Unilever continues to restructure its operations, but to truly revive, it must focus on market shares
It has some of the world’s best managers and some of the most prolific brand portfolios. Yet, Unilever seems to be way past its prime, the days when the mere mention of its name commanded tremendous respect and admiration. Thanks to inability to cope with market trends, the company is desperately seeking a route back to good ol’ days.
Although 2007 has been a better year, there still remains a lot to achieve. While announcing results for the nine months ending September (turnover increased by 4% to €30.3 billion & net profit by 20% to €3.3 billion), CEO Patrick Cescau had enthusiastically commented, “Focus on our growth priorities, together with stronger innovation, improved speed to market & better in-market execution, is delivering consistent & sustainable organic growth.” 2007 results, to be announced as this magazine goes to print, are expected to be in line with company expectations of 3-5% organic growth.
Yet, as always, there are some devils in the details. As per Credit Suisse analyst Charlie Mills, a large part of the increase is due to rise in prices, i.e. value growth (around 2.5% in price growth estimated in Q4, 2007). The company underperforms peers like Reckitt Benckiser, Nestle & Cadbury in organic growth for 2007. Market shares are lower in 2007 compared to 2006 in most categories across Europe & US; deodorants being the only clear saving grace. Morgan Stanley analyst Michel Steib also maintains an underweight rating. He adds, “Unilever’s headwind from commodity costs will double from around 200 bps in 2007 to over 400 bps in 2008 estimate for the full year.”
The company had announced plans to do away with a whopping 20,000 jobs in August last year. Even emerging markets, long touted as a saving grace are facing the flak, evident from recent news of Hindustan Unilever Ltd. (HUL) doing away with 50 managerial positions. Comments K. Sudarshan, Managing Partner, EMA Partners India, “Earlier, HUL was insulated from the global parent and the company was designed for the high growth era.” He adds at the rates of growth prevalent at that time, they could carry non-performers.
Now the parent company is taking up more control, and redundancies are being created for jobs particularly in category innovation, manufacturing and even HR functions in India. The power brand strategy created further pressure. The bulge is mainly in the upper middle management, or 3A & 3B category. Also, it is no longer the top employer of choice in India’s key business schools.
With such tidings in one of Unilever’s key markets, it’s quite apparent that these are trying times for the company. More than restructuring and cost cutting, it’s important to get its brands back in the reckoning as far as market shares go. Perhaps that should be the most credible starting point to bring some vitality to this Anglo-Dutch behemoth.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
It has some of the world’s best managers and some of the most prolific brand portfolios. Yet, Unilever seems to be way past its prime, the days when the mere mention of its name commanded tremendous respect and admiration. Thanks to inability to cope with market trends, the company is desperately seeking a route back to good ol’ days.
Although 2007 has been a better year, there still remains a lot to achieve. While announcing results for the nine months ending September (turnover increased by 4% to €30.3 billion & net profit by 20% to €3.3 billion), CEO Patrick Cescau had enthusiastically commented, “Focus on our growth priorities, together with stronger innovation, improved speed to market & better in-market execution, is delivering consistent & sustainable organic growth.” 2007 results, to be announced as this magazine goes to print, are expected to be in line with company expectations of 3-5% organic growth.
Yet, as always, there are some devils in the details. As per Credit Suisse analyst Charlie Mills, a large part of the increase is due to rise in prices, i.e. value growth (around 2.5% in price growth estimated in Q4, 2007). The company underperforms peers like Reckitt Benckiser, Nestle & Cadbury in organic growth for 2007. Market shares are lower in 2007 compared to 2006 in most categories across Europe & US; deodorants being the only clear saving grace. Morgan Stanley analyst Michel Steib also maintains an underweight rating. He adds, “Unilever’s headwind from commodity costs will double from around 200 bps in 2007 to over 400 bps in 2008 estimate for the full year.”
