Unilever Business Strategy

Unilever tune line StrategyJump to SWOT epitome of Unilever Unilever BCG MatrixUnilever PESTEL Unilever Financial Analysis Unilever CompetitorsThis is a cause speculate on Unilever business strategy. It would seek to break the strategic position of the group with the help of SWOT, PEST and BCG Matrix models. The subject would critically assess the emulous situation of the teleph sensationr in social intercourse to other major crossway based companies in the foodstuff and companys pecuniary performance and depict issues. In the end it would submit few recommendations.The case study is my first effort towards analyzing the business strategy of Unilever and its success in the securities industry. Since Unilever is so famous and its products so widely used all all over the world, it is of great interest for me to carry out a case study on its business strategy. The paper would greatly help me and the readers to understand some(a) key issues concerning Unilever in today s business world.Introduction2.1. About UnileverUnilever is a multi-national corporation, shit of Anglo-Dutch parentage that owns many of the worlds consumer product reproachs in foods, beverages, cleaning agents and personal fearfulness products. Unilever employs nearly 180,000 people and had worldwide revenue of almost 40 one million million in 2005.Unilever is a dual-listed company populateing of Unilever NV in Rotterdam, Netherlands and Unilever PLC in London, England. This arrangement is homogeneous to that of Reed Elsevier and that of Royal Dutch Shell prior to their unified structure. some(prenominal) Unilever companies cook the same directors and exitively operate as a integrity business. The current non-executive Chairman of Unilever N.V. and PLC is Michael Treschow while P Mr Paul Polman is the Group political boss Executive. The company is widely listed on the worlds stock trades (About Unilever 2008).2.2. HistoryUnilever was founded in 1930 by dint of merge r by the British, open up Brother and the Dutch, Margarine Unie now Unilever PLC in London, U.K and Unilever N.V in Rotterdam, Netherlands respectively. In 1872 before the merger, Jurgens and Van den Bergh, the Dutch, built mill in Netherlands for the production of Margarine made from milk and fact. In 1927, they organize Margarine Unie (margarine Union) together with both European Businesses, Centre and Schicht. prize Co on the other go through was founded in 1884 by British William Hesketh Lever and his brother, James, and was producing soap Sunlight soap for people in England in particular for women. William Lever wrote to make cleanliness commonplace to lessen work for women to foster health and sign to personal attractiveness, that life may be more enjoyable and recognise for the people who use our products. In 1890, Lever Co become bound company known as Lever Brothers (Uhomhoabhi, Fredrick Albert 2008)Unilever, Unilever N.V and Unilever PLC comprise Unilever gro up. Both companies exact the same directors. Its annual turnover in 2005 was 39.672 one million million million and employs206, 000 employees around the world.1 Unilever grimes consist of Food, Beverage, and Home and Personal Care. Some of these products are Knorr, Breyers and Magnum, Lipton, Omo (detergent) etc. Knorr has the biggest sales of 2.3 billon in 2005.In May 2007 it became the first afternoon tea company to commit to sourcing all its tea in a sustainable manner, asking the Rainforest Alliance, an international environmental NGO, to start certifying its tea estates in East Africa. It declared its aim to have all Lipton Yellow Label and PG Tips tea bags sold in westward Europe certified by 2010, followed by all Lipton tea bags globally by 2015. Covalence, an ethical reputation ranking agency, placed Unilever at the height of its ranking based on positive versus negative news reportage for 2007. In 2008 Unilever was honored at the 59th Annual Technology Engineering Em my Awards for large(p) Achievement in Advanced Media Technology for Creation and Distribution of interactional Commercial Advertising Delivered through Digital Set Top Boxes for its class Axe.Strategic position of the companyThe strategic position of the company shall be analyzed through following techniques3.1. S.W.O.T AnalysisThe overall evaluation of a companys strengths, weaknesses, opportunities, and threats is called SWOT analysis. In general, a business unit has to monitor key macro environment forces (demographic-economic, technological, political-legal, and social-cultural) and significant microenvironment actors (customers, competitors, distributors, suppliers) that affect its efficacy to earn moolahs. The business unit should set up a marketing intelligence brass to track tends and important developments. For each trend or development, management need to identify the associated opportunities and threats.