Global Strategy Advisors. . .

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.

Respectfully submitted,

GSA

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

Exports. P&G Financial Analysis S. RBV Analysis Q. Ranking by Revenues. J. RBV Analysis R. Unilever Financial Analysis T. P&G Portfolio: Product Groups & Businesses DD. Global Data Synchronization Network AA. Trend Line. Fastest Growing Markets O. Imports. Historical Data-Personal and Household Products Household and Personal Prod. P&G SWOT Summary U. Trend Line. Industry. 2000 Z. 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. P&G e-Business Network 5. History of Unilever’s Global Expansion X. Unilever Complete Global Data Synchronization Project BB. Endnotes . SIC 2844 N.I. Dynamic Resource-Based Model of Competitive Advantage Y. P&G. Unilever Portfolio: Product Groups & Businesses EE. History of P&G Global Expansion W. Safeway. Value Chain Analysis. Unilever. Unilever Initiatives in Information Technology CC. Company Ranking by Personal Care Revenues L. Unilever SWOT Summary V. SIC 2844 M. P&G and Unilever P. Unilever’s Early Use of the Internet.

P&G’s strategy is flexibility for quick response to market demands and opportunities. as it divested itself of non-performers. having steady growth. which will maximize strategy achievement. advertising. Unilever needs to establish a focused strategy. develop innovative new products. Unilever has improved its focus and resource allocations. Unilever’s biggest challenges are in improving efficiencies to reduce costs. improved efficiencies. Additionally. suppliers and buyers. cost reduction. and continued investments in R&D. and internally for management and product development. quickly getting new ideas from conception to the shelf. knowledge sharing. development of strong product branding. alliances. with ongoing efforts to achieve a corporate structure. An examination of two major competitors in this industry. From a portfolio perspective. allowing it to concentrate on performing products. and first mover advantage – i. As P&G takes a proactive roll in e-business and innovation. and new product innovation. Additionally. obtaining real-time information and utilizing global knowledge sharing externally from its users. These conditions create the need for companies to respond quickly. recommendations provided herein include an alignment of strategies. global expansion. and the ever changing wants and needs of the consumer. Procter & Gamble (P&G) and Unilever reveals a very competitive industry that is not yet highly consolidated.e. maintaining its focus. competition. Although Unilever seems to have expanded globally with some success. . a strengthening of brand differentiation. P&G also maximizes its value by investing in global markets through acquisition. changes in government regulations. 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. emerging global markets. P&G is an industry leader focused on innovation. P&G Chemicals and Health Sciences lab reflect the vertical integration of its current product line. Learning and sharing information on a global scale is one of P&G’s strengths. and strategic alliances. and industry trends. direct investment and direct marketing. and find ways to become more efficient while reducing costs. including a review of the historical market share.P&G and Unilever Executive Summary i This paper provides an examination of the personal products industry as a whole. product development and quality advertising has helped it hold its position. joint ventures. and developing brand loyalty. and market introductions and management will enable Unilever to remain competitive and grow as an industry leader. a slow recovery of growth due to the economy. it seems to be lacking an overall global strategy. The industry itself is an attractive one. and development of alliances. While Unilever trails slightly behind P&G in most product segments. Unilever’s costs and number of employees is much higher than P&G’s. and repeat purchases (consumables products). but a weakness for Unilever. but also requires achieving economies of scale. Unilever’s stance is a reactive one. Unilever is primarily focused on strong brand recognition. significant investing in R&D. Both P&G and Unilever take advantage of economies of scale and global expansion into emerging markets. The improvements in overall communications. presenting issues such as increases in the cost of raw materials and operations. financial performance. expansion of its product lines through R&D. its similar focus on branding. especially in its use of people and its time to market. processes. The recent corporate restructuring should continue. To achieve speed and flexibility. P&G has been a leader in e-business implementation. and ensure activities drive toward strategy achievement. a discussion of industry opportunities and challenges is conducted. P&G’s investments and business developments have remained in or related to the consumer products industry.

and conclusions about attractiveness for incumbents.”1 In 2005. internet searches and company websites. past and future performance trends. an examination of their strategies.3 For an analysis of the Industry Structure. Industry Defined The industry segment chosen for this analysis has been assigned the SIC code 2844 entitled Perfumes. oral hygiene. market share and current initiatives. the leading revenue source in this market was hair care. accounting for 25. The SIC 2844 category. personal hygiene. make-up. Information for these analyses was derived from library databases.5 percent of the global value (See Appendix B). Porter's 5 Forces Model4 has been used and provided in Appendix C. Additional objectives include a competitor analysis. This highly competitive industry will “derive its future performance relative to global consumer spending patterns and raw material prices. comparing Procter & Gamble and Unilever. moderate bargaining power of . Our analysis includes global operations. The global personal products market encompasses fragrances. A complete list of the products included in this industry has been provided in Appendix A. and skincare products. put significant pressure on operating margins and earnings in 2005.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. financial results. as commodity costs began to stabilize. and recommendations for future growth and sustainability. when converted to the new North American Industry Classification System (NAICS) was further divided into 2 categories. Companies within this industry have referred to this market segment as the Personal Products Industry.2 This industry has recently been affected by rising commodity costs which. Cosmetics and other Toilet Preparations. The result of this analysis reveals strong barriers to entry. hair care. competitors. coupled with increased marketing spending. 325620 (Toilet Preparation Manufacturing) and 325611 (Soap and Other Detergent Manufacturing). Earnings per share (EPS) were expected to improve by 2006.

2 percent for the four year period. $22. Over the past 3 years. 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. however they still exceeded the S&P 500 Average.95% and for the past three years increased to 11.8 billion in 2001.7 The market’s weighted average growth in sales for the past 5 years was 9. however. operating margin.1% 9 (See Appendix H). Historical Data Analysis The CR4 analysis provided in Appendix D shows a total of only 28. which followed an average 5 percent per year growth between 1996 and 2000. In most cases. and substantial rivalry among existing companies.) This reflects a slow recovery from the downturn in the economy in the early 2000s.7% between 2006 and 2009. with a projected average of 2. Therefore this industry as a whole is not considered highly consolidated. 2000 – 2004. This industry favors incumbents.7 billion in 1994. considerable threat of substitutes. the industry average EPS grew by 19.7 percent of the market being satisfied by the top four producers in the industry.6 The Producer Price Index also shows a slow but steady growth over the past ten years (see Appendix F). . The market volume has shown an average growth of 2.8 billion in 1997 to $28. Such factors. and sales when comparing the five-year industry average to the most recent one-year average. The industry has seen slight increases in gross margin. The industry average Return on Assets (ROA). these figures have exceeded the S&P 500’s averages (See Appendix I).P&G and Unilever 2 buyers and suppliers. will vary by company and a more in depth analysis of the industry leaders would need to be made. (Actual rates are provided in Appendix E.29%8 (See Appendix G for details). The total value of industry shipments has steadily increased from $19.5 Market growth is expected to continue to grow steadily over the next five years.

Companies have instituted cost reduction programs (including the creation of manufacturing efficiencies. As of April 2005. the top three were (1) P&G.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. Colgate-Palmolive. followed by Kimberly-Clark. thus requiring the investment of significant resources into R&D. where consumption of household products is low) as an opportunity to expand revenues13 (For fastest growing markets in cosmetics and toiletries. and employee and plant layoffs) to improve margins during the last few years. renegotiated supply contracts. strong brands and superior product development.P&G and Unilever 3 Major Competitors Fortune Magazine and Reuters group “personal products” together with “household products” when analyzing industries. followed by Procter & Gamble (8. see Appendix L). These segments are characterized as having well-supported. Gillette and Avon Products (See Appendix J). 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. When competitors in the Personal Care Industry are ranked by revenues however.8%). Additionally. many firms view emerging markets (such as China and India. commanding premium pricing in sectors that are less cyclical. personal products companies rely on a high turnover of products in order to improve performance. 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. (2) L’Oreal and (3) Unilever (See Appendix K for rankings by revenue).5%)11 (See Appendix D for an industry market share overview). 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. Competitor ranking of the personal products industry (not combined with household products) as measured by market share is led by L’Oreal (8. which in turn prompted . The October 2005 acquisition of Gillette by P&G10 solidifies P&G’s number one position on this list.

17 These macro-level factors – environmental regulations (government). the cost of raw materials.”16 Trends in how consumers shop also affect the industry.15 Changes affecting the demographics and demands of the consumer. The consumer will continue to be influenced by price and convenience for most products. 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. and significant mergers or pending mergers . directly affect the industry. rather than at upscale department stores. but also the global economy. The growing need for compliance with more stringent environmental regulations. In addition. innovations in research. global competition. with less exposure to specific raw materials. Many companies instituted cost reduction programs. Not only the US economy. have also changed how products are produced. perfumes. Beginning in the 1990s into the 2000s. but in the end. industry competition in the form of advertising has ratcheted upward. such as the aging baby boomers causing an increase in the demand for age-defying skin care and hair color.18 . such as some cosmetics.P&G and Unilever 4 price increase announcements. and with balance sheet flexibility. and the consumer demand for natural and organic products. requiring additional investment and expanded product lines. such as Costco and Sam’s Club. and the ever changing wants and needs of the consumer – will continue to impact the performance of companies in this industry. or animal rights activists protesting animal testing. P&G’s acquisition of Gillette. the global economy. 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. will affect sales for items not considered a necessity.among them. consumers began purchasing these types of products at mass discount centers. and household items. 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. “There is a close correlation between a country’s consumption of soaps and detergents and its standard of living. consumer demographics. largely due to the strong influence of P&G in 2005.

this industry will likely become more consolidated. and first mover advantage. Most US Consumers are willing to pay. Industry Conclusions The attractiveness of the Personal Products industry includes such elements as steady growth in consumer demand and repeat purchase of the products. If the personal products industry can find ways to produce natural and organic products at reasonable costs.P&G and Unilever 5 Strategic Challenges and Opportunities As mergers and acquisitions continue. and Eastern Europe21 (see Appendix N). will favor sustainability for incumbents. expansion into the global market is not new to this industry. 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. one of the main hindrances in this area has been low income. which. Some larger current producers are achieving economies of scale. and are used to paying.22 Products designed for areas with higher incomes may not be suitable for emerging markets. brand loyalty. along with strong entry barriers and substantial rivalry among existing members. Future performance in this industry will be tied to global consumer spending patterns and raw material prices. A global expansion study would be recommended to determine which countries would provide the best opportunity. As is seen by the trends in imports and exports provided in Appendices L and M. since most are consumables. a higher price for natural and organic products. thus companies desiring to expand into this region will need to invest in development of products that can be priced more affordably. Latin America. 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 global markets will be important for future growth. the profit margins on such products are expected to be greater than their non-organic counterparts.”19 The fastest growing and emerging markets include the Pacific Rim20. “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. While the Asia-Pacific area is noted to be a key emerging market for this industry.

Greater China and ASEAN/Australasia/India".29 These global business units are distributed into five segments. Health Care.8 billion for the fiscal year ended June 2005. leading teams to build brands organized in seven geographies: "North America. and environmental impact). the two strangers traveled to the United States.. met and married sisters. The business segment being examined in this report. Value Chain Analysis. Central and Eastern Europe/Middle East/Africa. feminine . headquartered in Cincinnati. P&G Beauty.g.000 employees are organized into three global business units. for an overview of P&G structure and primary activities). keeping up with changes in customer preferences and government regulations (e. P&G Family Health (30% net earnings). 26 and has Market Development Organizations in 80 countries. and high frequency stores (neighborhood stores in developing countries).47 each. Snacks and Coffee.25 Today. and the investment in R&D required to stay ahead of the competition with new product innovation. Northeast Asia. Ohio. Home Care. Western Europe. P&G markets more than 300 brands. discount stores. Procter and Gamble pledged $3. cosmetics. and formed the Procter and Gamble Company in 1837. balanced worldwide with one half from the domestic market and one half from the international market.27 Their products are sold primarily in grocery stores. Fabric Care. chemical handling. 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. At their father-in-law’s urging.596. labeling.24 This revenue comes from sales in over 160 countries. and P&G Beauty (37% net earnings). antiperspirants or deodorants. has reported revenues of $56. colognes. membership club stores.23 The Company.P&G and Unilever 6 producers have developed a market niche for a specific consumer need and have been successful. through mass merchandisers. hair care. and P&G Beauty30 (See Appendix O.28 The Company and its 110. encompasses personal cleansing. through a series of events. Baby and Family Care. Latin America. of which 22 are $1B sales producers. P&G Household Care (33% net earnings). The challenges in this industry include taking advantage of economies of scale in order to compete on price with current companies.

includes five $1Billion brands. as well as their customer and partner management is P&G's significant use of IT and tracking systems.32 (See Appendix Q. Spending $2B annually on R&D and deploying approximately 7. P&G is well known for its brand management and brand leadership capabilities.257M Sales31.39 P&G has also been successful with its mergers and acquisitions strategy. communications. that improve R&D speed and capabilities. In order to sustain their competitive advantage.P&G and Unilever 7 protection. such as the recent acquisitions of Clairol in 2001. . Wella in 2003. and skin care. economies of scale and scope in purchasing. especially in emerging markets. and should continue this strategy. Value Chain Analysis. have introduced the #1 or #2 new non-food products in the US. information tracking and sharing. P&G must continue to utilize their acknowledged strengths. business services and merchandising provide financial and trade advantages. hair color. including CRM.40 Active portfolio management. for a P&G company overview). one of which is innovation.33 They have 29. facilitating their rapid go-to-market capabilities.38 Additionally. which are significant advantages for customer loyalty and market penetration (See Appendix O for P&G's RBV Analysis).500 researchers in technical centers around the world. as P&G is currently overexposed in the US and Western Europe. P&G is a leader in innovation. and achieved double digit growth for 2005. 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. as well as continue to exploit international growth. Supplementing their innovations. and ROE of 42% on 7. with a net profit margin of 13%. EDI. ROI of 12%. and over the past eight years.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. and Gillette in 2005. and RFID. P&G’s competitive advantages arise from several key factors.000 patents. distribution.36 Additionally. Lastly. and inventory management37 (See Appendix O. reducing costs and quickly expanding the company knowledge and line offerings.34 Key to their success is knowledge sharing and cross-borders replication of innovations. Financial Analysis. for an overview of P&G supporting technologies and awards for excellence).

through the merger of Lever Brothers. Competitor Analysis: Unilever Unilever was officially formed in 1930. in conjunction with their maintenance of market share and line extensions in developed countries. home.000 people. and has numerous wellknown brands. has been shown to increase stakeholder value. a Dutch margarine manufacturer. Their Corporate Standards System application provides for innovative R&D methods to reduce costs while increasing quality and enhancing go-to-market capabilities.46 Although the company has two legal entities as its parents.48 Today Unilever is present in 150 countries. governed by an equalization agreement. P&G has been diligently participating in activities that should ensure a good future of sustainability. and profits.P&G and Unilever 8 using divestiture and acquisition strategies. divesting if needed. as well as increase free cash flow. and continue activities that have been driving organic growth and increasing EPS (2.42 They need to successfully fold in Gillette. a British soap manufacturer and Margarine Unie. as well as expansions and adaptations of current lines to meet local needs. Their R&D has enabled ongoing introduction of new lines. a strong focus on expansion in developing countries is being undertaken and should provide significant growth opportunities. however.49 Unilever has products for three markets. employs over 223. . which their activities are focused on to accomplish (See Appendix R for financials on P&G and Appendix T: P&G SWOT Analysis). and ensure good fit and value-added. 2. and have recognized $1B in cost synergies as this integration occurs. food.44 It has since become one of the largest direct investors in the United States.662 diluted normalized EPS 2005).50 which fall into 6 primary categories: home care (17%).831 basic normalized EPS. it has only one board of directors47 and reports one set of financial statements. P&G needs to look at their businesses. and personal care. and one British (Unilever plc). ROI.41 P&G needs to review longer held businesses and lower earners for their continued value to the organization.43 Additionally. 12 of which each have worldwide sales exceeding €1 billion.45 Unilever is unique in that it has maintained a dual ownership structure since its inception. one Dutch (Unilever NV).

