By MARK@ (Ruska, Markevichus, Naniev, Grachev) Emerging russian ice-cream market is good area for different producers as it has great potential 1. Currently Russian ice-cream market is the 4th largest in terms of amount produced and 10th in terms of value. 2. The market is growing slowly and the consumption less than in the US and Scandinavian countries. 3. The ice-cream market has got good potential. 4. Mainly people contribute icecream by impulse rather than taking it home. 5. A few leaders have got huge share of the market. Russian ice-cream market is growing slowly but has a good potential Trend of ice-cream consumers share Trend of market volume 60% 59% 58% 57% 56% 55% 54% 53% 112,80% 115% 110% 105% 100% 95% 90% 2011 2012 2013 2014 100% 2009 2015 113,15% 2010 2011 Differentiated demand provide sufficient market share for main producers Trubochka 3% Sandwich 2% Fruit Ice 3% Wafer Cup 11% Other 10% Main ice-cream categories Log+Cake 3% Cone 18% Takehome; 32,00% Stick 21% Share value of main producers, 2011 Bulk 5% Pot 4% Tub 10% Unilever-Inmarko 22% Big Brick 9% 36% Other 1% Iceberry 15% 6% Nestle 7% 14% Russki Holod Talosto Other According to current situation on the Russian ice-cream market Unilever-Inmarko has got a great potential acting in this area. Hence, Unilever-Inmarko could achieve good results by having a good-functioning structure. So the main goal is to achieve the 1st place in certain areas (Central, North-West, South) of Russia by modifying current distribution system. MARK@ 2 Current position of Unilever-Inmarko on the market gives huge opportunities for constructing effective distribution network Unilever-Inmarko can use its strengths to resist threats and use opportunities to improve weaknesses. Strength Weaknesses Good position in world and Russian market; Good facilities; Well-balanced portfolio of brands; High quality of products Bad experience in acting on Russian ice-cream market; Production capacities not always cover existing demand; Weak position in distribution in some regions Opportunities Threats Central region has great potential; Developing economy gives huge opportunities; Huge areas that could be used in manufacturing; Economy of scale could be used Unstable political situation; Uncertain tax policy of the government; Strong competitors Acting in competitive market with strong players Unilever has got its own advantages (Price/quality; Tula - high technology; High quality of service) that give company opportunities for growth. Brand portfolio Price (from the point of view... Unilever has strong positions in Russian market in certain areas, but not good enough to be a leader in ice-cream sector. Previous bad experience could be a good example for company. Unilever should use existing capacities of Inmarko and should improve distribution channels. Novosibirsk Unilever can optimize distribution network (in Central, NorthWest, South regions) using given capacities. Low power and not suited to modernization. The shop in Novosibirsk is equipped with only two production lines. In 2011 - re-equip into the distribution warehouse and the logistics center. Producer's CPI Brand 10 8 6 4 2 0 Value shares Effectiveness of... Good location (Central, South and North-West). The high production capacities. Complex for the production of ice cream + logistics center (5,000 tons of finished products). By the end 2014 will produce about 120 mln liters of ice cream (potentially 200 million liters). I = 100 million euros. Produces 60% of Inmarko production. Maximum production capacity = 60 million liters of ice cream. Warehouse (20,000 pallets for 5,000 tons of finished products). Tula Unilever-Inmarko Nestle Iceberry Russki Holod Talosto Omsk Fairly modern enterprise. Regular upgrading. Can produce only 50 mln tons of ice cream per year. Partial modernization has already begun. Restructuring measures will increase the production of ice cream up to 75 tons per year. Later will produce goods for Siberia, the Far East and Kazakhstan. Using its competitive advantages and existing capacities Uniliver can build effective distribution network in Central, North-West and South regions based mainly on highly technological plant in Tula. MARK@ 3 Modify currently existing system in Central Federal District Pros and cos of highly populated region with lots of distributors Central Federal District has the biggest population among the others (37 million). Central region also less suffers from seasonal changes, also, Inmarko's plant is situated here. Our current distributors (5) work almost in every city except Lipetsk and Tula. They have high CCFOT and expectable level of % of sales. Almost all warehouses are owned. Almost all distributors are huge and highly appreciated by companies. They have high rating. We have 10 possible distributors, as well, that gives us opportunity to change something. In Central Federal District work a lot of companies. That is why it is highly concentrated. Minus is that almost all our current distributors work with our competitors. That is why we can't guarantee that we will get required amount of pallets. x2 => 1st place in CFD According to predictions demand will grow and capacities of Tula manufactory will grow as well. This will lead to increase of sales and increase of profit. Thus, having such structure we will get the 1st place in Central Federal District and this will lead to doubling of profit by 2015 Modification of current distribution network will give Unilever-Inmarko more effective structure In this region we have a lot of strong and productively working current and possible distributors. So, we do not have to change distribution network system. But we can change some currently working distributors in different cities to possible distributors. Thus we will build efficiently working system. Changes will take place in these cities: Belgorod CentralD -> Distributor 16 Less % of sales, less CCFOT, but more pallet capacity + ability to rent Vladimir CLC -> Distributor 9 Less % of sales, less CCFOT, but more pallet capacity + ability to rent Kostroma Ice -> Distributor 8 The same % of sales, more CCFOT, more pallet capacity Lipetsk Wait till Logistic+ will build there warehouse Ryazan Logistic+ -> Distributor 11 More % of sales, more CCFOT, more capacity Smolensk Snezhok-> Distributor 11 More % of sales, more CCFOT, more capacity Tver Ice -> Distributor 9 More % of sales, more CCFOT, more capacity We made our assumptions according to % of sales, CCFOT, pallet capacity, own/rent, customer price. Look for calculations in Appendix MARK@ 4 Combine different systems for North-West Federal District Pros and cos Has small population level and hard climatic environment, therefore, we consider low consumption level in its regions. Inmarko has 5 distributors in North-West district. Besides, Inmarko may have 7 possible distributors here. Almost all current distributors have high CCFOT and low % of sales. Distributors are represented in almost every region. Possible distributors have some optional qualities. The main characteristic is low temperatures. That is why demand here could be lower. x2 => 1st place in NWFD Modification of current distribution network will give Unilever-Inmarko more effective structure We suppose, that organizing an own distribution network there is not the most effective option. The better way is to use current distribution channels. To make the system work more effectively we should change distributor C on distributor 4 (higher CCFOT, no contracts with competitors, more pallets, own). There is a possibility to change A on 1 and 3, thus we would have got entrance on new market, but their KPI is lower. We cab add 5 (and probably move out E) - that will give us entrance on new market in Murmansk, but again KPI is worse. In our opinion we should combine modified distribution network and logistics center. The costs will approve themselves. For more calcilations look in the Appendix. We made our assumptions according to % of sales, CCFOT, pallet capacity, own/rent, customer price. Look for calculations in Appendix According to predictions demand will grow and capacities of Tula