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Challenging boundaries and beyond
February 19, 2006 Unilever Unilever House, Blackfriars London EC4P 4BQ, United Kingdom Sent Via Electronic Mail RE: Strategy Analysis Ladies and Gentlemen: At the request of the Board of Directors of Unilever, we provide herein our analysis of the Personal Products Industry and a strategy analysis of both Unilever and its biggest competitor, Procter & Gamble. The enclosed analysis also provides recommendations for Unilever to improve its competitive advantage.
Procter & Gamble, Unilever and the Personal Products Industry
Global Strategy Advisors Lee Ann Graul, Sherry Henricks, Steve Olp and Charlene Strohecker
University of Maryland, University College AMBA 607 February 19, 2006
Table of Contents
1. Executive Summary 2. Industry Analysis-Personal Products Industry a. Introduction b. Industry Defined c. Historical Data Analysis d. Major Competitors e. Trends and Industry Outlook f. Strategic Challenges and Opportunities i 1 1 1 2 3 3 5 5 6 6 8 10 10 11 13 14 15 15 16 17 19 20 22 22 24 25 30 31 32 33 34
g. Industry Conclusions 3. Procter & Gamble and Unilever a. Competitor Analysis: P&G b. Competitor Analysis: Unilever c. Strategy P&G i. Business Level ii. Global iii. E-Business iv. Corporate d. Strategy: Unilever i. Business Level ii. Global iii. E-business iv. Corporate e. Conclusions and Recommendations 4. Appendices A. SIC Code 2844 and Industry Description B. Global Personal Products Industry, Market Segmentation C. Personal Products Industry, Five Force Analysis D. Global Personal Products Industry, Market Share E. Market Growth F. Producer Price Index (PPI) for SIC 2844 G. Industry Growth Rate-Sales H. Average Revenue Growth: Industry
History of P&G Global Expansion W. Imports. Unilever. Unilever Financial Analysis T. Industry. Global Data Synchronization Network AA. P&G Portfolio: Product Groups & Businesses DD. Trend Line. SIC 2844 N. 2000 Z. Unilever Initiatives in Information Technology CC. RBV Analysis R. RBV Analysis Q. Unilever SWOT Summary V. Ranking by Revenues. Endnotes . Fastest Growing Markets O. P&G SWOT Summary U. Company Ranking by Personal Care Revenues L. Unilever Complete Global Data Synchronization Project BB. Dynamic Resource-Based Model of Competitive Advantage Y. Unilever’s Early Use of the Internet. SIC 2844 M. P&G and Unilever P.I. Safeway. Exports. Profits 36 38 39 40 41 42 43 51 53 55 61 66 67 68 69 71 72 73 74 75 76 79 84 85 K. History of Unilever’s Global Expansion X. Trend Line. J. P&G. Value Chain Analysis. Unilever Portfolio: Product Groups & Businesses EE. P&G Financial Analysis S. Historical Data-Personal and Household Products Household and Personal Prod. P&G e-Business Network 5.
advertising. financial performance. and find ways to become more efficient while reducing costs. Procter & Gamble (P&G) and Unilever reveals a very competitive industry that is not yet highly consolidated. a slow recovery of growth due to the economy. especially in its use of people and its time to market. and ensure activities drive toward strategy achievement. As P&G takes a proactive roll in e-business and innovation. its similar focus on branding. Additionally. An examination of two major competitors in this industry. Unilever’s stance is a reactive one. it seems to be lacking an overall global strategy. Unilever’s biggest challenges are in improving efficiencies to reduce costs. product development and quality advertising has helped it hold its position. cost reduction. with ongoing efforts to achieve a corporate structure. direct investment and direct marketing. Learning and sharing information on a global scale is one of P&G’s strengths. improved efficiencies. and continued investments in R&D. and new product innovation. but also requires achieving economies of scale.e. P&G Chemicals and Health Sciences lab reflect the vertical integration of its current product line. Unilever has improved its focus and resource allocations. To achieve speed and flexibility. as it divested itself of non-performers. Unilever needs to establish a focused strategy. but a weakness for Unilever. The recent corporate restructuring should continue. These conditions create the need for companies to respond quickly. allowing it to concentrate on performing products. changes in government regulations. Both P&G and Unilever take advantage of economies of scale and global expansion into emerging markets. The industry itself is an attractive one. suppliers and buyers. While Unilever trails slightly behind P&G in most product segments. development of strong product branding. a discussion of industry opportunities and challenges is conducted. The improvements in overall communications. maintaining its focus. knowledge sharing. From a portfolio perspective. obtaining real-time information and utilizing global knowledge sharing externally from its users. expansion of its product lines through R&D. global expansion. P&G understands the importance of local market insights and successful management of people in foreign markets and subsidiaries and has achieved competence in these key aspects of globalization. P&G also maximizes its value by investing in global markets through acquisition. a strengthening of brand differentiation. including a review of the historical market share. quickly getting new ideas from conception to the shelf. and industry trends. and first mover advantage – i. presenting issues such as increases in the cost of raw materials and operations. . significant investing in R&D. P&G’s investments and business developments have remained in or related to the consumer products industry. having steady growth. and the ever changing wants and needs of the consumer. P&G has been a leader in e-business implementation. competition. emerging global markets. and repeat purchases (consumables products). P&G’s strategy is flexibility for quick response to market demands and opportunities. and market introductions and management will enable Unilever to remain competitive and grow as an industry leader. and developing brand loyalty. develop innovative new products. P&G is an industry leader focused on innovation. Unilever’s costs and number of employees is much higher than P&G’s. Although Unilever seems to have expanded globally with some success. alliances.P&G and Unilever Executive Summary i This paper provides an examination of the personal products industry as a whole. and strategic alliances. Additionally. which will maximize strategy achievement. and internally for management and product development. processes. and development of alliances. Unilever is primarily focused on strong brand recognition. joint ventures. recommendations provided herein include an alignment of strategies.
”1 In 2005. make-up.2 This industry has recently been affected by rising commodity costs which. the leading revenue source in this market was hair care. Information for these analyses was derived from library databases. Additional objectives include a competitor analysis. Companies within this industry have referred to this market segment as the Personal Products Industry. personal hygiene. This highly competitive industry will “derive its future performance relative to global consumer spending patterns and raw material prices. market share and current initiatives. financial results. as commodity costs began to stabilize. Porter's 5 Forces Model4 has been used and provided in Appendix C.3 For an analysis of the Industry Structure. past and future performance trends. Our analysis includes global operations. 325620 (Toilet Preparation Manufacturing) and 325611 (Soap and Other Detergent Manufacturing). accounting for 25. Industry Defined The industry segment chosen for this analysis has been assigned the SIC code 2844 entitled Perfumes. moderate bargaining power of . comparing Procter & Gamble and Unilever. coupled with increased marketing spending.5 percent of the global value (See Appendix B). The global personal products market encompasses fragrances. put significant pressure on operating margins and earnings in 2005. A complete list of the products included in this industry has been provided in Appendix A. and skincare products. The SIC 2844 category. and recommendations for future growth and sustainability. an examination of their strategies. competitors. and conclusions about attractiveness for incumbents.P&G and Unilever 1 INDUSTRY ANALYSIS – PERSONAL PRODUCTS INDUSTRY Introduction The objective of this report is to provide an overview and examination of the Personal Products Industry – covering industry structure. internet searches and company websites. when converted to the new North American Industry Classification System (NAICS) was further divided into 2 categories. Earnings per share (EPS) were expected to improve by 2006. Cosmetics and other Toilet Preparations. oral hygiene. The result of this analysis reveals strong barriers to entry. hair care.
will vary by company and a more in depth analysis of the industry leaders would need to be made. The industry average Return on Assets (ROA). however.8 billion in 1997 to $28. these figures have exceeded the S&P 500’s averages (See Appendix I).7 The market’s weighted average growth in sales for the past 5 years was 9. 2000 – 2004. which followed an average 5 percent per year growth between 1996 and 2000. .95% and for the past three years increased to 11. operating margin. considerable threat of substitutes. The total value of industry shipments has steadily increased from $19. Therefore this industry as a whole is not considered highly consolidated.29%8 (See Appendix G for details).7 percent of the market being satisfied by the top four producers in the industry. Over the past 3 years.P&G and Unilever 2 buyers and suppliers.6 The Producer Price Index also shows a slow but steady growth over the past ten years (see Appendix F).7 billion in 1994.2 percent for the four year period. with a projected average of 2. $22. Historical Data Analysis The CR4 analysis provided in Appendix D shows a total of only 28. The Global Strategy Advisors believe these decreases were caused by higher operating costs (raw materials and fuel) in the past year and/or required larger investment in assets or R&D since the Liquidity and Solvency Ratios were below average for the same time periods. Return on Equity (ROE) and Return on Investment (ROI) have decreased when comparing the same time periods. the industry average EPS grew by 19.5 Market growth is expected to continue to grow steadily over the next five years.) This reflects a slow recovery from the downturn in the economy in the early 2000s.7% between 2006 and 2009. Such factors. (Actual rates are provided in Appendix E. however they still exceeded the S&P 500 Average. In most cases. and substantial rivalry among existing companies.1% 9 (See Appendix H). This industry favors incumbents. The industry has seen slight increases in gross margin. The market volume has shown an average growth of 2. and sales when comparing the five-year industry average to the most recent one-year average.8 billion in 2001.
As of April 2005. (2) L’Oreal and (3) Unilever (See Appendix K for rankings by revenue).14 Two events that dominated the landscape in 2005 for consumer product companies will also have an impact on future performance – the continuation of raw material cost escalations. and employee and plant layoffs) to improve margins during the last few years. Facing stiff competition from private labels. Procter & Gamble (P&G) was the leading company in terms of revenues and profits in the Household and Personal Products Industry. Additionally. where consumption of household products is low) as an opportunity to expand revenues13 (For fastest growing markets in cosmetics and toiletries. many firms view emerging markets (such as China and India. see Appendix L).P&G and Unilever 3 Major Competitors Fortune Magazine and Reuters group “personal products” together with “household products” when analyzing industries. the top three were (1) P&G. followed by Procter & Gamble (8.8%). These segments are characterized as having well-supported. personal products companies rely on a high turnover of products in order to improve performance. thus requiring the investment of significant resources into R&D. Colgate-Palmolive. Trends and Industry Outlook The household products and personal care segments are expected to be the stronger within the US consumer products industry – entering 2006 with a strong financial profile. The October 2005 acquisition of Gillette by P&G10 solidifies P&G’s number one position on this list. Competitive advantage in mature industries often manifests itself in cost advantage from economies of scale or experience and differentiation advantage through brand loyalty12 – all of which are characteristic of the personal products industry. Companies have instituted cost reduction programs (including the creation of manufacturing efficiencies. followed by Kimberly-Clark. Gillette and Avon Products (See Appendix J).5%)11 (See Appendix D for an industry market share overview). strong brands and superior product development. commanding premium pricing in sectors that are less cyclical. renegotiated supply contracts. which in turn prompted . When competitors in the Personal Care Industry are ranked by revenues however. Competitor ranking of the personal products industry (not combined with household products) as measured by market share is led by L’Oreal (8.
directly affect the industry. largely due to the strong influence of P&G in 2005. and the consumer demand for natural and organic products. Keeping up with changing wants and needs of the consumer in order to remain competitive in this industry increases the need for investment in research and development. such as some cosmetics. The consumer will continue to be influenced by price and convenience for most products. rather than at upscale department stores. industry competition in the form of advertising has ratcheted upward. the cost of raw materials. Not only the US economy.18 . such as the aging baby boomers causing an increase in the demand for age-defying skin care and hair color.P&G and Unilever 4 price increase announcements. The growing need for compliance with more stringent environmental regulations. and significant mergers or pending mergers . but also the global economy. with less exposure to specific raw materials. Many companies instituted cost reduction programs. and with balance sheet flexibility.17 These macro-level factors – environmental regulations (government). consumers began purchasing these types of products at mass discount centers.15 Changes affecting the demographics and demands of the consumer.among them.”16 Trends in how consumers shop also affect the industry. Companies expected to fare well in the future are those with strong momentum from earlier and successful restructuring actions whose cost savings are ramping up quickly. perfumes. but in the end. such as Costco and Sam’s Club. have also changed how products are produced. consumer demographics. the global economy. and the ever changing wants and needs of the consumer – will continue to impact the performance of companies in this industry. and household items. Beginning in the 1990s into the 2000s. P&G’s acquisition of Gillette. will affect sales for items not considered a necessity. or animal rights activists protesting animal testing. requiring additional investment and expanded product lines. Globalization and the growing ethnic population in the US will also continue to broaden the industry and create new market segments. few companies were able to fully offset raw materials cost escalation. global competition. In addition. innovations in research. “There is a close correlation between a country’s consumption of soaps and detergents and its standard of living.
along with strong entry barriers and substantial rivalry among existing members.P&G and Unilever 5 Strategic Challenges and Opportunities As mergers and acquisitions continue. Industry Conclusions The attractiveness of the Personal Products industry includes such elements as steady growth in consumer demand and repeat purchase of the products. brand loyalty. thus companies desiring to expand into this region will need to invest in development of products that can be priced more affordably. Future performance in this industry will be tied to global consumer spending patterns and raw material prices. since most are consumables. which. Some larger current producers are achieving economies of scale. As is seen by the trends in imports and exports provided in Appendices L and M. While the Asia-Pacific area is noted to be a key emerging market for this industry. this industry will likely become more consolidated. the profit margins on such products are expected to be greater than their non-organic counterparts. will favor sustainability for incumbents. Expansion into global markets will be important for future growth. one of the main hindrances in this area has been low income. Other smaller . Cost and availability of raw materials may continue to pose a threat to smaller firms lacking adequate capital reserves to compensate for additional costs. expansion into the global market is not new to this industry. If the personal products industry can find ways to produce natural and organic products at reasonable costs. A global expansion study would be recommended to determine which countries would provide the best opportunity. and first mover advantage.22 Products designed for areas with higher incomes may not be suitable for emerging markets. and Eastern Europe21 (see Appendix N). “Low consumption of household products in emerging markets – such as China and India – represents an opportunity for companies to expand their revenues and escape from the stale performance of their home markets.”19 The fastest growing and emerging markets include the Pacific Rim20. The expanding US Market for natural and organic personal care products is an opportunity for industry to provide products for a growing consumer want and need. Latin America. and are used to paying. a higher price for natural and organic products. Most US Consumers are willing to pay.
balanced worldwide with one half from the domestic market and one half from the international market. for an overview of P&G structure and primary activities).596. colognes. Procter and Gamble pledged $3. and high frequency stores (neighborhood stores in developing countries)..27 Their products are sold primarily in grocery stores. Central and Eastern Europe/Middle East/Africa.29 These global business units are distributed into five segments. Latin America. Health Care. has reported revenues of $56. hair care. Home Care.28 The Company and its 110. Snacks and Coffee. and formed the Procter and Gamble Company in 1837. membership club stores. labeling. 26 and has Market Development Organizations in 80 countries.g. P&G Household Care (33% net earnings). cosmetics. P&G Beauty. P&G markets more than 300 brands. the two strangers traveled to the United States.8 billion for the fiscal year ended June 2005. At their father-in-law’s urging. Ohio. through a series of events. The challenges in this industry include taking advantage of economies of scale in order to compete on price with current companies. chemical handling. and environmental impact). The business segment being examined in this report. and P&G Beauty (37% net earnings).000 employees are organized into three global business units. encompasses personal cleansing. and the investment in R&D required to stay ahead of the competition with new product innovation. P&G Family Health (30% net earnings).25 Today.23 The Company. PROCTER & GAMBLE AND UNILEVER Competitor Analysis: P&G William Procter (a candle maker from England) and James Gamble (a soap maker from Ireland) founded Procter & Gamble Company when. Fabric Care. Western Europe. Greater China and ASEAN/Australasia/India".P&G and Unilever 6 producers have developed a market niche for a specific consumer need and have been successful. of which 22 are $1B sales producers. leading teams to build brands organized in seven geographies: "North America. met and married sisters. headquartered in Cincinnati. feminine . Baby and Family Care. discount stores. antiperspirants or deodorants. through mass merchandisers. Northeast Asia. and P&G Beauty30 (See Appendix O. Value Chain Analysis. keeping up with changes in customer preferences and government regulations (e.24 This revenue comes from sales in over 160 countries.47 each.
500 researchers in technical centers around the world. for a P&G company overview). P&G is well known for its brand management and brand leadership capabilities.40 Active portfolio management. P&G must continue to utilize their acknowledged strengths. and Gillette in 2005. reducing costs and quickly expanding the company knowledge and line offerings. Wella in 2003. business services and merchandising provide financial and trade advantages. as well as their customer and partner management is P&G's significant use of IT and tracking systems. communications. that improve R&D speed and capabilities. and over the past eight years.33 They have 29. In order to sustain their competitive advantage. P&G is a leader in innovation. includes five $1Billion brands. especially in emerging markets. Financial Analysis. distribution. EDI.34 Key to their success is knowledge sharing and cross-borders replication of innovations. and skin care.257M Sales31. one of which is innovation.35 Another factor contributing to their competitive advantage is their largescale operations and go-to-market capabilities that provide first mover advantage and limit the ability of competitor’s to copy ideas and replicate them. such as the recent acquisitions of Clairol in 2001.P&G and Unilever 7 protection. Lastly. and achieved double digit growth for 2005. including CRM.36 Additionally. which are significant advantages for customer loyalty and market penetration (See Appendix O for P&G's RBV Analysis). and inventory management37 (See Appendix O.32 (See Appendix Q. Value Chain Analysis. . information tracking and sharing.38 Additionally. facilitating their rapid go-to-market capabilities. with a net profit margin of 13%. and ROE of 42% on 7. as P&G is currently overexposed in the US and Western Europe. Supplementing their innovations. as well as continue to exploit international growth. ROI of 12%.39 P&G has also been successful with its mergers and acquisitions strategy.000 patents. economies of scale and scope in purchasing. Spending $2B annually on R&D and deploying approximately 7. have introduced the #1 or #2 new non-food products in the US. P&G’s competitive advantages arise from several key factors. hair color. and RFID. the company is moving away from the commoditized household products and food businesses and should continue its focus on personal care health and strong household businesses that provide for more profitable growth. and should continue this strategy. for an overview of P&G supporting technologies and awards for excellence).
