Business Strategy Assignment 2 (Project Report of Henkel)

1
BUSINESS STRATEGY (B9MG100)
Module/Subject Title: Business Strategy.
Lecturer Name: Aisling Duhy.
Assignment Title: Assignment 2 – Individual Assignment.
Student(s) Name & Number(s):
Chetan Padme (10393059)
Word count: 3000 +/- 10%

2
TABLE OF CONTENTS
INTRODUCTION............................................................................................................................................. 3
PART 1: CAPABILITIES ANALYSIS................................................................................................................... 4
MISSION AND VISION STATEMENT: HENKEL ..................................................................................................... 4
RESOURCES AND CAPABILITIES: HENKEL........................................................................................................... 4
CAPABILITIES OF HENKEL AS AN ORGANISATION: ............................................................................................. 5
SWOT AND PESTEL ANALYSIS ............................................................................................................................ 8
VRIN ANALYSIS .................................................................................................................................................. 8
GROWTH/SHARE MATRIX ................................................................................................................................. 9
PORTER'S 5 FORCES ANALYSIS ......................................................................................................................... 10
PART 2 : STAKEHOLDER ANALYSIS ................................................................................................................11
STAKEHOLDERS: .............................................................................................................................................. 11
STAKEHOLDER MAPPING ................................................................................................................................ 13
MODE OF ENGAGEMENT WITH STAKEHOLDERS............................................................................................. 14
STAKEHOLDER ENGAGEMENT PROGRAM....................................................................................................... 14
PART 3: CULTURE ANALYSIS .........................................................................................................................15
CULTURE AT HENKEL:................................................................................................................................. 15
DIVERSITY ....................................................................................................... Error! Bookmark not defined.
STRUCTURE AND CONTROL........................................................................................................................ 15
VALUE BASE AND DRIVE FOR SUSTAINABILITY:.......................................................................................... 16
EMPLOYEE WELL-BEING ............................................................................................................................. 16
CULTURAL WEB ANALYSIS....................................................................................ERROR! BOOKMARK NOT DEFINED.
ANALYSIS OF ENVIRONMENT INTERNAL AND EXTERNAL ................................................................................ 17
PART 4: STRATEGY ANALYSIS AND RECOMMENDATION...............................................................................18
HENKEL EXISTING STRATEGY FOR 2020........................................................................................................... 18
RECOMMENDATIONS FOR FUTURE STRATEGY ............................................................................................... 19
BIBLIOGRAPHY.............................................................................................................................................19

3
INTRODUCTION
In 1876, Fritz Henkel established the company Henkel & Cie in Aachen, Germany, which is
now known as Henkel AG & Company, KGaA, a German chemical and consumer goods
company headquartered in Düsseldorf, Germany. Henkel’s initial product was sodium
silicate based laundry detergent. Over the years Henkel has grown as one of the leading
multinational company which has its presence in 125 countries around the world & employs
around 53,000 people. Henkel Operates both in the consumer and industrial sector.
Company has maintained well-balanced and diversified portfolio with its three business
units i.e., Adhesive Technologies, Beauty Care, Laundry & Home Care (Henkel, 2019; Henkel,
2019).
Henkel’s Adhesive technology is driving high-impact solutions worldwide with unique
portfolio and Specializes in providing tailor made solutions for consumers and industrial
customers. Which are major manufacturer, transport and metal businesses, general
industries, electronics industry, aviation industry (Henkel, 2019). Henkel Beauty Care unit
develops & manufacture various high-quality products (hair, body, skin and oral) products
and successfully serving 150 countries worldwide (Henkel, 2019). Laundry & Home Care unit
is where it all started and since then consumer goods business has grown and has become a
globally active unit with well established brands such as Persil, Purex or Pril (Henkel, 2019).
Henkel’s Innovations are based on strong global consumer insights combined with deep
knowledge of consumer need and strong commitment to sustainability. These are the key
success factor of their reach in emerging markets. As per 2018 reports business
accountability in terms of sales of Adhesive technology was 47% and Beauty Care was 20%
and Laundry & Home Care was 32% (Henkel, 2019).