manufactory will grow as well. This will lead to increase of sales and increase of profit. Thus, having such structure we will get the 1st place in North-West Federal District and this will lead to doubling of profit by 2015 MARK@ 5 Make own distribution network in South Federal District Pros and cos Has high level of demand depending on season. In this region we should make own distribution network. We have 4 distributors here and 6 potential distributors. To make work more efficient we should add distributor 5 (entrance on new market) or add distributor 5 and 6 and put out distributor B, because they have better KPI but less capacities. Distributor C is the most interesting from the point of view of M&A. He works only with us, he is one of the most trusted distributors and has logistics contract as well. x2 => 1st place in SFD Own distribution network (RUR) 2010 FC VC Kiosks Quantity of subjects in region Chests Quantity of chests Trucks Consumption per year Truck's roads per year Total costs Consumption per year Population Consumption per district (liters) Inmarko consumption in region (liters) Inmarko consumption in region (kg) SFD 5 400 000 219 157 198 6 80 660 744 2504,653696 145 859 245 810 329 51 445 677 187 14 686 261,00 30 694 285,49 1 841 657,13 810329,1369 According to predictions demand will grow and capacities of Tula manufactory will grow as well. This will lead to increase of sales and increase of profit. Thus, having such structure we will get the 1st place in South Federal District and this will lead to doubling of profit by 2015 MARK@ 6 Each region requires individual structure of distribution depending on different strategic options of channels Having certain demand and knowing capacities in Tula we can calculate what structure will give us the least costs. Takehome 32% Impuls e 68% Russia's location Low HoReCa Pretty high price for quality icecream (185,7 rubles in 2010) Demand in Russian ice-cream market highly depends on season, but in volume we have huge numbers. As most purchasing are made buy impulse than we should mainly concentrate on Traditional trade Every region needs individual approach according to its characteristics and given market features (For more information refer to Appendix) Central Federal District has the biggest population among the others (37 million). Central region also less suffers from seasonal changes, also, Inmarko's plant is situated here. Our current distributors (5) work almost in every city except Lipetsk and Tula. They have high CCFOT and expectable level of % of sales. Almost all warehouses are owned. Almost all distributors are huge and highly appreciated by companies. They have high rating. We have 10 possible distributors, as well, that gives us opportunity to change something. In Central Federal District work a lot of companies. That is why it is highly concentrated. Minus is that almost all our current distributors work with our competitors. That is why we can't guarantee that we will get required amount of pallets. In this region we have a lot of strong and productively working current and possible distributors. So, we do not have to change distribution network system. But we can change some currently working distributors in different cities to possible distributors. Thus we will build efficiently working system. North-West FD Has small population level and hard climatic environment, therefore, we consider low consumption level in its regions. Inmarko has 5 distributors in North-West district. Besides, Inmarko may have 7 possible distributors here. Almost all current distributors have high CCFOT and low % of sales. Distributors are represented in almost every region. Possible distributors have some optional qualities. The main characteristic is low temperatures. That is why demand here could be lower. We suppose, that organizing an own distribution network there is not the most effective option. The better way is to use current distribution channels. South FD has high level of demand depending on season. In this region we should make own distribution network. We have 4 distributors here and 6 potential distributors. To make work more efficient we should add distributor 5 (entrance on new market) or add distributor 5 and 6 and put out distributor B, because they have better KPI but less capacities. Distributor C is the most interesting from the point of view of M&A. He works only with us, he is one of the most trusted distributors and has logistics contract as well. Own network Long-term strategy Kiosks (average cost 150 - 200 000 RUR) Labor-intensive Refrigeration equipments Vehicles Chest boxes Warehousing Own Sales Department Logistics Delivery between cities Delivery within city Distributors Compensation to distributors (discounts + bonus for CCFOT) As we are considering that Inmarko's interaction with distributors in European regions is not absolutely effective, we should change the existing system of distribution so that in every region (North-Western, Central and Southern Federal Districts ). According to our reasoning we should built own distribution network in Central region and use services of current distributors in North-West and South region MARK@ 7 Appendix 1. Unilever-Inmarko SWOT-analysis Strengths Unilever is the world's biggest ice cream manufacturer Inmarko - the leading manufacturer of ice cream in Russia, and has a strong position in the market Good facilities and good location of plants, ensuring a high coverage of demand. Well-balanced portfolio of brands, aimed at medium and high price categories, as well as different tastes of consumers. High quality of the products and a continuous expansion of the range + active communication with consumers. 3 factories (Omsk, Novosibirsk, Tula) are equipped with the latest innovative technologies and have the necessary capacity to meet demands in the Russian market Tremendous capacity (9 branches in major cities across Russia) Weaknesses Unilever came on the domestic market twice, in 1997 and 2003, both times did not last more than one season (1st Algida brand +crisis, 2nd - huge costs) The production capacities in Tula did not provide complete coverage of the rapidly growing demand in central and northwestern region The factory in Novosibirsk seemed low power and not suited to modernization. Weak positions in distribution in North-West, Central and South regions Opportunities Central region has great potential Developing economy gives huge opportunities Huge areas that could be used in manufacturing Economy of scale could be used as Unilever is large company Threats Unstable political situation Uncertain tax policy of the government Strong competitors MARK@ 8 Appendix 2. Central current distributors Distribut or CLC A B C D E Ice Snezhok Logistics + Coverage Moscow, Ivanovo, Vladimir (Central Disrtict) Moscow, Yaroslavl (25% to Kostroma), Tver Smolensk, Bryansk, Kaluga Ryazan, Tambov CentralD Orel, Kursk, Belgorod, Voronezh, Lipetsk % of sales CCFOT Type of Contracts with Stock (pallet capacity) Own/ Transport (own/rent) volume company competitors Rent 30% 97% Distributor + Own, 10000(Moscow) + Own + Rent 4000(Ivanovo) +3000(Vladimir) 20% 85% Distributor + Own, 8000(Moscow) + ? 