Reckitt Benckiser, the Anglo – Dutch consumer products group, has agreed to buy the maker of Durex condoms for £2.5bn.
Last week the board of SSL recommended that the shareholders accept the offer from Reckitt which was at an effective 33% premium on the share price.
In addition to Durex condoms SSL also make Scholl shoes but £2.5bn is a lot of money and a 33% premium is pretty good in today’s environment. Should the shareholders therefore grab this opportunity with both hands?
Students of business strategy will be aware that there are both pros and cons of acquisitions. The general view amongst analysts in this situation though appears to be that it represents a good fit for the Reckitt business.
Firstly, Reckitt will strengthen their health and personal care division which is currently their fastest growing area. Health and personal care is considered by many to be a key area for businesses going forward (this is a nice link to PESTEL within the syllabus).
Secondly, SSL has a larger presence in a number of emerging markets. In particular SSL are in a strong position in China, a country where Reckitt are relatively weak compared to their competitors.
Cost savings from synergies of course can never be ignored. If the deal goes ahead there could be reported savings of £100m a year in terms of removing duplicate jobs, combining distribution channels, etc.
Marketing synergies are also important. Reckitt for example produce the headache tablet Nurofen.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-07-26 13:23:542010-07-26 13:23:54How much do condoms cost to buy? Well, I guess anywhere from £1 to £2.5bn…
There was an interesting court case in Germany this week. Not only for people that follow employment law but also for people that have to wear certain outfits to work.
German Policeman Martin Schauder was awarded an extra 7 days of holiday a year after arguing that the time he spent changing into his uniform each day was part of his job. He therefore claimed that this time was part of his work time.
He stated that it took him 15 minutes every day to get his police outfit on and 15 minutes to take it off. These extra 30 minutes a working day amount to an extra 45 working hours every year.
The court in Germany agreed with the policeman and told his employers to either pay him the overtime or to give him holiday.
The police force have unsurprisingly said that they are going to appeal against the decision.
Now, if this case is upheld then it raises some interesting opportunities for me. As an accountant who meets clients then I am expected to be dressed smartly. My personal choice of clothes for the office however would be shorts and a t-shirt so the fact that I have to wear a tie surely means that the time it takes me to do my tie up is overtime.
This varies from a sleepy 1 hour plus on a Monday to a speedy sub 1 minute on a Friday. Adding this all up will amount to a significant sum of overtime money and this is before I take into account the time taken to tie up my shoelaces instead of slip on my preferred choice of footwear of flip flops.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-07-16 13:52:312010-07-16 13:52:31If you wear a business outfit to work then surely getting dressed in the morning is overtime?
According to reports this week, Ernst & Young will be the first of the Big 4 to appoint non-executive directors to its global advisory council.
This is a major move for the accountancy profession.
The profession has been under increasing regulatory pressure for a while now and the decision to appoint non-execs is reportedly in response to the new audit firm governance code that was published earlier this year.
The revised Ernst & Young advisory council structure will in broad terms mean that Ernst & Young will have a board structure which is similar to the multi-national companies that are their clients. Their remit will include monitoring strategy and risk.
Their global advisory council currently includes 36 senior partners. These partners will soon be joined by 4 non-executive directors drawn from the business and regulatory world.
The names of these non-execs will be disclosed later this year and although I’m not a betting man I’d probably have a wager that their CVs will not include the names of Deloitte, KPMG or PricewaterhouseCoopers.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-07-09 10:58:342010-07-09 10:58:34What will make Ernst & Young different from the rest of the Big 4? Will it be an Executive Decision or…
So my plan for tomorrow night is to have a relaxing evening and settle down with a nice box of chocolates, a glass of Pinot Grigio wine and start reading the 50th anniversary edition of the book “To Kill a Mockingbird” which has just been released.
The only problem is that I don’t have chocolates, wine or the book…
Not to worry though as I can order these over the internet for delivery tomorrow. Two websites I’ve ordered from before are those of the supermarket Tesco and the online bookstore Amazon. Tesco have sold books as part of their offerings for a while now so I might as well order all of them from their website.
Hold your horses though as Amazon today announced that as well as books, DVDs and suchlike they would now be selling a range of grocery items online. Over 22,000 grocery items in fact.
Items ranging from a packet of cinnamon sugar for 29p through to a Highland Fayre Royal Banquet for £1,203.97 are now available for home delivery on www.amazon.co.uk.
Is this a smart move by Amazon or simply an online bookstore trying to get some extra revenue? After all, shouldn’t they stick to what they do best and sell books?
Well, if you think about it, what do they do well? (what are their “core competencies” in strategy exam talk?)
I’d argue that they are pretty good at getting stock into their warehouses (using Porter’s value Chain: inbound logistics), processing orders (operations), delivering goods to customers (outbound logistics), running a website (sales and marketing) and dealing swiftly with any returns (after sales service).
Whether the item of stock being processed is the classic book by Harper Lee or a whole lamb for £119.99 then does it really make any difference?
