1.

Introduction

Gillette is a brand of men's safety razors and other personal care products including shaving
supplies, owned by the multi-national corporation Procter & Gamble (P&G).

Based in Boston, Massachusetts, United States, it was originally owned by The Gillette Company,
a supplier of products under various brands until that company merged into P&G in 2005. The
Gillette Company was founded by King C. Gillette in 1901 as a safety razor manufacturer

Under the leadership of Colman M. Mockler Jr. as CEO from 1975–91, the company was the target
of three takeover attempts, from Ronald Perelman and Coniston Partners. On October 1, 2005,
Procter & Gamble finalized its merger with the Gillette Company.

Gillette started out as a company of USA but within a short period of time it spread out its branches
all over the world and expanded itself. It took its business to an international level. To conduct this
feat successfully, a proper understanding of the international atmosphere of business is needed.
Gillette ran various activities all around the world. Though it initially started out as a shaving
appliance selling company, later Gillette expanded its expertise on to other products as well, the
sole objective of which was to improve the recognition of the organization worldwide. But, such
expansion requires co-ordination of all the activities and aligning them in a way so as to earn
maximum profit and establish worldwide recognition. All of this was possible due to proper
handling of the international business, doing the right thing at the right time and serving the
different nationalities around the world earning global recognition. Only proper understanding of
the global business and undertaking of the situation enabled this outcome.

Objectives:

The Gillette Company is the world leader in the men's grooming product category as well as in
certain women's grooming products. Gillette maintains 64 manufacturing facilities in 27 countries,
and its products are sold in more than 200 countries and territories, with more than 60 percent of
sales occurring outside the United States.

The objectives of this study are –

 To know about international operations performed by Gillette

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  To analyze the secret of Gillette’s running business in different cultures and different
societies
 To know how Gillette instigates coherence between its global affairs to run business
smoothly.

Scope of the Study

This study focuses on the “International business” segment of Gillette. The analysis run in this
study fixates on the international operations run by Gillette and discusses on the activities those
help it run their international operations successfully.

Gillette and International Business

Globalization of Gillette

Globalization is an industry term that refers to preparing a product or service to be offered in many
markets or worldwide, taking into account the different aspects of doing business in multiple
countries, including, but not limited to: language, time zone, measurement standards, cultural
differences, etc.

Founded in Boston in 1901 by King C. Gillette, the Gillette Company was already selling in eight
countries by the start of World War I 13 years later. There are Today Gillette maintains 64
manufacturing facilities in 27 countries. More than 70 percent of Gillette's $6 billion in sales and
75 percent of its 31,000 employees are outside the United States. The company's impressive
financial performance is a result of its global growth strategy; profits grew 13 percent a year from
1989 to 1994.

Global structure follows global strategies. Gillette restructured to strengthen its global focus after
the successful conclusion to a takeover battle in 1987-88, adopting a “transnational" organization
for its core products similar to that of other global giants. North American and European shaving
and personal care activities were grouped into one seamless trans-Atlantic body. The North
Atlantic group integrates all functions in North America and Europe, putting most of the developed
countries under one head. Gillette International focuses on the developing countries

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Global structure follows global strategies. Gillette restructured to strengthen its global focus after
the successful conclusion to a takeover battle in 1987-88, adopting a “transnational" organization
for its core products similar to that of other global giants. North American and European shaving
and personal care activities were grouped into one seamless trans-Atlantic body. The North
Atlantic group integrates all functions in North America and Europe, putting most of the developed
countries under one head. Gillette International focuses on the developing countries

Gillette managers acknowledge country differences but still prefer to treat the world as one.
"Language and social things are different," an executive said. "We try to get people to speak the
local language. But we also require operating committees in small countries to speak English."

Diversification of products to meet customer needs

The process of expanding business opportunities through additional market potential of an existing
product is called product diversification or diversification of products. Diversification of a product
could be achieved by entering into a new market or by adopting additional pricing strategies. Often
the product might be altered, improved or changed to satiate the needs of the customers.