4
PART 1: CAPABILITIES ANALYSIS
MISSION AND VISION STATEMENT: HENKEL
MISSION:
Create sustainable value.
VISION:
Lead with innovations, brands and technologies.
VALUES:
Henkel keeps their customers and consumers at the centre of everything they do.
Henkel values, challenges and rewards their people.
Henkel is dedicated in driving sustainable financial performance.
Henkel is committed to leadership in sustainability.
Henkel has demonstrates a strong entrepreneurial spirit based on family business tradition
(Henkel, 2019).
RESOURCES AND CAPABILITIES: HENKEL
Resources are considered as organization’s capability but because of interdependency most
of the times resources combined together create capability. Resources ad capability
empowers organisation to drive business & generate profit. Moreover helps the
organisation face competition with competitive advantage (Milara, 2014, p. 5).
Tangible
Resources
Financial
• Assets
• Revenue
• Operating Income
Organizational
• Governing body
• Key individuals like Chairman & CEO
• Organisational structure
Physical
• Production Plants
• Machinery
• Warehouses
• raw material
Technological
• process licence
• patents.

5
Intangible
Resources
Technological
• Computer aided Production processes
• Technological knowhow
• product tailored according to customer need
• Research and development
Human
Resources
• Skilled employee
• Experienced labour
• personnel skills like innovativeness,
interdependence and flexibility
Management
• capability to encourage learning, performance and
R&D.
• process management skills
• human resource & management skills
collaboration
• network of suppliers, distributers, retailer, etc.
• Contracts with Raw material suppliers and
customers.
• informal collaboration with interest group.
CAPABILITIES OF HENKEL AS AN ORGANISATION:
TECHNOLOGY
Henkel’s technological capabilities are divided into Adhesive Technologies, Beauty Care,
Laundry & Home Care based on their business units. They have improved production
processes through latest technology to serve the market need. Henkel has invested into
Research and development and has various patents at their disposal. Also they have
demonstrated digital capability by strong presence in e commerce environment. M&A
strategies which they have used are serving as a technology transfer mean. Moreover
Henkel is working towards industry 4.0 complience.
MANUFACTURING
Based on the technology, Henkel now has 185 production sites in 56 countries which are
mainly categorized into 3 business units as explained above. They have updated their
tangible resources like equipment’s, processes, facilities to make the use of intangible
resources like employee expertise, advanced technology, which enables them to low-cost
product design & engineering approach and helps them achieve short term delivery.

6
Figure 1 Sales by Business Unit, (Henkel, 2019, p. 2)
DISTRIBUTION
Because of technological advantage the company is been in a leading position where it has
constructed a strong network of dealers suppliers throughout the world given it has
presence in 125 countries with the use of tangible and intangible resources. For customer
ease, Henkel has provided a platform for direct purchase through internet. Through
networks, contracts and informal collaboration Henkel has demonstrated distribution/
supply chain capabilities.
Figure 2 Sales by Region, (Henkel, 2019, p. 2)
MARKETING
Based on the wide product portfolio Henkel has demonstrated successful marketing
strategies till now for their beauty care products they have held miss Fa contest in Russia,
also their intuitive commercials of laundry and beauty care products are reason behind the
success of Henkel’s brands like Persil, Purex or Pril. Also industrial marketing of adhesive
products through digital medium as well as through traditional means via industry digest
magazines is also successful.
STRONG FINANCIAL

7
Figure 3 Key financial from the year 2014 to 2018, (Henkel, 2019, p. 2)
Henkel possesses a strong financial position in market. Positive performance of five year is
evidence of that positive. Organic sales growth of 2.4% and Earning per share growth of 2.7
% is observed in 2018 when compared with that of 2017 (Henkel, 2019). Because of such
strong performance in the market it is observed the volumes of shares traded on stock
market is comparatively large (Henkel, 2019, p. 19).
with the use of tangible as well intangible resources like strong financial position,
competitive leadership Henkel is implementing investment (M&A) as well divestment
strategies to increase revenue and add an edge to their market reach and technology.
Figure 4 Acquisition and divestment report 2017/ 2018, (Henkel, 2019)
Figure 5 Acquisition and divestment report 2017/ 2018, (Henkel, 2019)
WORKFORCE
A vital capability of Henkel are the workforce which it employs. The workforce is skilled and
divided into various organisational area like marketing, manufacturing , research and
development, and human resources because of the companies shared vision, values,
leadership and employee expertise the company is able to achieve the targeted goal.