60 One such effort at consolidation is the 2005 sale of Unilever Cosmetics International unit to Coty for . First. with approximately 40% of Unilever's employee headcount. and impacted opportunities for efficiency economies of scale and scope. separate organizational structures (PLC and NV). share buybacks. such as a global brand strategy group. and personal care (26%)51 (See Appendix Q for Unilever's structure and primary activities). Unilever Financial Analysis). and leading brands in personal care. ice cream & frozen foods (16%). ROE of 37%. and a restructuring that created global groups. not to mention the potential concern in transparency in reporting.3 billion) the third largest cosmetics company behind L'Oreal ($17. Unilever has several issues to resolve (See Appendix Q for RBV Analysis). savory & dressings (21%). cost elimination. In order to sustain their competitive advantage. Sales were flat in 2004. sales of 48. it has been a complex company.P&G and Unilever 9 spreads (12%). In the area of personal care. beverages (8%). Unilever's competitive advantages arise from strong brand recognition.5M (See Appendix S. deodorant and personal wash.204M and net income of 2468. one of the segments where Unilever competes directly with P&G. a decrease in the number of executive managers by one-third. and advertising.7 billion) and P&G ($16. with two CEO's.55 Their renewed focus on strong line expansion (especially after reducing their number of brands from 1600 products to approximately 400 in 2003). Euro and Dollars. marketing. and earnings reported in two venues.56 and alliances with strong corporate partners such as Pepsi are also advantages. a flattening of the organization. focus on core products and regional activities with increased spending on R&D.54 Clearly there are fundamental operational differences between Unilever and P&G. such as Dove and Bird's Eye. Unilever initiated consolidation efforts (One Unilever) including development of one executive group (from three). and Unilever began a major push for elimination of non-productive lines. Women's Wear Daily ranked Unilever ($9. resulting in increased sales growth in many regions.52 Company-wide.57 This complexity increased costs.5 billion). P&G's sales are around $70 billion and Unilever's are around $50 billion. ROI of 6%.59 In 2005. strong R&D initiatives for line expansion.53 P&G's sales are nearly 40% greater than Unilever's.58 The 2004 figures reflected a net profit of 5%.

Feminine Care (35%). and Hair Care (greater than 20%). with the largest product portfolio in the consumer products industry.64 The company is divided into four pillars: Global Business Units. Global Business Services and Corporate Functions. and twelve-$1B brands in Baby. and continue to expand globally. Unilever needs to continue their operational enhancements. protect against exchange rate fluctuations. each working separately and together to bring competitive advantage to P&G. Strategy: P&G Business-level Strategy P&G. with a focus on flexibility and responsiveness. faces significant challenges maintaining cost efficiency and scale economies while creating innovation and differentiation. Market Development Organizations. with a balance of ten.66 P&G's business strategy focuses on large-scale operations.68 To achieve sustainability and continued growth. and quickly responding to competitive advancements. P&G's strategy is to continue to innovate and sell products that appeal to retail trade customers and consumers.$1B brands in Beauty and Health. especially in India and China. Family and Household lines. add line extensions with core brands while guarding against negative impacts should an extension fail. providing pricing and product that adds value for the customer. are leaders in inbound logistics. is required to maintain and grow their leadership position.67 P&G is the global leader in its four core categories. the identified locations for substantial growth.69 Their comprehensive research network and $2B of research spending annually support their innovative focus. Fabric Care (approximately 30%). look to mergers and acquisitions to support their growth and development. strong product branding. and product innovation to develop competitive advantage.62.65 As competition from other major global and small local companies are vying for market share. and they have received awards for supply chain management (#1 in 2004).63 With their recent acquisition of Gillette. including additional outsourcing when needed (as was done in business support services). while improving efficiencies in sales and operations with their ongoing restructuring and technology enhancements. a sound business strategy.61 For future sustainability.P&G and Unilever 10 approximately $800 million. Baby Care. and are . P&G now has 22 brands that each exceed $1B in annual sales.

all successful activities that promote local acceptance and a climate enabling knowledge transfer. P&G uses business development structures combining sales.P&G and Unilever 11 technology innovators for improving efficiencies and reducing costs. another competitive advantage. and needs to be further implemented beyond the US and Western Europe. 2) ability to manage people in foreign markets. global resource centers. planned divesture and ongoing acquisition strategies. and continues to concentrate on relationship management with customers and suppliers. and investing in the developing marketplace. and alliances to expand their market understanding and reach. such as with bar coding and wireless technologies. joint ventures.78 Their flattened .72 P&G has been awarded #1 best category management and consumer marketing. Beauty and Health Care.76 Their global strategy includes innovation. and IT to work with trade customers for ways to add value to the consumer.77 P&G has gained substantial market knowledge. and provides training. logistics. growing volume in developed and developing markets.75 Global Strategy P&G has made substantial investments globally. to provide focus and management for increasing customer concentration at the retailer and country levels. 71 Additionally. Key to expansion are three competencies P&G has developed: 1) understanding of the foreign marketplace. finance. increasing market share on base business while focusing on each business as well as on each industry." identifying their "target market's requirements and designing the supply chaining backward from that point. and 3) skills at managing foreign subsidiaries. P&G should continue to meet (and exceed) its business goals. and partnerships and alliances for managing foreign subsidiaries.74 With ongoing improvements in resource management. and focusing on higher profitability lines for growth. and continued maximization of their product innovations. marketing. and rapid go-to-market strategies.70 With their market knowledge and focus on efficiencies.73 Use of the Siebel CRM solutions has improved efficiencies and reduced costs. has innovative databases including over 100 million consumers across 30 countries. marketing. they excel at "demand chain planning. utilizes a blend of local and expatriate managers. and used acquisitions. including Market Development Organizations in 80 countries.

87 P&G has coordinated activities to provide a global network with all activities. P&G modified products in their upper tier and launched middle tier level products in Russia.85 P&G has been an early adopter and substantial user of information technologies.P&G and Unilever 12 structure and focus on relationship management with stakeholders provides for efficient and rapid communications throughout the value chain. P&G is at risk due to overexposure in the US and Western Europe.89 P&G has been working to expand rapidly in these markets. they have created the ability to implement distribution systems that can move innovations across borders. where launches are first piloted on a limited basis.79 These capabilities have afforded P&G the opportunity to leverage insights from the local shopper. knowledge transfer.000 towns. and in China alone. Knowledge from that rollout was then integrated into the Olay launch in Spain. 80 With their marketplace knowledge and research centers strategically located throughout nine countries. their presence in high frequency stores has grown 50% in 4 years. and has been recognized by CIO Magazine for its “Corporate Standards System application” that revolutionizes the way their employees and partners collaborate. However.82 Other examples of their approach to learning. then expanded upon. and getting products quickly to the marketplace. identifying significant opportunities and acting on them quickly. and rollout based on market understanding is the learning from SK-11 store counters in Asia. innovation. and in fact. P&G serves 2000 cities and 11.84 Overall. 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.83 demonstrating a reduced risk method of global expansion. improving product quality. structure and coordination driving for a global competitive advantage. and rapid go-to-market strategy (See Appendix V for the History of Global Expansion P&G).88 It is estimated that 90% of the world's population will be in developing countries by 2010.86 P&G has had success expanding globally with its strategies of acquisition. and with innovation a key component of their global strategy. and needs to continue growing globally. P&G focuses on 360-degree innovation. strategic partnering. consumer.90 .81 For example. driven by their identification of the beauty-conscious orientation of women in that marketplace. reducing costs.

and for video conferencing and customer information and feedback.. current and prospective retail partners. receive invoices.com Inc. The Web Order Management System and Customer Portal assist partners in purchasing.93 P&G has taken a “use it or lose it” approach since many of its patents are not being used. P&G fully utilized its Electronic Data Interchange (EDI) as a hub of doing business. and transportation carriers. grocery stores. working simultaneously on the same files. 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). real-time and predictive business intelligence. 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. internally share R&D information. billing and payment. formed in February 2001.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. product information. P&G has invested in Yet2. suppliers. financial institutions. and ‘virtualization’ of business processes. managing and promoting products by providing critical data. P&G has also invested in a marketing collaborative software development company called Emmperative. P&G’s website PGEDI. P&G does not have direct selling of its products through the internet. order status and invoices 24 hours a day. and wholesale clubs (such as Costco). 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. logistics for retail partners. however.”92 Sales and distribution is through retail partners – drug stores. transportation. and share data. There are also links to track shipments. an Internet company that has launched a web site that allows companies to post their technologies for license or sale. make payments. every day. These resources all interact electronically to provide real-time access to information to those who need it. creating a competitive advantage.com provides an electronic exchange of information between P&G and its trading partners. which provides a way of sharing significant information share data.

are difficult for the competition to easily imitate. From an end-user standpoint. and if complex enough. Initiatives and investments such as these. Everyday Solutions. or pet care. in accordance with the Dynamic Resourcebased Model of Competitive Advantage.95 are valuable resources that enable P&G to increase its efficiency and effectiveness. health & wellness. as well as provide feedback.99 Internationally. and among others. and free samples. promotions. customers can visit PG. P&G also has numerous internet sites for specific brands and products where customers can obtain information. P&G continues to both look for acquisition opportunities that are related to its core business .com. household. Family care. in 2005 P&G acquired a Pharmaceuticals business in Spain. iams. i. a commercial product segment.96 Corporate Strategy P&G markets over 300 products in 160 different countries. which vertically integrates ingredients for some of its products and P&G Health Science which is a research lab for product development. and most recently. and snacks and coffee.e. Baby. acquired Gillette. P&G also has a Market Development Organization organized in seven97 geographical areas. which offers tips. coupons. P&G’s portfolio includes other ventures related to its core products.com. and samples. such as pampers. charmin. P&G groups its business into two categories.”94 Creating this central library for accessing information allows for faster turnover and more efficient use of time and information.com and many others. P&G Chemicals. Inc. Such early involvement and sizable investment in e-business as a tool reinforces P&G's position as a leader in the industry. P&G Chemicals.com.com and sign up for P&G’s monthly emailed publication. a Fabric care business in Europe and Latin America. P&G also sells basic marketing and management techniques on the web site. baby & family.. Home. acquired Wella in 2003. foundation business and higher growth business. P&G divested its juice business in August 2004. tide. and increased ownership in its Glad venture with the Clorox Company. Health Sciences. Foundation Business includes Fabric. or seek expert advice about personal care. and P&G Europe98 (See Appendix CC for list of businesses and product group descriptions).P&G and Unilever 14 developments.

and two of six segments in Home & Personal Care (skin and deodorants). “In a rapidly globalizing world. P&G is aware of their core products and business foundation. consumers have many choices regarding which brand they select.107 With its resources aligned and a commitment to funding its significant R&D spending. without adequate differentiation. With twelve brands that each exceeds €1 billion in annual sales.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. . P&G should continue its current successful strategy.102 Unilever's market leadership cannot be sustained if costs are significantly higher than a competitor's products. brand loyalty could be difficult to maintain. and brand strategy ("Categories"). one responsible for brand development. Similarly. and they do it well. For Unilever. 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. and the other for managing the business. innovation. research and development is the key to maintaining its competitive advantage.P&G and Unilever 15 and develop new products. and winning with customers ("Regions"). advertising quality and new product development. the current business-level strategy would be characterized as a differentiation strategy. where the emphasis is on branding. effective deployment of brands and innovations. Perhaps the greatest risk to sustaining their competitive advantage is the high SG&A costs of Unilever's current organizational structure. Unilever should be well positioned to sustain and improve their current standings. 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. but also understands that the development of new products through innovation.101 In the consumer products industry.106 The alignment of company resources with its strategy is an important component for sustaining a competitive advantage.104 Company resources have been divided into two primary functions. Unilever holds the world number one position in five of six food segments.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").

Indonesia. Unilever’s progress in exploiting global presence may in fact be hampered by the lack of an overarching global strategy. the knowledge imperative. Unilever is the market leader in most priority categories in countries where it has a presence (key markets include India. deepening partnership with customers. excellence in reaching consumers and customers. where the company enjoys a long-established presence. with the goal of “One ULA” (Unilever Latin America) and a regional approach based on four cornerstones -.strategic leadership. With 223. has established consumer intimacy. there is evidence that the firm was driven by nearly all five global expansion imperatives -.000 employees in over 150 countries. Thailand. In doing so. systems and shared services. products are tailored to different income levels. Unilever places emphasis on: serving and delighting consumers. Vietnam and the Philippines).P&G and Unilever 16 Global Strategy Unilever’s global presence has deep roots.” Unilever embarked on a number of transformational initiatives. the efficiency imperative. At various stages throughout the course of Unilever’s history. and Unilever’s distributions systems reach deep into these areas. 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 three countries in this region. However. In this region. and prides itself on affordability.111 With 44 operating companies in the Asia/Africa region.113 . innovation.112 Unilever’s current expansion plans call for a focus on the developing and emerging markets. South Africa.109 Unilever is proud of its deep roots in local cultures and markets worldwide. In an effort to “win Latin America. resources and product launches. the globalization of customers.the growth imperative. Unilever is the market leader for four out of six primary HPC categories.in its efforts to globalize. beginning with the founding companies (See Appendix W for a history of Unilever’s global expansion). and building relationships with local communities. Thirty-five percent of Unilever’s turnover is in developing and emerging markets. and brands sold in 98 countries. and the globalization of competitors108 -. which enables it to bring its wealth of knowledge and international expertise to local consumers. and implementing common processes. market share and brand health.

the company has not articulated an overarching global strategy that clearly outlines the alignment of all functions in the value chain to that strategy.P&G and Unilever 17 Unilever is aiming for “seamless global development.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. in at least one of its brands.116 Unilever needs to take the next steps in ensuring global competitive advantage. and “global box-ticking can’t match intuitive knowledge of local markets. Unilever needs to “counter threats in specific markets” and transplant learning's from one place to another. among other things.”114 with system-wide automation and data synchronization. press officer for Unilever has stated. and capture economies of global scale and global scope. the implementation of RFID technologies. according to the Dynamic Resource-based Model of Competitive Advantage (DRMCA) (See Appendix X).”115 However.an example of centralizing key business functions -. to participation in the GDSN.”117 along each of three dimensions: activity architecture.which. though cost effective. however. 121 Many of the products in the personal products industry fall under the category of “experience goods” – that is.119 and the creation of an online buying system for making certain types of purchases from suppliers. to make this possible. Unilever has made significant advances – most notably its alliance with Safeway. but its IT initiatives are not unique or rare within this industry. 118 E-Business Strategy Unilever’s e-business strategy continues to evolve. it has opted to consolidate its advertising accounts into one global agency network -.122 As . Unilever will need to continue to add new and industry-leading IT resources to build and sustain a resource-based advantage. despite all the references that Unilever has made to global strategy and its acknowledged global presence. Further. While it has taken steps to adapt to local markets. The firm’s e-business strategy is progressing. from its early membership in a B2B marketplace. locational competencies and global coordination. by evaluating the “optimality of its global network for each activity in its value chain. runs counter to being sensitive to local markets. nor are they inimitable. the qualities and characteristics of those products are only recognized after consumption. as Trevor Gorin.

and reach out to consumers. see Appendix BB). and make appropriate sourcing decisions)133 (For additional information about Unilever’s utilization of information technology. which offers a cost-effective data pool with solutions and services that support user needs. radically change its supply chain. 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). in June 2004. Unilever was making plans to invest heavily in electronic commerce. However.130 the Unilever Private Exchange (which provides secure links between operating companies and suppliers’ and customers’ systems and to external electronic marketplaces).”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). 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. the first time that product information had been “synchronized between the leading supply side and demand side data pools” (See Appendix AA). as a member of Transora.131 Ariba. Safeway and Unilever heralded the success of their joint Global Data Synchronization initiative. Furthermore. those products by and large do not lend themselves well to e-commerce – purchases by consumers via the internet. regional and global supply managers to gather and analyze information quickly.124 Unilever and P&G are members of Transora. The company recognized that it could achieve significant savings by using the internet to “buy everything from raw materials to cardboard.126 Transora merged with UCCnet to form 1SYNC.127 Unilever. in an effort to slash costs. and helps the industry maximize the value of data synchronization.P&G and Unilever 18 such. Unilever’s supply management information system (which helps local. 129 Other examples of Unilever’s forays into e-commerce and information technologies include: the implementation of radio frequency identification (RFID) tags. as early as February 2000. .125 a B2B marketplace consisting of 49 companies.

