CASE STUDY: UNILEVER – INMARKO

MERGER

TOWARDS A NEW ORGANISATION

- By: Anjali Saxena(6B), Mandeep Singh(18B),

Puneet Rajput(26B), Renuka Bhagat(29B),
Sagar Chandola(31B), Sunil Tewari(37B)
 Merger & Acquisition Targets

 Savings Should Reach to 3 Million Euro / Year

 Overall FTE Productivity Should Increase 2.5 times in a Year

Solutions – Financial KPI

 Productivity = Turn Over (Volumes of Sales of Goods )/ FTE

 Increase(↑) Turn Over and/or Decrease(↓) Full Time Employees (FTE)

 Increased(↑) Turn Over shall increase savings also

 Increased(↑) Financial Discipline and Technology based Innovation

Confidential · All rights reserved ·

Solutions – Productivity KPI

 Increased(↑) FTE efficiency through Skill Gap Analysis

 Identify Wastes and Apply Appropriate

2 Levers as per LEAN
Brand Merger

3
 Brand Merger

Precedent

► M&A is similar to Thums Up Merger in Coca Cola

► An example of a Horizontal merger: When Both Companies are in the Same Line of Business, i.e.
Competitors

► However this is also a Conglomerate Merger due to no Unilever Presence in Ice Cream sector in
Russia.

► In 1993, when Coke entered India, Thums Up had a 36 per cent Market Share of Soft Drinks when it
was Acquired by Coca Cola, the Highest amongst its Peers

► Currently it Commands 16% Market Share (still the highest), as against 13% by Pepsi and 8% by
Coke

► Unilever will have to Piggyback on Inmarko’s Goodwill and Build its presence
Organisational
Consolidation

5
 Organisational Structure

INMARKO – Main Units

• Commercial sector
This sector effects sales of the Company’s products and is divided into the following regional departments:
1. Eastern department (Urals, East and Siberia divisions)
2. Central department.
3. Key Chains department (in charge of sales to the key federal and regional retailers)
4. Moscow department

To cover the demand of large territories the company resorts to selling via their own branches, where it is difficult to find
a distributor satisfying the requirements of Inmarko.

• Production sector

Production operations are in Tula, Omsk and Novosibirsk

• Logistics sectors

It secures timely deliveries of end products to the retail chains and the distribution network; it includes the
transportation and products logistics departments.

• The Rest of the Sectors are Regarded as Support Services (Manpower, Financial, Marketing,
Legal Sectors, etc.)
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 Organisational Structure

INMARKO Organisational Chart – Linear Functional

7
Organisational Structure

INMARKO – Own Branch Structure

8
 Organisational Structure

UNILEVER Organisational Structure - Regional Level

• Operation of Unilever in Russia, Ukraine, and Belarus (Unilever RUB) is

Organised through a Unified Structure
• It is Headed by the 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.

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 Organisational Stucture

UNILEVER Organisational Structure - Overview

10
 Organisational Stucture

UNILEVER - Structure
The Company Organisation has a Matrix Structure, with the following 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 other Functions, in line with Unilever model include the following
Departments:
• R&D Division is responsible for driving all Innovation rigourously.
• Human Resources, Finance, IT, Legal, and PR.

• Each Department is headed by a Vice President.

• Brand Building, Supply Chain, and Customer Development jointly plan Sales Volumes for
various Periods led by a Project Manager.
• The Anticipated Production Volume they order from the 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 an Efficiency Viewpoint.
• Thus, Factories “Compete” with one Another in order to provide the Company with Quality
Products at a Relevant Original Cost.

