global crisis

Merging Brands in the Post M&a Portfolio

Successful business mergers demand successful brand mergers. If they are to succeed, managers need to be aware that there are different types of mergers and strategies and to identify the one that will work best.

However, despite the obvious and much-heralded potential of both the merged organization and its brands, it is very reasonable to ask if tomorrow’s merged brands will be as powerful and enduring as the pre-merger ones. Trends and recent history seem to signal otherwise. Consolidations are risky, often resulting in a lower market share than those of the pre-merger brands together.

Just what differentiates a success from a failure? Unfortunately, brand mergers tend not to be driven by strategic thinking. Nor are they all of the same variety. It is important to identify clearly the type of brand merger being attempted, and its unstated assumptions. Critical still, is the necessity to determine if the manner in which the brands are merging is consistent with the new firm’s branding strategy, that is, the end game that the merged business wishes to pursue with regard to its customers. Experience shows that, in the absence of such foresight, brand mergers are frequently haphazard, likely to be driven by short-term goals or personal agendas, and lead to mistrust and failure. Further, in the absence of a deliberate attempt to align brand mergers with the branding strategy, the final portfolio of brands lacks the power to capture the potential created by the merger itself. Mismatches, in fact, do more than spoil a re-branding opportunity, thus wrecking havoc on customer expectations and employee morale.

Successful business mergers demand successful brand mergers that create the basis for superior customer value and competitive differentiation for strategic advantage. In fact, there are four distinct approaches to merging brands. Below, I will describe the advantages and disadvantages of each one, and point out how misunderstanding the task at hand can lead to organizational crisis and market failure.

Ways of Merging Brands

Following a merger, managers usually employ four apparently similar verbs to describe what they will do to their brands and brand portfolios: streamline, rationalize, consolidate, reconfigure. But these verbs reflect not one, but four considerably different approaches to brand mergers.

1. Streamline implies choosing a form that presents little resistance to flow, increasing speed and ease of movement. Efficiency is enhanced by removing obstacles that create

turbulence. If firms are seen as managing flows – of ideas and resources – streamlining brands following a merger essentially warrants selecting a business model and aligning

all brands to meet its needs. The selected business model might correspond to that of the dominant firm (common during acquisitions), or one that is different from that of both merging firms. Brands, here, are seen as ways of fulfilling expanded potential, usually in operations and marketing. Brand elimination or movement decisions are guided by desired synergies at the supply-end, such as, contributing to economies of scale in production, sourcing efficiency, added distribution power, and advertising related advantages. Brands that require deviation from the model, e.g., design adaptations, or specialized channels, are dropped for reasons of efficiency. Over the long term, the objective is to develop the most efficient flow, using the combined resources of the merged firm. Key advantages of streamlining are speed in arriving at the desired portfolio and cost savings within a reasonable time. Among its potential downsides are loss of customer franchise for brands that have been seriously repositioned or eliminated from the merged portfolio, and a short-term impact on revenue following brand divestments.

Unilever’s purchase of Helen Curtis and subsequent merger with two other U.S.-based subsidiaries, Cheesebrough-Ponds and Lever Brothers, left the Anglo-Dutch multinational with a considerable stable of brands in the foods and beauty care markets. Rather than leaving the three to operate separately, Unilever’s streamlining approach defined the business model of the future to include the most profitable and fastest growing customer segments. Supply-end efficiencies resulted from divesting marginal and non-strategic brands in favour of potential brand leaders. Brand elimination led to disbanding the sales force, centralizing back-office functions, moving the headquarters, focusing new product development projects and reorganizing the brand management effort. As one of the executives who lived through the merger exercise noted – “Just by eliminating duplicated overheads, a lot of cost was taken out of the business and invested in marketing.” Within just two years of the merger, the alignment of brands with the chosen business model contributed hugely to the success of a new brand of hair care products.

2. Rationalizing is an extreme form of streamlining. It suggests not simply collapsing multiple flows into just one, but collapsing brands within the chosen flow as well. A mixture of reasons – supply as well as demand-driven – prevails. In addition to operating and marketing economies, the 20/80 rule – 20 per cent of brands contribute 80 percent of profit – prompts managers to severely cull portfolios, swinging all their resources behind only a few winning brands. A different logic – one in favour of creating a single global brand – also drives the drastic reduction in brands. Such global or mega brands are claimed to embody the values of global segments, ones that rise above cultural or regional preferences. These brands require little or no adaptation, travel far and wide, and hold forth the prospect of satisfying the most at the least cost.

Despite a roaring debate over their efficacy, a great many firms – the likes of Unilever, Proctor & Gamble, Nestle, and Diageo – have taken decisive strides towards rationalizing their portfolios in favour of global brands. But, going forward requires more than slash and burn – rather, a careful balancing act of the requirements for success in different markets. This strategy of saving all the eggs in the global brand’s basket may be risky, especially as competitors often counter by waving customized offers at consumers.