Only time will tell whether this venture will be successful. Amazon has a trusted brand and is a world leader in processing orders over the internet so maybe they will be successful. The established supermarkets already have a successful internet presence though so it will be interesting to see how this develops.
Anyway, after writing this I’ve now made my decision and I’ll buy the chocolates, wine and books from the Sainsbury Express store next to the office and have the relaxing evening tonight.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-07-07 18:42:352010-07-07 18:42:35I’d like the classic novel “To Kill a Mockingbird” and a whole lamb delivered tomorrow please.
The Times newspaper in the UK is one of the oldest in the world. It was first published in 1785 and for 219 years until 2004 it followed the traditional route of quality journalism delivered via a “broadsheet” newspaper.
In 2004 certain traditionalists were shocked when the newspaper moved to the smaller compact size favoured by the tabloid papers. This move proved to be successful though and the new size appealed to both the younger generation and commuters who no longer had to try to read their paper without upsetting the person next to them.
This was a good example of a successful adjusting of the product component of the marketing mix.
The Times has had one of the better newspaper websites and last week they completed their transition so that their website no longer has any free content. Instead, readers now have to pay £1 to read the online version of the newspaper. The “product” costs the same whether it is a paper version or an electronic version.
From mid June users were asked to register free to read articles but from last week when you clicked through you were greeted with the following:
Reports suggest that since the requirement to register was brought in last month the viewing figures of the website have almost halved.
The requirement to pay for viewing will no doubt cause viewing figures to drop even further.
The paper’s owner, Rupert Murdoch’s News Corp, will be expecting viewing numbers to fall but importantly for them they believe that charging for content will enable them to continue at the forefront of quality journalism.
There are also reports that the Sun and the News of the World, two other UK titles in the News Corp portfolio, will also disappear behind a website paywall. These papers are more “down-market” than the Times so it will be interesting to see how this will work.
The traditional newspaper street vendor’s call of “Read all about it, read all about it” may soon become “Read all about it either in this newspaper or the online version for the same price”. But then again will there be any paper newspapers being sold in a few years or will it all be electronic?
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-07-05 10:47:012010-07-05 10:47:01It’s 225 years old and has just given birth to a beautiful newly born one pound baby.
So then, England’s football team are back home following their worst defeat in a World Cup ever. As an Englishman, I care about this very much, but I’m trying to be brave about it.
Germany deserved to win. They played better and importantly played as a team. England were fragmented and dreadful.
But the official score of 4-1 was rubbish. The second goal went over the line by about a whole metre. Unfortunately, FIFA “disallowed” the goal because the linesman didn’t see it and they refuse to install goal line technology. The official reason for this is that many countries can’t afford that technology, which is doubtless a fair argument. But surely countries that can’t afford expensive “Hawkeye” style equipment that the major tennis championships use could still afford to pay a responsible person to stand by each goal line through the match and call when a ball goes over the line? This feels like very poor judgement.
In the UK at the moment, we’re questioning three things in connection with the World Cup.
1. How can England have been so bad? There are no immediate answers to that.
2. How can FIFA possibly believe that their reputation can be held intact when they refuse to listen to the reasonable arguments of so many stakeholders?
3. How is it that the England manager (Fabio Capello) can be entitled to a £12 million severance package if he’s fired next month? His team’s performance was a dismal failure, so surely he should go. £12 million is what’s technically known as “an awful lot of money to pay a loser”.
It feels to me that the Football Association in the UK could benefit from a reading of the ACCA paper P1 notes. Executive remuneration being linked to performance and ease of firing a non-performing executive (Fabio Capello) and how to protect reputation (FIFA).
We’ll give them a course free if they want it. They both need it.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-06-30 07:36:232010-06-30 07:36:23Fabio Capello’s comedy version of Sydney Pollack’s classic film “Out of Africa” was complete and utter…
It’s one year since Michael Jackson died. In the year since his death, his estate has made earnings of £670 million.
Given that he was allegedly in serious financial trouble at the time of his death, this must be the source of a certain amount of posthumous frustration to Mr Jackson. His ability to spend the money has been significantly impaired in the period since the money started to roll in, on the grounds of his no longer being alive.
This is a quandary well known to many pop stars. The murder of John Lennon in 1980 sparked a sudden and deep revival of his career.
I can’t help but wonder why none of Michael Jackson’s advisors pointed him in the direction of the Bowie Bond.
David Bowie issued bonds in 1990 that were secured on the future income to be earned from songs that he had written up until that date. This is a simplification of course, but that’s the big picture. By doing this, David Bowie was able to get the benefit of some of his post death earnings while he was still alive. He is a smart business operator as well as enormously popular song writer, it seems.
The Bowie bond has been influential in business since it was issued. In practice, I personally used it as the backbone of market data to help in the divorce settlement of another well known musician.
Its influence amongst accountants is significant, though less so with the pubic at large. Rock stars probably don’t shout about it because valuation and securitisation of intellectual property isn’t really very rock and roll.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-06-28 08:30:222010-06-28 08:30:22Should Michael Jackson have had more of a bond with David Bowie?
