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Reckitt Benckiser Group SWOT & PESTLE Analysis

ID : 52235953 | Jul 2017

OVERVIEW

Name of the Company: Reckitt Benckiser Group

Business Sector: FMCG

Operating Geography: United Kingdom, Global

About the Company: Reckitt Benckiser Group plc is a manufacturer and marketer of health, hygiene and home products. It was formed in 1999 by the merger of the UK-based Reckitt & Colman plc and the Netherlands-based Benckiser NV. Headquartered in Slough, England, the company is selling its products in 180 countries and has about 35000 employees. Rakesh Kapoor is the current CEO.

Revenue: £ 9.891 billion (FY ending December 31st, 2016)

SWOT & PESTLE Analysis

The SWOT analysis for Reckitt Benckiser Group is presented below:
Strengths
Weaknesses
1. Growth driven by strong global brands
2. Global presence with sector diversification
3. High performing Research and Development
4. Multiple awards and recognitions
1. Embroiled in controversies
2. Low penetration in rural markets
3. Lack of growth in meaningful categories
Opportunities
Threats
1. Acquisition of Mead Johnson to drive growth and open new market access
2. High potential in Chinese and Indian markets
3. Expanding portfolios across categories and geographies
1. Strong competition
2. Emergence of private label brands
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Strengths

1. Growth driven by strong global brands: Reckitt Benckiser’s has delivered consistent growth over the years driven by its strong global brands. The company derives major strength from its ‘power’ brands, names such as Dettol, Harpic, Durex, Strepsils, Gaviscon, Vanish and Calgon. The company's strategy is to have a highly focused portfolio and is driving growth through innovation and investing disproportionately on its 19 Powerbrands and 16 high-potential markets - Powermarkets, which are responsible for close to 80% of net revenues. The company reported an Adjusted Earnings per Share of 302.0p and declared a dividend of 153.2p for FY16.

2. Global presence with sector diversification: Reckitt Benckiser has operations in 60 countries and its products are sold in 200 countries across six continents. They have 37,000 employees or ‘entrepreneurs’ as they like to call it, across the globe, all inspired by a vision of a world where people are healthier and live better. The acquisition Mead Johnson will also significantly strengthens Reckitt Benckiser’s position in developing markets, especially Asia and Latin America. Further Reckitt’s consumer products span several market sectors, a situation which provides attractive diversification. The company’s product categories span across four major areas – Health, Hygiene, Home and; Portfolio (including food) products.better.

3. High performing Research and Development: Reckitt Benckiser’s global, well-connected R&D team features a diverse mix of different functions and specialisms. Primarily the R&D of Reckitt Benckiser focuses on five key functions – category R&D, regulatory affairs, evidence-consumer safety and oversight, 3D and packaging and innovation and sustainability. The teams are located across 35 different countries around the world with major facilities in Germany, Italy, India, China, Thailand and the USA. The company’s state of art £105m Centre for Scientific Excellence in Hull is RB’s biggest healthcare development centers.

4. Multiple awards and recognitions: RB group has constantly been in media, gaining recognition for its efforts in terms of innovation, marketing and sustainability. In Dow Jones sustainability world index 2015, RB scored 83 out of 100. In addition, for seventh consecutive year RB has been identified as a leader in carbon disclosure project. In innovation, Dettol and Lysol's No-Touch hand wash system took gold in product design at the Design Business Association's Design Effectiveness Awards. In marketing, Durex Fundawear grabbed silver award at the Cannes Lions International Festival of Creativity, while RB received Company of the Year in the British OTC industry.

Weaknesses

1. Embroilment in controversies: Reckitt Benckiser got a hit on its reputation in South Korea when it found itself surrounded by the controversy regarding the deadly lung injuries caused by the usage of humidifier sterilizers marketed by the firm. Although the incident occurred in the 2011, the official apology was offered in 2016 which did further damage. In another incident in 2015, the company had to recall 1.5 million bottles of the congestion and cold medicine Mucinex due to mislabeling issues.

2. Low penetration in rural markets: Rural markets have always been the greener pastures for any marketer in the view of high growth and untapped potential. The rural consumers are known to have low income, low brand awareness and inadequate information. Despite increased focus on emerging markets, 64% of RB’s home care business is generated from developed mature markets. RB need to come up with new strategies to develop the yet untapped rural markets, especially in emerging economies in South Asia and Africa.