8
SWOT AND PESTEL ANALYSIS
Figure 6 SWOT Analysis
Figure 7 PESTLE Analysis
VRIN ANALYSIS
V Strong Financials, organisational culture, leadership & workforce adds the
value to Henkel as well as consumers.
R
Rarity is observed in case of technology and R&D capability because there are
very few companies capable of serving in adhesive technology market which
specifically cater to industries like aerospace, automobile.
I Patented technology are very hard to imitate as compared to the other
capabilities, given that resources influence the capabilities.

9
N
It is hard for competitor to use another resource or capability to replace
Henkel from their advantage in capabilities except people based resource &
capabilities.
GROWTH/SHARE MATRIX
Growth share matrix is developed by Boston consulting group. It is a corporate planning
tool, which is used to analyse organisation’s portfolio on the basis of market share and
industry growth rate. Results of G/S matrix i.e, BCG matrixs can be utilised to form
investment strategy.
Figure 8 BCG Matrix a.k.a. Growth/Share Matrix, (Ovidijus Jurevicius, 2013)

10
PORTER's 5 FORCES ANALYSIS
Figure 9 Porter's 5 forces analysis
Value chain of Henkel.
Henkel Has developed a sustainable approach for its value chain to enhance to processes
and to reduce the carbon footprint.
Figure 10 value chain of Henkel for Sustainability, (Henkel, 2019, p. 13)

11
PART 2 : STAKEHOLDER ANALYSIS
(Johnson, et al., 2017, p. 134) States that shareholders are an entity associated with the firm
it may be individual or a group that depend on organisation to fulfil their own agendas and
also get affected by what organisation is doing. Stakeholders can be external or internal
which impact to success or failure of organisation, depending upon their type they are
further classified into following categories
Figure 11 categorization of stakeholders
STAKEHOLDERS:
CUSTOMERS AND CONSUMERS
Based on the wide product portfolio across three business areas. Henkel has identified the
type of customers and has broken down based on their specific needs. Customers are
concerned about the end product and quality of service which comes along with it. They are
Stakeholders
Economical
Customers
Distributors /
Retailers
Suppliers
Shareholders
/ Investors
Social /
Political
Government
authorities
Politicians
NGOs
Technological
Government
authorities
Community
Local
communities
Academic
Associations
Internal
Employee

12
the important considering the product is developed to serve their requirement by applying
technological capabilities in accordance with international regulations and quality
standards.
INVESTOR AND SHAREHOLDER
Although majority of share are held by Henkel family by share pooling arrangement yet the
amount of shares which is out in the market are traded heavily and counts for a significant
amount and are responsible for achieving strategic business goals and profits. Henkel shares
and treats their investor according to principles and rules listed in the organisation’s bylaws
and keep them aware about information concerning the activities via AGM, press releases,
annual reports, etc.
Investor
EMPLOYEES/ WORKFORCE
Employees are not only a vital resource and capability of any organization but also a vital
stakeholders because they are impacted by organisations performance and their
performance is also a factor affecting companies vision and performance as well.
GOVERNMENT AUTHORITIES
Government agencies are considered a stakeholder because of multinational status of
company the laws of different countries may not be same for a outside company. Secondly
Being a chemical and consumer goods company it directly impact environment as well as
humans which comes in contact hence laws are very stringent for these companies. Also
various approval licences and permits are awarded by government agencies hence their
decision impacts the performance of the company.
DISTRIBUTERS & RETAILERS
From 185 production plants in 56 countries to serve a population of 125 countries is of
utmost important to have a well-established supply chain plan and trust worthy distributor
and retailers because their performance is of utmost importance to cater market.
SUPPLIERS
Given the production scale of Henkel and the target audience the production facilities are
present in 56 countries yet the raw material is sourced from 135 countries to make that
happen and keep the consistent flow going supplier is very important.
LOCAL COMMUNITIES
Local communities are of different types examples cities associated near the production
plants or warehouses, small neighbourhood or the communities which are affected by the
organisation are very important to them considering the organisations brand image is at
stake if any mishap happen.
NONGOVERNMENTAL ORGANIZATIONS (NGOs)
Non-government organisations have their agendas which sometimes results into conflicts t
and because of that a constant spur of negative publicity happens hence organisations
performance gets affected.