Gillette generally specialized in shaving products. But later Gillette entered into different markets
to earn more profit. The diversified markets that Gillette entered in were:

 Batteries
 Stationaries
 Toiletries
 Dental care
 Personal care

There are various reasons that Gillette considered for diversifying its reach. These reasons proved
to be beneficial towards the international business of Gillette-

1. Cater to the new market: Despite being strong, Europe and North America were mature,
slow growing markets in Asia Pacific, Eastern Europe and Latin America entered
recessions. There were currency fluctuations in Eastern Europe without meaningful
inflation during these periods. In 1999, the battery industry sales surged potentially, due to

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 consumer’s fear of potential Y2K power outage. So Gillette saw this as an opportunity to
enter into a new market and bought Duracell to enter into the battery industry.
2. To make Gillette popular in the International market: The more diversified its product
range, the more people will encounter the products of Gillette. It wouldn’t be confined to
the product which sells shaving products only. This will increase the international
popularity of Gillette. This will help run international business in the long run.
3. Spread the risk: The risk of running an international business is huge. The business might
not comply well with the political, social or economic factors of the country in which they
are run in. These adverse effects could prove fatal if the company focuses on a lone factor
or product. So, product diversification paves the way to sustaining the business in the long
run in case a specific product line fails in an area. Thus Gillette diversified its product range
to reduce its risk factors.
4. To achieve economies of scale: By Economies of scale is the cost advantage that arises
with increased output of a product. Economies of scale arise because of the inverse
relationship between the quantity produced and per-unit fixed costs; i.e. the greater the
quantity of a good produced, the lower the per-unit fixed cost because these costs are
spread out over a larger number of goods. By adopting new product ranges, of the same
type, Gillette in a way reduces its fixed costs producing the products. Apart from that this
also enables Gillette to grasp on to a new market. This enlarges Gillett’s market and enables
it to produce more product at a time and achieve economies of scale.
5. Avail competitive edge: Diversifying its product range gives Gillette another way to
approach its customers. This helps them satisfy the needs of the customers in various ways.
By adhering to this decision, Gillette avails competitive edge over the competitors.

Strategic positioning and value addition

Gillette is dedicated to driving innovative technology that will develop and produce hair removal
products that deliver a superior shave performance, both in closeness and comfort. Its male
image is masculine, confident and well groomed, while the female image is fun, youthful and
energetic. Gillette is positioned at the premium end of the market, offering superior quality
products that set the grooming industry standard.

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In essence, the Gillette Company celebrates world class products, world class brands and world
class people. It is committed to growth through innovation to maintain the company's position as
a world leader in the consumer products marketplace.

Global recognition gained from advertising through sports

Gillette has a rich sports heritage that provides natural synergies with our reputation as a
performance brand. Sports marketing plays an important role for the Gillette brand, helping us to
tap into a key passion for men and strengthening our connection with consumers.

Through the years, Gillette has had partnerships with many sportsmen, including world-class
athletes. Gillette’s enduring association with sports goes as far back as the early 1900s. Gillette
had the vision to see the value in connecting the brand with top-tier sports and athletes. In 1910,
Gillette produced a print ad with images of baseball greats such as Pittsburgh Pirates’ infielder,
Honus Wagner, in ads for the original Gillette Safety Razor.

Joseph Spang Jr, who became president of Gillette in 1938, used all-out sports promotion,
beginning with the 1939 baseball World Series. From baseball, Gillette quickly moved on to
football, and snapped up the Orange Bowl and Sugar Bowl, and later the Cotton Bowl, and the
biggest collegiate spectacle of all, the Rose Bowl. However, boxing probably gave Gillette the
most payback for its advertising dollar because it delivered to an overwhelmingly male audience
suited to Gillette’s overwhelmingly male product line.

