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Challenging boundaries and beyond
February 19, 2006 Unilever Unilever House, Blackfriars London EC4P 4BQ, United Kingdom Sent Via Electronic Mail RE: Strategy Analysis Ladies and Gentlemen: At the request of the Board of Directors of Unilever, we provide herein our analysis of the Personal Products Industry and a strategy analysis of both Unilever and its biggest competitor, Procter & Gamble. The enclosed analysis also provides recommendations for Unilever to improve its competitive advantage.
Procter & Gamble, Unilever and the Personal Products Industry
Global Strategy Advisors Lee Ann Graul, Sherry Henricks, Steve Olp and Charlene Strohecker
University of Maryland, University College AMBA 607 February 19, 2006
Table of Contents
1. Executive Summary 2. Industry Analysis-Personal Products Industry a. Introduction b. Industry Defined c. Historical Data Analysis d. Major Competitors e. Trends and Industry Outlook f. Strategic Challenges and Opportunities i 1 1 1 2 3 3 5 5 6 6 8 10 10 11 13 14 15 15 16 17 19 20 22 22 24 25 30 31 32 33 34
g. Industry Conclusions 3. Procter & Gamble and Unilever a. Competitor Analysis: P&G b. Competitor Analysis: Unilever c. Strategy P&G i. Business Level ii. Global iii. E-Business iv. Corporate d. Strategy: Unilever i. Business Level ii. Global iii. E-business iv. Corporate e. Conclusions and Recommendations 4. Appendices A. SIC Code 2844 and Industry Description B. Global Personal Products Industry, Market Segmentation C. Personal Products Industry, Five Force Analysis D. Global Personal Products Industry, Market Share E. Market Growth F. Producer Price Index (PPI) for SIC 2844 G. Industry Growth Rate-Sales H. Average Revenue Growth: Industry
P&G e-Business Network 5. Imports. Trend Line. J. Dynamic Resource-Based Model of Competitive Advantage Y. Endnotes . Exports. Unilever SWOT Summary V. Ranking by Revenues. SIC 2844 N. Unilever. Unilever Portfolio: Product Groups & Businesses EE. Company Ranking by Personal Care Revenues L. Global Data Synchronization Network AA. P&G Portfolio: Product Groups & Businesses DD. History of P&G Global Expansion W. Unilever’s Early Use of the Internet. P&G. Historical Data-Personal and Household Products Household and Personal Prod. SIC 2844 M. Fastest Growing Markets O. P&G Financial Analysis S. Safeway. 2000 Z.I. Unilever Complete Global Data Synchronization Project BB. History of Unilever’s Global Expansion X. RBV Analysis Q. Unilever Financial Analysis T. P&G SWOT Summary U. RBV Analysis R. 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 and Unilever P. Industry. Value Chain Analysis. Trend Line. Unilever Initiatives in Information Technology CC.
P&G Chemicals and Health Sciences lab reflect the vertical integration of its current product line. with ongoing efforts to achieve a corporate structure. and internally for management and product development. a slow recovery of growth due to the economy. and ensure activities drive toward strategy achievement. development of strong product branding. The improvements in overall communications. suppliers and buyers. expansion of its product lines through R&D. but also requires achieving economies of scale.e. and development of alliances. Unilever has improved its focus and resource allocations. Additionally. develop innovative new products. allowing it to concentrate on performing products. and new product innovation. and strategic alliances. Both P&G and Unilever take advantage of economies of scale and global expansion into emerging markets. P&G also maximizes its value by investing in global markets through acquisition. significant investing in R&D. improved efficiencies. Learning and sharing information on a global scale is one of P&G’s strengths. and market introductions and management will enable Unilever to remain competitive and grow as an industry leader. product development and quality advertising has helped it hold its position. and first mover advantage – i. These conditions create the need for companies to respond quickly.P&G and Unilever Executive Summary i This paper provides an examination of the personal products industry as a whole. P&G is an industry leader focused on innovation. recommendations provided herein include an alignment of strategies. which will maximize strategy achievement. direct investment and direct marketing. emerging global markets. Although Unilever seems to have expanded globally with some success. Unilever’s biggest challenges are in improving efficiencies to reduce costs. obtaining real-time information and utilizing global knowledge sharing externally from its users. a strengthening of brand differentiation. knowledge sharing. An examination of two major competitors in this industry. The industry itself is an attractive one. and repeat purchases (consumables products). Unilever needs to establish a focused strategy. a discussion of industry opportunities and challenges is conducted. financial performance. . advertising. Unilever’s costs and number of employees is much higher than P&G’s. it seems to be lacking an overall global strategy. presenting issues such as increases in the cost of raw materials and operations. 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. maintaining its focus. but a weakness for Unilever. Unilever is primarily focused on strong brand recognition. especially in its use of people and its time to market. and the ever changing wants and needs of the consumer. P&G has been a leader in e-business implementation. As P&G takes a proactive roll in e-business and innovation. Procter & Gamble (P&G) and Unilever reveals a very competitive industry that is not yet highly consolidated. and developing brand loyalty. its similar focus on branding. The recent corporate restructuring should continue. and find ways to become more efficient while reducing costs. changes in government regulations. While Unilever trails slightly behind P&G in most product segments. joint ventures. and continued investments in R&D. To achieve speed and flexibility. P&G’s strategy is flexibility for quick response to market demands and opportunities. and industry trends. Additionally. cost reduction. as it divested itself of non-performers. global expansion. P&G’s investments and business developments have remained in or related to the consumer products industry. including a review of the historical market share. quickly getting new ideas from conception to the shelf. Unilever’s stance is a reactive one. processes. having steady growth. alliances. From a portfolio perspective. competition.
comparing Procter & Gamble and Unilever.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. as commodity costs began to stabilize. coupled with increased marketing spending. and skincare products. internet searches and company websites. hair care. accounting for 25. Additional objectives include a competitor analysis. Cosmetics and other Toilet Preparations. put significant pressure on operating margins and earnings in 2005. Companies within this industry have referred to this market segment as the Personal Products Industry. Earnings per share (EPS) were expected to improve by 2006. financial results. past and future performance trends.5 percent of the global value (See Appendix B). The result of this analysis reveals strong barriers to entry. moderate bargaining power of . make-up. The global personal products market encompasses fragrances. Porter's 5 Forces Model4 has been used and provided in Appendix C. Information for these analyses was derived from library databases. when converted to the new North American Industry Classification System (NAICS) was further divided into 2 categories. This highly competitive industry will “derive its future performance relative to global consumer spending patterns and raw material prices. 325620 (Toilet Preparation Manufacturing) and 325611 (Soap and Other Detergent Manufacturing). and conclusions about attractiveness for incumbents. the leading revenue source in this market was hair care. The SIC 2844 category. an examination of their strategies. personal hygiene. market share and current initiatives.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. A complete list of the products included in this industry has been provided in Appendix A. oral hygiene.”1 In 2005. Our analysis includes global operations.2 This industry has recently been affected by rising commodity costs which. competitors. and recommendations for future growth and sustainability.
operating margin. $22. (Actual rates are provided in Appendix E. and sales when comparing the five-year industry average to the most recent one-year average. Such factors. The total value of industry shipments has steadily increased from $19. considerable threat of substitutes. The industry has seen slight increases in gross margin.8 billion in 2001.95% and for the past three years increased to 11. Over the past 3 years. these figures have exceeded the S&P 500’s averages (See Appendix I).8 billion in 1997 to $28. the industry average EPS grew by 19. In most cases. The industry average Return on Assets (ROA).2 percent for the four year period.7% between 2006 and 2009.6 The Producer Price Index also shows a slow but steady growth over the past ten years (see Appendix F).29%8 (See Appendix G for details). . Historical Data Analysis The CR4 analysis provided in Appendix D shows a total of only 28. however. 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.1% 9 (See Appendix H). which followed an average 5 percent per year growth between 1996 and 2000. This industry favors incumbents. Return on Equity (ROE) and Return on Investment (ROI) have decreased when comparing the same time periods.7 billion in 1994.7 percent of the market being satisfied by the top four producers in the industry. The market volume has shown an average growth of 2.5 Market growth is expected to continue to grow steadily over the next five years. with a projected average of 2. 2000 – 2004. and substantial rivalry among existing companies.7 The market’s weighted average growth in sales for the past 5 years was 9.) This reflects a slow recovery from the downturn in the economy in the early 2000s. however they still exceeded the S&P 500 Average. will vary by company and a more in depth analysis of the industry leaders would need to be made. Therefore this industry as a whole is not considered highly consolidated.P&G and Unilever 2 buyers and suppliers.
see Appendix L). commanding premium pricing in sectors that are less cyclical. These segments are characterized as having well-supported. Procter & Gamble (P&G) was the leading company in terms of revenues and profits in the Household and Personal Products Industry. the top three were (1) P&G.8%).P&G and Unilever 3 Major Competitors Fortune Magazine and Reuters group “personal products” together with “household products” when analyzing industries. The October 2005 acquisition of Gillette by P&G10 solidifies P&G’s number one position on this list. Additionally. thus requiring the investment of significant resources into R&D. personal products companies rely on a high turnover of products in order to improve performance. Companies have instituted cost reduction programs (including the creation of manufacturing efficiencies. When competitors in the Personal Care Industry are ranked by revenues however.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. where consumption of household products is low) as an opportunity to expand revenues13 (For fastest growing markets in cosmetics and toiletries. Facing stiff competition from private labels. Colgate-Palmolive. many firms view emerging markets (such as China and India. renegotiated supply contracts. followed by Kimberly-Clark. strong brands and superior product development. (2) L’Oreal and (3) Unilever (See Appendix K for rankings by revenue). which in turn prompted . Competitor ranking of the personal products industry (not combined with household products) as measured by market share is led by L’Oreal (8. As of April 2005. and employee and plant layoffs) to improve margins during the last few years. 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. Gillette and Avon Products (See Appendix J). followed by Procter & Gamble (8.5%)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.
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. will affect sales for items not considered a necessity. or animal rights activists protesting animal testing. such as the aging baby boomers causing an increase in the demand for age-defying skin care and hair color. with less exposure to specific raw materials. have also changed how products are produced. the cost of raw materials. Not only the US economy. “There is a close correlation between a country’s consumption of soaps and detergents and its standard of living. and the ever changing wants and needs of the consumer – will continue to impact the performance of companies in this industry.”16 Trends in how consumers shop also affect the industry. and household items. The growing need for compliance with more stringent environmental regulations. and the consumer demand for natural and organic products. consumers began purchasing these types of products at mass discount centers. 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. perfumes. and with balance sheet flexibility. global competition. such as Costco and Sam’s Club. largely due to the strong influence of P&G in 2005. innovations in research. In addition. The consumer will continue to be influenced by price and convenience for most products. Many companies instituted cost reduction programs. directly affect the industry. P&G’s acquisition of Gillette.15 Changes affecting the demographics and demands of the consumer. the global economy. Beginning in the 1990s into the 2000s. but in the end.among them. 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. requiring additional investment and expanded product lines. but also the global economy.17 These macro-level factors – environmental regulations (government). rather than at upscale department stores. such as some cosmetics. industry competition in the form of advertising has ratcheted upward. and significant mergers or pending mergers . consumer demographics.18 .P&G and Unilever 4 price increase announcements.
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. “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. this industry will likely become more consolidated. brand loyalty. While the Asia-Pacific area is noted to be a key emerging market for this industry. Most US Consumers are willing to pay. along with strong entry barriers and substantial rivalry among existing members.”19 The fastest growing and emerging markets include the Pacific Rim20. and first mover advantage. one of the main hindrances in this area has been low income. a higher price for natural and organic products. will favor sustainability for incumbents. expansion into the global market is not new to this industry. the profit margins on such products are expected to be greater than their non-organic counterparts. If the personal products industry can find ways to produce natural and organic products at reasonable costs. which. A global expansion study would be recommended to determine which countries would provide the best opportunity. and Eastern Europe21 (see Appendix N). since most are consumables. Expansion into global markets will be important for future growth. 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. thus companies desiring to expand into this region will need to invest in development of products that can be priced more affordably.22 Products designed for areas with higher incomes may not be suitable for emerging markets. Some larger current producers are achieving economies of scale. Future performance in this industry will be tied to global consumer spending patterns and raw material prices. Industry Conclusions The attractiveness of the Personal Products industry includes such elements as steady growth in consumer demand and repeat purchase of the products. and are used to paying.P&G and Unilever 5 Strategic Challenges and Opportunities As mergers and acquisitions continue. As is seen by the trends in imports and exports provided in Appendices L and M.
P&G markets more than 300 brands. Latin America.23 The Company. and P&G Beauty (37% net earnings). of which 22 are $1B sales producers. colognes. through a series of events. leading teams to build brands organized in seven geographies: "North America. and formed the Procter and Gamble Company in 1837. the two strangers traveled to the United States.28 The Company and its 110.g. cosmetics. and the investment in R&D required to stay ahead of the competition with new product innovation. 26 and has Market Development Organizations in 80 countries. Snacks and Coffee.47 each. Health Care. The business segment being examined in this report.000 employees are organized into three global business units. keeping up with changes in customer preferences and government regulations (e. for an overview of P&G structure and primary activities). At their father-in-law’s urging.25 Today. Western Europe. 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. hair care.27 Their products are sold primarily in grocery stores. has reported revenues of $56. balanced worldwide with one half from the domestic market and one half from the international market. Fabric Care. Baby and Family Care. and environmental impact). Central and Eastern Europe/Middle East/Africa. Value Chain Analysis. The challenges in this industry include taking advantage of economies of scale in order to compete on price with current companies.596. Ohio. and P&G Beauty30 (See Appendix O. Northeast Asia.29 These global business units are distributed into five segments..P&G and Unilever 6 producers have developed a market niche for a specific consumer need and have been successful. P&G Household Care (33% net earnings). through mass merchandisers. encompasses personal cleansing. antiperspirants or deodorants. P&G Beauty.24 This revenue comes from sales in over 160 countries. membership club stores. discount stores. feminine . labeling. headquartered in Cincinnati. P&G Family Health (30% net earnings). Home Care. met and married sisters. and high frequency stores (neighborhood stores in developing countries).8 billion for the fiscal year ended June 2005. Procter and Gamble pledged $3. Greater China and ASEAN/Australasia/India".
hair color. In order to sustain their competitive advantage. reducing costs and quickly expanding the company knowledge and line offerings. P&G is well known for its brand management and brand leadership capabilities. and inventory management37 (See Appendix O. . Financial Analysis. and Gillette in 2005. as well as continue to exploit international growth.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.34 Key to their success is knowledge sharing and cross-borders replication of innovations. for an overview of P&G supporting technologies and awards for excellence). such as the recent acquisitions of Clairol in 2001. includes five $1Billion brands. especially in emerging markets.000 patents. Spending $2B annually on R&D and deploying approximately 7. as P&G is currently overexposed in the US and Western Europe.500 researchers in technical centers around the world. distribution. communications. with a net profit margin of 13%.38 Additionally. including CRM. P&G must continue to utilize their acknowledged strengths. that improve R&D speed and capabilities. P&G is a leader in innovation.39 P&G has also been successful with its mergers and acquisitions strategy.32 (See Appendix Q. facilitating their rapid go-to-market capabilities. and ROE of 42% on 7. EDI.257M Sales31. Value Chain Analysis. Lastly. business services and merchandising provide financial and trade advantages. Wella in 2003. information tracking and sharing. ROI of 12%. and skin care. Supplementing their innovations. 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.36 Additionally. as well as their customer and partner management is P&G's significant use of IT and tracking systems. and over the past eight years. economies of scale and scope in purchasing. and should continue this strategy. for a P&G company overview). have introduced the #1 or #2 new non-food products in the US. one of which is innovation.P&G and Unilever 7 protection. which are significant advantages for customer loyalty and market penetration (See Appendix O for P&G's RBV Analysis).40 Active portfolio management.33 They have 29. P&G’s competitive advantages arise from several key factors. and RFID.
a strong focus on expansion in developing countries is being undertaken and should provide significant growth opportunities. divesting if needed.662 diluted normalized EPS 2005). governed by an equalization agreement. and have recognized $1B in cost synergies as this integration occurs. a British soap manufacturer and Margarine Unie. 2.48 Today Unilever is present in 150 countries. .46 Although the company has two legal entities as its parents. Their Corporate Standards System application provides for innovative R&D methods to reduce costs while increasing quality and enhancing go-to-market capabilities. and has numerous wellknown brands.45 Unilever is unique in that it has maintained a dual ownership structure since its inception.43 Additionally. in conjunction with their maintenance of market share and line extensions in developed countries.41 P&G needs to review longer held businesses and lower earners for their continued value to the organization.49 Unilever has products for three markets. however. employs over 223.831 basic normalized EPS. and ensure good fit and value-added. and personal care.50 which fall into 6 primary categories: home care (17%). ROI. 12 of which each have worldwide sales exceeding €1 billion. through the merger of Lever Brothers. P&G needs to look at their businesses. Their R&D has enabled ongoing introduction of new lines. home. and profits. as well as increase free cash flow. food.44 It has since become one of the largest direct investors in the United States. and continue activities that have been driving organic growth and increasing EPS (2. one Dutch (Unilever NV). it has only one board of directors47 and reports one set of financial statements. P&G has been diligently participating in activities that should ensure a good future of sustainability. a Dutch margarine manufacturer.P&G and Unilever 8 using divestiture and acquisition strategies.000 people. has been shown to increase stakeholder value. and one British (Unilever plc).42 They need to successfully fold in Gillette. as well as expansions and adaptations of current lines to meet local needs. which their activities are focused on to accomplish (See Appendix R for financials on P&G and Appendix T: P&G SWOT Analysis). Competitor Analysis: Unilever Unilever was officially formed in 1930.
