RB’s Global Presence and Market Strategy

CHAPTER 1

Introduction to the company, its business and competitors

Reckitt Benckiser Group plc (RB) is a British multinational consumer goods company headquartered in England, UK. The firm manufactures health, hygiene and home products. It was founded in 1999 as a result of the merger of Reckitt & Colman and Benckiser NV, a Dutch company (Cavale, 2019). The company owns brand such as Dettol, Strepsils, Veet, Airborne, Airwick, Clearasil, Lysol, Vanish and many more. Since the merger between the British and Dutch company, RB has grown at a very rapid pace and today is considered as one of the leading firms in the consumer goods market. Its biggest competitor is Unilever which is also a British-Dutch transnational consumer goods company. It sells a wide variety of consumer goods such as cleaning agents, beauty products, personal care products and others. Currently, it is the seventh most valuable company in Europe. Unilever owns more than 400 brands (Ryder, 2017). Products manufactured by RB are sold in more than 200 countries around the world (Tournois, 2016). The company primarily categorises its products into three main categories – health, hygiene and home – but it also operates in other categories such as food, pharmaceuticals and portfolio brands. Out of all brands owned by the group, 19 of them are its most profitable businesses, and therefore the firm gives more emphasis on maintaining these brands, that revenue and profitability can be maximised. These brands constitute more than 70% of net revenue for the group (Simu & Chowdhury, 2016).

The company needs to develop and follow specific strategic goals and objectives. These can help the firm to work in an adequate direction and be able to sustain in the market. In order to succeed and perform well in the market, RB focuses on three key strategic objectives. They are shown in Figure 2. Through these strategic objectives, the company aims at improving its operations in such a manner that it can sustain in the market while fulfilling various needs and demands of the customers. The modern-day consumer goods market is a highly competitive one. Companies need to develop and focus on such objectives that help not only in fulfilling the strategies but also in ensuring that demands of the customers and other stakeholders are fulfilled. Herein it can further be observed that the company aims at making the world a better place for future generations. Its health and hygiene businesses are focusing on managing their functions with agility and offer high-quality products to the customers, especially the younger generations.

One of the biggest competitors of RB is Unilever. Founded in 1929, almost a century before, the company is now the most significant consumer goods manufacturer in the world. Since its establishment, the firm has grown at a rather very rapid pace to become a leading player of the market. In the year 2017, the company had a turnover of €53.7 billion, while 13 of the brands it owns raked in sales figures of one billion Euros each (Unilever, 2018). The Unilever Group has four main divisions – Foods, Refreshment (Beverages and Ice Creams), Home Care and Beauty & Personal Care. Furthermore, the company also has research and development facilities located in the Netherlands, India, UK, China and the US (Unilever, 2019). Over the years, the company has made several corporate acquisitions. Some of which are Lipton in 1971, Brooke Bond in 1984, Ben & Jerry’s in 2000, Dollar Shave Club in 2016 and many more. Making these acquisitions has helped in strengthening the position of the group in the market (Bourgeois & Vivian, 2017).

CHAPTER 2

Financial Results and Key Non-Financial Information

Financial Results

From the table above it can be observed that the financial performance of RB against Unilever has not been outstanding. Although Unilever is a much bigger group than Reckitt Benckiser, RB is still a company that operates on a vast scale. It has a presence in more than 200 markets around the world and is considered to be one of the leading players in the industry. Due to this reason, it may be said that the performance of RB is lack lustrous, to say the least in comparison to that of Unilever. While both the companies experience a slight decline in their revenues from 2017 to 2018, Reckitt Benckiser experienced significant growth in its operating profits during the same period. In contrast to it, operating profits of Unilever took a significant hit, as they declined considerable, thereby depicting a bad performance from the world's largest consumer goods company. Increase in the profit before tax for both the firms shows that they earned a good amount of profits before paying off the taxes. This is in contrast to the fact that operating profits and revenue for the two firms decline significantly from the year 2017 to the year 2018. Basic earnings per share for both the companies improved during the said period. This shows that despite weak financial performances, shares of both the organisations and their prices did not decline significantly. It depicts the amount of trust that the customers have developed on these brands and the extent to which they believe in their operations.

Non-Financial Information

Since its establishment, Reckitt Benckiser has become one of the prime players in the global consumer goods market (Brinkhuis & Scholtens, 2018). It is now considered as a highly trustworthy brand, as can be seen from the immense trust and faith put in by the shareholders and stakeholders in the company. Coming into the new decade, the company will be going through many changes, the biggest of which is concerning the hiring of and take over by the newly appointed CFO Ahold’s Jeff Carr (Cavale, Reckitt hires Ahold's Carr to take over as CFO in 2020, 2019). The group expects that Ahold will use his substantiate experience and put it to good use for the company and provide it with new direction and growth prospects. Appointing the new CFO is the second biggest management change in the company. Earlier, the long-time CEO Rakesh Kapoor was replaced by Laxman Narasimhan, who earlier was the chief executive of PepsiCo. According to the new CEO, Carr possesses a strong ability to build strong teams that can manage crunch situations and provide the company with new zeal and enthusiasm, thereby filling it with energy to move in new directions. Although there are several non-financial information about Unilever, the biggest ones and a very significant one is that McLaren has lured Unilever away from the Williams team for the 2020 F1 season (Noble, 2020). Formula 1 is an investment based sports and attracting investors for advertisements is one of the primary sources of income for all the ten teams. Unilever had been a partner with Williams since the 2015 season, but as the teams’ performance continued to decline, Unilever has been attracted by the fast-developing and highly impressive team of McLaren.

REFERENCES

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Simu, T. H., & Chowdhury, M. A. (2016). Performance Evaluation of LeadingFMCG Company in Sylhet Metro City: a Case Study on Selected Products of Reckitt Benckiser Group PLC (RB) in Sylhet Region. Journal of Governance and Innovation, 22.

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