The Hindu Business Line : What the restructuring means

THE restructuring of arguably the most admired international corporation in the country is of great interest to many. Several no doubt will link some of the changes in people to the recent corporate results, seen in the stickiness in the topline growth front, on the shelves of your corner grocery store just as much as the stock market prices.

The company itself talks of the changes as a thrust towards greater profitable growth. What is more interesting is the likely rationale for the structural change, into two major divisions, which mirror the top-level structure of the parent, Anglo-Dutch multinational, Unilever.

This business traditionally accommodated two major cultures and histories the Dutch and the British, right at the top, with the leadership being shared in a number of ways over the years between the two chairmen.

The complexity of controlling multi-business, multi-country organisations is a vast area for research. Differentiation and control have usually had three dimensions: geography, nature of products or consumers, and functions. It was only recently that the global business was recast into easily manageable chunks, home and personal care products as well as foods, in an attempt to bring some cohesion and direction to the growth and acquisition plans, which hitherto had been rather lacklustre.

The Business Presidents concept in Unilever combines the geography and the business group as in, say, HPC Asia. According to the official Unilever Web site, it is the business presidents who are responsible for delivering business results and report to either the director of the foods or the home and personal care divisions. They play an important role in shaping divisional strategy.

Unstated in all this is one more example of the worldwide decline of the national CEO as the Viceroy representing the Emperor, with more and more companies either being de-listed and taken private or made subsidiary in strategic intent if not legal content; what you have instead is in some respects what obtained 60 years ago, different managing directors with their own overseas bosses — only this time round the legal entity is one, and of far more vast proportions.

But we ain't seen nothing yet. I do think many more companies will do more of this sort of restructuring all over the world.

(The writer is Director, IFMR, Chennai)

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