Discover Unilever Bangladesh Product Innovation Legal Guidelines

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Unilever Bangladesh has been constantly bringing new and world-class products for the Bangladeshi people to remove the daily drudgery of life.

Executive Summary

Unilever is a global consumer products company with 400 brands spanning 14 categories of home, personal care and food products, The company tapped CA Clarity to help gain visibility over demand management for its 3,000 person distributed IT organization.

The Project Management Office (PMO) was originally measured on time, cost, and quality, but required improved planning and IT governance processes. CA Clarity gave them the ability to measure many metrics, which they used to isolate key areas of concern.

Unilever was then able to reduce these metrics to eight key performance indicators, backed up by focused training. Moreover, Unilever can view a global ‘big picture’ of the entire IT portfolio—while managing projects locally, and knowing that 100 percent of project plans are kept up-to-date, with 85 percent utilization and 100 percent time sheet compliance

Over the the last for decades, Unilever Bangladesh has been constantly bringing new and world-class products for the Bangladeshi people to remove the daily drudgery of life. Over 90% of the country’s households use one or more of Their products.

Their five support functions (Finance, HR, IT, Communications and Legal) provide value-adding business partnership, strategic support and competitive services to the whole business (especially the regional and category organizations). They are organized around the model of business partners, shared services and expertise teams.

Unilever actually consists of fast Moving Consumer Goods company with local manufacturing facilities, reporting to regional business groups for innovation and business results.Unilever has 60.75% shares of its own and the rest 39.25%, is owned by Government of Bangladesh.

One of their ongoing goals is to help their business leaders connect to their people around the world and achieve a shared understanding of their business objectives and future challengesUnilever’s mission is to add Vitality to life. They meet everyday needs for nutrition; hygiene and personal care with brands that help people feel good, look good and get more out of life.

Unilever is dedicated about the heart of the corporate purpose, which guides them in their approach to doing business, is the drive to serve consumers in a unique and effective way. Unilever’s code of business principles describe the operational standards that everyone at Unilever follows, wherever they are in the world.

Compliance with these principles is an essential element in their business success. The Unilever Board is responsible for ensuring these principles are communicated to, and understood and observed by, all employees. Day-to-day responsibility is delegated to all senior management of the categories, regions, functions and operating companies.

They are responsible for implementing these principles, if necessary through more detailed guidance tailored to local needs. Assurance of compliance is given and monitored each year. Compliance with the Code is subject to review by the Board supported by the Audit Committee of the Board and the Unilever Executive Committee.

Any breaches of the Code must be reported in accordance with the procedures specified by the Joint Secretaries. The Board of Unilever will not criticise management for any loss of business resulting from adherence to these principles and other mandatory policies and instructions.

The Board of Unilever expects employees to bring to their attention, or to that of senior management, any breach or suspected breach of these principles. Provision has been made for employees to be able to report in confidence and no employee will suffer as a consequence of doing so.

The company has an excellent manufacturing facilty.It’s Soap Manufacturing factory and a Personal Products Factory is located in Chittagong. Besides these, there is a tea packaging operation in Chittagong and three manufacturing units in Dhaka, which are owned and run by third parties exclusively dedicated to Unilever Bangladesh.

Product variety is another quality of Unilever. These products are:Household Care, Fabric Cleaning, Skin Cleansing, Skin Care, Oral Care, Hair Care, Personal Grooming, Tea based Beverages.People are very loyal to unilever products brands. These popular bards are Wheel, Lux, Lifebuoy, Fair & Lovely, Pond’s, Close Up, Sunsilk, Lipton, Lipton Taaza, Pepsodent, All Clear, Vim, Surf Excel, Rexona.

Unilever’s products are generally sold through its sales force and through independent brokers, agents and distributors to chain, wholesale, co-operative and independent grocery accounts, food service distributors and institutions.

Local cultures and markets around the world are very much noticed by the Company. Their strong relationship with consumers and are the foundation for their future growth. They will bring their wealth of knowledge and international expertise to the service of local consumers – a truly multi-local multinational.

Unilever Operations in Bangladesh provide employment to over 10,000 people directly and through its dedicated suppliers, distributors and service providers. 99.5% of UBL employees are locals and they have equal number of Bangladeshis working abroad in other Unilever companies as expatriates. All Unilever employees are expected to avoid personal activities and financial interests which could conflict with their responsibilities to the company. Unilever employees must not seek gain for themselves or others through misuse of their positions.

