Unilever Case Analysis (2017).pdf

CASE ANALYSIS

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Unilever: Mission Statement & Vision Statement, Analysis & Recommendations UPDATED ON FEBRUARY 21, 2017 BY JUSTIN YOUNG

A Unilever building in Englewood Cliffs, New Jersey in 2010 (Photo: Public Domain) Unilever’s vision statement and mission statement guide business growth in the consumer goods industry, although some changes can enhance these corporate statements.

Unilever’s mission statement and vision statement are a basic foundation for the success of the company’s consumer goods business. The corporate mission statement indicates the strategic approaches of the company. In Unilever’s case, the mission statement determines how the business addresses the needs of its target consumers. On the other hand, the corporate vision statement provides the development direction of the organization. Unilever’s vision statement broadly presents what the company needs to do to succeed in the long term. Considering the company’s position as one of the biggest consumer goods firms in the world, Unilever’s mission statement and vision statement remain relevant and appropriate to global market conditions. Unilever’s vision statement reflects how the company grows and maintains its success in the global consumer goods market. The mission statement shows the value of Unilever’s products and how these products benefit customers.

Unilever’s Vision Statement Unilever’s corporate vision is “to make sustainable living commonplace. We believe this is the best long-term way for our business to grow.” This vision statement puts emphasis on sustainability, especially among consumers. The following components are notable in Unilever’s vision statement: 1. Commonplace sustainable living 2. Best long-term way 3. Business growth Commonplace sustainable living is a core component in Unilever’s corporate vision statement. This component shows the company’s efforts in changing its products to suit current market conditions. For example, through sustainable design for home care and personal care products, Unilever helps consumers reach their goals to integrate

sustainability in their lives. The corporate vision also states that commonplace sustainability is the best long-term way for the business. Unilever understands the importance of sustainability and other market trends shaping the industry. Moreover, the vision statement reflects the company’s view of sustainability as a way to maintain business growth. This vision statement aligns with Unilever’s corporate social responsibility strategy to address business stakeholders in the consumer goods industry.

Unilever’s Mission Statement Unilever’s corporate mission is “to add vitality to life. We meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life.” This mission statement underscores how the company satisfies customers in various aspects of their lives. The following are the significant components in Unilever’s mission statement: 1. Adding vitality to life 2. Meeting everyday needs for nutrition, hygiene, and personal care 3. Helping people feel good, look good, and get more out of life Adding vitality to life is a general indicator of business strategy in Unilever’s corporate mission statement. Such vitality is the value that consumers can expect from the company’s products. The corporate mission also specifies the aspects of life where such vitality is added. For example, Unilever’s food products address consumers’ vitality needs in terms of nutrition. Furthermore, through these products, the company attracts customers who want to feel good, look good, and get more out of life. The mission statement’s specification of the types of products provides a foundation for the product mix in Unilever’s marketing mix.

Unilever’s Vision & Mission – Recommendations Unilever’s vision statement implies the desired condition of being a leader in bringing sustainable living to customers through consumer goods. However, the statement does not specify the desired condition of the company as a business organization. A sound corporate vision statement contains details on the desired future situation of the organization. For example, it is necessary to specify the company’s market position in the future, to guide organizational development. Thus, a recommendation for Unilever’s vision statement is to improve it by including additional information about market position or a leadership role in the consumer goods industry. Unilever’s mission statement includes detailed information of what the business does and must do. For example, the company adds vitality to life through products that address consumers’ needs in nutrition, hygiene, and personal care. In this regard, the corporate mission statement satisfies standards that require specificity on general strategic approaches. However, a recommendation is to enhance Unilever’s mission statement by adding more information on how the company strategically achieves its aims in adding vitality to consumers’ lives. References • •

Unilever – Investor Relations – Annual Reports and Accounts Overview. Ekpe, E. O., Eneh, S. I., & Inyang, B. J. (2015). Leveraging Organizational Performance through Effective Mission Statement. International Business Research, 8(9), 135.