P&G has been diligently participating in activities that should ensure a good future of sustainability.662 diluted normalized EPS 2005). 12 of which each have worldwide sales exceeding €1 billion. in conjunction with their maintenance of market share and line extensions in developed countries. and personal care. a strong focus on expansion in developing countries is being undertaken and should provide significant growth opportunities. and profits. a Dutch margarine manufacturer.41 P&G needs to review longer held businesses and lower earners for their continued value to the organization. food. P&G needs to look at their businesses. 2. it has only one board of directors47 and reports one set of financial statements.48 Today Unilever is present in 150 countries. Their Corporate Standards System application provides for innovative R&D methods to reduce costs while increasing quality and enhancing go-to-market capabilities. however. and one British (Unilever plc). and ensure good fit and value-added. ROI. as well as increase free cash flow. which their activities are focused on to accomplish (See Appendix R for financials on P&G and Appendix T: P&G SWOT Analysis). Their R&D has enabled ongoing introduction of new lines.49 Unilever has products for three markets.45 Unilever is unique in that it has maintained a dual ownership structure since its inception. employs over 223. . and has numerous wellknown brands. home.831 basic normalized EPS. has been shown to increase stakeholder value. as well as expansions and adaptations of current lines to meet local needs.43 Additionally.50 which fall into 6 primary categories: home care (17%). divesting if needed. and have recognized $1B in cost synergies as this integration occurs. Competitor Analysis: Unilever Unilever was officially formed in 1930. through the merger of Lever Brothers. one Dutch (Unilever NV). governed by an equalization agreement.42 They need to successfully fold in Gillette.44 It has since become one of the largest direct investors in the United States.46 Although the company has two legal entities as its parents.P&G and Unilever 8 using divestiture and acquisition strategies.000 people. and continue activities that have been driving organic growth and increasing EPS (2. a British soap manufacturer and Margarine Unie.
and impacted opportunities for efficiency economies of scale and scope. not to mention the potential concern in transparency in reporting. resulting in increased sales growth in many regions.52 Company-wide. with approximately 40% of Unilever's employee headcount. In the area of personal care. separate organizational structures (PLC and NV).59 In 2005.5M (See Appendix S.204M and net income of 2468. First. a decrease in the number of executive managers by one-third.3 billion) the third largest cosmetics company behind L'Oreal ($17. and earnings reported in two venues. strong R&D initiatives for line expansion.53 P&G's sales are nearly 40% greater than Unilever's. such as Dove and Bird's Eye. Euro and Dollars. it has been a complex company. one of the segments where Unilever competes directly with P&G. and personal care (26%)51 (See Appendix Q for Unilever's structure and primary activities).P&G and Unilever 9 spreads (12%).55 Their renewed focus on strong line expansion (especially after reducing their number of brands from 1600 products to approximately 400 in 2003).54 Clearly there are fundamental operational differences between Unilever and P&G.5 billion).58 The 2004 figures reflected a net profit of 5%. ROE of 37%.57 This complexity increased costs. Women's Wear Daily ranked Unilever ($9. focus on core products and regional activities with increased spending on R&D. Unilever initiated consolidation efforts (One Unilever) including development of one executive group (from three). and leading brands in personal care. such as a global brand strategy group. a flattening of the organization. marketing.7 billion) and P&G ($16. and advertising. and Unilever began a major push for elimination of non-productive lines. with two CEO's. ice cream & frozen foods (16%). Sales were flat in 2004. beverages (8%). deodorant and personal wash. cost elimination. Unilever Financial Analysis). Unilever's competitive advantages arise from strong brand recognition. P&G's sales are around $70 billion and Unilever's are around $50 billion. In order to sustain their competitive advantage. savory & dressings (21%). and a restructuring that created global groups.60 One such effort at consolidation is the 2005 sale of Unilever Cosmetics International unit to Coty for . Unilever has several issues to resolve (See Appendix Q for RBV Analysis). ROI of 6%. share buybacks.56 and alliances with strong corporate partners such as Pepsi are also advantages. sales of 48.
Baby Care. providing pricing and product that adds value for the customer.64 The company is divided into four pillars: Global Business Units. each working separately and together to bring competitive advantage to P&G.67 P&G is the global leader in its four core categories. especially in India and China.66 P&G's business strategy focuses on large-scale operations. protect against exchange rate fluctuations. with a focus on flexibility and responsiveness. Strategy: P&G Business-level Strategy P&G. and twelve-$1B brands in Baby.63 With their recent acquisition of Gillette.P&G and Unilever 10 approximately $800 million. Market Development Organizations. and they have received awards for supply chain management (#1 in 2004). P&G's strategy is to continue to innovate and sell products that appeal to retail trade customers and consumers.62. and continue to expand globally.65 As competition from other major global and small local companies are vying for market share. and are . Feminine Care (35%). faces significant challenges maintaining cost efficiency and scale economies while creating innovation and differentiation.61 For future sustainability. is required to maintain and grow their leadership position. and product innovation to develop competitive advantage.69 Their comprehensive research network and $2B of research spending annually support their innovative focus. while improving efficiencies in sales and operations with their ongoing restructuring and technology enhancements. strong product branding. the identified locations for substantial growth. Family and Household lines. look to mergers and acquisitions to support their growth and development. including additional outsourcing when needed (as was done in business support services). with the largest product portfolio in the consumer products industry. and Hair Care (greater than 20%).68 To achieve sustainability and continued growth. P&G now has 22 brands that each exceed $1B in annual sales. Fabric Care (approximately 30%).$1B brands in Beauty and Health. Unilever needs to continue their operational enhancements. are leaders in inbound logistics. add line extensions with core brands while guarding against negative impacts should an extension fail. Global Business Services and Corporate Functions. a sound business strategy. with a balance of ten. and quickly responding to competitive advancements.
74 With ongoing improvements in resource management. marketing. global resource centers.77 P&G has gained substantial market knowledge. to provide focus and management for increasing customer concentration at the retailer and country levels. and continues to concentrate on relationship management with customers and suppliers. and rapid go-to-market strategies.73 Use of the Siebel CRM solutions has improved efficiencies and reduced costs. and IT to work with trade customers for ways to add value to the consumer.78 Their flattened .75 Global Strategy P&G has made substantial investments globally. including Market Development Organizations in 80 countries. logistics. planned divesture and ongoing acquisition strategies. and partnerships and alliances for managing foreign subsidiaries. and 3) skills at managing foreign subsidiaries. Beauty and Health Care.76 Their global strategy includes innovation. increasing market share on base business while focusing on each business as well as on each industry. Key to expansion are three competencies P&G has developed: 1) understanding of the foreign marketplace. such as with bar coding and wireless technologies. marketing. P&G uses business development structures combining sales. 71 Additionally. and alliances to expand their market understanding and reach.72 P&G has been awarded #1 best category management and consumer marketing. joint ventures. has innovative databases including over 100 million consumers across 30 countries. and investing in the developing marketplace. all successful activities that promote local acceptance and a climate enabling knowledge transfer. they excel at "demand chain planning. and needs to be further implemented beyond the US and Western Europe. P&G should continue to meet (and exceed) its business goals. and provides training." identifying their "target market's requirements and designing the supply chaining backward from that point.70 With their market knowledge and focus on efficiencies. finance. 2) ability to manage people in foreign markets. and used acquisitions.P&G and Unilever 11 technology innovators for improving efficiencies and reducing costs. utilizes a blend of local and expatriate managers. and focusing on higher profitability lines for growth. growing volume in developed and developing markets. another competitive advantage. and continued maximization of their product innovations.
90 . their presence in high frequency stores has grown 50% in 4 years.P&G and Unilever 12 structure and focus on relationship management with stakeholders provides for efficient and rapid communications throughout the value chain. where launches are first piloted on a limited basis.84 Overall. then expanded upon. and rapid go-to-market strategy (See Appendix V for the History of Global Expansion P&G). improving product quality.85 P&G has been an early adopter and substantial user of information technologies. and rollout based on market understanding is the learning from SK-11 store counters in Asia. consumer. and in China alone. reducing costs. P&G modified products in their upper tier and launched middle tier level products in Russia. and getting products quickly to the marketplace. P&G is at risk due to overexposure in the US and Western Europe. knowledge transfer. innovation.89 P&G has been working to expand rapidly in these markets. identifying significant opportunities and acting on them quickly. P&G serves 2000 cities and 11. they have created the ability to implement distribution systems that can move innovations across borders. 80 With their marketplace knowledge and research centers strategically located throughout nine countries. and needs to continue growing globally. and has been recognized by CIO Magazine for its “Corporate Standards System application” that revolutionizes the way their employees and partners collaborate. P&G focuses on 360-degree innovation.88 It is estimated that 90% of the world's population will be in developing countries by 2010. driven by their identification of the beauty-conscious orientation of women in that marketplace. structure and coordination driving for a global competitive advantage.000 towns.87 P&G has coordinated activities to provide a global network with all activities.79 These capabilities have afforded P&G the opportunity to leverage insights from the local shopper.86 P&G has had success expanding globally with its strategies of acquisition. Knowledge from that rollout was then integrated into the Olay launch in Spain. and in fact.81 For example. However. strategic partnering. and retailer to generate cross-business unit plans and create efficiencies across the breadth of P&G lines. P&G has a well-developed knowledge base and global mindset. and with innovation a key component of their global strategy.83 demonstrating a reduced risk method of global expansion.82 Other examples of their approach to learning.
an Internet company that has launched a web site that allows companies to post their technologies for license or sale.”92 Sales and distribution is through retail partners – drug stores. and transportation carriers. and wholesale clubs (such as Costco). financial institutions. These resources all interact electronically to provide real-time access to information to those who need it.. order status and invoices 24 hours a day. receive invoices. current and prospective retail partners. product information. P&G’s website PGEDI. real-time and predictive business intelligence. formed in February 2001. logistics for retail partners. P&G has invested in Yet2. even pulling up research collected by colleagues in other countries for various brands and re-applying it to other product . P&G has also created such centralized e-business sites for the business-to-business (B2B) side.com provides an electronic exchange of information between P&G and its trading partners. working simultaneously on the same files. internally share R&D information. transportation.P&G and Unilever 13 E-Business Strategy P&G’s CEO wants P&G “to be known as the company that collaborates – inside and out – better than any other company in the world”91 P&G’s strategy and e-business focus is three-fold: “one-to-one communications. P&G does utilize the internet as a valuable resource tool for its domestic and global operations to improve the efficiency and effectiveness of managing its supply chain. suppliers. and for video conferencing and customer information and feedback. Such a system can provide real-time information regarding costs and other metrics in order to more quickly identify problems or issues and implement a resolution (See Appendix X For network details). billing and payment. managing and promoting products by providing critical data. P&G fully utilized its Electronic Data Interchange (EDI) as a hub of doing business.93 P&G has taken a “use it or lose it” approach since many of its patents are not being used. There are also links to track shipments. and ‘virtualization’ of business processes. creating a competitive advantage. make payments. P&G has also invested in a marketing collaborative software development company called Emmperative. however. which provides a way of sharing significant information share data. The Web Order Management System and Customer Portal assist partners in purchasing. and share data.com Inc. grocery stores. every day. P&G does not have direct selling of its products through the internet.
tide. a Fabric care business in Europe and Latin America. in accordance with the Dynamic Resourcebased Model of Competitive Advantage. P&G continues to both look for acquisition opportunities that are related to its core business . P&G also sells basic marketing and management techniques on the web site. P&G Chemicals. foundation business and higher growth business. and free samples.96 Corporate Strategy P&G markets over 300 products in 160 different countries. and increased ownership in its Glad venture with the Clorox Company.com. P&G groups its business into two categories. and most recently.99 Internationally. a commercial product segment. From an end-user standpoint. Such early involvement and sizable investment in e-business as a tool reinforces P&G's position as a leader in the industry. and P&G Europe98 (See Appendix CC for list of businesses and product group descriptions). which vertically integrates ingredients for some of its products and P&G Health Science which is a research lab for product development.com and many others. and samples. household. or pet care. P&G divested its juice business in August 2004. and if complex enough. promotions. iams. Baby. are difficult for the competition to easily imitate.com.e. Home.P&G and Unilever 14 developments. such as pampers. and among others.. which offers tips. acquired Gillette.95 are valuable resources that enable P&G to increase its efficiency and effectiveness. P&G’s portfolio includes other ventures related to its core products. i. P&G also has numerous internet sites for specific brands and products where customers can obtain information. customers can visit PG. health & wellness. Everyday Solutions. in 2005 P&G acquired a Pharmaceuticals business in Spain. or seek expert advice about personal care. and snacks and coffee. as well as provide feedback. baby & family. charmin. Inc. Foundation Business includes Fabric. acquired Wella in 2003. Health Sciences. Initiatives and investments such as these.com and sign up for P&G’s monthly emailed publication.com.”94 Creating this central library for accessing information allows for faster turnover and more efficient use of time and information. Family care. coupons. P&G Chemicals. P&G also has a Market Development Organization organized in seven97 geographical areas.
advertising quality and new product development. With twelve brands that each exceeds €1 billion in annual sales. For Unilever.103 Unilever holds the (world) number two position in two of the six Home and Personal Care segments (Laundry and Daily Hair Care) and is number three or less in Household Care and Oral Care. brand loyalty could be difficult to maintain. “In a rapidly globalizing world. Similarly.102 Unilever's market leadership cannot be sustained if costs are significantly higher than a competitor's products. P&G should continue its current successful strategy. . Strategy: Unilever Business-level Strategy Most companies that hold a market leadership position do so by achieving the right balance between differentiation and low cost. P&G is aware of their core products and business foundation. the current business-level strategy would be characterized as a differentiation strategy.106 The alignment of company resources with its strategy is an important component for sustaining a competitive advantage. without adequate differentiation. and they do it well. effective deployment of brands and innovations. and brand strategy ("Categories"). one responsible for brand development. and two of six segments in Home & Personal Care (skin and deodorants). but also understands that the development of new products through innovation. Unilever should be well positioned to sustain and improve their current standings.105 Their commitment to R&D and innovation is clearly stated through their mission statement ("Add vitality to life") and their corporate purpose ("Vitality Innovation").104 Company resources have been divided into two primary functions. and winning with customers ("Regions"). and the other for managing the business. research and development is the key to maintaining its competitive advantage. consumers have many choices regarding which brand they select. focusing on core expertise and collaborating with partners in innovative ways are the keys to growth”100 which is exactly what P&G is doing.107 With its resources aligned and a commitment to funding its significant R&D spending.P&G and Unilever 15 and develop new products. where the emphasis is on branding. Unilever holds the world number one position in five of six food segments. Perhaps the greatest risk to sustaining their competitive advantage is the high SG&A costs of Unilever's current organizational structure. innovation.101 In the consumer products industry.
systems and shared services. which enables it to bring its wealth of knowledge and international expertise to local consumers.strategic leadership.109 Unilever is proud of its deep roots in local cultures and markets worldwide.in its efforts to globalize. Unilever places emphasis on: serving and delighting consumers.” Unilever embarked on a number of transformational initiatives. and prides itself on affordability. beginning with the founding companies (See Appendix W for a history of Unilever’s global expansion). Indonesia. At various stages throughout the course of Unilever’s history. where the company enjoys a long-established presence. and building relationships with local communities. the globalization of customers. there is evidence that the firm was driven by nearly all five global expansion imperatives -. Unilever is the market leader for four out of six primary HPC categories. resources and product launches. and implementing common processes. market share and brand health.111 With 44 operating companies in the Asia/Africa region. In doing so. with the goal of “One ULA” (Unilever Latin America) and a regional approach based on four cornerstones -. the efficiency imperative.113 . Unilever is the market leader in most priority categories in countries where it has a presence (key markets include India. and brands sold in 98 countries. South Africa. In this region. deepening partnership with customers. has established consumer intimacy. and Unilever’s distributions systems reach deep into these areas. In three countries in this region. With 223. However. Unilever’s progress in exploiting global presence may in fact be hampered by the lack of an overarching global strategy. Vietnam and the Philippines). and the globalization of competitors108 -. Thailand.the growth imperative.112 Unilever’s current expansion plans call for a focus on the developing and emerging markets. Unilever labels itself as a “multi-local multinational”110 and truly believes that it is creating value through global expansion by adapting to local market differences and tapping the most optimal locations for activities. In an effort to “win Latin America. excellence in reaching consumers and customers. innovation.P&G and Unilever 16 Global Strategy Unilever’s global presence has deep roots. the knowledge imperative. products are tailored to different income levels. Thirty-five percent of Unilever’s turnover is in developing and emerging markets.000 employees in over 150 countries.
by evaluating the “optimality of its global network for each activity in its value chain. among other things. Further. however.”115 However.”114 with system-wide automation and data synchronization. Unilever needs to “counter threats in specific markets” and transplant learning's from one place to another.which. but its IT initiatives are not unique or rare within this industry. the company has not articulated an overarching global strategy that clearly outlines the alignment of all functions in the value chain to that strategy. in at least one of its brands.116 Unilever needs to take the next steps in ensuring global competitive advantage. to make this possible. While it has taken steps to adapt to local markets. The firm’s e-business strategy is progressing.P&G and Unilever 17 Unilever is aiming for “seamless global development. 121 Many of the products in the personal products industry fall under the category of “experience goods” – that is. the qualities and characteristics of those products are only recognized after consumption. Unilever will need to continue to add new and industry-leading IT resources to build and sustain a resource-based advantage. though cost effective. runs counter to being sensitive to local markets. and “global box-ticking can’t match intuitive knowledge of local markets. despite all the references that Unilever has made to global strategy and its acknowledged global presence. press officer for Unilever has stated. from its early membership in a B2B marketplace. 118 E-Business Strategy Unilever’s e-business strategy continues to evolve. as Trevor Gorin.119 and the creation of an online buying system for making certain types of purchases from suppliers.an example of centralizing key business functions -. according to the Dynamic Resource-based Model of Competitive Advantage (DRMCA) (See Appendix X).120 The firm’s e-business strategy focuses primarily on the use of the internet and information technologies (IT) to achieve operational efficiencies in dealing with suppliers and in utilizing its distribution network. locational competencies and global coordination. and capture economies of global scale and global scope. to participation in the GDSN. the implementation of RFID technologies. nor are they inimitable.122 As . it has opted to consolidate its advertising accounts into one global agency network -. Unilever has made significant advances – most notably its alliance with Safeway.”117 along each of three dimensions: activity architecture.