4000(Yaroslavl) +1500(Tver) 20% + indexing 80-90% Local producer 20% 92% Distributor + 30% 95% Distributor _ Own, 6000(Kaluga) + 2000(Smolensk) + 2000(Bryansk) Own, 3000(Ryazan)+1500(Tambov). possible rent Own, 6000 (Voronezh) + 2000 (Orel) + 2000(Belgorod) +3000 (Kursk) + 3000 (Lipetsk, 30% rent) + 1000 rent in Belgorod Own Possible rent MARK@ 9 Appendix 3. Central potential distributors Distributor Coverage % of sales volume CCFOT Type of company Contracts with competitors 1 Distributor 8 Yaroslavl Kostroma 20% 89% Local producer - 2 Distributor 9 Moscow Tver Vladimir 28% 93% Distributor + 3 Distributor 10 27% 91% Distributor + 4 5 Distributor 11 Distributor 12 Moscow Yaroslavl Vladimir Ivanovo Moscow Ryazan Smolensk Moscow Kaluga Bryansk 26% 25% 93% 90% Distributor Distributor + - 6 Distributor 13 Bryansk Kursk Belgorod 20% 84% Local producer + 7 8 9 Distributor 14 Distributor 15 Distributor 16 Orel Lipetsk Voronezh Voronezh Belgorod Lipetsk 19% 20% 27% 88% 90% 91% Distributor Distributor Distributor + 10 Distributor 17 Moscow 28% 94% Distributor + Stock (pallet capacity) Own/ Rent Own 2000 Rent 1500 Own 6000 Rent 2500 Own 7000 Rent 2000 Rent 6000 Own 2000 Rent 3500 Own 2000 Rent 3000 Own 3000 Rent 3500 Own 5000 Rent 2500 Own 6000 MARK@ 10 Appendix 4. Central distributors MARK@ 11 Appendix 5. North-West current distributors Distributor Coverage % of sales volume CCFOT Type of company Contrac Stock (pallet ts with capacity) Own/ competi Rent tors A Arktika St. Petersburg, Novgorod, Pskov 25% 94% Local producer + Own, 6000 Rent 2000 B LED St. Petersburg, Novgorod, Tcherepovets, Vologda 20-25% 92% Distributor + Own, 5000 rent 1200 C SeverKholod Ukhta, Syktyvkar 10% + 7% 85% Distributor + Rent, 1500 (50% for Inmarko, rest for others) D Alfa Arkhangelsk 20% 90% Distributor + E Beta Severodvinsk 20% 91% Distributor - Rent 3000 (part of it) Rent 3000 (part of it) MARK@ 12 Appendix 6. North-West possible distributors Distributor Coverage % of sales volume CCFOT Type of company 1 Distributor 1 25% 92% Distributo r 2 Distributor 2 27% 90% 3 Distributor 3 18% 87% 4 Distributor 4 St. Petersburg, Petrozavodsk, Velikiy Novgorod Tcherepovets, St. Petersburg Velikiy Novgorod, Pskov Ukhta, Syktyvkar 22% 88% 5 Distributor 5 25% 90% 6 Distributor 6 Murmansk, Apatity, Severodvinsk Arkhangelsk 21% 89% 7 Distributor 7 Arkhangelsk Vologda 18% 88% Distributo r Local producer Distributo r Distributo r Distributo r Distributo r Contracts with competitor s + Stock (pallet capacity) Own/ Rent Own 5000 - Own 2000, Rent 2500 Own 1500 + + - Own 3000, Rent 1000 Rent 2000 Own 1500, Rent 1000 Own 1000 MARK@ 13 Appendix 7. North-West distributors MARK@ 14 Appendix 8. South current distributors Distributor Coverage % of sales volume CCFOT Type of company A Santa Krasnodar, Stavropol, Tcherkessk 15-24% 80-90% B FGD 25% 87% C Antares 20% 90% (99% for logistics) D Zero Stavropol, Vladikavkaz, Naltchik, Nazran Kalmykia, Rostov, Astrakhan Volgograd Local producer (summer) + Distributor (winter) Distributor 15% 80% Contrac Stock (pallet capacity) ts with Own/ Rent compet itors Own, 4000 + 3500 + 1000 - Own 2000 + 6000 Rent, own 2500, rent 1800, rent 1000) Distributor - Local producer - Own, 1200(Elista) + 5000(Rostov) + 3000(Astrakhan) Rent, 3500 (share with own goods) MARK@ 15 Appendix 9. South possible distributors Distributor Coverage % of sales volume CCFOT Type of company Contracts with competitors Stock (pallet capacity) Own/ Rent Own 4000 1 Distributor 18 25% 88% Distributor + 2 Distributor 19 27% 89% Distributor 20 27% 94% Local producer Distributor + 3 + Own 3000 Rent 1000 Own 3800 4 Distributor 21 25% 90% Distributor + Own 3000 5 Distributor 22 24% 89% Local producer + Rent 1900 6 Distributor 23 Volgograd, Astrakhan Volgograd Rostov Elista Rostov Astrakhan Krasnodar Stavropol Grozny Makhatchkala Nazran Vladikavkaz Naltchik Tcherkessk 23% 93% Distributor + Own 3500 4000 Rent 1200 MARK@ 16 Appendix 10. South distributors MARK@ 17 Appendix 11. ice-cream density m=pV Depending on kind of an ice-cream its density (p) could be different. According to our own empirical data (icecream's wrapper) we found that 1 liter of icecream in average weight 0,44 kg. MARK@ 18 Appendix 12. Chests The chest boxes with a metal lid Size: 200 - 700 liters Price: from $ 500 - $ 700 to $ 800 - $ 1000 (Europe) from $ 350 -$ 500 to $ 700 $ - $ 800 (Russia) If we consider the highest size for foreign chest we will give 600$ for 3 years ((1000/5)*3) + 150$ (average delivery costs) = 750$, for Russian chest we will give the whole value 800$ for the same period of time. So, foreign chest is more profitable and we will choose it. The chests with a glass straight sliding lid Size: 200- 600 liters Price: from $ 550 - $ 600 to $ 800-900 (Europe) from $ 370 - $ 500 up to $ 700 (Russia) If we consider the highest size for foreign chest we will give 540$ for 3 years ((900/5)*3) + 150$ (average delivery costs) = 690$, for Russian chest we will give the whole value 700$ for the same period of time. So, foreign chest is more profitable and we will choose it. The chests with a sagged (bent) glass cover Increases the exhibit space + increasing sales volume up to 30% Cost higher by 30 $ -100 $ Price: from $ 580 - $ 630 to $ 900-1000 (Europe) from $ 400 - $ 530 up to $ 800 (Russia) We use similar calculations as for the chests with a glass straight sliding lid. Foreign chest is more profitable and we will choose it. MARK@ 19 Appendix 12. Chests (continue) For Russia: normal & \"tropical\" version. \"tropical\" versions Thicker layer of heat-insulation of the box + additional capacitor. For remote trading or in outdoor cafes and in zones of moderate climate. Cost 20% higher than on the ordinary ones. 10% - defect. This version isn't profitable because of higher costs and % of defected equipment. That is why we won't choose this variant. Customs costs (15%) of the imported products Delivery = 50 - 200 $. Often choose imported chests: 1) small scale of production of chests (Inmarko can buy in Russia no more than 7,000 per year for delivery in the Central Federal District, North-West, South and North-Caucasus Federal District), 2) chests are not always high-quality equipment (average service life of a foreign chest is 5 years, of the Russian one - 3 years). According to quantity/price index we will choose the 3rd type of chests - The chests with a sagged (bent) glass cover (foreign) Quantity of chests = Q (consumption per year in District) * % spontaneous purchases / Average volume of chest Costs on chests = Quantity of chests * Average price * Customs duty + Quantity of chests * average price + Quantity of chests * Average cost for delivery of 1 chest During Summer -> rent 5,000 - 10,000 rubles per month - average = 7,500 RUR per month (We assume that we have enough chests and we won't need to rent additional chests, because we can always move acquired chests from 1 region to another one) Type of chest 1 2 3 Min/max min max min max min max Quantity, liters 200 700 200 600 200 600 Average price, $ 600 900 575 850 605 950 Average price, RUR 18960 28440 18170 26860 19118 30020 Bonus 0,3 0,3 Quantity/price 0,33 0,78 0,35 0,71 0,63 0,93 MARK@ 20 Appendix 13. Kiosks Price: 150 - 200 thousand RUR Average = 175 000 RUR We assume that in 1 kiosk we have 2 chests Quantity of kiosks = Quantity of chests / 2 Costs on kiosks = Quantity of kiosks * Average price MARK@ 21 Appendix 14. Trucks Truck FRASCOLD C415 8SP Hyundai HD25 Hyundai HD170 Volume, sq m Loading capacity, tons Price (VAT incl), RUR 10,8 16 2 880 000 10,8 16 3 586 600 10,8 9 3 002 000 We will chose FRASCOLD C415 8SP trucks because for less money paid we will get the same (16 tons) loading capacity. Quantity of truck's roads per year required to satisfy demand in District = Q/loading capacity Q (consumption per year in District) = Share of Inmarko in District * total consumption of ice-cream in Russia Quantity of truck's roads per year = quantity of required trucks because we need not only external trips but also internal. Costs on trucks = Quantity of trucks * payment for purchasing + Average petroleum costs + Average wages We will use our own trucks to deliver products between cities and logistic services trucks for within city delivery. MARK@ 22 Appendix 15. Consumption per district Population of District * Share of ice-cream Consumption * Share of Unilever-Inmarko in District* Ice cream consumption in Russia per capita consumption (3,8 liters) = Consumption in liters 1 liter ice cream = 0,44 kg ice cream MARK@ 23 Appendix 16. Model of own distribution network Our goal is to achieve minimum costs FC = sales department* + warehouse** * Federal and regional levels are fully equipped; territory positions are equipped on 33%. We should take additional 67%. We will take average salary, because the model is constructed such that it is applicable for every region. ** As not in every district there are not enough warehouses we could either buy or rent it. But to buy warehouse is not profitable because they are too expensive and every year distribution network changes. That is why it's