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Henkel Adhesives: Strategy Redefined
Transcript of Henkel Adhesives: Strategy Redefined
Heavy-duty detergent sold in handy packets Pioneer of brand management and innovative advertising Slogan "A Brand Like a Friend" Laundry and Homecare Cosmetics/Toiletries Consumer and Craftsman Adhesives Henkel Technologies Merger in 2007 created Henkel Adhesives This segment accounts for 47% of Henkels overall revenue This segment quickly became a leader in the DIY sector as well as professional craftsman and industrial sections Very few companies in this particular section Three key issues facing Henkel
Quality is declining because lack of coordination results in complex products
• Unable to catch misguided product lines from lack of strategic flexibility.
Rapid growth through acquisitions/mergers
Proximity to consumer
Diminished marketing capability Lacks value because innovation is not customer-oriented.
Not Rare- Profitability issues makes it easier to imitate. Not rare- Rival firm with superior brand awareness.
Not valuable- no information is being passed on to consumer.
Rare- Henkel is the leader in production capacity.
Valuable- differentiated products at the low prices. Rare- sole premium quality provider
Semi-Valuable- Unreliable service Competitive Advantage Mission Statement To provide the most superior modern products in the adhesive technology sector that satisfy the specifc needs of homeowners, craftsman and industry professionals in the German market. Business-Level Strategy
-Customer oriented innovation
-Henkel as a "brand" adds value
-Integrated Marketing Communication
Individual SBU division now control operations and responsible for production.
-Secures of differentiation and quality capabilities.
-Quality innovation stems from continuous and consumer oriented R & D.
Outsourcing non-core competencies lowers cost and reduces complexity.
-Restores flexibility to effectively adjust to enviromental changes on time.
-Integrating operations realigned resources all by themselves. Organizational Strategy Multidivisional
-Operating divisions each represent a separate business or profit center (SBU)
-Each SBU has their own unique controls/strategy
-Allows more accurate performance monitoring
-Improves resource allocation
-Facilitates inter-divisional comparison process' 'Autonomous Strategic Behavior’ vs. ‘Induced Strategic Behavior’ •Declines in Profitability Target customer base is shrinking in the long run.
Expenses increasing due to cost of raw materials and the union is demanding higher wages.
Lack of flexibility. Organizational Inefficiencies Decreased Value of Product Portfolio Organizational Inefficiencies Introduction to Henkel Operations Efficiency Differentiation Capability •Marketing capabilities Production Capability Customer Loyalty Evaluation of Core Competencies: Sophisticated Information System Interactive Website Support
Enterprise Resource Planning Value Chain Integration Henkel: A Long Term Strategy
Julie St. Leger-Barter
Kunpeng Bran Three times larger than its nearest competitor in the adhesive industry Organizational Strategy Utilizing focused differentiation and a multidivisional structure will effectively allow Henkel to implement:
-Cross-functional product development teams
-Centralized decision making
-Focus on marketing & product R&D
-Continual innovation in focused markets Continual innovation in focused markets:
-Innovation will continue with product development specific to untouched markets
-Aqcuire new target group
-Expand customer pool
-Require more frequent inter-managerial communication regarding firm performance
-Based off Financial Statements
-ROI, ROA, Retained Earnings, Cash Flow, etc.
-Compare to historical data, competitors and industry
-Hedge against rising resource (gas) prices
-Make sales positions more commission based Household and office segment:
UHU well known in Germany, very synonymous with household adhesives
PCI 28% marketshare and market leader
Mapei was #1 in the world in the tiler segment. Italian company.
Monitor innovation rate by comparing current rate to previous rate to determine if the rate of innovation has increased.
Measure the change in market share in each of the markets that Henkel competes in and compare that change to competitors.
We believe that by applying the proposed Business-Level, Organizational, and Information Strategies we will be able to solve the 3 key issues with Henkel. Q&A