ASSIGNMENT ON CASE ANALYSIS OF PROCTER & GAMBLE VS UNILEVER: A CASE OF CORPORATE ESPIONAGE

Ques. 1 Comment on the business paradigm did P&G managers suffered from which lead them to the current situation?
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Ans. 1 Well the business paradigm which P&G managers was suffering from is a very common scenario, which we usually call as cut throat competition and with this comes the feeling of acquiring as much information of competitor as possible, either by hook or by crook. Now when it comes to acquisition on market share, companies always try to know about their immediate competitor and their upcoming strategies. Talking about P&G which got caught into corporate espionage ran a secret operation to acquire secret information about the hair care business of Unilever, which is undoubtedly the immediate competitor of former. Thought various analysts and competitive intelligence experts have their own view regarding what P&G did, a crisp note by Bill Waite (Managing Director and Senior Counsel, Risk Advisory Group) says a lot about what P&G got itself into. He rightly pointed out that there is always huge amount which is at stake and to make your decisions go your way, you have to make your competitors decision go wrong, and this is possible when you know about your competitors equally or more that what you know about yourself. This is the reason, because of which an organization like P&G also felt like getting into corporate espionage and then to control the damage to its public image, it voluntarily admitted its mistake.

Ques.2 Briefly describe how can the top management of a company escape its liability by
saying that the information was acquired without its knowledge?

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Ans.2 The case discusses the corporate espionage controversy involving two of the world's largest consumer product companies, P&G and Unilever, in the early 21st century. Corporate Espionage means impregnating a corporate system or structure with spies or systems so as to facilitate leak of information which could in all probability affect the growth, financial stability and future prospects of the victim organization to have sustained development in future. Many examples are available in the corporate history of the corporate espionage instances like General motors vs. Volkswagen, Oracle Corporation vs. Microsoft etc As it is mentioned in the case that CI executives at P&G hired an independent contractor to spy on its arch rival Unilever Ltd in the hair care business, the internal spying operation gathered about eighty documents detailing Unilevers plans for the U.S. hair care business over the next three years, including critical information such as launch-plans, prices & margins. P&G admitted, afterwards, that the information collection episode had indeed taken place, but without the knowledge of the top management. The top management of P&G escaped its liability by commenting that these spying activities on Unilever did not comply with the companys internal policies and procedures and it had no knowledge of the whole episode. P&Gs top management was in a situation where their subordinates had not violated the law but did get involved in an illicit practice according to the companys policies. Also, in highly competitive industry, they were exposed to trade secrets of their closest competitor which could go a long way in helping him outshine Unilever. P&G itself approached Unilever in April 2001 with details of the entire issue. P&Gs top management is very much liable for this whole issue against Unilever because these spying activities were conducted by its own CI executives and the company also got exposure to trade secrets of their closest competitor which can be beneficial in the long run. But, if the
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company admits after the issue that the information was acquired without its knowledge then its simply escaping its liability or lowering the after effects of the whole issue in the market. This statement helps a lot in defending the company during further proceedings and also could reduce the impact of Unilevers response to the incident. As in the case the two companies started negotiations to settle the issue amicably. The top management if honestly admits the issue voluntarily and also states that the activity was conducted without its knowledge then it is making things a little easier for it to handle. Publicly the image of P&G could have been got more tarnished if Unilever had discovered its misdeeds itself. In the market after this statement from P&G that it was indifferent towards these spying activities of its executives the response of the customers and the investors could be more lenient because of their thinking that the company is not an unethical entity its just the case that some of its executives did not follow the guidelines of the business practices of P&G. The issue could result in a strong statement from P&G assuring Unilever about its strict stand on the whole issue and dismissal of the CI executives involved in the issue from the organization.

More precisely it can be stated that the company can escape its liability by saying that the information was acquired without its knowledge because: Firstly, if the top management put all blames on the companys executives that they involved in the issue violating the guidelines or policies of the company then it can get some benefit in the legal processes, whole company may not suffer the impact of the issue.
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Secondly, the public image of the company does not drop that much with this statement and the trust of customers and stakeholders is maintained.

It is not liable to pay any high compensation or suffer any severe legal decision it was not technically involved in this issue against Unilever

It also lowered the impact of the response of Unilever about this issue against it.

So, it can be said that today companies find this tool helpful in escaping its liabilities towards the unethical issues it get into against its competitors. It get away with paying less than it should pay by putting complete blame on its executives.

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