UNILEVER Portfolio Management
Sohail Aslam Esmeralda Garca Christoph J. Szczecina Henrique A. Lima de Faria
Fachhochschule Dortmund
University of Applied Sciences and Arts
June 19th, 2008
PERSPECTIVES
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Unilever Overview Executive Management Portfolio Management Project and Program Management Operations Management
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
UNILEVER Company Overview
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Created in 1930 as result of a merger Key player in the food and household products industry Maintains dual head quarter / dual chairperson approach Launched Path to Growth strategy (2000) to revive the company Historically grew through acquisitions
http://www.unilever.com/ourcompany/investorcentre/annual_reports/annual_report_Form.asp Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Strategy
1. EXPANSION More than 150 different countries
R&D sites worldwide
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization
Legal Structure
Rotterdam
Dual-listed company
London
5
4. Path to Growth - Brand Reduction - Brand Extension
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
UNILEVER Regional distribution facts
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
million (2006) 39 642 5 408 179 000 950 11 450
http://www.unilever.com/ourcompany/investorcentre/annual_reports/annual_report_Form.asp
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
Unilever - Competitor Comparison
Research 2006 Bianca Cole ~ Reginald Green
Top Segment Top Brand CEO Stock per share Growth Revenues Revenue Growth International Business Segments Employees
CG/Foods Dove A. Burgmans $66.03 15.58% $42,942 M -11.93% 100+ 3 234000
Consumer care Tide A.G. Lafley $53.76 9.25% $28.2 B 19% 42 5 110000
Food Mac & Cheese R. Deromedi $30.70 8.20% $31,010 M 4.30% 150+ 5 10600
Food Kit Kat P. Letmathe $66.9 11.23% $69 B -1.93% 86 6 253000
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
UNILEVER Executive Management
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Source: Project Management Institute, Inc.: The Standard for Portfolio Management, Penssylvania (USA), 2006, page 9 Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Vision
Through our brands we see ourselves playing an important role in contributing to improvements in hygiene among our consumers around the world.
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Mission
Unilever's mission is to add vitality to life.
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
10
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Goals & Objectives
Focus on customer care (cosmetics) Focus on path to growth Reduction in energy cost and better use of operational energy Reduction of brands Simplifying structure Focus on emerging markets Driving innovation Make supply chain smart
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
11
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Strategy
In 2000 Unilever unveiled its business strategy
Path to Growth
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
12
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Portfolio Management
Source: Project Management Institute, Inc.: The Standard for Portfolio Management, Penssylvania (USA), 2006, page 9 Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
13
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Portfolio Features 2nd largest packaged consumer goods company 3rd largest food firm Portfolio of 1600 brands Present in 150 countries
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
14
UNILEVER Path to Growth
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Segment
1600 brands in 1999 causes loss of focus 100 brands 75% turnover February 2000 five-year growth strategy Path to Growth
Category Culinary Product Frozen Product Food and Beverage Ice Cream Tea Spreads & Cooking Products Household Care Loundry Deodorants Home and Personal Care (HPC) Hair Care Personal Wash Oral Care Fragrances Major Brands Ragu, Colmans, Calve Findus Magnum, Breyers Lipton Rama, Becel Domestics, Cif Omo, Ala, Snuggle Axe, Rexona, Dove Sunsilk, Organics Vaseline, Dove, Lux, Ponds Signal, Close-Up Calvin Klein
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
15
UNILEVER Plan
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Get rid of some non-strategic brands Reduce the portfolio to 400 power brands by 2004 Make the companies operation in 150 countries more efficient Reorganize its 3,000,000 workers worldwide Save $7billion within 5 years
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
16
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Before the power brand strategy
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
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UNILEVER 1990: The sleeping giant
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Years of slow performance Lack of sound corporate strategy Numerous low-volume brands Small global presence compared to competition Mediocre performance in emerging markets
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
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UNILEVER 1994: Core Strategy
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Unilever - Core Strategy
50 products 15 products
Food & Beverage
Personal Care
Home Care
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
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UNILEVER 1999
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
UNILEVER FINANCIALS (IN MILLION EUROS)
Group Turnover Total Gross Operating Profit Net Profit 1998 40,437 1999 40,977 2000 47,582 2001 51,514 2002 48,270. 2003 41,817 2004 40,366
4410 2,944
4,303 2,771
3,181 1,105
5,174 1,838
5,041 2,129
3,526 2,942
3,573 1,9
6% 0.3%
Source: www.unilever.com
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
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UNILEVER September 1999
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Fewer and stronger brands
Reduce its brand portfolio 1600 400 power brands Result expected:
Unilevers top line growth to 5% - 6% Increase the profit to 16% by 2005 Reduce the work force by 10% Reduce operations to 110 countries from 150 Promote faster growth
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
21
UNILEVER Niall Fitzgerald said:
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
power brand strategy was implemented successfully Unilever cut the portfolio from 1600 to 400 brands and is at the number 2000 4 brands with sales of more then $1bn 2005 12 brands with sales of more then $1bn
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
22
UNILEVER Analysts say:
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
power brand strategy did not reach Unilevers expectations Sales grew only by 0.4% (targeted 5%-6%) sometimes strong brands were more important than scale KPN, Nivea Global companies need a hybrid approach (local and global brands in its portfolio)
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
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UNILEVER Concurrence
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Private labels like Aldi and Lidl were vital to the failure P&G are a threat to Unilever
