As discussed in the Case Study, Reckitt-Benckiser use “constructive conflict” to help them make fast decisions in an industry where getting their product to the market before their competitors is essential.
QUESTIONS & ACTIVITIES
1. Outline the factors that contributed to the success of Reckitt-Benckiser (RB) following their merger in 1999.
2. What was the overall aim of RB’s strategy?
3. RB had three main components to their strategy. What were they?
4. Explain what a Powerbrand is and give examples.
5. Describe how RB use brand recognition to promote their products world wide.
6. Explain why innovation is important to RB and what strategies they use to generate new ideas.
7. Outline RBs four core values used during recruitment to determine if they have got the right person for the job.
8. Discuss how RB uses constructive conflict at their meetings to aid their decision-making.
9. Explain why diversity is important to RB.
10. What strategies does RB employ to ensure they get their ideas to market first?
11. Outline the roles of the two cost-cutting teams RB has set up to keep costs under control.
12. Explain the different types of leadership styles and where the management team at RB fit within the model.
EXTENSION ACTIVITIES
1.’ Reckitt-Benckisers success is not due to their innovative products, but to having a better marketing strategy than their competitors’. Do you agree or disagree with this statement? Give reasons why.
2. Consider your favourite teacher. What leadership style do you think he or she uses? In general, do you think students prefer a teacher who is more authoritarian or more delegative/laissez faire? Explain your preference.
3. Find two job ads for management or executive positions. What leadership qualities are mentioned in these ads?
In the fast paced world of household, consumer health and personal care products, innovation is the key to success. To keep ahead of their competitors, Reckitt Benckiser (RB) needed to create a company culture that allowed new ideas to thrive. This case study focuses on the strategies that RB uses to achieve above average growth within the industry and the importance of innovation and marketing to this global organisation.
As a result of reading this case study, students should be able to:
To be successful in the fast-paced world of household, health and personal care products, you have to think big.
RB’s strategy has always been clear: employ the right people to drive above industry-average growth and turn it into profit and cash.
The concept of the Powerbrand was introduced in 2002 and consists of RB’s leading global brands that compete in markets with significant potential for high growth.
A strong corporate culture is an important part of any good business and attracting and retaining the right people has been a key part of RB’s success.
A good leader may be described as one who influences, motivates and enables their employees to do their job well and contribute to the success of the organisation.
Since the merger in 1999, RB has seen phenomenal success.
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The two businesses were a good match, with a combined history of innovation spanning over 150 years. Complimenting each other geographically, they now covered extensive markets across Europe, the UK, Australia, the United States and many smaller markets worldwide.
Similarly, their product portfolios worked well together, with Benckiser a market leader in automatic dishwashing and fabric care products, while
Reckitt & Colman had achieved success in disinfectants, home care, pest control and health and personal care.
The merger was a successful one, with RB the fastest growing business in its sector. The above industry-average growth since the merger can be linked directly to the company’s strategy, company culture and leadership model. Having the right people helps create the right culture, one RB describes as strong, fast-acting and highly effective.
The company embraces diversity and encourages constructive conflict to achieve the best ideas and innovations. The leadership team expects their employees to use initiative, take ownership of their ideas and to take risks, with the aim of outperforming the market.
central message is clearly communicated to all stakeholders makes good business sense. By focussing on the common goal, both shareholders and employees can be confident they understand the company’s vision and the strategy to achieve their objectives.
Employing and retaining people with the right principles and attitudes helps to create the culture and approach to business that makes RB unique.
To stay ahead of the market, RB needs creative thinking and employees who are willing to take a risk on new ideas, as well as a leadership team
prepared to support them. The range of products RB manufacture and sell is extensive. Household names such as Aerogard, Clearasil, Dettol, Mortein, Pine O Cleen and Strepsils are but a few of the easily recognisable products in Australia.
