Time to (re)reorganise

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

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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The VAS space, currently dominated by text and picture messages, along with ringtones and data downloads, has in itself driven the user to maximising these services. The reason, according to Durbha, has a lot to do with impulse usage. Instantly he takes out a handset, clicks a picture and sends it across to this reporter’s e-mail address. The process, as simple as counting 1 to 5, but what held attention was that the entire operation was done through a phone costing just Rs.4000.

“We’ve got 10.2 million ‘unique’ users, who only sample our VAS, less than 5 times a month. Probably this number exceeds the total number of subscribers of many service providers across the world,” says Durbha. For now, the future seems brighter than ever before. With Reliance now foraying into the GSM bracket, it seems all set to duplicate its tactics and win itself another enthusiastic horde!

In India, the mobile VAS industry, according to IAMAI, expectedly hit the billion dollar mark by December 2007 and in that figure, we see a jump of nearly 60% over December 2006. Currently the most optimistic figures put VAS at 12-15% of revenues of a mobile service provider. As Mahesh Prasad, President, Applications & Solutions Group, RCOM, puts it, “If Japanese and Koreans can derive 25-30% of revenues from VAS, there is no reason we cannot.” Concludes Durbha, “There are a lot of clichés involved when we talk about the future of mobile phone services and in particular about VAS... Unfortunately, they’ve all become much over-hyped. But, eventually, under all that hype is a reality.” And surely there is little doubt now that RCOM has moved far beyond the company that broke the lower end of the price barrier to provide mobile services that were ‘cheaper than a post card.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
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Malaysia must begin to mull...

...ways and means to make sure that the minority communities are not discriminated against
The subtle equilibrium of the inter-racial politics of 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.

Surprisingly, HINDRAF’s mass mobilisation has made very little or no appeal to non-Hindus, many of them Indians. The situation was somewhat worsened by the un-diplomatic participation of Indian politicians in a war of words with their Malaysian counterparts. M. Karunanidhi, Chief Minister of Tamil Nadu reacted angrily to the events. The RSS grabbed the chance to show itself as the sole propagator of Hindu cause & talked about “global unity of Hindus”. As always, authorities too, jumped the gun.

Many ethnic Chinese & Indians, who form the two main minority communities, are uncared for, particularly concerning an affirmative action programme named ‘Bhoomiputra Programme’ that gives privileges to Malays in business, jobs & education. What made the issue complex was the fact that any attempt to air ethnic minority grumbles in Malaysia is always projected by the Malay dominated government & administration as a threat to national security & cannot be allowed to be glossed over, without mentioning the 1969 race riots, which had Malays & Chinese against each other, that claimed several lives. The same happened this time as Sami Velu, the Minister for ethnic minority Indians & himself a Hindu, termed the protest irrational & accused RSS and other NRI Hindus of trying to destabilise the country.

Nevertheless, HINDRAF thinks otherwise. P. Uthyakumar, the legal advisor of HINDRAF told B&E, “Sami Velu is a proxy of the UMNO led government. In exchange for the salary, the royal awards and also some government contracts, his job is to cheat the Indian community.” Meanwhile, Malaysia has said that it is willing to sacrifice public freedoms for the sake of national stability. It can be concluded that recent events have deeply affected the social fabric of Malaysia. For a novice, Lord Rama is the most favoured hero of Malaysians & stage performance on Ramayana, the most watched event. There is a lesson to be learnt there.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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The Palestinians

The Palestinians are the cause of exiting and ex-presidents. There’s no real electoral payback anticipated in supporting them. Jews and Israel-loving evangelicals dwarf any Arab lobby to the extent that it’s not even funny. President Bush is now on the exit track. And it’s time to rectify the fundamental error he had made in allowing the war-on-terror rhetoric to wrongly discredit the Palestinian national movement.

His best hope in Annapolis may be the Texas connection. If Bush gets behind Salam Fayyad, the Palestinian prime minister who attended the University of Texas, things may finally move on this front. But for that to happen, he has to stick with him. Fayyad, 55, is the can-do face of the Palestinian movement. Just like his people, he’s long been in the wilderness. Unlike many of them, he hasn’t succumbed to the culture of the victim. “One year,” he said in an hour-long conversation, “is more than adequate to come to a peace treaty and end this conflict.”

In seven years in office, Bush has been, in fact, quite uninterested in such an ending. He has hallucinated about roads from Baghdad to Jerusalem. He also talked about two states and later lost interest in the initiative. The American Middle East policy has, in fact, been quite distracted and unbalanced on the whole. Now, overcoming his Clinton angst, Bush has summoned the parties to Annapolis, Md. But clearly, it’s happening too late in the day. The rising Middle Eastern power, Iran, has not been invited to the conference. Nor has the Hamas. What’s instead present, and that too in abundance, is desperation. Bush must use it.

The Palestinians, on one hand, are desperate because they are now looking at a dead end. They’ve been the losers over six decades of strife, through ineptitude, corruption & Arab hypocrisy, apart from their susceptibility to victims’ hollow consolations. As Fayyad had earlier noted, “Last year more than 50,000 Palestinians emigrated. How is that consistent with ending the occupation?”

The Israeli desperation, on the other hand, is relatively quieter. The economy has indeed blossomed, but not the Israeli soul. Four decades of occupation since the 1967 war have been a scourge for the country. Jewish precariousness still persists. The diaspora Jew did not go to Zion to build the Jew among nations.

Bush faces Palestinian weakness and compromised Israeli strength. He must offset the weakness by standing with the Palestinians on core demands. He must insist on Israeli sacrifice – territorial and ideological – in the name of US-guaranteed security. “Without peace,” Bush should tell the Israelis, “the Arab birth rate and the jihadist tide will eventually wash over you.”

Fayyad told me he’s coming into the conference Tuesday “disappointed that more progress has not been made.” On core issues – Jerusalem, borders, settlements – the impasse has prevailed. Annapolis can solve nothing actually; all it can do, realistically speaking, is to jump-start an intense process.

That process then needs essentially three elements, Fayyad told me. First, there should be an explicit framing within the context of UN Security Council resolutions, including 242, that makes clear Israel’s obligation to, in Fayyad’s words, “end the occupation that began in 1967.” Second, the Annapolis conference must result in an Israeli commitment to freeze the West Bank settlements and to remove illegal settler outposts, which will be paralleled by Palestinian commitments to “institution building and fighting terrorism.” Third, “we must get a reference to a timeline, a conclusion of final status peace within the Bush presidency.” Fayyad is right. A return to the 1967 lines, plus or minus agreed swaps, is the only plausible basis for a two-state accord. An Israeli settlement freeze is the first step to a Palestinian buy-in. A time table is the anchor all the talking needs. I asked Fayyad how he’d reassure Israel about security. He became animated. “Political pluralism is fine, but I can’t tolerate security pluralism. There’s no such thing as militias running around taking decisions! That has led to catastrophe. Law and order is basic. I said in a speech the other day that Nablus is more important than Annapolis! It is. The people of Nablus need security, just like Israelis.”

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial,

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

Top Articles on IIPM:-
IIPM makes business education truly global-Education-The Times of ...
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
IIPM Ranked No1 B-School in India
Moneycontrol >> News >> Press- News >> IIPM ranked No1 B-School in ...
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India eNews - IIPM Ranked No1 B-School in India
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