It led in 1942 to the Gillette Cavalcade of Sports, Gillette’s signature title for all its exclusively
sponsored sports events. Cavalcade of Sports presented nearly all the big national sports events
and was America’s premier vehicle for radio and television sports broadcasting for about 25 years.

The 1952 World Series would bring another memorable first – the introduction of what was one
of the most effective television jingles of all time, “To Look Sharp, every time you shave/To feel
sharp, and be on the ball/To be sharp…”

For that same World Series telecast, Gillette introduced another ditty that was in the same league
as “Look Sharp” for its longevity and latter-day nostalgic recall. This was the: “How’re Ya Fixed

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for Blades” of startled men in their undershirts caught in mid-shave, their faces lathered up and
razors poised.

Sharpie the parrot became one of America’s most recognized cartoon characters of the 1950s, and
for a while, was almost as well-known as Donald Duck and Mickey Mouse.

Over the years, Gillette has continued its efforts to increase involvement with top-level sports
beyond signature events by partnering with strong properties such as Major League Baseball,
NCAA Basketball, NCAA Football, NASCAR, PGA Tour, Champions Tour, LPGA Tour and the
National Hockey League.

Beginning in the 1970s, Gillette sponsored international events such as the FIFA World Cup,
rugby, the Gillette Cup in Cricket and Formula One racing.

In 2004, Gillette began a partnership with football star, David Beckham, which represented a major
enhancement to Gillette’s sports marketing. Beckham was soon featured in the company’s
worldwide consumer advertising and promotional campaigns and the platform clearly transcended
sports.

Three years later in February 2007, Gillette launched the Gillette Champions program that
highlighted the athletic and personal accomplishments of three of the world’s greatest athletes –
Roger Federer, Thierry Henry, Tiger Woods – as they personified the essence of Gillette’s brand
and were known for their top performance, truly representing the best in their respective sports.
The Gillette Champions program was the largest sports-marketing initiative for the brand and was
rolled out to more than 150 markets through various marking initiatives.

Today, Gillette remains a strong supporter of the world of sports

Tackling with cultural differences

Differences in the culture could affect the business in various ways. For a business to succeed, it
needs cross cultural literacy. It means understanding of how the critical differences across and
within the nations can affect the business. A culture is generally a system of values and norms that
are shared among a group of people and that when taken group believes to be good, right and
desirable. The culture of a country impacts on the economic business a lot.

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Although Gillette entered the Indian market in 1984 and launched its newest triple-blade system,
Mach3 in 2004, sales were flat for a long time. The product did not go through any changes and
kept its key features - such as long lasting diamond-like coating blades, 'Power Glide' smoothness,
ergonomic handles, pivoting precision heads - and premium price, which was 10 times more than
its two-blade competitors.
Even though the target customers were professional men with higher disposable incomes than the
average Indian, the traditional, double-edged razor, could not be dislodged. Indian men do not
consider shaving a significant enough activity to justify such a premium. Gillette's Mach3 value
proposition was based on extensive consumer research, which highlighted key concerns men had
about shaving: it was time-consuming, caused skin irritation and was generally unpleasant. Mach3
promised "the closest shave ever in fewer strokes - with less irritation". Research and development
served as the key value network component supporting this value proposition, as it was crucial to
deliver the promised performance. Manufacturing, distribution, marketing and advertising were
geared for the global introduction through increased production capacity and aligned promotional
material.
With such indifference towards shaving, Gillette had to focus on changing the consumer's attitude,
leading to some creative marketing campaigns. For example, the launch of the newest Gillette
Mach3 in 2009 was supported by the 'Shave India Movement 2009' campaign which included
several initiatives. Gillette created the platform 'India Votes... to shave or not' to support this
campaign, which asked three controversial questions: Are clean-shaven men more successful? Did
the nation prefer clean-shaven celebrities? And the big one: do women prefer clean-shaven men?
For two months, various media channels picked up on the campaign and ran interviews,
discussions, editorials and news stories, which triggered popular interest. The main purpose was
to create a debate around shaving.
The company created the Women against Lazy Stubble (WALS) association, where women were
encouraged to ask their men to shave, capitalizing on their role as influencers of men in this aspect.
Gillette recruited Bollywood celebrities such as Arjun Rampal and Neha Dhupia to support the
campaign. This innovative way of marketing proved to be effective and as awareness grew, sales
and market share increased by 38 per cent and 35 per cent respectively.