13
POLITICIANS
Apart from government agencies, politician are also considered stakeholder because though
they are not in the position of the power yet they have the power to influence the law and
for a chemical and consumer goods company it is very easy to fall in the traps of the political
fued.
ACADEMIC ASSOCIATIONS
academic associations like Chemical Industry association has a panel of scientists and
industry professional who encourages practices and set out annual interventions like reduce
carbon footprint, zero discharge, etc to engage industry professionals and influence the
current practices. This affect organisation hence it is considered as one f the important
stakeholder.
STAKEHOLDER MAPPING
Stakeholder mapping is nothing but identification of stakeholder power/influence and
interest to understand political priorities (Johnson, et al., 2017, p. 136). This helps us
arranging the stakeholders in to following groups based on priorities and to develop
shareholder mapping: power influence matrix.
1. Key players
2. Observers (are those who needs to be keep informed)
3. By standers(are those who needs to be keep satisfied)
4. Crowd (are those who needs to be minimal efforts)
Figure 12 Mandelow's Matrix, (Johnson, et al., 2017, p. 136).
Henkel has identified there stake holders and for the purpose of this report are categorised
as follows.

14
MODE OF ENGAGEMENT WITH STAKEHOLDERS
mode of engagement based on the key identified stakeholder is as follows.
STAKEHOLDER ENGAGEMENT PROGRAM
Apart from usual mode of engagement, special engagement initiatives which the company
conduct for its stakeholder are called as stakeholder engagement program the purpose of
this to target large audience at a type few of Henkel stakeholder engagement program are
as follows.
1. Henkel Conducts integrated stakeholder dialogue with their stakeholders via
communication instruments and channel. It is conducted for internal stakeholder to
reflect the organisational changes, goal and concerns. Which ensures local as well as
regional challenges are communicate via experts. Sometimes solution as well as
foundation of strategies are developed there itself.
2. Since 2005, International expert dialogue are being conducted to collaborate and
showcase capability in competitive environment. Expert dialogue are conducted by
by professional with concerned knowledge area to enhance and influence
stakeholders to align for sustainable development and social responsibility.
3. Dialogue with policy makers is a way of engaging with external stakeholders, where
public policy debates are conducted to meet societal challenges and to restate the
interest in legitimate practices among employees, business partners, consumers and
shareholders are represented at all levels. Example of which is “Representation of
Interests in Public Affairs” which provides guidance on conduct (Henkel, 2019)
4. Apart from dialogue Henkel conduct volunteer program to supports environmental
initiative for example. Completion 20 years of volunteerism, Henkel employee
donate hair for breast cancer initiative this serves as a Corporate social responsibility
strategy and sustainability strategy (Henkel, 2019).

15
PART 3: CULTURE ANALYSIS
Culture is a vital part of an organisation the belief and assumption shared by members
operating consciously and unconsciously in an organization. It signifies how things works in
a particular organisation. (Johnson, et al., 2017, p. 171) defines organisational culture as
member’s taken for granted behaviour and assumption within organisational environment.
CULTURE AT HENKEL
After the crises of 2009, Henkel has taken significant involvements in changing the
organisational structure in 2010 they clearly defined corporate culture in response to rising
international diversity with the organization. A clear orientation, identification and guidance
is provided to employee working in worldwide in terms of a clear vision and shared values.
The vision of the organisation to create sustainable value while being a global leader helps
the members of the organisation to maximize their performance while utilising the potential
to the fullest to achieve the goals.
DIVERSITY
Henkel has presence in 125 countries and employing around 53,000 employees worldwide
which comes from different background and values. Henkel has kept moving forward with
this diversity to enhance performance by inculcating share vision and values. Henkel is
working towards gender equality to promote women empowerment and keep the balance
within organisation. Most importantly Henkel is devoted to source competent talent world-
wide to enhance leadership and performance within the organisation.
Figure 13 Diversity and inclusion: facts, (Henkel, 2019)
STRUCTURE AND CONTROL
Henkel has a top down power structure which means the most of the strategic decisions are
taken by Headquarters of Germany. Some strategic and operational decisions are handled
by regional country headquarters. The Organisation structure is handled by competent
leadership, whereas employee recognition and rewards is an essential part of structure and
control. Evaluation of their performance of each employees is done on monthly and annual
basis by their superior this assessment helps management to make changes regarding the
problems to enhance performance.