economically more profitable to rent warehouse. We can rent warehouses using our connections with distributors. VC (Q) = kiosks + chests + trucks (including petroleum and wages of truck drivers) TC = VC + FC --> min MARK@ 24 Case study Unilever Towards a new organization /3 Contents This case study was prepared by Changellenge>> for Unilever solely to use for educational purposes in the framework of Changellenge National Case Study League >>. The authors do not intend to illustrate effective or ineffective management. Certain names in this case study, together with other identification data might have been altered for confidentiality purposes. Case study data might not be valid or accurate, and also might have been altered to comply with commercial confidentiality policy. All rights reserved, unauthorized use is prohibited. In order to purchase the case and for distribution purposes please contact us: info@changellenge.com. This case study is dedicated to the acquisition of major national ice cream producer (Inmarko) by Unilever leading worldwide FMCG company. You should bridge the gaps between corporate cultures and organizational structures of two companies and elaborate the necessary organizational changes. Solution of the case should include a new organizational model, staff optimization proposal and a change management plan to achieve target acquisition synergies. Introduction /14 Synergy effects during mergers and acquisitions /15 /4 Unilever Company Background Unilever today Unilever in Russia Organizational set-up of Unilever Mission, values and corporate culture of Unilever /10 Inmarko Company Background Company Business Today Organizational set-up of Inmarko Mission, values and corporate culture Inmarko Integration of companies: business consolidation models and corporate culture /16 Organizational changes in company Organizational changes in the context of HR strategy Key HR risks and issues related to organizational changes Appendices /18 Case study Unilever - contents Introduction Anna, HR Director, Unilever, had just returned from the meeting with top corporate management. The meeting was dedicated to the recent transaction - acquisition of the large state-wide leading ice-cream manufacturer1. This transaction had been prepared, estimated and planned for a long time before and finally colleagues were celebrating the successful close-out. Anna was also quite happy with the changes. Even though she was not a key decision-maker on Inmarko acquisition she earnestly believed that this expansion would grant Unilever new business opportunities in Russia. This case describes situation as of January 2009. Hereinafter any references to \"current situation\" should be regarded as references to the situation actual of January 2009. When using any additional materials please make sure that such materials are dated January 2009 or earlier 1 3 Anna had loads of work forthcoming. After all, the company employing over 5 500 people would now become a member of Unilever family. In fact the merger of two companies was a demanding challenge for Anna. Differences in corporate cultures, excessive Inmarko headcount, deeply rooted diverging organizational concepts - all that could result in certain integration issues. Anna was not expecting swift and easy wins. Moreover, she actually preferred complex tasks over simple ones. She was well poised for careful planning and productive scrutiny. Anna already had a positive experience of integrating a new plant into the company some time ago. In case with Inmarko Unilever management granted Anna almost unlimited powers related to integration of two companies cultures on one condition: as a result the planned synergy effect from merger should be attained. The following operating indicators should be reached with account for merger of both companies' resources: improved cost efficiency should result in 3 million EUR saved per year and overall Inmarko and Unilever FTE productivity2 should increase 2.5 times in a year. Anna called a meeting for her work team and listed all outstanding tasks with detailed descriptions on a flip chart: 1) Propose a new target organizational model determine Inmarko autonomy range and Unilever control extent (at the level of sales and revenues volume, decision-making in business processes, and managerial control). 2) Develop organization chart what it will comprise, determine cost cutting approach, define target headcount on departmental level. 3) Develop Talent3 and Reward management policies. 4)1Develop Change Management policy. Prepare a plan of organization activities for 12 months and incorporate performance indicators. 5)1Develop plans for integration of two corporate cultures. Definitely, not a single task is the easy one summed up Anna. \"Should we remake and/or integrate organization charts of two companies? Should we reassign certain functions between departments and (if yes) how exactly? How can we preserve unique competitive advantages already pertinent to Inmarko whilst maintaining high Unilever environmental protection and production quality standards (and get the maximum effect)? Furthermore, we should not forget about our internal values and competencies model. How exactly are we going to define general and professional skills of our colleagues, and how can we blend/prioritize those skills in the new model? We could just leave all Inmarko employees in their current status as they are, evidently, very experienced in what they are doing, and yet on the other hand, since this icecream manufacturer is about to become a part of the global corporation, maybe we should consider adding our specialists into their team and decide what should be the ratio? In the Calculated as the ratio of TO (Turnover) to FTE (Full Time Employee), where TO - is turnover (volume of sales of goods or services in terms of money for a certain period of time), and FTE full-time equivalent of one person in one day 3 2 latter case one team will comprise people very different in their skills, knowledge, values, and background. Another point for investigation maybe certain processes should be outsourced? Should Inmarko employees be retrained and should Unilever business culture be propagated there? If so, how should we proceed educating Inmarko employees or appointing Unilever reps? What corporate culture attributes are most important and what should be the implementation sequence in case of ice-cream manufacturer? In a week we will be discussing a draft new organization concept. I'm expecting all of you to submit ideas on new model, structure, headcount and all other aspects we discussed today\" with these words Anna concluded the meeting. She was shivering with anticipation for huge amount of interesting and challenging work! Talent Management - a set of tools of personnel management, giving organizations the opportunity to attract, retain and effectively use staff who makes a significant contribution to its development Case study Unilever - introduction Unilever 4 Company Background The multinational Anglo-Dutch company was established in England in 1880, and its contemporary name appeared when Dutch Margarine Uni and Lever Brothers (British soap manufacturing company) merged in 1930. The reasons for merger were the multiple benefits gained in purchasing of raw materials - oils and fats required in manufacturing of both products. Thus the company started with larger merger, and throughout the history of Unilever development M&A4 transactions played a significant role. The current state of the company and the strategy of its development has been affected by a range of characteristic historical background features. First years of the company business coincided with the Great Depression in 1930s. These years were a period of trial for both Unilever and the entire world. The unfavorable economic conditions made the freshly united enterprise adapt and streamline as fast as possible. In the following years this furthered the creation of corporate methods of quick adaptation to the global changes and external economic factors. World War II became the second trial for the transnational