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Gabriella: Hello and welcome back to englishclass101.com. I’m your host Gabriella.
Gina: Hi! I’m Gina. This is Culture Class, Season 2, Lesson 7 - Top Five Battles in Energy and Manufacturing.
Gabriella: We will tell you about some of the biggest companies in energy and manufacturing, and how they are competing against each other.
Gabriella: Let’s dive right in with competition number 5 – Unilever vs. Reckitt Benckiser.
Gina: Unilever is an Anglo-Dutch company formed by the merger of the British soap maker Lever Brothers and the Dutch margarine producer Margarine Unie in 1930.
Gabriella: Unilever is everywhere in the marketplace now, isn’t it? They have so many products.
Gina: They have around 400 products on sale, mainly low priced consumer goods and food, although their top 25% account for 70% of their sales.
Gabriella: Reckitt Benckiser is another Anglo-Dutch company, isn’t it?
Gina: Oddly enough, yeah it is! Again, a British and Dutch company merged although this merger happened in 1999. Reckitt Benckiser has a core 19 brands that they concentrated on after the merger but they then began to branch out and buy other companies.
Gabriella: What did they buy?
Gina: The over counter medication division of Boots and SSL International.
Gabriella: So they’re both Anglo-Dutch companies and both are in the consumer goods industry.
Gina: Yeah. Unilever has more brands and a higher income due in part to that, but Reckitt Benckiser has some of the highest selling consumer goods brands in the world, such as Dettol and Veet.
Gabriella: These low priced items are big business, aren’t they?
Gina: Yes, because they’re essential in our daily lives. It’s a fiercely contested market and they’re two of the biggest companies around.
Gabriella: Number 4 is Rio Tinto Group vs. Anglo American plc. I think that these two companies manufacture things slightly more expensive than shampoo or tea bags.
Gina: They definitely do! Rio Tinto Group is named after the Rio Tinto River in Spain because it was here that the company started mining for copper in 1873. It became the world’s largest supplier of copper. It branched out of Spain and now mines many different materials.
Gabriella: Rio Tinto now mines diamonds, coal, uranium, iron and others. What about Anglo American plc?
Gina: Anglo American Corporation started mining for copper and coal in Africa. They bought a majority share in De Beers and moved into diamonds, also. In the 1950s AAC was the biggest gold mining company in the world.
Gabriella: It became Anglo American plc in 1999 after a merger and now mines base metals, coal, iron ore and platinum, amongst others.
Gina: Rio Tinto Group and Anglo American plc are both companies that mine raw materials and manufacture them for sale. They do mine similar materials but also have their own specialities.
Gabriella: What are their specialities?
Gina: Anglo American is the largest producer of platinum in the world. If you’re lucky enough to own a platinum ring, it’s probably from Anglo American. Rio Tinto is the world’s largest producer of bauxite and borates and the second highest producer of iron ore.
Gabriella: What are their incomes? I like talking about the money!
Gina: Me too! Anglo American employs more people and has a market capitalisation of £31.2 billion whereas Rio Tinto’s is £86.4billion.
Gabriella: That’s a lot of mining! Okay, number 3 is GlaxoSmithKline vs. AstraZeneca
Gina: GSK formed from a series of mergers that eventually saw Glaxo Wellcome and SmithKline Beecham merge in 2000. GSK specialises in both prescription and non-prescription medication. GSK sells its goods in 70 countries.
Gabriella: And AstraZeneca?
Gina: It’s an Anglo-Swedish company that was formed in 1991 by the merger of Astra AB and Zeneca Group plc. AstraZeneca specialises in prescription medication and biotechnology products.
Gabriella: GSK seems to have a wider product base.
Gina GSK does, yes, but we have figures based on prescription only medication. As they are both in that market, we can compare them. In 2009, GSK was the fourth biggest company in the world by prescription sales and AstraZeneca was the fifth.
Gabriella: Ah, so GSK wins that battle. I guess GSK has a much larger income then, considering they have extra product lines too.
Gina: Their incomes are probably closer than you’re expecting. The 2012 net incomes are £4.744 billion for GSK and £4.082 billion for AstraZeneca.
Gabriella: That is closer than what I was expecting! So the next pair of companies in at number 2 moves onto energy companies, as it’s British Gas vs. SSE.
Gina: British Gas has a very long history dating back to 1812 and it was the first public utilities company in the world. It has been merged, nationalised and privatised many times over the years but 1986 saw it fully privatised with an initial public offering of £9 billion.
Gabriella: Privatisation opened up the energy market in the UK and allowed companies to compete for customer contracts.
Gina: Yeah, it helped a lot of companies such as Scottish and Southern Energy. Again, SSE was formed from a merger in 1998. The founding companies had been providing energy to different parts of the UK since the 40s, but the merger helped them become national.
Gabriella: British Gas and SSE are two of the so-called “big six” energy companies in the UK, aren’t they?
Gina: Yes. The competition between the six is fierce and all of the companies are always trying to prove that they are the cheapest option for energy.
Gabriella: I think everyone who lives in the UK has had representatives from the energy companies at their door claiming to be cheaper.
Gina: {laughter} Probably! British Gas and SSE have the largest customer bases out of the big six.
Gabriella: British Gas must be the biggest, I think.
Gina: That’s correct. British Gas has 20 million customers and SSE has 9.6 million customers. The battle for new customers and to make customers switch still carries on though!
Gabriella: That battle will never end! Our number one battle between companies is…
Gina: BP versus Shell.
Gabriella: Two companies that are huge in the energy field.
Gina: Not just two huge energy companies, but two of the largest companies in the world. BP was established in 1909 and the British government bought a controlling interest in it in 1913. Eventually, this stake was sold in 1987. BP began as a petroleum company but diversified into coal and minerals also.
Gabriella: Shell is an Anglo-Dutch company, isn’t it?
Gina: Yeah, it was formed due to a merger, what else, in 1907. It is split between the two countries as its registered office is in London but its headquarters are in the Netherlands. It has operations in over 90 countries.
Gabriella: How do the two companies compare to each other?
Gina: They are both part of the “big oil” companies and “supermajors”. These are the six biggest oil and energy companies in the world. At one point, Shell and BP were numbers 1 and 2 in the list of the biggest oil companies.
Gabriella: But they aren’t now?
Gina: If you’re looking at revenue, Shell is the biggest company in the world. Not just the biggest oil company, but the biggest company of any kind. BP is now only the fourth biggest oil company due to the compensation it had to pay following the Deepwater Horizon oil spill in 2010.
Gabriella: Okay, let’s hear the figures. I can’t even imagine how high Shell’s income is.
Gina: BP had a net income of £11.816 billion in 2012.
Gabriella: And BP is only the fourth biggest oil company now? Wow. How about Shell?
Gina: Are you ready?
Gabriella: Ready!
Gina: Shell had a net income in 2012 of £26 and a half billion.
Gabriella: That’s just for one year? 365 days?
Gina: Yes it is.
Gabriella: I need to get into the oil business.
Gina: I don’t think it’s that easy!
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Gabriella: That’s it for this lesson. Thanks for listening, and we’ll see you next time!
Gina: Goodbye!

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