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Unilever
August 2001 marked one of the most high profile incidents of corporate
espionage ever reported. The companies under limelight were Procter &
Gamble and Unilever. According to the magazine Fortune, Procter &Gamble
ran an illegal corporate espionage program against Unilever. According to
sources, the espionage had been taking place since 2000 and continued
through 2001. P&G had appointed paid spies, thought to be former US
government agents, to obtain crucial information on Unilevers marketing
plans for its hair care range. These agents introduced themselves as market
analysts and journalists.
Unilever and P&G have been rivals from around the 19th century when
Unilever first entered the US market competing directly with the market leader
P&G. This rivalry has only intensified in the last decade as both of them
expanded their horizons to the major markets around the world with P&G
dominating the US household and personal care market whereas Unilever
dominating the European household and personal care market. Although in
Asia, both were the market leaders and had equal dominance in both
household and personal healthcare products. Both the companies competed to
dominate over each other in every possible aspect from new product
development and launches to pricing and promotional strategies and entering
new markets.
Espionage started back in the late sixth century when the Byzantine emperor,
Justinian, hired two monks to visit China to smuggle silkworm eggs and
mulberry seeds to break its worldwide monopoly on silk production. And in
just a few years, Byzantine Empire overpowered China in the production of
silk.
P&G informed Unilever about the transgressions in April, and the two
companies have been trying to negotiate a settlement ever since. At our
deadline, a settlement was within reach. According to someone close to the
negotiations, the following points were being hashed out:
(1) P&G would reassign several key personnel in its hair-care business to other
positions in the company.
(2) P&G would be restricted in its market activity in the hair-care business.
Meaning, for instance, it could not launch certain new products until the end
of 2003.
Question1)
Comment critically on the business paradigm that the P&G managers suffered
that led them to the current situation?
Answer 1)
Values and ethics are important in the workplace to help keep order, ensuring
that a company runs smoothly and remains profitable. Each individual
company makes its values and ethics known almost immediately after hiring an
employee, or many times, during the interview process. And in many
businesses, no matter how well an employee performs, if he doesnt follow
workplace values and ethics, it can result in termination.
P&G admitted about the information collection episode, but without the
knowledge of top management Refuted Fortune Magazines claim that P&Gs
agents misrepresented themselves and also claimed that it had not indulged in
any illegal activities & these were against its strict business policies.
Many analysts felt that what P&G did was right as it occurred in the intensely
competitive hair care business in US. However some analysts argued that P&G
had made a mistake by voluntarily disclosing its transgression to UNILEVER.
Competitive intelligence
A technique of applying industry/research expertise to analyze the information
available on competition from public sources & draw conclusions based on this
data. Agent follow a set of legal & ethical guidelines formulated by the society
of competitive intelligence professionals.
Corporate Espionage
Proper training for employees to prevent them from divulging sensitive info.
Law
Q2. Comment on how the top management of a company escape its liability
by saying that the information was acquired without its knowledge? What
could be the reasons for this behavior?
In the case, the top management tried to escape from its liability by saying the
following points:
The benchmark in any case of espionage is to deny the involvement of the top
authority of the company. In this case the top management at P&G tried to
escape by saying unavailability of information of such things.
The top management argued that they hired the competitive intelligence
independent contractor to spy on the company's competitors (especially
Unilever) in the hair care business which is legal.
Dumpster diving as an intelligence gathering technique which is legal& could
be performed by any company so the top management could argue that
Unilever was careless to allow its most confidential papers to be lying in a
dustbin.
First of all no one in the top authority wants to caught in such type of illegal
practices thats why they always deny of this type of information.
The chairman of the P&G may not have been aware of the extent of spying
done by the executives.
Athough the top management should have taken moral responsibility, it took
the moral high ground by appearing to be more transparent.
The top management at P&G was aware of the of the fact that they are
performing legal practice of competitive intelligence technique and not
breaking any laws so they made effective use of it.
The risk involved when obtaining such classified information was high hence it
was withdrawn.
The case of corporate espionage is very serious and illegal. It will badly affect
the companys image and higher management is forced to resigned if they
caught in practicing such illegal things.