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 Organisational Consolidation

Comparing Both the Structures

INMARKO UNILEVER

• The Company Organisation has a • The Company Organisation has a

Linear Functional Structure Matrix Structure
• Has Three prominent sectors • Brand Building, Supply Chain, and
Commercial, Production, and Customer Development jointly plan
Logistics which have their Own Sales Volumes for Various Periods
Functionary Head • Other Functions, in line with Unilever
• Other Support Service Sectors are model include the Following
Manpower, Financial, Marketing, Departments: Human Resources,
Legal sectors, etc. Finance, IT, Legal, and PR
 Organisational Consolidation

Combined Model – Linear Functional towards Matrix

► A Combined Model - A Selective Integration of Business Processes would take Place in a Glocal
Way, for the Business Consolidation
► Also to Retain top Performers a Certain Level of Full Operational Freedom should be given, which
is provided by the Combined Model
► However at the Organisational Structure Level, lay the Foundation of a Matrix structure, as the
next best step for a Linear Functional Organisation
► The Same Level of Flexibility remains but a more Mature Model with some level of Accountability
and Delegation involved along with higher FTE Productivity
► For new Organisation, start with a Linear Functional Structure as in the case of Inmarko and then
move to a Matrix structure (Unilever RUB like) as it is a Cross Cultural M&A
► Functional Structure allows Exclusion of Duplication of Managerial Functions and a High
Competency of Specialists required to achieve the KPIs
► Wherever there are Gaps, particularly in the R&D and Marketing department, Unilever can Move in
its own People

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 Organisational Consolidation- Issues and Resolutions

Combined Model – Dual Subordination

► A Combined Business Model with Matrix Structure will lead to

Hard to Maintain constant Interrelations between various
Functional Services and Lead to Long Procedures and Duration
for Decision-making

► A ‘Culture Abacus’ should be used to conduct a

‘Gap analysis’ which Identifies areas of Cultural Fit, Legacy
Overheads and Potential Problems as a part of an overall Due Diligence

► Slowly transition into a Matrix Structure with fusion of Project Activities and Functional
Activities with Dual Subordination of Executives – to Project Manager and to Functional
Department (Line/People) Manager

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 Organisational Consolidation

Values

► ‘Culture Abacus’, ‘Best of Both Worlds’ initiatives and ‘Intent workshops’ need to be run
to Merge best Elements of both Company’s Histories and ensure Synergies combined of
Corporate Culture & Values.
► Key decision Makers, will Need to get Together to build a Vision of how they will Behave
Collectively and What they Will Achieve. 

UNILEVER INMARKO

• Integrity • Respect for Employees Individuality

• Respect for Employees • Take Personal Responsibility & Accountability
• Take Personal Responsibility & Accountability • Pioneering & Leadership
• Pioneering with focus on R&D • Innovation Based Growth Mindset
• Growth Mindset • Consumer & Customer Focus
• Consumer & Customer Focus • Building Talent & Teams
• Building Talent & Teams • Openness
• Bias for Action • Customer Delight

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Unilever – Employment Facts

Unilever Employment (FTE)

16
Transition & Transformation

17
 Transition & Transformation

Head Count Classification & Plan of Action

Top
Top Management
Management Departmental
Departmental Heads
Heads Mid
Mid Level
Level Mgmt.
Mgmt. Sr.
Sr. Delivery
Delivery Jr.
Jr. Delivery
Delivery
(Tier
(Tier A)
A) (Tier B)
(Tier B) (Tier C)
(Tier C) Resources
Resources (Tier
(Tier D)
D) Resources
Resources (Tier
(Tier E)
E)

Based
Based on on Newly
Newly Skill
Skill Gap
Gap Analysis
Analysis Performance
Performance Review
Review Change
Change Agents
Agents Change
Change Agents
Agents
Identified Roles
Identified Roles over
over Previous
Previous 55 review
review ++ Skill
Skill Gap
Gap review
review ++ Skill
Skill Gap
Gap
Realign
Realign oror send
send on
on years
years or
or Less
Less (as
(as Analysis
Analysis + 360 Deg.
+ 360 Deg. Analysis
Analysis + 360 Deg.
+ 360 Deg.
Planned Leaves
Planned Leaves appropriate)
appropriate) Feedback
Feedback Feedback
Feedback
Training
Training Plan
Plan or
or
Realign Role
Realign Role
Realign
Realign or
or RS/VRS
RS/VRS Training
Training Plan/
Plan/ RS
RS Training
Training Plan
Plan or
or Training
Training Plan
Plan or
or
Mid Realign Role
Realign Role
Mid Year
Year Realign
Realign Role
Role
Performance
Performance Review
Review
(If
(If required
required after
after 11 Identify
Identify Change
Change
year)
year) Agents
Agents Among Them
Among Them Review
Review of
of Review
Review of
of
Performance
Performance After 66
After Performance
Performance After 11
After
months
months and
and 11 year
year year
year

