The Procter & Gamble (P&G)-Gillette Merger
|
|
ICMR HOME | Case Studies Collection
Case Details:
Case Code : BSTR159
Case Length : 19 Pages
Period : 2005
Organization : Gillette, Procter and Gamble
Pub Date : 2005
Teaching Note : Available
Countries : USA
Industry : FMCG
To download The Procter & Gamble (P&G)-Gillette Merger case study
(Case Code: BSTR159) click on the button below, and select the case from the list of available cases:
OR
Buy With PayPal
|
Price:
For delivery in electronic format: Rs. 500;
For delivery through courier (within India): Rs. 500 + Shipping & Handling Charges extra
» Business Strategy Case Studies
» Case Studies Collection
» Business Strategy Short Case Studies
» View Detailed Pricing Info
» How To Order This Case
» Business Case Studies
» Case Studies by Area
» Case Studies by Industry
» Case Studies by Company
Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
Chat with us
Please leave your feedback
|
|
<< Previous
P&G Gets the Razor Edge Contd...
|
At the same time, Gillette had also grown since Kilts joined the company in
2001. Rivals such as Energizer5 and Rayovac6
made attempts to diversify to compete with it (Refer Exhibit I for a note on
Gillette's competitors). Commenting on the merger deal, Kilts said, "We believe
we can bring these companies together and create a juggernaut". He added that he
was a great believer in scale and did not want to "get stuck with the leftovers"in a consolidating sector7.
According to analysts, the merging companies had a lot of similarities -a
corporate history more than a century old, billion-dollar brands, and pioneering
consumer product marketing initiatives.
|
|
They called it a unique case of acquisition by an innovative company to expand
its product line by acquiring another innovative company. Analysts said both
companies had faced similar problems of low sales and dwindling profits
around the year 2000 and both had emerged winners after following similar
approaches. Both the companies had focused on strong brands and cut down
costs to ensure productivity gains. They described the merger as a "perfect
marriage".
|
|
Some
analysts also viewed the merger as a move to bring the consumer goods
manufacturers on par with retailers, who had gathered considerable
bargaining power.
However, analysts were concerned about P&G's handling of the risks
accompanying the biggest merger it had planned to undertake in its
168-year-old history. This merger was 10 times bigger than P&G's largest
purchase earlier8. Therefore,
analysts felt that the scale of the merger would make the integration a
huge challenge. Further concerns were raised by analysts with relation
to the integration of the workforce and the culture of the two
companies, especially as there would be massive layoffs across
countries. |
They also feared that P&G could face the risk of not being able to concentrate on its functioning due to the demands of the integration effort. They felt that the formulation of country specific strategies for the combined firm could take considerable time. Critics also pointed out that P&G already had some in-process integration of Wella that it had acquired in 2003 and this could also divert the management's
attention and energies away from the current integration.
Excerpts >>
|