(S)trengthsRecognized as a global company. heavy brand portfol io.Strong relationship with retailersEconomies of scale.Corporate social behaviorVariety of products(W)eaknesses forked leadershipLimited costumer connectionInefficient management of brandsunfitness to maximize acquisitionsLack of harbour in the marketReduced spend on RD(O)pportunitiesChanging consumer preferencesIncreasing need for healthy productsLow income consumersspeedy increase in population(T)hreatsDecrease in revenueStrong competition(PG)Tougher business climateExchange ratesEconomic crisisIncrease in production and labor cost3.2. BCG MatrixStars(High market festering character) luxSunsilkWalls ice creamFair lovelyRafhanEnergileAXEVaslinePG tipsDogs(Low market emersion role)Wheel detergentSupreme teaLifebuoy shampooCash cows(Low growth High share)Surf excelPondsLiptonClose upBlue roachDove soapRexonaKnorrQuestion marks(High growth low share)Clear shampooRinComfortBen JerrysPersil3.3. PESTEL Analysis3.3.1. (P)olitical/Legal environmentUnilever, as a matter of po licy, set a standard as to the way of tackling political issues. Unilever has its tactical way of handling political issues. First, in the 1960s, many countries began to nationalize contrasted firms which also affected Unilever. This was a call for local equity affair in foreign firms. Thus, so many companies were subject to local control on prices, imports, employment of expatriates and so on. As a result of the unbecoming effect of nationalization policy, in the 1970, many US companies e.g. IBM and coca the skinny left India. There was fear by foreign companies uncertain issues such as knowledge leakage, loss of trademark etc. this was also high-risk for Unilever as its control over operation in the market was stamp downd. For role model UAC, a subsidiary of Unilever, whose operation was in many African countries (Cameroon, Ghana, tusk Coast, Nigeria, etc.), was concentrate oned on as its profit margin and rate of patrician remittance of profit to its Anglo-Dutch parent was enormous. Nationalizing UA Chambered Unilevers control over the market where UAC operates. However, Unilever uses its experience and goodwill to make contacts in many countries to bargain with political sympathies so as to modify their regulations. In central and south America, Unilever just engaged in lobbying rather than active politicking. In other words, Unilever neer get involved in sponsoring political parties. Today, Unilever has gained political ground utilize its tactical strategy and experience. Unilever is a member of many organizations all over the world. The aim is to create favorable business environment, and also facilitate merged reputation management.3.3.2. (E)conomic environmentUnilever market environment is becoming highly competitive especially in the Western Europe. Procter Gamble (PG) is one of the major competitors in the European market. More so, there are so many discounters in the European market resulting from EU free trade policy. This has had adverse effect on Unilevers profit potentials. Retailers are pressurizing FMCG producers to reduce prices of their products.Consumers on the other hand would not want to buy expensive product or brands ascribable to current economic tide. Competition in EU has grown so strong that Unilever is facing difficulties in places like France, Netherlands. In the exploitation countries and the uphill economies (Asia and Africa), where there are political instability, Unilever has adopted its company strategy to ensure that its profitability drive is sustained. Some Products are packaged in wee size for low or regular income earner, for affordability. In some developing countries, Nigeria to be precise, there was uncertainty intimately duties to be paid by companies due to inflation and fluctuation of currency. The effect on Unilever was a reduction in profit in 2005 compared to 2004, though there was increase in turnover.3.3.3. (S)ocio-cultural environmentUnilever has continued to maint ain momentum in its socio-cultural environment in line with its sustainability drive. The company is working relentlessly to bring improve hygienics and better nutrition to people in Asia, Africa and Latin America, especially the scummy and obesity. Over 30% of Africa population lives on less than $1 per day. By this, Unilever strengthens it goodwill. However, the low literacy of consumers affects marketing vehicles such as advertisement in bell ringer media. This therefore requires employment of more resources, for instance to grow face-to-face communication. Besides, Unilever employs about 100 nationalities. It ensures that diversity works for everybody both employees and consumer alike. In order to compass and ensure that diversity works amongst employees, Unilever employed the strategy of so as to manage and leverage diversity. Unilever is focused on building an exclusive nuance and embracing difference, which resulted in high demand of its products in the developing and a ppear markets.3.3.4. (T)echnological environmentRight in the 1930s, Unilever continue to diversify. Business continue to sail through in the1950s with new technology world invented to boast production and enhance fictitious character products for consumer, competitors improving their products using new inventions. Unilever did not give up its effort in RD. Since 2000, Unilever has been spending on ITto improve its business especially in the area of e-business so as to improve brands communication and market through inter enlighten, making