• Short Term View – 6 months to a year and Long Term View – 2 years
• Financial KPIs are expected to be met in a year, which go Hand in Hand with Productivity KPIs hence 1st T&T milestones to be
within 6 months.
• 2 Year Performance Review for Retained Employees, based on which further Action/ Career Growth Progression, can be planned
for that Particular Employee.
• T&T team led by Anna and part of the Bigger M&A team (consisting of Legal & Financial Experts), will be Leading this Initiative
Communication Channel

19
 Corporate Communication

“The Single Biggest Problem in Communication is the Illusion that it has Taken Place. “
- George Bernard Shaw

• In order to Minimize Risks, it is Necessary to Maintain Systematic and Regular

Communication Channels, to Ensure Highest Participation of Employees in the
Process of Reorganization (Both by Informing and Involving them in Decision-
Making as a part of the Change Management) and to Ensure High Motivation
Levels
• Most Problems in Life happen Due to Lack of or Improper Communication and so
can be the Case Here
• The Goal of Managers and T&T team is to Forecast Reasons, which can Lead to
Employees’ Resistance, as well as to Design Initiatives, which could Help to
Prevent such Scenarios or Minimize Negative Effects and Adapt People to New
Conditions
• For this Communication and Constant Feedbacks are Necessary Including
Performance Dialogues with all Stakeholders
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for constant Motivation
 Merger - Summary

► The Organisational structure of Unilever seems to be Overall more Efficient Built

around JIT Principles.

► The Matrix structure of Unilever is more Robust in terms of Sales and Profitability.

► INMARKO as a subsidiary of Unilever will be the Local Face of Unilever, under the Combined Brand Merger Model
suggested

► Though INMARKO has a Very Successful Record for Sales and Profit Margins in the Current Organisational Structure, but
as the Company will Become a Part of a Larger Entity, Departmental Focus will Lead to Interdepartmental Communication
and Coordination to Suffer.

► Inmarko will also Have to be Restructured to Ensure that it can Compete in Future with Global Competitors and be a part
of a Larger Standardisation of Processes.

► The Functional Areas will be More Difficult to Manage as the Company Grows , and Will be Almost like Small
Companies(Silos) with their Own Cultures, Facilities and Management and May be Distracted by their Own Goals and
Focus on them rather than on Overall Company Objectives.

► Thus Communication will Lie at the Heart of the Merger, to Ensure Transparency.

► Hierarchical Matrix Layers mean Ideas for Change must Brave a Bureaucratic Chain of Command. This is where adopting
Inmarko’s ‘Openness’ in Culture will be of overall Help.

Some of the Advantages after Adopting Unilever’s Organisational Structure will be:
• Resources can be used Efficiently, since Experts and Equipment can be shared across Projects.
• Products and Projects are formally Coordinated across Functional Departments.
• Information flows both Across and Up Through the Organization and Speeds up Decision Making.
Financial KPI

22
 To Reach Financial KPI

► Merge Ad spends
► Merge overhead Operating costs – Eg. Consolidated Financial Statements and Audits
► Transportation Economies of Scale
► Storage facilities Consolidated
► Sales Tech support Consolidation
► Feedstock , Materials and Inventory Combined
► Bonuses Freeze for sometime
► No new Hiring
► Merging Office Spaces
► Integrate Functional units like – Market Research, Communications, Finance, R&D, HR, IT, Legal
► Tell Certain Managers to take PL till Roles Aligned Properly
► Advanced IT and R&D Solutions

* These Initiatives help in Reducing Expenses and Increasing Net Profit, along with Increase in Overall Sales

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Synergy Effect

24
 Synergy Effect - Path towards Stronger
Bonds

Expected Financial Benefits:

 In Transportation and Storage

 In Raw Material Purchase

 In Brand Promotions

 In Departmental Costs (IT, Administration, Sales, Accounting etc.)

