Value creation criteria First Non Executive Chairman was appointed Concept of “ONE UNILEVER” Unilever started soft selling under this VITALITY strategy,STRATEGY : FOCUSED GROWTH

29、TOOLS : DIVESTMENT ACQUISITION,Turnover & Profit Last 12 years,SOURCE : UNILEVER ANNUAL REPORTS 1996 - 2008,2008restructuring again,Announced 20, 000 Job Cuts Combined its two Global units Food & HPC into a single one Focus on personal care Products Division,UNILEVER & FEW CLOSE COMPETITORS A COMPAR

30、ATIVE STUDY,SHARE LISTINGS, EPS & DIVIDENTS,SOURCE : UNILEVER.COM, 2008,WHATS IN THE NEWSACQUISITIONS IN 2009,UNILEVER ACQUIRED SARA LEES PERSONAL CARE DUSCHDAS, GERMAN SHOWER GEL & SWITZAL, BABY SHAMPOO,REFERENCES,Renewing Unilever Transformation and Tradition, Geoffrey Jones Munching on Change, Economist, January 06, 1996 Unilever to create “Power Brands”, http:/news.bbc.co.uk, September 21, 1999 Rohan Mike, Refocused Unilever on Global Acquisition Spree,