company. Unilever was fragmented during the years of war. German and Japanese enterprises were located on occupied territories and any connections to London and Rotterdam were completely severed. This resulted in development of the distinct corporate culture: local Unilever companies started to operate with high level of independence and focused on particularities of local markets. The trait kept up till nowadays: group operational management is split based on location of enterprises, and different brands are promoted on different markets. Geographical diversification of business makes it possible to acquire local companies and brands that are successful in the markets of Unilever presence (this strategy is impossible for many FMCG companies as their development strategies allow acquisition of global players and businesses only). The postwar European prosperity and growth of wealth stimulated with the European Community take-off resulting in consumer demand boom and growing living standards, which also influenced new Unilever strategy. The company starts to pay additional attention to perfection of process solutions and establishes R&D units. Eventually, Unilever expands and the products of the company gain in variety; innovations are implemented and new acquisitions are effected. Advertising units also evolve, as do affiliated marketing research and packing companies. By the beginning of 1980s Unilever becomes 26th largest company in the world. The company businesses included tropical plantations, cargo forwarding, manufacturing of plastics, packing materials, and a wide range of food, personal, care and household maintenance products. In 1990s the company changed the strategy abruptly: the strategy of brand portfolio diversification was replaced with the strategy of focusing on key products and best selling markets with high growth potential. By the end of 20th century Unilever decreased the number of marketed product categories from 50 to 13. At the same time, the company launched first environmental efficiency programs. Unilever welcomed XXI century with the Path to Growth program. This new five-years strategy is aimed to further development of leading brands, improvement of production, and speeding up the company growth. Sweeping changes were introduced to the group range of marketable products: the company sold 140 various brands and focused on leading brands. Unilever Health Institute was established in the beginning of the century. The Institute is dedicated to R&D in food, health, and life energy. In 2004, Unilever adopted a new corporate mission. Its essence is formulated in just one word - Vitality. The new corporate mission statement is Add Vitality to Life. Mergers and acquisitions 4 Case study Unilever - Unilever Unilever today Today, Unilever is one of the world leaders in production of FMCG goods. The company products are sold to more than 170 countries with 160 million purchase units worldwide using a Unilever product, and on any given day over two billion customers enjoy the company brands. Unilever products are broken down into 4 product categories: personal care products, household maintenance products, food products, and refreshment5. Personal care products category covers antiperspirants, skin care products, hair care products, and oral care products. This category includes Dove, Lux, Rexona, Sunsilk, Axe, Close Up, and other brands. Unilever household maintenance products category comprises softeners, washing powders and detergents, soaps, and dish washing and cleansing agents. In this respect famous brands are Omo, Surf, Comfort, Radiant, Cif, Domestos, and Sunlight. Food products segment consists of soups, sauces, snacks, mayonnaise, salad dressings, margarine, and spreads6. Well-known brands in this category comprise Knorr, Blue Band, Rama, Hellmann's and Amora. Refreshment category comprises icecream, tea-based cold beverages, weight loss products, and vitamin enriched staple food products sold in emerging markets. The category brands sold worldwide are Heartbrand, Lipton, Slim-Fast, Becel, and Flora. Unilever pays particular attention to emerging markets as they have been demonstrating the stable sales growth for over 20 years. Today their share in the company total turnover is over 40 %. Unilever sales in 13 emerging countries are in excess of EUR 0,5 billion, and the sales growth in these countries outpaces the total corporate sales growth. The company focuses on implementing innovations and creating new products in all consumer segments. Unilever's approach is that of open innovation7, which helps to source new ideas all over the world. In 2009 the company announced a new R&D Genesis program that provides for a long-term streamlining of new ideas. Thanks to the program, the innovational pyramid-shaped Lipton Yellow Label tea bags were introduced to the market recently. These unique formed bags preserve the taste of fresh tea leaves. Another successful product is Rexona for Women deodorant that combats body odor even during active movements. The company has 6 research & development laboratories worldwide with over 6 000 employees. The high efficiency of R&D programs is proved with annual registration of 250 to 350 new patents in the corresponding industry fields. Total volume of annual investments into R&D is around 891 million EUR in 2009. The top 25 brands from Food and Personal Care categories generate as much as 70 % of the company's revenues. The company owns 13 brands priced at over 1 billion EUR each: Lipton, Sunsilk, Dove, Rexona, Axe, Knorr, Becel, Hellmann's, Rama, and also Omo, Surf, Lux and Heartbrand (not sold in Russia). The company's sales amounted to over 40.5 billion EUR in 2009. Beverages and ice-cream Food product based on vegetable and milk fat mix Open innovation (term suggested by professor H. Chesbrough) is a paradigm that assumes that firms can and should use external ideas as well as internal ideas 5 6 7 5 Case study Unilever - Unilever Unilever in Russia Unilever entered the Russian market in 1991, and in 1992 it opened the Unirus representative office in Moscow. This office started by importing products, including Lux soaps, OMO detergent, Signal toothpaste, Impulse deodorants and Lipton tea . The head office was created in St Petersburg in January of 1994; by July of the next year the fragrance and cosmetics manufacturing site Severnoye Siyanie was united with Unirus. Production of brands like Sunsilk, Timotei and Denim, and also of a wide variety of goods under Severnoye Siyanie label (Flowers of Russia toilet Organizational set-up of Unilever To a large extent, company's achievements result from work of its international management team that consists of Chief Executive Director, 5 Executive Directors (for Finance, R&D, HR, Supply Chain, and Marketing and Communications), 4 Directors responsible for major product categories (personal care, home care, foods, refreshment), and 3 regional Presidents. Unilever manages its operations within three geographical segments, each headed by a regional President with a dedicated Board of Directors. Those are America, Western Europe, and all other regions: Asia, Africa, Central and Eastern Europe. In the period from 2000 to 2008, Unilever reduced global workforce numbers by 41 %, from 295 000 to 163 000 people. 