127 Unilever. and reach out to consumers. in June 2004. in an effort to slash costs. regional and global supply managers to gather and analyze information quickly. radically change its supply chain.130 the Unilever Private Exchange (which provides secure links between operating companies and suppliers’ and customers’ systems and to external electronic marketplaces). which offers a cost-effective data pool with solutions and services that support user needs. Unilever’s supply management information system (which helps local.124 Unilever and P&G are members of Transora.126 Transora merged with UCCnet to form 1SYNC. the first time that product information had been “synchronized between the leading supply side and demand side data pools” (See Appendix AA). Unilever was making plans to invest heavily in electronic commerce.131 Ariba. Furthermore. as a member of Transora. see Appendix BB). and helps the industry maximize the value of data synchronization. The company recognized that it could achieve significant savings by using the internet to “buy everything from raw materials to cardboard. and make appropriate sourcing decisions)133 (For additional information about Unilever’s utilization of information technology.”123 Unilever also began using the internet to target consumers of its products by advertising selected products on websites catering to specific consumer markets (See Appendix Y for Unilever's early use of the Internet).125 a B2B marketplace consisting of 49 companies. However. .P&G and Unilever 18 such. 129 Other examples of Unilever’s forays into e-commerce and information technologies include: the implementation of radio frequency identification (RFID) tags. was part of an enterprise-wide effort in 2004 to test the GDSN – an internet-based supply chain initiative launched to streamline communication of product information128 (See Appendix Z). as early as February 2000. Safeway and Unilever heralded the success of their joint Global Data Synchronization initiative. Unilever’s online buying system (which “enables purchases of non-production items to be made at volume-negotiated prices from selected suppliers”)132 and ISIS. those products by and large do not lend themselves well to e-commerce – purchases by consumers via the internet.
higher profit opportunities. including the portfolio of businesses that a firm chooses to engage in. Unilever is number one or two in all but three segments in which they compete.136 and are sold in 150 different countries. Consolidating markets can help provide sustained competitive advantage by reducing the overall level of competition. and would help consolidate a market. and help reduce their high SG&A costs.138 Further.135 Unilever's activities are spread across six primary business categories.141 With a stated focus on developing and emerging markets.200 to around 400 as part of an overall restructuring campaign. including home care. the business is in an area that is relatively mature and segmented.144 .137 As previously mentioned. beverages. they face intense competition and weak consumer spending. under-performing business units in order to free up resources to focus on higher growth. ice cream & frozen foods. they risk a reduction in the value of the business due to further brand depreciation. the locations or geography it will cover.143 Another option for the cash that would be generated through the divestiture of low-growth businesses would be to seek out potential acquisitions that offer growth or complimentary products. should Unilever wait too long before executing this divestiture.139 It is in cases like this where companies might benefit from a divestiture of low-growth. provide cash for additional debt reduction. savory & dressings.134 Unilever's strategy is to have strong customer relationships at the local level.P&G and Unilever 19 Corporate Strategy Corporate strategy addresses the scope of the firm's activities. and the amount of vertical integration it employs. however. and personal care. A decision to divest the brands that are under-performing would not be foreign to Unilever. In the segments where they are not number one or two. everywhere they do business. and to be seen as "a truly multi-local multinational". particularly in Europe. over the last several years the brand count has been reduced from over 1. spreads.140 (For additional details see Appendix U: Unilever SWOT Summary). particularly in the area of personal care. Such a move would better position Unilever for sustained profitability.142 divesting the European frozen foods units would free up resources.
we recommend the following plan of action for the next 5 years (with annual reviews of progress to date): • Align Unilever resources to strategies. and alignment of strategies. product and brand differentiation initiatives. E-Business strategy progressing. Utilize partnerships and alliances for market understanding and product development. however it will require strong discipline and careful analysis in terms of pursing appropriate acquisitions and divestitures. • Strengthen consumer research and brand differentiation. cost reduction programs. distribution networks. and communications related to suppliers. Continue consumer research to ensure that products and brands are meeting target customer needs. Global Strategy Advisors believe that there is considerable opportunity for Unilever to strengthen its profitability and sustainability. and pursue increased efficiencies and cost reduction strategies. . develop an overarching global strategy that provides consistent direction and ensures global synchronization and pooling of knowledge and best practices. Look for opportunities for vertical integration: cost savings and increased efficiencies can be created with this modification in the Unilever portfolio. Continue consumer research efforts to ensure an understanding of the global marketplace. and retailers/customers. while identifying new opportunities. Unilever can learn from P&G and further develop itself as a leader. Taking into consideration the analysis provided. electronic transactions. align strategies to optimize all value chain components. Unilever must remember to base its strategies and activities on three fundamental questions: Who are our target customers? What value do we want to deliver to these customers? How will we create this value? Based on the results of our analysis presented in this report. • Continue investments in R&D initiatives for increasing line extensions and new products. continue to invest in IT and internet solutions to achieve global efficiencies in negotiations. develop fallback plans should line extension efforts fail.P&G and Unilever 20 Conclusions and Recommendations This comparison clearly shows why P&G is a leader in the industry. Regional Unilever strategies are individually strong.
but only when alliances/investments are aligned with Unilever strategies and where projected ROI will enhance pursuit of goals of profitability and sustainability. Conduct (or contract for the development of) in-depth global expansion study to identify risks/benefits of potential regions and focus on markets with growth opportunities. . Identification of optimal acquisitions is beyond the scope of this paper. • Continue to pursue strategic corporate alliances for R&D. for example). where economically feasible and ROI is highly probable. a market analysis is required to identify best acquisition options that would complement existing brands and product lines. Identify potential acquisitions that would help consolidate markets and thereby enhance Unilever’s market leadership. and where that competitive advantage can be sustained. identify locations where first mover advantage is possible. especially for higher profit line and expansion in emerging countries. Market leadership cannot be sustained if your costs continue to exceed that of your competitors’ products. Use proceeds from divestitures to acquire businesses. Exploit markets where consumption of household products is low. Sell off under performing businesses or slower performing brands (European frozen foods businesses.P&G and Unilever 21 • Balance differentiation with low costs and continue reducing SG&A costs. • Exploit and expand global presence. Seek opportunities to out-source. • Increase focused advertising. Explore increasing global research centers. and promote market consolidation. when such alliances fit with and add value to Unilever’s strategies and where ROI justifies cost. • Aggressively pursue acquisitions and divestitures. Seek alliances that may produce ways to increase speed-to-market and leverage global opportunities while increasing protection against exchange rate fluctuations.
tonics.osha. perfume • Cosmetic creams • Cosmetic lotions and oils • Cosmetics • Dentifrices • Denture cleaners • Deodorants. Cosmetics. tablets • Soap impregnated papers and paper washcloths • Suntan lotions and oils • Talcum powders • Toilet creams. cakes. personal • Depilatories. Establishments primarily engaged in manufacturing synthetic perfume and flavoring materials are classified in Industry 2869. rinses. premoistened • Washes.display?id=614&tab=description . and those manufacturing shampoos and shaving products. creams. cosmetic • Dressings.. hair • Shaving preparations: e. and scalp conditioners • Home permanent kits • Lipsticks • Manicure preparations • Mouthwashes • Perfume bases. and other toilet preparations. powders. 2006. from http://www. This industry also includes establishments primarily engaged in blending and compounding perfume bases. cosmetic Retrieved February 7. • Bath salts • Bay rum • Body powder • Colognes • Concentrates. powders.P&G and Unilever 22 APPENDIX A: SIC CODE 2844 AND INDUSTRY DESCRIPTION 2844 Perfumes. blending and compounding • Perfumes. natural and synthetic • Sachet • Shampoos. lotions. cosmetics. cosmetic • Face creams and lotions • Face powders • Hair coloring preparations • Hair preparations: dressings. and those manufacturing essential oils are classified in Industry 2899.gov/pls/imis/sic_manual. whether from soap or synthetic detergents.g. and Other Toilet Preparations Establishments primarily engaged in manufacturing perfumes (natural and synthetic). and waters • Toilet preparations • Toothpastes and powders • Towelettes.
549.00 M Sales $8. LVMH Moet Hennessy Louis Vuitton S.00 M Sales .00 M Sales $12.00 M Sales $17.00 M Sales $19. (4913) Procter and Gamble Co.80 M Sales $8.563.P&G and Unilever 23 APPENDIX A. Merck Johnson and Johnson (JNJ) Abbott Laboratories (ABT) Pharmachim Holding Sanofi-Aventis (SNY) L'Oreal SA (LORLY) Wyeth (WYE) Christian Dior S.882.00 M Sales $53.90 M Sales $17.10 M Sales $63.219. 2006. (LVMHF) CP and P Inc. Illinois Sofia Paris Clichy Madison. (PG) Unilever E. pg 2: GLOBAL INDUSTRY RANKING BY SIC Current Industry: 2844 .90 M Sales $11." Encyclopedia of Global Industries.70 M Sales $18.680.317.00 M Sales $49. New York Boston. Colgate-Palmolive Co. Georgia Taiz Dar es Salaam New York. Ohio London Darmstadt New Brunswick. Massachusetts Tokyo New York.563.038.Perfumes.083.A.532. Cosmetics and Other Toilet Preparations Source: Business & CO Resource Center. Elf Aquitaine Nestle S.741.584.A. Hayel Saeed Anam Group of Cos.674.723.50 M Sales $10.00 M Sales $17. Kao Corp.A. (CL) Gillette Co. Toiletries and Cosmetics.108. Online Edition.00 M Sales $16.40 M Sales $19.157.20 M Sales $10. (NSRGY) Sunstar Inc.00 M Sales $47.348.477. Thomson Gale.00 M Sales $19. (KCRPY) Unilever United States Inc. New Jersey Paris Paris Atlanta.358. New Jersey Abbott Park. Paris La Defense Vevey Osaka Cincinnati.000.00 M Sales $56. IPP Ltd. New York $124.20 M Sales $59.024.
30% Make-up 13. by Value.50% The leading revenue source in the personal products market is hair care. .70% 16. which accounts for 25. 2004 Oral hygiene 12.70% Haircare 25.5% of the global value. Market Segmentation145 Global Personal Products Market Segmentation: % Share.P&G and Unilever 24 Appendix B: Global Personal Products Industry.30% Fragrances 13.50% Personal Hygiene Skincare 18.
) There are no proprietary product differences in the industry. 148 No ( ) These segments are characterized as having well-supported. (For example. distribution networks and supply chain. . materials. used equipment might be available. (For instance. Newcomers to the industry will have little difficulty in obtaining the necessary inputs and resources (e. to include product development. costs do not decline significantly with volume. as in the airline industry. existing companies’ products are not protected by patents) There are no established brand identities in the industry. The industry rate of growth is high. Five Forces Analysis PERSONAL PRODUCTS INDUSTRY FIVE FORCES ANALYSIS (Industry Attractiveness Analysis from the Perspective of Major Incumbents ) I. “Global personal products market grew by 3.146 This industry encompasses a wide variety of products and brands. or suppliers) to start business operations. and enjoy an advantage (particularly the industry leaders) due to size.g. 149 Industry entry requires capital to either acquire an existing company or to construct facilities and purchase all manufacturing (and R&D) equipment. industry leaders have been masterminds in developing innovative products147 – which suggests that they benefit from experience curve economies – in many aspects of their businesses. (Lack of brand equity for incumbents) Yes ( ) Comment/Support Large firms do indeed enjoy economies of scale in this industry – and advantages of size.. Barriers to Entry and/or Mobility Factor Large firms do not have a cost or performance advantage in your segment of the industry. While human resources may be available. to start operations) Newcomers to the industry will be able to access existing distribution channels. Incumbent firms have the advantage. and that it would be difficult for less experienced firms to gain the same level of performance without going through the same learning process. skilled people. (No economies of scale) There are no “experience curve” economies in this industry. (This is different from economies of scale. and superior product development. strong brands. For example.4% in 2004 to reach a value of Not much capital is needed to enter the industry. scale and diversity of products. establishing partnerships with suppliers and distributors will take time. The existence of experience effects in an industry means that incumbents are able to have lower costs due to past learning and experience.P&G and Unilever 25 Appendix C: Personal Products Industry. commanding premium pricing in sectors that are less cyclical. Incumbent companies establish contracts with firms in their distribution channels. Patents abound in this industry.
154 Planning and establishing personal products manufacturing facilities involves permits and adhering to environmental and government regulations. due to current low penetration of personal products in large markets (China.152 The industry has well-defined product standards or specifications.1% since 2004.151 Highest growth area expected in the Asia-Pacific region. many FDA regulations govern this industry. (Incumbents haven’t attempted all possible viable strategies in the industry) The industry has no history of retaliation by incumbents against new entrants. to include prohibiting manufacturers from making therapeutic claims based on the vitamin content of skin care products. however competition is fierce. with leaders regularly introducing new products. India). consumer concern over animal rights and environmental concerns have affected the industry for more than 100 years.P&G and Unilever 26 $152. No evidence of retaliation by incumbents against new entrants.” 150 Market is forecasted to have a value of $182. intervention.g.. The industry offers newcomers one or more potential point of entry. the more attractive the industry to incumbents. however industry leaders are goliaths! Newcomers to the industry will be able to obtain the necessary licenses and permissions to start operations.S. Note: The greater the number of NO checks. high variable cost. 153 Government regulation. low fixed. Some U. Product standards are fairly welldefined. . low level of consolidation) is such that incumbents don’t typically react to new entries. Industry economics (e.9 billion in 2009 – an increase of 20. There are many different market segments and niches where a new entrant might specialize. which newcomers can implement.4 billion. states have instituted regulations limiting the use of volatile organic chemicals (VOCs) as a result of pressure to reduce the use of VOCs for environmental reasons.
The quality of inputs is critical to my finished product.155 It is difficult for buyers to vertically integrate backwards into these businesses. No ( ) .) purchase in large quantities. natural products). Bargaining Power of Suppliers Factor The supplier industry is more consolidated than my industry. distributors (Wal-Mart. Yes ( ) Comment/Support Supplier industry is not any more consolidated than personal care industry.) The buyers can vertically integrate backwards into your business. No significant costs associated with switching suppliers. Yes.P&G and Unilever 27 II. A draw here – consumers buy in small quantities. Many firms in industry are vertically integrated156. My business is not important to the suppliers. Business is important to suppliers. My product is a small part of the buyer's cost of inputs. products with vitamins. Many products in this industry are fundamental to health and cleanliness. buyers tend to be more knowledgeable about what they are buying. as companies continue to expand globally. Yes ( ) Comment/Support Buyer industry will continue to grow. technical information is not required in making purchasing decisions. Product lines target males and females. for consumers as well as distributors. While some products are becoming more sophisticated (anti-aging products.) Does the buyer need a lot of important (technical) information to inform its purchasing decision? (In such situations. and of use to people of all ages. III. The buyer does not face any significant costs in switching suppliers. (That is. etc. No ( ) Buyers buy in large quantities. Many firms are vertically integrated in this industry – large multinational firms are engaged in every aspect of the production process. Bargaining Power of Buyers Factor The buyer industry is more consolidated than my industry. quality is of prime concern in each step of production chain. my buyers can easily purchase from my competitors.