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King, D. L., Case, C. J., & Premo, K. M. (2014). Does Company Size Affect Mission Statement Content? Academy of Strategic Management Journal, 13(1), 21. Kirkpatrick, S. (2016). Build a Better Vision Statement: Extending Research with Practical Advice. Rowman & Littlefield.

Unilever: PESTEL Analysis & Recommendations UPDATED ON FEBRUARY 21, 2017 BY NATHANIEL SMITHSON

Unilever’s bath salts sold as Radox (Photo: Public Domain) A PESTEL analysis of Unilever shows growth opportunities based on external factors in the consumer goods remote/macro-environment.

Unilever’s ability to address external factors in its remote or macro-environment contributes to business prominence in the global consumer goods market. This PESTEL analysis identifies such external factors. The PESTEL Analysis model is a tool for managers to understand the influence of the external environment on businesses. In the case of Unilever, these external factors vary significantly, considering the international scope of the business. Nonetheless, the company must focus on maximizing business performance. Unilever can achieve higher business performance through strategies that overcome the most significant threats and exploit the biggest opportunities shown in this PESTEL analysis. This PESTEL analysis of Unilever outlines growth opportunities in the international consumer goods market. While the company faces threats in its remote or macroenvironment, growth is achievable by focusing on product innovation, among other approaches.

Political Factors Affecting Unilever’s Business The political landscape affects Unilever’s performance. This section of the PESTEL analysis identifies the impact of governments on firms’ remote or macro-environment. The following political external factors are significant in Unilever’s consumer goods business: 1. Political stability of most countries (opportunity) 2. Political issues in the European Union (threat) 3. Growing free trade relations (opportunity)

The political stability of most countries presents opportunity for Unilever to grow in these markets. For example, the political stability of the United States helps minimize challenges in the company’s strategic implementations in the country. On the other hand, the political issues in the European Union are a potential threat against Unilever’s operations in the region’s consumer goods market. Nonetheless, the company has opportunity for global growth based on the expanding free trade relations, especially those involving developing countries. Based on the political external factors in this section of the PESTEL analysis, there are opportunities generally available in the market, although Unilever must address the challenges linked to the political condition of the European Union.

Economic Factors Important to Unilever Unilever’s business performance depends on the situation of economies around the world. This section of the PESTEL analysis outlines the influence of economic conditions on firms and their remote or macro-environment. The following economic external factors are determinants of Unilever’s performance in the consumer goods industry: 1. Increasing wages in developing countries (opportunity & threat) 2. High growth of developing countries (opportunity) 3. Economic stability of developed countries (opportunity) The increasing wages in developing countries present the opportunity for Unilever to profit more from higher potential sales, as consumers gain higher disposable incomes. However, the same external factor is a threat in terms of increasing costs, considering that the company has many manufacturing facilities located in developing regions. Nonetheless, Unilever can expect business growth, as these countries grow in terms of consumer goods market size and value. For example, China presents major growth opportunity for the company. Moreover, the economic stability of developed countries cushions the business from risks in other markets, while facilitating gradual but steady growth. Thus, this section of the PESTEL analysis of Unilever highlights opportunities for global growth.

Social/Sociocultural Factors Influencing Unilever’s Business Environment Sociocultural trends and issues affect Unilever’s business performance and the remote or macro-environment. The socially driven behavioral aspect of markets is considered in this section of the PESTEL analysis. The sociocultural external factors significant in Unilever’s consumer goods business are as follows: 1. Rising health consciousness (opportunity) 2. Rising environmentalist behaviors (opportunity) 3. Gradual dismantling of the gender divide (opportunity) Unilever can grow through products that directly address consumers’ increasing interest in healthful products. In addition, rising environmentalist behaviors present an opportunity for the company to attract more consumers by improving its environmental impact. For example, Unilever can minimize its energy consumption by adopting new and more energyefficient technologies. Also, the company can grow through higher sales based on improving incomes among female consumers worldwide. The external factors in this section

of Unilever’s PESTEL analysis show the importance of product innovation in growing the consumer goods business.