2000 9 brands with sales over $1bn 2004 19 brands with sales over $1bn
Traditional media fragmented target audience more expensive to reach
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
24
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Brand Categories
Type of Brand Significance Brands those needs to be defended ferociously Power and deployed juridiciously Brands those have have the potencia to become a Sleeper power brand with a little support Slider Soldier Black Hole Rocket Wallflower Discard Brands which earlier was a power brand but lately lost momentum and needs immediate attention Brands those regular contribute significantly without much attention Brands those needed excess resources without any significant contribution Brands those will get power brand status soon were underappreciated, under priced, under marketed but had a small but loyal customer base Brands that should be discarded long ago
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
25
UNILEVER Portfolio Identification
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Source: Project Management Institute, Inc.: The Standard for Portfolio Management, Penssylvania (USA), 2006, page 9 Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
26
UNILEVER Portfolio Identification
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Identify the opportunities and challenges, brand portfolio helped to compare all the brands, Identify and allocate resources to the brand with greatest potential, taking necessary measures to prevent investments in some nonperforming brands. Unilever appointed PriceWaterhouse Coopers to streamline its portfolio of 1600 brands and identify the power brands from it.
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
27
UNILEVER Portfolio Categorization
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Source: Project Management Institute, Inc.: The Standard for Portfolio Management, Penssylvania (USA), 2006, page 9 Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
28
UNILEVER Portfolio Categorization
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
The managers tried to understand the brand portfolio properly.
Source: Project Management Institute, Inc.: The Standard for Portfolio Management, Penssylvania (USA), 2006, page 9 Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
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UNILEVER Portfolio Evaluation
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Source: Project Management Institute, Inc.: The Standard for Portfolio Management, Penssylvania (USA), 2006, page 9 Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
30
UNILEVER Portfolio Evaluation
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Exhibit 3: BRAND CONTRIBUTION
Annual revenues from brand Less : Direct marketing expenses Less : Below-the-line spending Apparent Brand Contribution Hidden Costs Senior management Time Extra attention of the sales force Complex product line Customer/Trade complaints Bad public relations Staff Turnover Others Does this brand Leverage with trade partners contribute to Platform for line extensions and new products the profitability of other brands but not captured in P&L Importance of Contribution to profit the contribution Contribution to overheads of the brand relative to other brands Overall contribution of the brand How important this brand in the overall brand portfolio will be three years down the line ( In $)
Yes
No
Yes
No
Top Third
Middle Third
Bottom Third
High More
Medium Same
Low Less
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
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UNILEVER Portfolio Selection
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Source: Project Management Institute, Inc.: The Standard for Portfolio Management, Penssylvania (USA), 2006, page 9 Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
32
UNILEVER Portfolio Selection
1. UNILEVER Company - Overview - Legal structure - Group distribution
Exhibit 4: BRAND RENEWAL MATRIX
2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Movement of Brand Brand Renewal Imperative Contribution Traction Momentum High High High Ideal power Brand High High Low Fast Track High Medium Low Solid brand but showing a declining trend Medium Medium Medium Maintain. Solid performer without much intervention Low Low High W atch this brand. It will either be a power brand or black hole Low High Low This brand serves a small/niche group of customers. Low Low Low Divest the brand
Source: Achieving the ideal brand portfolio Sam hill, Richard Ettenson and Dane Tyson, MIT Sloan Management Review (Dec 2004) Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
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UNILEVER Portfolio Prioritization
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Source: Project Management Institute, Inc.: The Standard for Portfolio Management, Penssylvania (USA), 2006, page 9 Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
34
UNILEVER Portfolio Prioritization
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Exhibit 5: CLASSIFICATION OF BRANDS Type of brand Power Significance Brands those needs to be defended ferociously and deployed judiciously Brands those have the potential to become a power brand with a little support Brands which earlier was a power brand but lately lost momentum and needs immediate attention Brands those regular contribute significantly without much attention Brands those needed excess resources without any significant contribution Brands those will get power brand status soon Brands those were underappreciated, under priced, under marketed but had a small but loyal customer base Brands that should be discarded long ago
Source: Achieving the ideal brand portfolio Sam hill, Richard Ettenson and Dane Tyson, MIT Sloan
Sleeper
Slider Soldier Black Hole Rocket
Wallflower Discard
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
35
UNILEVER Portfolio Balancing
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Source: Project Management Institute, Inc.: The Standard for Portfolio Management, Penssylvania (USA), 2006, page 9 Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
36
UNILEVER Portfolio Balancing
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Brand A B Market Position Dominant Strong Weak Not Present Global Marke t Share 15% 7% Regional Presence North America Latin Americe Asia Pacific Western Europe Cash Status Cash Generator Cash Neutral Cash user Eastern Europe % of Sales 17 8 % of profit 20 10 Cash Status Generato r User
Exhibit 6: THE BRAND AUDIT SHEET
Brand Positioning
Quality, Value, Upscale, Fun, Adventurous, Premium, Safe, Reliable, Trustworthy, Aggressive, Cheap
Source: Kill a brand, keep a customer, Nirmalya Kumar, HBR (Dec 2003) Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
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UNILEVER Portfolio Authorization
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Source: Project Management Institute, Inc.: The Standard for Portfolio Management, Penssylvania (USA), 2006, page 9 Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
38
UNILEVER Portfolio Authorization
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
GO!
