strategic management toolbox

Strategic Management Toolbox Prof. Dr. Büchler 1

Final presentation of the Henkel 2004 strategy Henkel vs. Reckitt: Conquering the Cleaning Segment An interactive case study of internal and external competition in new product development

Strategic Management Toolbox Group 3: Sahil, Mehak, Clemens, Tshering, Christian


SWOT-Inventory

Strenghts Weaknesses

Opportunities Threats


Strategic Management Toolbox Prof. Dr. Büchler

Strengths

Strong brand image

§  market leadership in some categories (shelf improvement)

§  Significant market penetration abroad

Outstanding innovation in homecare market

§  Chemical formulation allowing fast development and testing new formulas

§  Innovation Gate Management

3 Strategic Management Toolbox Group 3: Sahil, Mehak, Clemens, Tshering, Christian


Strengths

High quality standard

§  Sustainability awards – eco-friendly production

Cooperation and coordinaton between R&D plants of Henkel

§  Global Research Partnerships (Discovery+Basic Development)

§  Regional R&D (specific development)

Success in sales forces

§  placing products at the trade – good trade relationships)



Weaknesses

High total costs in SC processes

§  No packaging and applications à High costs of Outsourcing

Less support from other functions

§  bad coordination and information flew between departments

§  „Double“ Research & Development at different R&D plants of Henkel – missing sustainable information

management (Master data management)



Weaknesses

Decision Problem

§  Complexity in product diversification

§  Refusing attitude towards retail (Metro was looking for more innovative products)

Slow response to competitors new strategies

Maneuvering in terms of pricing

§  Quietly not possible due to changing retail formats (discounter) and private labels



Opportunities

New surface technologies (allowing reduction of cleaning intensity)

§  Trend tends to be having less time for organizing the household

§  Nano technology

§  Trend: ultrasonic cleansing, microfiber cleaning rags (clean without chemical cleaners)

New project

§  Acquisition (NA)



Opportunities

Multiple purpose cleaner

Globalization neglecting the local market

§  Declining of competitors in some part of europe

Evolving new retail formats:

§  Increase large scale formats because of positive impacts

§  Meet the low cost demands of major retailers



Threats

Shortage of labour, Limited supply

Low price private labels stealing market share

Limited finance according to acquisition in NA

§  Concentration problem of Top Management (Europe or Northamerica?)



Threats

High bargaining power of consumers (retailers) Rumours about competitive attack in surface care market (Cillit bang) Green Movement

§  Requires more intensive (pre)testing products

§  Stricter european regulation on environmental issues

§  Control of biological and chemical ingredients, Safety checks


Strategic Management Toolbox Prof. Dr. Büchler 11 Strategic Management Toolbox Group 3: Sahil, Mehak, Clemens, Tshering, Christian

Strenghts (S)

1.  Strong brand image 2.  Outstanding

innovation 3.  High quality standard 4.  Cooperation between

R&D plants 5.  Success in sales

forces

Opportunities (O)

1.  New surface technologies 2.  Project – acquisition 3.  Multiple purpose cleaner 4.  Glob. Neglecting local market 5.  New retail formats

Weaknesses (W)

1.  High costs in SC 2.  Bad coordination betw.

Functions 3.  Decision problem 4.  Slow response to

comp. strategies 5.  Pricing

Threats (T) 1.  Short. Labour, limited supply 2.  Low price private labels 3.  Limited finance according M&A in NA 4.  Low bargaining power – retailmarket 5.  Competitive attack Cillit Bang 6.  Green movement regulations

O1 O2 O3 O4 O5 T1 T2 T3 T4 T5 T6

S1 X X X X X X X X

S2 X X X X X X X X X

S3 X X X X X X X

S4 X X X X X X X

S5 X X X X X X X

W1 X X X X X

W2 X X X

W3 X X X X X X

W4 X X X X X X X

W5 X X X X

TOWS-Matrix


Defining 3 key strategies for OGSM

12

1.  Internal coordination and cooperation strategy

2.  Differentiation by innovation

3.  External coordination and cooperation strategy



Strenghts (S)

1.   Strong brand image 2.   Outstanding innova8on 3.   High quality standard 4.   Coopera8on between

R&D plants 5.   Success in sales forces

Opportuni8es (O)

1.   New surface technologies 2.   Project – acquisi8on 3.   Mul8ple purpose cleaner 4.   Glob. Neglec8ng local market 5.   New retail formats

Weaknesses (W)

1.   High costs in SC 2.   Bad coordina8on betw.

Func8ons 3.   Decision problem 4.   Slow response to comp.

strategies 5.   Pricing

Threats (T) 1.   Short. Labour, limited supply 2.   Low price private labels 3.   Limited finance according M&A in NA 4.   Low bargaining power – retailmarket 5.   Compe88ve aWack Cillit Bang 6.   Green movement regula8ons

O1 O2 O3 O4 O5 T1 T2 T3 T4 T5 T6

S1 X X X X X X X X X X X X X

S2 X X X X X X X X X X X X

S3 X X X X X X X X X X X

S4 X X X X X X X X

S5 X X X X X X X X X X X X

W1 X X X X X X X

W2 X X X X

W3 X X X X X X X X X X

W4 X X X X X X X X X X X

W5 X X X X X X

Bundeling the TOWS-Matrix


Be the most preferred and market leading company for customers, consumers and shareholders

- Return of sales 12 % Streamlining of brand portfolio (3 top brands >80%) Reduction of complexity -15% of SKU's net working capital: 15% of NES Organic sales growth (+5%: above market) Innovation rate of 40 % (currently 25 %) Marketshare (+25%) Realiza4on of new project

KS 1: Internal Coordination and Cooperation Strategy: -  Reduce the Cost/ Increase Efficiency -  Reduce Supply Chain costs -  Coordination among the departments KS 2: Differentiation by Innovation - Launch new product -  Improving products (new surface technologies) -  Introduce ecofriendly products -  Develop open innovations -  Face low price private labels by differentiation KS 3: External coordination and cooperation strategy -  Project – acquisition -  New retail formats -  Face low-price private labels -  Low bargaining power -  Be prepared for the Competitive attack by Cillit Bang -  Create strong brand image -  Taking advantage of good trade relationships

-  # of SKUs -  Capacity

Utilization -  Inventory Level -  T/W costs -  Market Survey -  High

Performance Programme

-  Price Index -  Innovation

Rate

O G S M


Strategic Action Plan Stragtegic Issues Actions Add. Cost/

investment Benefit Realized by Responsible

Person

KS 2: Differentiation by Innovation

Launch new product -  Improving

products (new surface technologies)

-  Introduce ecofriendly products

-  Develop open innovations

-  Face low price private labels by differentiation

2003: Sales in M€ 9436, R&D in M€ 257, Innovation Rate 2.7% ->increase innovation rate +40% -> need to achieve innovation rate of 3.8% 2003: 9436x1.05 = 2004: 9907.8 (Sales) 9907x0.038 = 376,466M€ (R&D expenses)

+40% innovation rate +market share increases

R&D Supply Chain Marketing Sales

Christian R&D director


Let´s fight the challenges of 2004 because...


strategic management toolbox

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