200 to around 400 as part of an overall restructuring campaign.144 .139 It is in cases like this where companies might benefit from a divestiture of low-growth.140 (For additional details see Appendix U: Unilever SWOT Summary). the locations or geography it will cover. Unilever is number one or two in all but three segments in which they compete. particularly in the area of personal care. higher profit opportunities. over the last several years the brand count has been reduced from over 1.137 As previously mentioned.135 Unilever's activities are spread across six primary business categories. everywhere they do business. ice cream & frozen foods. particularly in Europe. and to be seen as "a truly multi-local multinational". under-performing business units in order to free up resources to focus on higher growth. and help reduce their high SG&A costs. however. beverages. Such a move would better position Unilever for sustained profitability. Consolidating markets can help provide sustained competitive advantage by reducing the overall level of competition. the business is in an area that is relatively mature and segmented. spreads. and personal care. A decision to divest the brands that are under-performing would not be foreign to Unilever. and the amount of vertical integration it employs. provide cash for additional debt reduction.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. including the portfolio of businesses that a firm chooses to engage in.136 and are sold in 150 different countries. including home care.141 With a stated focus on developing and emerging markets. they risk a reduction in the value of the business due to further brand depreciation. they face intense competition and weak consumer spending.138 Further. savory & dressings. and would help consolidate a market.142 divesting the European frozen foods units would free up resources. should Unilever wait too long before executing this divestiture. In the segments where they are not number one or two.P&G and Unilever 19 Corporate Strategy Corporate strategy addresses the scope of the firm's activities.134 Unilever's strategy is to have strong customer relationships at the local level.

Continue consumer research to ensure that products and brands are meeting target customer needs. Taking into consideration the analysis provided. Regional Unilever strategies are individually strong. 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. and retailers/customers. continue to invest in IT and internet solutions to achieve global efficiencies in negotiations. E-Business strategy progressing. develop fallback plans should line extension efforts fail. and pursue increased efficiencies and cost reduction strategies. Look for opportunities for vertical integration: cost savings and increased efficiencies can be created with this modification in the Unilever portfolio. however it will require strong discipline and careful analysis in terms of pursing appropriate acquisitions and divestitures. align strategies to optimize all value chain components. and alignment of strategies. we recommend the following plan of action for the next 5 years (with annual reviews of progress to date): • Align Unilever resources to strategies. .P&G and Unilever 20 Conclusions and Recommendations This comparison clearly shows why P&G is a leader in the industry. Unilever can learn from P&G and further develop itself as a leader. cost reduction programs. Continue consumer research efforts to ensure an understanding of the global marketplace. while identifying new opportunities. electronic transactions. • Continue investments in R&D initiatives for increasing line extensions and new products. and communications related to suppliers. product and brand differentiation initiatives. • Strengthen consumer research and brand differentiation. develop an overarching global strategy that provides consistent direction and ensures global synchronization and pooling of knowledge and best practices. Global Strategy Advisors believe that there is considerable opportunity for Unilever to strengthen its profitability and sustainability. distribution networks. Utilize partnerships and alliances for market understanding and product development.

for example). • Increase focused advertising. when such alliances fit with and add value to Unilever’s strategies and where ROI justifies cost. and where that competitive advantage can be sustained. but only when alliances/investments are aligned with Unilever strategies and where projected ROI will enhance pursuit of goals of profitability and sustainability. Explore increasing global research centers. . and promote market consolidation. a market analysis is required to identify best acquisition options that would complement existing brands and product lines. Seek alliances that may produce ways to increase speed-to-market and leverage global opportunities while increasing protection against exchange rate fluctuations. Identify potential acquisitions that would help consolidate markets and thereby enhance Unilever’s market leadership. where economically feasible and ROI is highly probable. Market leadership cannot be sustained if your costs continue to exceed that of your competitors’ products. 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. • Aggressively pursue acquisitions and divestitures. Exploit markets where consumption of household products is low. • Exploit and expand global presence. Identification of optimal acquisitions is beyond the scope of this paper. • Continue to pursue strategic corporate alliances for R&D. Use proceeds from divestitures to acquire businesses. 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. identify locations where first mover advantage is possible. Seek opportunities to out-source. especially for higher profit line and expansion in emerging countries.

powders. blending and compounding • Perfumes. natural and synthetic • Sachet • Shampoos. whether from soap or synthetic detergents. Establishments primarily engaged in manufacturing synthetic perfume and flavoring materials are classified in Industry 2869. hair • Shaving preparations: e. and those manufacturing essential oils are classified in Industry 2899.g. and those manufacturing shampoos and shaving products. and scalp conditioners • Home permanent kits • Lipsticks • Manicure preparations • Mouthwashes • Perfume bases. lotions.osha. personal • Depilatories. tablets • Soap impregnated papers and paper washcloths • Suntan lotions and oils • Talcum powders • Toilet creams.. and waters • Toilet preparations • Toothpastes and powders • Towelettes. premoistened • Washes. Cosmetics. cosmetic • Dressings.display?id=614&tab=description . This industry also includes establishments primarily engaged in blending and compounding perfume bases.P&G and Unilever 22 APPENDIX A: SIC CODE 2844 AND INDUSTRY DESCRIPTION 2844 Perfumes. from http://www. cosmetic • Face creams and lotions • Face powders • Hair coloring preparations • Hair preparations: dressings. powders. tonics. and Other Toilet Preparations Establishments primarily engaged in manufacturing perfumes (natural and synthetic). and other toilet preparations. 2006. rinses. cakes. cosmetics. cosmetic Retrieved February 7. perfume • Cosmetic creams • Cosmetic lotions and oils • Cosmetics • Dentifrices • Denture cleaners • Deodorants. • Bath salts • Bay rum • Body powder • Colognes • Concentrates. creams.gov/pls/imis/sic_manual.

Cosmetics and Other Toilet Preparations Source: Business & CO Resource Center. (CL) Gillette Co. (PG) Unilever E. Massachusetts Tokyo New York.10 M Sales $63.680.741.038. Illinois Sofia Paris Clichy Madison. Colgate-Palmolive Co. New York Boston.348.40 M Sales $19. New Jersey Paris Paris Atlanta.532.024. (4913) Procter and Gamble Co. (KCRPY) Unilever United States Inc.00 M Sales .00 M Sales $49.000.477.Perfumes.108.317. Thomson Gale.A.584.80 M Sales $8.20 M Sales $10. Kao Corp.00 M Sales $53.083. New York $124.90 M Sales $17.00 M Sales $12. Georgia Taiz Dar es Salaam New York. Online Edition.70 M Sales $18. Hayel Saeed Anam Group of Cos.00 M Sales $19. Elf Aquitaine Nestle S.00 M Sales $17.50 M Sales $10.00 M Sales $47.157. IPP Ltd.A.674. New Jersey Abbott Park. LVMH Moet Hennessy Louis Vuitton S.549.90 M Sales $11.00 M Sales $16.00 M Sales $17. Merck Johnson and Johnson (JNJ) Abbott Laboratories (ABT) Pharmachim Holding Sanofi-Aventis (SNY) L'Oreal SA (LORLY) Wyeth (WYE) Christian Dior S. Ohio London Darmstadt New Brunswick.P&G and Unilever 23 APPENDIX A.219.563.00 M Sales $8. (LVMHF) CP and P Inc. 2006.00 M Sales $19. Toiletries and Cosmetics." Encyclopedia of Global Industries.20 M Sales $59.358. pg 2: GLOBAL INDUSTRY RANKING BY SIC Current Industry: 2844 .A.723. Paris La Defense Vevey Osaka Cincinnati. (NSRGY) Sunstar Inc.00 M Sales $56.882.563.

which accounts for 25.5% of the global value.30% Fragrances 13. Market Segmentation145 Global Personal Products Market Segmentation: % Share.P&G and Unilever 24 Appendix B: Global Personal Products Industry.50% Personal Hygiene Skincare 18.50% The leading revenue source in the personal products market is hair care.70% Haircare 25. by Value. 2004 Oral hygiene 12.70% 16. .30% Make-up 13.

Incumbent firms have the advantage. (Lack of brand equity for incumbents) Yes ( ) Comment/Support Large firms do indeed enjoy economies of scale in this industry – and advantages of size. distribution networks and supply chain. . costs do not decline significantly with volume. strong brands. “Global personal products market grew by 3. materials. industry leaders have been masterminds in developing innovative products147 – which suggests that they benefit from experience curve economies – in many aspects of their businesses. or suppliers) to start business operations. (For instance. existing companies’ products are not protected by patents) There are no established brand identities in the industry. Five Forces Analysis PERSONAL PRODUCTS INDUSTRY FIVE FORCES ANALYSIS (Industry Attractiveness Analysis from the Perspective of Major Incumbents ) I. Incumbent companies establish contracts with firms in their distribution channels.P&G and Unilever 25 Appendix C: Personal Products Industry. and that it would be difficult for less experienced firms to gain the same level of performance without going through the same learning process. commanding premium pricing in sectors that are less cyclical. For example.146 This industry encompasses a wide variety of products and brands. as in the airline industry. While human resources may be available. (No economies of scale) There are no “experience curve” economies in this industry. The industry rate of growth is high. and superior product development. scale and diversity of products.) There are no proprietary product differences in the industry. Newcomers to the industry will have little difficulty in obtaining the necessary inputs and resources (e.g. establishing partnerships with suppliers and distributors will take time. 149 Industry entry requires capital to either acquire an existing company or to construct facilities and purchase all manufacturing (and R&D) equipment..4% in 2004 to reach a value of Not much capital is needed to enter the industry. used equipment might be available. (This is different from economies of scale. Barriers to Entry and/or Mobility Factor Large firms do not have a cost or performance advantage in your segment of the industry. to include product development. The existence of experience effects in an industry means that incumbents are able to have lower costs due to past learning and experience. skilled people. (For example. to start operations) Newcomers to the industry will be able to access existing distribution channels. 148 No ( ) These segments are characterized as having well-supported. Patents abound in this industry. and enjoy an advantage (particularly the industry leaders) due to size.

. The industry offers newcomers one or more potential point of entry. however competition is fierce. due to current low penetration of personal products in large markets (China.4 billion. to include prohibiting manufacturers from making therapeutic claims based on the vitamin content of skin care products. There are many different market segments and niches where a new entrant might specialize.151 Highest growth area expected in the Asia-Pacific region.g.152 The industry has well-defined product standards or specifications. (Incumbents haven’t attempted all possible viable strategies in the industry) The industry has no history of retaliation by incumbents against new entrants. India).154 Planning and establishing personal products manufacturing facilities involves permits and adhering to environmental and government regulations. the more attractive the industry to incumbents. low level of consolidation) is such that incumbents don’t typically react to new entries. Product standards are fairly welldefined.9 billion in 2009 – an increase of 20.” 150 Market is forecasted to have a value of $182. however industry leaders are goliaths! Newcomers to the industry will be able to obtain the necessary licenses and permissions to start operations. which newcomers can implement. low fixed. 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. Industry economics (e. consumer concern over animal rights and environmental concerns have affected the industry for more than 100 years. with leaders regularly introducing new products. Some U. . No evidence of retaliation by incumbents against new entrants. high variable cost.S. intervention.P&G and Unilever 26 $152. many FDA regulations govern this industry. 153 Government regulation.1% since 2004. Note: The greater the number of NO checks.

Bargaining Power of Buyers Factor The buyer industry is more consolidated than my industry.155 It is difficult for buyers to vertically integrate backwards into these businesses. distributors (Wal-Mart. No significant costs associated with switching suppliers. etc.) purchase in large quantities. Yes ( ) Comment/Support Supplier industry is not any more consolidated than personal care industry. While some products are becoming more sophisticated (anti-aging products. Yes ( ) Comment/Support Buyer industry will continue to grow.P&G and Unilever 27 II. No ( ) . The quality of inputs is critical to my finished product. quality is of prime concern in each step of production chain. for consumers as well as distributors. products with vitamins. Many products in this industry are fundamental to health and cleanliness. My business is not important to the suppliers. III. No ( ) Buyers buy in large quantities. (That is.) Does the buyer need a lot of important (technical) information to inform its purchasing decision? (In such situations. Bargaining Power of Suppliers Factor The supplier industry is more consolidated than my industry. as companies continue to expand globally. My product is a small part of the buyer's cost of inputs. Product lines target males and females. and of use to people of all ages. Yes. Business is important to suppliers.) The buyers can vertically integrate backwards into your business. Many firms are vertically integrated in this industry – large multinational firms are engaged in every aspect of the production process. A draw here – consumers buy in small quantities. Many firms in industry are vertically integrated156. The buyer does not face any significant costs in switching suppliers. natural products). buyers tend to be more knowledgeable about what they are buying. technical information is not required in making purchasing decisions. my buyers can easily purchase from my competitors.

Threat of Substitutes Factor My customers have one or more substitutes available to them.P&G and Unilever 28 My inputs (materials. due to No ( ) . one-size-fits-all approach will not work when supplying global markets.(For example. My suppliers can vertically integrate forward into my business.158 There are many different components and ingredients. services must be differentiated. Each market has its own unique preferences and needs. supplies. from raw materials (cultivation of plants and flora used in fragrances).) At least one of the substitutes performs well and could pose a threat to my business.” 160 Market is forecasted to have a value of $182. substitutes are readily available. substitute products perform well and can pose a threat. It would not be easy for suppliers to vertically integrate forward. Therefore.9 billion in 2009 – an increase of 20. supplies.157 There are many. through the final production stages159 and packaging and distribution. Yes ( ) Comment/Support “Global personal products market grew by 3. Little costs incurred in switching for consumers. I cannot switch suppliers quickly and cheaply. I don't have many supplier alternatives. services. That is. No ( ) V.4% in 2004 to reach a value of $152. Proximity of manufacturing plants to distributors/retail stores is an advantage (lower transportation costs). While brand loyalty exists for some firms. distributors/retail giants will need to renegotiate contracts (to possibly include transportation).161 Highest growth area expected in the Asia-Pacific region. etc) are unique or differentiated. labor. many personal care contract manufacturing suppliers for this industry. Yes ( ) Comment/Support See appendix D – top four firms make up only 28% of market share. My customers will not incur much costs or critical uncertainties in switching to a substitute. IV. Rivalry Among Existing Competitors Factor My industry is not growing rapidly or the industry is in the decline stage of its life cycle. high fructose corn syrup is a substitute for sugar in many industrial applications.1% since 2004.4 billion.

Leading firms (those with comparable levels of differentiation) are similar in size. Investment in facilities.162 The industry is fragmented and exhibits boom-andbust cycles. There are no significant product differences and brand identities among the major competitors. Not the case. distribution networks is substantial. 164 Some industry leaders specialize in limited segments. There are high exit barriers. making exit pricey. strong brands. or the industry is cyclical with intermittent excess capacity. 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. commanding premium pricing in sectors that are less cyclical. some of which span multiple industries. My competitors are mostly specialized in my line of business and are not diversified.P&G and Unilever 29 current low penetration of personal products in large markets (China. and superior product development. The industry suffers competition from companies based in low-cost locations. The industry has excess capacity. relative to the size of the industry. Major competitors in my industry are of comparable size. leading firms in this industry are not small. R&D. however most provide a variety of brands and products. India). This industry is not fragmented.163 Excess capacity not evident. Industry is characterized as having well-supported. 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. industry is not markedly cyclical. . the more attractive the industry is to incumbents.