6 water, For men and Club cologne water), was started in Russia. Investing further in its Russian assets and aiming at development in the food market, Unilever founded its Van den Bergen Jurgens B. V. office in April 1996. This is how brands like Rama, Delmy and Calve appeared. There was also Brooke Bond tea with similar to advertising concept of Lipton, because this brand was widely distributed and had gained consumer trust by that time. In March 1998, the company acquired the Moscow Margarine Factory (MMF). In October 2000, Unilever bought the Bestfoods Company Global employment at Unilever 2000-2008 (former CPC Foods). This company's goods, including Knorr and Hellmann's, were well known. As a result of this merger, in Russia emerged another very modern production factory in Tula. Along with companies' acquisitions, Unilever was building its own factory in St. Petersburg, a copy of the plant in the United Arab Emirates. The construction of the tea-packing factory began in 1998, but adverse economic conditions allowed to complete the construction only by 2002. Today this factory produces the entire range of the Unilever tea: Lipton, Brookebond and Beseda. Since 2009, Unilever owns the St. Petersburg's Baltimore company, which started producing in 1995 the same-name ketchups. In 2008 Unilever became 100 % shareholder of Inmarko and anchored in Russian ice-cream market. Inmarko had a turnover of around USD 243 million, 16 % market's share, about 5 500 full-time employees and 3 plants located in Novosibirsk, Omsk and Tula. 6 500 people work for Unilever in Russia, Ukraine and Belarus at the present date. The total amount of the company's investment into Russian economy exceeds 20 billion rubles. 300,000 250,000 200,000 150,000 100,000 50,000 Source: Unilever Annual Reports 2004, 2008 2000 2001 2002 2003 2004 2005 2006 2007 2008 Numbers in Europe (for 2000-2003 it is whole Europe, from 2004 only Western Europe) Represents the Americas Represents Asia, Africa, and Middle East (since 2004 including Eastern and Central Europe) Case study Unilever - Unilever Unilever organisational structure at regional level Operation or Unilever companies in Russia, Ukraine, and Belarus (Unilever RUB) is organised through a unified structure and headed by President and the Board of Directors, who define the general strategy of business development for all businesses in the territory of Russia, Ukraine, and Belarus. Company headquarters are located in Moscow. It hosts all departments of the company and its management: Directors by function, and the Chairman of the Board. The company organisation has a matrix structure, with the following basic departments by function: sales function is represented by Customer Development Department, supply function is represented by Supply Chain Department, marketing function is represented by Brand Development and Brand Building Departments, and other functions, in line with Unilever model, are instrumental and include the following departments: Human Resources, Finance, IT, Legal, and PR. Each Department is headed by a Vice President. Customer Development Department is one of the biggest departments at Unilever, and its employees work in all the regions of Russia and ensure availability of products on the shelves from Kaliningrad to Vladivostok. It consists of several departments. 8 Key Accounts department is responsible for sales through major customers (defined by sales volume and in relation to channel of trade, for instance, Metro Cash & Carry, X5 Retail Group, etc.). Field Sales department is responsible for sales through network of distributors. Customers Marketing department is engaged in organising promotion activities in line with sales tasks for specific categories, and with account to brand concepts. Capability Building Department takes strategic decisions on where to and how the whole Department will develop. CD Operations Department supports keeping Sales Department databases, together with planning and analysing sales figures. Then, there are divisions that are not direct parts of CD, but they work closely with it as specialised partners: CD Finance division renders commercial support, analyses efficiency of funds' application, and fulfilment of business results KPI8. CD HR division CD Customer Services division Supply Chain Department is comprised of specific areas: production, planning (planning functions for production and shipments), procurement (negotiating with suppliers, enforcement of contracts with suppliers), logistics (shipments and storage), and monitoring service levels (tracking the level of customer service and developing measures to improve it). In addition, this Department includes production facilities. Marketing Department works along two major directions: Brand Development and Brand Building. Brand Development is responsible for brand concepts, and the needs to introduce changes and develop new brands. Working results of Brand Development team (for example, responsible for Central and Eastern Europe) are transferred to a local Brand Building team (for example, in Russia, Ukraine, and Belarus) for further introduction of brand to the market. Brand Building, in its turn, analyses the market and its requirements, and organises brand promotion in view of this analysis. Brand Building, Supply Chain, and Customer Development jointly plan sales volumes for various periods. The anticipated production volume they order from Production Department. In the event that factories located in Russia, Ukraine, and Belarus are not capable of producing the necessary volume in the required timeframe, the order may be transferred to a different factory in a different country, if it is appropriate from efficiency viewpoint. Thus, factories \"compete\" with one another in order to provide the company with quality products at a relevant original cost. Key Performance Indicators 7 Case study Unilever - Unilever Mission, values and corporate culture of Unilever Unilever's mission Day by day Unilever is working to create a better future. Company helps people feel better, look better and get more from life due to friendly products and services. And by leveraging Unilever's global reach and inspiring people to take small, everyday actions, everyone in the company believes that all together we can help make a big difference to the world. Unilever inspires people for small daily actions that will help all of us to make great advances. Unilever will develop new ways of managing the business, which will give it the opportunity to double its volumes, at a time decreasing environmental impact Purposes & Principles Unilever Corporate Purpose states that the company stives to suceed through \"the highest standards of corporate behaviour towards everyone we work with, the communities we touch, and the environment on which we have an impact\". Conducting company's operations with integrity and with respect for the many people, organisations and environments Unilever business touches has always been at the heart of it's corporate responsibility. The company aims to make a positive impact in many ways: through own brands, commercial operations and relationships, through voluntary contributions, and through the various other ways in which the company engages with society. Unilever is also committed to continuously improving the way company manages it's environmental impacts and is working towards their longer-term goal of developing a sustainable business. Corporate Purpose sets out company's aspirations in running business. It's underpinned by Code of Business Principles9 which describes the operational standards that everyone at Unilever follows, wherever they are in the world. The Code also supports company's approach to governance and corporate responsibility. Compliance with these principles is an essential element in Unilever business success. The Unilever Board is responsible for ensuring these principles are applied throughout Unilever. The Board of Unilever will not criticize management for any loss of business resulting from adherence to these principles and other mandatory policies and instructions. Unilever is socially responsible business See http://www.unilever.com/aboutus/purposeandprinciples/ ourprinciples/ 9 8 Case study Unilever - Unilever Corporate Culture and Values Unilever values guide people in their judgments, decisions and actions they take every day. These values underpin everything people say and do. Integrity We are committed to integrity because it creates our reputation, so we never compromise on it. It defines how we behave, wherever we are. It guides us to do the right thing for the long-term success of Unilever. Respect We are committed to respect because people should be treated with dignity, honesty and fairness. We celebrate the diversity of people, and we respect people for who they are and what they bring. Responsibility We are committed to responsibility because we want to take care of our consumers, customers