52 Company-wide.53 P&G's sales are nearly 40% greater than Unilever's. a decrease in the number of executive managers by one-third. one of the segments where Unilever competes directly with P&G.P&G and Unilever 9 spreads (12%). Unilever Financial Analysis). Unilever initiated consolidation efforts (One Unilever) including development of one executive group (from three). and a restructuring that created global groups. sales of 48. focus on core products and regional activities with increased spending on R&D.5M (See Appendix S. deodorant and personal wash. and impacted opportunities for efficiency economies of scale and scope. Sales were flat in 2004. In order to sustain their competitive advantage. marketing. P&G's sales are around $70 billion and Unilever's are around $50 billion.59 In 2005. Women's Wear Daily ranked Unilever ($9. and advertising. not to mention the potential concern in transparency in reporting. such as a global brand strategy group.58 The 2004 figures reflected a net profit of 5%.57 This complexity increased costs. ROE of 37%.54 Clearly there are fundamental operational differences between Unilever and P&G. savory & dressings (21%).55 Their renewed focus on strong line expansion (especially after reducing their number of brands from 1600 products to approximately 400 in 2003). it has been a complex company. a flattening of the organization. and leading brands in personal care.7 billion) and P&G ($16. and Unilever began a major push for elimination of non-productive lines. strong R&D initiatives for line expansion. with two CEO's. beverages (8%). First. ROI of 6%.60 One such effort at consolidation is the 2005 sale of Unilever Cosmetics International unit to Coty for . resulting in increased sales growth in many regions. cost elimination. Euro and Dollars. Unilever's competitive advantages arise from strong brand recognition.5 billion). and personal care (26%)51 (See Appendix Q for Unilever's structure and primary activities). and earnings reported in two venues. In the area of personal care.204M and net income of 2468.3 billion) the third largest cosmetics company behind L'Oreal ($17. share buybacks. such as Dove and Bird's Eye. ice cream & frozen foods (16%).56 and alliances with strong corporate partners such as Pepsi are also advantages. separate organizational structures (PLC and NV). Unilever has several issues to resolve (See Appendix Q for RBV Analysis). with approximately 40% of Unilever's employee headcount.
strong product branding.66 P&G's business strategy focuses on large-scale operations. and they have received awards for supply chain management (#1 in 2004). and twelve-$1B brands in Baby. Market Development Organizations.64 The company is divided into four pillars: Global Business Units. the identified locations for substantial growth. with a focus on flexibility and responsiveness. Family and Household lines.63 With their recent acquisition of Gillette. including additional outsourcing when needed (as was done in business support services).67 P&G is the global leader in its four core categories. with the largest product portfolio in the consumer products industry. Strategy: P&G Business-level Strategy P&G. and product innovation to develop competitive advantage. providing pricing and product that adds value for the customer.68 To achieve sustainability and continued growth. each working separately and together to bring competitive advantage to P&G. with a balance of ten.62. especially in India and China.$1B brands in Beauty and Health. P&G now has 22 brands that each exceed $1B in annual sales. and continue to expand globally. while improving efficiencies in sales and operations with their ongoing restructuring and technology enhancements. and quickly responding to competitive advancements. are leaders in inbound logistics. is required to maintain and grow their leadership position. and are . look to mergers and acquisitions to support their growth and development.69 Their comprehensive research network and $2B of research spending annually support their innovative focus. Feminine Care (35%). P&G's strategy is to continue to innovate and sell products that appeal to retail trade customers and consumers. and Hair Care (greater than 20%). Unilever needs to continue their operational enhancements. protect against exchange rate fluctuations. Fabric Care (approximately 30%). faces significant challenges maintaining cost efficiency and scale economies while creating innovation and differentiation.61 For future sustainability. add line extensions with core brands while guarding against negative impacts should an extension fail.P&G and Unilever 10 approximately $800 million. Baby Care. Global Business Services and Corporate Functions. a sound business strategy.65 As competition from other major global and small local companies are vying for market share.
and partnerships and alliances for managing foreign subsidiaries. logistics. and rapid go-to-market strategies. P&G should continue to meet (and exceed) its business goals. including Market Development Organizations in 80 countries.76 Their global strategy includes innovation. growing volume in developed and developing markets. marketing. has innovative databases including over 100 million consumers across 30 countries. and continued maximization of their product innovations.75 Global Strategy P&G has made substantial investments globally. they excel at "demand chain planning. another competitive advantage. and alliances to expand their market understanding and reach. and continues to concentrate on relationship management with customers and suppliers.74 With ongoing improvements in resource management. planned divesture and ongoing acquisition strategies.70 With their market knowledge and focus on efficiencies." identifying their "target market's requirements and designing the supply chaining backward from that point. and 3) skills at managing foreign subsidiaries. utilizes a blend of local and expatriate managers. 2) ability to manage people in foreign markets. P&G uses business development structures combining sales.P&G and Unilever 11 technology innovators for improving efficiencies and reducing costs. 71 Additionally.78 Their flattened . to provide focus and management for increasing customer concentration at the retailer and country levels. and used acquisitions. and IT to work with trade customers for ways to add value to the consumer. Key to expansion are three competencies P&G has developed: 1) understanding of the foreign marketplace. increasing market share on base business while focusing on each business as well as on each industry. all successful activities that promote local acceptance and a climate enabling knowledge transfer. and focusing on higher profitability lines for growth. finance. and provides training. joint ventures.77 P&G has gained substantial market knowledge. Beauty and Health Care. and needs to be further implemented beyond the US and Western Europe. such as with bar coding and wireless technologies. marketing.73 Use of the Siebel CRM solutions has improved efficiencies and reduced costs. global resource centers. and investing in the developing marketplace.72 P&G has been awarded #1 best category management and consumer marketing.
P&G and Unilever 12 structure and focus on relationship management with stakeholders provides for efficient and rapid communications throughout the value chain. identifying significant opportunities and acting on them quickly.83 demonstrating a reduced risk method of global expansion. and retailer to generate cross-business unit plans and create efficiencies across the breadth of P&G lines. innovation. they have created the ability to implement distribution systems that can move innovations across borders. driven by their identification of the beauty-conscious orientation of women in that marketplace. and getting products quickly to the marketplace. then expanded upon. improving product quality. P&G has a well-developed knowledge base and global mindset.000 towns.87 P&G has coordinated activities to provide a global network with all activities. and with innovation a key component of their global strategy. and in China alone.81 For example.85 P&G has been an early adopter and substantial user of information technologies. reducing costs. and has been recognized by CIO Magazine for its “Corporate Standards System application” that revolutionizes the way their employees and partners collaborate. P&G focuses on 360-degree innovation. knowledge transfer. where launches are first piloted on a limited basis. and needs to continue growing globally. and in fact. 80 With their marketplace knowledge and research centers strategically located throughout nine countries. strategic partnering.86 P&G has had success expanding globally with its strategies of acquisition. However. and rapid go-to-market strategy (See Appendix V for the History of Global Expansion P&G).82 Other examples of their approach to learning.84 Overall. Knowledge from that rollout was then integrated into the Olay launch in Spain. P&G serves 2000 cities and 11.90 . P&G modified products in their upper tier and launched middle tier level products in Russia.88 It is estimated that 90% of the world's population will be in developing countries by 2010.79 These capabilities have afforded P&G the opportunity to leverage insights from the local shopper. consumer. their presence in high frequency stores has grown 50% in 4 years. structure and coordination driving for a global competitive advantage.89 P&G has been working to expand rapidly in these markets. and rollout based on market understanding is the learning from SK-11 store counters in Asia. P&G is at risk due to overexposure in the US and Western Europe.
93 P&G has taken a “use it or lose it” approach since many of its patents are not being used. suppliers. These resources all interact electronically to provide real-time access to information to those who need it. and wholesale clubs (such as Costco). creating a competitive advantage. P&G has also created such centralized e-business sites for the business-to-business (B2B) side. The Web Order Management System and Customer Portal assist partners in purchasing. P&G’s website PGEDI. and ‘virtualization’ of business processes. receive invoices. every day. which provides a way of sharing significant information share data. P&G has also invested in a marketing collaborative software development company called Emmperative. order status and invoices 24 hours a day. 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. formed in February 2001.com Inc. managing and promoting products by providing critical data. and for video conferencing and customer information and feedback. financial institutions. P&G fully utilized its Electronic Data Interchange (EDI) as a hub of doing business.”92 Sales and distribution is through retail partners – drug stores. real-time and predictive business intelligence. however. transportation. current and prospective retail partners. make payments. There are also links to track shipments. and transportation carriers. product information. P&G does not have direct selling of its products through the internet. grocery stores. billing and payment. internally share R&D information.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. 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).. P&G has invested in Yet2. an Internet company that has launched a web site that allows companies to post their technologies for license or sale. working simultaneously on the same files. even pulling up research collected by colleagues in other countries for various brands and re-applying it to other product .com provides an electronic exchange of information between P&G and its trading partners. logistics for retail partners. and share data.
which offers tips. or pet care. are difficult for the competition to easily imitate. Foundation Business includes Fabric.com and sign up for P&G’s monthly emailed publication. household. as well as provide feedback.com. Initiatives and investments such as these.com.P&G and Unilever 14 developments. a commercial product segment. such as pampers. iams. P&G’s portfolio includes other ventures related to its core products. and among others.e. From an end-user standpoint. Inc. P&G groups its business into two categories. customers can visit PG. tide. Such early involvement and sizable investment in e-business as a tool reinforces P&G's position as a leader in the industry.com. P&G also has a Market Development Organization organized in seven97 geographical areas. a Fabric care business in Europe and Latin America. P&G Chemicals. foundation business and higher growth business. charmin. health & wellness. and if complex enough.”94 Creating this central library for accessing information allows for faster turnover and more efficient use of time and information.95 are valuable resources that enable P&G to increase its efficiency and effectiveness. and P&G Europe98 (See Appendix CC for list of businesses and product group descriptions). P&G also sells basic marketing and management techniques on the web site. baby & family. and most recently. Everyday Solutions. i. acquired Gillette. in 2005 P&G acquired a Pharmaceuticals business in Spain. and snacks and coffee. promotions. Health Sciences. Baby. Home. and free samples. acquired Wella in 2003. which vertically integrates ingredients for some of its products and P&G Health Science which is a research lab for product development. or seek expert advice about personal care. P&G continues to both look for acquisition opportunities that are related to its core business .96 Corporate Strategy P&G markets over 300 products in 160 different countries. coupons. P&G Chemicals. and samples.. P&G divested its juice business in August 2004. P&G also has numerous internet sites for specific brands and products where customers can obtain information.com and many others. in accordance with the Dynamic Resourcebased Model of Competitive Advantage. Family care. and increased ownership in its Glad venture with the Clorox Company.99 Internationally.
consumers have many choices regarding which brand they select. effective deployment of brands and innovations.106 The alignment of company resources with its strategy is an important component for sustaining a competitive advantage.107 With its resources aligned and a commitment to funding its significant R&D spending. and two of six segments in Home & Personal Care (skin and deodorants). one responsible for brand development.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. the current business-level strategy would be characterized as a differentiation strategy. Perhaps the greatest risk to sustaining their competitive advantage is the high SG&A costs of Unilever's current organizational structure. brand loyalty could be difficult to maintain. and they do it well. but also understands that the development of new products through innovation. P&G should continue its current successful strategy. P&G is aware of their core products and business foundation. and winning with customers ("Regions"). where the emphasis is on branding.P&G and Unilever 15 and develop new products. Similarly. and the other for managing the business. 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.101 In the consumer products industry. Unilever holds the world number one position in five of six food segments. without adequate differentiation. With twelve brands that each exceeds €1 billion in annual sales. For Unilever.104 Company resources have been divided into two primary functions.102 Unilever's market leadership cannot be sustained if costs are significantly higher than a competitor's products. advertising quality and new product development. 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. Unilever should be well positioned to sustain and improve their current standings. .105 Their commitment to R&D and innovation is clearly stated through their mission statement ("Add vitality to life") and their corporate purpose ("Vitality Innovation"). “In a rapidly globalizing world. and brand strategy ("Categories"). innovation. research and development is the key to maintaining its competitive advantage.
innovation. and prides itself on affordability.109 Unilever is proud of its deep roots in local cultures and markets worldwide. Vietnam and the Philippines).strategic leadership. products are tailored to different income levels.” Unilever embarked on a number of transformational initiatives. which enables it to bring its wealth of knowledge and international expertise to local consumers. Indonesia. systems and shared services. Unilever places emphasis on: serving and delighting consumers. with the goal of “One ULA” (Unilever Latin America) and a regional approach based on four cornerstones -. excellence in reaching consumers and customers. In three countries in this region. In an effort to “win Latin America. With 223. has established consumer intimacy. Thailand. and building relationships with local communities.P&G and Unilever 16 Global Strategy Unilever’s global presence has deep roots. In doing so. and the globalization of competitors108 -. However.000 employees in over 150 countries. Unilever is the market leader for four out of six primary HPC categories. and Unilever’s distributions systems reach deep into these areas.the growth imperative. At various stages throughout the course of Unilever’s history. the globalization of customers. In this region. resources and product launches.in its efforts to globalize. Unilever is the market leader in most priority categories in countries where it has a presence (key markets include India. Unilever’s progress in exploiting global presence may in fact be hampered by the lack of an overarching global strategy. deepening partnership with customers. beginning with the founding companies (See Appendix W for a history of Unilever’s global expansion). the knowledge imperative.113 . where the company enjoys a long-established presence. South Africa. the efficiency imperative. market share and brand health. 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. and brands sold in 98 countries. there is evidence that the firm was driven by nearly all five global expansion imperatives -. and implementing common processes. Thirty-five percent of Unilever’s turnover is in developing and emerging markets.112 Unilever’s current expansion plans call for a focus on the developing and emerging markets.111 With 44 operating companies in the Asia/Africa region.