166 While this industry is becoming more consolidated.50% Unilever.P&G and Unilever 30 Appendix D: Global Personal Products Industry.80% ColgatePalmolive.8% of the global value. The top four companies in the Global Personal Products industry represent 28. Company L'Oreal P&G Unilever Colgate-Palmolive TOTAL %share 8. . The four-firm concentration ratio (CR4) is calculated by adding the market share of the four largest firms in the industry. P&G’s acquisition of Gillette in 2005 will very likely change this picture in Datamonitor’s 2006 reports. A CR4 of 40% or higher represents a consolidated industry.8 3.60% Other. 2004165 Global Personal Products Market Share: % Share.5 7. 2005. May. 71. 8. it would not be characterized as an oligopoly. Market Share . 2004 L'Oreal. which accounts for 8. The following CR4 table shows the total of less than 80% and is therefore not considered highly consolidated.% Share by Value.7 Source: Datamonitor.6 28.8 8. industries that reach that ratio begin to exhibit oligopolistic behavior. particularly as industry leaders merge with or acquire other firms. 3.20% The leading player in the personal products market is L’Oreal.8% of the market share. 8. 7.80% Procter & Gamble. by Value.

5 47.6 138.2 Market Value Growth $ Billion Market Value 133.3 152.4 3.2 2.2 2.3 3.6 % Growth 2. .P&G and Unilever 31 Appendix E: Market Growth Market Volume Growth 2000 – 2004 Year 2000 2001 2002 2003 2004 Billion Units 45.5 46.3 Source: Datamonitor. (2005.3 142.7 48.5 1.5 3.9 2.4 Year 2000 2001 2002 2003 2004 % Growth 3.9 147.1 3.5 49. May).

7 166.1 172.9 167.8 168.7 179.0 .8 168.4 1999 172.1 179.1 172.2 179.6 169.4 166.4 180.5 168.0 172.4 178.9 180.0 180.7 168.1 179.6 178.1 175. and other toilet preparations Base Date: 8003 Year Jan Feb 165.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.1 167.4 168.8 181.1 170.4 176.9 167.7 168.1 176.7 171.8 172.2 165.2 170.8 177. cosmetics.0 177.8 166.6 167.2 167.3 168.5 169.5 176.0 166.4 176.8 Jul 166.4 165.4 180. and other toilet preparations Product: Perfumes.0 168.6 179.9 Apr 167.2 168.1 168.7 179.1 181.7 1993 165.1 168.7 181.4 169.6 179.3 168.1 172.3 172.1 167.8 181.6 2002 179.8 177.2 180.0 169.7 181.5 179.5 2001 179.9 Dec 166.3 180.7 Aug 166.2 167.3 181.1 180.4 176.9 Jun 166.8 172.9 176.7 Sep 167.5 172.6 173.0 178.0 167.9 178. sales and excise taxes.4 180.9 165.2 166.5 2000 176.5 167.0 177.7 179.6 174.8 180.7 166. A family of indexes that measure the average change over time in selling prices received by domestic producers of goods and services.3 1994 167.7 181.9 171.2 1997 168.6 176.4 168.4 179.2 180.6 168.8 175.4 181.3 179.9 172.9 168.2 181.0 180.2 168.4 181.5 1996 169.7 181.4 180.8 170.2 1995 168.7 164.9 Annual 166.9 167.4 168.9 1998 169.0 Mar 166.8 Oct 166.8 170.1 168.9 167. Series Id: PDU2844# Industry: Perfumes.9 166.6 181.3 2003 181. Sellers' and purchasers' prices may differ due to government subsidies. cosmetics.9 172.6 167.9 May 167. PPIs measure price change from the perspective of the seller. and distribution costs.7 168.2 179.5 179. This contrasts with other measures that measure price change from the purchaser's perspective.0 165. such as the Consumer Price Index (CPI).8 176.9 Nov 166.

29 9. Ltd. Industry.83 .00 32.95 85.03 17.65 4.P&G and Unilever 33 Appendix G: Industry Growth Rate .90 17. Sales Growth 5 Yr.reuters.319.94 11.62 11.Sales Note: this source did not include Unilever in its categorization of Personal & Household Prods.investor. Sales TTM Sales $ Rate% Growth Rate% 44.205. (ADR) Colgate-Palmolive Company 3 Yr.80 61.675.com/ Data as of 2/9/2006 72 companies Name MktCap Weighted Average McKesson Corporation The Procter & Gamble Company Mitsui & Co.876.01 7.396.14 12.22 12. source: http://www..27 45.27 7.

Inc.5% 3.319.5 2. 8.6% 57.7% 48.5% 33.8 14. 6.2% 47.8% 19.9% 26.0% 61.4 Name Gross Margin Operating Margin Net Profit Margin Industry Average 1.8% 10.0 2.9 $5. 7. Inc. 2. Blyth. McKesson Corporation The Procter & Gamble Company Mitsui & Co. 3.A. (ADR) The Clorox Company Ecolab Inc. Tech.6 2. Shiseido Co.5 2.4% 18.1% 9.7% 2.465. 3 yrs 11. EPS Name EPS EPS Change (1yr) EPS Growth (3yr) Industry Average 1. S.2% 15.6% 13. The Estee Lauder Co.479. (ADR) Pillowtex Corporation The Clorox Company The Procter & Gamble Company McKesson Corporation Grupo Casa Saba.4% 11.6% 35. LTD. Ltd Pillowtex Corporation The Yankee Candle Company.6 $6.9 Revenue Growth 11.9% NA 12.205.2% -2.9 $85. 9.1% 12.. Ltd.149.8% 61.1% 9.2% 14.4% 6.6 $11.3% 17.8% 15.2 $4.8 $61. Mitsui & Co.5% 5..6 15. 2. 2. China Techfaith Wireless Comm.7% -124.1% 26.396.2% Rev Growth.8 $6.P&G and Unilever 34 Appendix H: Average Revenue Growth: INDUSTRY Name Revenue M $44.0 $32. 3.2% 7. 4. 47.6 3. 5.675.876.0% 9.396. Newell Rubbermaid Inc.4% 2.3% 24.508.5% 10. (ADR) Colgate-Palmolive Company Alberto-Culver Company USANA Health Sciences. 3.2% 12. 10. 7.4 2.5% -0.4% 47.2% . 3.5 19. 5.0% 14.3% 7.4% 2. Inc.7% 5.1% 19. 6.2% 54.0 $4.362.3% 203. 10. 4. 9.9% 21.4% 18.9 $8. Inc.8% 4. (ADR) Colgate-Palmolive Company Avon Products.3 1.9 1. Ltd.6% 137.7% Industry Average 1.0% 15.8% 4.4% NA 23. 8.

9% 11. The Procter & Gamble Company WD-40 Company Parlux Fragrances. Colgate-Palmolive Company USANA Health Sciences.2% 17. 10.5% 16. 7.0% 48. 9.4% 11.5% 12.9% 9.P&G and Unilever 35 4.2% 51. Inc.4% 18.0% 11. Playtex Products.7% 19. Inc.6% 57.5% .6% 11.4% 37.9% 9. 8. Inc. 5.6% 18. 6. DAC Technologies Group 52.0% 35.4% 18.7% 19.9% 54.

70% 9.60% 23.50% 1.10% 14.9 .90 $59.1 5.60% 9. Financial information on the Personal Products industry as a whole is difficult to obtain without subscribing to a service such as Hoovers or Datamonitor.1yr Op Margin .50% 12.00% 5.60% 45.30% 23.072.90% 23.1yr Net Margin .00% 15.investor.90 28.40% 9.50% 20.com Note: The industry being studied in this report does not include household products.60% 10.10% 18.30% 20.10% 44.90% 4.1yr Pre-Tax Margin .1yr Sales .10% 9.reuters.5yr Industry Sector S&P 500 47.5 13.00% 15.00% 10.P&G and Unilever 36 Appendix I: Historical Data – Personal and Household Products Source: http://www.1yr Op Margin .30% 12.30% 18.6 1 $690.062. However. Profitability Industry Exceeds S&P Gross Margin – 1yr Gross Margin – 5yr EBITD Margin .10% -3.60% 9.140.20% 9.871.30 $94.90 33.80% 16.80% 14.20% 14.030.40% 18.60% 14.00% 17.80% 13.20% 14.5yr Op Margin .5yr Capital Spending .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 $709.80% 7.90 $45.007.1yr EBITD Margin .80% 14.2 $525.5yr Industry Sector S&P 500 11.70% 9.90% 47.90% 13.90% 18.90% 10.10% 20.10% 10.80% 45.1yr Net Margin .60% Growth Industry Exceeds S&P Sales .5yr Net Margin .9 1.6 0.5yr Op Margin .60% 4.5yr Pre-Tax Margin .5yr Net Margin .5 12 6.40 19.50% 44.40% 14.30% 5.20% 9.5 27.2 12.

80% 17.1yr ROA .5yr ROI .P&G and Unilever 37 Financial Industry Exceeds S&P Returns ROA .90% 8.30% 9.60% 13.40% 32.50% 5.qtr Current Ratio .1yr Debt/Equity .qtr Total Debt/Equity .5 139.60% 36.1yr ROI .40% 29.qtr Interest coverage .5yr ROE .1yr ROE .2 16 156 115.50% 26.70% 7.3 0.2 1.70% 33.60% 30.10% 10.50% 12.9 1.9 12.5yr 32.9 138.4 1.7 8.30% 52.40% 11.5yr Liquidity Quick Ratio .70% 80.qtr Solvency LT Debt/Equity .4 105.4 90.9 1 1.30% 41.40% 30.1yr Tax Effective Tax Rate .50% 9.20% 30.6 38.1yr Effective Tax Rate .40% 12.04 180.60% 15.7 163.20% Industry Sector S&P 500 .

586 1.813 2.327 1. 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 1.748 5.407 15.116 1.477 7. .439 PROFITS % change $ % change from 2003 millions from 2003 19 7 7 13 13 13 4 13 13 26 N/A 5 38 56 6.324 3. EPS. Profits (US) 167 Revenues.224 2. 2005 issue of Fortune magazine.P&G and Unilever 38 Appendix J: Household and Personal Products Industry Industry Ranking by Revenues.258 3.462 1.790 4.481 1.. Total return.800 1. Profits Profit as % of.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 15.584 10.401 10..000 revenues rank 26 135 210 215 278 346 445 530 533 593 729 893 929 941 $ millions 51.

A. The Estée Lauder Companies Inc.datamonitor. Inc.datamonitor.com http://www.P&G and Unilever 39 APPENDIX K: Company Ranking By Personal Care Revenues Only (Financial Yr 2005). Shiseido Company. Source: www. Limited Colgate-Palmolive Company Kimberly-Clark Corporation . 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.

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. . Int’l Trade Administration.P&G and Unilever 40 Appendix L: Trend Line.

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. Int’l Trade Administration. Imports. .P&G and Unilever 41 Appendix M: Trend Line.

The leading category in terms of growth was skin care. China’s cosmetics market grew by 12.7%. as industry leaders continued to capitalize on developing international markets. Sales of skin care products in Asia reached about US$17. in 2004. while India’s increased by 7. led by Japan.”168 . with sales in Argentina alone growing by 17% compared to 2003. Russia and China were the fastest growing markets for cosmetics. followed by hair care. Argentina. 2004 “Heading into the mid-2000s.P&G and Unilever 42 Appendix N: Fastest Growing Markets. Brazil.5% in 2004. China and India accounted for US$10 billion in sales in 2004. Together. the cosmetics and toiletries industry was becoming more global than ever before. Indeed.5 billion in 2004.

oral hygiene products. Camay. Signal. Old Spice. America. Hugo Boss. Safeguard. Ivory. Aussie. explain the dimension. Infusium. Suave. Balance between retail customers (top 5 sell $ 1B annually. make-up. Max Factor. and oral care: Axe. Zest. deodorant. affordabilityLifebuoy. Calvin Klein & other designer fragrances Additional Info Industry includes fragrances. 10. personal hygiene products and skincare products. as well as regional differentiations. Covergirl. Sunsilk. and high frequency stores (developing countries). Noxzema. Pantene.income strategy (product lines) for developing markets (affordability).P&G and Unilever 43 Appendix O: Value Chain Analysis. hair. hair care. Dimension Product(s) P & G Beauty (34% of portfolio) includes personal cleansing. Always. ½ International. Pert. Beauty focuses on providing the customer a “beauty experience”. Clairol.e. Rexona. Tampax. Use the findings to write an explanation within the body of your analysis comparing the companies. cosmetics.e. No dependence on single channel or customer. Dove. 2006 Unilever Personal care (26% of portfolio) includes skin. Balanced approach w/ ½ sales from N. clear. P&G and Unilever Value Chain Analysis: Worksheet Key Differences between Major Competitors Industry: Personal Products Industry P&G Date: Feb. Lux. Sunsilk -Europe. Secret. Ponds. Herbal Essence. i. Vaseline. & Giorgio Colognes Lower. DoveN America . feminine protection hair color. hair care. Target Customer Segments Differentiated for different income levels i. colognes. Head & Shoulders. Olay. Activity Market Positioning For each company. perfume. Targeting of Gillette products into China major initiative. and skin care products: Sure. Close Up. PhysQue. antiperspirants or deodorants.

discount stores. hair care in Japan. Products positioned through Market Development Organizations in 80 countries. ponds Malaysia.P&G and Unilever 44 Summary of Product-Market Positioning Strategy to achieve balancing of products. turkey. and high frequency stores (neighborhood stores in developing countries).e. Products sold primarily in grocery stores. Northeast Asia. and brands. Rexona ebony. Western Europe. Indonesia. and Latin America.brazil.169 Products are tailored regionally for customer differences. Latin America. i. customers. Central and Eastern Europe/Middle East/Africa. and further expanded across product lines i. and massage bar in Brazil . Lux is body wash in Europe. leading brands organized in seven geographies: "North America. markets. through mass merchandisers. Greater China and ASEAN/Australasia/India ". membership club stores. Sunsilk for Asia. facilitated by Gillette acquisition.e.

