Two to Tango

            

Authors


Authors: Pradip Sinha & Sadhu Ramakrishna
Associate Consultant, Research Associate,
ICMR (IBS Center for Management Research).



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Pros and Cons Contd...

From a Different Stroke

P&G

Strength

 Weakness

• Leading consumer goods producing company of the world.
• Known for its feminine hygiene products.
• Has got reach in both developed and developing countries.
• 16 billion-dollar brands.

• Does not have anything particular in the men's category.

Opportunity

 Threat

• Got strong hold in developing countries like China.

 • Too many local players coming up with cheaper products.
 • Market fluctuations, i.e., in share prices.

Gillette

Strength

 Weakness

• World's No. 1 in the shaving sector.
• Strong and innovative history.
• 5 billion dollar brands.
• Known for its Guy's products.

 • No existence in developing countries like china.

Opportunity

 Threat

• Has a feel of the women's shaving market.
• Greater brand recall power.

 • Too many local players coming up with cheaper products.

P& G + Gillette

Strength

 Weakness

• World's No. 1 in the shaving sector.
• Leading consumer producing company of the world.
• Strong innovative history.
• 21 billion-dollar brands.

 • Overlapping of products.

Opportunity

 Threat

• Has a feel of the women's shaving market.
• Greater brand recall power.
• Presence in both developed and developing countries.

 

 

 • Clash of corporate culture.
 • Uncertainty among its employees.
 • Job cut-off.
 • Gillette's loss of identity.
 • Giving enough time for its competitor to think of counter attack strategy.

A SWOT analysis of both the mega firms before and after the merger shows that Gillette is going to lose its identity. As far as its presence in the women's personal care segment is concerned, it may not be No. 1, but its women oriented products like Braun are well accepted worldwide. There seems to be number of concerns for Gillette-What will happen to its products like Duracell batteries, Oral-B toothbrushes and after shaves that will be clashing with the products of P&G-What will happen to them? Will P&G be promoting them separately? Is the timing of the acquisition right? Will they be giving the same amount of time, quality and emphasis to the research and development as Gillette used to give to their products especially to its razor Mach 3? These are some of the questions which at this moment are very unclear and no one dares to answer. Moreover, the top management is going to change. It's a known fact, when the boss changes, the company's priorities also change accordingly. Gillette made a direct entry to the Indian market without anyone's help and is now doing exceptionally well. All the above mentioned discussions boil down to the same question: How good is Gillette's marriage with P&G. More or less it seems like a typical Indian middle class marriage where the bride sacrifices everything for the sake of marriage. Soon she loses her identity as an individual and lives by the norms laid down by her husband. Honestly, Gillette does not really need to get acquired.

The mega deal will lead to a cut-off of approximately 6000 employees of the combined workforce of 1,40,000 employees working in 80 countries across the globe. According to the officials, most of the cuts will be through the elimination of management overlaps. However, lay-off is considered a hindrance for the growth of any company. Lay-offs create a sense of fear and uncertainty among the employees thereby affecting the employee's productive levels and the company's solidarity. For example, many middle level managers in Gillette, who were expected to move up the ladder, are now insecure of their position.

Gillette's products are basically targeted at upper middle class segment, whereas P&G's products are targeted at the core middle class. This difference of target audience may give them a little trouble. Moreover though deal has been announced, it will take quite some time for both the parties to materialize the whole issue. It is expected to be finalized only by this September, giving ample time for the competitors to devise appropriate strategies, so that the union will not affect their profits.

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