which. locational competencies and global coordination. and capture economies of global scale and global scope. 121 Many of the products in the personal products industry fall under the category of “experience goods” – that is. to participation in the GDSN. to make this possible. the qualities and characteristics of those products are only recognized after consumption. press officer for Unilever has stated. Unilever has made significant advances – most notably its alliance with Safeway.an example of centralizing key business functions -. While it has taken steps to adapt to local markets.”114 with system-wide automation and data synchronization. despite all the references that Unilever has made to global strategy and its acknowledged global presence. The firm’s e-business strategy is progressing. and “global box-ticking can’t match intuitive knowledge of local markets.122 As . in at least one of its brands. according to the Dynamic Resource-based Model of Competitive Advantage (DRMCA) (See Appendix X). 118 E-Business Strategy Unilever’s e-business strategy continues to evolve. Further. the implementation of RFID technologies.P&G and Unilever 17 Unilever is aiming for “seamless global development.”117 along each of three dimensions: activity architecture. as Trevor Gorin. though cost effective. among other things.119 and the creation of an online buying system for making certain types of purchases from suppliers. however. runs counter to being sensitive to local markets.”115 However. nor are they inimitable. Unilever needs to “counter threats in specific markets” and transplant learning's from one place to another.116 Unilever needs to take the next steps in ensuring global competitive advantage. from its early membership in a B2B marketplace. it has opted to consolidate its advertising accounts into one global agency network -. Unilever will need to continue to add new and industry-leading IT resources to build and sustain a resource-based advantage.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. the company has not articulated an overarching global strategy that clearly outlines the alignment of all functions in the value chain to that strategy. but its IT initiatives are not unique or rare within this industry. by evaluating the “optimality of its global network for each activity in its value chain.
which offers a cost-effective data pool with solutions and services that support user needs.130 the Unilever Private Exchange (which provides secure links between operating companies and suppliers’ and customers’ systems and to external electronic marketplaces).126 Transora merged with UCCnet to form 1SYNC. 129 Other examples of Unilever’s forays into e-commerce and information technologies include: the implementation of radio frequency identification (RFID) tags. those products by and large do not lend themselves well to e-commerce – purchases by consumers via the internet.125 a B2B marketplace consisting of 49 companies. Unilever was making plans to invest heavily in electronic commerce. in June 2004. 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. . and reach out to consumers.P&G and Unilever 18 such. in an effort to slash costs. regional and global supply managers to gather and analyze information quickly. see Appendix BB). 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). and helps the industry maximize the value of data synchronization. radically change its supply chain. The company recognized that it could achieve significant savings by using the internet to “buy everything from raw materials to cardboard. as a member of Transora.”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). However.124 Unilever and P&G are members of Transora. the first time that product information had been “synchronized between the leading supply side and demand side data pools” (See Appendix AA). Safeway and Unilever heralded the success of their joint Global Data Synchronization initiative. Unilever’s supply management information system (which helps local. as early as February 2000. and make appropriate sourcing decisions)133 (For additional information about Unilever’s utilization of information technology.127 Unilever.131 Ariba. Furthermore.
they risk a reduction in the value of the business due to further brand depreciation. and to be seen as "a truly multi-local multinational". they face intense competition and weak consumer spending. particularly in the area of personal care.P&G and Unilever 19 Corporate Strategy Corporate strategy addresses the scope of the firm's activities. ice cream & frozen foods. spreads. including the portfolio of businesses that a firm chooses to engage in.135 Unilever's activities are spread across six primary business categories. including home care.140 (For additional details see Appendix U: Unilever SWOT Summary). A decision to divest the brands that are under-performing would not be foreign to Unilever.136 and are sold in 150 different countries. and help reduce their high SG&A costs. under-performing business units in order to free up resources to focus on higher growth. and the amount of vertical integration it employs. and personal care.134 Unilever's strategy is to have strong customer relationships at the local level. particularly in Europe.137 As previously mentioned.139 It is in cases like this where companies might benefit from a divestiture of low-growth. should Unilever wait too long before executing this divestiture.144 . the business is in an area that is relatively mature and segmented.141 With a stated focus on developing and emerging markets. over the last several years the brand count has been reduced from over 1. higher profit opportunities. and would help consolidate a market. Such a move would better position Unilever for sustained profitability. beverages. the locations or geography it will cover.142 divesting the European frozen foods units would free up resources. In the segments where they are not number one or two.138 Further. provide cash for additional debt reduction.200 to around 400 as part of an overall restructuring campaign. everywhere they do business.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. however. Unilever is number one or two in all but three segments in which they compete. savory & dressings. Consolidating markets can help provide sustained competitive advantage by reducing the overall level of competition.
cost reduction programs. we recommend the following plan of action for the next 5 years (with annual reviews of progress to date): • Align Unilever resources to strategies. and communications related to suppliers. • Strengthen consumer research and brand differentiation. distribution networks. . and retailers/customers. Taking into consideration the analysis provided. continue to invest in IT and internet solutions to achieve global efficiencies in negotiations. align strategies to optimize all value chain components. however it will require strong discipline and careful analysis in terms of pursing appropriate acquisitions and divestitures. 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. 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. Regional Unilever strategies are individually strong. Continue consumer research efforts to ensure an understanding of the global marketplace. electronic transactions. develop fallback plans should line extension efforts fail. E-Business strategy progressing. Continue consumer research to ensure that products and brands are meeting target customer needs. and pursue increased efficiencies and cost reduction strategies. • Continue investments in R&D initiatives for increasing line extensions and new products. Utilize partnerships and alliances for market understanding and product development. and alignment of strategies. Look for opportunities for vertical integration: cost savings and increased efficiencies can be created with this modification in the Unilever portfolio.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. product and brand differentiation initiatives. while identifying new opportunities.
Identify potential acquisitions that would help consolidate markets and thereby enhance Unilever’s market leadership. Seek alliances that may produce ways to increase speed-to-market and leverage global opportunities while increasing protection against exchange rate fluctuations. • Exploit and expand global presence. for example). identify locations where first mover advantage is possible. Explore increasing global research centers. a market analysis is required to identify best acquisition options that would complement existing brands and product lines. Use proceeds from divestitures to acquire businesses. • Increase focused advertising. where economically feasible and ROI is highly probable. Exploit markets where consumption of household products is low.P&G and Unilever 21 • Balance differentiation with low costs and continue reducing SG&A costs. Seek opportunities to out-source. especially for higher profit line and expansion in emerging countries. . 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. • Continue to pursue strategic corporate alliances for R&D. when such alliances fit with and add value to Unilever’s strategies and where ROI justifies cost. Market leadership cannot be sustained if your costs continue to exceed that of your competitors’ products. 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. Sell off under performing businesses or slower performing brands (European frozen foods businesses. and promote market consolidation. • Aggressively pursue acquisitions and divestitures. Identification of optimal acquisitions is beyond the scope of this paper.
cosmetic • Face creams and lotions • Face powders • Hair coloring preparations • Hair preparations: dressings.g. cosmetic • Dressings. rinses.P&G and Unilever 22 APPENDIX A: SIC CODE 2844 AND INDUSTRY DESCRIPTION 2844 Perfumes. lotions. from http://www. natural and synthetic • Sachet • Shampoos.osha. and those manufacturing essential oils are classified in Industry 2899. 2006. blending and compounding • Perfumes. powders.. cosmetics. cakes. and waters • Toilet preparations • Toothpastes and powders • Towelettes.display?id=614&tab=description . cosmetic Retrieved February 7. This industry also includes establishments primarily engaged in blending and compounding perfume bases. whether from soap or synthetic detergents. personal • Depilatories. and scalp conditioners • Home permanent kits • Lipsticks • Manicure preparations • Mouthwashes • Perfume bases. hair • Shaving preparations: e.gov/pls/imis/sic_manual. and those manufacturing shampoos and shaving products. and other toilet preparations. premoistened • Washes. • Bath salts • Bay rum • Body powder • Colognes • Concentrates. creams. Establishments primarily engaged in manufacturing synthetic perfume and flavoring materials are classified in Industry 2869. perfume • Cosmetic creams • Cosmetic lotions and oils • Cosmetics • Dentifrices • Denture cleaners • Deodorants. and Other Toilet Preparations Establishments primarily engaged in manufacturing perfumes (natural and synthetic). tablets • Soap impregnated papers and paper washcloths • Suntan lotions and oils • Talcum powders • Toilet creams. tonics. powders. Cosmetics.
Merck Johnson and Johnson (JNJ) Abbott Laboratories (ABT) Pharmachim Holding Sanofi-Aventis (SNY) L'Oreal SA (LORLY) Wyeth (WYE) Christian Dior S. New Jersey Paris Paris Atlanta. New Jersey Abbott Park. (4913) Procter and Gamble Co.00 M Sales $53.723.563.358. New York Boston.157. IPP Ltd.A.00 M Sales $16. (NSRGY) Sunstar Inc.038.549. Massachusetts Tokyo New York. Paris La Defense Vevey Osaka Cincinnati. Hayel Saeed Anam Group of Cos. Georgia Taiz Dar es Salaam New York.00 M Sales .108. Online Edition.90 M Sales $17.P&G and Unilever 23 APPENDIX A. New York $124.882.024.477.000.00 M Sales $17.A.219.20 M Sales $10. Elf Aquitaine Nestle S.00 M Sales $56. LVMH Moet Hennessy Louis Vuitton S. (CL) Gillette Co. Cosmetics and Other Toilet Preparations Source: Business & CO Resource Center.90 M Sales $11.532. Toiletries and Cosmetics. pg 2: GLOBAL INDUSTRY RANKING BY SIC Current Industry: 2844 .741. 2006. (KCRPY) Unilever United States Inc.00 M Sales $19.00 M Sales $8." Encyclopedia of Global Industries. Illinois Sofia Paris Clichy Madison.Perfumes. (PG) Unilever E.563. Kao Corp.00 M Sales $49.40 M Sales $19.00 M Sales $12.674.20 M Sales $59.584.50 M Sales $10. Thomson Gale. Ohio London Darmstadt New Brunswick.A.00 M Sales $17.00 M Sales $19. Colgate-Palmolive Co.10 M Sales $63.317.680.70 M Sales $18.348.80 M Sales $8. (LVMHF) CP and P Inc.00 M Sales $47.083.
50% The leading revenue source in the personal products market is hair care. Market Segmentation145 Global Personal Products Market Segmentation: % Share.5% of the global value. by Value.70% 16. 2004 Oral hygiene 12.P&G and Unilever 24 Appendix B: Global Personal Products Industry.70% Haircare 25. .50% Personal Hygiene Skincare 18. which accounts for 25.30% Fragrances 13.30% Make-up 13.
existing companies’ products are not protected by patents) There are no established brand identities in the industry. to include product development. (No economies of scale) There are no “experience curve” economies in this industry.4% in 2004 to reach a value of Not much capital is needed to enter the industry. (This is different from economies of scale. and enjoy an advantage (particularly the industry leaders) due to size.P&G and Unilever 25 Appendix C: Personal Products Industry. The industry rate of growth is high. Incumbent firms have the advantage. distribution networks and supply chain. materials. Incumbent companies establish contracts with firms in their distribution channels. as in the airline industry. (For instance. costs do not decline significantly with volume. and superior product development.. scale and diversity of products. (Lack of brand equity for incumbents) Yes ( ) Comment/Support Large firms do indeed enjoy economies of scale in this industry – and advantages of size. Barriers to Entry and/or Mobility Factor Large firms do not have a cost or performance advantage in your segment of the industry. or suppliers) to start business operations.g. used equipment might be available. 149 Industry entry requires capital to either acquire an existing company or to construct facilities and purchase all manufacturing (and R&D) equipment. “Global personal products market grew by 3. (For example. 148 No ( ) These segments are characterized as having well-supported. Newcomers to the industry will have little difficulty in obtaining the necessary inputs and resources (e. Patents abound in this industry. establishing partnerships with suppliers and distributors will take time.146 This industry encompasses a wide variety of products and brands. strong brands. Five Forces Analysis PERSONAL PRODUCTS INDUSTRY FIVE FORCES ANALYSIS (Industry Attractiveness Analysis from the Perspective of Major Incumbents ) I. industry leaders have been masterminds in developing innovative products147 – which suggests that they benefit from experience curve economies – in many aspects of their businesses. and that it would be difficult for less experienced firms to gain the same level of performance without going through the same learning process. While human resources may be available. skilled people. For example.) There are no proprietary product differences in the industry. to start operations) Newcomers to the industry will be able to access existing distribution channels. commanding premium pricing in sectors that are less cyclical. . The existence of experience effects in an industry means that incumbents are able to have lower costs due to past learning and experience.
the more attractive the industry to incumbents. low fixed. The industry offers newcomers one or more potential point of entry. There are many different market segments and niches where a new entrant might specialize.” 150 Market is forecasted to have a value of $182.g. however industry leaders are goliaths! Newcomers to the industry will be able to obtain the necessary licenses and permissions to start operations. India).154 Planning and establishing personal products manufacturing facilities involves permits and adhering to environmental and government regulations. Note: The greater the number of NO checks. . (Incumbents haven’t attempted all possible viable strategies in the industry) The industry has no history of retaliation by incumbents against new entrants. which newcomers can implement.S..152 The industry has well-defined product standards or specifications. Industry economics (e.9 billion in 2009 – an increase of 20. with leaders regularly introducing new products. however competition is fierce. No evidence of retaliation by incumbents against new entrants. many FDA regulations govern this industry. Product standards are fairly welldefined.151 Highest growth area expected in the Asia-Pacific region.4 billion. due to current low penetration of personal products in large markets (China. low level of consolidation) is such that incumbents don’t typically react to new entries. high variable cost. consumer concern over animal rights and environmental concerns have affected the industry for more than 100 years. intervention. 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.1% since 2004. to include prohibiting manufacturers from making therapeutic claims based on the vitamin content of skin care products.P&G and Unilever 26 $152. 153 Government regulation. Some U.