Technological Factors in Unilever’s Business Unilever depends on available technologies to support its consumer goods business. This section of the PESTEL analysis identifies the impact of technological trends on firms and their remote or macro-environment. In Unilever’s case, the following technological external factors are significant: 1. Rising business automation (opportunity & threat) 2. Rising R&D investments (threat) 3. Decreasing cost of transportation based on technological efficiencies (opportunity & threat) Rising business automation is an opportunity for Unilever to increase operational efficiency. For example, new business processing equipment can enhance inventory monitoring to support supply chain and distribution efficiencies (Read: Unilever’s Operations Management). However, the same technological external factor is a threat because it increases the competitiveness of other firms, including small ones in local markets. On the other hand, rising research and development (R&D) investments threaten Unilever because it also increases the competitive advantage of other firms in the consumer goods industry. Nonetheless, the decreasing cost of transportation leads to lower operating costs, which contribute to business growth. Still, the decreasing cost of transportation is a threat because it contributes to the competitiveness of other firms. This section of the PESTEL analysis of Unilever highlights growth opportunities and competitive threats based on technological trends in the remote or macro-environment.

Ecological/Environmental Factors Affecting Unilever Ecological trends and conditions influence Unilever’s remote or macro-environment. The effects of the natural environment and related issues are considered in this section of the PESTEL analysis. The following ecological external factors significantly affect Unilever’s consumer goods business: 1. Rising interest in business environmentalism (opportunity) 2. Increasing business efforts on sustainability (opportunity) 3. Increasing complexity of environmental programs (opportunity) The rising interest in business environmentalism is an opportunity for Unilever to improve its environmental programs to attract consumers concerned about the environment. In relation, the company can enhance its sustainability programs to strengthen its competitiveness against other firms in the consumer goods industry. Unilever’s corporate social responsibility strategy must effectively implement these programs throughout the organization. For example, the strategy must consider product innovation and internal business processes to further reduce business environmental impact. These efforts should also support Unilever’s ability to satisfy increasingly complex environmental programs. Such external factor is an opportunity for the company to improve its competitive advantage through corporate responsibility. Based on the condition of the remote or macroenvironment shown in this section of Unilever’s PESTEL analysis, there are opportunities to

improve business performance by making the organization more environmentally sustainable.

Legal Factors Facing Unilever Unilever must satisfy regulations to minimize barriers to its consumer goods business. This section of the PESTEL analysis determines the impact of legal systems on firms’ remote or macro-environment. Unilever must satisfy the issues based on the following legal external factors: 1. Increasing complexity of environmental regulations (opportunity) 2. Strengthening international patent laws (opportunity) 3. Strengthening consumer rights laws (opportunity) Unilever has an opportunity to enhance its corporate image by matching the organization’s corporate social responsibility strategy with environmental regulations. In addition, strengthening international patent laws can facilitate the company’s growth. For example, new patent laws in developing countries help reduce patent-related issues Unilever experiences in its remote or macro-environment. Furthermore, stronger consumer rights laws create an opportunity for the company to improve its customer-service quality, along with product quality standards. These efforts can increase the attractiveness of Unilever’s brands in the consumer goods market. The external factors in this section of the PESTEL analysis of Unilever indicate the benefits of improving legal systems worldwide.