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
39
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Brand Reduction
Dalda -
Launched in British India in 1938. Overall market leader Net proceeds from sales are about Pak. Rs 2.05 billion. Selected Oils and Fats Business (SOFB) sold for Pak. Rs 1.4 billion . UPL had to sell its SOFB products as part of Unilever's global strategy focus on core brand and product areas.
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
40
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Brand Extension
Knorr
Knorr was founded in Germany 1838 Unilevers leading soup brand 1994: SPAGHETTERIA ready-made dishes 1997: TASTEBREAKS Asia noodle type 2000: Marked as - Power brand 2004: Entering frozen foods sector
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
41
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Brand Extension
Dove
Dove soap launched in US 1955 Mild cleansing ingredient: pH neutral 2000: Marked as - Power brand 2003: 24% of US market by 2003 2003: Brand Extension in hair care 2004: Dove Campaign for Real Beauty
(link)
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
42
Any Questions left?
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Serdecznie dzikujemy M Muchas Gracias Muito Obrigado
Thank you very much
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
43
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
SWOT Analysis Weaknesses
Dual leadership Not connecting with customers Inefficient management of brands Reduced spending for R & D Inability to maximize acquisitions Decrease in revenues
Strengths
Recognized as a global company Strong brand portfolio Strong relationship with retailers Economies of scale
Opportunities
Changing consumer preferences Increasing need for healthy products
Threats
Strong Competition Increasing store brands Tougher Business Climate Exchange rates
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
44
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization
Environmental Management
http://www.unilever.com/ourcompany/investorcentre/annual_reports/annual_report_Form.asp
4. Path to Growth - Brand Reduction - Brand Extension
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
45
UNILEVER Distribution of cash value 06
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
http://www.unilever.com/ourcompany/investorcentre/annual_reports/annual_report_Form.asp Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
46
SlimFast
Rationale
Build strong portfolio Strategically attractive category
Ben & Jerrys
Bestfoods
Attractive Drivers
Strong customer reach 20% annual growth rate Strong sales and distribution network Opportunity for product Would make Unilever worlds largest ice cream products maker Premium prices Strong brand equity 10th largest U.S. based food products companies History of growth in revenues and earnings Strong global position
Unilever contributions
$2.3 billion cash International presence $20.3 billion euro cash; assumption of net debt Operating efficiency Similar portfolios and geographic coverage
$326 million Competencies in the industry
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Strategy Overview
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
48
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Strategy
Growth
20%
15%
10%
Expansion Path of the growth
5%
2.5%
80s
90s
99s
Years 2003
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
49
UNILEVER
1. UNILEVER Company - Overview - Legal structure - Group distribution 2. Executive Management - Vision - Mission - Strategic Objectives - Strategic Plan 3. Portfolio Management - Identification - Categorization - Evaluation - Selection - Prioritization - Portfolio Balancing - Authorization 4. Path to Growth - Brand Reduction - Brand Extension
Global IT strategy
Unilever Selects SAP as Standard for Global IT Strategy Unilever Information Program (UIP) develop an infrastructure to support the path to grow strategy Data Integrator ETL (extraction, transformation and loading) tool able to extract data, transform it into usable business information, and load it into the data warehouse Business Objects Rapid Marts CRM (customer relationship management) and SCM (supply chain Management) applications
Christoph, Esmeralda, Henrique, Sohail
Portfolio Management - Prof. Dr. rer. pol. Johannes R. Hofnagel
50