P&G and Unilever 27 II. and of use to people of all ages. The buyer does not face any significant costs in switching suppliers. Bargaining Power of Suppliers Factor The supplier industry is more consolidated than my industry. My business is not important to the suppliers. No significant costs associated with switching suppliers. natural products).155 It is difficult for buyers to vertically integrate backwards into these businesses. quality is of prime concern in each step of production chain. Many firms in industry are vertically integrated156. products with vitamins. A draw here – consumers buy in small quantities. Many products in this industry are fundamental to health and cleanliness. Product lines target males and females.) 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. technical information is not required in making purchasing decisions. buyers tend to be more knowledgeable about what they are buying. distributors (Wal-Mart.) purchase in large quantities. III. The quality of inputs is critical to my finished product. No ( ) . etc. Yes. as companies continue to expand globally. my buyers can easily purchase from my competitors. Yes ( ) Comment/Support Supplier industry is not any more consolidated than personal care industry. Business is important to suppliers. Bargaining Power of Buyers Factor The buyer industry is more consolidated than my industry. Yes ( ) Comment/Support Buyer industry will continue to grow. While some products are becoming more sophisticated (anti-aging products. for consumers as well as distributors.) Does the buyer need a lot of important (technical) information to inform its purchasing decision? (In such situations. My product is a small part of the buyer's cost of inputs. No ( ) Buyers buy in large quantities. (That is.
labor. Threat of Substitutes Factor My customers have one or more substitutes available to them.157 There are many.158 There are many different components and ingredients. services.9 billion in 2009 – an increase of 20. due to No ( ) . distributors/retail giants will need to renegotiate contracts (to possibly include transportation).1% since 2004.” 160 Market is forecasted to have a value of $182. substitute products perform well and can pose a threat. Yes ( ) Comment/Support “Global personal products market grew by 3. Therefore.161 Highest growth area expected in the Asia-Pacific region. substitutes are readily available. That is. Little costs incurred in switching for consumers. No ( ) V.(For example. It would not be easy for suppliers to vertically integrate forward. I don't have many supplier alternatives. While brand loyalty exists for some firms.4% in 2004 to reach a value of $152.4 billion. one-size-fits-all approach will not work when supplying global markets. I cannot switch suppliers quickly and cheaply.) At least one of the substitutes performs well and could pose a threat to my business. etc) are unique or differentiated. My suppliers can vertically integrate forward into my business. Yes ( ) Comment/Support See appendix D – top four firms make up only 28% of market share. through the final production stages159 and packaging and distribution. supplies. from raw materials (cultivation of plants and flora used in fragrances). Rivalry Among Existing Competitors Factor My industry is not growing rapidly or the industry is in the decline stage of its life cycle. My customers will not incur much costs or critical uncertainties in switching to a substitute. many personal care contract manufacturing suppliers for this industry. high fructose corn syrup is a substitute for sugar in many industrial applications. Each market has its own unique preferences and needs. IV. supplies. Proximity of manufacturing plants to distributors/retail stores is an advantage (lower transportation costs). services must be differentiated.P&G and Unilever 28 My inputs (materials.
R&D.163 Excess capacity not evident. Major competitors in my industry are of comparable size. making exit pricey. and superior product development. Investment in facilities.162 The industry is fragmented and exhibits boom-andbust cycles. distribution networks is substantial. There are high exit barriers. strong brands. . 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.P&G and Unilever 29 current low penetration of personal products in large markets (China. commanding premium pricing in sectors that are less cyclical. The industry suffers competition from companies based in low-cost locations. Leading firms (those with comparable levels of differentiation) are similar in size. This industry is not fragmented. The industry has excess capacity. Not the case. relative to the size of the industry. 164 Some industry leaders specialize in limited segments. leading firms in this industry are not small. There are no significant product differences and brand identities among the major competitors. 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. industry is not markedly cyclical. Industry is characterized as having well-supported. or the industry is cyclical with intermittent excess capacity. India). some of which span multiple industries. My competitors are mostly specialized in my line of business and are not diversified. the more attractive the industry is to incumbents. however most provide a variety of brands and products.
Market Share . The four-firm concentration ratio (CR4) is calculated by adding the market share of the four largest firms in the industry.8 3. The top four companies in the Global Personal Products industry represent 28. May.6 28. 3. 2004 L'Oreal. it would not be characterized as an oligopoly.50% Unilever. 8. Company L'Oreal P&G Unilever Colgate-Palmolive TOTAL %share 8.8% of the global value. 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. 2005.P&G and Unilever 30 Appendix D: Global Personal Products Industry. 2004165 Global Personal Products Market Share: % Share. 8.80% ColgatePalmolive. 71. particularly as industry leaders merge with or acquire other firms.20% The leading player in the personal products market is L’Oreal.8 8.80% Procter & Gamble. .5 7. The following CR4 table shows the total of less than 80% and is therefore not considered highly consolidated. which accounts for 8.60% Other.8% of the market share. by Value. industries that reach that ratio begin to exhibit oligopolistic behavior. 7.% Share by Value.166 While this industry is becoming more consolidated.7 Source: Datamonitor.
5 49.6 138.2 2.3 3.5 46.1 3.5 3.2 2.3 Source: Datamonitor.7 48.2 Market Value Growth $ Billion Market Value 133.3 142.5 1.9 2. .9 147.3 152.4 Year 2000 2001 2002 2003 2004 % Growth 3.4 3.5 47. May).6 % Growth 2. (2005.P&G and Unilever 31 Appendix E: Market Growth Market Volume Growth 2000 – 2004 Year 2000 2001 2002 2003 2004 Billion Units 45.
4 179.7 1993 165.0 180.8 172. A family of indexes that measure the average change over time in selling prices received by domestic producers of goods and services.5 172.4 181.7 181.8 175.8 166.9 178.6 179. cosmetics.2 165. and distribution costs.5 2000 176.3 179.6 167.6 167.2 167.7 168.1 179.8 172.8 170.4 165.4 178.2 166.1 167.6 173.3 1994 167.1 172.8 168.0 .1 181. PPIs measure price change from the perspective of the seller. This contrasts with other measures that measure price change from the purchaser's perspective.1 175.5 1996 169.0 172.0 165.1 179.4 180.8 Jul 166.0 168.4 180.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.4 176.2 180.1 168.1 170.0 180.3 181.0 169.6 169.7 181.0 177.6 181.4 169.7 168.2 168.1 168.6 174.8 177.1 168.8 176.9 Jun 166.5 168.3 2003 181.2 167.7 Sep 167.3 168.1 176.6 179.4 180.8 177. and other toilet preparations Base Date: 8003 Year Jan Feb 165. sales and excise taxes.9 165.9 171.7 164.4 176.8 Oct 166.6 2002 179.4 166.4 181.2 1995 168.5 179.0 Mar 166.5 179.2 179.9 Annual 166.9 May 167.9 167.1 180.6 178.2 1997 168.8 180.7 179.9 167.1 167.9 Nov 166.7 179.9 1998 169.8 181.9 167.4 180.4 168.2 170.7 166.3 168.0 177. such as the Consumer Price Index (CPI).8 170.9 176.2 179.0 178.5 169.0 166.1 172.8 181.4 168.9 172.5 176.2 180.6 176. Sellers' and purchasers' prices may differ due to government subsidies.7 166. cosmetics.6 168.4 1999 172.3 180.4 176.0 167. Series Id: PDU2844# Industry: Perfumes.7 181.5 167.9 172.2 181.9 167.2 168.9 168.7 168.4 168.1 172.7 171.9 180.5 2001 179.8 168.9 Dec 166.9 166.7 181.9 Apr 167. and other toilet preparations Product: Perfumes.7 179.3 172.7 Aug 166.
.396.205.94 11. Industry.reuters.29 9.90 17.P&G and Unilever 33 Appendix G: Industry Growth Rate .95 85.876.80 61.27 7.83 .03 17.675.01 7.00 32.22 12. (ADR) Colgate-Palmolive Company 3 Yr.27 45.14 12.investor.Sales Note: this source did not include Unilever in its categorization of Personal & Household Prods.319.65 4. Sales Growth 5 Yr.62 11. Ltd. Sales TTM Sales $ Rate% Growth Rate% 44. source: http://www.com/ Data as of 2/9/2006 72 companies Name MktCap Weighted Average McKesson Corporation The Procter & Gamble Company Mitsui & Co.
9 Revenue Growth 11.1% 12.396.5% 5.4% 47.9 1. 7.4% 6.3% 203.6% 57.0% 14.4% NA 23. Newell Rubbermaid Inc. 3.6 $11.9 $5. 2.4 Name Gross Margin Operating Margin Net Profit Margin Industry Average 1.8% 15.319.2% Rev Growth.7% 2. EPS Name EPS EPS Change (1yr) EPS Growth (3yr) Industry Average 1.6% 35. The Estee Lauder Co. 4.8 $6.5% 3.2% 15. 9. 4.P&G and Unilever 34 Appendix H: Average Revenue Growth: INDUSTRY Name Revenue M $44.6% 137. 9.479. 5.4% 11.3 1. 8. Inc. 3.2% 54. 2.0 2.6 $6.8% 4. 6.A.2% 14.1% 9.8% 19. Inc. 3 yrs 11.6% 13.9% NA 12.4% 2.9 $85.6 3.5% -0. (ADR) Colgate-Palmolive Company Alberto-Culver Company USANA Health Sciences. 5.1% 9.8 14.5% 33. 7.675. 2.9% 21.2% ..0% 9. (ADR) Colgate-Palmolive Company Avon Products.6 15.2% 12. 10.7% 5.2 $4.8% 10.4 2. 3.5 2.8% 4. Mitsui & Co.5 19.. LTD.7% Industry Average 1. 3.7% -124. Blyth.0 $32.6 2.4% 18.2% 7. Ltd.8% 61.4% 2.508. 6. Inc.0% 15.465. McKesson Corporation The Procter & Gamble Company Mitsui & Co.5 2.3% 17.1% 26. Tech.0% 61.7% 48.205.8 $61. S. China Techfaith Wireless Comm. (ADR) The Clorox Company Ecolab Inc. (ADR) Pillowtex Corporation The Clorox Company The Procter & Gamble Company McKesson Corporation Grupo Casa Saba.0 $4.3% 7.1% 19. 8. Shiseido Co.9 $8. Ltd Pillowtex Corporation The Yankee Candle Company. Ltd. 47.396.5% 10.876. Inc.362.4% 18.2% 47.9% 26.149.2% -2.3% 24. 10.
9% 9. 7.9% 54.0% 48.9% 11.4% 37. 10.6% 57. 5. 6. 9.9% 9.2% 51. The Procter & Gamble Company WD-40 Company Parlux Fragrances.6% 18.5% 12.6% 11.4% 11.P&G and Unilever 35 4. Inc.4% 18. Inc.0% 35. DAC Technologies Group 52.5% 16.0% 11. Colgate-Palmolive Company USANA Health Sciences.7% 19.4% 18. Playtex Products.5% . 8. Inc.7% 19.2% 17.
Financial information on the Personal Products industry as a whole is difficult to obtain without subscribing to a service such as Hoovers or Datamonitor.50% 1.5yr Net Margin .1yr Op Margin .6 1 $690.90 $59.P&G and Unilever 36 Appendix I: Historical Data – Personal and Household Products Source: http://www.072.30 $94.60% 4.1yr Net Margin .30% 23.2 $525.60% 9.00% 17.5yr Industry Sector S&P 500 47.20% Operational Efficiency Industry Exceeds S&P Revenue/Employee Net Income/Employee SGA/Sales Receivable Turnover Inventory Turnover Asset Turnover Industry Sector S&P 500 $709.20% 9.00% 15.90% 47.9 1.5 27.1 5.5yr Op Margin .90 33.60% 9.40 19.5yr Pre-Tax Margin .70% 9.60% 23.investor.50% 44.60% 10.70% 9.5yr Industry Sector S&P 500 11.030.80% 16.00% 10.40% 14.5yr Op Margin .5 13.40% 9.30% 5.1yr Op Margin . Profitability Industry Exceeds S&P Gross Margin – 1yr Gross Margin – 5yr EBITD Margin .5yr Capital Spending .062.30% 12.00% 5.10% 9.20% 14.20% 14.00% 15.871.20% 9.90 28.10% 44.1yr Net Margin .40% 18.90% 18.1yr EBITD Margin .80% 45.90% 10.90% 4.6 0.50% 12.007.60% 45.1yr Pre-Tax Margin .5yr Net Margin .1yr Sales .com Note: The industry being studied in this report does not include household products.80% 7.50% 20.60% Growth Industry Exceeds S&P Sales .90 $45.90% 23.10% 20.140.80% 13.10% 10.80% 14.9 .90% 13.10% 18.2 12.reuters.80% 14.10% 14.60% 14. However.30% 20.10% -3.5 12 6.30% 18.
4 90.2 16 156 115.04 180.1yr Effective Tax Rate .1yr Debt/Equity .30% 52.5yr ROI .9 1.6 38.qtr Current Ratio .20% Industry Sector S&P 500 .3 0.7 163.9 1 1.20% 30.40% 29.1yr ROI .7 8.40% 12.70% 33.50% 9.1yr ROE .5 139.qtr Interest coverage .5yr Liquidity Quick Ratio .2 1.1yr ROA .1yr Tax Effective Tax Rate .40% 11.9 138.60% 30.60% 13.4 105.30% 41.80% 17.30% 9.4 1.90% 8.P&G and Unilever 37 Financial Industry Exceeds S&P Returns ROA .qtr Solvency LT Debt/Equity .qtr Total Debt/Equity .40% 30.60% 15.50% 5.9 12.50% 26.10% 10.60% 36.5yr 32.5yr ROE .70% 7.70% 80.40% 32.50% 12.
813 2.748 5. Total return.401 10.586 1.324 3. EPS.P&G and Unilever 38 Appendix J: Household and Personal Products Industry Industry Ranking by Revenues.224 2.439 PROFITS % change $ % change from 2003 millions from 2003 19 7 7 13 13 13 4 13 13 26 N/A 5 38 56 6.477 7.327 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..258 3.584 10.407 15.790 4.800 1. 2005 issue of Fortune magazine.691 846 342 549 142 367 267 -50 97 89 56 25 6 -7 22 27 7 11 -13 240 57 N/A 12 10 260 From the April 15.. .481 1. Profits (US) 167 Revenues.000 revenues rank 26 135 210 215 278 346 445 530 533 593 729 893 929 941 $ millions 51.462 1. Profits Profit as % of.116 1.
com http://www. 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.A. Shiseido Company.datamonitor.P&G and Unilever 39 APPENDIX K: Company Ranking By Personal Care Revenues Only (Financial Yr 2005). Inc.datamonitor. Limited Colgate-Palmolive Company Kimberly-Clark Corporation . The Estée Lauder Companies Inc. Source: www.
P&G and Unilever 40 Appendix L: Trend Line. Int’l Trade Administration. . Exports (SIC 2844) (In millions of dollars) Value of exports Million US $ 2500 2000 1500 1000 500 89 90 91 92 93 94 95 96 97 19 19 19 19 19 19 19 19 19 19 98 Million US $ 2844 Toilet preparations Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Million US $ 694 886 1118 1254 1437 1733 1887 2195 2628 2586 Source: US Dept of Commerce: Bur of the Census.
P&G and Unilever 41 Appendix M: 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.
while India’s increased by 7. Argentina. Sales of skin care products in Asia reached about US$17. The leading category in terms of growth was skin care.5 billion in 2004.P&G and Unilever 42 Appendix N: Fastest Growing Markets. with sales in Argentina alone growing by 17% compared to 2003. the cosmetics and toiletries industry was becoming more global than ever before. followed by hair care.”168 . 2004 “Heading into the mid-2000s. led by Japan. China’s cosmetics market grew by 12. as industry leaders continued to capitalize on developing international markets.7%.5% in 2004. China and India accounted for US$10 billion in sales in 2004. Brazil. Russia and China were the fastest growing markets for cosmetics. in 2004. Together. Indeed.
i. clear. colognes. America. Balance between retail customers (top 5 sell $ 1B annually. Pert. Olay. Rexona. Dove. PhysQue. personal hygiene products and skincare products. Close Up. Beauty focuses on providing the customer a “beauty experience”. Zest. Ponds. and skin care products: Sure. Camay. Dimension Product(s) P & G Beauty (34% of portfolio) includes personal cleansing. Balanced approach w/ ½ sales from N. and oral care: Axe. explain the dimension. Aussie. deodorant. Suave. Vaseline. DoveN America .e. Pantene. Use the findings to write an explanation within the body of your analysis comparing the companies.income strategy (product lines) for developing markets (affordability). hair care. hair care. Noxzema. Tampax. oral hygiene products. cosmetics.P&G and Unilever 43 Appendix O: Value Chain Analysis. perfume. Hugo Boss. feminine protection hair color. Always. Old Spice. Infusium. No dependence on single channel or customer. Targeting of Gillette products into China major initiative. Sunsilk. ½ International.e. as well as regional differentiations. 2006 Unilever Personal care (26% of portfolio) includes skin. make-up. Target Customer Segments Differentiated for different income levels i. Covergirl. antiperspirants or deodorants. Sunsilk -Europe. Ivory. Signal. Herbal Essence. Activity Market Positioning For each company. Lux. & Giorgio Colognes Lower. Head & Shoulders. P&G and Unilever Value Chain Analysis: Worksheet Key Differences between Major Competitors Industry: Personal Products Industry P&G Date: Feb. Calvin Klein & other designer fragrances Additional Info Industry includes fragrances. and high frequency stores (developing countries). 10. Secret. affordabilityLifebuoy. Max Factor. Clairol. Safeguard. hair.
i. ponds Malaysia. Products positioned through Market Development Organizations in 80 countries. and high frequency stores (neighborhood stores in developing countries). Greater China and ASEAN/Australasia/India ". discount stores.169 Products are tailored regionally for customer differences. Northeast Asia. Products sold primarily in grocery stores. customers. Indonesia. and massage bar in Brazil . and brands. leading brands organized in seven geographies: "North America. through mass merchandisers. Rexona ebony. Western Europe.e. membership club stores. Sunsilk for Asia. hair care in Japan. Central and Eastern Europe/Middle East/Africa. and Latin America. facilitated by Gillette acquisition. and further expanded across product lines i. turkey. Latin America.P&G and Unilever 44 Summary of Product-Market Positioning Strategy to achieve balancing of products.e.brazil. markets. Lux is body wash in Europe.