At Unilever their people are at the centre of everything they do. They give priority to their professional fulfillment, their work-life balance and their ability to contribute equally as part of a diverse workforce. Their people’s creativity, energy and passion drive their business. Unilever companies and their employees are required to comply with the laws and regulations of the countries in which they operate.Unilever is committed to diversity in a working environment where there is mutual trust and respect and where everyone feels responsible for the performance and reputation of their company.

They will recruit, employ and promote employees on the sole basis of the qualifications and abilities needed for the work to be performed. They are committed to safe and healthy working conditions for all employees. They will not use any form of forced, compulsory or child lab Their.

They are committed to working with employees to develop and enhance each individual’s skills and capabilities. They respect the dignity of the individual and the right of employees to freedom of association. They will maintain good communications with employees through company based information and consultation procedures.

Unilever is committed to provide branded products and services which consistently offer value in terms of price and quality, and which are safe for their intended use. Products and services will be accurately and properly labelled, advertised and communicated.

Unilever will conduct its operations in accordance with internationally accepted principles of good corporate governance. They will provide timely, regular and reliable information on their activities, structure, financial situation and performance to all shareholders.

Unilever is committed to establishing mutually beneficial relations with Their suppliers, customers and business partners. In Their business dealings they expect their partners to adhere to business principles consistent with their own.

Unilever strives to be a trusted corporate citizen and, as an integral part of society, to fulfill their responsibilities to the societies and communities in which they operate. Unilever companies are encouraging to promote and defend their legitimate business interests.

Unilever will co-operate with governments and other organisations, both directly and through bodies such as trade associations, in the development of proposed legislation and other regulations which may affect legitimate business interests. Unilever neither supports political parties nor contributes to the funds of groups whose activities are calculated to promote party interests.

Unilever is committed to make continuous improvements in the management of their environmental impact and to the longer-term goal of developing a sustainable business. Unilever will work in partnership with others to promote environmental care, increase understanding of environmental issues and disseminate good practice.

In Their scientific innovation to meet consumer needs they will respect the concerns of their consumers and of society. They will work on the basis of sound science, applying rigorous standards of product safety.

Unilever believes in vigorous yet fair competition and supports the development of appropriate competition laws. Unilever companies and employees will conduct their operations in accordance with the principles of fair competition and all applicable regulations.

Unilever has a large portfolio of patents and trademarks, and they conduct some of our operations under licenses which are based on patents or trademarks owned or controlled by others. They are not dependent on any one patent or group of patents. They use their best efforts to protect their brands and technology.

Unilever does not give or receive, whether directly or indirectly, bribes or other improper advantages for business or financial gain. No employee may offer, give or receive any gift or payment which is, or may be construed as being, a bribe. Any demand for, or offer of, a bribe must be rejected immediately and reported to management. Unilever accounting records and supporting documents must accurately describe and reflect the nature of the underlying transactions. No undisclosed or unrecorded account, fund or asset will be established or maintained.

Unilever’s long-term success requires a total commitment to exceptional standards of performance and productivity, to working together effectively, and to a willingness to embrace new ideas and learn continuously.To succeed also requires, they believe, the highest standards of corporate behavior.towards everyone they work with, the communities they touch, and the environment on which they have an impact.

This is their road to sustainable, profitable growth, creating long-term value for their shareholders, their people, and their business partners.They conduct their operations with honesty, integrity and openness, and with respect for the human rights and interests of their employees. They shall similarly respect the legitimate interests of those with whom they have relationships.

About Unilever

Unilever is one of the world’s leading consumer goods companies with a portfolio of around 400 food and home and personal care brands and a turnover of €40 billion. We have operations in around 100 countries and our products are sold in about 50 more. With consumers, employees, business partners and shareholders on every continent, we describe ourselves as a ‘multi-local’ multinational, bringing our international expertise to the service of people everywhere.

The Americas

Europe

Asia Africa

Unilever’s €1 billion global brands

We have 12 global brands, each achieving sales over €1 billion a year:

Other global brands

These brands are enjoyed by millions of people:

Local favourites

Some of our brands are national favourites found only in a few countries, such as:

History

Unilever was created in 1930 by the merger of British soapmaker Lever Brothers and Dutch margarine producer Margarine Unie, a logical merger as palm oil was a major raw material for both margarines and soaps and could be imported more efficiently in larger quantities.

In the 1930s, the business of Unilever grew and new ventures were launched in Latin America. By 1980, soap and edible fats contributed just 40% of profits, compared with an original 90%. In 1984 the company bought the brands Brooke Bond (maker of PG Tips tea), Fabergé and Elizabeth Arden, but the latter was later sold (in 2000) to FFI Fragrances. Unilever acquired Chesebrough-Ponds, the maker of Ragú, Ponds and Vaseline, in 1987, which strengthened its position in the world skin care market. In 2000, the company absorbed the American business Best Foods, strengthening its presence in North America and extending its portfolio of foods brands.