Unilever’s PESTEL Analysis – Recommendations This PESTEL analysis reflects a number of opportunities and threats that Unilever must prioritize in its strategies for growth and global expansion in the consumer goods market. A recommendation is that the company’s strategies must include the external factor of rising health consciousness among consumers. Unilever can take this factor as an opportunity to improve its food products. It is also recommended that the company must improve its sustainability programs to address opportunities regarding business sustainability. Another recommendation is to take rising business automation as a significant threat that empowers Unilever’s competitors, especially smaller ones in local markets. For example, local companies can increase their competitive advantage by automating their production processes. Given such issues based on this PESTEL analysis of Unilever, global growth with innovation and business sustainability require strategic focus. References • • • • •

Dockalikova, I., & Klozikova, J. (2014, November). MCDM Methods in Practice: Determining the Significance of PESTEL Analysis Criteria. In European Conference on Management, Leadership & Governance (p. 418). Academic Conferences International Limited. Gillespie, A. (2007). PESTEL analysis of the macro-environment. Foundations of Economics, Oxford University Press, USA. Housing Industry Association (2011). An Introduction to PESTLE Analysis. HIA Ltd. Murphey, M., & Gause, R. (1974). UCF Research Guides. Industry Analysis. PESTLE Analysis. Business Horizons, 17(5), 27-38. Roper, K. (2012, November). BIM Implementation: PESTEL Drivers & Barriers (Cross-national Analysis). In World Workplace 2012. IFMA.

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U.S. Department of Commerce – The Consumer Goods Industry in the United States – Select USA. Unilever – Investor Relations – Annual Reports and Accounts Overview. Yüksel, I. (2012). Developing a multi-criteria decision-making model for PESTEL analysis. International Journal of Business and Management, 7(24), 52.

Unilever: Five Forces Analysis (Porter’s Model) & Recommendations UPDATED ON FEBRUARY 21, 2017 BY DANIEL KISSINGER

A Unilever factory in Poland. (Photo: Public Domain) A Five Forces analysis of Unilever shows competition and consumers have the biggest impact on the firm, based on external factors in the consumer goods industry environment.

Unilever effectively competes in the global consumer goods market. A Five Forces Analysis (Porter’s model) of the company shows the need to strategically prioritize competition and the bargaining power of customers in the industry environment. Michael Porter’s Five Forces Analysis model is a management tool for understanding the impacts of external factors in a firm’s environment. In Unilever’s Five Forces Analysis, competitive rivalry is viewed as one of the strongest external forces, along with the bargaining power of buyers. To ensure long-term success, the company must address the issues related to these forces. Unilever’s market position and organizational strengths are adequate to address such forces. A Porter’s Five Forces analysis of Unilever identifies competition and consumers as the most important forces in the company’s industry environment. The external factors related to these forces have a direct impact on Unilever’s financial performance in the consumer goods market.

Competitive Rivalry or Competition with Unilever (Strong Force) Competition is a major force in Unilever’s industry environment. This section of the Five Forces analysis identifies the external factors that present the impact of firms on each other. The strong force of competitive rivalry against Unilever is based on the following external factors and their intensities: • High number of firms (strong force) • High aggressiveness of firms (strong force) • Low switching costs (strong force) There are many firms operating in the consumer goods industry. This external factor imposes a strong force on Unilever. In addition, these firms are generally aggressive, further adding to the intensity of competition. Unilever also experiences tough competition because of low switching costs. For example, it is easy for consumers to switch from one

firm to another. Thus, a high level of competition is shown in this section of Unilever’s Five Forces analysis, highlighting the need to consider competitive rivalry as a high-priority force in the company’s industry environment.

Bargaining Power of Unilever’s Customers/Buyers (Strong Force) Unilever’s business and industry environment depend on the response of consumers to its products. The influence of buyers on business performance is considered in this section of the Five Forces analysis. Unilever must address the following external factors that lead to the strong force of the bargaining power of customers: • Low switching costs (strong force) • High quality of information (strong force) • Small size of individual buyers (weak force) The low switching costs make it easy for consumers to transfer from Unilever’s products to other companies’ products. This external factor contributes to the strong intensity of the bargaining power of buyers. In addition, consumers have access to high quality of information about consumer goods, making it even easier for them to decide when transferring from Unilever to other providers. For example, buyers can compare products based on online information. The small size of an individual consumer’s purchases has minimal impact on Unilever’s profits. However, the low switching costs and high quality of information outweigh this third external factor in the industry environment. Based on this section of the Five Forces analysis, the bargaining power of customers is one of the strongest forces affecting Unilever’s consumer goods business.