and employees, as well as the 9 environment and the communities in which we operate. We take this personally and always do what we say we will do. Pioneering We are committed to the pioneering spirit because it created us and still drives us as a business. It gives us the passion for winning and for creating a better future. It means that we are always willing to take intelligent risks. Standards Of Leadership The company encourages its employees to sustain high behavior standards in their daily work, corresponding to the company's values: integrity, respect, responsibility, and the manifestation of pioneering spirit. Sustainable profitable growth can be reached if the company would have people with a winning mindset, a passion for consumers and an appetite to drive personal performance. Standards of Leadership are behaviours Unilever expects to see in it's employees, because they drive company's performance and culture. Growth Mindset this is competitive leadership. It's a positive, yet realistic, attitude about the company's future. It's passion for winning. Consumer & Customer Focus this is purpose-driven leadership. It's externally focused-on consumers, on customers. It's seeing our brands through their eyes. Bias for Action this is action-driven leadership. It's a sense of urgency in decisionmaking. It's thoughtful action, intelligent risktaking. Accountability & Responsibility this is performance-driven leadership. It's staring reality in the eye. It's owning Unilever's overall performance. Building Talent & Teams this is peopledriven leadership. It's investing in people's development. It's building teams that pull together to win. Case study Unilever - Unilever Inmarko 10 Company Background In 1992 two entrepreneurs in Novosibirsk came up with an idea to organize ice-cream sales from the portable street stands. It was a successful move as ice-cream was in short supply in the city at that moment and there was no specialized ice-cream trade network. Inmarko company was officially registered on January 26, 1993. Company owners were not considering own manufacturing at first. Initially, the company sold ice-cream made by Novosibirsk ColdStore Combine, and later Inmarko started to cooperate with other regional manufacturers. The sales proceeded from eighty stands located in city. Distribution was set through personal contacts. Later in 1993 the company turned its attention to overseas products, reaching out for complex ice-creams like fruit ice or chocolate and nuts sundaes as opposed to traditional ice-cream cones or briquettes. This was a novelty for Russia as local ice-cream factories only manufactured popular low cost items. Inmarko imported cornets and eskimo from Poland, Denmark, England, Sweden, Spain, and cooperated with internationally renowned companies like Koral, Augusto, ISCO, Menorquina, Frederic's. The assortment backbone remained to be Danish (premium segment) and Polish (economy class). Manufacturing Capacities In the mid-90s customs duties changed drastically in Russia. It became more affordable to establish own manufacturing lines rather than continue importing icecream from foreign countries. In 1996 Inmarko opened first own factory (capacity - 5 thousand tons) in Elitnoe village, Novosibirsk Oblast. This factory was built under supervision of Danish subjects from Frisco. The product composition and packaging was developed by the designated unit. At that period, there was no purported advertisement of Inmarko brands, as the company believed that the extraordinarily flashy packaging would serve as such. In addition to wholesaling and sales through kiosks, the company started to supply products to grocery stores. In about a year, the existing factory manufacturing capacity began to run short. The corporate management started to consider manufacturing lines expansion but that was impossible at Novosibirsk plant due to space limitations. In 1997 Inmarko acquired a tendered block of state shares of Omsk factory. This plant required modernization and the company invested all its profits into reconstruction. The same Danish and German specialists were in charge of the modernization. As of today Omsk factory has underwent three stages of reconstruction, and its potential capacity is 50 000 tons. Potential capacity of Novosibirsk factory is 35 000 tons. In 2007 the company considerably strengthened its positions in European Russia after purchase of OAO Tulski Cold-Store Combine with the annual production capacity of over 25 000 tons and ready products storage capacity of over 18 000 tons. After the fullscale reconstruction the factory capacity rose to 45 000 tons. The company makes full use of five own low-temperature storage facilities and rents three more with the total capacity of 7 420 tons. Case study Unilever - Inmarko Company Business Today Throughout its development Inmarko company transformed from the distributor of Novosibirsk cold combines into the major Russian ice-cream manufacturer. At the beginning of 2009 the total number of kiosks owned by Inmarko is around 600 retail kiosks10 located in omsk, novosibirsk, Krasnoyarsk and Barnaul. Over 92 000 frost chambers and low temperature counters are installed at retail points including retail stands and kiosks both owned by the company and rented. inmarko also owns the largest russian fleet of refrigerated trucks (330 vehicles11) that delivers products to retail outlets, and 8 large refrigerated trucks for long distance cargo transportation. Inmarko is the leader in retail segment in terms of total number of retail trade units (frost chambers) and its distribution network leaves behind all Russian competitors (80 distributors in 100 Russian cities). Inmarko has 10 own sale centers located in Novosibirsk, Omsk, Krasnoyarsk, Moscow, Tula, Kazan, Novokuznetsk, Yekaterinburg, Barnaul and Kemerovo. Company headquarters are located in Novosibirsk. In contrast with many Russian ice-cream manufacturers, Inmarko focuses on sales of branded ice-cream in middle and middle-top price segments. Company range of products includes such brands as Magnat, Zolotoi Standart, Djemka, Cornetto, Carte d'Or and more. Several key brands of the company are actively promoted by both ATL and BTL advertisement thus preserving the high level of brand awareness. Huge corporate portfolio comprising 139 product items covers all price segments, which results in high demand from distribution channels. In 2008 Inmarko became the absolute leader of Russian ice-cream market in production and sales volume. As of the beginning of 2009 Inmarko controlled 16.2 % of sales (natural units) in Russia. Inmarko revenues in 2008 totaled 243 million USD in cash and 72.700 tons of ice cream in kind. Organizational set-up of Inmarko On the date of acquisition, Inmarko has been employing 5 500 staff members, and operating three plants in the cities of Omsk, Novosibirsk and Tula. The main office of the company is located in Novosibirsk; the company also owns 10 branches. The main Inmarko units are commercial, production and logistics sectors. The commercial sector effects sales of the Company's products. It is regionally divided into departments and comprises the Eastern department (Urals, East and Siberia divisions), the Central department, the Key Chains department (in charge of sales to the key federal and regional retailers), and the Moscow department. To cover the demand of large territories the companies resort to selling via their own branches, where it is difficult to find a distributor satisfying the requirements of Inmarko. The branches allow for direct sales of products, both to third trade units and to inhouse chain of kiosk (600 units). The production sector is in charge of operations in Tula, Omsk and Novosibirsk, as well as for quality control and feedstock procurement. The plant in Tula produces 40 % of Inmarko ice-cream and covers North-Western, Central, Southern, and North Caucasian Federal Districts, while the plants in Omsk and Novosibirsk (60 % of production) supply icecream to the Volga region, Siberia, Far East, and Kazakhstan. The logistics sector secures timely deliveries of end products to the retail chains and the distribution network; it includes the transportation and products logistics departments. Given the fact that ice-cream is a short shelf life product, and strongly dependent on the temperature conditions too, it is therefore subject to higher requirements in terms of storage and transportation. Inmarko uses expensive specialized transportation equipment and special low-temp storage facilities. The rest of the sectors are regarded as support services (manpower, financial, marketing, legal sectors, etc.). 