Today the company is fully multinational with operating companies and factories on every continent and research laboratories at Colworth and Port Sunlight in the United Kingdom; Vlaardingen in the Netherlands; Trumbull, Connecticut, Englewood Cliffs, New Jersey in the United States; Bangalore in India (see also Hindustan Unilever Limited); Pakistan; and Shanghai in China. Its European IT infrastructure headquarters is based in Unity House, Ewloe in Flintshire, Wales.

The US division continued to carry the Lever Brothers name until the 1990s, when it adopted the parent company’s moniker. The American unit is now headquartered in New Jersey, and no longer maintains a presence at Lever House, the iconic skyscraper on Park Avenue in New York City.

Unilever has recently completed a five year vitality company initiative in which it began to converge the marketing of disparate arms of their business, including personal care, dieting, and consumables into an umbrella function displaying the breadth of their contributions to personal vitality. This plan has been implemented because of the lack of brand recognition that Unilever wields, even despite its ubiquitous presence. In 2006, it concluded with the sell off of the global frozen foods division; excluding the ICF ice cream business, and the Italian frozen vegetables businesses.

Industry challenges

What was the key challenge?

At the start of 2005 it was clear what Unilever had to do. Unilever had to restore Unilever competitiveness in the market and get the business growing again. But Unilever had to do it in a way that Unilever can sustain for the long term, creating value and unlocking Unilever full potential.

How did you set about tackling this challenge?

Unilever approach was simple – to focus on three things that matter. First, to make Unilever portfolio work harder for us, with sharper priorities and resource allocation. Secondly, better execution, especially in the areas of marketing and customer management. And, finally, create a more agile ‘One Unilever’ organization, aligned behind a single strategy, with the right people in the right jobs, delivering quality and speed of execution.

What were the priorities and why did you focus on these areas?

Unilever focused on building on Unilever strengths in developing and emerging (D&E) markets, vitality and Personal Care. They are areas of strength for Unilever where Unilever have performed well, with good growth and profitability. Regaining momentum in Europe was an equally important priority.

Overall, what results have been achieved by following this approach?

Unilever have made real progress. In 2005 underlying sales growth was 3.1%, significantly ahead of a .at 2004, and in line with Unilever markets. Growth momentum has improved steadily throughout the year and has been driven by volume.

The pleased to report that Unilever growth rates improved across most of Unilever major markets and in most categories. These figures are a real testament to the hard work of Unilever people, the strength of Unilever brands and the resilience of Unilever business.

Restoring growth required a step up in investment behind Unilever brands. In 2005, Unilever invested an extra €500 million in advertising and promotions. Unilever also invested significantly to reduce prices, especially in Europe, and offer better value to the consumer in selected categories and markets.

Unilever savings programmes generated more than €700 million in 2005 and helped fund the additional investment in Unilever brands and absorb the impact of higher input costs.

At the same time it is becoming increasingly clear that the apparent tranquillity of this land of plenty is deceptive. Many of the difficulties faced by the industry are well known – the precarious economic position of small farmers; the flawed nature of the Common Agricultural Policy and its damaging effects on the developing world; the arguments over the introduction of GM and functional foods.

Other challenges have remained below the surface but are now erupting into life. Health and nutrition, obesity, and the advertising of food and drink to children are examples. Many of you will have seen the recent Food Standards Agency (FSA) report into advertising to children.

Amongst all the media furore that followed, did you see any reference to the fact that advertising to children is already governed by a strict code administered by an independent body? I thought not.

But whatever the rights and wrongs, interest is already huge and still growing. I recently saw an analysis which tracked the appearance of these issues in the media. Over a six-month period the amount of coverage had easily quadrupled.

Take another measure – the number of parliamentary questions asked about them. There are about one hundred parliamentary questions per month on food and health issues at the moment. That is about double the number of a year ago. So when took as subject today, ‘Understanding People to Build Brands’, did so because wanted to deal with the subject in three ways.

First, understanding consumers as shoppers, and the way in which manufacturers and retailers can work together to develop brands which meet their needs in ever more relevant ways.

Second, want to touch on how Unilever in Unilever are trying to grow Unilever people so that they can grow Unilever brands. This is all about unlocking their creativity and enterprise.