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Tackling social norms

During their reign in the international businesses, Gillette functioned in nations with social norms and
beliefs. This compelled Gillette to tweak their marketing scenes and product attributes. The people of a
specific culture may or may not be interested to products which are appealing to other societies. Their way
of thinking might not coincide. Gillette responded to this possibility and portrayed their product in different
ways to different international markets. This brought about a positive change in their sales and market
condition.

When Gillette started out in 1901, it was an organization selling shaving products and operated in USA. In
United States, the people generally showed an individual entity. They made their decisions their self. The
people of New York thrived towards making themselves look better and sharper. Gillette appealed to their
desire and brought out their product as safety razors. These razors later got upgraded to improved and
refined razors like Gillette Mach 3. Thus Gillette grabbed 90% of the market of USA.

But when Gillette went to market in India, they experienced a different kind of trait in the people. Gillette
was not able to influence the habit of shaving into the people of that nation. It needed to instigate shaving
in their day to day activities. So, Gillette took on a different approach. It started to convey their message
through celebrities. This influenced large number of people at once and since collectivism has been seen in
the people of India, they were influenced not as individuals but as larger groups of people.

That is how Gillette ran successful international business in two separate places with people of different
traits.

Choice of Strategy:

Differences in strength of pressures for cost reductions versus those for local responsiveness
affect a firm’s choice of strategy. There are specific strategies to firms when they operate
internationally. The strategies are basically 4 types:

1. Global standardization strategy

2. Localization strategy
3. Transnational strategy
4. International strategy

1. Global standardization strategy- Firms peruse global standardization strategy focus on

increasing profitability and profit growth by reaping the cost reductions that come from

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 economies of scale, learning effects and location economies, that is their strategy to pursue
a global scale. The production, marketing and R&D activities of the firms perusing a global
standardization strategy is concentrated on a few favorable locations.
2. Localization strategy- a localization strategy focuses on increasing the profitability by
customizing the firm’s goods or services so that they provide a good match to tastes and
preferences in different national markets.
3. Transnational strategy-A company following the transnational strategy are trying to
simultaneously achieve low costs through location economies, economies of scale and
learning effects, differentiating their products into different geographical markets to satisfy
the needs.
4. International strategy-The firms adopting the international strategy takes the product first
produced in the domestic market and later takes them internationally, making only
minimum alterations in the products. The distinguishing features of these kinds of product
is that they are satisfying some global needs around the world and requires very little
customization.

From the analysis of the activities Gillette does as part of its international business, it appears that
Gillette adopts the transnational strategy of the International business strategy. Gillette
simultaneously tries to achieve low cost through location economies, economies of scale and
learning effects. Apart from that they also try to differentiate their product across the geographic
markets to account for local differences; and foster a multidirectional flow of skills between
different subsidiaries the firm’s global network of operations. Here are some complications
between these different targets.

Differentiating the product to respond to the local demands in different geographic markets raises
cost which runs counter to the goal of reducing costs. Gillette finds such a sweet spot to cover both
low cost products and proper diversification of product to satiate the needs of the local inhabitants.

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Conclusion:

Gillette is a global conglomerate which has done miracles in the shaving appliances industry. Apart
from that it also spread out its reach in other businesses worldwide. In the phase of running the
international business Gillette has been successful in establishing a global stature of itself amongst
its competitors. If Gillette continues with its performance it can achieve success in the long run.

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