Also. with LeanLogistic's Webnative On-Demand TMS implemented value chain solutions flexible warehousing in NA to reduce inventory and Costs. Localized inbound raw materials supply to decrease costs & increase efficiencies. by survey of US retailers. began compliance labeling mandates for its suppliers to improve efficiencies and reduce costs.P&G and Unilever 45 Primary Activities Inbound Logistics Awarded # 1 in supply chain management 2004. Also. Early in 2000. Unilever logistics organization has been restructuring and consolidating to create uniform regional distribution centers geographically located nearer the customers (within 24 hrs delivery). Have developed transportation leadership team to analyze and improve processes from acquiring raw material through output to customers. . with bar coding and wireless technologies. while delivering on-time. implemented webbased solutions provider (Transplace) to manage inbound transportation. Leaders in inbound logistics.

logistics. and IT to work with trade customers for ways to add value to the consumer. Standardized manufacturing platforms. finance. hired IBM Business Consulting Services. "Trade links" with large retailers such as WalMart and Carrefour. marketing. Additionally P & G developed their customer business development structure. Large scale manufacturing operations located in 42 countries. retailers. which teams sales. In 2005. and transportation carriers.P&G and Unilever 46 Operations Since 1999. and increased product supply services. SAP & customer management software. general accounting and bill-to-cash functions. deploy latest technologies incl. contract manufacturing when available. regional financial shared services. operating in India. Decreased global business services costs over 5 years 15%. have ongoing restructuring programs to minimize costs in production and sales. . Use Value Added Networks for B2B Customers: linking financial institutions. increased sales per employee 40%. to provide purchase-to-pay. Have strong partnerships with large retailers. Large scale distribution operations in over 160 countries. Poland and Portugal. RFID for supporting operations.

sourcing strategies spend history. including partnering for Dove's American Girl with Bath & Body and Mattel Co. P & G also co-developed software for case picking and truck-loading for P & G. Unilever provides wireless applications in the field to gather customer information from sales back to the company. Currently have 22 brands each produce $1B sales annually (10 $1B brands in Beauty & Health). and customer relationship management. Consolidated transport business. Philippines. warehousing.'s. and UK . New branding initiatives for all products implemented. and now sells that software through a joint venture with Moore and Associates. Use IT software for order management. Also implementing webbased B2B solutions for managing transportation information. Additionally.P&G and Unilever 47 Outbound Logistics P & G uses logistics specialists to support its transportation. Awarded # 1 in 2004 for most helpful consumer and shopper information. Canada. including carrier contracts. Have focus on word of mouth programs to impact influential teens (Tremor). China and Mexico. as well as regional marketing campaigns. Global business service organizations l in low cost. advertised on fantasy airline airplanes. Unilever and P & G have strong programs for corporate social responsibility Customer Service Enterprise IT Strategy for positive customer impact and social impact. Awarded # 1 best category management and consumer marketing in survey of US retailers. Superior sales and marketing machine. high quality locations Costa Rica. and picking solutions such as it's expanded contract with Exel to service distribution centers in France. incl. Argentina. United States. Interestingly. Ocean going internationally. and Lynx deodorant. improving efficiencies and decreasing carrier bases 70%. Morocco. Marketing and Sales Strong international growth from mega brands that are marketed globally.

Brazil has approx. 4 Global divisions: P&G Beauty. P&G Family Health.e. . Provide flexible work hours. customer development. and support staff (i. internal clubs. relocation assistance program and other benefits. and other benefits. # of plants. Baby Care & Family Care. and Duracell & Braun. tuition reimbursement program.P&G and Unilever 48 Support Activities Firm Infrastructure 4 Pillars of the firm: Global Business Units. Developed "Community of Learning Academies" for ongoing learning and knowledge sharing throughout key functions. Blades & Razors. further organized into mostly regional business groups w/brand.000 workers. incl. tuition reimbursement. innovation. 754 managers. i. global employment with blend of local and expatriates in management roles. Latin America. 13. and Gillette. and 13 plants) Human Resources Management One Campaign providing Regional HR activities. Unilever has won awards on cultural diversity and leading company to work for. Global Business Services and Corporate Functions working separately and together. managers. HR. IT. The number of U. P&G Household Care. profit-sharing plan. 2 Global divisions: foods & home and personal care. Fabric Care & Home Care.S. Strong recruiting and training program. Managers get global toolkit for diversity training. Diverse leadership teamhalf of the presidents are from outside the US. stock options. Health Care. Snacks & Coffee. comprehensive training at "P&G College". Market Development Organizations. minorities and women at the VP and GM level over the last five years has doubled. PG has strong recruiting and "employee for life" history (golden handcuffs) from strong stock purchase plan. and technical centers-heavy resources deployed. such as finance. in 7 segments: Beauty.e. Additionally. Heavy recruiting at business schools and top universities.

inboundlogistics. 24). March).).datamonitor.zdnet. Leverage Buying Power w/global procurement and services (high economies of scale) and software based supply chain management In 2004.doc Editorial Staff. C. Have 20 technical centers in 4 continents. February 9).inboundlogistics.d.html Harps. Have network of "global research centers" and are beginning to work with external innovation partners to expand R & D capabilities. (2000. Press Release. (2004.ie/pdf/CR1515_Unilever.shtml Harps.html Hallet. (2005). 2006 from http://www.com/articles/features/0302_feature02. Have strong Bto-B programs such as "Connect & Develop" program to find innovation partners-strong effort now for packaging initiatives. To date PG has 29. spend approx $2B on continuing R & D. on select. 2006 from: http://www. Created new product categories w/in last 4 years generating $5B retail sales. Retrieved February 11. Procter & Gamble Taps Exel for Logistics Services Supply & Demand Chain Executive. December.D.html . Retrieved February 11. Making Dollars & Sense Out of Logistics. Berkeley. 2006 from www.asp?article_id=6181 Editorial Staff. Retrieved February 11. Retrieved February 2. 2005 Annual Report. (2006. (2002. Balance and leadership. September). T. August). 2006 from: http://news. 2006 from: http://www.com. Unilver foods. Unilever Aims to Improve Customer Service with On-demand TMS. Retrieved February 11.lowrycomputer. L. Have won the National Medal of Technology for innovative achievement in technology in the US. N. Supply & Demand Chain Executive.sdcexec.net/ccbn/7/1142/1201/ Case study. producing innovations and line extensions of core products.com/article_arch. (2004. L.com/article_arch.com/articles/features/0702_feature05. Retrieved February 11.smh.000-patented technologies. Retrieved February 11. focused global projects. Retrieved February 11.au/news/business/fantasy-airline-gives-unileverdream-run/2006/02/08/1139379573717. Minow.blogs.com Drake. May). 2006 from http://web. 2006 at: http://ccbn.solution for Unilever salesforce. February 11). Procter & Gamble's Tremor Targets Young Girls and Minors for Viral Marketing. July). and speed to market. (2002. P & G has more Ph. Retrieved February 11.'s working in their labs world wide than a combination of faculty from Harvard. and use large network of partners to support R & D efforts. 2006 from: http://newmediasphere.shtml . spent E1040.o2. 2006 from http://www.asp?article_id=6153 Fantasy airline gives Unilever dream run. 2006 from: http://www.com/2100-9589_22-6007859. Retrieved from P & g Website February 1. (2006. October 7). IBM wins 7-year Unilever outsourcing deal.com/news/press/pg_Release. Retrieved February 11. (n.sdcexec. Syndey Morning Herald. (2005. (2005. Transformers.pdf Company Spotlight: Unilver. 120 people from 20 nations-Global purchasing yielded approximately E700M in savings in 2004. and MIT in science and engineering Procurement 15 Global Supply Management teams of approx.mobular. 2006 from: http://www.com/nms/2004/10/procter_gambles.P&G and Unilever 49 Technology/R&D In 2005.

Unilever Brazil: A truly local global company.vault.jhtml .eg/unilever.espace. 2006 from: http://www.com/UniLever.com/en_US/index. Organizing to win in Latin America. Company Homepage.com. V. 2006 at: http://www. (2004). Retrieved February 11. Retrieved February 1. (site retrieved?) Sobredo. careers and hiring information.html Unilever jobs. (n.html Welcome to P & G Solutions.pg. (2006). 2006 from: http://www.) Retrieved February 11. (site retrieved?) 2004 Unilever annual review and summary financial statement (citation) Unilever.com/jobs-company/Unilever_. (2002) Retrieved February 11.d.P&G and Unilever 50 Prianti.htm Unilever and eSpace: a potentially growing relationship. 2006 at: http://www. A.legendarylogistics.

P&G Household Care. not probable. locations in 42 countries Yes Yes Yes. and focus Difficult to AchieveUnilever working on this now.P&G and Unilever 51 Appendix P: Procter & Gamble. Snacks & Coffee. Pampers): 22 brands each produce $1B sales annually (10 $1B brands in Beauty & Health) Yes Yes Possible. Blades & Razors. but volume of innovation very hard to imitate Yes Yes Possible. Fabric Care & Home Care. esp. RBV Analysis Resources & Sources of Competitive Advantage Innovation: brands & categories. noncommoditized brands Possible but difficult esp. Requires with heavy investment. but high replication costs Yes. and Gillette . 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. but market leadership difficult to overtake Possible. not probable. in 7 segments: Beauty. high replication costs Resources & Capabilities Ongoing R & D: 20 technical centers in 4 continents Yes Yes Yes. Tide. in noncommoditized markets Difficult to replace or compete with IP Possible. and Duracell & Braun. high replication costs Possible not probable. Difficult in market leading. Crest. 300 consumer products in 4 areas P&G Beauty. but high entry costs Global Scope Advantage: Large scale sales and distribution operations in over 160 countries Large scale manufacturing operations. but difficult in noncommoditized markets Possible. P&G Family Health. Health Care. but high replication costs Yes Yes . IP. Baby Care & Family Care.e. Patents: 29.000 patented technologies Rare Valuable Core Competencies Yes Inimitable Nonsubstitutable Possible with heavy R & D Yes Possible. Downy.

high replication costs Possible.com Form 10-Q for PROCTER & GAMBLE CO.pgedi. May). high replication costs Possible. February).html P & G North America electronics data interchange. Retrieved February 1. r & d. social impact. not probable. high replication costs Yes Possible.d. not probable. (2004. not probable.matrixone.com/e/060130/pg10-q. The Procter & Gamble Company.html . 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. (n.com/. C. technology Growth in Emerging Markets (but weakness in overexposure in US & Western Europe) Yes Yes Yes Possible. January).com/matrixone/press_releases_20040223_p g. 2006 from: http://www. (2004. high replication costs Yes Yes Yes Yes Yes Value Added Networks for B2B Customers: linking financial institutions.P&G and Unilever 52 Economies of Scale with leveraged Buying Power w/global procurement and services.xhtml Company Profile: Procter and Gamble. Retrieved February 1. (2006. Retrieved February 5. logistics. 2006 from www. February).datamonitor. not probable. Retrieved February 7. Procter & Gamble awarded enterprise value award by CIO Magazine for work with MatrixOne on innovative product lifecycle management application. retailers.) Fact Sheet.yahoo. marketing.hoovers. 2006 from: http://www. Retrieved February 10. America-need to extend reach Enterprise IT Strategy for cost reductions. positive customer impact. transportation carriers EDI (Electronic Data Interchange (only in N. ROI. 2006 from: http://biz. supply chain management w/RFID Economies of Scale with Global operations in finance. (2006.com/procter-&-gamble/--ID__11211--/free-co-factsheet. 2006 from: http://www.

(Need to expand into India and China) Yes Yes Yes Yes Limited Yes but difficult to imitate Yes. but difficult Yes . offering additional supply chain management. relationship management Yes. Chile. Bird's Eye Brand Leadership. Wal-Mart. 35% of sales in developing & emerging countries. but strong brand acceptance NO Yes No Yes Yes Yes . Carrefour Rare Valuable Core Competencies Inimitable Nonsubstitutable No Yes. Peru. 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. but with continued development further differentiate and strengthen core products Limited Yes but difficult. JV's for strong positioning-ie Pepsi. but requires strong IP. Difficult to reproduce Resources & Capabilities Yes Ongoing R & D: high spending and ongoing brand extensions Yes Yes . but difficult Yes . incl. and high spending Yes. but requires resources. Magnum Hellman's. i.P&G and Unilever 53 Appendix Q: Unilever. Large scale manufacturing operations. esp. but strong brand acceptance Yes.e. but difficult Yes Yes Yes Yes Yes. Knorr. Mexico. (Dove) Strong relationship with Retailers. but difficult Yes Global Scope Advantage: Large scale sales and distribution operations. complementary distribution network "Path to Growth" Strategy to focus on core products and R & D for development of them Yes Yes . RBV Analysis Resources & Sources of Competitive Advantage Innovation: Strong Brand Recognition and Trust: 12 Brands with E1Billion. Dove. requires heavy resources .

Difficult to reproduce Emerging Emerging Limited No No No No Limited Difficult Yes but costly and difficult to implement Limited Difficult Introduction to Unilever.current weakness & focus for improvement Adapted from Lucas (2002) Yes/emerging Yes/emerging Yes but difficult to imitate Yes.Vast resources with leveraged Buying Power and supply chain management for reduces costs However. RFID technologies-weakess. 2006 from: http://www. just developing Growth through Acquisition weakness-need to look to this avenue ongoing Go to Market Expertise Capabilities. but brand sell offs & corporate reorganizing improving this.com/Images/Introduction%20to%20Unilever_tcm13-15184. (2005. organizational structure & differentiated product lines had been weakness. June). Retrieved February 2.unilever.datamonitor. Retrieved February 2.P&G and Unilever 54 Economies of Scale. May).com . (2004. 2006 from: ww.pdf Unilever Company Profile.

0 – 1.803.P&G and Unilever 55 Appendix R: P&G Financial Analysis P&G Financial Statements ANNUAL BALANCE SHEET In Millions of U.623.554.0 57.0 – 1.0) 14.0 19.792.554.0 212.0 – 12.0 4.0 3.358. Dollars (except for per share items) As of 6/30/2005 As of 6/30/2004 Reclass.220.038.487.0 20.0 7.265.0 1.330.347.894.0 Long Term Debt Capital Lease Obligations Total Long Term Debt 12.384.617.846.792.831.0 2. Total .0 1.932.0 8.925.912.0 196.660.0 9.0 15.726.0) 13.0 3.475.0 3.0 40.166.0 – 2.387.776.0 – 11.0 11.070.0 2.0 8.703.077.0 12.993.0 (9. Net Long Term Investments Other Long Term Assets.659.531.062.0 4.0 12.0 6.039.0 3.0 – 1.185.0 (9.S.0 – 894.821.306.0 10.0) 13.924.331.147.0 7.721.0 11.375. Net Total Inventory Prepaid Expenses Other Current Assets. Total Property/Plant/Equipment.0 17.0 3.0 2.115.0 6.0 As of 6/30/2002 As of 6/30/2001 Cash & Equivalents Short Term Investments Cash and Short Term Investments Accounts Receivable Trade.689.025.075.0 Total Debt 24.062.0 10.441.0) 14.0 43.704.816.0 34.647.0 12.090.931. of LT Debt/Capital Leases Other Current liabilities.0 4.048.456.0 (11.0 – 907.Net Goodwill.328.0 9.396.0 – 9.0 61.196.205.0 (11.0 – 1.0 2.966.0 4.542.0 1.0 5.0 22.0 2.133.0 4.0 23.892.0 3.201.0 1.731.640.287.476.0 (10.0 14.438.233.0 3.0 – 2.172.0 25.212.0 12.0 4.0 958.0 Accounts Payable Accrued Expenses Notes Payable/Short Term Debt Current Port. Total Total Current Liabilities 3.0 2.0 300.0 3.329. Total Total Assets 26.464.095.038.290.0 2.0 22.0 2.0 – 2.006.0 4.0 1.0 5.887.090. Total .0 11.889.438.0 843.427.0 1.0 25.0 3.0 Property/Plant/Equipment.0 3.400.0 2.0 – 12.875.0 – 1.0 397.0 – 11.0 – .0 1.0 19.0) 13.185.931.0 4.0 1.0 – 2.610.0 2.332.841.0 20.475.879.527.081.261.0 – 1.0 2.0 13.0 – 1.0 – 2. Net Total Receivables.304.104.0 3.349.103.108. Total Total Current Assets 6.631. Net Intangibles.0 5.325.887.706.795.Gross Accumulated Depreciation.0 23.518.0 11.0 12.0 4.201.0 5.389.554. 6/30/2004 5.512.0 521.744.0 Deferred Income Tax Minority Interest 2. 6/30/2005 As of 6/30/2003 Reclass.232.969.802.0 1.132.