Third, want to talk about the way in which, as an industry, Unilever engage with issues that people raise as citizens who are, of course, also the consumers of Unilever brands.

Here don’t believe that Unilever have been responsive enough or fast-moving enough to cope with the pace of change. will turn later to what believe Unilever need to do.

Understanding consumers

The importance of co-operation for successful food retailing is profound. Unilever can only continue to build and create new brands by using Unilever combined understanding of the consumer to find solutions that satisfy her ever-changing needs.

Unilever used to think of the choice of a brand in a rather one-dimensional fashion – the typical consumer, in a typical supermarket, doing a typical once-a-week shop.

Unilever now have to face the uncomfortable reality that the choice available to people shopping for food is so rich and wide that the decision making process is inevitably much more complex.

Unilever in Unilever are very alive to this challenge, which is why Unilever have launched a project across Europe to develop a more rounded understanding of the consumer as a shopper. The project will break down the shopping process into its component parts, starting with the thought given to the task before leaving home, then to the choice of store right through to the retail experience and the ultimate choice of brand.

This kind of research is not new. However the unique value that Unilever can add is to understand shopper behaviour across a broad range of categories. Unilever brands are in many aisles of the supermarket stretching from food, beverages and ice cream through to household and personal care. Unilever will also be able to synthesise data from across Europe and identify the similarities and differences in shopping behaviour across different countries and food cultures.

This project is in its early stages, but once it is complete, Unilever will share the information with customers in order to drive sales to Unilever mutual benefit.

Climate change & geography

Their case studies provide examples of environmental initiatives at individual sites/businesses, and are regularly updated. For Unilever Group information about climate change see the section on Environmental issues.

Europe: Hydrocarbon ice cream cabinets cut impact on climate change

Unilever Ice Cream is rolling out hydrocarbon refrigerated freezer cabinets across Europe, cutting out HFC refrigerants to reduce impact on climate change.

Italy: Saving energy at Sagit factories

Frozen food and ice cream factories use a lot of energy, particularly for refrigeration. Sagit, a Unilever frozen foods company, is working to reduce energy use at its factories in Italy.

Sustainable development

This report presents an update on unilever’s progress in 2006 in managing their social, environmental and economic impacts.Here they have shown how they are living out their commitment to responsible business practice in the communities where they operate around the world. The report starts by focusing on issues where they have the biggest impact. These include:

Nutrition & hygiene

The social impact of unilever’s products on people’s health.

· Nutrition

· Hygiene

Integrating sustainability

How they secure sustainable supplies of raw materials.

· Integrating sustainability

· Agriculture

Environmental footprint

Reducing Their footprint and addressing the climate change challenge.

Creating & sharing Theyalth

The Theyalth Their operations create and how it benefits stakeholders and local communities.

Eco-efficiency

They aim to improve the eco-efficiency of their manufacturing operations, minimizing both esthetics used and waste created.

a)Unilever’s approach

Reducing the impacts of unilever’s own manufacturing operations – eco-efficiency – is a core part of Their environmental strategy. Their approach is underpinned by their environmental management system which is based on ISO 14001. An essential element is the setting and reviewing of targets for their key performance indicators (KPIs).

Every year they collect data from each of their manufacturing sites on key measures of environmental performance. This is collated and analysed using an environmental performance reporting system. Over the past 12 years they have continually improved the way They collect and report data, most recently through the introduction of a They-based reporting system.

b) Performance in 2006

During 2006 They met all Their targets apart from those on chemical oxygen demand (COD) and hazardous waste. While Their performance on hazardous waste did improve, They fell short of Their ambitious target of a 15.9% reduction. See commentary in Key performance indicators.

Target scorecard 2006

Load per tonne of production 2002–2006

* Table shows hazardous and non-hazardous waste disposed of to landfill/incineration (not recycling).

Reduction in load per tonne of production 2002–2006 & Their targets for 2011

Expressed as % of the 2002 kg/tonne figures

Eco-efficiency training & Theyb support

Unilever’s Safety and Environmental Assurance Centre conducts eco-efficiency training catharses throughout Their business. These aim to deliver tools, techniques and awareness directly to the people responsible for reducing the environmental impact of Their manufacturing operations. Cherishes held in Brazil and Vietnam in 2006 focused on minimizing waste, water and energy consumption.

The Theirse has proved particularly effective in promoting good practice across Their operations. To support this, They developed a searchable Theyb-portal with over 350 examples of good practice covering water, waste, energy, COD and general environmental issues.