3. Lack of growth in meaningful categories: Reckitt Benckiser must explore growth potential in categories such as air care and dish-washing where it is lagging behind its competitors. Some of the Reckitt Benckiser’s 16 Power markets are mature ones that present the right income conditions for consumers who are more likely to purchase higher-value products that offer a degree of convenience through innovations such as automation. Allergy care is a particularly glaring hole in RB’s global portfolio, but other areas, including dermatological care could benefit from greater investment.

Opportunities

1. Acquisition of MEAD Johnson to drive growth and open new market access: Reckitt Benckiser group announced officially in the month of February 2017, to acquire Mead Johnson in a deal of worth $16.6 billion. This acquisition of the global pediatric leader has opened an entirely new segment of customers in the Consumer Health segment for the group and looks very promising in terms of growth. Mead’s Enfa franchise which is a leading global brand in infant and children’s nutrition is a natural extension to Reckitt Benckiser’s consumer health portfolio and has the potential to become one of its Powerbrands. Mead Johnson’s go‐to‐market capabilities will be enhanced by RB’s supply chain infrastructure and distribution network. According to the company’s estimates, the acquisition will drive a growth of revenues in this segment by approximately 90%.

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The PESTLE analysis for Reckitt Benckiser Group is presented below:
Political
Economic
1. Volatile political climate and economic uncertainty may impact business1. Strong GDP growth in emerging markets
2. Sharp fluctuations in currency markets
Social
Technological
1. Increased life expectancy with higher healthcare costs
2. Partnership with ‘Save the Children’
1. Technology innovation and sustainable development
Legal
Environmental
1. Change in tax laws and regulations
2. Established compliance framework for suppliers
1. Initiatives for sustainability and reduction in carbon footprint
2. Sustainable sourcing and supply chain
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Social

1. Increased life expectancy with higher healthcare costs: Life expectancy is rising across the globe, especially in developed economies. Longevity and rising income is also encouraging better hygiene and healthier home environments. This has led to a growing demand for cost-effective ways to help consumers protect and manage their health and hygiene. Thus Reckitt Benckiser can capitalize on the market potential and develop innovative Health, Hygiene and Home products, helping consumers to protect and improve their health and well-being, as they enjoy longer and more prosperous lives.

2. Partnership with ‘Save the Children’: Reckitt Benckiser recently announced that they will be launching two ‘affordable’ products to help eradicate preventable child deaths from diarrhea in India, Pakistan and Nigeria, in partnership with ‘Save the Children’ UK, an NGO. The partnership is part of the Save the Children’s Stop Diarrhea program aimed at preventing, controlling and treating the disease. RB group won’t be earning any profit from this partnership.

Technological

1. Technology innovation and sustainable development: Technology innovation is crucial for driving sales of many of the Reckitt Benckiser’s brands and the company prides itself on its entrepreneurial culture with a desire to improve products. With its rich R&D, innovation has been a key contributor for the high sales of RB group. Through e-commerce platform the company has tasted major successes, especially in the Chinese market where it has managed to generate 30% of its sales through the medium. Connected Health is another area where innovation has led to the breakthrough for Reckitt Benckiser by developing first-ever connected health product: Nurofen FeverSmart Temperature Monitor – which placed under a child’s arm can send real-time continuous temperature readings straight to the user’s smartphone, thus helping parents monitor effectively.

Environmental

1. Initiatives for sustainability and reduction in carbon footprint: Climate change is a real threat to society that must be addressed in order to avoid the consequences that are predicted will occur. Reckitt Benckiser is committed to making more with less; continually reducing emissions while producing more and growing the business. Since 2012 the company has reduced its carbon emission by 25% and energy consumption by 18.5%. Investments in low carbon technologies include installation of a cooling module that uses external air to cool manufacturing operations at Reckitt Benckiser’s Nowy Dwor plant. The company has also collaborated with Materials Lifestyle Management Company for conversion of waste into low carbon fuel. RB further aims to address sustainability in each of its operations and has integrated addressing climate change initiatives within its value chain such as investments in renewable energy and implementing LEED certification on its campuses.

2. Sustainable sourcing and supply chain: Reckitt Benckiser ensures that it source its natural raw materials in a sustainable way. In this regard the company has implemented strong procurement standards and policies. One notable example is its sourcing of palm oil, which is derived from palm oil plantations which cause severe large scale deforestation for its development. RB has built responsible palm oil supply chains by increasing the traceability of the source and continuous review of its palm oil supply chain.

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Copyrights and Disclaimer

Reckitt Benckiser SWOT and PESTLE analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.

Copyright of Reckitt Benckiser SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.