The company had announced plans to do away with a whopping 20,000 jobs in August last year. Even emerging markets, long touted as a saving grace are facing the flak, evident from recent news of Hindustan Unilever Ltd. (HUL) doing away with 50 managerial positions. Comments K. Sudarshan, Managing Partner, EMA Partners India, “Earlier, HUL was insulated from the global parent and the company was designed for the high growth era.” He adds at the rates of growth prevalent at that time, they could carry non-performers.
Now the parent company is taking up more control, and redundancies are being created for jobs particularly in category innovation, manufacturing and even HR functions in India. The power brand strategy created further pressure. The bulge is mainly in the upper middle management, or 3A & 3B category. Also, it is no longer the top employer of choice in India’s key business schools.
With such tidings in one of Unilever’s key markets, it’s quite apparent that these are trying times for the company. More than restructuring and cost cutting, it’s important to get its brands back in the reckoning as far as market shares go. Perhaps that should be the most credible starting point to bring some vitality to this Anglo-Dutch behemoth.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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Malaysia has come under serious peril from an unanticipated front & the response from the Malaysian Government poses critical questions about freedom of expression. A relatively unknown conglomerate of Hindu NGOs named Hindu Rights Action Force (HINDRAF) called a mammoth rally in Kuala Lumpur, to air its objections about the so called marginalisation of the Indian ethnic minority community (read Tamil Hindus). Apart from that, in a somewhat comical demand, the organisation also demanded compensation from Great Britain for the community’s exploitation during the colonial era. An off the guard government came quickly to action & arrested the top HINDRAF leaders.
the real me is at home!” I must have lost it, as I don’t see it in my cupboard any more. But sometimes, I wonder how easy it would have been to send another me to work on an especially cold December morning. I could just sleep at home. Well, apparently the day is not far away, as this story will tell you. Allow me to introduce you to a shocking future involving virtual reality and MMORPGs. If you have never heard of an MMORPG and you think it is some esoteric piece of software, you are surprisingly close to the truth. MMORPG stands for Massively Multiplayer Online Role Playing Game.
the last three years generally infrastructure schemes have given good returns… this means that the funds which had focus or were more overweight on infrastructure have given better returns during the last three years as compared to say a diversified equity fund or a sector fund like Pharma or IT. For instance, DSP Tiger and Tata Infra have given very good returns of over 42% CAGR during the last three years. Also few dynamic funds such as Opportunities Fund from DWS, Kotak and ICICI Pru Dynamic Fund have given over 40% CAGR because of active portfolio management by fund manager. 
fund houses reveals that there are schemes, which have offered returns higher than stock markets despite the market mayhem. Interestingly, most of the outperformers are actually equity-based funds. And analysts are hopeful about other equity-based funds will also bounce back soon. Sharing his views with 4Ps B&M, Sudip Bandyopadhyay, CEO, Reliance Money avers, “Barring past two quarters, the returns from the diversified equity MF have been over 40% CAGR over past five years… we should understand equity per se is associated with risk; but we believe this is a temporary correction more to do with global factors than over our own economy and in the medium to long term we believe equities will definitely give better returns as compared to other assets classes.” His words justify the basic investment rule: if you want handsome returns, invest with a long term perspective.
segments and with full force. When we think that the market is right, we time our entry"On the future of the small cars Mayank Pareek,Executive Officer (Marketing & Sales), Maruti Suzuki India is known to be a small car market for quite some time now and this is primarily because of the low penetration levels here. As of now only 9 out of 1,000 people own a car. Naturally, every body desires finally to upgrade. So we look forward to help this vast multitude of population to get a car. To give a prospective, even countries like Pakistan have car penetrations of 20 per 1,000! So demand for small cars will always be there in India. Secondly, if you see demographic wise, if you divide the households into 4 categories, i.e. deprived, aspirers, middle class and rich-the middle class households will almost double to 48% by 2010-11. Therefore demand for small cars will be extremely big.
face to technology. But for the Indian technology giant, HCL Technologies, it wasn’t very difficult to showcase how over the years, the company had unwittingly become an integral part of its consumers life. After all, HCL has been India’s sole hardware brand for decades. So, in April 2007, when HCL decided to give itself a modern and global face, the domestic tech giant picked its own employee to make a communication splash. With a telling tagline – ‘Technology that touches life’ – the commercial began with a hitchhiker (an employee of HCL) taking a lift from an investment banker. During the journey, the hitchhiker explains how HCL Technology is an integral part of everyone’s life. Exactly a year later in April 2008, HCL technologies came up with a sequel to the ad in which the world is shown coming to the employee and talking about HCL making an impact in their lives.