Yes ( ) Comment/Support “Global personal products market grew by 3. Each market has its own unique preferences and needs. My customers will not incur much costs or critical uncertainties in switching to a substitute. services. Threat of Substitutes Factor My customers have one or more substitutes available to them. substitute products perform well and can pose a threat. My suppliers can vertically integrate forward into my business. Proximity of manufacturing plants to distributors/retail stores is an advantage (lower transportation costs). No ( ) V. substitutes are readily available. etc) are unique or differentiated.9 billion in 2009 – an increase of 20.158 There are many different components and ingredients.161 Highest growth area expected in the Asia-Pacific region.(For example. It would not be easy for suppliers to vertically integrate forward. I don't have many supplier alternatives.4 billion.” 160 Market is forecasted to have a value of $182. labor.4% in 2004 to reach a value of $152. Little costs incurred in switching for consumers. from raw materials (cultivation of plants and flora used in fragrances). one-size-fits-all approach will not work when supplying global markets.P&G and Unilever 28 My inputs (materials. supplies. high fructose corn syrup is a substitute for sugar in many industrial applications. due to No ( ) . many personal care contract manufacturing suppliers for this industry. Rivalry Among Existing Competitors Factor My industry is not growing rapidly or the industry is in the decline stage of its life cycle. services must be differentiated. Therefore. through the final production stages159 and packaging and distribution. Yes ( ) Comment/Support See appendix D – top four firms make up only 28% of market share.) At least one of the substitutes performs well and could pose a threat to my business. distributors/retail giants will need to renegotiate contracts (to possibly include transportation). supplies. IV.157 There are many.1% since 2004. I cannot switch suppliers quickly and cheaply. That is. While brand loyalty exists for some firms.
industry is not markedly cyclical.162 The industry is fragmented and exhibits boom-andbust cycles. Leading firms (those with comparable levels of differentiation) are similar in size. or the industry is cyclical with intermittent excess capacity. Not the case. and superior product development. R&D.163 Excess capacity not evident. commanding premium pricing in sectors that are less cyclical. India). however most provide a variety of brands and products.P&G and Unilever 29 current low penetration of personal products in large markets (China. Investment in facilities. the more attractive the industry is to incumbents. . of Checks Yes (# Checks) Comment/Support No (# Checks) 8 4 5 0 6 23 4 3 1 3 2 13 Note: The greater the number of NO checks. There are no significant product differences and brand identities among the major competitors. 164 Some industry leaders specialize in limited segments. leading firms in this industry are not small. Overall Ratings of the Five Forces Force (Relative to the Power of Incumbents) Barriers to entry/mobility Bargaining power of buyers Bargaining power of suppliers Threat of substitutes Rivalry among incumbents Total No. The industry has excess capacity. The industry suffers competition from companies based in low-cost locations. There are high exit barriers. relative to the size of the industry. making exit pricey. Industry is characterized as having well-supported. My competitors are mostly specialized in my line of business and are not diversified. Major competitors in my industry are of comparable size. strong brands. This industry is not fragmented. some of which span multiple industries. distribution networks is substantial.
20% The leading player in the personal products market is L’Oreal. it would not be characterized as an oligopoly. particularly as industry leaders merge with or acquire other firms. P&G’s acquisition of Gillette in 2005 will very likely change this picture in Datamonitor’s 2006 reports.% Share by Value.166 While this industry is becoming more consolidated.P&G and Unilever 30 Appendix D: Global Personal Products Industry. .8% of the market share. Market Share .80% ColgatePalmolive.5 7. 7. 2004 L'Oreal.6 28.8% of the global value. The four-firm concentration ratio (CR4) is calculated by adding the market share of the four largest firms in the industry.80% Procter & Gamble. industries that reach that ratio begin to exhibit oligopolistic behavior.7 Source: Datamonitor. May. A CR4 of 40% or higher represents a consolidated industry. Company L'Oreal P&G Unilever Colgate-Palmolive TOTAL %share 8.8 3. by Value. 3. The top four companies in the Global Personal Products industry represent 28.8 8. 2004165 Global Personal Products Market Share: % Share. The following CR4 table shows the total of less than 80% and is therefore not considered highly consolidated.60% Other. 2005. 71.50% Unilever. 8. which accounts for 8. 8.
2 2.9 2.5 47. (2005.5 46. .9 147.7 48.5 1.2 2.6 138.3 3.4 3.5 49.4 Year 2000 2001 2002 2003 2004 % Growth 3.3 Source: Datamonitor.5 3.3 142.2 Market Value Growth $ Billion Market Value 133.6 % Growth 2.P&G and Unilever 31 Appendix E: Market Growth Market Volume Growth 2000 – 2004 Year 2000 2001 2002 2003 2004 Billion Units 45. May).3 152.1 3.
7 181. such as the Consumer Price Index (CPI).7 168.4 168.3 179.2 179.5 167.9 Apr 167.7 171.8 181.7 168.1 168.8 180.2 166. cosmetics.2 179.1 179.9 176.4 180.5 1996 169.9 171.7 168.1 180.1 167.9 178.8 175.9 172.4 1999 172.6 2002 179.5 168.7 179.4 176.4 166.1 168.6 179.4 181.9 167.8 Oct 166.5 176.1 170.9 1998 169.3 181.9 165.2 180.9 167.8 176.9 Annual 166.9 168.8 177.9 Dec 166.4 180.7 181.8 172.9 May 167.2 181.9 166.5 2001 179.4 176.2 1997 168.P&G and Unilever 32 APPENDIX F: Producer Price Index (PPI) For SIC 2844 The following was obtained from the US Bureau of Labor website.8 170.9 172.0 177.2 180.6 169.4 178.1 167.1 181.0 Mar 166.7 164.4 180.0 172.1 172.0 165.0 168.1 172.2 168.8 166.3 168. This contrasts with other measures that measure price change from the purchaser's perspective.4 181.7 Sep 167.9 167.4 168.8 177.7 181.7 179.4 165.0 180.9 Nov 166.9 Jun 166.1 176.3 180.7 181. and distribution costs. Series Id: PDU2844# Industry: Perfumes.5 172. sales and excise taxes.2 1995 168.2 170. PPIs measure price change from the perspective of the seller.1 168.7 Aug 166.7 1993 165.8 168.0 169.7 166.3 172.1 179.3 168.6 173. and other toilet preparations Product: Perfumes.4 168.8 Jul 166.7 179. A family of indexes that measure the average change over time in selling prices received by domestic producers of goods and services.5 179.4 169.1 175.5 179.6 167.5 169.6 178. Sellers' and purchasers' prices may differ due to government subsidies.4 176.6 181. and other toilet preparations Base Date: 8003 Year Jan Feb 165.2 165.2 168.1 172.0 .2 167.6 179.9 167. cosmetics.0 180.8 168.6 176.5 2000 176.4 179.3 2003 181.0 178.8 172.7 166.2 167.3 1994 167.6 168.4 180.0 166.6 167.0 177.8 181.8 170.9 180.6 174.0 167.
Sales Note: this source did not include Unilever in its categorization of Personal & Household Prods..29 9.876.03 17. (ADR) Colgate-Palmolive Company 3 Yr.80 61.01 7.00 32.83 .62 11.com/ Data as of 2/9/2006 72 companies Name MktCap Weighted Average McKesson Corporation The Procter & Gamble Company Mitsui & Co. Sales TTM Sales $ Rate% Growth Rate% 44.27 7. Industry.P&G and Unilever 33 Appendix G: Industry Growth Rate .94 11.675. Ltd.90 17.95 85.27 45.205.65 4. source: http://www.396.14 12. Sales Growth 5 Yr.319.22 12.reuters.investor.
8% 4.4% 6. McKesson Corporation The Procter & Gamble Company Mitsui & Co. 9.9% NA 12.5% 33.3% 24. 5.8 $61.2 $4.0% 15. Tech.479.4 2.3% 203.7% Industry Average 1.2% 7.396. 6. Inc.9% 26.5 2.0 $4.508. Inc.465.4% 11. 8. LTD.0 $32.9 1. Ltd.6% 13.7% 48.6 $6.1% 19. 6.5% -0.4% 47.2% 54.6 3.0% 61.2% 12. 3.0% 9. (ADR) The Clorox Company Ecolab Inc.A. 47.5% 3. Inc. 10.P&G and Unilever 34 Appendix H: Average Revenue Growth: INDUSTRY Name Revenue M $44. 4..2% 14. 8.5% 5.7% 2.5 19.8 14.6 $11.6 2. 3. (ADR) Colgate-Palmolive Company Alberto-Culver Company USANA Health Sciences.8% 15. 7.396.9 Revenue Growth 11. (ADR) Colgate-Palmolive Company Avon Products.2% -2.8% 19.6% 35.8% 61.8% 4.. 2.362.9% 21.3% 17. The Estee Lauder Co. 2.3% 7. 2.4% NA 23.6 15.9 $85.675. Shiseido Co. 7.876. 3 yrs 11.7% 5.4% 18. 10.6% 57.5 2.1% 12.3 1.0% 14.4% 2. 3.1% 9.2% 47. EPS Name EPS EPS Change (1yr) EPS Growth (3yr) Industry Average 1.4 Name Gross Margin Operating Margin Net Profit Margin Industry Average 1.6% 137. Ltd Pillowtex Corporation The Yankee Candle Company. Ltd. 3.7% -124.1% 9. Blyth. Mitsui & Co. Newell Rubbermaid Inc.4% 18.0 2.1% 26. 5.4% 2.8% 10.2% Rev Growth. 4.319.149.2% .205.5% 10.2% 15. (ADR) Pillowtex Corporation The Clorox Company The Procter & Gamble Company McKesson Corporation Grupo Casa Saba.8 $6.9 $8.9 $5. China Techfaith Wireless Comm. Inc. S. 9.
9% 11. DAC Technologies Group 52.0% 48.2% 17.4% 18. Inc.5% .0% 11. Inc. 9.5% 12.4% 37.7% 19. 8.7% 19. 7.4% 18.9% 54.4% 11.0% 35.9% 9. 6.9% 9.6% 57.5% 16. The Procter & Gamble Company WD-40 Company Parlux Fragrances.6% 18. Colgate-Palmolive Company USANA Health Sciences. Inc.6% 11. Playtex Products. 10.2% 51. 5.P&G and Unilever 35 4.
00% 17.5yr Net Margin .60% Growth Industry Exceeds S&P Sales .9 .com Note: The industry being studied in this report does not include household products.90% 4.5 13.20% 9.80% 45.80% 14.90 $59.10% 20.60% 23.80% 16.90% 10.062.1yr Sales .60% 9.80% 14.5yr Industry Sector S&P 500 11.10% 44.70% 9.30 $94.00% 15.1yr Net Margin .00% 10.072.5yr Capital Spending .6 0.9 1.50% 20.030.1yr Pre-Tax Margin .90% 13.40% 18.5yr Op Margin .871.00% 15.60% 10.20% 14.40% 14.10% -3.140.1 5.5yr Net Margin .reuters.6 1 $690.50% 12.60% 9.30% 23. Profitability Industry Exceeds S&P Gross Margin – 1yr Gross Margin – 5yr EBITD Margin .80% 13. Financial information on the Personal Products industry as a whole is difficult to obtain without subscribing to a service such as Hoovers or Datamonitor.investor.50% 44.007.10% 9.60% 45.5yr Industry Sector S&P 500 47.40% 9.P&G and Unilever 36 Appendix I: Historical Data – Personal and Household Products Source: http://www.1yr Net Margin .50% 1.90 $45.90% 47.10% 10.20% 9.30% 18.1yr EBITD Margin .30% 20.2 $525.30% 12.00% 5.80% 7.5 27.60% 4.20% Operational Efficiency Industry Exceeds S&P Revenue/Employee Net Income/Employee SGA/Sales Receivable Turnover Inventory Turnover Asset Turnover Industry Sector S&P 500 $709.30% 5.5yr Pre-Tax Margin .20% 14.5 12 6.10% 18.90% 18.5yr Op Margin .70% 9.90 28.90 33. However.40 19.90% 23.10% 14.1yr Op Margin .1yr Op Margin .2 12.60% 14.
9 12.qtr Solvency LT Debt/Equity .7 163.20% Industry Sector S&P 500 .40% 32.4 1.20% 30.60% 15.2 16 156 115.6 38.50% 26.40% 30.1yr Effective Tax Rate .70% 7.50% 5.50% 12.qtr Total Debt/Equity .5 139.1yr ROE .9 1 1.90% 8.4 105.60% 13.9 1.40% 11.70% 33.1yr ROI .qtr Current Ratio .10% 10.qtr Interest coverage .50% 9.80% 17.30% 41.60% 36.2 1.30% 9.9 138.4 90.1yr Tax Effective Tax Rate .5yr Liquidity Quick Ratio .P&G and Unilever 37 Financial Industry Exceeds S&P Returns ROA .5yr ROE .60% 30.5yr ROI .04 180.1yr ROA .1yr Debt/Equity .5yr 32.7 8.40% 29.70% 80.30% 52.40% 12.3 0.
813 2.462 1.327 1.800 1. EPS.P&G and Unilever 38 Appendix J: Household and Personal Products Industry Industry Ranking by Revenues.477 7.401 10.748 5.224 2. ..000 revenues rank 26 135 210 215 278 346 445 530 533 593 729 893 929 941 $ millions 51. Profits Profit as % of. Employees REVENUES Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Company Procter & Gamble KimberlyClark ColgatePalmolive Gillette Avon Products Estée Lauder Clorox AlbertoCulver Stanley Works Energizer Holdings Solo Cup Blyth Church & Dwight Rayovac 1..324 3.439 PROFITS % change $ % change from 2003 millions from 2003 19 7 7 13 13 13 4 13 13 26 N/A 5 38 56 6.691 846 342 549 142 367 267 -50 97 89 56 25 6 -7 22 27 7 11 -13 240 57 N/A 12 10 260 From the April 15.481 1.116 1.258 3. Total return.407 15.790 4. 2005 issue of Fortune magazine.584 10.586 1. Profits (US) 167 Revenues.
A. Source: www.com http://www. Shiseido Company. Inc.datamonitor.datamonitor.P&G and Unilever 39 APPENDIX K: Company Ranking By Personal Care Revenues Only (Financial Yr 2005). The Estée Lauder Companies Inc. Unilever Global Gillette Kao Corporation Avon Products.com/~927b43b1a6624e8dbcd8e03d52c57dde~/companies/lists/list/?listID=5876A758-E821-4B88-99790DEA4C54EA5C List last updated: 5 April 2005 1 2 3 4 5 6 7 8 9 10 The Procter & Gamble Company L'Oreal S. Limited Colgate-Palmolive Company Kimberly-Clark Corporation .
. Exports (SIC 2844) (In millions of dollars) Value of exports Million US $ 2500 2000 1500 1000 500 89 90 91 92 93 94 95 96 97 19 19 19 19 19 19 19 19 19 19 98 Million US $ 2844 Toilet preparations Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Million US $ 694 886 1118 1254 1437 1733 1887 2195 2628 2586 Source: US Dept of Commerce: Bur of the Census.P&G and Unilever 40 Appendix L: Trend Line. Int’l Trade Administration.
SIC 2844 (In millions of dollars) Imports YR 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 M$ 594 634 712 892 956 1035 1156 1257 1410 1618 Source: US Dept of Commerce: Bur of the Census. Imports. . Int’l Trade Administration.P&G and Unilever 41 Appendix M: Trend Line.
7%.5% in 2004. led by Japan. China and India accounted for US$10 billion in sales in 2004.5 billion in 2004. with sales in Argentina alone growing by 17% compared to 2003. Together. the cosmetics and toiletries industry was becoming more global than ever before. Sales of skin care products in Asia reached about US$17. Russia and China were the fastest growing markets for cosmetics. The leading category in terms of growth was skin care. Argentina. as industry leaders continued to capitalize on developing international markets. Brazil.P&G and Unilever 42 Appendix N: Fastest Growing Markets. in 2004. Indeed. 2004 “Heading into the mid-2000s. China’s cosmetics market grew by 12. followed by hair care.”168 . while India’s increased by 7.
& Giorgio Colognes Lower. and high frequency stores (developing countries). ½ International. i. Secret. Aussie. antiperspirants or deodorants. Sunsilk. Targeting of Gillette products into China major initiative.e. feminine protection hair color. cosmetics. Balance between retail customers (top 5 sell $ 1B annually. P&G and Unilever Value Chain Analysis: Worksheet Key Differences between Major Competitors Industry: Personal Products Industry P&G Date: Feb. Beauty focuses on providing the customer a “beauty experience”. Old Spice. Covergirl. 2006 Unilever Personal care (26% of portfolio) includes skin. No dependence on single channel or customer. Noxzema. PhysQue. America. Clairol. Head & Shoulders. Rexona. Dimension Product(s) P & G Beauty (34% of portfolio) includes personal cleansing. Max Factor. DoveN America . affordabilityLifebuoy. hair.e. Calvin Klein & other designer fragrances Additional Info Industry includes fragrances. Pert.income strategy (product lines) for developing markets (affordability). perfume. Herbal Essence. Zest. Signal. and skin care products: Sure. Sunsilk -Europe. as well as regional differentiations.P&G and Unilever 43 Appendix O: Value Chain Analysis. Hugo Boss. make-up. 10. Balanced approach w/ ½ sales from N. Activity Market Positioning For each company. Ivory. Olay. Use the findings to write an explanation within the body of your analysis comparing the companies. Close Up. Vaseline. Pantene. Dove. Target Customer Segments Differentiated for different income levels i. and oral care: Axe. personal hygiene products and skincare products. deodorant. Safeguard. explain the dimension. hair care. clear. Always. hair care. Lux. colognes. Suave. Camay. oral hygiene products. Tampax. Ponds. Infusium.
