The power of linkages A classic example of how a multinational firm can support the “take-off” of one of its suppliers is provided by ULSA’s relationship with its main supplier of “field marketing” services - or direct product merchandising to its retailers - a local South African company called Smollan. In turn, this case demonstrates how strong, local suppliers can benefit multinational firms as well: the relationship is hardly a “one-way” street. By building its business in co-operation with Smollan, ULSA has considerably expanded its sales. To understand Smollan’s value to ULSA, it is important to recognise that the South African modern trade makes extensive use of “field marketing”, with Smollan being the pioneer and leading company in this arena. Field marketing serves local retailers by taking their product orders and by stocking the shelves when the goods arrive. In 1981 Smollan, an already successful if relatively small company at the time, had the chance to merchandise for ULSA’s predecessor firm, Lever Brothers, in one region of South Africa. Over the next few years more regions were added, and in 1993, Fieldmarketing Group (Pty) Limited, known more generally as Unilever Channel Management (UCM), came into being as a Smollan subsidiary. Today, UCM covers all of South Africa and some 15 000 stores. It has grown into a Smollan subsidiary with 2 600 people marketing ULSA products, from a total Smollan employment of 8 600. ULSA has thus played a critical role in Smollan’s growth - the company is now expanding overseas - just as Smollan has bolstered the visibility and availability of ULSA brands. Interestingly, Smollan now has more employees overall than ULSA, and its subsidiary that deals solely with ULSA employs more than half the number of people that ULSA does in total. If any example demonstrates the power of linkage effects in generating economic development, this does. As Smollan has written of this partnership, “We are privileged to be associated with Unilever, not only due to the credibility it brings to our business, but also because of the trust Unilever bestows in us, the world class learning we are exposed to… and the scope of development we are allowed to pursue for our mutual gain.”
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