Loading presentation...

Present Remotely

Send the link below via email or IM

Copy

Present to your audience

Start remote presentation

  • Invited audience members will follow you as you navigate and present
  • People invited to a presentation do not need a Prezi account
  • This link expires 10 minutes after you close the presentation
  • A maximum of 30 users can follow your presentation
  • Learn more about this feature in our knowledge base article

Do you really want to delete this prezi?

Neither you, nor the coeditors you shared it with will be able to recover it again.

DeleteCancel

Make your likes visible on Facebook?

Connect your Facebook account to Prezi and let your likes appear on your timeline.
You can change this under Settings & Account at any time.

No, thanks

P&G Corporate Triangle Long

No description
by

Frederic Marxer

on 5 June 2011

Comments (0)

Please log in to add your comment.

Report abuse

Transcript of P&G Corporate Triangle Long

Vision Be, and be recognised as, the best consumer products and services company in the world. Goals & Objectives 1. More Consumers

2. In more parts of the world

3. More Completely Grow by : Financial Goals Grow organic sales 1% to 2% faster than market growth (IC)

Grow 8% - 10% in emerging markets

Generate free cash flow productivity of 90% or greater Agenda:

1. Chop Shop Conclusions
2. C&M‘s Triangle for P&G
3. Recommendations


4. Key Takeaways
5. Lessons Learned Kaspar Eisenhut, Christian Kaufmann, Frédéric Marxer,
Alexander Oyaert, Adrian Sauter Executive summary Chop-shop conclusion Relative to its competitors:

Extremely high EBITDA-margin: 149.62% compared to competitor’s average.

Almost no conglomerate discount: 92.39% compared to competitor’s average Consolidating around core businesses would be justified → Recommendations Key Takeaways Lessons learned Q&A Support/Appendix/Ref VRIS 1 VRIS 2 Synergy table Resources Divestiture Vertical integration Acquisition Joint venture OI Businesses Consumer understanding

Innovation

Brand Building

Go to market capabilities Economical synergies:
Similarity Economical synergies:
Complementarity Scope economies through the exploitation of strategic resources throughout business segments
Operational sharing of activities (eg. distribution, purchasing)
Operational sharing of resources Complementary Products (eg. Razor, Razor Blades, Foam)
Product Bundles and Cross-selling Possibilities (eg. Gillette, Wella)
Complementary Geographies (similar customer needs for P&G products) Financial synergies Internal Capital Markets: is it more effective? YES
Structural incentives increase collaboration between businesses
Managers have incentive to handle in P&G’s favor (stock-option program)
Have cheap financing possibilities

Revenue Smoothing NO
Consumer products
No luxury products, no seasonal products Fit 1 Mutual Forbearance Multi-market contact with most of its main competitors
Not only dyadic but also triadic competition





Mutual forbearance reduces degree of rivalry among competitors BEAUTY & GROOMING

Pharmaceutical Preperations
Perfumes, Cosmetics, and other toilet preparations

Braun
Electric Housewears and Fans Strategic Resources
Degree of similarity among big competitors competitive parity
Enhances entry barriers

Mutual forbearance with main global competitors HOUSEHOLD CARE

Pet Food
Dog and Cat Food

Hygiene care
Sanitary Paper Products
Soap and other Detergents
Speciality Cleaning, Polishing and Sanitation Preperations

PUR
Service Industry Machinery

Duracell
Primary Batteries
Storage Batteries
Lighting Equipment Market Development Organization
(MDO) North America Asia West Europe CEEMA Latin-America Beauty & Grooming Household Care Global
Business
Services
(GBS) Corporate Functions Perfumes, Cosmetics and Other toilet preparations
Electric Housewares and Fans Service Industry Machinery
Sanitary paper products
Pharmaceutical preparations
Soap and other detergents
Cleaning, polishing
Primary Batteries
Storage Batteries
Lighting Equipment
Dog and Cat food
Chips Streamlining operations
Virtualization
Accelartating internal collaboration
Steer the business
Driving Digital Capabilities Company-level strategy
Portfolio analysis
Corporate accounting
External relations
Treasury Governance
Human resources
Legal
Other centralized functional support Global Business Units (GBU) Fit 2 Structure: YES Front-Back Hybrid Matrix Organization
GBU (responsible for profit product category)
MDO (responsible for sales growth)
Global Business Services (fosters collaboration) Elimination of redundancies Cross Divisional Committees
Global Leadership Council
Technology council Incentive System: YES
Stock Option Plans for employees (retirement programs) Corporate HR: YES
Mgmt development program
Training Center
Rotating employees in different positions, locations (global-local) Culture: YES
Collaboration culture needed
Leadership style at P&G: participatory, delegating, and empowerment Strong synergies between the Beauty and Grooming segment and the Houshold Care segment

Weak synergies between segments for Pet Foods, Duracell and PUR (water filters)

Strong potential synergies between Braun (part of Beauty&Grooming) and Duracell Fit 3 Corporate Functions

Ensures latest & most effective methodologies are being used (adaptation )


Leadership program: Built From Within



Corporate parenting ensures ongoing functional innovation and capability improvement E.g.: Connect & Develop, E-commerce Corporate Strategy
Spring 2011
Prof. Xavier Castañer 3.1 Divestitures
3.2 Vertical Integration
3.3 Diversification C&M‘s Triangle for P&G Conclusion Strategic resources are meant to keep competitors out