P&G and Unilever 44 Summary of Product-Market Positioning Strategy to achieve balancing of products. and high frequency stores (neighborhood stores in developing countries).169 Products are tailored regionally for customer differences.e. membership club stores. Sunsilk for Asia. Northeast Asia. ponds Malaysia. markets. Indonesia. and further expanded across product lines i. turkey. Rexona ebony. customers. and brands. leading brands organized in seven geographies: "North America. through mass merchandisers. Products positioned through Market Development Organizations in 80 countries. Lux is body wash in Europe.e. Products sold primarily in grocery stores. and Latin America. i. Central and Eastern Europe/Middle East/Africa. Western Europe. facilitated by Gillette acquisition. Latin America. and massage bar in Brazil .brazil. hair care in Japan. discount stores. Greater China and ASEAN/Australasia/India ".
Also. Localized inbound raw materials supply to decrease costs & increase efficiencies. while delivering on-time. with bar coding and wireless technologies.P&G and Unilever 45 Primary Activities Inbound Logistics Awarded # 1 in supply chain management 2004. began compliance labeling mandates for its suppliers to improve efficiencies and reduce costs. Early in 2000. Leaders in inbound logistics. by survey of US retailers. Unilever logistics organization has been restructuring and consolidating to create uniform regional distribution centers geographically located nearer the customers (within 24 hrs delivery). with LeanLogistic's Webnative On-Demand TMS implemented value chain solutions flexible warehousing in NA to reduce inventory and Costs. implemented webbased solutions provider (Transplace) to manage inbound transportation. Also. Have developed transportation leadership team to analyze and improve processes from acquiring raw material through output to customers. .
regional financial shared services. and IT to work with trade customers for ways to add value to the consumer. hired IBM Business Consulting Services. and transportation carriers. Standardized manufacturing platforms. Large scale manufacturing operations located in 42 countries. . Use Value Added Networks for B2B Customers: linking financial institutions. increased sales per employee 40%. Poland and Portugal.P&G and Unilever 46 Operations Since 1999. RFID for supporting operations. Additionally P & G developed their customer business development structure. SAP & customer management software. retailers. general accounting and bill-to-cash functions. "Trade links" with large retailers such as WalMart and Carrefour. which teams sales. have ongoing restructuring programs to minimize costs in production and sales. finance. and increased product supply services. marketing. logistics. Decreased global business services costs over 5 years 15%. Have strong partnerships with large retailers. Large scale distribution operations in over 160 countries. contract manufacturing when available. In 2005. operating in India. to provide purchase-to-pay. deploy latest technologies incl.
China and Mexico. and picking solutions such as it's expanded contract with Exel to service distribution centers in France. New branding initiatives for all products implemented. including carrier contracts. incl. and Lynx deodorant. Marketing and Sales Strong international growth from mega brands that are marketed globally. Use IT software for order management. as well as regional marketing campaigns. and customer relationship management. Interestingly. Morocco. Have focus on word of mouth programs to impact influential teens (Tremor). advertised on fantasy airline airplanes.'s.P&G and Unilever 47 Outbound Logistics P & G uses logistics specialists to support its transportation. Ocean going internationally. Philippines. warehousing. Consolidated transport business. Canada. Unilever provides wireless applications in the field to gather customer information from sales back to the company. Additionally. high quality locations Costa Rica. and UK . Unilever and P & G have strong programs for corporate social responsibility Customer Service Enterprise IT Strategy for positive customer impact and social impact. Also implementing webbased B2B solutions for managing transportation information. sourcing strategies spend history. United States. improving efficiencies and decreasing carrier bases 70%. including partnering for Dove's American Girl with Bath & Body and Mattel Co. Awarded # 1 in 2004 for most helpful consumer and shopper information. Argentina. and now sells that software through a joint venture with Moore and Associates. Awarded # 1 best category management and consumer marketing in survey of US retailers. Global business service organizations l in low cost. Superior sales and marketing machine. Currently have 22 brands each produce $1B sales annually (10 $1B brands in Beauty & Health). P & G also co-developed software for case picking and truck-loading for P & G.
Unilever has won awards on cultural diversity and leading company to work for. minorities and women at the VP and GM level over the last five years has doubled. Strong recruiting and training program. such as finance. 754 managers. and other benefits. . Fabric Care & Home Care. Global Business Services and Corporate Functions working separately and together. Developed "Community of Learning Academies" for ongoing learning and knowledge sharing throughout key functions. Market Development Organizations. profit-sharing plan. Latin America. comprehensive training at "P&G College". internal clubs. Health Care. HR. stock options. IT. and Duracell & Braun. further organized into mostly regional business groups w/brand.e. tuition reimbursement program. 4 Global divisions: P&G Beauty. The number of U. in 7 segments: Beauty. relocation assistance program and other benefits. P&G Household Care. tuition reimbursement.S. and technical centers-heavy resources deployed. and support staff (i. Heavy recruiting at business schools and top universities. Additionally. Provide flexible work hours. Brazil has approx. Managers get global toolkit for diversity training. # of plants. and 13 plants) Human Resources Management One Campaign providing Regional HR activities. Blades & Razors. managers. Diverse leadership teamhalf of the presidents are from outside the US. and Gillette. global employment with blend of local and expatriates in management roles. innovation. 13. 2 Global divisions: foods & home and personal care.e. Baby Care & Family Care.000 workers. Snacks & Coffee. PG has strong recruiting and "employee for life" history (golden handcuffs) from strong stock purchase plan. P&G Family Health. incl.P&G and Unilever 48 Support Activities Firm Infrastructure 4 Pillars of the firm: Global Business Units. customer development. i.
2006 from www. 2006 at: http://ccbn. 2006 from: http://www.smh. (n. Retrieved February 2.au/news/business/fantasy-airline-gives-unileverdream-run/2006/02/08/1139379573717. (2000. March). P & G has more Ph. Unilever Aims to Improve Customer Service with On-demand TMS. spent E1040.html Harps.asp?article_id=6153 Fantasy airline gives Unilever dream run. May). Retrieved February 11.shtml Harps. Balance and leadership.P&G and Unilever 49 Technology/R&D In 2005. Retrieved February 11. Have 20 technical centers in 4 continents.000-patented technologies.d.com/article_arch. Retrieved from P & g Website February 1.com/nms/2004/10/procter_gambles.mobular. Retrieved February 11.sdcexec.blogs.lowrycomputer.com/articles/features/0702_feature05. (2002. L. September). producing innovations and line extensions of core products.com/news/press/pg_Release.solution for Unilever salesforce. and MIT in science and engineering Procurement 15 Global Supply Management teams of approx. Procter & Gamble's Tremor Targets Young Girls and Minors for Viral Marketing. Supply & Demand Chain Executive. Have network of "global research centers" and are beginning to work with external innovation partners to expand R & D capabilities. Transformers.'s working in their labs world wide than a combination of faculty from Harvard.pdf Company Spotlight: Unilver. 2006 from http://www. 2006 from: http://news. focused global projects.com. Leverage Buying Power w/global procurement and services (high economies of scale) and software based supply chain management In 2004. August).com/article_arch. Created new product categories w/in last 4 years generating $5B retail sales. T.). 24). Press Release. and speed to market. (2005.zdnet. 2006 from: http://www.inboundlogistics. Retrieved February 11.o2. (2006. 120 people from 20 nations-Global purchasing yielded approximately E700M in savings in 2004.ie/pdf/CR1515_Unilever.sdcexec. and use large network of partners to support R & D efforts.shtml . To date PG has 29. Berkeley.asp?article_id=6181 Editorial Staff. IBM wins 7-year Unilever outsourcing deal. Minow. (2002. (2006. July).com/articles/features/0302_feature02. February 9).D. 2006 from: http://www. Retrieved February 11.com Drake. (2004. (2005). on select. Have strong Bto-B programs such as "Connect & Develop" program to find innovation partners-strong effort now for packaging initiatives.inboundlogistics. 2005 Annual Report. Have won the National Medal of Technology for innovative achievement in technology in the US. 2006 from: http://newmediasphere. spend approx $2B on continuing R & D. Retrieved February 11.datamonitor. December. Making Dollars & Sense Out of Logistics.com/2100-9589_22-6007859. 2006 from http://web. October 7). (2004. L. February 11). Retrieved February 11. C. Procter & Gamble Taps Exel for Logistics Services Supply & Demand Chain Executive. (2005. 2006 from http://www.net/ccbn/7/1142/1201/ Case study. N.html . Retrieved February 11. 2006 from: http://www.html Hallet. Retrieved February 11.doc Editorial Staff. Syndey Morning Herald. Unilver foods.
careers and hiring information.legendarylogistics. Company Homepage. (2006). (2004).com/en_US/index. (2002) Retrieved February 11. Retrieved February 11. Organizing to win in Latin America.pg. (n.html Unilever jobs.jhtml .com/jobs-company/Unilever_. 2006 at: http://www. 2006 from: http://www.vault.P&G and Unilever 50 Prianti. (site retrieved?) Sobredo. A. Unilever Brazil: A truly local global company.espace. V. Retrieved February 1.html Welcome to P & G Solutions.com.d. 2006 from: http://www.) Retrieved February 11.htm Unilever and eSpace: a potentially growing relationship. 2006 at: http://www.eg/unilever.com/UniLever. (site retrieved?) 2004 Unilever annual review and summary financial statement (citation) Unilever.
and Gillette . but difficult in noncommoditized markets Possible. but volume of innovation very hard to imitate Yes Yes Possible.P&G and Unilever 51 Appendix P: Procter & Gamble. but high replication costs Yes. Snacks & Coffee. noncommoditized brands Possible but difficult esp. Tide. not probable. IP. P&G Household Care. Crest. esp. and Duracell & Braun. Health Care. in 7 segments: Beauty. high replication costs Resources & Capabilities Ongoing R & D: 20 technical centers in 4 continents Yes Yes Yes. high replication costs Possible not probable. RBV Analysis Resources & Sources of Competitive Advantage Innovation: brands & categories. Pampers): 22 brands each produce $1B sales annually (10 $1B brands in Beauty & Health) Yes Yes Possible. Downy. locations in 42 countries Yes Yes Yes. and focus Difficult to AchieveUnilever working on this now. Requires with heavy investment. Baby Care & Family Care. 300 consumer products in 4 areas P&G Beauty. but market leadership difficult to overtake Possible. Blades & Razors.e.000 patented technologies Rare Valuable Core Competencies Yes Inimitable Nonsubstitutable Possible with heavy R & D Yes Possible. but high replication costs Yes Yes . Fabric Care & Home Care. but high entry costs Global Scope Advantage: Large scale sales and distribution operations in over 160 countries Large scale manufacturing operations. not probable. not probable Go to Market Expertise Capabilities Yes Yes Difficult to Achieve Brand Management: Development of Name Recognition and Trust Yes Yes Brand Leadership (i. P&G Family Health. in noncommoditized markets Difficult to replace or compete with IP Possible. Difficult in market leading. Patents: 29.
Procter & Gamble awarded enterprise value award by CIO Magazine for work with MatrixOne on innovative product lifecycle management application.matrixone. marketing.html . Retrieved February 7.hoovers.com/. January).xhtml Company Profile: Procter and Gamble. transportation carriers EDI (Electronic Data Interchange (only in N. not probable.) Fact Sheet. May). (2006. 2006 from: http://www. high replication costs Yes Possible. Retrieved February 5.P&G and Unilever 52 Economies of Scale with leveraged Buying Power w/global procurement and services. February). Retrieved February 1.com/matrixone/press_releases_20040223_p g. 2006 from: http://biz. not probable.datamonitor. 2006 from: http://www. (2004. social impact. (2004. 2006 from: http://www. r & d. supply chain management w/RFID Economies of Scale with Global operations in finance. 2006 from www. high replication costs Possible. operational efficiency Yes Yes Yes-requires willing partners & partner management Yes Yes Yes Yes-requires willing partners & partner management Yes Yes Yes Yes but difficult to implement and afford enterprise-wide Yes but difficult to implement and afford enterprise-wide Adapted from Lucas (2002) Colbert. The Procter & Gamble Company.pgedi. technology Growth in Emerging Markets (but weakness in overexposure in US & Western Europe) Yes Yes Yes Possible. positive customer impact. logistics. (2006. C. ROI. high replication costs Yes Yes Yes Yes Yes Value Added Networks for B2B Customers: linking financial institutions.com/procter-&-gamble/--ID__11211--/free-co-factsheet.com/e/060130/pg10-q. retailers. not probable. high replication costs Possible.yahoo.d.html P & G North America electronics data interchange. America-need to extend reach Enterprise IT Strategy for cost reductions. February).com Form 10-Q for PROCTER & GAMBLE CO. not probable. (n. Retrieved February 1. Retrieved February 10.
RBV Analysis Resources & Sources of Competitive Advantage Innovation: Strong Brand Recognition and Trust: 12 Brands with E1Billion. but strong brand acceptance Yes. (Dove) Strong relationship with Retailers.P&G and Unilever 53 Appendix Q: Unilever. Peru. Wal-Mart. Dove. Carrefour Rare Valuable Core Competencies Inimitable Nonsubstitutable No Yes. Bird's Eye Brand Leadership. but requires strong IP. Knorr. but difficult Yes . Difficult to reproduce Resources & Capabilities Yes Ongoing R & D: high spending and ongoing brand extensions Yes Yes . JV's for strong positioning-ie Pepsi. relationship management Yes. offering additional supply chain management. but difficult Yes . Large scale manufacturing operations. Mexico. and high spending Yes. Chile. incl. requires heavy resources .e. but with continued development further differentiate and strengthen core products Limited Yes but difficult. esp. 35% of sales in developing & emerging countries. but difficult Yes Yes Yes Yes Yes. but difficult to imitate Yes Yes Limited Limited Yes Yes Opportunity to build in lock outs Wide product reach across stores (present in many locations) Growth in Emerging Markets. i. but strong brand acceptance NO Yes No Yes Yes Yes . but difficult Yes Global Scope Advantage: Large scale sales and distribution operations. (Need to expand into India and China) Yes Yes Yes Yes Limited Yes but difficult to imitate Yes. complementary distribution network "Path to Growth" Strategy to focus on core products and R & D for development of them Yes Yes . but requires resources. Magnum Hellman's.
but brand sell offs & corporate reorganizing improving this. Difficult to reproduce Emerging Emerging Limited No No No No Limited Difficult Yes but costly and difficult to implement Limited Difficult Introduction to Unilever.pdf Unilever Company Profile. (2005. RFID technologies-weakess. Retrieved February 2.unilever.com/Images/Introduction%20to%20Unilever_tcm13-15184. organizational structure & differentiated product lines had been weakness. 2006 from: http://www. Retrieved February 2.com . June). (2004.P&G and Unilever 54 Economies of Scale. 2006 from: ww.datamonitor.Vast resources with leveraged Buying Power and supply chain management for reduces costs However.current weakness & focus for improvement Adapted from Lucas (2002) Yes/emerging Yes/emerging Yes but difficult to imitate Yes. just developing Growth through Acquisition weakness-need to look to this avenue ongoing Go to Market Expertise Capabilities. May).
706.0 – 2.0 9.090.932. Net Long Term Investments Other Long Term Assets.166. Net Total Inventory Prepaid Expenses Other Current Assets.0 9.387.358.0 12.0 – 1.744.265.0 11.795.831.115.438.0 2.0 20.0 300.0 5.0 23. Total Total Assets 26.081.325.0 4.0 – 1.0 521.0 Property/Plant/Equipment.0 10.875.0 – 12.201.617.966.726.0 1.792.0 12.0 4.0 22. Total Total Current Assets 6.631.0 3.0 (10.846.0 – .0 – 1.332.0 2.0 4.0 40.887.0 43.0 34.039.0 3.0 8.0) 13.931.0 2.487.0 5.0 2.554.232.375. of LT Debt/Capital Leases Other Current liabilities.0 25.0 1.894.0 6.287.0 2.0 10.400.0 8.0 1.075.212.S.347.924.0 – 12.185. Total .095.427.0 843.349.731.0 2.Net Goodwill.704.925.0 2.0 25.802.P&G and Unilever 55 Appendix R: P&G Financial Analysis P&G Financial Statements ANNUAL BALANCE SHEET In Millions of U.610.475.438.Gross Accumulated Depreciation.0 3.306.205.475.892.0 2.623.0 – 11.527.703.0 958.0 Accounts Payable Accrued Expenses Notes Payable/Short Term Debt Current Port.331.0 Long Term Debt Capital Lease Obligations Total Long Term Debt 12.554.0 (9.328.0 – 2.0 – 2.0 11.0 – 2.0 (11.721.0 (9.132.0 196.0 7.0 19.0 3.172.0 397.647.0) 13.0 Deferred Income Tax Minority Interest 2. 6/30/2004 5.659.0 – 1.330.0 14. Net Intangibles.0 – 894.384.0 3.048.261.0 4. Dollars (except for per share items) As of 6/30/2005 As of 6/30/2004 Reclass.0 3.396.0 4.0 1.108.0 11.0 4.0 4.0 – 1.006.689.931.0 3.0 5.464.0 12.0 Total Debt 24.0 1.070.196. Total Total Current Liabilities 3.0 4.0 12.038.0 2.0 7.512.0 17.389.025.554.0 15.104. 6/30/2005 As of 6/30/2003 Reclass.0 4.304. Net Total Receivables.0 1.792.201.290.0 212.0 As of 6/30/2002 As of 6/30/2001 Cash & Equivalents Short Term Investments Cash and Short Term Investments Accounts Receivable Trade.0) 14.0 5.542.0) 14.038. Total .912.0 6.821.993.640.0 13.077.103.147.0 3.816.841.329.062.0 3.0 – 1.0) 13.441.776. Total Property/Plant/Equipment.185.0 2.220.531.0 1.0 – 1.0 61.0 (11.969.0 – 11.133.0 57.0 3.0 22.062.090.0 23.0 19.0 – 907.803.889.0 2.879.0 20.887.0 – 9.0 12.456.518.0 3.476.0 1.233.660.0 – 2.0 1.0 11.