10 11 Required staff of one kiosk - 2,5 FTE Required staff of one vehicle - 2 FTE 11 Case study Unilever - Inmarko Mission, values and corporate culture Inmarko Company Mission Inmarko is an actively developing company, a leader in ice-cream production and sales in Russia. Leadership of Inmarko is based on high standards of product quality, guaranteed level of services and is being achieved by continuous innovations and professional teamwork. Company's mission is defined as follows: We meet the customers' needs better than the competitors can do. We produce not just ice-cream, we produce pleasure for you. Values Responsibility This means responsibility for your own result. Fulfillment of accepted obligations on time and on a full scale. Achieving high quality results. Understanding that the result is the key, not the amount of work performed. Courage in taking decisions within your competence and responsibility for consequences. This means responsibility for the results of the teamwork. Taking care of interests of the subordinate employees and colleagues when making decisions. Accepting responsibility not only for your small part of the job, but also for achieving the company's goals in general. This means social responsibility of the company. Ensuring safety and high quality of products and services. Fulfillment of commitments to employees, customers and partners. Leadership Whoever does well, we shall do better. We are not satisfied with what has already been achieved, and aspire to continuously improve our performance and our professionalism. We are constantly moving ahead. Every one of us aspires to be the best in his place. We are already thinking today, what will let us be the best tomorrow. We wish to go beyond just being better; we wish to be substantially better than the competitors: best producers, best employers, best distributors, - best in everything! So that Goals and Principles As a result of the interviews with 10 managers of the company, main principles that had helped ensure leadership in the market and best describing the culture of working at Inmarko, were formulated: Leadership and ambitiousness. Set new ambitious goals on a regular basis to outperform competitors. Passion to win. If the company does not win, there is no success for everyone. Prompt decisions prompt result. High speed and flexibility in taking decisions. Less discussions - more simple actions. Result is in the first place and is the main indicator. You better do it than not. 12 Market and consumers. Flexibility and attention to every market and to every consumer. Involvement of the employees through trust and openness. Close personal approach establishing emotional ties with employees, lack of barriers to discuss the concerns with the manager (without an appointment through a secretary or within special visiting hours) the others unconditionally acknowledge our leadership. We are all sharing the spirit of the winners. There are no impossible tasks for us. We are not afraid of difficult goals, not afraid of \"jumping over our own head\". We are able to energize the others, encouraging optimism and confidence in success. Leadership is our joint commitment, we are the team of leaders. We support healthy competition inside the team. But we stand together against the competitors. We are proud of our company's successes. We are all convinced that every employee can do his important contribution to the common cause. Innovations This means constant search for new, bright, unusual, positive ideas and solutions in our industry. Successful implementation of a new approach, product, method of work. Unconventional approach which goes ahead of the market and thus ensures the leadership. We are investigative; we are constantly involved in self-development - aimed at acquiring new knowledge and experience. We love changes. We are constantly looking for something new and adopting it for development and improvement of our work and the company's position in the market. We aspire to change relations, products and the world to the better. Teamwork We are a professional united team, where we value the atmosphere of mutual help and support in order to achieve the joint goal. We aspire to base our cooperation on mutual trust and readiness for joint constructive work. We aspire to coordinate all important decisions. We help each other. We share our experience and knowledge with the members of the team. Our principle is concerted teamwork. Every one of us has his strengths and weaknesses, but altogether we can achieve more, we take proper solutions needed to succeed. We are proud of our team! \"Customer Mania\" What is a customer for us? A customer is who receives our services and products. This means not only consumers and buyers, but also partners and colleagues. Every one of us is responsible for the company's image as perceived by the customers and by the society in general. We aspire to let our customers feel supportive of the united team. We are oriented at long-lasting mutually beneficial relations. Strategic partnership is important for us. We are committed to the winwin principle in our joint work. We aspire to explore in detail and understand the situation, interests and needs of our customers in order to exceed their expectations. We show respect to our customer's opinion. We aspire to understand first, and then to be understood. We meet commitments to our customers and to each other. We understand that any unresolved problem affects all customers of the company. We sincerely take care of our customers. A customer should not be just satisfied. A customer must be happy and pleasantly surprised! Case study Unilever - Inmarko Company Style Openness We are open and friendly to contacts and communication. When we have problems, we speak about them openly. We are not afraid to voice our opinion even if it goes against the majority. When discussing the problems, we propose solutions. We aspire to make our company comprehensible for those who work with it. Every employee understands the company structure and areas of responsibility, has access to non-classified information. He is informed about key developments in the company's life. We care about what people think of us. We are open for feedback and proposals from outside. Individuality We take people as they are. We show respect to different styles of work, thinking and appearance. We consider that the employee may choose any style of dress and behavior which is convenient for him and does not interfere with his fulfilling professional tasks. We appreciate bright individuality in people. Every one of us has a zest. Our ideas are a surprise. Enthusiasm (Drive) We are enthusiastic in our approach. We feel inspiration and encouragement to give the world something more than just a product. We have sense of humor, optimism, positive and good spirits. We find pleasure in what we are doing. 13 Case study Unilever - Inmarko Synergy effects during mergers and acquisitions12 12 When working with the case participants may not focus on this list, they are free to add any other synergies and to exclude those described here if they find this to be desirable course of action. 14 The purchase of Inmarko group by Unilever and its proper integration in Unilever business can create a variety of synergies. In economics a synergetic effect is an improvement in work effectiveness as a result of combination, integration, merger of parts into unified whole. During merger and acquisition, synergies stop being abstract notions they are identified and each synergy is evaluated. Synergies can show the