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

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SWOT-Inventory

Strenghts

Weaknesses

Opportunities

Threats

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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

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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)

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Weaknesses
High total costs in SC processes

No packaging and applications 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)

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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

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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)

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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

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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?)

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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

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TOWSMatrix

Opportunities (O)

Threats (T)

1.
2.
3.
4.
5.

1.
2.
3.
4.
5.
6.

New surface technologies

Project acquisition
Multiple purpose cleaner
Glob. Neglecting local market
New retail formats

O1

O2

O3

O4

O5

Short. Labour, limited supply

Low price private labels
Limited finance according M&A in NA
Low bargaining power retailmarket
Competitive attack Cillit Bang
Green movement regulations

T1

T2

T3

T4

Strenghts (S)

S1

1. Strong brand image

2. Outstanding
innovation
3. High quality standard
4. Cooperation between
R&D plants
5. Success in sales
forces
Weaknesses (W)

S2

S3

S4

S5

W1

1. High costs in SC
2. Bad coordination betw.
Functions
3. Decision problem
4. Slow response to
comp. strategies
5. Pricing

W2

W4

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W3

W5

T6

X
X
X

T5

X
X

11

Defining 3 key strategies for OGSM

1. Internal coordination and
cooperation strategy
2. Differentiation by innovation
3. External coordination and
cooperation strategy
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Bundeling
the TOWSMatrix

Opportuni8es (O)
1.
2.
3.
4.
5.

New surface technologies

Project acquisi8on
Mul8ple purpose cleaner
Glob. Neglec8ng local market
New retail formats

O1

O2

Strenghts (S)

S1

1.
2.
3.
4.

Strong brand image

Outstanding innova8on
High quality standard
Coopera8on between
R&D plants
5. Success in sales forces

S2

S3

Weaknesses (W)

W1

1. High costs in SC
2. Bad coordina8on betw.
Func8ons
3. Decision problem
4. Slow response to comp.
strategies
5. Pricing

W2

S4

S5

O3
X

O4
X

X
X

1.
2.
3.
4.
5.
6.
O5

T1

W4

X
X

X
X

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T4
X

T5

X
X
X

X
X

T6

X
X

X
X

T3

T2

Short. Labour, limited supply

Low price private labels
Limited nance according M&A in NA
Low bargaining power retailmarket
Compe88ve aWack Cillit Bang
Green movement regula8ons

W3

W5

Threats (T)

X
X

X
X

13

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

S
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

M
- # of SKUs
- Capacity
Utilization
- Inventory Level
- T/W costs
- Market Survey
- High
Performance
Programme
- Price Index
- Innovation
Rate

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

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Strategic Management
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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%

+40% innovation
rate

R&D
Supply Chain
Marketing
Sales

Christian R&D
director

+market share
increases

->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)

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Lets fight the challenges of

2004 because...

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17