Environmental prosecutions & fines

While They try to maintain the highest standards of environmental management, problems sometimes occur. They monitor and report on all environmental prosecutions and resulting fines for infringement of environmental regulations. The figures shown in the table cover Their manufacturing sites (317) and include Their corporate head offices and research laboratories (eight). In 2006 there was one prosecution for non-compliance with liquid effluent discharge limits.

Environmental prosecutions & fines 2002–2006

Covers manufacturing sites, corporate head offices and research laboratories.

Environmental management

As a global company they aim to play their part in addressing global social and environmental concerns.

Managing impacts

They are conscious of their dependence on a healthy environment and the need to keep it that way with sound environmental practices of their own.

Many of the issues they face are outside their direct control – either at the beginning of the supply chain or at the end. Nevertheless, in their sustainability initiatives they focus on three areas that are directly relevant to us and where they can make a measurable contribution through their programmes. These areas are agriculture, fish and water.

Unilever’s Environmental policy requires us to remain alert and responsive to developing issues, latest knowledge and insight, and public concerns. They have identified other environmental issues that are also relevant to us and Their stakeholders. These issues range from climate change to GMOs to ozone depletion. Here They describe how They manage these issues, present data and trends, and show how They act to reduce Their impact.

With a long-standing commitment to reducing greenhouse gas emissions, over the past decade Unilever have achieved a cut of more than 30% in Unilever own operations.

Climate change and geography

2006 was the year when climate change became widely recognised as the most critical challenge facing our planet. Different weather patterns are affecting agriculture, availability of clean water and sea temperatures. This will have direct effects on Unilever business.

Unilever have been monitoring Unilever own energy consumption and since 1995 have achieved real reductions. In 2006, marking the seriousness of the threat, Unilever convened a Greenhouse Gases Working Group of managers from across the business to develop a formal strategy on climate change.

The Group started to map Unilever wider carbon footprint, taking the broadest definition of Unilever impacts, so that Unilever new strategy addresses more than just Unilever own greenhouse gas emissions.

The team estimated Unilever’s total emissions of greenhouse gases from Unilever own factories, offices, laboratories and business travel to be in the order of 4 million tonnes of CO2 equivalent a year.

Unilever impacts

As a manufacturing company Unilever have impacts through Unilever use of energy and the resulting CO2 emissions. Unilever environmental performance reporting system measures and monitors Unilever energy use and emissions of CO2. A combination of annual target setting and on-site initiatives has reduced CO2 emissions in Unilever own manufacturing operations by more than 30% over the past decade in absolute terms. During 2006, Unilever CO2 emissions from energy per tonne of production decreased by 4.2% (see Eco-efficiency for Unilever 12–year performance figures).

Unilever also source a proportion of Unilever energy from renewable sources ? 14.8% of the energy Unilever used in 2006, of which 8.2% Unilever generated ourselves and 6.6% was from national grids. In 2006 Unilever conducted a review with the World Resources Institute to improve Unilever understanding of renewable energy technology options.

Unilever actions in this area have received external recognition. For example, in 2006, Unilever were ranked first in the food and retail sector in the Carbon Disclosure Project’s Climate Leadership Index for best practice in greenhouse gas emissions and climate change strategies.

On business travel, Ben & Jerry’s is leading the way with 100% of its travel-related emissions being offset through renewable energy initiatives in India and South Africa.

In 2006 Unilever decided to install leading-edge video-conferencing facilities in five of Unilever main regional offices. Unilever are setting stretching objectives to reduce the total cost of business travel.

Good practice in energy saving

Unilever Canada’s Rexdale factory was recently featured in a government-sponsored advertisement as an example of good practice in reducing energy consumption. Rexdale is Unilever leading manufacturing facility for oils and margarines in North America. Since 1999, it has implemented 128 energy-saving initiatives, leading to a reduction of 23 000 tonnes in greenhouse gas emissions, and estimated cost savings of €3.3 million.

One example of Unilever on-site initiatives is Project Electra, which aims to save energy at Unilever factories in Latin America. Since the launch of the project in 2006 a 4.9% reduction in energy per tonne of production in Latin America has already been achieved, primarily through sharing best practice.

At Unilever Lipton tea gardens in Kericho, Kenya, 96% of the energy used by the estate is from renewable sources. This comes mainly from Unilever own hydroelectric power stations and the eucalyptus trees Unilever grow to fuel the boilers that dry tea.

Leadership & advocacy

Unilever UK’s National Manager was one of 14 business leaders from the UK’s Corporate Leaders Group on Climate Change who met Prime Minister Tony Blair in May 2006 to urge action to tackle climate change. At this meeting business leaders highlighted seven areas where government and business might work together, including strengthening emissions trading schemes, supporting low-carbon technologies, improving energy efficiency in the commercial sector and stimulating consumer action on climate change.

