Henkel acquired Sun Products, a leading North American home care brand, to strengthen its existing laundry and home care portfolio. The acquisition complements Henkel's and Sun's similar product lines. However, Henkel must mitigate brand cannibalization and create a long-term brand vision to ensure the merger's success. It should appoint a change leader empowered to make decisions regarding the combined brand portfolio and inspire change while gaining input from brand managers.

1. Michael Kek
MGMT 5223 – ManagingInnovation&Change
Change inthe News
Henkel’s Purchase of Sun Products
The purchase of SunProductsis perhapsHenkel’sbiggestnews-makingactivityin2016. Henkel
isa large consumergoodsgiant“organizedintothree globallyoperatingbusinessunits”(“Brandsand
Businesses”,2016), one of whichisLaundry & Home Care. SunProductsis a “leadingNorthAmerican
providerof laundrydetergent,fabricsofteners,dishcare,andotherhouseholdproducts.”Therefore,
the Henkel EVP’stake that“thisacquisitioncomplementsandstrengthensourexistinglaundryand
home care portfoliowithwell-knownandsuccessful brandsinNorthAmerica”(“Henkel closes
acquisitionof the SunProductsCorporation”,2016) is well-groundedand accurate. Giventhe likeness
and complementarynature of Henkel’sandSun’s home care businessunits,itmakessense tocentralize
managementof the businessesunderone unifiedleadership. Inordertoensure the successful merger
of Henkel andSun,Henkel musttake sufficientstepstomitigate brandcannibalizationamongitsand
Sun’sbrands.To facilitate overallsuccessinthe process, the Henkelmanagementshould create an
overarchinglong-termbrandportfolio visionforthe merger.Then,the Henkel managementteam
shouldinspire andempowerachange leaderinthe organizationtomake decisions withthe brand
managementteamsinordertoeffecta systemthatdeliversonthe long-termcompanyvision.
Henkel “see[s]excellentopportunitiesfor[their] combinedbusinessestoserve [their]
customersandconsumersevenbetter”(“Henkel closesacquisitionof the SunProductsCorporation”,
2016). The acquisitionof “SunProductsgivesHenkel scale totake onProcter& Gamble Co.inthe highly
competitiveandshrinkingU.S.detergentsmarket,”givingHenkel the positionas“the No.2 supplierin
NorthAmericaforlaundry-care productsat a critical time”as consumers’laundrycare habitsevolve.
Sun’sportfolio“willhelpHenkel expandinthe heavy-dutydetergentsegmentandthe more mid-tierAll

2. brand” while also“gain[ing] entryintothe private-label laundrycare market”(Noel,2016). Therefore,
the two portfoliosfitwell togetherintheory.
As a consultanttothe company,I wouldadvise Henkelto inspire avisionthatensuresthe two
companies’home care brandportfolios complementeachotherwell inpractice.Alltoooften,“the
more brands a firmhas ina specificproductcategorythe higherthe riskof brand cannibalizationdue to
overlappingtargetsegmentsand/ormarketpositions”(Raggio,2011).To solve thistechnical challenge,
the Henkel managementteammustfinalizealong-termbrandportfoliostrategy. While “getting[brand]
strategyrightis onlypartof the battle”(Carlotti,2004), itis alsoextremelyimportantforthe Henkel
managementteamtocreate a “bonding”atmosphere withinitscorporate culture,where“leaderand
follower”have a“sharedset of valuesandcommitment‘thatbondthemtogetherinacommon cause’
inorder to meeta commongoal.” Theyshoulddothisby communicatingthe “rightvision”toinspire a
sharedsense of accountabilityinthe change effortto“bridge the presenttothe future”(Mendez-
Morse,1993).
Once the sharedvisionisestablished,Henkelmustappointachange leader,“adynamic
portfoliomanagerwhocanensure thatthe whole portfoliomovesnimbly.”Inordertomove nimbly,I’d
suggestthisindividual be empoweredasachange agent bythe managementteamwithoversightof the
overall Henkel homecare brandportfolioandthe abilitytoeffectswiftcourse-correctionstocounteract
failures.Because “takingactionwithone [brand] oftenmeansdoingsowithanother,”the portfolio
manager’srole dependson“the abilitytodetermine,onanongoingbasis,how well individualbrands
are fulfillingtheirpartinthe portfoliostrategyandwhetherthe strategyitself stillmakessense”
(Carlotti,2004). Thispersonmustrate highlyinEQ andpossessthe “interpersonalcourage”to“make
people redundant”or“say whatneedstobe said.”If the change leaderlacksthe interpersonal courage
to tell itlike itis,he/she mayhave the abilitytoanalyze dataandunderstandif abrand is
underperforming,butif he/shelacksthe abilitytoconfrontthe brandandchange the direction/course

3. of the company,the whole processwillbreakdown.“Appraisalsystemsfail becausemanagerscannot
tell people theirperformance isaverage,”sothisisexactlywhythe change leadermustavoidthe
avoidantkindof behaviorandconfrontpoorperformance “directly,quickly,andfairly”(Furnham,2002).
Thus far,the recommendationsforthe change effortshave dealtwiththe leadershipside of
thingswithoutconsideringthe individual brandmanagers,butchange implementedneglectingthe
individualbrandmanagersissure toinspire cynicismfromthiscamp. One wayto ensure thatthe brand
managersstay engagedandinvestedinthe change processisto involve themduringdiscussionswhich
shape the company’slong-termbrandportfoliovision.“More substantive formsof participationin
decisionmakingtendtobe associatedwithhighercommitment,”whichdemonstratesthat“more
involvementisassociatedwithlesscynicism.”Theyshouldbe able togive inputtothe Henkel
managementteamandportfolio managerontheirvisionfortheir individualbrands’ positioning.
Anotherwayto mitigate cynicismistoensure thatthe portfoliomanager“foster[s] two-way
communicationandgoodworkingrelationships”and“show[s] considerationandrespectforworkers.”
Making sure that the portfoliomanagerandbrandmanagershave goodworkingrelationshipsiskey
since the portfoliomanagerwillbe akeydailyliaisonbetweenHenkel uppermanagementandthe
brand managers.Finally,asstatedbefore,itiscritical to “keeppeople informedaboutthe necessityfor
change”as well asabout the qualityof theirbrands’performance throughoutthe evolutionof the
company’slong-termbrandportfoliovision to“keepsurprisestoa minimum” (Reichers,1997).
In conclusion,Henkel isdefinitelytakingthe rightapproachtocentralizationof managementof
itsand Sun’shome care brandportfolios.However,itsmanagementmustbe careful tocreate a clear
change visionandlong-termbrandstrategy,toappointabrand portfoliomanagerempoweredtobe a
change agentwithoversightoverthe overall home care brandportfolio,andtoensure brandmanagers’
inputsare takenintoconsiderationthroughoutthe process.

4. Sources:
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10.1080/714042525
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Méndez-Morse,S.(1993). Vision,LeadershipandChange. SouthwestEducational Development
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Noel,A.“Henkel toAcquire Sunfor$3.6 BillioninBiggestU.S.Deal”.(June 24,2016). In Bloomberg.
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