3. Compared to the above two approaches, Consolidation takes a more demand, or customer-driven, view of brand mergers. If watchwords for streamlining and rationalizing

are efficiency and profitability, for Consolidation they are market coverage and coherence. Faced with multiple business flows, the merged firm attempts to lend coherence through the elimination of overlaps, and add strength by leveraging the whole portfolio. Redefinition of the business is sought not by focussing narrowly – i.e., on a specific competency or product-class expertise – but by considering the entire range of customers hitherto served by the merging firms, with expanded opportunity for market coverage, and in satisfying complimentary needs, both within and across segments.

Kidde Plc, a U.K.-headquartered firm involved in fire protection devices and services around the world, has grown considerably in the past decade through acquisitions. Interestingly, such a strategy has deliberately avoided looking for production or service efficiencies, and focused instead -on covering diverse segments in a region (e.g., government offices, private home buyers, warehouse-style retail stores), and a variety of regions around the world. Barring selective brand divestments to remove irritations at the dealer/ distributor level, the philosophy driving brand mergers has been very much of a Consolidating variety, leaving Kidde as a ‘nation of small tribes.’

Ford’s acquisition of Volvo, Jaguar and Aston Martin and their cohabitation within the Luxury Car Division is yet another example of the Consolidating approach. So too is the joint portfolio which includes Volkwagen, Audi and Rolls Royce, covering diverse markets with different offers. Key advantages of Consolidating are customer retention and the continuation of harmonious relationships with trade channels that existed prior to the merger. The merged firm acts as a large holding company with the added advantage of diversifying its risks across brands and geographies. Among its key disadvantages are the risk of diluting the overall corporate purpose, the conundrum of chasing marketshare growth over profitability, inadequate sharing of knowledge across the firm, and the wastage of precious resources, such as multiple new products teams charged, more or less, with similar mandates.

4. Reconfiguring involves abandoning previous flows and discovering a new way of thinking about the business of the merged firm – in terms of its competencies and vision for the future. It may lead to radical changes in organizational structure, movement towards new technologies, and segmenting customers differently than in the past. Brands,

in this scenario, often end up intact in terms of their basic features, but transformed in every other way. New groupings, following the merger, impart markedly different value

propositions, segment positionings, and competitive sets – even requiring the development or acquisition of additional brands to complement existing ones.

Coca Cola’s purchase of Cadbury Schweppes has allowed the number- one soft drink marketer in the world to substantially expand its portfolio of brands into several nonalcoholic beverage categories including mixers and juices. From Coke’s point of view, a significant Reconfiguring  opportunity is in the offing – one capable of presenting a whole basket of brands that compliments specific customer lifestyles, in effect foreclosing competition from targeting the same segment/s with a specific brand in a specific drink category.

If successful, Reconfiguring can go a long way in building competitive advantage by re-defining markets and quality standards that competitors would struggle to imitate. In Coke’s case, for example, if successful, a customer may begin to view all non-alcoholic beverages that he/she consumes as being part of a set, perhaps with serious joint purchase benefits. Caution, however, is warranted in terms of the long-range sustainability of the newly conceived flows as well as in addressing the specific challenges that lie within them. Such as, the risk of contamination, i.e., failure or under performance of one brand within a set spoiling the fortunes of all the others, as Coca Cola Company may have to watch out for in the future.

Much of the disagreement over brands after a merger arises from misunderstanding the intended or even adopted approach. For someone interested in Streamlining, calls to support or strengthen brands outside the flow may appear wasteful. Imagine the confusion among managers from the two recently merged firms, as Rationalizing comes into conflict with Reconfiguring. Champions of the former might have viewed the whole merger exercise as one that would lead to a single dominant brand fit for rolling out everywhere, marshalling the entire management effort. Proponents of the later may have conjured up a back-to-the-drawing board scenario, with everything up for grabs.

Reconciling views about brand mergers may be difficult as long as assumptions underlying the four approaches remain hidden. Streamlining, for example, assumes a potential for synergy within the new organization – both in locating an opportunity and in actualizing the promise. Rationalizing, on the other hand, assumes a potential for differentiation, which is critical to positioning the firm’s lead brand in every served market. A potential for responsiveness characterizes Consolidating – an expectation that the merged firm has the wherewithal to compete effectively in varied markets. For Reconfiguring, it is the potential for transformation within the firm, as well as the ability to convince customers and trade partners about a very different view of the world.

Concluding Thoughts

For merging managers, the challenge is to discover which approach has the most support, and to bring its assumptions as well as strengths and weaknesses to light.

