Question

Mars Inc.: merger of the European food, pet care and confectionery divisions

Mars Inc. is a diversified multifunctional company whose primary products include foods, petcare, confectionery, electronics and drinks. Owned and controlled by the Mars family, this US giant is one of the world’s biggest private companies, but also one of the most secretive. Mars’ decision in January 2000 to merge its food, pet care and confectionery divisions across Europe – and eventually with headquarters in the UK – has split the marketing industry. The most well-known brands within the three divisions are:

• Foods: Uncle Ben’s rice and sauces;

• Pet care: Whiskas, Pedigree;

• Confectionery: M&Ms, Snickers, Milky Way, Mars Bar.

Mars UK says the decision to pool the businesses was taken to strike at the company’s international competitors in food and confectionery, such as Nestlé and Unilever. The move also coincides with plans to create a single European market and highlights the company’s belief that its consumers’ needs are the same across the continent. However, the combination of food and confectionery with pet care is not clear to all industry observers. One industry analyst made the comment: Generally speaking, Mars is doing the right thing by merging divisions to squeeze profits out of them. Before the advent of the euro it was acceptable to run separate companies in different European countries but not anymore. Another analyst said: ‘I can’t imagine it marketing all three sides of the business together. They’re too different.’ The only visible benefit appears to be an improvement in distribution. Tastes across European markets are very different, whether you’re selling products for animals or people It’s all very well Mars saying it will tackle competitors such as Nestlé and Unilever, but they are only rivals in food and confectionery. If Mars starts laying down too many controls by merging all its businesses – and therefore also its marketing and management strategies – it may streamline communications, but could lose the creativity available in different regions.

Questions:

1. Discuss the two views of organizing Mars’ European activities. (300 words)

2. Did Mars Inc. do the right thing in your opinion? ​​(300 words)

Answer 1

Q.-1 Discuss the two views of organizing Mars’ European activities.

Ans.- The two views pertaining to the re-organization of Mars’ activities in Europe are as follows-

i. The first view asserted by a group of market experts is that the decision taken by Mars to merge its food, pet care and confectionary divisions across Europe is very good and prudent. They argue that considering the fact that now entire Europe is one single market because of the introduction of Euro and having giant competitors like Unilever and Nestle, the merger of all divisions of Mars’ across Europe is a good move to capture the market and effectively cater the need of the customers. This centralization will also help to improve the Mars’ distribution channel and streamline its communication channel. All these things will help the Mars’ to earn more revenue and profit in the European market.

ii. The second view asserted by another group of market experts is that the decision taken by Mars to merge its food, pet care and confectionary divisions across Europe is neither good and nor prudent. They are giving their own arguments like, Unilever and Nestle are not the competitors of Mars in all of Mars’ product categories/businesses. Moreover, the needs of all customers are different across Europe which will not be effectively catered by the centralization of its business and marketing strategies. This decision to merge all the divisions will kill the creativity of its employees. Hence, this decision of Mars will backfire soon in the near future.

Q.- 2 Did Mars Inc. do the right thing in your opinion?

Ans.- In my opinion, the decision of Mars Inc. to merge its food, pet care, and confectionary divisions across Europe is prudent and need of the hour. The giant competitors like Unilever and Nestle can only be tackled with a strong brand presence. Moreover, the centralization of Mars Inc. will help to take the speedy decision, streamline the communication strategy, and improve the distribution channel. And considering the adoption of a single euro across Europe, it is also economically/financially prudent to have a single and centralized brand so that the customers’ needs can be effectively catered. As far as the matter of creativity hampering is concerned, this issue can be resolved by prudently giving the power to take decisions and responsibilities to each employee. So in my opinion Mars did the right thing by merging its food, pet care, and confectionary divisions across Europe.

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