(since Microsoft put forward their proposal to buy Yahoo! at a 62% premium to the closing price on January 31, 2008, the day preceding the announcement), the stalemate continues. Steven A. Ballmer, CEO, Microsoft Corp. said in a letter on April 7, “The goal in making such a generous offer was to create the basis for a speedy and ultimately friendly transaction.” But since speed is a pipedream still, Ballmer has threatened to take the battle to the shareholders and also that the valuation will be reduced significantly.
and India head of SB Asia Infrastructure Fund, better known as SAIF Partners, flew from the US to ink a deal with a media company to invest in a new line of business related to electronic media. In a chat then, Adusumalli, who debuted at 77 in the Forbes’ “The Midas List, 2008,” told us that he believes in a strong ‘local’ team that is fiscally responsible. That was an eye opener as most global Private Equity (PE) and Venture Capital (VC) players used to fly down from their home country, sign an agreement, and return back. So, talking about an India-dedicated team was certainly a rare occurrence.
which HDFC has successfully reflected. Carlyle Group has shown much interest in the housing finance domain, a niche area; thanks to the surge in disposable income of Indians. Its interest in this domain is also highlighted by the fact that it has picked up a significant stake in Repco Home Finance for a cool $27.7 million. For the purpose of growing, expanding and even maintaining its position in the market, a lot of capital will be needed and thus the association will be a long term one. Though they have no clear categorisation, it is the overall industry opportunity that guides their investment in India. Be it Repco or HDFC, it goes on to prove that investments being made by Carlyle in this segment are long term in nature. Besides capital, PE firms also bring with them international expertise in terms of technology and management, besides closely monitoring management developments.”
school, dispassionately herding the thoroughly hungry and raucous lot of us students into the bus, the grime and the heat of the afternoon sun – garnished with a motionless traffic jam – perhaps can never be forgotten that easily... And neither can be forgotten those spectacularly huge Air India billboards standing resplendent in the sun, glorified by the mascot we all knew as the Maharaja, billboards we would crane our necks to see, for not only were they creativity benchmarks of those times, but also because we, er, loved the Maharaja!
because of consumer pull, availability, convenience & wide variety of taste. The pester power has given boost to the brand in three ways. Firstly, children get excited with the taste and ask for Maggi when they come back from school. Secondly, the pester power of kids has made mothers consider variants like Maggi Vegetable Atta Noodles & Maggi Dal Atta Noodles as a wholesome snack for its apparent nutritional value. Thirdly, the pester power influence from kids to kids has a strong demonstration effect. All this has helped Maggi to become a favourite & powerful brand.
in transportation with considerable growth opportunities, an impressive track record and a strong franchise that should continue to deliver superior returns. Today, FedEx has evolved into a global transportation and logistic powerhouse, providing a portfolio of transportation, e-commerce, and business services through companies operating independently, competing collectively, and managed collaboratively, under the respected FedEx brand. 
ONGC controls the raw material i.e. crude, while HPCL, BPCL et al are all dependent on crude oil. The learning curve effect is the greatest advantage for ONGC and it has helped it reduce its project execution time. Stronger geographical presence and data collection has further increased its efficiency. Despite the fact that as an upstream company it has to share the burden of 33% oil subsidy its performance is praiseworthy. Retaining talent at the mid-level has been a problem though; all thanks to its PSU status. It has a huge cash reserve too. The company can very well take advantage of the heightened crude prices, the only hindrance being the administered price mechanism. Despite government apathy, the company continues to perform well and will surely be more successful in future.