 In Technology

 In Bargaining Power
 Unilever – Inmarko Merger

Synergy Effect - Transportation and Storage

Unilever
Unilever Inmarko
Inmarko Unilever
Unilever Inmarko
Inmarko

Warehouse
Warehouse Warehouse
Warehouse Warehouse
Warehouse

Customer
Customer Customer
Customer
Remarks
• Unilever and Inmarko both have seperate Storage arrangements at different places.
• Combined use of Storage places will lead to Low transportation Cost.
• Unilever and Inmarko both have seperate Transportation facilities.
• Combined use of Transportation utilities will lead to low running cost as well as less time required to transport.
 Unilever – Inmarko Merger

Synergy Effect - Raw Material Purchase

Unilever
Unilever Inmarko
Inmarko Unilever
Unilever Inmarko
Inmarko

Raw
Raw Material
Material Raw
Raw Material
Material Raw
Raw Material
Material

High
High Discount
Discount
Low
Low Discount
Discount Low
Low Discount
Discount On
On Cumulative
Cumulative
On
On Less
Less Qty.
Qty. On
On Less
Less Qty.
Qty. More
More Qty.
Qty.

High
High Production
Production Cost
Cost Low
Low Production
Production Cost
Cost
Remarks
• Purchasing Raw Material independently leads to less discount to both Unilever and Inmarko.
• Less Discount will lead to higher Production Cost.
• Buying Raw Material in Bulk as a Single Entity will lead to Higher Discounts.
• Higher Discount will lead to Low Production Cost, which in turn can lead to Better Sales and Overall Revenue
 Unilever – Inmarko Merger

Synergy Effect - Brand Promotions

Unilever
Unilever Inmarko
Inmarko Unilever
Unilever Inmarko
Inmarko

Advertisement
Advertisement Advertisement
Advertisement Advertisement
Advertisement

High
High Bargaining
Bargaining
Low
Low Bargaining
Bargaining Low
Low Bargaining
Bargaining Power
Power with
with Better
Better
Power.
Power. Power.
Power. Terms.
Terms.

High
High Promotion
Promotion Cost
Cost Low
Low Promotion
Promotion Cost
Cost
Remarks
• Inmarko is not Strong enough when it comes to Advertisment.
• Unilever can share its International Expertise for ATL, BTL and TTL Advertisement.
 Unilever – Inmarko Merger

Synergy Effect - Technology

• When it comes to Technology, Being a small supplier Inmarko can never compete with Unilever.
• Incorporation of Unilever Process technology in Inmarko‘s existing manufacturing Lines will reduce Production Cost.
• Incorporation of Unilever Process technology will also reduce Head counts upto an extent, thus Reducing Production cost.
• Advanced IT and R&D Solutions of Unilever along with CRM and Mobility Solutions allow better ‘Feet on Street’ – Eg.
Waterworks

Synergy Effect In Bargaining Power

Unilever
Unilever Inmarko
Inmarko Unilever
Unilever Inmarko
Inmarko

Advanced
Advanced R&D
R&D Limited
Limited More
More Streamlined
Streamlined
and
and Technological
Technological IT
IT Processes.
Processes.
Technology
Technology Advancements
Advancements

Better
Better Operational
Operational
Efficiency
Efficiency
Operational
Operational
Inefficiences
Inefficiences
Productivity KPI