0 27.0) 13.0) (561.0 1. Net Non-Operating Interest Income(Exp).0 – (1.090.S.591.0 33.0 1.0 – 51.608.000 1.560.543. Expenses.0 – – 1.853.426.688.0 6/30/2003 43.0 – 2.54 2.230.543.0) – (629. Total Preferred Stock . Total Gross Profit 27.0 21.526.770.0 20.0 40.90 2.259.0 10.057.0) – (603.169.0 13.0 28.545.0 20.050.0 69.0 6/30/2001 39.504.0 – – 755.0) – (561.0 16.473.244.0 10.0 1.0) (2.0 6.634.90 2.776.0 Shares Outs .0 11.613.827.0 21.0 2.701.377.0 6/30/2004 51.520.000 106.706.634.706.0) 16.238.962.0 2.Non Redeemable.544.0) 12.845.0) (2.004.601.736.591.0 4.0) (794.0 2.0) (1.Common ESOP Debt Guarantee Other Equity.0 1.0 26.0 – – – – 41.0 1.0 – – – – 45.375.741.0 22.0 1.0 9.524.0 34.0 43.048.308.000 1.000 1.0 – 2.0 1.000 110.0 – (1.40 2. Net Non-Operating Gain (Loss) on Sale of Assets (834.527.980.278.0) 17.0 1.723.204.0 – (1.611.234. Dollars (except for per share items) Revenue Other Revenue.804.580.0 57.360.000 98.373.0 – (1.Common Stock Primary Issue Total Common Shares Outstanding 2.0 25.0 – 1.000 1.508.0 Cost of Revenue.0) (834.0 Interest Expense.760.344. Total Total Liabilities 3.0 – (1.601.40 2.451.301.0 1.0) – (794.Net Operating Unusual Expense (Income) Total Operating Expense 18.282.407.377.0 40.0 44. Total Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Treasury Stock .451.0 11.594.088.741.0 13.0 Selling/General/Admin.594.076.331.814.678.927.407.0 4.808.0 34.692.0) – .000 ANNUAL INCOME STATEMENT In Millions of U.000 1.472.0 10.483.000 106.769.80 2.0) (2.291.142.580.070.54 2.010.0 43.P&G and Unilever 56 Other Liabilities.937. Total Total Revenue 12 Months 12 Months 12 Months 12 Months 12 Months Ending Ending Ending Ending Ending 6/30/2005 56.0 – – 1.0 – 56.027.0 6/30/2002 40.80 2.425.0 – 39.283.0) (603.244.594.0 7.296.0 Operating Income 10.0 18.0 35.0 2.339.0 19.186.48 2.120.0 39.601.0) 17.0) (1.054.0 3.48 Employees Number of Common Shareholders 110.0 13. Total Total Equity 1. Net Common Stock.472.0 – 2.0 27.006.665.0 – 1.490.481.387.0 Redeemable Preferred Stock.0 Total Liabilities & Shareholders' Equity 61.566. Total Research & Development Depreciation/Amortization Interest Expense(Income) .0) (629.010.0 2.0 2.477.

557.0 6.257.186.352.847 1.922.0 4.200 398.0 308.10 2.034 1.0) 7. Net Net Income Before Taxes 346.0 – – – 4.012.80 1.0 2. 334.228.925 Interest Expense.0 – – 2.0 7.0 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.031.0 1.0 603.0 2.352.461 2.121.603.061.P&G and Unilever 57 Other.801.10 2.0 6.802.439.285.0 2.831 2.003.693.061.891.321 116.034 DPS .0 6.593.629 1.439. Exp.0 0.831 2.831 2.496 1.340 2.0 1.0 2.922. Basic Normalized EPS Diluted Normalized EPS – 10.60 1.545 106.0 2.481.350.800 1.321 2.0 2.321 755.0 2. Items – – 7.726.0 6.350.594.0 – – – 5.383.820 1.0 1.0 5.041 1.700 1.121.0 2.928 1.0 1.0 4. Basic EPS after Stock Based Comp.077 1.410.910.0 – 3.0 7.694.3 4.283.788.0 5.0 4.0 Pro Forma Stock Compensation Expense Net Income after Stock Based Comp.0 561.811.703.0 5.Common Stock Primary Issue Gross Dividends .0 – – – 2.0 Accounting Change Discontinued Operations Extraordinary Item Net Income – – – 7.385 310. Diluted EPS after Stock Based Comp.0 (124.952 2.530.257.0 (125.0 2.339.20 1.0 – – 6.408.530 325.662 2.60 2.271.0 5.0 6.186.156.0 1.352.0 5.60 1.922.0) 2.0) 5.0 2.461 2.461 2.580.700 2.0 2.3 2.662 – 9.0 (131. Exp.930 2.662 127.515.0 2.760 1.460 1.869.422 .0 2.257.030 2.0 632.7 3.121.0 213.0 1.20 2.0 6.0 Basic Weighted Average Shares Basic EPS Excluding Extraordinary Items Basic EPS Including Extraordinary Items 2.0 0.0 7.481.182. Avail to Com.733.186.0 Preferred Dividends Income Available to Com Excl ExtraOrd (136.809.923.027.790.0 152.0 7.Common Stock 1.350.0 – 2.545 1. Exp.869.952 1.0 238.0 2.884.0 Provision for Income Taxes Net Income After Taxes 3.0 0.0 6.0 1.0 2.0 3.80 1.0 (121.0 4.0 1.481.228.0 8.0 2.0 10.0 0.350.847 112.257.0 7.077 Dilution Adjustment Diluted Weighted Average Shares Diluted EPS Excluding ExtraOrd Items Diluted EPS Including ExtraOrd Items 135. Supplemental Depreciation.0 794.0 – – 5.481.0 6.350.0 674.0) 6.20 1.182.326.960 0.121.0 – – 4.0 Income Available to Com Incl ExtraOrd 7.0 Minority Interest Equity In Affiliates Net Income Before Extra. Supplemental 834.0 2.0 629.629 2.0 9.0) 4.728.0 5.595.612.7 1.801.161 2.0 0.820 2.822.616.0 – – – 6.600.723.344.705 442.971.0 2.0 2.127.0 252.

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
Restated 6/30/2005

6/30/2003
Restated 6/30/2005
5,186.0 1,703.0 63.0 – 1,748.0 8,700.0

6/30/2002

6/30/2001

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

(61.0) 2,157.0

(46.0) (1,196.0)

387.0 2,629.0

17.0 1,121.0

(56.0) 891.0

Cash Interest Paid Cash Taxes Paid

783.0 2,644.0

630.0 1,634.0

538.0 1,703.0

629.0 941.0

735.0 1,701.0

2005 Net Income Sales Assets Equity
7,257.0 56,741.0 61,527.0 17,477.0

2004

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

2001
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.

525.835.934.838.032.167.2 2.046.388.477.8 4.159.4 528.5 1.8 (10.271.509.7 8. Net Total Inventory Prepaid Expenses Other Current Assets.8 Total Debt 14.4 (9.7 (8.626.9 657.9 – 10.5 3.9 7.6 566.4 1.Net Goodwill.1 8.8) 8.651.7 – 8.810.9 – 6.5 – 69.3 30.065.9 1.120.535.8 4.458.553.149.8 – 15.4 – 13.0 34.679.060.1 17.400.8 23.3 3.088. Net Intangibles.196.8 393.213.499.761.2 1.S. Total Total Current Liabilities 4.6 18.9 Restated 12/31/2002 2.2 3.938.Other 2. Net Receivables .1 1.5 526.7 1.282.081.219.4 896.2 4. Total Total Current Assets Property/Plant/Equipment.413.135.123.7 (11.394.0 3.947.6 .313.107.6 4.5 597.0 30.6 4.463.7 5.224.1 6.7 792.6 13.448.1 741.3 23.858.801.236.0 796.358.0 450.3 5. Total Total Assets 16.8 23.092.9 – 17.9 10.010.904.2 661.3 16.855.1 6.5 1.333.434.5 21.080.8 Cash and Short Term Investments 3.1 1.4 – 40.1 17.690. of LT Debt/Capital Leases Other Current liabilities.7 5.3 1.849.2 4. Net Long Term Investments Other Long Term Assets.791.779.770.6 5.489.Gross Accumulated Depreciation.411.475.8 16.4 4.P&G and Unilever 61 Appendix S: Unilever Financial Analysis Unilever Financial Statements ANNUAL BALANCE SHEET In Millions of U.6 3.5 13.8 – 63.631.712.8 5. Total .491.484.6 1.308.212.1 – 13.2 687.4 16.4 16.0 742.6 19.9 6.4 24.159.726.271.807.5 5.505.6 3.2 35.6 – 10.2 27.7 6.4 814.565.596.214.8 – 50.484.9 – 8.8 2.845.170.7 4.8 Accounts Payable Accrued Expenses Notes Payable/Short Term Debt Current Port.065.014.508.2 20.6 Deferred Income Tax Minority Interest 613.471.6 14. Total .4) 11. 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 1.538.4 238.8 2.0 5.8 1.4 3.631.6 (8.2 434.062.0 3.8 4.3 3.057.250.545.4 Total Receivables.0 1.010.6 3.9 15.9 – 20.453.679.8) 11.7 Accounts Receivable Trade. Total Property/Plant/Equipment.4 22.3 4.0 5.209.5 6.5 18.923.579.563.120.4 6.351.8 – 45.2 242.724.382.321.935.927.696.3 21.419.6 1.3) 7.013.6 3.2 764.234.2 Long Term Debt Capital Lease Obligations Total Long Term Debt 8.601.921.1) 7.466.038.003.986.789.063.3 4.

S.58 571.5 3.3 Selling/General/Admin. Total Research & Development Depreciation/Amortization Interest Expense(Income) .7 – – – – 51.233. Total Total Revenue 48.515.391.5 4.6 – 51.321.0 1.3) 6.266.58 571.385.926.122.641.3) 5.222. Dollar ADR Information 1 Share(s) Per ADR ANNUAL INCOME STATEMENT In Millions of U.196.8 – 2.9 6.676.9 59. 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 61.062.686.000 258.4 3.926.2 8.Common Other Equity.803.431.3 45.122.4 25.936.Non Redeemable.6 Redeemable Preferred Stock.368.100.Net Operating Unusual Expense (Income) Total Operating Expense 20.0 1.6 5.1 – – 504.929.563. Total Gross Profit 24.119. Net Common Stock.0 1.917.008.58 571.2 – – – – 44.4 26.5 – – – – 55.58 571.291.4 50.7 23.010.138.9 – – 504.104.831.8 Shares Outs .242.459.8 23.000 265.7 Revenue Other Revenue.6 – (1.3 29.206.838.9 – (1.5 38.834.000 240.1 6.6 57.3 34.0 1.S.483.676.014.00 Employees 227.7 – – – – 53.4 – (1.3 Cost of Revenue.4 19.7 – 57.138.962. Total Preferred Stock .676.6 – – 504.58 571.111.4 – – – – 44.0 29. Total Total Equity – – 504.6 6.5 6.5 54.6 45.P&G and Unilever 62 Other Liabilities.3 57.653.58 571.000 Currency Exchange Rate (most recent) 0.093.6 .945.379.204.2 28.9 9.819.8 6.3 – 61.58 1.5 6.304.233.676.4 6.3 – 57. Total Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Treasury Stock .097.2 24.651.000 295.Common Stock Primary Issue Total Common Shares Outstanding 571.833 Euro / U.871.4 32.7 51.7 – 48.066.5 – 2.3 – – 504.170.8 63.1 Operating Income 4.7 69.819.6 25.8) 7.0 30.00 1. Total Total Liabilities 7.579.524.2 Total Liabilities & Shareholders' Equity 40.057.676.190.58 571.204. Expenses.883.5 5.642.9 8.525.0 1.100.8 22.935.802.367.860.

5) – 129.8 (650.503.5 2.8 (1.6 (32.932 DPS . Net Non-Operating Interest/Invest Income .2) – – 636.592 0.560 982.0 1.424 0.177.014.4 4. Items (928.7 – .7 1.625.8 – – 4.012.010.41 2.4) 1.8 460.749.209.877.254.7) (1.242.6 4.0 2.3) (2.6 (1.0 (61.70 3.7 Interest Expense.223.125.625.604.6 Basic Weighted Average Shares Basic EPS Excluding Extraordinary Items Basic EPS Including Extraordinary Items 963.0 (52.7 Provision for Income Taxes Net Income After Taxes 938.7 0.802 4. Supplemental 921.1 3.407.5 2.7 1.862.7 1.80 0.592.00 0.1 (32.407.4) – (44.6) 643.5 1.8 526.832.296.4 (613.4 – – 4.683.600 0.018.8 (934.3 0.0 1.822.14 3.9 1.8) – 972.55 2. GAAP Adjustment Net Income Before Extra.956 0.572 968.447 2.0) – 188.NonOperating Interest Income(Exp).836.708 3.9 472. Net Non-Operating Gain (Loss) on Sale of Assets Other.386.1 2.478.8) – 1.0 1.937.4) 3.9 2.445.8 1.863.990.569 – 1.2) – (73.91 3.5 3.4 (1.613.576 0.1 1.6) (1.1 3. Supplemental Interest Capitalized.8 (7.9 – – 5.2 (774.5 3.822.4 2.1 2.918 4.0 1.863.195.Common Stock 2.584.302.8 – – 3.4) 3.468.2 1.511.956 Dilution Adjustment Diluted Weighted Average Shares Diluted EPS Excluding ExtraOrd Items Diluted EPS Including ExtraOrd Items 0.4) 3.1) – (273.6 Income Available to Com Incl ExtraOrd 2.8 – – 4.511.447 0.28 0.8) – (199.716 1.2) 3.749.267.8) 945.9 (73.827.926.2) 1.088 2.7 0.268 2.267.3 (922.125. Supplemental Depreciation.22 0.078.6 – 1.585 989.7 (1.7) (1.274. Net Net Income Before Taxes (921.9 Total Special Items Normalized Income Before Taxes Effect of Special Items on Income Taxes – 3.592.4 Preferred Dividends Income Available to Com Excl ExtraOrd (33.600 3.406.0 – – 2.860.4 574.3 626.735.1) – 50.932 0.0 – – 3.406.0 1.8 363.006.040 1.0 – – – 998.178.4 998.P&G and Unilever 63 Interest Expense.0) – 1.4 Accounting Change Discontinued Operations Extraordinary Item Net Income 0.2) 582.S.708 976.2) 308.2) 5.453.872 1.9 (50.3 1.1 Minority Interest Equity In Affiliates U.572 2.60 3.9 1.735.478.445.6) 2.Common Stock Primary Issue Gross Dividends .0 998.9 4.8 945.

3) (32.090.9) (2.5) (1.7) (8.491.3) 10.683.159.048.572 2.176.040.344.6) (6. Dollar ADR Information 1 Share(s) Per ADR .210.822.8 (3. Net Issuance (Retirement) of Debt.9) (6.S.203.1 27.833 Euro / U.4) – (1.S.5 – 136.708 3.833 Euro / U.5) (7.5) (879.7 – (410.2 2.827.704.1 – (860. Total Cash from Investing Activities (1.707.3) (21.918 3.9 (1.0) 2.023.6) (3.097.600 1.2 (684. Basic Normalized EPS Diluted Normalized EPS 938.687.4 3.015.008.549.848.0) (2.2) Financing Cash Flow Items Total Cash Dividends Paid Issuance (Retirement) of Stock.4) (3.S.2) 766.447 1.414.8 (1.761.576 1.6 Net Income/Starting Line Depreciation/Depletion Deferred Taxes Non-Cash Items Changes in Working Capital Cash from Operating Activities 4.0 – (226.302.098.4) (2.3) 4.449.844.1 1.9) (7.180.9 2.2) – (525.933.336.956 0.430.642.432. Net Cash from Financing Activities (972.9 Currency Exchange Rate (most recent) 0.932 Currency Exchange Rate (most recent) 0.935.937. 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 5.7 1.5 2.963.5 2.760.579.575.249.7) 1.445.9 582.1) 6.3 3.478.9 1.0) 6.468.843.8 (1.8) Cash Interest Paid Cash Taxes Paid – 1.6) – 144.4 2.575.1 2.5) (9.6) (1.6) (1.050. Avail to Com.633.6 3.9 2.386.0 3.926.592 0.336.505.864.1) (1.9 – 667.613.3) 6.0 0.9) (2.6 0.4 3.653.9 3.592.6 2.542.584.7 1.P&G and Unilever 64 Inc Tax Ex Impact of Sp Items Normalized Income After Taxes Normalized Inc.3 6.124.802 1.5 58.0) 302.7 Foreign Exchange Effects Net Change in Cash – (806.4) (2.379.5 (1.4 (873.5 3.1 Capital Expenditures Other Investing Cash Flow Items.122.9) (34.7 3.080. Dollar ADR Information 1 Share(s) Per ADR ANNUAL CASH FLOW STATEMENT (Indirect Method) In Millions of U.4) (1.488.646.1 6.9) 7.093.1 2.490.7) (3.5 2.832.2 (1.496.5 2.1 3.1 945.1) 6.634.2 2.0) (8.7 1.8 (482.9 – 427.962.6) 27.