Ten years ago former accountant Mr. Christopher Timbrell became former accountant Mrs. Christine Timbrell.
Christopher had surgery to alter his gender and became Christine but still remained married to his wife, Joy.
Yesterday, three Appeal Court judges in the UK gave a ruling which links to a number of discrimination issues.
Under 2004 legislation, as a transsexual Christine is entitled to enjoy the full status of her gender. However, married transsexuals are only allowed to have their gender recognized if they dissolved their marriage. This is where the problem for Christine occurred as although she had the sex change operation she still remained happily married to her wife Joy and they didn’t get divorced.
This meant that Christine was still treated as a man for pension purposes and therefore became entitled to a pension at 65 rather than at 60 which is when a woman becomes entitled to a pension.
Christine argued that she was a woman and it was a violation of her human rights to be forced to get divorced to become entitled to a pension at 60. The three Appeal Court judges found in Christine’s favour and also added that she was a victim of discrimination.
Christine, aged 69 who has two children with Joy from before the sex change operation, will now receive backdated pension payments going back to when she was 60.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-06-25 11:39:402010-06-25 11:39:40An accountant can make 65 become 60 but it takes rather extreme measures.
The French football team revolted yesterday and refused to train, football powerhouse Germany lost to Serbia, defending champions Italy failed to beat football minnows New Zealand and England were embarrassing in their game against Algeria on Friday.
At least Nike seem to be getting it right though.
Last week we blogged about the Bavaria girls and their ambush marketing at the World Cup in South Africa.
Nike, which was established in 1962 by Phil Knight who incidentally was an accounting major, is one of the best companies in the world in terms of getting its marketing just right.
They have a long history of having a certain flair for marketing. After the 1972 Olympic marathon trials for example they proudly announced that 4 of the top 7 finishers had worn Nike shoes. They neatly ignored the fact that the top 3 were wearing Adidas shoes!
Although Adidas are the official sportswear sponsors of the World Cup, Nike are doing rather well in terms of their profile.
Anyone that has seen a World Cup match will no doubt have been drawn to the orange Nike boots that a lot of top players such as England’s Wayne Rooney and Portugal’s Cristiano Ronaldo are wearing.
These boots, or Nike Mercurial Vapor Superfly II Elite boots (retailing at GBP 275) as they are officially known, are arguably catching people’s attention more so than any promotion that Adidas have done at the tournament.
Students of strategy papers will be aware of Michael Porter’s generic strategies whereby organisations compete either by way of cost leadership or differentiation (see our ExPress notes for a refresher if you’re unsure about these terms).
It can be argued however that Nike take the best of both of these approaches.
They focus on the differentiation side of things by investing heavily in R&D, design and marketing. As a result they can charge a premium for being “different”.
On the cost leadership side of things then Nike use external manufacturers rather than internal production. This means that they can source their manufacturing via approved suppliers which they will select for each product on the basis of the best price offered by these suppliers. It enables them to shop around for the best price whilst still guaranteeing the quality.
All in all a very smart business model but I’m sure that fans of the World Cup are more interested in the goals that are scored with these boots rather than the business model behind them.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-06-21 05:50:422010-06-21 05:50:42Nike and Michael Porter – generically speaking I think it’s somewhere in between…
So the World Cup is in full swing but what got all the publicity yesterday involved a team of attractive female Dutch fans rather than a team of footballers.
36 young blond Dutch fans wearing bright orange mini-dresses were removed from the stadium at half time and two of them were arrested and then released on bail.
But what exactly was their crime and why all the media attention?
Their crime was that they were alleged to be part of an ambush marketing campaign by Bavaria, the Dutch brewer.
Ambush marketing is where companies which are not official sponsors of tournaments aim to get their marketing message across without making any payment to the tournament organisers.
The mini-dresses the ladies wore were promotional dresses provided by Bavaria in the run up to the tournament and when they all started clapping and swaying in unison in these dresses they understandably attracted a lot of attention. Unfortunately for them this attention was not only from the world’s press but also FIFA representatives that were on the lookout for ambush marketing.
Anheuser Busch’s Budweiser is the official beer of the tournament and no other beer company is allowed to promote itself within World Cup stadiums. FIFA receive significant amounts of money from official sponsors and therefore are keen to protect their sponsors.
Another example of ambush marketing involving a major sports tournament was at the 2009 British Golf Open. Hugo Boss sailed its corporate sponsored yacht just off the coast of Turnberry, Scotland where the golf course was located.
As a result of this the BBC who were filming the golf had little choice but to show the Hugo Boss yacht in the background of a lot of shots. Great advertising for Hugo Boss!
Back to the Dutch girls and the 2010 World Cup though and it’s safe to say that whatever the outcome of this situation it’s no doubt been a success for Bavaria. More people have now probably heard of Bavaria beer as a result of the arrests than if the girls had just been left in the stadium to sway and clap in unison and enjoy the rest of the game!
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-06-16 11:43:142010-06-16 11:43:1436 attractive Dutch ladies, Hugo Boss and an ambush. It’s all happening at the World Cup.
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