050.057.0) 17.000 1.0 2.48 Employees Number of Common Shareholders 110.0) 12.204.601.0 – – 1.331.80 2.0 1.0 21.0 Redeemable Preferred Stock.0 69.40 2.0 2.0 33.0 – 56.0 18.387.0 40.545.0) (629.0 2.0 10.927.688.0 2.0 9.601.0 11.S.0 28.769.0) – (794.0 – (1.339.490.0 43.544.0 34.741.580.0 11.0 1. Total Research & Development Depreciation/Amortization Interest Expense(Income) .0 – 2.Common Stock Primary Issue Total Common Shares Outstanding 2.373.692.594.736.230.0 – (1.601.776.80 2.527. Total Gross Profit 27.259.0 10.278.0) (834.0 Total Liabilities & Shareholders' Equity 61.0 1.238.P&G and Unilever 56 Other Liabilities.0) – (561.169.451.0 6/30/2001 39.0 13.0 6/30/2003 43.962.0 3.451.0) (2.706.520.741.0) (1.0 – (1.0 Shares Outs .0 6/30/2002 40.0 13.0 – 2.Non Redeemable.377.483. Expenses.508.543.070.594.000 1.0) – .296.0 Cost of Revenue.0 25.808.477. Net Common Stock.282.076.344.54 2.0 6.090.0 Interest Expense.634.472.000 110.473.827.526.0 1.Net Operating Unusual Expense (Income) Total Operating Expense 18.54 2.0 – (1.0 – – 1.804.613.723.000 98.0 20.360.814.0 – 1.244.0 1.608. Total Total Liabilities 3.377.0 – 1.770.591.000 1.120.0 19.054.0 27.0) (1.0 Operating Income 10.0 26.0 10.Common ESOP Debt Guarantee Other Equity.0 16.665.611.0 2. Total Preferred Stock .701.0 1.0 13.234.0) 13.0 2.0 43.407.845.0) (2.706.0 1. Total Total Revenue 12 Months 12 Months 12 Months 12 Months 12 Months Ending Ending Ending Ending Ending 6/30/2005 56.0 – 39.591.0) 17.186.0 1.0 – (1.472.006. Total Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Treasury Stock .0 – – 755.0 – – – – 45.244.634.0 57.0 34.426.48 2.0 7.027.0 21.0 – 2.0) – (603.90 2.0 4.980.010.0) – (629.594.580.40 2.000 1.0 – – – – 41. Net Non-Operating Interest Income(Exp).000 ANNUAL INCOME STATEMENT In Millions of U.0 6/30/2004 51.853.000 1.0 Selling/General/Admin.0) 16.0 1.524.566.0) (561.90 2.481.010. Net Non-Operating Gain (Loss) on Sale of Assets (834.283.0 35.0 22.0 4.407.0 27.0 44.0) (603. Dollars (except for per share items) Revenue Other Revenue.308.0 – 51.000 106.375.560.543.760.048.937.0 39.504.425.142.291.678.0) (2.0 20.004.301.0) (794.0 40.000 106. Total Total Equity 1.088.
034 DPS .0 6.0 4.0 2.030 2.077 Dilution Adjustment Diluted Weighted Average Shares Diluted EPS Excluding ExtraOrd Items Diluted EPS Including ExtraOrd Items 135.0 2.461 2. Items – – 7.0 7.481.0 7.910.802.0 7.0 (124.0 561.257.0 0.0 (121.788.545 1.0 5.0 4.0 Basic Weighted Average Shares Basic EPS Excluding Extraordinary Items Basic EPS Including Extraordinary Items 2.077 1.831 2. Exp.410.0 2.350.703.0 2.0) 4.928 1.811.0 1.831 2.733.0 Minority Interest Equity In Affiliates Net Income Before Extra.0 10.7 1.0 – – – 2.350.545 106.496 1.930 2.700 1.0 1.700 2.186.831 2.P&G and Unilever 57 Other.3 4.0 Provision for Income Taxes Net Income After Taxes 3.0 6.271.0 5.923.061.Common Stock 1.257.0 0.0 22.214.171.1244.0 2.186.801.952 2.0 2.971.003.Common Stock Primary Issue Gross Dividends . Basic EPS after Stock Based Comp.0 Accounting Change Discontinued Operations Extraordinary Item Net Income – – – 7. 334.10 2.60 1.0 6.0 5.800 1.0 – – – 4.182.352.027.0 5.595.10 2.0 5.0 213.0 1.0) 5.0 – 2.257.580.0 794.285.182.0 2.0) 7.0 2.161 2.0 Preferred Dividends Income Available to Com Excl ExtraOrd (136.705 442.481.0 9.321 116.790.034 1.041 1.616.481.922.0 1.0 252.0 2.439.0 6.728.0 632.0 – – – 5.0 7. Basic Normalized EPS Diluted Normalized EPS – 10.228.0 2.0 Income Available to Com Incl ExtraOrd 7.0 – 3. Supplemental Depreciation.385 310.960 0.0 6.121. Net Net Income Before Taxes 346.439.847 112.80 1.60 2.0) 6.884.0 2.352.5126.96.36.1999 1. Exp.321 755.0 1.0 6.344.952 1.061.283. Exp.20 1.321 2.186.326.3 2.0 629.20 2.0 1.820 1.340 2.612.80 1.7 3.0 2.0 4.481.0 0.0 (131.60 1.257.0 5.760 1.847 1.121.0 2.0 238.0 – – – 6. Avail to Com.0 2.801.869.922.352.0 4.922.422 .350.0 0.0) 2.461 2.0 2.0 2.339.0 – – 6.012.662 2. Diluted EPS after Stock Based Comp.0 Pro Forma Stock Compensation Expense Net Income after Stock Based Comp.0 674.515.0 6. Supplemental 834.0 6.408.693.200 398.031.925 Interest Expense.383.0 308.820 2.891.662 127.603.0 3.530.557.593.530 325.350.600.0 1.629 2.869.0 (125.460 1.723.0 – – 2.822.0 – – 5.0 2.0 – – 4.809.20 1.0 2.350.0 0.156.0 2.726.0 7.0 603.0 Total Special Items Normalized Income Before Taxes Effect of Special Items on Income Taxes Inc Tax Ex Impact of Sp Items Normalized Income After Taxes Normalized Inc.662 – 9.0 152.0 8.461 2.
P&G and Unilever 58
P&G and Unilever 59
ANNUAL CASH FLOW STATEMENT (Indirect Method)
In Millions of U.S. Dollars (except for per share items)
12 Months 12 Months 12 Months 12 Months 12 Months Ending Ending Ending Ending Ending 6/30/2005 6/30/2004
5,186.0 1,703.0 63.0 – 1,748.0 8,700.0
Net Income/Starting Line Depreciation/Depletion Deferred Taxes Non-Cash Items Changes in Working Capital Cash from Operating Activities
7,257.0 1,884.0 650.0 – (1,069.0) 8,722.0
6,481.0 1,733.0 415.0 – 733.0 9,362.0
4,352.0 1,693.0 389.0 – 1,308.0 7,742.0
2,922.0 2,271.0 (102.0) – 713.0 5,804.0
Capital Expenditures Other Investing Cash Flow Items, Total Cash from Investing Activities
(2,181.0) (155.0) (2,336.0)
(2,024.0) (8,120.0) (10,144.0)
(1,482.0) 119.0 (1,363.0)
(1,679.0) (5,156.0) (6,835.0)
(2,486.0) 643.0 (1,843.0)
Financing Cash Flow Items Total Cash Dividends Paid Issuance (Retirement) of Stock, Net Issuance (Retirement) of Debt, Net Cash from Financing Activities
– (2,731.0) (4,548.0) 3,111.0 (4,168.0)
– (2,539.0) (3,515.0) 5,686.0 (368.0)
– (2,246.0) (967.0) (1,882.0) (5,095.0)
– (2,095.0) (331.0) 2,623.0 197.0
– (1,943.0) (1,109.0) 38.0 (3,014.0)
Foreign Exchange Effects Net Change in Cash
Cash Interest Paid Cash Taxes Paid
2005 Net Income Sales Assets Equity
7,257.0 56,741.0 61,527.0 17,477.0
P&G Financial Data 2003 2002
5,186.0 43,377.0 43,706.0 18,186.0 4,352.0 40,238.0 40,776.0 13,706.0
2,922.0 39,244.0 34,387.0 12,010.0
6,481.0 51,407.0 57,048.0 17,278.0
P&G Dupont Analysis Net Profit Margin 0.07 0.11 0.12 0.13 0.13 Asset Turnover 1.14 0.99 0.99 0.90 0.92 Rtn. On Invest. 0.08 0.11 0.12 0.11 0.12 Financial Leverage 2.86 2.98 2.40 3.30 3.52 Rtn. On Equity 0.24 0.32 0.29 0.38 0.42
2001 2002 2003 2004 2005
P&G and Unilever 60
P&G Dupont Analysis 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2001 2002 2003 2004 2005 Net Profit Margin Asset Turnover Rtn. On Invest. Rtn. On Equity
Financial data obtained from Reuters on February 4, 2006 from http://www.investor.reuters.com/IS/aspx.
P&G's overall financial performance is good, but not stellar. Return on equity has generally risen slightly over the last several years, although profit margin and return on investment have both leveled off in the 12%-13% range. Asset turnover efficiency is declining, which is due to increases in inventory, accounts receivable, cash and goodwill. The firm's financial leverage increased, which is due to increasing levels of debt that is being carried on the balance sheet, most of which is short-term debt. Carrying a high short-term debt load may be considered problematic, and is reflected in P&G's liquidity as measured by the current ratio and quick ratio at .81 and .61 respectively, somewhat below the sector (non-cyclical consumer goods) averages. In terms of the long-term debt load, it is currently equal to about 42% of the stockholder's equity, which is also considered a little on the high side, compared to a more optimal level of 25%-35%. P&G's SG&A costs are in the 25%-30% range, which is somewhat high, compared to a more optimal level of 12%-15%. Cash flow from operating activities has also slowed, and in the most recent year was reduced to a level comparable to two years prior.
3 3.308.4 6.9 – 17.2 20.4) 11.938.9 – 8.6 566.010.0 5.1) 7.Net Goodwill.838.4 16.9 15.8 Cash and Short Term Investments 3.921.224.8 23.3 1.807.1 6. Net Total Inventory Prepaid Expenses Other Current Assets. Total .063.845.696.779.419.Other 2.1 1.046.4 – 13.509.092.0 450.8 23.234.4 22.057.0 796.170.313.1 – 13.690.934.791.3) 7.4 24. Net Receivables .2 27.388. Total .8 2.6 .413.8 – 15.724.1 8.6 14.8 1.463.4 896.8 5.7 (11.579.761.8 – 63.5 18.6 3.835.484.7 1.545.6 Deferred Income Tax Minority Interest 613.458.394.6 18.484.060.726.2 4.0 3.770.321.9 Restated 12/31/2002 2.010.3 4.947.213.032.986.6 5.3 30.9 1.2 434.081.4 1.9 7.0 3.6 (8.4 814.475.9 6.271.7 792.505.282.434.1 17.631.219.5 5.382.2 764.8 Total Debt 14.448.065.631.4 3.2 2.9 657.8 4.8 4.6 3.6 1.212.5 6.9 – 20.013. of LT Debt/Capital Leases Other Current liabilities.0 742.358.923.167.8 (10.4 238.6 4.8 393. Total Property/Plant/Equipment.508.563.4 Total Receivables.1 17.0 5.6 1.6 19.038.453.7 5.7 5.S.003.7 4.4 (9.2 4.477.810.8 16.8 4.8 Accounts Payable Accrued Expenses Notes Payable/Short Term Debt Current Port.499.491.4 16.3 23.411.P&G and Unilever 61 Appendix S: Unilever Financial Analysis Unilever Financial Statements ANNUAL BALANCE SHEET In Millions of U.4 528.6 – 10.3 16.2 Long Term Debt Capital Lease Obligations Total Long Term Debt 8.0 34.626.120.8) 8.5 1.5 526.7 (8.135. Dollars (except for per share items) As of As of As of As of As of 12/31/2004 12/31/2003 12/31/2002 12/31/2001 12/31/2000 Restated 12/31/2003 Cash & Equivalents Short Term Investments 1.1 741.679. Net Intangibles.1 1.7 Accounts Receivable Trade.6 3.2 1.9 10.080.6 13.601.107.236.6 3.2 3.062.466.5 13.5 – 69.8) 11.8 – 45.801.596.9 – 10.927.088.214.935.8 2.159.535.8 – 50.014.0 30.196.400.2 35.3 4.3 21.7 – 8.0 1.120.553.858.4 4.3 5.3188.8.131.529.2 661.149.849.471.904.855. Total Total Assets 16.489.5 597.5 1.525.3 3.065.712.7 8.1 6.159.651.2 687.5 21.5 3.271. Total Total Current Liabilities 4.9 – 6.7 6.250.333. Total Total Current Assets Property/Plant/Equipment.679. Net Long Term Investments Other Long Term Assets.2 242.Gross Accumulated Depreciation.6 4.538.4 – 40.565.
5 6.8 – 2.0 1.3) 6.066.3 – – 504.871.819.6 – 51.000 295.676.242.7 – – – – 53.00 1.7 51.0 1.926.S.Common Other Equity.170.014.883.5 4.831.111.7 – 57.579.5 54.929.8) 7.838.379.3 Selling/General/Admin.3 57.367.9 8.58 571.935.4 3.431.Non Redeemable.196.6 45.3) 5.097.3 45.1 – – 504.58 571. Dollars (except for per share items) 12 Months 12 Months 12 Months 12 Months 12 Months Ending Ending Ending Ending Ending 12/31/2004 12/31/2003 12/31/2002 12/31/2001 12/31/2000 Restated 12/31/2003 Restated 12/31/2003 61.104.642.58 1.58 571. Total Gross Profit 24.4 6.190.926.945.6 57.6 – (1.58 571.010.803.653.9 – – 504.204.391.100.8 6.3 – 57.936.233.4 19. Total Research & Development Depreciation/Amortization Interest Expense(Income) .0 29.5 6.5 – 2.8 23.7 – – – – 51.P&G and Unilever 62 Other Liabilities.676.6 25.266.368.563.093.5 5.9 9.3 29.860. Total Total Equity – – 504.4 50. Net Common Stock.962.057.204.651.Net Operating Unusual Expense (Income) Total Operating Expense 20.385.834.7 69.8 63.5 38.459.2 – – – – 44.6 – – 504. Total Total Revenue 48.0 1.686.3 Cost of Revenue.0 1.122.4 26.222.008.6 5.4 32.676.525.9 – (1.4 25.00 Employees 227.9 59.6 .7 – 48.119.9 6.6 Redeemable Preferred Stock.4 – – – – 44.2 Total Liabilities & Shareholders' Equity 40. Dollar ADR Information 1 Share(s) Per ADR ANNUAL INCOME STATEMENT In Millions of U.321.122. Expenses.641.304.3 34.4 – (1.000 240.000 Currency Exchange Rate (most recent) 0.6 6.2 8.7 23.676.100.1 6.524.8 22.58 571. Total Total Liabilities 7. Total Preferred Stock .58 571.5 – – – – 55.8 Shares Outs .000 258.483.2 28. Total Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Treasury Stock .233.802.515.138.3 – 61.58 571.S.833 Euro / U.2 24.138.0 1.000 265.062.917.1 Operating Income 4.291.206.7 Revenue Other Revenue.819.676.Common Stock Primary Issue Total Common Shares Outstanding 571.5 3.0 30.
716 1.1 2.5 3.4 574.1 1.91 3.8 526.8 (934.125.078.0 – – 2.8 – – 3.0 998.2) 582.4) 1.511.209.22 0.0 1.014.453.1 3.478.613.7 1.254.576 0.28 0.4 – – 4.7) (1.1 2.1 (32.8) 945.9 2.1) – (273.70 3.3 0.223.956 0.478.6 (1.8) – (199.708 3.7 1.468.195.406.827.424 0.6 4.006.749.4) – (44.1 3.3) (2.9 Total Special Items Normalized Income Before Taxes Effect of Special Items on Income Taxes – 3.447 0.010.5 3.267.7 (1.242.7 0. Supplemental 921.178.735.4) 3.877.584.NonOperating Interest Income(Exp).862.2) 3.0 – – 3.0 1.683.1) – 50. Items (928. GAAP Adjustment Net Income Before Extra.956 Dilution Adjustment Diluted Weighted Average Shares Diluted EPS Excluding ExtraOrd Items Diluted EPS Including ExtraOrd Items 0.7 Provision for Income Taxes Net Income After Taxes 938.4) 3.937.125. Net Net Income Before Taxes (921.4 Preferred Dividends Income Available to Com Excl ExtraOrd (33. Net Non-Operating Gain (Loss) on Sale of Assets Other.0 (61.9 4.3 (922.0 1.560 982.2) 1.268 2.P&G and Unilever 63 Interest Expense.9 1.8 (650.406.296.5) – 129.177.8 945.0 1.2) – (73.2) – – 636.600 3.918 4.572 2.9 – – 5.0) – 1.860.8 – – 4. Net Non-Operating Interest/Invest Income .604.2) 5.6 – 1.0 1.503.445.8 – – 4.0 (52.6 Basic Weighted Average Shares Basic EPS Excluding Extraordinary Items Basic EPS Including Extraordinary Items 963.8) – 1.040 1.8 460.7 Interest Expense.6) 643.585 989.9 1.447 2.863.4 998.7 1.3 626.80 0.445.6) (1.592.832.7 0.6 Income Available to Com Incl ExtraOrd 2.0 2.5 2.872 1. Supplemental Depreciation.5 2.Common Stock Primary Issue Gross Dividends .802 4.4) 3.863.9 472.8 (7.386.Common Stock 2.708 976.4 (1.407.2 1.822.3 1.41 2.6) 2.302.990.836.625.572 968.4 2.592.749.2) 308.511.735.0) – 188.274.932 DPS .0 – – – 998.5 1.60 3.822.592 0. Supplemental Interest Capitalized.926.018.7 – .8) – 972.1 Minority Interest Equity In Affiliates U.625.267.600 0.932 0.55 2.4 (613.4 4.4 Accounting Change Discontinued Operations Extraordinary Item Net Income 0.7) (1.S.407.088 2.00 0.14 3.8 (1.8 363.6 (32.2 (774.012.9 (50.569 – 1.9 (73.8 1.