Prof. Surinder Pal Singh
http://www.articlesbase.com/strategic-planning-articles/merging-brands-in-the-post-ma-portfolio-723017.html

Apocalypse? No! – Why there is no Global Warming Crisis

Lord Christopher Monckton was an advisor to Margaret Thatcher & has been following the Global Warming issue with growing concern the facts have not been properly revealed.
This nine minute excerpt of his New DVD gives you some good information to think about

Duration : 0:9:43

Read more…

CNBC – Dollar Will be Utterly Destroyed, Global Currency, New World Order

Friday, 6 Nov 2009 – The dollar will get “utterly destroyed” and become “virtually worthless”, said Damon Vickers, chief investment officer of Nine Points Capital Partners. Due to the huge wage disparities between the United States and emerging markets like China, Vickers said that may resolve itself in some type of a global currency crisis.

“If the global currency crisis unfolds, then inevitably you get an alignment of a global world government. A new global currency and a new world order, so we may be moving towards that,” he said.

For those who have claimed this is a fake clip I suggest you visit CNBC’s website:

http://www.cnbc.com/id/33709379

http://www.infowars.com

Duration : 0:3:52

Read more…

Overfishing – A Global Crisis

This is a video by Frankie Richardson, Sam Morris, and Greg Tolentino for Mr Adams Marine Biology, adressing the current global issue of Overfishing. Please watch this so that you can be informed of the negative effects of overfishing, along with things that can be done to help save the fish. Please click the following links for more info and solutions: http://www.greenpeace.org/australia/issues/overfishing/solutions
http://www.grinningplanet.com/2005/06-07/overfishing-article.htm

Duration : 0:5:20

Read more…

global crisis

I declare the end to all wars…all troops return home from overseas…….UNITED STATES OFFICIALLY DEBT FREE AS ECONOMY RISES IRS TAX REFUND & HEALTH CARE FOR
EVERYONE…ALL POLITICANS SENT TO JAIL AS CITIZENS TAKE OVER FREEDOM OF CHOICE ACTUALLY BECOMES REALITY……..END OF PROHIBITION IS ANOUNCED WORLD WIDE
ALL TAXES REMOVED… ALL THE WORLD LEADERS MEET AT A PEACE CONFERENCE GLOBAL WARMING WAS SCIENTIFICALLY PROVED A SCAM FOR MONEY ENDANGERED SPICIES THRIVE ONCE
AGAIN……. !!!!!!!!!!!!!!!!WE INTURUPT THIS BRODCAST TO BRING YOU THIS MEASSAGE!!!!!!!!!!!!!!LOVE IS FREE ALL DAY SO GIVE SOME AWAY

Duration : 0:4:20

Read more…

Small Businesses and the Credit Crisis in 2009

The FSB (Federation of Small Businesses) released their New Year’s message indicating that the government’s strategy to face the credit crisis in 2009 should begin by helping smaller firms avoid having to face closure due to late payments, an expected decline in trade and increased difficulty in accessing financial help for the year to come. The message continues to say that the government should present a light legislative programme for 2009 and a Budget focused on “getting the economy running again”.

John Wright, Chairman of the FSB points out that small business represent over half of the private sector turnover and that the innovative, enterprising and flexible nature of these businesses will help see the UK out of recession in 2009 and into recovery. Consumers will also play an important role in the New Year and will be urged to Keep Trade Local, this also goes for government departments and local authorities who shouldn’t let their global thinking stop them from buying locally.

The FSB New Year’s message calls for an extension of the Small Business Finance scheme into a wider business loan guarantee, access to working capitals to help with cash flow problems and guaranteed overdraft facilities. John Wright also indicates that bank managers lacking experience in dealing with a recession must undergo training to reduce the risk of having to close their offices unnecessarily and points out that there are 10,500 branches in the UK that could be affected by this lack of preparation.

One of the main concerns for small business in 2009 will be that of late payment from their service consumers as this would affect their cash flow and, in turn, their ability to pay business credit card balances on time. This is why the FSB has released the Prompt Payment Code; its purpose is to provide policies related to the payment of “B2B” bills focusing mainly on 3 areas:

- Paying suppliers on time; following terms previously agreed by their contract, without changing payment terms retrospectively or on unreasonable grounds.

- Providing suppliers with clear guidance; giving suppliers easily accessible guidance on payment procedures and a system for dealing with complaints and disputes whilst also ensuring suppliers are promptly advised of reasons why an invoice wouldn’t be paid in time.

- Encouraging good practice; requesting main suppliers to implement the code of practice down their own supply chains.

With many high street retailers closing down, it’s important to take precautions to avoid a similar fate. Considering that some companies rely greatly on the capital buffer coming from their business credit card, it’s important to take some measures to ensure it can still be relied upon in 2009. To avoid jeopardising your credit or being hit by higher rates you can resort to online banking to pay your business credit card balance in time, no matter where you are, find a low or 0 percent interest credit card and consider transferring some of your existing balance into it. In general, avoid leaving balances unpaid as low rate credit cards may prove harder to come by in the New Year.

Hannah Callen
http://www.articlesbase.com/finance-articles/small-businesses-and-the-credit-crisis-in-2009-712801.html