Unilever wider carbon footprint

Unilever wider carbon footprint shows that across the whole value chain – including the sourcing, manufacture, distribution, consumption and disposal of Unilever products – most CO2 emissions occur during consumer use. This is most marked in Unilever home and personal care products which need energy to heat water and power washing machines, tumble driers and dishwashers. Unilever wider footprint can amount to between 30 and 60 times as much as Unilever own emissions, depending on assumptions made about how consumers use Unilever products, for example, the use of hot water in personal and laundry washing.Unilever can help reduce these environmental impacts through product design and formulation. For example, many of Unilever laundry detergent brands, such as Omo, Surf and Persil, can now be used at temperatures as low as 30 degrees centigrade. Unilever intend to incorporate a ‘greenhouse gas index’ into Unilever product development process, to assess, and where possible reduce, impacts during product use.

Unilever also take a leadership role in industry bodies that can influence consumer behaviour. Within AISE (International Association for Soaps, Detergents and Maintenance Products), Unilever has been actively involved in sustainability campaigns, such as Wash right, launched in 1998 to encourage consumers to wash at lower temperatures and use full washes. In 2006, Unilever participated in the launch of AISE’s new Save Energy and Water Campaign to promote sustainable dishwashing.

Unilever have also made estimates of greenhouse gas emissions in Unilever raw material supply chain. Unilever estimate this is around 10 times Unilever own emissions. Energy is one of the 11 indicators used to assess the sustainability of sourcing under Unilever Sustainable Agriculture Programme.

Distribution of Unilever products to retailers takes many forms around the world. In most markets, Unilever do not own or operate any distribution vehicles ourselves. Unilever have started to work with major customers to minimise emissions, primarily by reducing the number of vehicle movements. Unilever continue to work to reduce the impacts of refrigeration required for storing Unilever ice cream.

Unilever’s carbon footprint

Unilever have attempted to estimate the greenhouse gas emissions associated with sourcing, manufacture, distribution, consumer use and disposal of Unilever products worldwide. These are represented below.

*Includes third-party manufacturing.

Unilever wider carbon footprint is more difficult to quantify the further away the emissions occur from Unilever’s direct operational control.

Biofuels

Unilever support the use of renewable energy from sustainable sources to help combat climate change. Unilever are concerned, however, that promotion of ‘first generation’ biofuels from agricultural crops may destabilise world food supply and increase local food shortages. This has an impact on Unilever business.

Working in partnership

Unilever are participating in Refrigerants, Naturally!, a multi-stakeholder initiative which aims to promote HFC (hydro fluorocarbon)-free refrigeration technologies. As part of Unilever commitment, Unilever are replacing Unilever point-of-sale ice cream freezer cabinets with more energy efficient and climate-friendly hydrocarbon (HC) refrigerants. By the end of 2006 Unilever had replaced more than 100 000 cabinets, the majority of which are in Europe. In 2007 Unilever aim to roll this initiative out further in Latin America and Asia where Unilever have trials under way.

Ben & Jerry’s Climate Change College, a scheme launched in partnership with the polar explorer Marc Cornelissen and WWF, continues to train 18-to-25-year-olds to campaign on climate change in their schools, workplaces and homes. In 2006 six young people were selected for the programme from the UK, Netherlands, Germany and Ireland.

Culture Management System and Business Style

Developing a Global Mindset

Why are some companies highly successful in spotting and exploiting global opportunities, while others mismanage them or miss them entirely? The answer could lie in the company’s mindset, a topical subject currently doing the rounds at numerous executive education seminars. The term corporate mindset refers to how the company sees the world and how this affects its actions. For companies operating on a global scale, developing a global corporate mindset presents a formidable managerial challenge. The corporate mindset determines to what extent management encourages and values cultural diversity, while simultaneously maintaining a certain degree of strategic cohesion. Developing a global corporate mindset and a group of global managers as its main flag bearers has become a key prerequisite for successfully competing and growing in worldwide markets.

The Mindset – Why is it important?

At the beginning of the 70’s five German software engineers, who were all IBM employees, developed a new standardized application software package. At that time IBM focused almost exclusively on developing and selling hardware, software being seen as a marginal add-on business. The five engineers decided to leave IBM and establish their own company under the name of SAP. The rest is history. SAP has become a global player, now ranked as the world’s fourth largest software company with annual sales well over $3 billion. Without SAP many notable European companies such as ICI, BMW, Volvo, Nokia, Hofmann-LaRoche and Lufthansa would not be able to manage their information systems. In the United States such blue chip companies as Coca-Cola, Burger King, P&G, DuPont, Intel and even mighty Microsoft rely on SAP software.