P&G and Unilever 45 Primary Activities Inbound Logistics Awarded # 1 in supply chain management 2004. with bar coding and wireless technologies. Have developed transportation leadership team to analyze and improve processes from acquiring raw material through output to customers. Leaders in inbound logistics. while delivering on-time. Localized inbound raw materials supply to decrease costs & increase efficiencies. Unilever logistics organization has been restructuring and consolidating to create uniform regional distribution centers geographically located nearer the customers (within 24 hrs delivery). Early in 2000. began compliance labeling mandates for its suppliers to improve efficiencies and reduce costs. by survey of US retailers. implemented webbased solutions provider (Transplace) to manage inbound transportation. with LeanLogistic's Webnative On-Demand TMS implemented value chain solutions flexible warehousing in NA to reduce inventory and Costs. . Also. Also.
deploy latest technologies incl. increased sales per employee 40%. logistics.P&G and Unilever 46 Operations Since 1999. to provide purchase-to-pay. Additionally P & G developed their customer business development structure. general accounting and bill-to-cash functions. Poland and Portugal. contract manufacturing when available. regional financial shared services. and IT to work with trade customers for ways to add value to the consumer. which teams sales. In 2005. "Trade links" with large retailers such as WalMart and Carrefour. marketing. retailers. . SAP & customer management software. and increased product supply services. RFID for supporting operations. finance. and transportation carriers. Decreased global business services costs over 5 years 15%. Large scale manufacturing operations located in 42 countries. Use Value Added Networks for B2B Customers: linking financial institutions. operating in India. have ongoing restructuring programs to minimize costs in production and sales. hired IBM Business Consulting Services. Large scale distribution operations in over 160 countries. Have strong partnerships with large retailers. Standardized manufacturing platforms.
Currently have 22 brands each produce $1B sales annually (10 $1B brands in Beauty & Health). Unilever provides wireless applications in the field to gather customer information from sales back to the company. and picking solutions such as it's expanded contract with Exel to service distribution centers in France. New branding initiatives for all products implemented. and UK . improving efficiencies and decreasing carrier bases 70%. P & G also co-developed software for case picking and truck-loading for P & G. Additionally. advertised on fantasy airline airplanes. Argentina. Philippines.'s. Global business service organizations l in low cost. Unilever and P & G have strong programs for corporate social responsibility Customer Service Enterprise IT Strategy for positive customer impact and social impact. Consolidated transport business. Canada. Awarded # 1 in 2004 for most helpful consumer and shopper information. Use IT software for order management. incl. Interestingly. United States. high quality locations Costa Rica. warehousing. sourcing strategies spend history. including carrier contracts. and customer relationship management. Morocco. Also implementing webbased B2B solutions for managing transportation information. Have focus on word of mouth programs to impact influential teens (Tremor). Marketing and Sales Strong international growth from mega brands that are marketed globally. as well as regional marketing campaigns. Ocean going internationally.P&G and Unilever 47 Outbound Logistics P & G uses logistics specialists to support its transportation. Awarded # 1 best category management and consumer marketing in survey of US retailers. including partnering for Dove's American Girl with Bath & Body and Mattel Co. and now sells that software through a joint venture with Moore and Associates. and Lynx deodorant. China and Mexico. Superior sales and marketing machine.
Snacks & Coffee. Diverse leadership teamhalf of the presidents are from outside the US. and 13 plants) Human Resources Management One Campaign providing Regional HR activities. internal clubs. i. . Brazil has approx. global employment with blend of local and expatriates in management roles. tuition reimbursement program. and technical centers-heavy resources deployed. 4 Global divisions: P&G Beauty. Heavy recruiting at business schools and top universities. Market Development Organizations. and Gillette. Health Care. P&G Household Care. Baby Care & Family Care. and Duracell & Braun. further organized into mostly regional business groups w/brand. 754 managers. profit-sharing plan. relocation assistance program and other benefits. tuition reimbursement. Strong recruiting and training program.e. Developed "Community of Learning Academies" for ongoing learning and knowledge sharing throughout key functions. in 7 segments: Beauty.P&G and Unilever 48 Support Activities Firm Infrastructure 4 Pillars of the firm: Global Business Units. incl. Provide flexible work hours. such as finance. 2 Global divisions: foods & home and personal care. Additionally. Managers get global toolkit for diversity training. PG has strong recruiting and "employee for life" history (golden handcuffs) from strong stock purchase plan. and other benefits. # of plants. customer development. Global Business Services and Corporate Functions working separately and together. Blades & Razors. stock options.e. and support staff (i. minorities and women at the VP and GM level over the last five years has doubled. Latin America. P&G Family Health. The number of U. comprehensive training at "P&G College". Unilever has won awards on cultural diversity and leading company to work for.S. Fabric Care & Home Care.000 workers. managers. innovation. HR. IT. 13.
spend approx $2B on continuing R & D. 2006 from: http://newmediasphere.net/ccbn/7/1142/1201/ Case study. Press Release. focused global projects. and use large network of partners to support R & D efforts.html Harps. P & G has more Ph. (2006. (2000.asp?article_id=6153 Fantasy airline gives Unilever dream run. (2005. (2002. To date PG has 29. Retrieved February 11. Procter & Gamble Taps Exel for Logistics Services Supply & Demand Chain Executive. Leverage Buying Power w/global procurement and services (high economies of scale) and software based supply chain management In 2004. L. Minow. 120 people from 20 nations-Global purchasing yielded approximately E700M in savings in 2004. (2005. Retrieved February 11. February 9).blogs. Retrieved February 11.D.com/article_arch. March). Retrieved February 11. 2006 from: http://news. 2006 from: http://www. (2002. Retrieved February 11. spent E1040. N. and MIT in science and engineering Procurement 15 Global Supply Management teams of approx. Have strong Bto-B programs such as "Connect & Develop" program to find innovation partners-strong effort now for packaging initiatives. February 11).zdnet.html Hallet.pdf Company Spotlight: Unilver. L. Retrieved February 11. Syndey Morning Herald. (2005).au/news/business/fantasy-airline-gives-unileverdream-run/2006/02/08/1139379573717.com/news/press/pg_Release. T. and speed to market. Retrieved February 11. Balance and leadership. C.sdcexec. 2006 from http://www. Berkeley. (2006.solution for Unilever salesforce. 2006 from: http://www. Unilever Aims to Improve Customer Service with On-demand TMS. 2006 at: http://ccbn.com. on select.com/2100-9589_22-6007859.com Drake. 2006 from www. Retrieved February 11.mobular.shtml Harps.'s working in their labs world wide than a combination of faculty from Harvard. December. Retrieved from P & g Website February 1.d. IBM wins 7-year Unilever outsourcing deal. September). Unilver foods.com/articles/features/0702_feature05.shtml . (n. 2006 from: http://www.smh. Created new product categories w/in last 4 years generating $5B retail sales. producing innovations and line extensions of core products.inboundlogistics. Transformers.sdcexec. July). Supply & Demand Chain Executive. Have won the National Medal of Technology for innovative achievement in technology in the US.com/nms/2004/10/procter_gambles. 2006 from http://www. August).ie/pdf/CR1515_Unilever. October 7).com/article_arch.o2. Have network of "global research centers" and are beginning to work with external innovation partners to expand R & D capabilities. 2006 from: http://www.P&G and Unilever 49 Technology/R&D In 2005.doc Editorial Staff.000-patented technologies.inboundlogistics. 24). Retrieved February 2.datamonitor.lowrycomputer. (2004. Retrieved February 11. 2006 from http://web. (2004.asp?article_id=6181 Editorial Staff. Procter & Gamble's Tremor Targets Young Girls and Minors for Viral Marketing.com/articles/features/0302_feature02.). Have 20 technical centers in 4 continents. Making Dollars & Sense Out of Logistics. 2005 Annual Report. May).html .
Retrieved February 11.legendarylogistics. careers and hiring information.eg/unilever. Unilever Brazil: A truly local global company.com/jobs-company/Unilever_.espace. (2002) Retrieved February 11. 2006 from: http://www.jhtml . (n.html Welcome to P & G Solutions.html Unilever jobs. 2006 from: http://www.pg. Retrieved February 1. (2004).d.com/en_US/index. Company Homepage.) Retrieved February 11.com/UniLever. (2006). A.com.htm Unilever and eSpace: a potentially growing relationship. V. (site retrieved?) Sobredo. Organizing to win in Latin America. 2006 at: http://www.P&G and Unilever 50 Prianti. 2006 at: http://www.vault. (site retrieved?) 2004 Unilever annual review and summary financial statement (citation) Unilever.
in 7 segments: Beauty. Baby Care & Family Care.P&G and Unilever 51 Appendix P: Procter & Gamble. high replication costs Resources & Capabilities Ongoing R & D: 20 technical centers in 4 continents Yes Yes Yes. but high replication costs Yes. 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. Patents: 29. Difficult in market leading. esp. and focus Difficult to AchieveUnilever working on this now. IP. but difficult in noncommoditized markets Possible. Pampers): 22 brands each produce $1B sales annually (10 $1B brands in Beauty & Health) Yes Yes Possible. in noncommoditized markets Difficult to replace or compete with IP Possible. not probable. P&G Family Health. and Gillette . high replication costs Possible not probable. but market leadership difficult to overtake Possible. and Duracell & Braun. Downy.000 patented technologies Rare Valuable Core Competencies Yes Inimitable Nonsubstitutable Possible with heavy R & D Yes Possible. RBV Analysis Resources & Sources of Competitive Advantage Innovation: brands & categories. locations in 42 countries Yes Yes Yes. but high replication costs Yes Yes . but volume of innovation very hard to imitate Yes Yes Possible. Crest. Requires with heavy investment. Fabric Care & Home Care. P&G Household Care. Blades & Razors. Tide. not probable. Health Care. Snacks & Coffee. but high entry costs Global Scope Advantage: Large scale sales and distribution operations in over 160 countries Large scale manufacturing operations. 300 consumer products in 4 areas P&G Beauty. noncommoditized brands Possible but difficult esp.e.
high replication costs Yes Yes Yes Yes Yes Value Added Networks for B2B Customers: linking financial institutions. positive customer impact. 2006 from: http://www.html . not probable.d. r & d. not probable.P&G and Unilever 52 Economies of Scale with leveraged Buying Power w/global procurement and services. 2006 from: http://biz. 2006 from: http://www. not probable.com/. 2006 from: http://www. January). Retrieved February 1. (2004. marketing. Retrieved February 1. (2004. May).hoovers. 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. C. February).matrixone.com/matrixone/press_releases_20040223_p g.) Fact Sheet. logistics. (2006. America-need to extend reach Enterprise IT Strategy for cost reductions. technology Growth in Emerging Markets (but weakness in overexposure in US & Western Europe) Yes Yes Yes Possible. transportation carriers EDI (Electronic Data Interchange (only in N. Retrieved February 5. Retrieved February 10. high replication costs Yes Possible. Retrieved February 7. social impact.yahoo.datamonitor. Procter & Gamble awarded enterprise value award by CIO Magazine for work with MatrixOne on innovative product lifecycle management application. retailers. high replication costs Possible.com/e/060130/pg10-q. high replication costs Possible.com Form 10-Q for PROCTER & GAMBLE CO. supply chain management w/RFID Economies of Scale with Global operations in finance.xhtml Company Profile: Procter and Gamble.com/procter-&-gamble/--ID__11211--/free-co-factsheet. 2006 from www. (n. February).pgedi. ROI. not probable. The Procter & Gamble Company.html P & G North America electronics data interchange. (2006.
Chile. Wal-Mart. Knorr. Mexico. relationship management Yes. but difficult Yes Global Scope Advantage: Large scale sales and distribution operations.P&G and Unilever 53 Appendix Q: Unilever. Carrefour Rare Valuable Core Competencies Inimitable Nonsubstitutable No Yes. requires heavy resources . 35% of sales in developing & emerging countries. i. but strong brand acceptance Yes. but difficult Yes . Difficult to reproduce Resources & Capabilities Yes Ongoing R & D: high spending and ongoing brand extensions Yes Yes . esp. incl. RBV Analysis Resources & Sources of Competitive Advantage Innovation: Strong Brand Recognition and Trust: 12 Brands with E1Billion. and high spending Yes. but requires strong IP.e. Large scale manufacturing operations. Peru. Magnum Hellman's. but difficult Yes Yes Yes Yes Yes. Dove. but strong brand acceptance NO Yes No Yes Yes Yes . but difficult to imitate Yes Yes Limited Limited Yes Yes Opportunity to build in lock outs Wide product reach across stores (present in many locations) Growth in Emerging Markets. but difficult Yes . (Need to expand into India and China) Yes Yes Yes Yes Limited Yes but difficult to imitate Yes. (Dove) Strong relationship with Retailers. JV's for strong positioning-ie Pepsi. but requires resources. offering additional supply chain management. complementary distribution network "Path to Growth" Strategy to focus on core products and R & D for development of them Yes Yes . Bird's Eye Brand Leadership. but with continued development further differentiate and strengthen core products Limited Yes but difficult.
Vast resources with leveraged Buying Power and supply chain management for reduces costs However. May).com .P&G and Unilever 54 Economies of Scale. just developing Growth through Acquisition weakness-need to look to this avenue ongoing Go to Market Expertise Capabilities.datamonitor. organizational structure & differentiated product lines had been weakness. (2004. but brand sell offs & corporate reorganizing improving this. RFID technologies-weakess. 2006 from: ww. 2006 from: http://www.com/Images/Introduction%20to%20Unilever_tcm13-15184.unilever. (2005. June). Difficult to reproduce Emerging Emerging Limited No No No No Limited Difficult Yes but costly and difficult to implement Limited Difficult Introduction to Unilever. Retrieved February 2.current weakness & focus for improvement Adapted from Lucas (2002) Yes/emerging Yes/emerging Yes but difficult to imitate Yes.pdf Unilever Company Profile. Retrieved February 2.
