Business

HUL’s strategy to combat crisis period

— PHOTO: PAUL NORONHA

WALKING A DIFFERENT PATH: H. Manwani (right), Chairman, and Ashok K. Gupta, Executive Director (legal), Hindustan Unilever, at the company’s annual meeting in Mumbai on Friday.

MUMBAI: Hindustan Unilever Ltd. (HUL) is using the current economic crisis as an opportunity to win amid the turbulence through a unique ‘paradox’ in strategy, which its Chairman Harish Manwani referred to as ‘business as usual on growth, business unusual on costs.’

Addressing shareholders at the company’s 76th annual general meeting here on Friday, Mr. Manwani dwelt at length on the actions being taken by the company.

“Crisis and opportunity are two sides of the same coin. This inspires us to push for business as usual on growth — straddling the pyramid, delivering superior value and functionality while pushing the boundaries of our understanding and responding to consumer and shopper behaviour. Simultaneously, this is an opportunity to drive for business unusual on costs — re-engineering core processes, declaring a war on waste, dynamic performance management and cash conservation.”

HUL is determined to focus on growth and consumer understanding is key to achieving this, Mr. Manwani said.

“Delivery of stronger functionality and value has always been important. Leveraging science and technology, however, to deliver even better value and create stronger differentiation becomes absolutely vital at a time of uncertainty,” he said.

In India there were simultaneous movements of some consumers uptrading while others were cutting back or downtrading as a response to the economic uncertainty.

“The strategy of ‘straddling the pyramid’ at a time like this gives us the ability to capture the uptrading opportunities while simultaneously insuring us against the inevitable downtrading that also occurs in a downturn.”

Mr. Manwani reiterated the need for companies to address the volatility of these turbulent times. Recognising this reality, HUL has rolled out the new ‘Go-to-Market’ distribution model which results in considerable cost reduction.

Similarly, the company as part of driving efficiencies has embarked on a ‘War on Waste’.

Putting the global economic crisis into context, he spoke about how the combination of lack of regulatory oversight, poor judgment but above all hubris has contributed to this crisis.

“In the end, winning over the long haul demands a deep seated belief in principles and values that are non-negotiable. That is the moral underpinning of a successful enterprise,” he said.

Referring to the key role of leadership in managing crisis, Mr. Manwani said, “The lessons from the global crisis are simple and must not be lost. Businesses must be fair, must be honest, must be transparent and above all must be responsible. Those that walk a different path will attract questions on their very relevance and role in society. Replacing long-term principles with short-term profits cannot be good business — not even in the short term. At a time of crisis more than any other it is ultimately leadership that matters.”

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