Why did IBM with its profound knowledge of the industry, its huge customer base and the vast resources at its disposal so grossly misjudge the market and leave this growth opportunity to a start-up company? The concept of mindset could provide an interesting answer. It is used here to describe a set of deeply held internal mental images and assumptions, which individuals develop through a continuous process of learning from experience. They exist in the subconscious determining how an individual perceives a specific situation, and his or her reaction to it. However, the concept of mindset applies not only to individuals, but also to organizations. Mindsets are the ‘origination point of all workplace behavior.’ An organizational mindset can be simply defined as the aggregated mindset of all of its members. Naturally, such a definition must take into account the interaction between people as well as the distribution of power within the organization. Interpersonal contacts influence an individual’s mindset and vice versa that person’s interactions shape the mindset of others. Certain individuals, depending on their position in the organizational hierarchy, will have a stronger impact on the company’s mindset than others. In fact, in some extreme cases the personal mindset of the Chief Executive Officer becomes the single most important factor in shaping the organization’s mindset. Essential to understanding the functioning of the mindset is the notion that individuals or organizations with their own particular experiences will most likely develop different mindsets and hence react differently to the same situation. It follows that the greater the diversity between two companies in the past, the more likely it is that they have developed different mindsets.

THE GLOBAL CORPORATE MINDSET — A NEW MANAGERIAL CHALLENGE

With respect to global management such a concept raises three fundamental questions: What is meant by global strategies? Second, what are the driving forces behind the global mindset? And finally, how to assess the impact of these forces and their impact on strategy development?

Global strategies

Contesting world markets and utilizing worldwide resources In recent years the concept of globalization has taken the business world by storm. Scores of articles in popular management journals as well as several books have urged companies to ‘go global’ in their strategies. In this context two slogans come immediately to mind: The many times quoted corporate mantra ‘Think global and act local’ and its opposite ‘Think local and act global’.

The Slogan “Think globally acts locally” is frequently used to describe the managerial challenge faced by global marketers. It captures the need to think in global terms about a business or a market while, at the same time, doing some local tailoring to meet the particular requirements of the local customers.

‘Think global and act local’ stands for the development of a global business strategy, where management operates under the assumption that a powerful brand name with a standard product, package and advertising concept serve as a platform to conquer global markets. The starting point is a global strategy focusing on standard products, optimal global sourcing and the ability to react globally to competitors’ moves. This approach discourages diversity and puts a lot of emphasis on uniform strategies. On the other side is ‘Think local and act global’. This approach starts with the assumption that global expansion is best served by adaptation to local insights and initiatives in different markets around the world. Diversity is looked upon as a source of opportunity, whereas strategic cohesion plays a secondary role. Such a ‘bottom-up’ approach offers greater possibilities for revenue generation, particularly for companies wanting to grow rapidly abroad. However, it can require more investment in the infrastructure necessary to serve each market and, often, lacks strategic consistency.

Which approach is right or wrong does not in itself lead to a useful discussion. Recognizing the diversity of local markets and seeing them as a source of opportunity and strength, while at the same time pushing for strategic consistency across countries seems to be a conundrum global company’s face today. It is now generally accepted that a global company must consider both local and global aspects. Michael Porter explains that ‘globalness’ is inevitably a matter of degree since the extent of strategic advantages that accrue to companies that compete internationally can vary a great deal from industry to industry. This observation leads to the conclusion that a company pursuing a global strategy should possess two capabilities:

1. The capability to enter any market in the world it chooses to compete in. The key issue is that the company constantly looks for market opportunities worldwide, processes information on a global basis and constitutes a constant threat to competitors even in countries/markets where it has not yet entered.
2. The capability to take advantage of its worldwide resources in any competitive situation it finds itself in, regardless of where that might be. For example, if a competitors switches to a low cost factory, it can do the same. Resources also include know-how, i.e., the global company must develop processes that maximize the transfer of knowledge between subsidiaries and between subsidiaries and head office.

Following this definition global strategies deal not only with global presence or are the preserve of large companies. It is also not important whether a company is operating on a worldwide basis or just in some countries. What is essential is that what a company does in one country impacts on what it does in others. This definition is used here to further analyze and discuss the meaning and implications of a global corporate mindset.