476.0 6.932.795.025.201.924.0 3.0 397.0 7.803.875.0 (9.0 4.0 12.006.706.892.205.0 10.329.0 14.542.0 61.038.0 212.0 19.0 843.0 11. Total Total Current Assets 6.220.0 15.0 (10. of LT Debt/Capital Leases Other Current liabilities.115.841.689.969.0 2.0 1.0 2.0 9.349.0 Deferred Income Tax Minority Interest 2.0 2. Total .831.077.610.0 3.0) 14.0 5.0 2.0 – 1.0 2.038.062.389.166.0 19.427.0 4.0 22.0 3.0 – 11.0 2.400.330.0 23.0 Accounts Payable Accrued Expenses Notes Payable/Short Term Debt Current Port.306.487.287.Net Goodwill.0 1.0 – 2.0 40.0 4.261.912. Net Total Inventory Prepaid Expenses Other Current Assets.0 3.196.0 5. Net Total Receivables.0 12.0 (9.201.331.889.887.640.0 3.887.802.304.0 2.172.776.816.0 3.0 – 894.0 9.0 – 1.0) 13.617.894.0 5.325. Dollars (except for per share items) As of 6/30/2005 As of 6/30/2004 Reclass.531.0 12.0 20.0 22.0 – 12.0 – 11. Total Total Current Liabilities 3.0 – 1.623.0 – 907.456.0 – 2. Net Intangibles.879.744.0 521.993.631.0 4.0 20.0 12.070.931.0 6.0 4.0 (11.212.527.375.0 7.0 Property/Plant/Equipment.0 5. 6/30/2004 5.0 23.0 4.0 3.0 – 2.0 – 1.438.0 17.703.0 25.475.0) 13.0 57.185.0 34.0 Total Debt 24.0 3.0 4.704.925.554.233.438.Gross Accumulated Depreciation.095.0 1.846.0 – 1.358.0 As of 6/30/2002 As of 6/30/2001 Cash & Equivalents Short Term Investments Cash and Short Term Investments Accounts Receivable Trade.721.062.441.554.0) 14.792.0 1.039.108.396.0 3.0 2.0 – 12.081.0 4.0 11.P&G and Unilever 55 Appendix R: P&G Financial Analysis P&G Financial Statements ANNUAL BALANCE SHEET In Millions of U.387.S.0 1.475.0 Long Term Debt Capital Lease Obligations Total Long Term Debt 12.966.0 300. 6/30/2005 As of 6/30/2003 Reclass. Net Long Term Investments Other Long Term Assets.792.0 11.384.075.0 1.0 1.512.731. Total .821.0 8.132.0 2. Total Property/Plant/Equipment.133.0) 13.0 2.0 3.0 1.647.0 10.0 – 1.0 – 1.232.290.265.0 12.048.147.554.0 8.0 2.659.0 196.0 – 2.518.332.104.0 3.0 – .0 13.660.103.0 1. Total Total Assets 26.0 43.0 25.726.0 (11.0 – 9.0 958.347.090.328.0 – 2.464.0 11.931.0 4.090.185.
0 9.0 27.90 2.723.0 1.560.S.706.360.0 13.0 – 2.490.524.678.006.0) (561.0 1.0 20.451.425.0 40.481.0 7.0 25.0 28.057.0 35.0 19.544.0 1.0 Selling/General/Admin.282.Non Redeemable.0 – 1.169.0 2.308.0 13.000 1.0 2.375.608.426.0 69. Dollars (except for per share items) Revenue Other Revenue.48 2.543.0 4.0 1.0 – 2.520.0 – 1.827.0 21.40 2. Total Research & Development Depreciation/Amortization Interest Expense(Income) .601.0 13.0 33.580.0 – 2.591.927.000 98.48 Employees Number of Common Shareholders 110. Total Total Equity 1.000 1.000 1.0 6/30/2003 43.387.0) (629.804.088.0 – – – – 45.0 Shares Outs .736.244.0 – 51.451.0 Interest Expense.504.048.980.0) 12.Common Stock Primary Issue Total Common Shares Outstanding 2.0 – (1.665.0 43. Net Non-Operating Interest Income(Exp).377. Net Non-Operating Gain (Loss) on Sale of Assets (834.0 40.054.601.0 34.0 6/30/2004 51.0 57.0 43.0 – (1.000 110.473.808.54 2.0) 13.186.0) (1.000 106.0) (2.483.472.283.0 Operating Income 10.301.0 6.545.0 10.845.010.0 – – 1.601.Common ESOP Debt Guarantee Other Equity.688.0 20.0 18.692.331.291.0 – (1.027.527.0 2.0 10.0 – (1.377.344.594.0 27.407.0 1.0 16.000 1.566.0 34.701.760.296.142.0) 17.0 – – – – 41.0 – 56.0 2.204.706.0 2.0 3.594.0 44.526.0) 17. Total Total Revenue 12 Months 12 Months 12 Months 12 Months 12 Months Ending Ending Ending Ending Ending 6/30/2005 56.853.234.0 1.937.54 2.0 1.0 – – 755.0 11.0 2.000 106.0) (794. Total Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Treasury Stock .814.0 21.80 2.000 ANNUAL INCOME STATEMENT In Millions of U. Total Preferred Stock .769.259.741. Total Gross Profit 27.543.770.0 1.611.0 1.962.407.P&G and Unilever 56 Other Liabilities.0) (2.741.80 2.0 4.238.0 39.0 – (1.0 Redeemable Preferred Stock.230.0) – (794.076.373.472.0 Total Liabilities & Shareholders' Equity 61.0) (834.776.0 – – 1.0 – 39.0 26.508.594.90 2.004.40 2.0) 16.634.120.634.0 11.0 Cost of Revenue.0) (2.Net Operating Unusual Expense (Income) Total Operating Expense 18.010.070.050.0) (603.0 6/30/2002 40. Net Common Stock.613.477.0) (1. Expenses.0 6/30/2001 39. Total Total Liabilities 3.0 10.0) – (629.090.278.580.0) – .0 22.591.0) – (561.0) – (603.244.339.000 1.
705 442.580.385 310.60 1.662 2.847 1.0 8.0 1.340 2.127.928 1.0 2.0 Minority Interest Equity In Affiliates Net Income Before Extra.0 9.0 Basic Weighted Average Shares Basic EPS Excluding Extraordinary Items Basic EPS Including Extraordinary Items 2.0 Provision for Income Taxes Net Income After Taxes 3.0 213.952 2.593.350.869.077 1.0 6.0 Income Available to Com Incl ExtraOrd 7.0 5.0 6.0 603.0 2.321 755.0 5.0 4.723.662 – 9.344.811.0 2.228.960 0.847 112. Items – – 7.0 Preferred Dividends Income Available to Com Excl ExtraOrd (136.629 1.971.0 0.0 2.0 7.228.20 1.10 2. Supplemental Depreciation.733.703.0 2.0 – – – 6.790.0 1.0 2.186.3 4.884.0 5.10 2.271.20 2.0) 4.662 127.0 6.350.923.20 1.0 2.257.910.0 10.0) 7.629 2.800 1. Exp.831 2.600.0 – – 4.925 Interest Expense.0 2.461 2.922.0 632.030 2.0 2. Basic EPS after Stock Based Comp.326.700 1.034 1.0 0.422 .0 629.788.0 7.0 2.0 7.0 (121.80 1.831 2.481.60 1.7 1.0 2.820 1.0 7.0 4.60 2.545 1.481.350.257.350.0 2.515. Basic Normalized EPS Diluted Normalized EPS – 10.121.760 1.530 325.031.461 2.012.700 2.0 – – 6.003.410.041 1.0 0.801.350.0 308.0 – 3.603.0 6.061.80 1.694.121.481.728.595.0 1.408.283.0 0.0 (131.285.061.0 – – – 5.186.616.034 DPS .0) 2.461 2.027.0 238.0 – – 5.0 (125.530.460 1.822.802.930 2.0 674.0 1.0 2.0 3. Net Net Income Before Taxes 346.0 794.0 6.0 1.0 5.0 561.3 2. Exp.0 6.186.922.0 4.0 – – 2.0 Accounting Change Discontinued Operations Extraordinary Item Net Income – – – 7. Diluted EPS after Stock Based Comp.0 152.0 – – – 2.0 (124.0 5.0 2.Common Stock 1.0 Pro Forma Stock Compensation Expense Net Income after Stock Based Comp.161 2.612.481.077 Dilution Adjustment Diluted Weighted Average Shares Diluted EPS Excluding ExtraOrd Items Diluted EPS Including ExtraOrd Items 135.439.594.0 4.0 7.831 2.0 252.352.0 6.156.0 5.726.352.952 1.0) 5.820 2.496 1. Exp.0 6.7 3.321 116.0 1.383.0 0.P&G and Unilever 57 Other.0 2. Supplemental 834.121.557.869.801.Common Stock Primary Issue Gross Dividends .257.321 2.200 398.121.545 106.182.0 2.0 2.0 – 2.182.352.0) 6.0 2.0 – – – 4.0 2.0 1. Avail to Com.809.439.257.922. 334.891.0 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.693.0 1.339.
P&G and Unilever 58
P&G and Unilever 59
ANNUAL CASH FLOW STATEMENT (Indirect Method)
In Millions of U.S. Dollars (except for per share items)
12 Months 12 Months 12 Months 12 Months 12 Months Ending Ending Ending Ending Ending 6/30/2005 6/30/2004
5,186.0 1,703.0 63.0 – 1,748.0 8,700.0
Net Income/Starting Line Depreciation/Depletion Deferred Taxes Non-Cash Items Changes in Working Capital Cash from Operating Activities
7,257.0 1,884.0 650.0 – (1,069.0) 8,722.0
6,481.0 1,733.0 415.0 – 733.0 9,362.0
4,352.0 1,693.0 389.0 – 1,308.0 7,742.0
2,922.0 2,271.0 (102.0) – 713.0 5,804.0
Capital Expenditures Other Investing Cash Flow Items, Total Cash from Investing Activities
(2,181.0) (155.0) (2,336.0)
(2,024.0) (8,120.0) (10,144.0)
(1,482.0) 119.0 (1,363.0)
(1,679.0) (5,156.0) (6,835.0)
(2,486.0) 643.0 (1,843.0)
Financing Cash Flow Items Total Cash Dividends Paid Issuance (Retirement) of Stock, Net Issuance (Retirement) of Debt, Net Cash from Financing Activities
– (2,731.0) (4,548.0) 3,111.0 (4,168.0)
– (2,539.0) (3,515.0) 5,686.0 (368.0)
– (2,246.0) (967.0) (1,882.0) (5,095.0)
– (2,095.0) (331.0) 2,623.0 197.0
– (1,943.0) (1,109.0) 38.0 (3,014.0)
Foreign Exchange Effects Net Change in Cash
Cash Interest Paid Cash Taxes Paid
2005 Net Income Sales Assets Equity
7,257.0 56,741.0 61,527.0 17,477.0
P&G Financial Data 2003 2002
5,186.0 43,377.0 43,706.0 18,186.0 4,352.0 40,238.0 40,776.0 13,706.0
2,922.0 39,244.0 34,387.0 12,010.0
6,481.0 51,407.0 57,048.0 17,278.0
P&G Dupont Analysis Net Profit Margin 0.07 0.11 0.12 0.13 0.13 Asset Turnover 1.14 0.99 0.99 0.90 0.92 Rtn. On Invest. 0.08 0.11 0.12 0.11 0.12 Financial Leverage 2.86 2.98 2.40 3.30 3.52 Rtn. On Equity 0.24 0.32 0.29 0.38 0.42
2001 2002 2003 2004 2005
P&G and Unilever 60
P&G Dupont Analysis 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2001 2002 2003 2004 2005 Net Profit Margin Asset Turnover Rtn. On Invest. Rtn. On Equity
Financial data obtained from Reuters on February 4, 2006 from http://www.investor.reuters.com/IS/aspx.
P&G's overall financial performance is good, but not stellar. Return on equity has generally risen slightly over the last several years, although profit margin and return on investment have both leveled off in the 12%-13% range. Asset turnover efficiency is declining, which is due to increases in inventory, accounts receivable, cash and goodwill. The firm's financial leverage increased, which is due to increasing levels of debt that is being carried on the balance sheet, most of which is short-term debt. Carrying a high short-term debt load may be considered problematic, and is reflected in P&G's liquidity as measured by the current ratio and quick ratio at .81 and .61 respectively, somewhat below the sector (non-cyclical consumer goods) averages. In terms of the long-term debt load, it is currently equal to about 42% of the stockholder's equity, which is also considered a little on the high side, compared to a more optimal level of 25%-35%. P&G's SG&A costs are in the 25%-30% range, which is somewhat high, compared to a more optimal level of 12%-15%. Cash flow from operating activities has also slowed, and in the most recent year was reduced to a level comparable to two years prior.
3 21. Net Receivables .690.7 1.8 – 45.491.855.149.779.927.1 17.4 3.5 – 69.6 1.8 4.938.057.2 3.P&G and Unilever 61 Appendix S: Unilever Financial Analysis Unilever Financial Statements ANNUAL BALANCE SHEET In Millions of U.7 8.Gross Accumulated Depreciation.167.Net Goodwill.3 3.8 4.789.5 526.3) 7.7 – 8.505.761.934. Net Long Term Investments Other Long Term Assets.4 1.014. of LT Debt/Capital Leases Other Current liabilities.046.0 5.601.0 34.9 7.0 1.4 896. Total Total Current Assets Property/Plant/Equipment.6 1.8 1.7 Accounts Receivable Trade.282.120.463.7 5.382.471.060.419.9 1.8 Cash and Short Term Investments 3.224.4 528.947.271.063.065.1 8.8 2.563.8 (10.8 16.5 188.8.131.525.1 17.484.9 15.010.213.9 – 8.159.6 5. Total Total Assets 16. Net Total Inventory Prepaid Expenses Other Current Assets.791.4) 11.Other 2.2 20.9 – 20.038.6 19.810.921.5 3.6 13.2 687.4 814.838.2 Long Term Debt Capital Lease Obligations Total Long Term Debt 8.508.400.7 4.013.236.579.0 5.S.5 5.565.3 23.538.2 1.807.509.9 – 6.0 796.411.1 1.9 657.313.726.394.2 6184.108.40.206.8 Total Debt 14.333.6 4.2 2.2 27.9 Restated 12/31/2002 2.7 (11.6 18.3 1.525.6 3. 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 1.003.159.3 3.696.4 4.1 – 13.553.321.4 16.6 3.4 – 13.4 238.092.010.1) 7.545.5 1.596.1 741.8 23.9 – 17.2 4.9 10.904.080.8 Accounts Payable Accrued Expenses Notes Payable/Short Term Debt Current Port.8 – 15.475.219. Net Intangibles.1 1.8 23.271.308.4 22. Total .453.088.724.7 792.6 14.489.0 3.7 6.7 (8.845.3 5. Total . Total Property/Plant/Equipment.413.631.986.8 – 63.5 21.6 4.8) 11.6 (8.466.6 566.9 6.170.3 4.5 1.3 30.351.477.626.4 24.2 242.081.123.8) 8.3 16.032.5 597.6 .209.2 4.065.679.6 Deferred Income Tax Minority Interest 613.1 6.0 450.4 – 40.8 393.801.631.5 13.448.388.651.458.849.4 16.835.4 6.4 (9.434.712.0 742.484.7 5.858.5 6.358.196.8 – 50.6 3.8 4.770.8 5.2 35.107.499.535.6 3.8 2.2 434.0 30.062.923.1 6.3 4.135.0 3.6 – 10.9 – 10.2 764.679. Total Total Current Liabilities 4.4 Total Receivables.
