Pi Attitude Zone: Ethics & Altruism

Differences Can Mar Corporate Alliances

A blameless corporate reputation is an increasingly valuable asset among big companies.  Consumers continue to look askance at corporations who cook the books, exploit their third-world suppliers’ work force, or endanger our planet’s well-being.  (Some companies just get marked down for being greedy and predatory.  Ask Big Oil, Big Pharma, Big Ag…)

But forget all that.  Need a better corporate reputation? Why not just buy one? Not so long ago, French-based cosmetic giant L’Oreal decided to do just that, offering a price way over the odds to buy up ‘environmentally-correct’ retailer Body Shop International, whose late founder Anita Roddick was a pin-up girl for planet-saving and the responsible employment movement.

The problem was that a reputation transplant can be rather like a skin-graft: the cosmetic goal can be powerfully attractive, but the grafted-on tissue may reject and atrophy.

The Henley Management College put it thus: “Mergers between large [commercial entities] and virtuous [ones] only work when the cultures of the two companies… are similar”.

Henley knew what they were talking about, having advised on the takeover of “ethical and organic” chocolate-maker Green & Black by the then UK-based chocolate giant Cadbury. The deal seemed to be blessed because of Cadbury’s commitment to the ethical principles of its Quaker founders.  The L’Oreal/Body Shop nuptials were less blessed, partly because of their intrinsically different commercial world-views, and partly because “French and British management teams mix like oil and water”.

A footnote to the Cadbury story is that soon afterwards Cadbury itself was taken over by Kraft Foods, now Mondelez International, who promptly closed the company’s UK headquarters.  How did the ‘marriage’ shape up?  Suffice it to say that Cadbury heiress Felicity Loudon (her grandfather George founded Cadbury’s) denounced Kraft as a “plastic cheese company from America”, and sold her $50 million mansion to fund the launch of a rival chocolate brand. 

So… not too much marital bliss between those corporations, then…  As the old proverb has it: “Marry in haste, repent at leisure”.

Zone: Ethics & Altruism Country: Multiple Geographies Product – Business / Professional