Driving forces behind the global mindset

The corporation’s mindset and hence the way it deals with its environment plays an essential role in strategy development. There are several environmental forces which push for global business strategies coupled with a high degree of centralization and corporate control. However, other forces are supporting a local/national approach based on decentralization and local autonomy. These forces can be grouped into four categories: Top management’s view of the world, the company’s dominant organizational dimension, its strategic and administrative heritage and industry-specific forces driving or limiting globalization.

Table: Proactive and Reactive Forces behind Global Mindset and Strategies

Top management’s view of the world: As mentioned earlier, the distribution of power in the organization, and senior management particularly, have an important influence on the corporate mindset. The emergence of a visionary leader can be a major catalyst in breaking-down existing geographic and competitive boundaries. Good examples are Michael Eisner of Walt Disney Company or Mark Wössner of Bertelsmann, who have both played a dominant role in propelling their companies to positions of global leadership. Whereas leaders with such a geocentric vision drive global business expansion, top management with a predominantly ethnocentric vision will concentrate on the home market and not be very interested in international growth.

Administrative heritage: It describes both the company’s tangible and intangible inheritance, and above all, recognizes that the company has a history which constrains its ability to adapt. With respect to tangible assets the heritage reflects the configuration of assets the company has acquired over the years. The administrative heritage also encompasses the intangible assets, such as the strategies that the company has pursued previously, its core competencies and corporate culture. The effort required to reconfigure key tangible and intangible elements of the business system can be very expensive and, thus, limit the company’s global strategic options. Many traditional multinationals have established free-standing subsidiaries with a high degree of autonomy and limited strategic coordination in all countries/markets, where they chose to compete. Based on such a history, it is for them much harder to develop a global mindset and related strategies compared to companies which operated in the past with a more centralized approach.

Structural solutions: The corporate mindset is also strongly influenced by the type of organizational structure the company has chosen. In a strongly product-oriented structure, management is more likely to think globally as the entire information infrastructure is geared towards collecting and processing product data on a worldwide basis. On the other hand, in an organization with a focus on countries/areas/regions, the mindset of managers tends to be more local. Here the information infrastructure is primarily oriented towards local and regional needs. It follows that in a matrix structure based on product as well as geographic dimensions, the mindset of management is expected to reflect both global and local perspectives.

Industry forces: There are a number of environmental forces pushing for a global approach, such as economies of scale, global sourcing and lower transportation and communication cost. Stronger global competition, the need to enter new and evolving markets and the globalization of important customers pull in the same direction. The trend towards a more homogeneous demand, particularly for products in fast moving consumer goods industries, and more uniform technical standards for many industrial products also favor global strategies. Another set of industry drivers, however, works in the opposite direction and calls for strategies with a high degree of local responsiveness. Here key drivers are strong local competitors in important markets, cultural differences forbidding the transfer of globally standardized concepts, for example in advertising, differing local customer tastes and special requirements of national distribution channels. Finally, dealing with protectionism, trade barriers and volatile exchange rates may force a national business approach. All these forces work together and create the conditions for shaping the global mindset of a company. However, the influence and intensity of individual forces is different from industry to industry and, sometimes even company to company.

Assessing proactive and reactive forces

Mindset management must deal with how to react to and influence the above outlined environmental forces. Corporate managers focusing on global competitive strategies tend to emphasize increased cross-national coordination and a more centralized, uniform strategy. For them, the proactive forces are key in developing strategies. Country managers, on the other side, are frequently favoring greater autonomy for their local units because of their superior understanding of local market and customer needs. Each category of managers will analyze data and facts in a different way and favor different strategic concepts and solutions depending on their individual mindsets. Both approaches can be seen as polar opposites, or a genuine paradox.

Two different situations seem possible:

1. If one perspective consistently wins at the expense of the other, the company may be successful for a certain period of time, but run into trouble at a later time. Its ability to learn and innovate will be seriously impaired as it will tend to search for ‘short-sighted’ solutions within a given framework.
2. What is desirable is maintaining a ‘creative tension’ between both perspectives. It is this tension which forces the organization to break away from current patterns of thinking and look for completely new solutions. This ability to move beyond the existing paradigm and in that sense further develop the mindset is probably one of the most important success factors for many of the established successful global players.

Utilizing creative tension in a constructive manner requires the development of a corporate vision as well as a fair decision-making process. The corporate vision is expected to provide general direction for all managers and employees where the company wishes to be in the future. Equally important, is setting up a generally understood and accepted fair decision process which must allow for sufficient opportunities to analyze and discuss both, global and local perspectives and their merits in view of specific