0 1.111.7 Revenue Other Revenue.431.0 29.379.5 3.58 571.291.871.122.676.222.459.8 23.945.7 69.6 – 51.104.819. Dollar ADR Information 1 Share(s) Per ADR ANNUAL INCOME STATEMENT In Millions of U.0 1.4 32.122.9 59.2 – – – – 44.242.524.100.000 Currency Exchange Rate (most recent) 0.P&G and Unilever 62 Other Liabilities.9 9.368.0 1.391.58 571. Expenses.206.58 571.802.7 – – – – 51.138.676.8 – 2.883.385.831.3 45. Total Gross Profit 24.000 258.010.2 28.7 – 57.4 3.803.4 25.929.8 6. Net Common Stock. Total Total Equity – – 504.483.6 – – 504. Total Total Liabilities 7.9 6.5 4.5 5.58 571.0 1.676.066.653.525.204.9 8.Non Redeemable.7 51.093.8) 7.6 25.676.2 Total Liabilities & Shareholders' Equity 40.6 57.000 265.7 23.0 1.7 – – – – 53.4 50.4 6.5 6.58 1.1 Operating Income 4. Total Preferred Stock .5 38.1 – – 504.642.196.3) 5.000 295.5 – – – – 55.Net Operating Unusual Expense (Income) Total Operating Expense 20.5 6.3) 6.000 240.2 8.8 63.7 – 48.00 1.321.833 Euro / U.S.686.233.6 .834.3 – 57.6 6.58 571.Common Other Equity.819.936.917.062.008. Total Research & Development Depreciation/Amortization Interest Expense(Income) .4 19.3 57.8 22.926.057.3 Cost of Revenue.6 5.4 – (1. 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 61.3 – 61.579.4 26. Total Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Treasury Stock .3 29.1 220.127.116.110.5 – 2.838.S.00 Employees 227.204.Common Stock Primary Issue Total Common Shares Outstanding 571.9 – – 504.5 54.9 – (1.6 45.266.651.304.367.3 34.58 571.676.563.138.3 Selling/General/Admin.0 30.58 571.6 Redeemable Preferred Stock.190.935.926. Total Total Revenue 48.119.097.4 – – – – 44.8 Shares Outs .233.6 – (1.962.3 – – 504.641.515.014.2 24.
749.4 (1.006.91 3.5) – 129.6) (1.604.4 (613.0) – 188.2) 3.NonOperating Interest Income(Exp).1 (32.4 Accounting Change Discontinued Operations Extraordinary Item Net Income 0.7 0.7 1.560 982. Items (928.708 976.9 (73.3 0.8 460.254.0 (52.4 4.195.822.683.Common Stock 2.6 Income Available to Com Incl ExtraOrd 2.827.447 0.447 2.7 (1.4) 3.877.735.6) 643.274.932 0.125.9 1.932 DPS .4 – – 4.7) (1.7 1.9 2.0 1.7 Interest Expense.2) – (73.572 968.478.569 – 1.613.8) 945.625.1 1.600 0.0 1.4 Preferred Dividends Income Available to Com Excl ExtraOrd (33.209.040 1.2) 582.125.735.4) 3.177.7 – .2 (774.0 2.28 0.576 0.4) 3.5 2.7) (1.8 (650.41 2.60 3.1 3.267.453.0 (61.8 – – 4. Supplemental Interest Capitalized.836.P&G and Unilever 63 Interest Expense.8 (934.503.178. Net Net Income Before Taxes (921.5 3.22 0.716 1.468.445.0 – – 2.018.010.S.4 2.511.749. Supplemental Depreciation.8 (7.8 – – 3.0 1.8 526.572 2.8 945.9 4.860.0 1.822.832.386.012.6 Basic Weighted Average Shares Basic EPS Excluding Extraordinary Items Basic EPS Including Extraordinary Items 963.918 4.0) – 1.445.584.8) – 1.9 Total Special Items Normalized Income Before Taxes Effect of Special Items on Income Taxes – 3.2) 308.223.3) (2.956 0.9 1.70 3.1) – 50.863.4 574.8) – (199.242.5 3.0 998.3 1.625.5 2.478.9 – – 5.302.Common Stock Primary Issue Gross Dividends .863.6) 2.7 1.8 363.0 – – 3.592.4) 1.406.937.2 1.990.00 0.926.268 2.956 Dilution Adjustment Diluted Weighted Average Shares Diluted EPS Excluding ExtraOrd Items Diluted EPS Including ExtraOrd Items 0.8 – – 4.078.014.6 (32.14 3.1) – (273.088 2.1 3.9 472.2) – – 636.6 4.407. GAAP Adjustment Net Income Before Extra.872 1.0 – – – 998.1 Minority Interest Equity In Affiliates U.406.296. Net Non-Operating Interest/Invest Income .267.1 2.8 (1.7 Provision for Income Taxes Net Income After Taxes 938.600 3.708 3. Supplemental 921.2) 5.55 2.8 1.3 626.4 998.1 2.4) – (44.0 1.592 0. Net Non-Operating Gain (Loss) on Sale of Assets Other.802 4.3 (922.511.80 0.6 (1.6 – 1.2) 1.424 0.5 1.9 (50.8) – 972.592.407.7 0.585 989.862.
336.302.6 3.5) (879.653.9 – 667.5) (9.7 Foreign Exchange Effects Net Change in Cash – (806.4 3.159.9) (6.7) 1.9 Currency Exchange Rate (most recent) 0.468.707.5 – 136.935.2) – (525.1 945.015.0 0.708 3.0) (2.822. Net Issuance (Retirement) of Debt.4 (873.6 2.1 1.683.505.0 3.414.3) 4. 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 5.1 6.6) (6.4 2.1) 6. Basic Normalized EPS Diluted Normalized EPS 938.760.4) (1.5 2.5) (1.5 2.180.7) (8.848.6) 27.633.6 0.336.097.8 (3.937.488.5 3.0) 6.1 Capital Expenditures Other Investing Cash Flow Items.9) 7. Net Cash from Financing Activities (972.490.8) Cash Interest Paid Cash Taxes Paid – 1.6 Net Income/Starting Line Depreciation/Depletion Deferred Taxes Non-Cash Items Changes in Working Capital Cash from Operating Activities 4.5 2.9 2.7 1.802 1.6) – 144.050.962.080.687.956 0.5) (7.704.344.491.832.9 2.023.9) (2.3) (32.2 2.4) – (1.9) (2.496.1 27.0) (8.048.6) (1.9 1.090.8 (482.203.933.430.592 0.1) 6.9 – 427.S.827.1 2.3 3.0) 302.449.549.0 – (226.844.3) 6.4) (2.7) (3.9 582.918 3.9) (34.008.124.3 6.5 58.4) (2.584.1 2.6) (1.575.7 – (410.932 Currency Exchange Rate (most recent) 0.646. Avail to Com.1 3. Dollar ADR Information 1 Share(s) Per ADR ANNUAL CASH FLOW STATEMENT (Indirect Method) In Millions of U.432.7 1.2 2.P&G and Unilever 64 Inc Tax Ex Impact of Sp Items Normalized Income After Taxes Normalized Inc.098.5 2.040.176.576 1.613.2) 766. Total Cash from Investing Activities (1.6) (3.2 (1.0) 2.833 Euro / U.7 1.2 (684.634.8 (1.542.3) (21.592.833 Euro / U.1) (1.210.1 – (860.963.2) Financing Cash Flow Items Total Cash Dividends Paid Issuance (Retirement) of Stock.843.3) 10.4 3.600 1.5 (1.864.445.926.572 2.575.478.642.9) (7. Dollar ADR Information 1 Share(s) Per ADR .7 3.379.386.447 1.9 3.S.761.579.9 (1.8 (1.4) (3.093.122.S.249.
104. Perhaps most significant is the fact that Unilever's sales have been on a decreasing trend for the last five years.642.80 0.7 57.07 0. their current ratio is . return on equity has also dropped off.98 1.06 7. On Invest. To Unilever's credit. Over the last three years.937.6 2.3 51. Rtn.57.3 63.05 Asset Turnover 0.170.641.12 Rtn.3 2.60 0. swelled to more than 40%.321.100.2 Unilever Dupont Analysis Net Profit Margin 0.1 57.838.02 0. its financial results can be greatly impacted by fluctuations in foreign exchange rates. their liquidity is still below industry averages.com/IS/aspx.37 2000 2001 2002 2003 2004 Unilever Dupont Analysis 1.9 61.40 1.20 0.563.8 5.01 6.40 0.204. 0.1 Unilever Financial Data 2003 2002 2001 3.9 2000 1.6 6.468. Net profit and return on investment margins have remained in the single digits for the last several years.51 0. On Equity 0. debt loads have been significantly reduced along with inventories and accounts receivable.82. Although their debt loads have been significantly reduced.04 0.926.00 0. On Equity Financial data obtained from Reuters on February 4.651.4 7.7 40.819.233. Because Unilever has its ownership spread across several different countries.14 1. Unilever's SG&A expenses have run unusually high at around 37%. which has improved the company's financial leverage and improved asset turnover. .reuters.5 48.08 0.27 0.06 0. 2006 from http://www. On Invest. Unilever's financial performance leaves much room for improvement.20 1.P&G and Unilever 65 2004 Net Income Sales Assets Equity 2. For the most recent year.1 9. and their quick ratio is . and in the most recent year.03 0.06 Financial Leverage 7.7 8.16 0.41 6.05 0.04 0.83 0.6 45.12 1.00 2000 2001 2002 2003 2004 Net Profit Margin Asset Turnover Rtn.7 69.616.803.584.52 0.391.19 Rtn.302.3 50.55 9.investor.
industry news and periodicals and competitor websites. company reports.P&G and Unilever 66 Appendix T: P&G SWOT Summary* Strengths • • • • • Weaknesses • • • • • Significant scales of scope and economies in their operations Excellent brand recognition and brand management Good product innovations Good overall performance Supply Chain excellence Reductions in cash flow levels Mature Markets High customer concentrations High SG&A costs Low R&D expenditures Opportunities • • • Threats • • • Good growth potential in the Health and Beauty segment Growth opportunities in developing countries and markets Growth potential of domestic retailers High levels of competition Raw material and energy price increases Potential Gillette integration issues *Information derived from financial statements. This summary represents the key issues that Global Strategy Advisors have identified for each category. .
industry news and periodicals and competitor websites. company reports. . This summary represents the key issues that Global Strategy Advisors have identified for each category.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.
and subsidiary management. in 1948. in England. This accomplishment is an example of their true Global Mindset and orientation to maximizing global strengths. P&G GmbH moved into Germany and established a manufacturing facility. moved into Eastern Europe through acquisitions and new business development. P & G created an Overseas Division to manage the Company's growing international business. and by 1930. North America. and developed the Market Development Organization. and distribution. P & G acquired a company for manufacturing and selling P&G products in Japan. P & G acquired their first Far East operations. which leads country business teams in building brands in local markets. P & G created its first subsidiary overseas. and in 1954. P & G modified their geographic structure for better strategic integration and coordination globally. Betrix. and by 1984.181 * This history is in an expanded presentation format to provide an insightful overview of their growth. . moved into Mexico with a subsidiary in Latin America.175 From the late 1980's until currently. especially their pharmaceutical line.. and their completed acquisition of the remaining 20% of its China venture from its partner.174 In the 1970's. following a roll out in store counters in Asia with lessons shared.178 To better serve the global marketplace.179 created alliances for co-marketing. purchasing. engineering. creating four regions. developing a manufacturing facility for soap and Crisco.173 Continuing to identify key markets.176 and secured additional acquisitions such as Max Factor.170 In 1935. manufacturing. To further propel their global expansion for increased opportunity. in Canada. with components developed in Japan and Europe. as the Board of Directors knows this information. serving Common Market subsidiaries. Latin America. P & G made several more acquisitions in the 1980's. in the 1960's.177 Clairol.171 Understanding the importance of foreign marketplace knowledge. and Gillette. to create an effective. P&G has formed a manufacturing JV in China and Viet Nam. highlighting their global development capabilities. Ltd. and reorganized to category management while integrating. Asia.172. and packaging in the United States..180 They continue to benefit from ongoing learning.P&G and Unilever 68 APPENDIX V: History of Global Expansion P & G As early as 1915. purchasing Thomas Hedley & Sons Co. moved into continental Europe leasing of a plant in France. P & G introduced Liquid Tide. such as their launch of Olay in Spain. well coordinated product supply system. The Unilever history is presented in a table. and opened their European Technical Center in Brussels. P & G began movement outside the United States. giving P & G full ownership. and Europe/ Middle East/Africa. people management. began Middle East business in Saudi Arabia.
United Africa Company (Unilever subsidiary) becomes UAC International . and enterprises in the Pacific. New mass market for consumer goods in Argentina Jurgens and Van den Bergh team up with two European businesses. Both Lever Brothers and Jurgens and Van den Bergh had established palm planting operations – Lever Brothers in the Solomon Islands. Jurgens and Van den Bergh in German Africa.S. Unilever acquires Frigo ice cream in Spain. Ireland and England. across the nine members of the EEC.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. creating a large group of European businesses involved in the production of almost all goods created from oils and fats. Unilever is broken up. Belgium and Czechoslovakia. Dove soap relaunched in Europe. New mass market for consumer goods in Brazil Unilever is officially established During war years.000 people in 200 offices and factories.the Margarine Union. increasing shareholder interest in UK businesses and gaining UK rights to deep-freezing methods (through acquisition of Birds Eye and other companies). post-war New mass market for consumer goods in Caribbean Sunsilk shampoo available in 18 countries worldwide Dove soap launched in the U. France. starting in Italy. Unilever’s tea business becomes one of the largest in the world. Jurgens and Van den Bergh own margarine factories in Scotland. New mass market for consumer goods in Mexico. Unilever continues to expand in the food market. Jurgens and Van den Bergh merge to create Margarine Unie . 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 . Cif (everyday cleaner) launched in France. By now.having expanded since its inception in the 1920s to trade in 43 countries. New mass market for consumer goods in Chile New mass market for consumer goods in Central America. Unilever employs nearly 177. Australia and the U. Jurgens and Van den Bergh acquire additional small businesses in the Netherlands. United Africa Company yields large profits in Nigeria Unilever acquires Lipton Teas. Margarine Unie acquires the French-Dutch Calvé-Delft group with factories in the Netherlands. Cornetto. The union gains new members. Manufacturing and packaging initiatives launched in Europe Good Humor ice cream acquired in U. Lever Brothers buys first company in West Africa. plus Canada. the first packaged and branded ice cream cone. they operate seven margarine factories in Germany. Centra and Schicht.S. Unilever regains control of its international network.S. begins its launch in Europe.S. Unilever acquires National Starch in the U. with businesses in German and Japanese-occupied territory cut off from London and Rotterdam.
Acquired controlling interest in leading Ecuadorian detergents. 1997 1999 2000s 2000 2001 2002 Our history. Ghana. Breyers ice cream (my favorite) acquired in the U. Unilever Health Institute opens regional centres in Bangkok and Accra. Amora-Maille culinary business acquired in France. from Unilever web site: http://www.S. Grupo Cressida.P&G and Unilever 70 1989 1990s 1992 1993 1994 1996 Magnum ice cream launched in Germany. Retrieved February 14.S. Hindustan Lever and Brooke Bond Lipton India merge to create India’s largest private sector company.com/ourcompany/aboutunilever/history/default. personal products and food company. in the Dominican Republic. Acquired Honduras-based soaps. Corporacion Jaboneria.com/ourcompany/aboutunilever/history/default. Retrieved February 14. Unilever disposes of United Africa Company. Acquired HPC business Sociedad Industrial Dominicana. and establishes UniRus in Russia.asp.unilever. Organising to win in Latin America. .asp. 2006. Organics shampoo first launched in Thailand.. By this time. Ben & Jerry’s ice cream and Slim Fast foods acquired in U. Annapurna iodized salt launched in India. 2006. Kibon ice cream acquired in Brazil. Unilever has cut the number of its brands from 1600 at the end of the 20th Century. from Unilever web site: http://www. to 900.unilever. and a controlling interest in the Varela HPC business in Colombia. foods and beverages company. Unilever enters the Czech Republic and Hungary.