16
VALUE BASE AND DRIVE FOR SUSTAINABILITY
Henkel has created a value based environment which is a part of their culture which
focusses on customers, people, financial performance, sustainability, and family. Being a
global leader, Henkel is committed to sustainability and not only encouraging their
employees but also the environment associated with to change the practices which are
harmful to environment. Employees at Henkel are inculcated organisational value because
of that they acts as a sustainability promoter to influence the external environment Henkel
has created various dialogue to engage the environment to enhance practice and how to
move forward. To promote this value Henkel is training 120 employees in Singapore who
will be sustainability ambassador of organisation.
EMPLOYEE WELL-BEING
Henkel employee are given a medical and dental cover and they can extend that to their
family by doing this Henkel is opting for a good heath and wellbeing of employees which will
results their performance. Apart from personal heath Henkel is continuously working
towards enhancing operational practices which will enhance employee performance. In
addition to this a necessary move which Henkel has taken is Industry 4.0 upgradation which
will only improving their manufacturing practices but also improving safety of employees
(Henkel, 2019).
CULTURAL WEB ANALYSIS
Cultural web is a tool for analysing the culture of an organisation it not helps understanding
organisational culture by identifying the symbolic, behavioural and physical manifestation of
a culture (Johnson, et al., 2017, p. 175). Based on the data available the culture at Henkel is
represented in a cultural web model shown below.

17
Figure 14 Cultural Web Matrix
ANALYSIS OF ENVIRONMENT INTERNAL AND EXTERNAL
Internal and External environment of an organisation is an essential factor of organisation
performance and growth. In a case of Henkel since they have significant investment in their
capabilities and recourses which has resulted in their success to summarize competent
talent at disposable has smoothened their performance, continued research and
development has resulted in various patent at disposable. Industry 4.0 upgradation will
bring their facilities to flexibility as well as increased efficiency. Training and value based
environment helps keep internal environment progressing.
Whereas external environment in case of Henkel is comparatively good considering the
work they are doing towards sustainability, corporate social inititivie, also the competitive
edge over the competitor has been an advantage in the sector of adhesive technologies. The
PARADIGM
quality products
majority of stake is
owned by henkel
family
beurocratic culture
STORIES
various aquisitions
throughout the world in
the same business area
to expand reach and
technology edge. SYMBOL
Henkel AG & Company,
KGaA known as Henkel
known for business units
i.e., Adhesive Technologies,
Beauty Care, Laundry &
Home Care. and brands like
Loctite, Fa, Persil, Purex,
Pril,etc.
POWER STRUCTURE
headquartered in
Düsseldorf, Germany makes
strategic decisions.
whereas regional offices
look after operational part.
ORGANISATIONAL
STRUCTURE
Heirarchial and
centralised.
CONTROL SYSTEM
Top down system
Reward emplyees.
ROUTINES AND RETUALS
quality products at
reasonable price.
continuous innovation to
make processes
sustainable

18
view of organisation in external environment is good considering all the work as well as
legitimacy in what they do.
PART 4: STRATEGY ANALYSIS AND RECOMMENDATION
HENKEL EXISTING STRATEGY FOR 2020
Henkel has internally identified and based on their vision, mission and values Henkel has
developed strategy for year 2020. They have categorised int 4 priorities as shown in the
diagrams.
Figure 15 2020 Strategy of Henkel
1. FUND GROWTH
Though they are financially strong to keep up in this competitive market they
are planning to implement various initiative like Resource allocation with the
use of net revenue management, increasing structural efficiency and
continuing to expand the global supply chain organization in Asia which they
have already set up in Europe.
2. DRIVE GROWTH
To drive the growth upwards the initiative they have planned are superior
engagement of customer and consumer by intensified partnership and
focusing on target group with specific need, increasing sale of top performing
brands, developing consultancy and technical services to their customers and
by targeting acquisition to compliment product portfolio
3. ACCELERATE DIGITALISATION
Accelerating the digitalisation through digitising the integration with
concerned parties like supplier, dealer, distributer, customers, etc.

