The Harvard Business School Publishing case study article by the Design Management Institute Illustrates Gillette's acquisition/merger of Braun AG Corporation. However, a much recent initiative is the merger/acquisition of Duracell by Gillette. This merger has helped Gillette achieve numerous economies of scale and a sustainable competitive advantage that supports the core competencies of the Gillette razor/toothbrush category industry with combined qualities and values of Duracell batteries. In the United States we are fortunate to be able to question ourselves as to What If? How Come? and So What? if mergers and acquisitions take place.
A brief to the facts history of Gillette and Duracell will give readers a straightforward perspective as the last blog of IsmailsInsidersInsights for my Marketing 442 Product Management course with Professor Dr. Paul Dwyer.
Gillette has introduced a number of new razor shaving systems during the last 30 years, beginning with the Trac II shaving system in 1971 and followed by a new system in 1977 known as the Gillette Atra. Between 1977 and 1988, new disposable razors with pivoting heads are twin blades were introduced along with an updated version of the original Trac II razor. Then, in 1990, the company introduced the Sensor shaving system and followed its release several years later with the Sensor Excel and the Sensor for Women. In 1998, Gillette brought another new shaving system to the market: the Mach3 razor. In 2001, the Mach3 and the Sensor were the top two shaving systems in the United States. At the beginning of 2001 is when the Gillette company finally diversified its businesses to in include more than razors. The business segments included but not limited to: personal-grooming products, small appliances, oral care products and portable power.
Duracell, on the other hand, and before its acquisition by Gillette, had been the leading producer of alkaline batteries in the United States. Between 1991 and 1996, the company had experienced consistent growth in revenues of about eight per cent per year and had increased total revenues by 46 percent during that time frame. The company also increased operating margins by more than 75 percent. At the time, 20 percent of Duracell's sales were outside of the United States.
The Gillette and Duracell merger came into existence because of two separate distinct divided categories of batteries that probably seemed attractive for Gillette to pursue. Batteries can generally be divided into two separate categories: primary and secondary. It is important to note that these categorizations do not necessarily refer to a battery's use in a device. Instead, they mainly refer to the battery's ability to be recharged. Primary batteries could not easily be recharged so they were made for one-time use; once the battery had discharged its energy, it was discarded. One the other hand, secondary batteries were those that could be recharged multiple times over the course of their life. Primary and secondary batteries each offered their own advantages and disadvantages. Primary batteries tended to hold their charge for longer amounts of time and were less expensive than secondary batteries. However, secondary batteries had a higher energy density and were more usable in extreme temperatures. The difference between these batteries often came down to their applications.
Primary batteries mainly consisted of alkaline and zinc-carbon cells. Companies such as Duracell concentrated on the disposable market because they believed that consumers were more apt to want a convenient, no hassle, portable power source.
Secondary batteries consisted of lead acid, nickel-containing (NiCd and NiMH), and lithium-ion batteries. Lead-acid batteries were most commonly found in automobiles and other transportation uses. Nickel-containing and lithium-ion batteries were used in electronic consumer products that utilized a rechargeable battery. Lithium batteries have increased in popularity for high drain devices such as laptop computers and cellular phones due to their energy density and weight. However, most other rechargeable consumer products used a nickel-containing secondary battery.
By acquiring Duracell, the future seems bright for Gillete (with its previous acquirement of Braun AG and Oral-B). Strategic alliances with the above mentioned brand names has and will continue to develop and nourish a strong foothold for Gillette Corporation with the razor, toothbrush, and batteries consumers markets with a globalized international awareness.
1 comment:
This is an acceptable blog entry but long at 695 words. The point you are trying to make has little to do with all the facts and history you describe. You are saying Gillette wants Duracell for its rechargeable batteries. That is the source of potential synergy between the two companies. That is an interesting point but you need to introduce some argument if you want to comment on this issue. For example, you could argue the pros and cons of mergers.
The grading rubric only rewards writing that has attributes of critical thinking: comparing points of view, challenging readings with logic, linking readings with new ideas, supporting ideas with evidence, logic and illustration with examples, both personal and from your observations of others. It may help if you think of these assignments as arguments where you argue both sides at once.
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