However, RB has identified 19 of their best selling products that, in their category, are globally number one or two on the market. They call these
their Powerbrands – global leaders in high growth categories. Focussing on their Powerbrands makes sense, as the profits from these 19 brands alone make up more than two-thirds of the company’s total revenue. RB invests heavily in these brands through advertising and marketing to maximise the returns and grow their market share. They also concentrate on continual innovation, listening to the needs of their customers and looking for ways to make their products better.
Another key strategy is to focus on organic growth. This refers to the development and growth of their existing Powerbrands; they only look to acquire new brands if they add significant financial or market value to the company.
Like all good businesses, RB is continually looking for ways to reduce costs. Managing costs by eliminating waste and improving efficiency contributes to their aim of turning growth into profit. Squeezing costs at every opportunity is an important aspect of cash management and is reflected in their above industry-average profits and returns for shareholders.
Brands like Finish, Vanish, Clearasil, Mortein, Dettol, Scholl, Harpic and Airwick are worldwide household names as a result of RB concentrating the majority of their innovation, marketing and media investments around them. In 2010, 69 percent of RB’s revenue and 85 percent of their growth came from these 19 Powerbrands. Product brand recognition is one of the company’s great strengths and is a result of RB’s products maintaining a consistent overall image around the world. Their plan is to create brands that are truly global. Local leaders can express the product differently, taking into account local market conditions, if it means gaining market share or improving growth – however, this does not allow them to change the way a brand is headed. To keep the consistency in their brands, RB has a global category team for each category, which works with the markets to define and ensure consistency of the brand’s purpose and positioning everywhere in the world.
In a market where there are many competitors all selling very similar products, differentiation is a key tactic in setting your product apart from the rest. In the markets that RB competes in, innovation is essential. Instead of spending large amounts of money researching and developing new products, they use extensive market research to determine what the consumer wants and needs, in order to make their use of the product ever more easy and convenient, and the results from the product ever better.
These are sometimes big innovations but often many smaller ones, where they can incrementally improve a product, implementing a few changes that may save the consumer time or make the product more convenient to use, and that they are prepared to pay more money for.
A good example is the Finish dishwasher detergent. They noticed that consumers usually use three different products in their dishwashers: a powder, a rinse and salt. In 2000 RB came up with the Finish PowerBall 2-in-1 that combined the powder and rinse aid. They then improved it in 2001 by adding salt, and again in 2005 by adding a glass protector. They support their new and improved products with heavy marketing and
their strategy has paid off, with over a third of their revenue coming from products that have been developed in the last three years.
A strong corporate culture is an important part of any good business and attracting and retaining the right people has been a key part of RB’s
success. At the time of the merger, about 80 percent of senior employees were let go as they did not fit the new culture. It was easier to hire new
staff or leave a position vacant, rather than wasting time trying to change people or put the wrong person in the job. During recruitment, there are
four core values that RB is looking for:
RB has a unique culture of ‘constructive conflict’ and values this as a positive problem solving tool. Rigorous discussion and debate is encouraged at their meetings and participants are expected to come well prepared to fight for their ideas and to have thought it through very carefully. At the end of the meeting a decision is made – often whoever has the strongest argument wins! All then agree to get behind and support the decision and move on.
Debate often stems from the significant international diversity that exists within the organisation, with employees bringing different ideas and perspectives to the table. For example, among the top 400 executive employees globally, 49 different nationalities are represented. The global
nature of their Powerbrands means diversity within their management team is crucial to understanding and developing the markets in which they operate.
A global company needs employees with different national perspectives as it encourages ‘risk’ taking. It increases its ability to challenge any “it
won’t work in this market” parochial thinking. Diversity improves creative thinking, challenges existing consumer behaviour models and brings a wealth of ideas to the organisation.
Generating the ideas and making quick decisions is only one aspect however. Getting those ideas to the market fast is imperative. The first to market has the advantage – and the faster the innovation comes to market the longer you have to take advantage of first mover economics. The company structure at RB is flatter than most other organisations. Middle management is limited, bringing the executive team in closer contact with those on the ‘front line’. This helps generate faster response times and also reduces office politics, giving employees more control over their work.