P&G and Unilever 71 Appendix X: Dynamic Resource-based Model of Competitive Advantage183 .
It is advertising its Lynx male body spray on the on-line sites of the so-called lad magazines like FHM. 2000 “Mindful that women buy most of the food and consumer products in a household.P&G and Unilever 72 Appendix Y: Unilever’s Early Use of the Internet. and American Web site aimed at women. which are widely read by British teens. a British site that plans to target teenage girls. and Wowgo. the company has taken equity stakes in iVillage.”184 .com.com.
Head of Customer eBusiness of Unilever and Co-chairman of the Global Commerce Initiative’s GDS Implementation Program.P&G and Unilever 73 Appendix Z: Global Data Synchronization Network Overview of Benefits for Manufacturer and Retailer185 “Global Data Synchronization (GDS) is fast becoming a strategic imperative for many manufacturers and retailers.187 .”186 Among the actual business benefits of GDS cited in this article was Unilever Colombia. “Early adopters understand that GDS is necessary to provide a foundation for future collaborative commerce and are realizing substantial benefits from implementing GDS. which significantly reduced their data inconsistencies and improved new item speed to market by aligning product information with their trading partners.” says Nigel Bagley.
…” “Through the successful completion of this project. and we view this project as an important step towards the realization of that vision. ‘Unilever is committed to the GCI Global Data Synchronization vision. 2004 the results of a successful global data synchronization initiative with Unilever.’”188 . Safeway and Unilever have demonstrated that by adopting industry standards. 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. announced on July 1. “The companies said the significance of this project has international reach. said his company is pleased to have collaborated with Safeway in achieving the industry milestone.P&G and Unilever 74 Appendix AA: Safeway. critical product information exchange between manufacturers and retailers can be achieved in a scalable and rapid manner. …” “Tom Barnhart. Inc. Unilever Complete Global Data Synchronization Project Safeway. director E-Business Unilever North America.
P&G and Unilever 75 Appendix BB: Unilever Initiatives in Information Technology189 INITIATIVE Latin America – “Orchestra” DETAILS Advances made in 2004 in this information. Information Management component has won external recognition for excellence. River Plate and Mexico. Enabled a reduction of over 50 traditional intranet sites in Europe. the Unilever standard data warehouse is available in nine countries with twelve countries using the regional e-Commerce hub. linked to broader data synchronization efforts to improve quality and speed of information sharing between Unilever and its customers. will continue to deploy to establish one environment for information and access within Unilever. Asia Siebel – automation technology RFID Unilever Portal . A demand and supply network planning tool has been implemented in eleven countries. An Asian trade funds management system has been implemented in two units (remainder to follow in that region in 2005/2006). Sales force automation technology – continues to be deployed across the business. to cover 60% of the Latin American business. Greater Andina. Good progress in Asia and Latin America using low-cost hand held devices.000 users in North America. sharing learning and best practices across regions. process and system harmonization and simplification program. which was deployed to over 110 sites and 9.400 users in Brazil.000 users in Europe and 6. Pilot programs in North America with Wal-Mart (Unilever is one of their lead suppliers). Common entry and navigation software technology. deployed to over 40. Unilever has agreed to a global licensing of this technology. Chile.
Myth. Linidor. Downy. fine fragrances. such as the Swiffer Duster and Mr. Pringles. feminine care. Folgers. Old Spice. ThermaCare. Puffs. and using leading health care technologies in the development of effective products -. Pampers. in addition the list contains some European/UK facilities. Evax. Lenor. Daz. Fairy. glycerine. this list is grouped by product line. Bounty. Metamucil. Secret. Proper. hair care. Kandoo. Ausonia. Tampax. Mr Clean. Bold. Olay. Naturella. Actonel. Charmin. Alomatik fatty alcohols. Scope. Lines Feminine care. Hugo Boss. Koleston. Pepto-Bismol. Bonux. PUR. pet health & nutrition. Commercial Products group. Fabric care. Dawn. personal health care. Herbal Essences. Millstone. Infasil. Prilosec OTC. Iams. scientific research in the areas of health. Noxzema. methyl esters. Cascade. Always. Sure. Eukanuba. Wella. oral care. Era. hair colorants. Dodot. Tempo. Aussie. pharmaceuticals P&G Household Care Coffee. Swiffer. Max Factor. Asacol. BlendaMed. Kukident. Ace. Febreeze. and nutrition P&G Family Health Baby care. Zest. Head & Shoulders. Joy. Fixodent. Salvo. Flash. Vidal Sassoon. tertiary amines. Shockwaves. Nice n Easy. 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. Infusium 23. Wellaflex. fatty acids. Viakal. P&G Chemicals manufacture and marketing of oleochemicals identifying. Crest. Tide. SEFOSEtm and OLEAN®. Dash. Dreft. Lacoste. professional hair care. family care. Laura Biagiotti. Natural Instincts. also known as the Newcastle Technical Center (UK) . CoverGirl. Safeguard. SK-11. Luvs. personal cleansing. Therefore. skin care. Rejoice. Home care. gain. Vicks.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.. Whisper. hygiene. Ivory. Vizir. Snacks. deodorant. developing. Cheer. The company's Go. Segment/ Company P&G Beauty Product line/purpose Cosmetics.200 scientists and collaboration with external partners By Country makes and markets fabric and household care products. Camay. Product Pantene. Didronel. Bounce. Ariel.
and mouth rinse . OlayComplete. and OlayQuench. Trac II. The company now has academies in the US. skin care items and cosmetics. a subsidiary of P&G The Folgers Coffee Company Global Gillette Pampers and LUVS branded baby wipes. and distributors. and Fusion). 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. M3Power. floss. Inc.P&G and Unilever 77 Procter & Gamble Technical Centres Limited. The world's #1 maker of shaving supplies Hair care education. Coffee and related. the firm is also a leading battery (Duracell) manufacturer & makes Braun electric shavers Iams also funds research efforts related to animal dermatology. Graham Webb International. Graham Webb founded the international hair care company. fragrances. irrigation products. A subsidiary of consumer products giant Procter & Gamble (P&G). Total Effects. converting and packing operations. Wella AG bought Graham Webb in 2001. oral care products. Also known as Rusham Park Technical Centre (RPTC). as well as flavored. The Dover Wipes Company. Regenerist. Webb makes hair care. cosmetologists. 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. and Sweden. Eukanuba and Iams premium dog and cat foods (dry and canned) roasted coffees. raw material storage. geriatrics. Ohm by Olay. Procter & Gamble acquired Wella in 2004. which is now woven into Wella AG. deodorants. and respiratory medicines makes and markets personal care products. and the premium-priced Mach3. regional arm of parent firm development of its hair care products. toothpaste. and shipping department The Iams Company Millstone Coffee Olay Company. Inc brings many of the parent company's top brands to consumers in Denmark. body care. and organic coffees skin care products (Sensor. Finland. Norway. power and manual toothbrushes. including their tubs and refills. pharmaceuticals and over-thecounter medicines (Prilosec). a warehouse. and cosmetics worldwide and sells them through licensed beauty salons. decaffeinated. allergies. Its first Graham Webb Academy opened in London in 1981. Paper machines to manufacture sanitary wet paper products.
and fragrances As the World turns. Natural Instincts. conditioner.com and pg.P&G and Unilever 78 P&G-Clairol. Inc. cosmetics.com . Guiding Light North America. Latin America. Nice 'n Easy. P&G owns more than 95% of Wella shares. and hair styling items Wella AG Wella UK Soap operas Market Development Organization world's leading haircare firms. part of the company's P&G Beauty division and makes hair coloring products. Hydrience. Ultress. Central and Eastern Europe/Middle East/Africa. it sells professional and retail haircare products. shampoo. Loving Care. hair spray. 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. Western Europe. Table Sources: Hoovers. and Balsam Color. brand building. Northeast Asia. Marketing. Greater China and ASEAN/Australasia/India 130 brands include Herbal Essences.
.700 430 1. Malaysia Zug. Indonesia 800 3. Venezuela Unilever Arabia Jeddah. Saudi Arabia Group of Companies Unilever Australia Limited Unilever Austria GmbH Unilever Belgique SA Epping. Austria Bruxelles. United States Athens. Colombia Guacara. KY. United States Jakarta.000 1. India New York. Employees 240 250 449 Company Type Private Subsidiary Private Parent Public Subsidiary Public Subsidiary Al Gurg Unilever Co Dubai. IN. Australia Wien.195 Private Subsidiary Private Independent Private Subsidiary . United States Clinton. IL. Hindustan Lever Limited [Unilever] Lancaster Cosmetics International PT Unilever Indonesia Tbk Owensboro. Switzerland Santafé de Bogotá DC.. Finland UBF Food Solutions Unilever Unilever Unilever (Malaysia) Holdings Sdn Bhd Unilever (Schweiz) AG Unilever Andina (Colombia) SA Unilever Andina SA Franklin Park. NY.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. CT.A. Belgium 1. United States Hammond.P&G and Unilever 79 Appendix DD: Unilever Portfolio: Product Groups & Businesses Company Name Location Sort By. Greece Mumbai. United Arab Emirates Conopco Inc Elais Unilever S. United States Kuala Lumpur.010 300 400 350 500 1.
United States Harrisburg. MD. AR. Italy Rotterdam. GA. United States Englewood Cliffs. United States Dublin.000 200 150 130 175 1. WI. United States Orange. United States Little Rock. Netherlands Helsingborg. CA. United States Ridgefield. NJ. United States Indianapolis. Ireland Chicago. Brazil 130 300 400 210 42. Switzerland Milwaukee.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. NC. United States São Paulo. PA. United States Inveruno.000 150 150 25 800 300 125 175 4 700 2. NJ. MO. United States New Century. NJ. IN. United States Atlanta. United States Baltimore. Sweden Merced. CA. United States Lisboa. KS. CA. United States Bayonne. Wiltshire. United States Independence. United States Merced. Portugal Thayngen.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 . IL.
P&G and Unilever 81
Unilever Canada Unilever Canada Unilever Canada
Toronto, ON, Canada Toronto, ON, Canada Calgary, AB, Canada
3,400 350 35 450 600 2,000
Private Subsidiary Private Parent Private Parent Private Parent Public Subsidiary Private Subsidiary Private Subsidiary
Unilever Canada Ltd Toronto, ON, Canada Unilever Caribbean Unilever Chile HPC Ltda Unilever Co Ltd Unilever Cosmetics International Unilever Cosmetics International France Unilever Cosmetics Intl Unilever Côte d'Ivoire Champs Fleurs, Trinidad and Tobago Santiago, Chile Shanghai, China Budd Lake, NJ, United States Neuilly sur Seine, France Oakville, ON, Canada Abidjan, Cote d'Ivoire
100 70 42
Private Branch Private Subsidiary Private Subsidiary Private Independent
UNILEVER CR spol Praha, Czech Republic sro Unilever Danmark A/S Unilever Deutschland GmbH Unilever España SA Unilever Foods España SA Unilever France Unilever France Foods Unilever France Home and Personal Care Unilever France Ice Cream and Frozen Food Unilever Ghana Limited Glostrup, Denmark Hamburg, Germany Madrid, Spain Barcelona, Spain Rueil Malmaison, France Rueil Malmaison, France St Ouen, France
1,499 134 9,000 2,020 505 1,120 1,117 1,050
Private Independent Private Subsidiary Private Subsidiary Private Subsidiary Private Independent Private Subsidiary Private Subsidiary Public Independent Private Subsidiary Public Subsidiary
Rueil Malmaison, France
P&G and Unilever 82
UNILEVER GROUP Unilever Hellas SA Unilever Home & Personal Care Unilever Home & Personal Care Unilever Home & Personal Care Unilever Home & Personal Care Unilever Home & Personal Care Inc. Unilever Home & Personal Care USA Unilever Home and Personal Care UK Ltd Unilever HPC Unilever HPC Unilever HPC Unilever HPC USA Unilever Hpc Usa Unilever HPC USA Unilever Hpcusa Unilever Ice Cream Unilever International Paris Unilever Israel Ltd Unilever Italia SpA Unilever Magyarország Kft Unilever Maroc Unilever N.V.
London, London, United Kingdom Piraeus, Greece Chicago, IL, United States Greenwich, CT, United States Baltimore, MD, United States Trumbull, CT, United States Clinton, CT, United States Troy, MI, United States Kingston upon Thames, Surrey, United Kingdom Clinton, CT, United States Chicago, IL, United States Englewood Cliffs, NJ, United States Jefferson City, MO, United States Greenwich, CT, United States City of Industry, CA, United States Palmetto, GA, United States Loveland, OH, United States Rueil Malmaison, France Ben Gurion International Airport, Israel Milano, Italy Budapest, Hungary Casablanca, Morocco Rotterdam, Netherlands
240,000 500 350 250 NA 135 500 15 2,410
Public Parent Public Subsidiary Private Subsidiary Private Subsidiary Private Branch Private Subsidiary Private Branch Private Subsidiary Private Subsidiary Private Parent Private Branch Private Branch Private Branch Private Subsidiary Private Subsidiary Private Parent Private Branch Private Subsidiary Private Subsidiary Private Subsidiary Private Subsidiary Private Independent
475 50 300 600 350 250 200 1 85 1,700 3,500 1,350
P&G and Unilever 83
Unilever Nigeria Plc Unilever Pakistan Limited Unilever Philippines Inc Unilever plc
Lagos, Nigeria Karachi, Pakistan Manila, Philippines London, United Kingdom
2,000 1,920 1,100 223,000 350 260 4,000 NA
Public Subsidiary Public Parent Private Subsidiary Public Parent Private Subsidiary Private Subsidiary Private Subsidiary Private Subsidiary Private Subsidiary Public Parent Private Subsidiary Private Subsidiary Private Subsidiary Private Subsidiary Private Subsidiary Private Subsidiary Private Parent
Unilever Research & Edgewater, NJ, United States Development Co. Unilever Singapore Pte Ltd Unilever South Africa (Pty) Ltd Unilever Special Markets Department (Military Div.) Singapore, Singapore Durban, South Africa Greenwich, CT, United States
Unilever Sverige AB Helsingborg, Sweden Unilever Tea Kenya Unilever United States Inc Unilever United States Inc. Unilever United States Inc. Unilever United States Inc. Unilever United States Inc. Unilever United States Inc. Unilever Usa Nairobi, Kenya Englewood Cliffs, NJ, United States New York, NY, United States Cartersville, GA, United States Los Angeles, CA, United States Raeford, NC, United States Washington, DC, United States Englewood Cliffs, NJ, United States
1,981 16,000 4 17,800 225 NA 500 3 700
Information obtained February 12, 2006, from: http://globalbb.onesource.com.
Global eXchange Services. via their selected Data Pools. to conduct business together in real time. The company operates a highly-reliable. (GXS) and Sterling Commerce.”190 Sterling Commerce is a subsidiary of SBC Communications. formerly Transora. synchronization and collaboration solutions. GDSN “connects retailers and suppliers. Sterling Commerce software and services help companies operate more profitably by giving them visibility and control over the processes they share with business and supply chain partners. GXS is “a leading worldwide provider of B2B integration. Inc. secure global network services platform enabling more than 30.”191 For Data synchronization.000 businesses. including over half of the Fortune 500. to the GS1 Global Registry.”192 P&G is also a member of 1SYNC. Inc. and “is the world's leading provider of multi-enterprise collaboration solutions for the Global 5000. a B2B marketplace of data for efficient use of data synchronization.P&G and Unilever 84 APPENDIX EE: P&G e-Business Network B2B data is exchanged directly through two Value Added Networks (VANs).193 . P&G uses the Global Data Synchronization Network (GDSN).
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