6) (1.432.833 Euro / U.4) (3.1 Capital Expenditures Other Investing Cash Flow Items.050.505.015.1) 6.3) 6.4) (2.760.7 1.6 2.9) (7.683.P&G and Unilever 64 Inc Tax Ex Impact of Sp Items Normalized Income After Taxes Normalized Inc.1) 6.9 3.833 Euro / U.5 2.5) (7.802 1.592.0) 6.1 2.1 945.9) (6.098.3 3.447 1.4 3.6 3.549.9 – 667.642.827.8) Cash Interest Paid Cash Taxes Paid – 1.633.935.159.008.5 2.9 2.414.7) (3.379.336.5 58.0 3. Basic Normalized EPS Diluted Normalized EPS 938.6) (6.S.5) (9.3) 4.5 3.8 (3.023.575.6) 27.5 2. Net Issuance (Retirement) of Debt.962.4 3.2 (1.9 (1.843.707.386.9 – 427.926.302.176.1 3.3 6.822.592 0.7 1.579.093.203.6 Net Income/Starting Line Depreciation/Depletion Deferred Taxes Non-Cash Items Changes in Working Capital Cash from Operating Activities 4.6) (1. Dollar ADR Information 1 Share(s) Per ADR .708 3.3) 10.932 Currency Exchange Rate (most recent) 0.2) 766.430.080.918 3.7) (8. Dollars (except for per share items) 12 Months 12 Months 12 Months 12 Months 12 Months Ending Ending Ending Ending Ending 12/31/2004 12/31/2003 12/31/2002 12/31/2001 12/31/2000 Restated 12/31/2003 Restated 12/31/2003 5.933.8 (1.7 3.0) 302.5 – 136.613.646.542.8 (1.844.9 Currency Exchange Rate (most recent) 0.490.2) – (525.5 (1.761.832.9) 7.1 27.1 6.7 – (410.4) (1.6) – 144.0) (2.449.4 (873.S.040.600 1.3) (32.3) (21.687.468.210.575.9 582.124.2 2.445.090.5) (879.6) (3.7 Foreign Exchange Effects Net Change in Cash – (806.9 1.9) (34.2 2.4 2.8 (482.180.1 – (860. Net Cash from Financing Activities (972.5 2.122.1 1.1) (1.9) (2.572 2.344.963.0 – (226.584.937.576 1.2) Financing Cash Flow Items Total Cash Dividends Paid Issuance (Retirement) of Stock.2 (684.048.848.6 0.5) (1.4) – (1.7 1.1 2.9) (2.S.336.0) 2.653.864.097.0 0.704.0) (8.9 2.634.496.7) 1.488. Avail to Com.478.956 0.4) (2. Dollar ADR Information 1 Share(s) Per ADR ANNUAL CASH FLOW STATEMENT (Indirect Method) In Millions of U.249. Total Cash from Investing Activities (1.491.
584. and in the most recent year.51 0.1 Unilever Financial Data 2003 2002 2001 3.302.563. Because Unilever has its ownership spread across several different countries.82.40 1.02 0. Unilever's financial performance leaves much room for improvement.391.6 2.468.3 2.27 0.00 0.9 2000 1.01 6.7 40. Net profit and return on investment margins have remained in the single digits for the last several years. Rtn.reuters.37 2000 2001 2002 2003 2004 Unilever Dupont Analysis 1.P&G and Unilever 65 2004 Net Income Sales Assets Equity 2. their liquidity is still below industry averages. On Equity Financial data obtained from Reuters on February 4.52 0.9 61.41 6.06 Financial Leverage 7.12 1.05 0.06 7.819. On Invest.80 0.6 6.233. return on equity has also dropped off.16 0.104.5 48. 0.19 Rtn.641.616.03 0. its financial results can be greatly impacted by fluctuations in foreign exchange rates.04 0.57.06 0.8 5.12 Rtn.7 8.2 Unilever Dupont Analysis Net Profit Margin 0. .642.investor.com/IS/aspx.60 0.3 63.98 1. Although their debt loads have been significantly reduced. which has improved the company's financial leverage and improved asset turnover.6 45.7 57. and their quick ratio is . Over the last three years.1 9.83 0.20 1. For the most recent year. On Equity 0. 2006 from http://www.00 2000 2001 2002 2003 2004 Net Profit Margin Asset Turnover Rtn. To Unilever's credit.204. Perhaps most significant is the fact that Unilever's sales have been on a decreasing trend for the last five years.07 0. their current ratio is .651.926.14 1.170.7 69.04 0.3 51. Unilever's SG&A expenses have run unusually high at around 37%.937.08 0.321.1 57. On Invest.20 0.55 9.838.3 50.100. debt loads have been significantly reduced along with inventories and accounts receivable. swelled to more than 40%.05 Asset Turnover 0.4 7.40 0.803.
P&G and Unilever 66 Appendix T: P&G SWOT Summary* Strengths • • • • • Weaknesses • • • • • Significant scales of scope and economies in their operations Excellent brand recognition and brand management Good product innovations Good overall performance Supply Chain excellence Reductions in cash flow levels Mature Markets High customer concentrations High SG&A costs Low R&D expenditures Opportunities • • • Threats • • • Good growth potential in the Health and Beauty segment Growth opportunities in developing countries and markets Growth potential of domestic retailers High levels of competition Raw material and energy price increases Potential Gillette integration issues *Information derived from financial statements. This summary represents the key issues that Global Strategy Advisors have identified for each category. industry news and periodicals and competitor websites. . company reports.
This summary represents the key issues that Global Strategy Advisors have identified for each category. . industry news and periodicals and competitor websites.P&G and Unilever 67 Appendix U: Unilever SWOT Summary* Strengths • • • Weaknesses • • • Strong brands and brand management Significant economies of scope and scale Abundant resources Very high SG&A costs Complex organizational structure Decreasing sales/revenues Opportunities • • • • Threats • • • Product portfolio simplification Developing markets in developing countries Significant debt reduction internal growth initiative Foreign currency exchange fluctuations Competitors growing through acquisition Potential failure of internal growth initiative *Information derived from financial statements. company reports.
creating four regions. purchasing Thomas Hedley & Sons Co. To further propel their global expansion for increased opportunity. began Middle East business in Saudi Arabia.172. highlighting their global development capabilities. moved into Eastern Europe through acquisitions and new business development. North America. P & G introduced Liquid Tide. Latin America.. in England.179 created alliances for co-marketing. P & G created an Overseas Division to manage the Company's growing international business. engineering. developing a manufacturing facility for soap and Crisco. Betrix.171 Understanding the importance of foreign marketplace knowledge. and distribution. and by 1930. moved into Mexico with a subsidiary in Latin America.181 * This history is in an expanded presentation format to provide an insightful overview of their growth. P & G acquired their first Far East operations. serving Common Market subsidiaries.180 They continue to benefit from ongoing learning.176 and secured additional acquisitions such as Max Factor.. purchasing. especially their pharmaceutical line. and Europe/ Middle East/Africa. following a roll out in store counters in Asia with lessons shared. This accomplishment is an example of their true Global Mindset and orientation to maximizing global strengths.170 In 1935. P&G has formed a manufacturing JV in China and Viet Nam. P & G began movement outside the United States. and reorganized to category management while integrating. and by 1984. Ltd. P & G made several more acquisitions in the 1980's. and their completed acquisition of the remaining 20% of its China venture from its partner.177 Clairol. such as their launch of Olay in Spain. to create an effective. well coordinated product supply system. and opened their European Technical Center in Brussels. moved into continental Europe leasing of a plant in France. Asia. P & G modified their geographic structure for better strategic integration and coordination globally. giving P & G full ownership. in Canada. . people management. manufacturing. P & G created its first subsidiary overseas. P&G GmbH moved into Germany and established a manufacturing facility. in 1948.P&G and Unilever 68 APPENDIX V: History of Global Expansion P & G As early as 1915. as the Board of Directors knows this information. P & G acquired a company for manufacturing and selling P&G products in Japan.173 Continuing to identify key markets. and packaging in the United States.174 In the 1970's. with components developed in Japan and Europe.178 To better serve the global marketplace. The Unilever history is presented in a table. and in 1954. which leads country business teams in building brands in local markets. and Gillette. and developed the Market Development Organization. in the 1960's.175 From the late 1980's until currently. and subsidiary management.
Jurgens and Van den Bergh merge to create Margarine Unie . Unilever acquires Frigo ice cream in Spain. Belgium and Czechoslovakia. Manufacturing and packaging initiatives launched in Europe Good Humor ice cream acquired in U. 1910 1914 1920s 1926 1927 1928 1929 1930 1940s 1945 1948 1950s 1954 1955 1960s 1961 1962 1963 1965 1970s 1971 1973 1977 1978 1980s 1987 .S. across the nine members of the EEC.having expanded since its inception in the 1920s to trade in 43 countries. Lever Brothers buys first company in West Africa. creating a large group of European businesses involved in the production of almost all goods created from oils and fats. Jurgens and Van den Bergh acquire additional small businesses in the Netherlands. New mass market for consumer goods in Mexico. the first packaged and branded ice cream cone.P&G and Unilever 69 APPENDIX W: A History of Unilever’s Global Expansion182 YEAR By 1906 GLOBAL EXPANSION Lever Brothers had established factories in three European countries. post-war New mass market for consumer goods in Caribbean Sunsilk shampoo available in 18 countries worldwide Dove soap launched in the U. Unilever is broken up. Cif (everyday cleaner) launched in France. and enterprises in the Pacific. Cornetto. they operate seven margarine factories in Germany. Dove soap relaunched in Europe. begins its launch in Europe. New mass market for consumer goods in Brazil Unilever is officially established During war years. Jurgens and Van den Bergh in German Africa. Unilever acquires National Starch in the U. increasing shareholder interest in UK businesses and gaining UK rights to deep-freezing methods (through acquisition of Birds Eye and other companies).000 people in 200 offices and factories. with businesses in German and Japanese-occupied territory cut off from London and Rotterdam. Australia and the U.the Margarine Union. Jurgens and Van den Bergh own margarine factories in Scotland.S. By now. Both Lever Brothers and Jurgens and Van den Bergh had established palm planting operations – Lever Brothers in the Solomon Islands. Unilever continues to expand in the food market. Margarine Unie acquires the French-Dutch Calvé-Delft group with factories in the Netherlands. Centra and Schicht. Ireland and England.S. The union gains new members.S. United Africa Company (Unilever subsidiary) becomes UAC International . Unilever regains control of its international network. Unilever employs nearly 177. New mass market for consumer goods in Chile New mass market for consumer goods in Central America. New mass market for consumer goods in Argentina Jurgens and Van den Bergh team up with two European businesses. France. plus Canada. Unilever’s tea business becomes one of the largest in the world. United Africa Company yields large profits in Nigeria Unilever acquires Lipton Teas. starting in Italy.
in the Dominican Republic.unilever. Hindustan Lever and Brooke Bond Lipton India merge to create India’s largest private sector company. personal products and food company. to 900. Unilever disposes of United Africa Company. foods and beverages company. Corporacion Jaboneria. By this time. Kibon ice cream acquired in Brazil. Organics shampoo first launched in Thailand. 2006.com/ourcompany/aboutunilever/history/default. Organising to win in Latin America. Breyers ice cream (my favorite) acquired in the U. Acquired controlling interest in leading Ecuadorian detergents. Acquired Honduras-based soaps. Retrieved February 14. and establishes UniRus in Russia. Retrieved February 14.com/ourcompany/aboutunilever/history/default. Acquired HPC business Sociedad Industrial Dominicana. 1997 1999 2000s 2000 2001 2002 Our history. Grupo Cressida. Unilever Health Institute opens regional centres in Bangkok and Accra.S. Amora-Maille culinary business acquired in France.unilever.. 2006. Unilever has cut the number of its brands from 1600 at the end of the 20th Century. and a controlling interest in the Varela HPC business in Colombia.asp.P&G and Unilever 70 1989 1990s 1992 1993 1994 1996 Magnum ice cream launched in Germany. . Annapurna iodized salt launched in India. Ben & Jerry’s ice cream and Slim Fast foods acquired in U.S. Ghana. Unilever enters the Czech Republic and Hungary.asp. from Unilever web site: http://www. from Unilever web site: http://www.
P&G and Unilever 71 Appendix X: Dynamic Resource-based Model of Competitive Advantage183 .
which are widely read by British teens.P&G and Unilever 72 Appendix Y: Unilever’s Early Use of the Internet. 2000 “Mindful that women buy most of the food and consumer products in a household.com. the company has taken equity stakes in iVillage.”184 .com. a British site that plans to target teenage girls. It is advertising its Lynx male body spray on the on-line sites of the so-called lad magazines like FHM. and Wowgo. and American Web site aimed at women.
P&G and Unilever 73 Appendix Z: Global Data Synchronization Network Overview of Benefits for Manufacturer and Retailer185 “Global Data Synchronization (GDS) is fast becoming a strategic imperative for many manufacturers and retailers.187 . which significantly reduced their data inconsistencies and improved new item speed to market by aligning product information with their trading partners.” says Nigel Bagley. “Early adopters understand that GDS is necessary to provide a foundation for future collaborative commerce and are realizing substantial benefits from implementing GDS. Head of Customer eBusiness of Unilever and Co-chairman of the Global Commerce Initiative’s GDS Implementation Program.”186 Among the actual business benefits of GDS cited in this article was Unilever Colombia.
2004 the results of a successful global data synchronization initiative with Unilever. Unilever Complete Global Data Synchronization Project Safeway. and we view this project as an important step towards the realization of that vision.P&G and Unilever 74 Appendix AA: Safeway. …” “Tom Barnhart. ‘Unilever is committed to the GCI Global Data Synchronization vision. director E-Business Unilever North America. …” “Through the successful completion of this project. critical product information exchange between manufacturers and retailers can be achieved in a scalable and rapid manner.’”188 . Inc. said his company is pleased to have collaborated with Safeway in achieving the industry milestone. announced on July 1. as it represents the first time that product information has been synchronized by way of interoperability between the leading supply side and demand side of data pools. Safeway and Unilever have demonstrated that by adopting industry standards. “The companies said the significance of this project has international reach.
000 users in North America. deployed to over 40. Information Management component has won external recognition for excellence. will continue to deploy to establish one environment for information and access within Unilever. Asia Siebel – automation technology RFID Unilever Portal .P&G and Unilever 75 Appendix BB: Unilever Initiatives in Information Technology189 INITIATIVE Latin America – “Orchestra” DETAILS Advances made in 2004 in this information. which was deployed to over 110 sites and 9.000 users in Europe and 6.400 users in Brazil. Common entry and navigation software technology. Pilot programs in North America with Wal-Mart (Unilever is one of their lead suppliers). the Unilever standard data warehouse is available in nine countries with twelve countries using the regional e-Commerce hub. Enabled a reduction of over 50 traditional intranet sites in Europe. process and system harmonization and simplification program. sharing learning and best practices across regions. linked to broader data synchronization efforts to improve quality and speed of information sharing between Unilever and its customers. Sales force automation technology – continues to be deployed across the business. Greater Andina. River Plate and Mexico. to cover 60% of the Latin American business. An Asian trade funds management system has been implemented in two units (remainder to follow in that region in 2005/2006). A demand and supply network planning tool has been implemented in eleven countries. Good progress in Asia and Latin America using low-cost hand held devices. Unilever has agreed to a global licensing of this technology. Chile.
