Industry: Portable Power Industry in the United States The acquisition of Duracell was seen by many as a smart move. Analysts, shareholders, executives had high expectations from this merger. Unfortunately, this acquisition created several problems for Gillette as its main objective of profit maximization was not achieved. Key questions: • Should Gillette divest Duracell? • Is Gillette using appropriate strategies to deal with competitors large and small? • Stock prices are down significantlyExternal AnalysisIndustry Structure• The dry cell battery industry generated $2.6 billion in domestic sales in the United States in 2000.• 75% of all alkaline battery sales were purchases impulsive.• AA batteries accounted for nearly 50% of all sales.• The industry was highly competitive, and the three big players were constantly developing new products.• There were three main distribution channels for batteries: discount stores, 52.5% of sales; drugstore, 23.8% of sales; and supermarkets and 23.7% of sales. Industry Trends • Alkaline batteries are favored by American consumers. • Due to the high percentage of impulse purchases, manufacturers must ensure they provide effective battery displays. Large amounts of sales depend on effective retailer exposure. • Retailers are creating their own private brands (produced by the same big players) Sociocultural Segment • In USA, where time is money, people are always in a hurry. This probably explains why the high percentage of battery sales are due to impulse purchases. Additionally, American culture is very receptive to technological innovations, so more efficient batteries will be needed. Economy segment...... middle of paper ......, since the company would be more competitive in prices and already has a well-established brand, it would be more difficult to gain market share for these small competitors that are emerging, i.e. private brands, Sony, Kodak, Panasonic, etc.Appendix1. Indices Financial Indices 2000 1999 1998 1997GP MARGIN (%) 63.59 62.95 61.97Operating Margin (%) 16.27 22.80 19.30ROS (%) 4.22 13.76 11.75ROA (%) 3.77 10.69 9.08ROE (%) 20.37 41.18 23.79PRICE/EARNINGS RATIO 94.59 35.09 44.27CURRENT RATIO 0.86 1.39 1.56 1.78DEBT/EQUITY RATIO 4.41 2 .85 1 .62 1.242. Debt to Equity Analysis Year Total Liabilities Total Equity Debt to Equity Ratio1997 6,023 4,841 1.2441644291998 7,359 4,543 1.6198547221999 8,726 3,060 2.8516339872000 8,478 1,924 4.406444906