19
upgradation of existing digital mediums to compliment integrated supply
chain organisation. Leveraging the industry 4.0 compliance.
4. INCREASED AGILITY
Increase agility by incorporating agile business and project management
methodology to enhance performance. Improving their innovations to
market time. In addition to that entrepreneurial spirit enlarging employee
decision making power.
RECOMMENDATIONS FOR FUTURE STRATEGY
Most of the factor considered in their strategy are justified because this report has
identified nearly the same things yet there are few recommendation and they are as follow,
1. Focused Cost Leadership and Focused Differentiation in Beauty care business unit
Beauty care business unit has a limited product portfolio & currently
generate 20% revenue. Product portfolios needs to be expanded as well as
marketing strategies are to be drawn for targeted market.
2. Focused Cost Leadership and Focused Differentiation in adhesive technologies
business unit
Adhesive manufacturing facilities are going under industry 4.0 upgradation,
they are to be made flexible as well as batch manufacturing type so that
customer specific product demands can be drawn easily making use it also it
will help debottlenecking.
3. Differentiation in research and development
The research and development at Henkel is observed to be laboratory driven
and it should be not specific to that. Considering increased consumer specific
demands hence a significant research should be driven by customer specific
need to develop better products which also gives a possibility of arriving at
entirely new product.
4. Blue ocean strategy:
Given expertise of organization in business environment and strong financial,
via acquisition or investment they should get into a new market where they
can use their resources and capabilities to increase revenue via developing
product with shared capability.
BIBLIOGRAPHY
Henkel, 2019. Henkel. [Online]
Available at: https://www.henkel.com/brands-and-businesses/adhesive-technologies
[Accessed 04 May 2019].
Available at: https://www.henkel.com/brands-and-businesses/laundry-and-home-care
[Accessed 04 August 2019].
Available at: https://www.henkel.com/press-and-media/facts-and-figures/company-profile
Available at:

20
https://www.henkel.com/resource/blob/912084/aff0ca8197f3f0c8a277998b70739171/dat
a/2018-annual-report.pdf
Available at:
https://www.henkel.com/resource/blob/912464/83e1dfa77abeffae32f25f3ec5fbd2eb/2018
-sustainability-report-data.pdf
Available at: https://www.henkel.com/investors-and-analysts/strategy-and-
facts/acquisitions-divestments
Available at: https://www.henkel-northamerica.com/sustainability/collaboration-and-
contacts/stakeholder-dialogue#Tab-21672_1
Available at: https://www.henkel-northamerica.com/spotlight/features/social-engagement
Available at: https://www.henkel.com/company/diversity-and-inclusion
Available at: https://www.henkel.com/careers/why-henkel/what-we-offer#Tab-34490_5
Henkel, 2019. Hnekel. [Online]
Available at: https://www.henkel.com/brands-and-businesses/beauty-care
Johnson, G. et al., 2017. Exploring strategy texts and cases. Eleveth edition ed. London:
Pearson.
Milara, I. M., 2014. semanticscholar.org. [Online]
Available at:
https://pdfs.semanticscholar.org/5c41/c636f1c4e1490dc6150f906f616922200f6e.pdf
Ovidijus Jurevicius, 2013. strategicmanagementinsight. [Online]
Available at: https://www.strategicmanagementinsight.com/tools/bcg-matrix-growth-
share.html

Business Strategy Assignment 2 (Project Report of Henkel)

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Business Strategy Assignment 2 (Project Report of Henkel)

Similar to Business Strategy Assignment 2 (Project Report of Henkel) (20)

More from Chetan Pandharinath Padme

More from Chetan Pandharinath Padme (13)

Recently uploaded

Recently uploaded (20)

Business Strategy Assignment 2 (Project Report of Henkel)