30
 To Reach Productivity KPI

► While Cost Efficiency can be achieved using Multiple Techniques, FTE Productivity Increase
is Much More Challenging
► For this we are Building our Case based around LEAN
► We suggest a Framework based on the 8 wastes and 7 levers of LEAN, for Increasing
Productivity.
► Under Continuous Improvement we will establish Training Programs based on Skill Gap
Analyis where we Map each Resource to the Current Level of Skillset and the Expected
score in terms of that Skillset, which includes Understanding of Cultural Differences and
Aligning to Overall Business Goals as per the Staff Tier.
► Then create a Training plan accordingly or else provide a RS.
► ‘Skill Gap’ analysis also helps identify Duplicity of Roles.
► Training Plan comes with its own Costs Overheads, hence that Needs to be Aligned to the
overall Planned Expenses.

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 To Reach Productivity KPI

► Change Agents will be identified, amongst the Mid level Management, for each designated
BU, who will Assist Bringing in New Planned Changes, Motivation ,along with Data Collection
and Assisting with Overall Asset Optimisation. They will Also Act as a Core part of the ‘Train
the Trainers’ Initiatives.

► Idea Collection facilitated Physically and Online, to ensure active involvement of Tier C,D
and E employees with Action Item Owners assigned from Change Agents of Tier B/C level
employees, with Tier B employee Assigned as Project Sponsors as Applicable.

► Ideas logged will also help Gauge who amongst Tier D/E employees is taking interest and
can be identified as ‘Internal Change Coordinators’ and included as a part of Overall R&R
program through Career Growth and other (non Monetary) Incentives.

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 8 Wastes as Per Lean

► I – Inventory – Storing parts, Pieces, Documentation ahead of requirements

► I – Intellect – Under utilizing capabilities, Delegating tasks with Inadequate training
► T – Transport – Moving people, Products & Information Unnecessarily. Not required
Bending, Turning, Reaching, and Lifting as well as Other Physical motion.
► W – Waiting – For parts, information, instructions, equipment
► R – Rework – Defects and Incorrect documentation leading to redoing the job
► O – Over Production – Making more than is IMMEDIATELY required
► O – Over Processing – Tighter tolerances or Higher grade materials than are necessary
► M – Motion – Unnecessary Mental Activity that Hinders productivity due to Lack of
Standardisation.

► Minimizing all these, helps to Improve Overall Productivity of the Workforce.

This is Achieved via LEAN levers.

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 Wastes of Lean

Before Choosing the LEAN lever to Apply, Identify what the Customer Values and
what Truly Excites and Engages the Customer.

Done by Identifying:

► Core: Actions that Directly contribute to Customer Value and Engagement and
hence the Overall Turnover.

► Incidental: Actions that do not contribute to Customer Value and Engagement,

but enable Value Add – Waste

► Frustration: Actions that do not Contribute to Customer Value and Engagement

, and do not enable Value Add – Waste

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 7 Levers of LEAN

1
Segment complexity Form Separate Channels for Complicated Tasks
so that Simple Ones are Not Held Up
2 Redistribute activities
Align Activities to Appropriate Skill Set and Group

3 Pool resources Utilize Existing Skills and Resources for Economies of

Scale with Focus on Inculcating Cross Functional Skills

4 Implement flexible manpower Balance Processing Capacity with the Ongoing Demand
systems by Moving People to where the Work Activity is

5 Reduce incoming work Eliminate Tasks from a Person by Reducing the

Actual Work Activity Arising

6 Reduce Non Value Add work Eliminate Work that Does not Directly Add Value to
the End Customer

7 Standardize operations Establish Best Practices to Execute a Task

Waste - Levers Mapping Matrix
The Framework

37
 The Suggested Framework

Organisational
Structure &
Consolidation – Tier
Wise, Linear
Functional towards
Matrix

Brand Merger - Cultural & Values

Combined Integration
Corporate
Communication
(Led by T&T team)

Cost Efficiency –
Combine Synergies, Productivity Increase
Identify Duplication & - Based on LEAN
Other Overheads Legal – MRTP
analysed based on
Due Diligence, Study
of Labour Laws &
Merging Accounting
Systems