transaction simple along chain.Today, Unilever is trying to smirch cost through IT efficiencies at global level. In addition, Unilever Technology proceed works in collaboration with Unilever RD group to help Unilever meet consumers needs. sphere of concern is genomics, advanced bioscience, advanced materials science and nanotechnology. In 2003, Unilever installed and commissioned pallette live memory system from Bitto Storage System Ltd. Thi s was meant to store its rooted(p) products. The facilities include pallet live storage systems, carton live storage systems, pallet racking, boltless shelving, plastic bins and containers, wide span and heavy load shelving, jut out racking, and multi-tier shelving systems.3.3.5. (E)nvironmentIn recognition of local legislation and to keep its corporate responsibilities, Unilever designed management system. Unilever has respect for consumer health and safety. This policy is to ensure all Unilever operators constitute a formal environmental management system. Training programs are being arranged in various regions/business groups to ensure compliance with the company Standard for Occupational Health and Safety Environmental Care (SHE). This fashion model is based on the ISO 14001 management standard. Unilever had also worked in conjunction with organisation of countries of its operation as regards waste management. For instance in Ghana, 2004, over 21 tones of wastes were suppli ed to small and medium size recycling businesses in Accra, Ghana, by Unilever to reduce the amount of plastic waste sent to landfill.Financial performance central sales growth of 7.4% was partly offset by movements in exchange rates (4.8%) and the net impact of disposals and acquisitions (1.4%). Including these effects, turnover was 40,523 million for the full form, increase by 0.8%. Operating profit increased by 1,922 million to 7,167 million, including a higher level of profits on business disposals. These generated a pre-tax profit of 2,190 million in 2008, comparedwith 297 million in 2007. Net profit was 28% higher than last grade, boosted by the profits on disposals. Earnings per share were 1.79, including a net gain of 0.36 fromRDIs. This compared with 1.35 last year, which included a net loss of 0.07 from RDIs. Net cash flow from operations at 3.9 billion was in line with last year. Total cash returns to shareholders in the year were 3.6 billion, made up of 2.1 billion of d ividends and 1.5 billion of share buy-backs.4.4. Financial ObjectivesUnilevers breathing in is to top Third Total Shareholder Return, over a 3 year rolling period out of peer group of 20 other companies. Its outlook for year 2010 isUn-geared free cash flow in the period 2005-2010 to be 25-30bn.Improvement in Return on Invested Capital. underlie sales growth of 3-5% p.a.Operating margin of over 15% by 2010 after normal restructuring.Improved capital and tax efficiency.Market share and competition5.3. Category position in the marketStrategic Issues next are some of the key strategic issues which Unilever faces today6.1. LeadershipUnilever maintains two business entities i.e. Unilever PLC and Unilever N.V. Due to dual chairperson approach it faces following problems in their business strategyList stock separatelyShared visiting card of directorsTypical management wear two, three hatsConflict in scorecard and Business responsibilitiesCompany remains fragmentedReduced effectiveness sla ck decision making process( Bureaucracy)Unilever believer (believe in Unilever)Unilever should create a mavin of belief amongst its consumers. It should try and focus on program that focuses on brand initiative to the consumers. Use advertising that connects with consumer needsConsumers demand high quality products that are both convenient and deliciousConsumers look for new slipway to use the productLarge population of single parent house holdMore females are working full-time jobsIncrease consumer focus on health and nutritionStrategy Justification7.1. Recommendation 1Make an initiative to create an overall umbrella brand crosswise all Unilevers brands that will eventually consolidate various businesses under one name.Unilever PlcUnilever NVOne UnileverProvides a greater clarity of leadership, responsibility, and accountabilityAllows Unilever to focus on the needs of their customers and consumers thus reigniting growth and increasing sales potentialProvides the ability to levera ge scale of operationsCreate a strategic course of study for brand managementRecommendation 2It should implement Unilever Believer product and brand extensions. The related example in this case is of Lipton tea. It should try and create an extension to this famous brand by focusing on push drinks. Justifications areEnergy drinks jumped 56% in sales last yearMarket has exceed $100 million in the recent daysMain Competitor Red BullPositioning Statement A Healthier Alternative to Energy DrinksUnilever should cash in this opportunity byTarget Market Young adults 18-32Uses stay up all nighttime and/or start a night outMain Ingredients Caffeine, Vitamin B, GuaranaAdvertisements highlight healthier ingredients of the product while showcasing its ability to give energy and regenerate body