Synergies
Strong synergies between core businesses



Structure:
Fit 2: front-back Dimensional Structure leverages resources across businesses (mainly GBS)
Fit 3: corporate parenting ensures the fostering of resources
Structure needs collaborative culture exemplified by P&G leadership PUR Reasons to divest:
Non-core business
Relatively low relatedness (few synergies)
No multimarket contact
Main reason to keep: CSR purposes


Brita (world’s market leader in point of use water filters)
Veolia Water (general filtration) Reasons to divest:
Non-core business
Few synergies (see VRIS/Synergy tables)
Capital-intensive, complex, regulated production process
Acquired due to mimetism (Unilever)


Mars (Pedigree, Royal Canin)
Nestlé (Purina)

However, P&G is currently concentrating on building the brands up Iams, Eukanuba (Pet Care) Focus on: 1. Less capital intensive

2. Higher margin industries Backward Integration
Depends on Transaction Costs



Forward Integration
Online Selling: higher margins but difficult to reach popularity
Own Retail Stores: not feasible
Strategic Partnerships with big retailers to reduce transaction costs
Difference in Developing Markets Sony-Braun/Duracell P&G Input Sony Input Current Technology & Brand equity


Brand building capabilities Technological development knowledge (R&D)
Consumer understanding for appliances
Specialized Distribution Reinforcing synergies between Duracell and Braun
P&G: Resource access to appliance business while focusing on core operations
Sony: Entry mode for Home & Health care appliances, increases multimarket contact and market power
Vertical Complementarities for both (see Appendix)
In the long run, advantages of collaboration outweigh transaction costs (see Appendix) Emerging markets: Dabur Leading consumer goods company in India, with similar portfolio with focus on natural products (Sales: $910 Mil.)



Wide and deep market penetration in India, global focus on emerging countries







Acquisition offers more advantages than collaboration as Dabur is a direct competitor (see appendix)

Merger with P&G India and divestiture of Dabur’s food business

Price: $ 5,55 bn - $ 6 bn (based on market cap + premium) Knowledge transfer for organic/local products
Economical synergies (e.g: vertical complementarities) Strategic resources can be strongly leveraged in:
Hygiene Products segment
Beauty and Grooming segment

Not the case for:
Pet Food, Duracell & PUR (water filters) Create access to white space market areas Gain more consumer understanding in emerging markets Simplification Examples:
Paper production facility produces paper input for all business segments
R&D of Crest and Oral B Corporate structure Example: Reinforce GBS
Standardize Global Platforms
Simplify Processes (Packaging & Planning)
Digitization & Virtualization

Increase collaboration between and inside matrix dimensions
Create further councils (e.g. Operations, Marketing)
Work Out Sessions (GE case) Further Integration to operate as one company Need to become more lean and agile 1 I http://www.bbc.co.uk/news/business-13064928 Corporate culture Corporate governance CEO CEO Duality: Robert McDonald

Separation of CEO & Chairman roles


Leadership style (servant leadership) decreases managerial overconfidence (see appendix) Acquisitions in last 10 years have weakened corporate culture
Distorts built-from-within policy Prevent alienation of culture Strengthen portfolio through acquisitions
Emerging Markets: Dabur
Industrialized Markets: Beiersdorf Focus on core businesses Discussions
Valuable if well prepared
Time consuming
Need to be organized
Work separation
Responsibilities should be divided
But: sharing of ideas is critical
Difficult to find balance

Hard to estimate work load

More time consuming Group Meetings Enables synergies Topic choice Prezi Generally very efficient to share information
Keep it structured
Problem with working on the same file

Good communication tool (eg. to organize meetings/news)
Not entirely professional

Urgency solution
But: not very effective due to coordination issues Drop Box Facebook Group Skype Meeting This leads to strategic resources' sustainability Tracking the performance of every manager
Monthly annual talent reviews Beauty and Grooming
Hygiene Products Pet Care Products
Pur
Duracell Weak synergies between segments Sell-off to specialized buyer (more value creation) Sell-off to "specialized" buyer (more value creation) No big retailers
Access creation to customers Product specificity
Degree of technology transfer Advantages Braun
Duracell In line with the overall growth strategy Industrialized markets: Beiersdorf Global personal care producer headquartered in Germany with strong presence in emerging countries (Overall sales: $8.3 Bn.)









Brand takeover requires acquisition, which is less time consuming than internal development (see appendix)

Divest Tesa Business (adhesives; 10% of sales)

Price: $ 18.85 bn - $ 20.3 bn (based on market cap + premium) Reinforcing Beauty and Grooming product portfolio (eg. Nivea)
Economical synergies (e.g: vertical complementarities) Distribution channels in emerging countries
Leading skin research center In line with the overall growth strategy Slow reaction during financial crisis (ING analyst report)
Little interaction between GBUs Assign outside independent director as lead director Proper incorporation of acquisitioned employees through Work-out sessions PUR Divestitures of non-core segments:
Pet Care Re-inforcing Synergies:
JV with Sony VALUE CREATION THANK YOU FOR YOUR ATTENTION Distribution synergies not taken into account
Full transcript