In such a fast paced market, where consensus is not sought, there is no patience for lengthy meetings, glossy presentations or political power plays. Swift decision making is vital if RB expects to be first to market. In an industry that relies on innovation to succeed, they need strategies to get their new ideas to market before their competitors. For RB, this means not worrying if the manufacturing costs of their latest product are not as low as they could be when first launched – although cost cutting starts the very next day. A good example of this is the launch of the Dettol (Lysol) No-Touch soap. The product was first launched in the US market before any competitor products and was so different to anything else in the category
it drove significant growth for the company. At RB, decisions are made fast and innovations are driven globally. As a result, within one year of launching in the first market the No-Touch system was being sold in numerous countries around the globe and has sustained the first-to-market advantage.
RB recognises the value of their high performing employees and they are prepared to pay for it. Remuneration is
consisting of a base salary plus incentives such as bonuses and share options for those who feel confident to push their ideas to get great results.
High performance is not all that is expected of RB managers. International, speedy mobility is part of their cultural style. Given the global stature of their Powerbrands it is an advantage for the management team to move between international offices as their career progresses, gaining experience and invaluable insights into operations and product performance in different markets: taking ideas from one market and introducing them as radical in another.
Keeping production costs under control is important in any business. However, RB considers this just as vital as building sales. A conservative attitude is reflected right across the organisation.
In line with RB’s strategic aim of turning their above industry-average growth into cash, they have set up two cost-cutting teams. The ‘Squeeze’ team looks to reduce the amount of materials used in their packaging, and this can generate significant savings. For instance, in 2009, the team recommended a new, resealable pack of Vanish stain remover as an option for consumers, and saved the company millions by using 70 percent less plastic than the original.
Secondly, the ‘X-trim’ team is responsible for improving efficiency across the entire organisation. This may mean changing the layout of a manufacturing plant, or finding a cheaper way to distribute their products. For example a simple change in the production process of aerosol cans resulted in a major efficiency improvement. The decoration of aerosols cans had always been achieved by printing directly onto the body of the can at the can manufacturer’s factory, before storing the cans by their intended use (e.g. what product they would ultimately contain). These cans were then shipped to the RB factory and stored again until needed for production.
It was decided to label cans after filling in the production process. This resulted in savings through many areas. Firstly there was less inventory of cans, at both the manufacturer and RB factory, as one can could now be used for multiple variants. The printing of labels, and application, was cheaper than printing tin plate, even allowing for the cost of the new labeling equipment. This project resulted in million dollar savings, and resulted in a more flexible production process.
It is thought that all leaders fit into one of these styles or somewhere in between. The leadership style at RB would lean more towards Participative, but not Democratic, as no vote is taken and consensus is not sought. However, crucially, it follows distributed leadership principles.
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From: | Edition 7 |
Your case study in Australian Business Case Studies will raise awareness of your business's commitment to corporate social responsibility and sustainability amongst tomorrow's leaders. Learning how you balance business needs with those of the environment, employees and the community will position you as a sustainable business that is working hard to meet the needs of future generations. You'll achieve this in a way that helps young people improve their exam grades and understand more about the businesses that that supply the goods and services they consume.
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Your case study will build your employer brand so you can attract more applicants, select better candidates and ultimately increase the effectiveness and profitability of your organisation.
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Some of the messages you may like to share are shown below. Some of business studies curriculum topics that would deliver that message are also shown in brackets.
Your case study in Australian Business Case Studies will enhance your reputation amongst the discerning consumers of today and tomorrow.
A better understanding and opinion of the organisation will lead to more purchases and profit. You'll achieve this in a way that helps young people improve their exam grades and understand more about the businesses that supply the goods and services they consume.
Some of the messages you may like to share are shown below. Some of the business studies curriculum topics that could deliver that message are also shown in brackets.