7 57.98 1.3 63. and their quick ratio is . debt loads have been significantly reduced along with inventories and accounts receivable. and in the most recent year. Although their debt loads have been significantly reduced.14 1. which has improved the company's financial leverage and improved asset turnover.937.6 2.7 40.6 45.41 6.321. Unilever's financial performance leaves much room for improvement.468.04 0.40 1.563. On Invest.3 50.20 1.12 Rtn.20 0.80 0. Over the last three years.82.6 6.04 0. Net profit and return on investment margins have remained in the single digits for the last several years. Rtn.02 0.60 0.838.00 2000 2001 2002 2003 2004 Net Profit Margin Asset Turnover Rtn.9 2000 1.5 48.3 51.391.27 0.926.1 9.reuters.com/IS/aspx.investor.104. return on equity has also dropped off.37 2000 2001 2002 2003 2004 Unilever Dupont Analysis 1. Perhaps most significant is the fact that Unilever's sales have been on a decreasing trend for the last five years.52 0.819.4 7.651. 2006 from http://www.642.584.2 Unilever Dupont Analysis Net Profit Margin 0.08 0.03 0. On Invest.19 Rtn.06 0. swelled to more than 40%.16 0.01 6. their current ratio is .204.07 0.00 0.233.83 0.641. Because Unilever has its ownership spread across several different countries.1 57.3 2. For the most recent year.12 1.51 0.302.803. their liquidity is still below industry averages.55 9. Unilever's SG&A expenses have run unusually high at around 37%.1 Unilever Financial Data 2003 2002 2001 3.06 7.7 69.616. On Equity 0.8 5.05 0. . its financial results can be greatly impacted by fluctuations in foreign exchange rates. On Equity Financial data obtained from Reuters on February 4.100.7 8.57.9 61.05 Asset Turnover 0. To Unilever's credit. 0.40 0.P&G and Unilever 65 2004 Net Income Sales Assets Equity 2.06 Financial Leverage 7.170.

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 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.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. .

P&G GmbH moved into Germany and established a manufacturing facility. P & G acquired a company for manufacturing and selling P&G products in Japan.174 In the 1970's.175 From the late 1980's until currently. P & G acquired their first Far East operations. developing a manufacturing facility for soap and Crisco. serving Common Market subsidiaries.. The Unilever history is presented in a table. . P & G made several more acquisitions in the 1980's. P & G modified their geographic structure for better strategic integration and coordination globally. which leads country business teams in building brands in local markets. in the 1960's. engineering. Latin America. and distribution.177 Clairol. This accomplishment is an example of their true Global Mindset and orientation to maximizing global strengths. Asia. in Canada. as the Board of Directors knows this information. and opened their European Technical Center in Brussels. and in 1954.180 They continue to benefit from ongoing learning. and subsidiary management. P & G introduced Liquid Tide. To further propel their global expansion for increased opportunity. and by 1930. and developed the Market Development Organization.181 * This history is in an expanded presentation format to provide an insightful overview of their growth. moved into Eastern Europe through acquisitions and new business development. Ltd. highlighting their global development capabilities. and Gillette. creating four regions. purchasing. and by 1984. P & G created an Overseas Division to manage the Company's growing international business.178 To better serve the global marketplace.173 Continuing to identify key markets. began Middle East business in Saudi Arabia. manufacturing. especially their pharmaceutical line. in 1948. moved into Mexico with a subsidiary in Latin America. purchasing Thomas Hedley & Sons Co. well coordinated product supply system. P & G created its first subsidiary overseas. and packaging in the United States. and their completed acquisition of the remaining 20% of its China venture from its partner. to create an effective. P & G began movement outside the United States. and Europe/ Middle East/Africa. P&G has formed a manufacturing JV in China and Viet Nam.171 Understanding the importance of foreign marketplace knowledge. moved into continental Europe leasing of a plant in France. North America. giving P & G full ownership.. and reorganized to category management while integrating.176 and secured additional acquisitions such as Max Factor. such as their launch of Olay in Spain. with components developed in Japan and Europe.P&G and Unilever 68 APPENDIX V: History of Global Expansion P & G As early as 1915. following a roll out in store counters in Asia with lessons shared.172.179 created alliances for co-marketing. in England. people management.170 In 1935. Betrix.

increasing shareholder interest in UK businesses and gaining UK rights to deep-freezing methods (through acquisition of Birds Eye and other companies).S. Lever Brothers buys first company in West Africa. France. starting in Italy.S. Belgium and Czechoslovakia. New mass market for consumer goods in Brazil Unilever is officially established During war years. Unilever continues to expand in the food market. Centra and Schicht. Australia and the U. plus Canada. Unilever acquires Frigo ice cream in Spain. New mass market for consumer goods in Argentina Jurgens and Van den Bergh team up with two European businesses. and enterprises in the Pacific. The union gains new members. begins its launch in Europe. United Africa Company (Unilever subsidiary) becomes UAC International . Unilever is broken up. Margarine Unie acquires the French-Dutch Calvé-Delft group with factories in the Netherlands. Dove soap relaunched in Europe. Jurgens and Van den Bergh acquire additional small businesses in the Netherlands. they operate seven margarine factories in Germany.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.S. Manufacturing and packaging initiatives launched in Europe Good Humor ice cream acquired in U. the first packaged and branded ice cream cone. with businesses in German and Japanese-occupied territory cut off from London and Rotterdam.S. Cif (everyday cleaner) launched in France. post-war New mass market for consumer goods in Caribbean Sunsilk shampoo available in 18 countries worldwide Dove soap launched in the U. Unilever’s tea business becomes one of the largest in the world. Both Lever Brothers and Jurgens and Van den Bergh had established palm planting operations – Lever Brothers in the Solomon Islands. Cornetto. Unilever employs nearly 177. Unilever regains control of its international network. Unilever acquires National Starch in the 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 . Jurgens and Van den Bergh own margarine factories in Scotland. Jurgens and Van den Bergh in German Africa. Jurgens and Van den Bergh merge to create Margarine Unie . creating a large group of European businesses involved in the production of almost all goods created from oils and fats. New mass market for consumer goods in Chile New mass market for consumer goods in Central America. New mass market for consumer goods in Mexico.having expanded since its inception in the 1920s to trade in 43 countries. across the nine members of the EEC. United Africa Company yields large profits in Nigeria Unilever acquires Lipton Teas. Ireland and England.000 people in 200 offices and factories. By now.the Margarine Union.

Acquired controlling interest in leading Ecuadorian detergents. Ben & Jerry’s ice cream and Slim Fast foods acquired in U. Grupo Cressida. Acquired Honduras-based soaps. Organics shampoo first launched in Thailand.asp.unilever. Unilever Health Institute opens regional centres in Bangkok and Accra. Annapurna iodized salt launched in India. Retrieved February 14.unilever. from Unilever web site: http://www. foods and beverages company.com/ourcompany/aboutunilever/history/default. and a controlling interest in the Varela HPC business in Colombia. Hindustan Lever and Brooke Bond Lipton India merge to create India’s largest private sector company. Kibon ice cream acquired in Brazil. 2006. . Unilever enters the Czech Republic and Hungary. By this time. 2006.com/ourcompany/aboutunilever/history/default. Acquired HPC business Sociedad Industrial Dominicana. Corporacion Jaboneria. Retrieved February 14. Breyers ice cream (my favorite) acquired in the U..P&G and Unilever 70 1989 1990s 1992 1993 1994 1996 Magnum ice cream launched in Germany. Amora-Maille culinary business acquired in France. personal products and food company. Unilever has cut the number of its brands from 1600 at the end of the 20th Century. Organising to win in Latin America. Ghana. 1997 1999 2000s 2000 2001 2002 Our history. Unilever disposes of United Africa Company. to 900. from Unilever web site: http://www. and establishes UniRus in Russia.S.S.asp. in the Dominican Republic.

P&G and Unilever 71 Appendix X: Dynamic Resource-based Model of Competitive Advantage183 .

which are widely read by British teens.”184 .P&G and Unilever 72 Appendix Y: Unilever’s Early Use of the Internet. a British site that plans to target teenage girls. and Wowgo.com. 2000 “Mindful that women buy most of the food and consumer products in a household.com. It is advertising its Lynx male body spray on the on-line sites of the so-called lad magazines like FHM. and American Web site aimed at women. the company has taken equity stakes in iVillage.

187 . which significantly reduced their data inconsistencies and improved new item speed to market by aligning product information with their trading partners.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. “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.” says Nigel Bagley.”186 Among the actual business benefits of GDS cited in this article was Unilever Colombia.

‘Unilever is committed to the GCI Global Data Synchronization vision. …” “Tom Barnhart. Unilever Complete Global Data Synchronization Project Safeway.’”188 . and we view this project as an important step towards the realization of that vision. “The companies said the significance of this project has international reach.P&G and Unilever 74 Appendix AA: Safeway. said his company is pleased to have collaborated with Safeway in achieving the industry milestone. …” “Through the successful completion of this project. 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. Inc. critical product information exchange between manufacturers and retailers can be achieved in a scalable and rapid manner. announced on July 1. Safeway and Unilever have demonstrated that by adopting industry standards. director E-Business Unilever North America. 2004 the results of a successful global data synchronization initiative with Unilever.

400 users in Brazil. River Plate and Mexico. Unilever has agreed to a global licensing of this technology. the Unilever standard data warehouse is available in nine countries with twelve countries using the regional e-Commerce hub. An Asian trade funds management system has been implemented in two units (remainder to follow in that region in 2005/2006). Information Management component has won external recognition for excellence. to cover 60% of the Latin American business. Sales force automation technology – continues to be deployed across the business. linked to broader data synchronization efforts to improve quality and speed of information sharing between Unilever and its customers. Common entry and navigation software technology. will continue to deploy to establish one environment for information and access within Unilever. Chile. which was deployed to over 110 sites and 9. Enabled a reduction of over 50 traditional intranet sites in Europe. Asia Siebel – automation technology RFID Unilever Portal .000 users in Europe and 6. Greater Andina. Pilot programs in North America with Wal-Mart (Unilever is one of their lead suppliers). process and system harmonization and simplification program. deployed to over 40.000 users in North America. A demand and supply network planning tool has been implemented in eleven countries. sharing learning and best practices across regions. Good progress in Asia and Latin America using low-cost hand held devices.P&G and Unilever 75 Appendix BB: Unilever Initiatives in Information Technology189 INITIATIVE Latin America – “Orchestra” DETAILS Advances made in 2004 in this information.

Downy. Didronel. methyl esters. Naturella. Crest. Sure. fine fragrances. Bonux. Nice n Easy. such as the Swiffer Duster and Mr. hair colorants. scientific research in the areas of health. Swiffer. Camay. gain. Koleston. Joy. Eukanuba. Aussie. Vidal Sassoon. Snacks. Commercial Products group. Noxzema. Kandoo. Scope. Dodot. Viakal. Cheer. skin care. Daz. Vicks. PUR. Bold. Always. feminine care. Infasil. Rejoice. Shockwaves. professional hair care. Folgers. Herbal Essences. Secret. tertiary amines. Lacoste. Max Factor.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. Tampax. Millstone. Hugo Boss. Dawn. Wellaflex. Proper. fatty acids. and nutrition P&G Family Health Baby care. Metamucil. Laura Biagiotti. Prilosec OTC. personal cleansing. SK-11. Pringles. and using leading health care technologies in the development of effective products -.. Dash. Charmin. Iams. family care. Head & Shoulders. Alomatik fatty alcohols. The company's Go. personal health care. also known as the Newcastle Technical Center (UK) . hair care. Fixodent. Wella. Kukident. Bounty. 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. Ariel. Tempo. Mr Clean. deodorant. Linidor. oral care. Whisper. P&G Chemicals manufacture and marketing of oleochemicals identifying. Salvo. ThermaCare. Dreft. Ausonia. Infusium 23. Evax. Ace. Natural Instincts. pet health & nutrition. Luvs. Era. SEFOSEtm and OLEAN®. Asacol. BlendaMed. pharmaceuticals P&G Household Care Coffee. Safeguard. Home care. Olay. Cascade. Myth. Flash. Fabric care. Product Pantene. Lenor. Febreeze. Puffs. Therefore. Actonel. Bounce. this list is grouped by product line. Segment/ Company P&G Beauty Product line/purpose Cosmetics. Zest. Fairy. hygiene. CoverGirl. Vizir.200 scientists and collaboration with external partners By Country makes and markets fabric and household care products. Lines Feminine care. Ivory. in addition the list contains some European/UK facilities. Old Spice. Pampers. Tide. developing. glycerine. Pepto-Bismol.

Procter & Gamble acquired Wella in 2004. including their tubs and refills. Its first Graham Webb Academy opened in London in 1981. Graham Webb International. and organic coffees skin care products (Sensor. and shipping department The Iams Company Millstone Coffee Olay Company. irrigation products. toothpaste. pharmaceuticals and over-thecounter medicines (Prilosec). and the premium-priced Mach3. Finland. the firm is also a leading battery (Duracell) manufacturer & makes Braun electric shavers Iams also funds research efforts related to animal dermatology. fragrances. Wella AG bought Graham Webb in 2001. deodorants. a subsidiary of P&G The Folgers Coffee Company Global Gillette Pampers and LUVS branded baby wipes.P&G and Unilever 77 Procter & Gamble Technical Centres Limited. Regenerist. Norway. and cosmetics worldwide and sells them through licensed beauty salons. Eukanuba and Iams premium dog and cat foods (dry and canned) roasted coffees. Total Effects. 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. The company now has academies in the US. skin care items and cosmetics. and mouth rinse . Coffee and related. a warehouse. 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 distributors. Paper machines to manufacture sanitary wet paper products. Webb makes hair care. M3Power. which is now woven into Wella AG. and Fusion). Also known as Rusham Park Technical Centre (RPTC). and respiratory medicines makes and markets personal care products. floss. converting and packing operations. The world's #1 maker of shaving supplies Hair care education. as well as flavored. Inc. Ohm by Olay. regional arm of parent firm development of its hair care products. A subsidiary of consumer products giant Procter & Gamble (P&G). Trac II. body care. decaffeinated. raw material storage. The Dover Wipes Company. Graham Webb founded the international hair care company. and Sweden. and OlayQuench. power and manual toothbrushes. oral care products. cosmetologists. Inc brings many of the parent company's top brands to consumers in Denmark. OlayComplete. allergies. geriatrics.

Central and Eastern Europe/Middle East/Africa. Inc. conditioner. cosmetics. Table Sources: Hoovers. shampoo. Guiding Light North America.P&G and Unilever 78 P&G-Clairol. it sells professional and retail haircare products. and fragrances As the World turns. and hair styling items Wella AG Wella UK Soap operas Market Development Organization world's leading haircare firms. Latin America. Western Europe. Marketing. Hydrience. Greater China and ASEAN/Australasia/India 130 brands include Herbal Essences. Natural Instincts.com . hair spray.com and pg. and Balsam Color. brand building. Ultress. part of the company's P&G Beauty division and makes hair coloring products. Northeast Asia. 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. P&G owns more than 95% of Wella shares. Nice 'n Easy. Loving Care.

