Having been in existence for 173 and 81 years respectively, P&G and Unilever are legends in their own rights. After years of divestitures and streamlining, P&G has a strong lead. But with a little help from Acquisitions and Emerging market presence, Unilever could end up as The Undisputed consumer goods leader.
On June 02, 2011, a news report in the Daily Mail (a British publication) sparked off rumours that P&G, the world’s largest FMCG giant was lining up $61.26 billion to acquire rival Unilever. Almost immediately, media circles were ablaze with debates, some arguing that the deal was practically impossible while others like C. K. Ranganathan, MD, CavinKare (a personal care products major in India) embracing the idea stating that it would be easier for him to fight one company instead of two!
However, far from chalking out an M&A plan, meetings in the corner offices of P&G and Unilever narrate a different story altogether. Robert McDonald, CEO, P&G, who has been working for the company for 31 years, moved on to meet his top executives at the Cincinnati headquarters. The agenda continued to be the same as it was ever since McDonald took the top job – strengthening its position in emerging markets, thereby making P&G a more operationally streamlined machine.
On the other hand, Paul Polman, CEO, Unilever, was busy making key decisions, which would determine and guide Unilever’s future strategic orientation. As a matter of fact, it was a sort of crisis situation for the Anglo-Dutch consumer goods major. Michael Polk, the head of global foods, home and personal care quit Unilever to join Newell Rubbermaid as CEO. His predecessor, Vindi Banga had also left in 2009. Polman probably could predict the future. To avoid risking another top executive, he promoted Harish Manwani, Chairman, HUL (Unilever’s Indian SBU) to COO of Unilever. More importantly, he rejigged the entire top management by dividing Unilever’s different divisions under five top executives.
Fact is, P&G would not be acquiring Unilever as long as they are in their right senses. That would mean going back to what they’ve been avoiding – complicating a company that is already too huge and complex in structure. That would further weaken control and make negative synergies in the realm of possibility.
McDonald, 57, is one hell of a strategist. And why not? Being a graduate from the US Military Academy, strategy was destined to come naturally to him. Unlike former CEO A.G. Lafley, who acquired Gillette for $57 billion in 2005 (which accounted for 10% of P&G’s $78.9 billion in 2010) [and which we think by far was the best decision taken by a CEO in P&G’s more than a century long history], McDonald prefers to stick to what he states in his annual reports – “to grow P&G’s core brands and categories with an unrelenting focus on innovation”. To be more precise, McDonald is shying away from making any further acquisitions. He instead plans to concentrate on strengthening the internal R&D pipeline and on pushing existing brands more aggressively to consumers around the world.
However, far from chalking out an M&A plan, meetings in the corner offices of P&G and Unilever narrate a different story altogether. Robert McDonald, CEO, P&G, who has been working for the company for 31 years, moved on to meet his top executives at the Cincinnati headquarters. The agenda continued to be the same as it was ever since McDonald took the top job – strengthening its position in emerging markets, thereby making P&G a more operationally streamlined machine.
On the other hand, Paul Polman, CEO, Unilever, was busy making key decisions, which would determine and guide Unilever’s future strategic orientation. As a matter of fact, it was a sort of crisis situation for the Anglo-Dutch consumer goods major. Michael Polk, the head of global foods, home and personal care quit Unilever to join Newell Rubbermaid as CEO. His predecessor, Vindi Banga had also left in 2009. Polman probably could predict the future. To avoid risking another top executive, he promoted Harish Manwani, Chairman, HUL (Unilever’s Indian SBU) to COO of Unilever. More importantly, he rejigged the entire top management by dividing Unilever’s different divisions under five top executives.
Fact is, P&G would not be acquiring Unilever as long as they are in their right senses. That would mean going back to what they’ve been avoiding – complicating a company that is already too huge and complex in structure. That would further weaken control and make negative synergies in the realm of possibility.
McDonald, 57, is one hell of a strategist. And why not? Being a graduate from the US Military Academy, strategy was destined to come naturally to him. Unlike former CEO A.G. Lafley, who acquired Gillette for $57 billion in 2005 (which accounted for 10% of P&G’s $78.9 billion in 2010) [and which we think by far was the best decision taken by a CEO in P&G’s more than a century long history], McDonald prefers to stick to what he states in his annual reports – “to grow P&G’s core brands and categories with an unrelenting focus on innovation”. To be more precise, McDonald is shying away from making any further acquisitions. He instead plans to concentrate on strengthening the internal R&D pipeline and on pushing existing brands more aggressively to consumers around the world.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
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Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