You will receive a full statistical breakdown on web traffic for your case study including downloads made so you can assess your return on investment. You'll also learn of the impact of the case study on opinions through web polls, surveys and focus groups.
1. What are the steps of the ADF recruitment process?
1. There are differences between the recruitment process for the ADF and that of other organisations/companies. What other aspects of HR do you think are specialised within the ADF and why might they be different? In your anser, you may like to look at:
1. Explain the meaning of franchising as a type of business ownership.
1. Tough Competition – SWOT Analysis
A SWOT Analysis is one of the most commonly used business tools allowing a user to take a snapshot of a businesses’ situation. Sometimes a SWOT Analysis is called a situational analysis. A SWOT Analysis investigates strengths and weaknesses that exist as part of the internal environment of the business, such as well-trained staff or outdated equipment. A SWOT analysis is also used to identify possible opportunities or threats that exist in the external or macro environment, such as new market segments or increased competition.
a. Using the material in this case study conduct a SWOT analysis on the operations of 7-Eleven Australia. List 3-5 clearly explained points for each category. You can even rank each point in order of importance.
b. In pairs conduct a SWOT analysis on a 7-Eleven store with which you are familiar. If you don’t have 7-Eleven in your local area perform the SWOT analysis on some other convenience store.
c. Share and discuss the results as a class. As a class you should compare and contrast the findings in relation to different types of convenience outlets including: Dedicated convenience stores such as 7-Eleven and Quix Petrol stations Supermarket and petrol co-branded ventures such as Woolworths/Caltex and Coles/ Shell Local milk bars Any other type of convenience outlet.
1. What is a destination brand? Why is it important for 7-Eleven Australia to have a destination brand such as Slurpee?
1. Brainfreeze Focus groups
Focus groups are a key part of market research campaigns and are ideal way to obtain direct product feedback from a target demographic.
Working in groups you are required to assemble focus groups from younger members of your school community, perhaps Year 7s or 8s.
After obtaining the relevant permission organise an appropriate time and location to work with these students. Make the venue more interesting, have music playing in the background, perhaps have a laptop ready and so on.
Approach your local 7-Eleven, explain what you are doing and see if you can obtain a voucher to provide free Slurpees and if possible; other products for your focus group. (If not you will have to supply these yourself)
Prepare a set of questions to find out how your focus group feels about Slurpee, 7-Eleven and consumer culture in general. You will need to be very prepared and have someone in the group record the information. Group members will need to have specific roles. At the very least you might need 2 facilitators (good communicators), a product wrangler (a good organiser) and a recorder (with good attention to detail). You might be able to video the sessions.
Some possible things to find out are:
What they like
What they don’t like?
How much money they have to spend?
Why and when they go to 7-Eleven?
What they think of special promotions, etc.?
Which products they like consuming together?
Taste tests and product comparisons.
What they think is currently cool or in and so on?
Prepare and give a report to your class that summarises the findings. Use visual aids and multimedia to enliven your presentation. Invite your local 7-Eleven owner/manager to the presentation.
The fast food industry is a growing one and attracts many young people to casual and permanent positions. Most people these days are familiar with reputable fast food brands like KFC and have come to expect that each time they dine at one of their stores they will receive consistently high quality service and cuisine.
KFC adopts a centralised HR system to protect the integrity of its highly recognisable brand and values staff retention and development whilst ensuring that KFC is a fun place to work.
By reading this Case Study, students should be able to:
If you've travelled within Australia or overseas you may have noticed there are some major restaurant companies with a significant market penetration. You probably also recognise these brands in a heartbeat and know the product range, service and customer experience to expect.
For most large organisations, the human resources function plays a crucial role in the overall performance of the business.
KFC recognises the importance of clear communication about potential internal career progression.
KFC is developing technology in one of its key human resources processes - recruitment and selection.
KFC is a highly successful quick-service restaurant brand that drives sales and profit through professional training and retention strategies.
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From: | Edition 3 |
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