Hindustan Lever Limited [Unilever] Lancaster Cosmetics International PT Unilever Indonesia Tbk Owensboro.A. IL.000 1. United States Hammond. NY. Venezuela Unilever Arabia Jeddah. KY. Australia Wien. Greece Mumbai. India New York. Employees 240 250 449 Company Type Private Subsidiary Private Parent Public Subsidiary Public Subsidiary Al Gurg Unilever Co Dubai. United States Jakarta. United States Athens.. IN.700 430 1. Saudi Arabia Group of Companies Unilever Australia Limited Unilever Austria GmbH Unilever Belgique SA Epping..195 Private Subsidiary Private Independent Private Subsidiary . Finland UBF Food Solutions Unilever Unilever Unilever (Malaysia) Holdings Sdn Bhd Unilever (Schweiz) AG Unilever Andina (Colombia) SA Unilever Andina SA Franklin Park.010 300 400 350 500 1. Belgium 1. Malaysia Zug.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. Austria Bruxelles. United States Clinton. Colombia Guacara. Switzerland Santafé de Bogotá DC. United States Kuala Lumpur.P&G and Unilever 79 Appendix DD: Unilever Portfolio: Product Groups & Businesses Company Name Location Sort By. CT. United Arab Emirates Conopco Inc Elais Unilever S. Indonesia 800 3.

NC. MO. United States Indianapolis. NJ. CA. United States Orange. United States Baltimore.000 150 150 25 800 300 125 175 4 700 2. United States Little Rock. CA. Switzerland Milwaukee. United States Lisboa. United States São Paulo. PA. United States Ridgefield. IN. Italy Rotterdam. United States Atlanta. CA. United States Dublin. AR. IL. Brazil 130 300 400 210 42.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. United States Inveruno. NJ. GA. United States Harrisburg. Netherlands Helsingborg.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 . United States Independence. United States New Century. United States Englewood Cliffs. KS. United States Merced. NJ. WI. Ireland Chicago. United States Bayonne.000 200 150 130 175 1. Portugal Thayngen. Sweden Merced. MD. Wiltshire.

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

850

Tema, Ghana

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

223,000

Public Parent

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.

including over half of the Fortune 500. synchronization and collaboration solutions. The company operates a highly-reliable. to the GS1 Global Registry. via their selected Data Pools. formerly Transora. Global eXchange Services. Inc.”191 For Data synchronization.000 businesses. (GXS) and Sterling Commerce. to conduct business together in real time. and “is the world's leading provider of multi-enterprise collaboration solutions for the Global 5000. 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.”192 P&G is also a member of 1SYNC. a B2B marketplace of data for efficient use of data synchronization. Inc.P&G and Unilever 84 APPENDIX EE: P&G e-Business Network B2B data is exchanged directly through two Value Added Networks (VANs). secure global network services platform enabling more than 30. GXS is “a leading worldwide provider of B2B integration. GDSN “connects retailers and suppliers.”190 Sterling Commerce is a subsidiary of SBC Communications. P&G uses the Global Data Synchronization Network (GDSN).193 .

2006. 2006. 2006. 37 P&G North America electronics data interchange. 14 Fitch: U.com. V. 19 Global personal products: Industry profile. Koller. 2005). and other toilet preparations. The Wall Street Transcript Corporation.jhtml. 11 Global personal products: Industry profile. August).investor.com. Retrieved February 1. 9 Personal and Household Products: Company Rankings. Encyclopedia of American industries (online edition). 17 Perfumes. (2006.com/e/060130/pg10q. 2006.com/company/who_we_are/ourhistory. 7. cosmetics. (2005). 23 Procter and Gamble: Our history. May). A.S. Business Wire.html. Retrieved February 6. 2006 from: http://www. 12 Grant. (2006.com/matrixone/press_release_20040223_ pg. Retrieved February 6. May). 16 Kamenicky. 80(5). 34 Ibid. 26 Ibid. 22 Global personal products: Industry profile. Divestiture: Strategy’s missing link. M. 10 P&G news: Information on exchange of Gillette shares. Thomson Gale. (2005). (2002. and other toilet preparations. consumer products industry outlook – limited upside in 2006 (Industry overview). 6 Global personal products: Industry profile. from Business Source Premier. The Procter & Gamble company. V. reuters. from: http://finance. 41 Dranikoff.com/procter-&-gamble/--ID__11211--/free-cofactsheet.matrixone..pg. M. (2006).investor. January). 2005). from http://www. 21 Perfumes. P 18. (February 7. 2006. 3 Wall Street Transcript. 25 Procter and Gamble Annual Report. Retrieved February 6. consumer products industry outlook – limited upside in 2006 (Industry overview).com/investors/exchange_of_gillette_shares. (2006. 40 Overview. Analyst interview: Household & personal products. P.referenceforbusiness.hoovers. from: http://finance.yahoo. NY. Ibid. from: http://www.S. 33 Ibid. Retrieved February 1. 2006. (2005). 39 Profile.reuters. R. Cleaning preparations and cosmetics – Industry Overview. (2005.com. 2006). T. (2006). 30 Profile..com/q/pr?s=PG. 20 Global personal products: Industry profile. Retrieved Feb 6. US Industrial Outlook. January). (2004. Retrieved from February 7. 2006. US Dept of Commerce.com.pg.K. Retrieved February 2. (May 2005). 2006. cosmetics.com/q/pr?s=PG 31 Ibid. 2006 from www. (2005). 2006.yahoo. MA: Blackwell. 2006. Retrieved February 1. from: http://www.jhtml.datamonitor. The quest for global dominance: Transforming global presence into global competitive advantage.jhtml. Farmington Hills. (June 20. 2006.pg. cosmetics.xhtml. 2 1 Form 10K Procter & Gamble Co. & Gupta. 4 Grant. 2006 from: http://www. Retrieved February 7. (December 8. Retrieved February 10. and other toilet preparations. Retrieved February 2. 5 Perfumes. 8 Industry Growth Rate – Sales.com/~d79aa700b01941d1821f3071842b6035~/companies/company/?pid=C895EAE6-25E0-4D36B30D-69500B939DC1. (2006). Contemporary strategy analysis (5th ed. from: http://www. Malden. L. 2006. 13 Global personal products: Industry profile. (2001). San Francisco: Jossey-Bass. 35 Ibid.yahoo. 32 Procter and Gamble Annual Report.com.findarticles. Reuters Fundamentals. from: http://www. Ibid. Retrieved Feb 6. Reproduced in Business and Company Resource Center. 38 Procter & Gamble Company Profile. 36 Govindarajan. Mich: Gale Group. 2006 from http://biz. Retrieved February 7. (May 2005). & Schneider. from: http://www.). 24 The Procter & Gamble Company. from: http://www.html. from: http://www. 2006 from: http://www. 42 Procter & Gamble awarded enterprise value award by CIO magazine for work with MatrixOne on innovative product lifecycle management application. New York. February). Harvard Business Review. R.datamonitor. and other toilet preparations. 29 28 27 .com. Retrieved February 6. (2006).P&G and Unilever 85 NOTES Global personal products: Industry profile.com/investors/ annualreports. 18 Fitch: U. (1992). cosmetics. Retrieved February 10. A. 15 Ibid. 7 Perfumes.pgedi. Contemporary strategy analysis..

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com/article2/0. 100 Sanford.pdf. R.a2zofb2b.unilever. Contemporary strategy analysis. J. 96 P&G Website. R. Wall Street Journal. from http://www. L. from Welcome to Access Events International website: http://www. & Gupta. from Unilever web site: http://www.asp. London. 123 Buerkle. 2005). .transcendata.And Collaboration. K. 2006. 2006. 2006. L.htm. (2006). 124 Ibid.asp. & Gupta. GDSN launched. from Welcome to Access Events International website: http://www. 2006.access-events. 91 90 97 98 Ibid. 121 Lucas. (2005. Unilever Annual Report & Accounts and Form 20-F. Brand Strategy. 99 Ibid. 117 Govindarajan. 126 A2Z of B2B. 2004). 2006.com/sanfrancisco/stories/2004/06/28/daily28.a2zofb2b. Retrieved February 11. (January 27. (January 27. The quest for global dominance.unilever. V. Strategies for electronic commerce and the internet P 10. 110 Our purpose. from Unilever web site: http://www.unilever. (April 6. from: http://www.com. 2005). San Francisco Business Times. 2006. 92 Ibid. 131 About Unilever. 2004). K. from: http://www. 1/9/2006. from Business Source Premier. Information Week. (February 23. UMUC. 112 The DE opportunity – Winning in Asia-Africa. 2004). M. Feb 28).co. 130 RFID technology in flux. www.unilever.. (February 24.2. P.com/in_the_news06. Contemporary strategy analysis. 2006. Unilever Annual Report & Accounts and Form 20-F. Retrieved February 11.000 workers and push e-commerce: Unilever to jettison brands and trim jobs. Retrieved February 7. 104. H. 2006. 125 Emigh. 94 Nelson.1759. GDSN launched for global e-business. 133 Our suppliers. (2005. 2006. 2006.00.php.com/ourcompany/aboutunilever/introducingunilever/oursuppliers. Pg B. M. (2003).. 10. 115 Multinationals merely pay lip-service to acting local. V. (August 5.uk/Images/Discover%20Unilever_tcm28-17220. A.com/ourvalues/purposeandprinciples/ourpurpose. 2006. H.t. Introduction to Unilever. The quest for global dominance. 2006. R. 108 Govindarajan. P&G and Other Large Firms Offer their Intellectual Property Online. J. NY. 106 Ibid.. Consumer goods giant to cut 25.com – Enterprise News & Reviews. Nov 14). October). 2000). Unilever exchange data. 114 ITI TranscenData enables seamless global development at Unilever. Retrieved from ABI/Inform. J.PG. A.com/cgibin/MasterFrameReunion. 105 Ibid. Retrieved February 11. 2005).html. UMUC. from: http://www. from: http://www. Wall Street Journal. T. 119 RFID technology in flux. 2006. from Unilever website: http://www. Jr.com/links/pages/eMarketplace/Industry_Sponsored_eMarket. Marketing Week. E. 134 Grant. 2004). p49. Feb 14. Razors.com/pr20040406.pdf. R.1633101. (2003). Issue 1064. 118 Ibid. Retrieved February 7..unilever.transora. from: http://www. C.4. Dec 31).bizjournals. P.com. 104 Ibid.com. 113 Unilever..cgi?http%3A//www. (August 5. Retrieved Feb 14. Retrieved February 11. Contemporary strategy analysis. (2001. C. (2000. NY. from: http://www. NY. Jr.unilever. Business Week Online. 116 Brand mot: Unilever. NY. 2004). 122 Grant. (June 30. eWeek. 132 Ibid. Businesses must learn to let go.eweek. from: http://www. 102 Unilever. 129 Safeway. 93 Jacobs. 103 Ibid. Retrieved February 11. M. International Herald Tribune. 109 Discover Unilever.iht. Introduction to Unilever. E-Business: Honeywell.access-events. Pg 1. Retrieved on Feb 15. (May 15. 2005). Retrieved February 14.asp. Selling Soap. Retrieved February 11. 2006. 2006. Retrieved February 14. (2005. Retrieved February 11. 95 Lucas. 2006 from: ABI/Inform. Retrieved February 11. M. IT Week. June).com/articles/2000/02/23/unilever.P&G and Unilever 87 Fact Sheet (2005. from: http://www. (March 4. June). 127 1SYNC. Foley.com. 120 About Unilever. 2006. 107 Grant. Strategies for electronic commerce and the internet. Retrieved February 11. Ibid. Contemporary strategy analysis.com/in_the_news06. E-business: The Web @ Work / Procter & Gamble. 128 Emigh.com/Images/2003%20About%20Unilever_tcm13-5417. Retrieved February 14. IT Week. 111 Organising to win in Latin America. Retrieved Feb 14. 101 Grant. 2006 from: ABI/Inform.

(April 18. 150 Global personal products: Industry profile.pdf. (2002).umuc. 2005). K. 2006. P. & Schneider. (2005. 158 Who’s who guide to personal care. Analyst interview. L. from Capgemini website: http://www. 2006. 2006. 160 Global personal products: Industry profile. 168 Toiletries and cosmetics.org/Docs/pdf/benefits%20of%20GDSN. Brandweek. Lucas. June). 142 Unilever. 144 Grant. 141 Wasserman. Note on industry structure. 185 Global data synchronization network: Overview of benefits for manufacturer and retailer. 146 Wall Street Transcript. 2005). from Business Source Premier. Strategies for electronic commerce and the internet. 173(11). cosmetics.. Contemporary strategy analysis. 179 Ibid. 149 Fitch: U. 174 Procter and Gamble: Our history. T.edu/mba/public/AMBA607/IndustryStructure. Reuters. Introduction to Unilever. June).P&G and Unilever 88 Unilever. Note on industry structure. (2006.cnn. V.uccnet. 170 171 Sanford. 153 Perfumes. 154 Toiletries and cosmetics. 172 Ibid.. 152 Ibid.K. Retrieved February 7. 157 Ibid. (March 8.capgemini. Retrieved February 11. 186 Capgemini News: Global data synchronization. from Business Source Premier Electronic Database. 10. 145 Global personal products: Industry profile. Jr. 148 General information.000 workers and push e-commerce. L. 2006.htm. and other toilet preparations. R. 138 Ibid. Koller. January). V. 147 Ibid. V. 184 183 .S. Industry: Household and personal products. 136 163 Jain. T. from uccnet web site: http://www. 143 Dranikoff. 162 Ibid. Retrieved January 9. 2006. 2006. & Gupta. Ibid.com/GI_General_Information. A. 2006) Business Week Online. 173 Govindarajan. (2006). 155 Ibid. Getting comfy in their skin. 164 165 166 167 135 Fitch: U. from http://info. Divestiture: strategy's missing link.com/resources/news/global_data_synchronisation. 156 Ibid. from: http://money. 180 181 182 Form 10-Q for PROCTER & GAMBLE CO. (January 9. (2006 Jan). Koller. M. consumer products industry outlook – limited upside in 2006 (Industry overview). T. Retrieved February 11. A.com/magazines/fortune/fortune500/industries/Household_and_Personal_Products/1. & Schneider. A. 175 Ibid. from: http://pgsupplier. Ibid.html. Divestiture: strategy's missing link. Retrieved February 12.html. P & G.. 139 Jones. 176 Ibid. 3. Consumer goods giant to cut 25. 159 Toiletries and cosmetics. Unilever-a case study. P.. 46(46). 3. 161 Ibid. 140 Dranikoff. 151 Ibid. 169 Ibid. Buerkle. T. Procter and Gamble: Our history. Global personal products: Industry profile. Introduction to Unilever. Jain. 2006.K. H. G. (November 2005). 177 Ibid. Retrieved February 15. (2005. (May 2005).. (2002). consumer products industry outlook – limited upside in 2006 (Industry overview). December 19). Retrieved February 5. 137 Ibid.. Global Cosmetic Industry.S. P. 178 Ibid. The quest for global dominance. C. (2005. L.

2004). http://www. from: http://www. 192 What is Data Synchronization? http://www.com/frameset_fs.com/article_arch. (2004).sdcexec. (July 1.gxs.transora. 189 About Unilever.P&G and Unilever 89 187 188 Ibid.com/About/CompanyInfo.pg. Safeway. 191 Sterling Commerce.sterlingcommerce.com. Supply & Demand Chain Executive.jhtml?frameURL=http://www.asp?article_id=5769.com. http://www. . Retrieved February 11.pg. Unilever Annual Report and Accounts. 2006. 193 www. 190 Global eXchange Services Inc.htm.com/industry_cp. Unilever Complete Global Data Synchronization Project.

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