Pepto-Bismol. Max Factor. Cheer. such as the Swiffer Duster and Mr. Ariel. Wellaflex. Millstone. this list is grouped by product line. Always. Therefore. Natural Instincts. Febreeze. Zest. Koleston. Actonel. Linidor. Hugo Boss.. Lenor. PUR. Naturella. Alomatik fatty alcohols. Vizir. glycerine. Bounty. Ausonia. Vicks. ThermaCare. Give & Grow program partners with the World Health Organization and selects a handful of graduates from top Western European P&G Health Sciences P&G Products Europe Procter & Gamble Ltd. scientific research in the areas of health. Sure. pet health & nutrition. Puffs. Dash. Eukanuba. also known as the Newcastle Technical Center (UK) . Luvs. Scope. SK-11. Swiffer. deodorant. Fabric care. Shockwaves. professional hair care. oral care. Herbal Essences. Laura Biagiotti. Infusium 23. developing. Metamucil. methyl esters. hygiene. Evax. Daz. Dodot. Fixodent. P&G Chemicals manufacture and marketing of oleochemicals identifying. Salvo. Viakal. Dreft. Pampers. Snacks. Charmin. Myth. gain. Lacoste. Lines Feminine care. skin care. CoverGirl. Era. Dawn. Fairy. in addition the list contains some European/UK facilities. Wella. Pringles. Noxzema. Vidal Sassoon. Ivory. Bounce. Folgers. Flash. Joy. and nutrition P&G Family Health Baby care. Product Pantene. Prilosec OTC. Tide. and using leading health care technologies in the development of effective products -. Tampax. Head & Shoulders. Asacol. Didronel. Commercial Products group. Proper. Home care. pharmaceuticals P&G Household Care Coffee. SEFOSEtm and OLEAN®. Ace. Nice n Easy. hair care. Tempo. Mr Clean. BlendaMed. hair colorants. Iams. tertiary amines. family care. feminine care. Kandoo. Bold. Safeguard. Cascade. fine fragrances.200 scientists and collaboration with external partners By Country makes and markets fabric and household care products. Camay. Infasil. Rejoice. Bonux. Whisper. personal health care. Downy. Crest.P&G and Unilever 76 Appendix CC: P&G Portfolio: Product Groups and Businesses There are numerous P&G manufacturing and distribution facilities around the world. Olay. Kukident. fatty acids. Aussie. Old Spice. Segment/ Company P&G Beauty Product line/purpose Cosmetics. The company's Go. Secret. personal cleansing.
Regenerist. Total Effects. which is now woven into Wella AG. Norway. and shipping department The Iams Company Millstone Coffee Olay Company. oral care products. a subsidiary of P&G The Folgers Coffee Company Global Gillette Pampers and LUVS branded baby wipes. Procter & Gamble acquired Wella in 2004. as well as flavored. Ohm by Olay. Eukanuba and Iams premium dog and cat foods (dry and canned) roasted coffees. and respiratory medicines makes and markets personal care products. Wella AG bought Graham Webb in 2001. and organic coffees skin care products (Sensor. regional arm of parent firm development of its hair care products. Inc. and OlayQuench. the firm is also a leading battery (Duracell) manufacturer & makes Braun electric shavers Iams also funds research efforts related to animal dermatology. Finland. Graham Webb International. fragrances. a warehouse. Graham Webb founded the international hair care company. The company now has academies in the US. and mouth rinse . OlayComplete. skin care items and cosmetics. Also known as Rusham Park Technical Centre (RPTC). The world's #1 maker of shaving supplies Hair care education. pharmaceuticals and over-thecounter medicines (Prilosec). power and manual toothbrushes. M3Power. and nutrition Oral-B Laboratories manufacturer of oral hygiene products (Oral-B was acquired in 1984 by Gillette and shifted to P&G in 2005) Daily Facials. floss. and Fusion). irrigation products. toothpaste. Procter & Gamble Western Europe P&G Nordic universities to work on projects before they graduate the division conducts research related to its parent's health and beauty care products. and the premium-priced Mach3.P&G and Unilever 77 Procter & Gamble Technical Centres Limited. allergies. geriatrics. Paper machines to manufacture sanitary wet paper products. Trac II. deodorants. cosmetologists. The Dover Wipes Company. decaffeinated. including their tubs and refills. A subsidiary of consumer products giant Procter & Gamble (P&G). Webb makes hair care. and cosmetics worldwide and sells them through licensed beauty salons. body care. Inc brings many of the parent company's top brands to consumers in Denmark. and Sweden. converting and packing operations. raw material storage. Its first Graham Webb Academy opened in London in 1981. and distributors. Coffee and related.
Western Europe. Clairol helped lay the foundation for P&G's head-first dive into hair care after P&G acquired Clairol from the Bristol-Myers Squibb Company in 2001. Latin America. Natural Instincts. and Balsam Color. Ultress. and fragrances As the World turns. it sells professional and retail haircare products. hair spray. Greater China and ASEAN/Australasia/India 130 brands include Herbal Essences. Guiding Light North America.com and pg.com . Inc. and hair styling items Wella AG Wella UK Soap operas Market Development Organization world's leading haircare firms. Marketing. Central and Eastern Europe/Middle East/Africa.P&G and Unilever 78 P&G-Clairol. Hydrience. cosmetics. part of the company's P&G Beauty division and makes hair coloring products. Nice 'n Easy. P&G owns more than 95% of Wella shares. shampoo. Loving Care. Table Sources: Hoovers. conditioner. brand building. Northeast Asia.
United States Jakarta. Indonesia 800 3. Austria Bruxelles. United Arab Emirates Conopco Inc Elais Unilever S. Belgium 1. IL. United States Clinton. CT. Greece Mumbai. Employees 240 250 449 Company Type Private Subsidiary Private Parent Public Subsidiary Public Subsidiary Al Gurg Unilever Co Dubai.A. Venezuela Unilever Arabia Jeddah. Malaysia Zug. Australia Wien. United States Athens. NY.700 430 1. United States Kuala Lumpur. United States Hammond.P&G and Unilever 79 Appendix DD: Unilever Portfolio: Product Groups & Businesses Company Name Location Sort By. India New York.. IN.. Finland UBF Food Solutions Unilever Unilever Unilever (Malaysia) Holdings Sdn Bhd Unilever (Schweiz) AG Unilever Andina (Colombia) SA Unilever Andina SA Franklin Park.000 1.453 723 366 Private Subsidiary Public Subsidiary Private Subsidiary Private Subsidiary Private Branch Private Subsidiary Private Independent Public Subsidiary Private Independent Private Independent Private Subsidiary Suomen Unilever Oy Helsinki.010 300 400 350 500 1. Colombia Guacara. Hindustan Lever Limited [Unilever] Lancaster Cosmetics International PT Unilever Indonesia Tbk Owensboro. Saudi Arabia Group of Companies Unilever Australia Limited Unilever Austria GmbH Unilever Belgique SA Epping.195 Private Subsidiary Private Independent Private Subsidiary . Switzerland Santafé de Bogotá DC. KY.
AR. NJ.000 150 150 25 800 300 125 175 4 700 2. United States Indianapolis. United States Dublin. NJ. KS. CA. IL. United States Little Rock. United States Atlanta. United States Ridgefield. United States Bayonne. United States Lisboa.050 170 40 Private Branch Private Branch Private Branch Private Branch Private Subsidiary Private Branch Private Subsidiary Private Branch Private Subsidiary Private Branch Private Branch Private Branch Private Branch Private Independent Private Subsidiary Private Subsidiary Private Branch Private Subsidiary Private Subsidiary Private Subsidiary Private Parent Private Branch Private Independent . CA. United States São Paulo. Ireland Chicago. Switzerland Milwaukee. NC. PA. United States New Century. United States Baltimore. Italy Rotterdam. MD. IN. MO. Brazil 130 300 400 210 42. United States Orange. CA.P&G and Unilever 80 Unilever Bestfoods Unilever Bestfoods Unilever Bestfoods Unilever Bestfoods Unilever Bestfoods Unilever Bestfoods Unilever Bestfoods Unilever Bestfoods Unilever Bestfoods (Ireland) Ltd Unilever Bestfoods Foodservice Unilever Bestfoods Foodservice Unilever Bestfoods Foodservice Unilever Bestfoods Foodservice Unilever Bestfoods Italia SpA Unilever Bestfoods Nederland BV Unilever Bestfoods Nordic AB Unilever Bestfoods North America Unilever Bestfoods North America Unilever Bestfoods Portugal SA Unilever Bestfoods Schweiz GmbH Unilever Bestfoods Solutions Unilever Bestfoods Specialty Products Unilever Brasil Ltda Asheboro. NJ. United States Harrisburg. Netherlands Helsingborg. United States Independence. United States Englewood Cliffs. Sweden Merced. Wiltshire. GA.000 200 150 130 175 1. United States Merced. Portugal Thayngen. United States Inveruno. WI.
P&G and Unilever 81
Unilever Canada Unilever Canada Unilever Canada
Toronto, ON, Canada Toronto, ON, Canada Calgary, AB, Canada
3,400 350 35 450 600 2,000
Private Subsidiary Private Parent Private Parent Private Parent Public Subsidiary Private Subsidiary Private Subsidiary
Unilever Canada Ltd Toronto, ON, Canada Unilever Caribbean Unilever Chile HPC Ltda Unilever Co Ltd Unilever Cosmetics International Unilever Cosmetics International France Unilever Cosmetics Intl Unilever Côte d'Ivoire Champs Fleurs, Trinidad and Tobago Santiago, Chile Shanghai, China Budd Lake, NJ, United States Neuilly sur Seine, France Oakville, ON, Canada Abidjan, Cote d'Ivoire
100 70 42
Private Branch Private Subsidiary Private Subsidiary Private Independent
UNILEVER CR spol Praha, Czech Republic sro Unilever Danmark A/S Unilever Deutschland GmbH Unilever España SA Unilever Foods España SA Unilever France Unilever France Foods Unilever France Home and Personal Care Unilever France Ice Cream and Frozen Food Unilever Ghana Limited Glostrup, Denmark Hamburg, Germany Madrid, Spain Barcelona, Spain Rueil Malmaison, France Rueil Malmaison, France St Ouen, France
1,499 134 9,000 2,020 505 1,120 1,117 1,050
Private Independent Private Subsidiary Private Subsidiary Private Subsidiary Private Independent Private Subsidiary Private Subsidiary Public Independent Private Subsidiary Public Subsidiary
Rueil Malmaison, France
P&G and Unilever 82
UNILEVER GROUP Unilever Hellas SA Unilever Home & Personal Care Unilever Home & Personal Care Unilever Home & Personal Care Unilever Home & Personal Care Unilever Home & Personal Care Inc. Unilever Home & Personal Care USA Unilever Home and Personal Care UK Ltd Unilever HPC Unilever HPC Unilever HPC Unilever HPC USA Unilever Hpc Usa Unilever HPC USA Unilever Hpcusa Unilever Ice Cream Unilever International Paris Unilever Israel Ltd Unilever Italia SpA Unilever Magyarország Kft Unilever Maroc Unilever N.V.
London, London, United Kingdom Piraeus, Greece Chicago, IL, United States Greenwich, CT, United States Baltimore, MD, United States Trumbull, CT, United States Clinton, CT, United States Troy, MI, United States Kingston upon Thames, Surrey, United Kingdom Clinton, CT, United States Chicago, IL, United States Englewood Cliffs, NJ, United States Jefferson City, MO, United States Greenwich, CT, United States City of Industry, CA, United States Palmetto, GA, United States Loveland, OH, United States Rueil Malmaison, France Ben Gurion International Airport, Israel Milano, Italy Budapest, Hungary Casablanca, Morocco Rotterdam, Netherlands
240,000 500 350 250 NA 135 500 15 2,410
Public Parent Public Subsidiary Private Subsidiary Private Subsidiary Private Branch Private Subsidiary Private Branch Private Subsidiary Private Subsidiary Private Parent Private Branch Private Branch Private Branch Private Subsidiary Private Subsidiary Private Parent Private Branch Private Subsidiary Private Subsidiary Private Subsidiary Private Subsidiary Private Independent
475 50 300 600 350 250 200 1 85 1,700 3,500 1,350
P&G and Unilever 83
Unilever Nigeria Plc Unilever Pakistan Limited Unilever Philippines Inc Unilever plc
Lagos, Nigeria Karachi, Pakistan Manila, Philippines London, United Kingdom
2,000 1,920 1,100 223,000 350 260 4,000 NA
Public Subsidiary Public Parent Private Subsidiary Public Parent Private Subsidiary Private Subsidiary Private Subsidiary Private Subsidiary Private Subsidiary Public Parent Private Subsidiary Private Subsidiary Private Subsidiary Private Subsidiary Private Subsidiary Private Subsidiary Private Parent
Unilever Research & Edgewater, NJ, United States Development Co. Unilever Singapore Pte Ltd Unilever South Africa (Pty) Ltd Unilever Special Markets Department (Military Div.) Singapore, Singapore Durban, South Africa Greenwich, CT, United States
Unilever Sverige AB Helsingborg, Sweden Unilever Tea Kenya Unilever United States Inc Unilever United States Inc. Unilever United States Inc. Unilever United States Inc. Unilever United States Inc. Unilever United States Inc. Unilever Usa Nairobi, Kenya Englewood Cliffs, NJ, United States New York, NY, United States Cartersville, GA, United States Los Angeles, CA, United States Raeford, NC, United States Washington, DC, United States Englewood Cliffs, NJ, United States
1,981 16,000 4 17,800 225 NA 500 3 700
Information obtained February 12, 2006, from: http://globalbb.onesource.com.
(GXS) and Sterling Commerce.”191 For Data synchronization. to the GS1 Global Registry. including over half of the Fortune 500. Sterling Commerce software and services help companies operate more profitably by giving them visibility and control over the processes they share with business and supply chain partners. GXS is “a leading worldwide provider of B2B integration. synchronization and collaboration solutions. The company operates a highly-reliable. Inc. P&G uses the Global Data Synchronization Network (GDSN).”190 Sterling Commerce is a subsidiary of SBC Communications. secure global network services platform enabling more than 30. via their selected Data Pools.193 . Inc. a B2B marketplace of data for efficient use of data synchronization.P&G and Unilever 84 APPENDIX EE: P&G e-Business Network B2B data is exchanged directly through two Value Added Networks (VANs). formerly Transora. Global eXchange Services. to conduct business together in real time. and “is the world's leading provider of multi-enterprise collaboration solutions for the Global 5000. GDSN “connects retailers and suppliers.000 businesses.”192 P&G is also a member of 1SYNC.
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(2002). T. M. (April 18. 10. Lucas.. 153 Perfumes. and other toilet preparations. 3. Retrieved February 11. 139 Jones. from: http://money. from Capgemini website: http://www. 140 Dranikoff. Introduction to Unilever. 175 Ibid.cnn. & Schneider. 155 Ibid. 142 Unilever. 172 Ibid.com/resources/news/global_data_synchronisation. (2005. 174 Procter and Gamble: Our history. 144 Grant. 2006. 154 Toiletries and cosmetics.S. T. Jain. 162 Ibid. Contemporary strategy analysis. (2006. 168 Toiletries and cosmetics. from Business Source Premier. 156 Ibid. 161 Ibid. 2006. 2006. H. A. 149 Fitch: U. 157 Ibid. consumer products industry outlook – limited upside in 2006 (Industry overview).. 145 Global personal products: Industry profile. (2006 Jan). Note on industry structure. & Gupta. 184 183 . & Schneider. Retrieved February 7. 2006. Retrieved February 12. Koller. Ibid. 2006) Business Week Online. Note on industry structure. 2006. Retrieved February 15. 176 Ibid. 186 Capgemini News: Global data synchronization. T. R. from Business Source Premier Electronic Database. from http://info. P & G. Introduction to Unilever. (January 9. A. (2005. L. Getting comfy in their skin. 2006.com/magazines/fortune/fortune500/industries/Household_and_Personal_Products/1. 151 Ibid. A. Divestiture: strategy's missing link. Consumer goods giant to cut 25.org/Docs/pdf/benefits%20of%20GDSN. 2005). Global Cosmetic Industry.. 173(11). June). Koller. Retrieved February 5.html. L.S. Retrieved February 11. 150 Global personal products: Industry profile. C. 173 Govindarajan.htm. 170 171 Sanford. 138 Ibid. December 19).. 185 Global data synchronization network: Overview of benefits for manufacturer and retailer. Unilever-a case study. Procter and Gamble: Our history. 148 General information. (November 2005).com/GI_General_Information... V. from: http://pgsupplier.K. 2006. 3. Divestiture: strategy's missing link. 160 Global personal products: Industry profile. 159 Toiletries and cosmetics.P&G and Unilever 88 Unilever.html. T. 179 Ibid. 158 Who’s who guide to personal care. 146 Wall Street Transcript. Jr. Brandweek. 2005). Global personal products: Industry profile. Analyst interview. Retrieved January 9. 141 Wasserman. cosmetics. Strategies for electronic commerce and the internet. (2006). consumer products industry outlook – limited upside in 2006 (Industry overview). V. L. 152 Ibid. P. (2002). 143 Dranikoff. Ibid. The quest for global dominance. 180 181 182 Form 10-Q for PROCTER & GAMBLE CO. G.edu/mba/public/AMBA607/IndustryStructure. June). (2005. 178 Ibid. 46(46). P. (May 2005). Reuters. (March 8.capgemini. Industry: Household and personal products.uccnet.000 workers and push e-commerce. Buerkle. 137 Ibid. 164 165 166 167 135 Fitch: U. 147 Ibid. 169 Ibid. from uccnet web site: http://www. January). V.umuc.pdf.K. K. 136 163 Jain. 177 Ibid. P.
190 Global eXchange Services Inc. Unilever Annual Report and Accounts. Retrieved February 11.com. . http://www. http://www. 192 What is Data Synchronization? http://www. Safeway.com/frameset_fs.transora.sdcexec. (2004). Supply & Demand Chain Executive.P&G and Unilever 89 187 188 Ibid.pg. 193 www.com.jhtml?frameURL=http://www.sterlingcommerce. (July 1.asp?article_id=5769.com/industry_cp.htm. 189 About Unilever. 191 Sterling Commerce.com/article_arch. 2006.pg. Unilever Complete Global Data Synchronization Project.com/About/CompanyInfo. 2004).gxs. from: http://www.
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