Bargaining Power of Unilever’s Suppliers (Moderate Force) Suppliers impact Unilever’s industry environment by affecting the level of supply available to firms. This section of the Five Forces analysis presents the influence of suppliers on companies. The following are the external factors that contribute to the moderate force of the bargaining power of suppliers on Unilever: • Moderate size of individual suppliers (moderate force) • Moderate population of suppliers (moderate force) • Moderate overall supply (moderate force) While Unilever has large suppliers like foreign firms that supply paper and oil, the average supplier is moderate in size. This external factor imposes a moderate intensity force on the consumer goods industry environment. In addition, the moderate population of suppliers enables them to impose significant but limited influence on firms like Unilever. Similarly, the moderate level of the overall supply adds to such significant but limited influence of suppliers. For example, any supplier’s change in production level leads to significant but limited change in the availability of raw materials used in Unilever’s business. Other firms in the industry are similarly affected. As shown in this section of the Five Forces analysis of Unilever, the bargaining power of suppliers is a significant but moderate consideration in the consumer goods industry environment.

Threat of Substitutes or Substitution (Weak Force) Substitutes can reduce Unilever’s revenues and the strength of firms in the consumer goods industry environment. The impact of substitution is determined in this section of the Five Forces analysis. In Unilever’s case, the following external factors are responsible for the weak force of the threat of substitution: • Low switching costs (strong force) • Low substitute availability (weak force) • Low performance to price ratio of substitutes (weak force) The low switching costs enable consumers to easily use substitutes to Unilever’s products. This external factor imposes a strong force on the company and the consumer goods industry environment. However, the overall impact of substitution is weakened because of the low availability of substitutes. For example, it is easier to access Unilever’s Close-Up toothpaste from grocery stores than to obtain substitutes like homemade organic dentifrice. In relation, most substitutes have low performance with minimal or insignificant cost difference when compared to consumer goods readily available in the market. This condition makes Unilever’s products more attractive than substitutes, thereby further weakening the intensity of the threat of substitution. This section of Unilever’s Five Forces analysis shows that the threat of substitutes is a minor issue in the business.

Threat of New Entrants or New Entry (Weak Force) Unilever competes with established firms as well as new firms in the consumer goods market. This section of the Five Forces analysis considers the influence of new firms on the industry environment. The following external factors create the weak force of the threat of new entrants against Unilever: • Low switching costs (strong force) • High cost of brand development (weak force) • High economies of scale (weak force) The low switching costs enable new entrants to impose a strong force against Unilever. For example, consumers can easily decide to try new products from new firms. However, it is costly to build strong brands like Unilever’s. This external factor weakens the intensity of the threat of new entrants against the company. Also, Unilever takes advantage of high economies of scale, which support competitive pricing and high organizational efficiencies that new firms typically lack. As a result, the company remains strong despite new entrants. Based on this section of the Five Forces analysis, the threat of new entry is a minor concern in Unilever’s industry environment.

Unilever’s Five Forces Analysis – Summary & Recommendations Summary. Unilever deals with a wide variety of external factors, considering the extent of its operations in the global consumer goods market. However, as shown in this Five Forces analysis, such external factors lead to variations in the intensities of the five forces impacting the business. The following are the intensities of the five forces in affecting Unilever:

1. 2. 3. 4. 5.

Competitive rivalry or competition (strong force) Bargaining power of buyers or customers (strong force) Bargaining power of suppliers (moderate force) Threat of substitutes or substitution (weak force) Threat of new entrants or new entry (weak force)

Recommendations. This Porter’s Five Forces analysis highlights competitive rivalry and the bargaining power of buyers as the issues with the highest intensity in affecting Unilever’s business. The bargaining power of suppliers is also important but has limited impact on the company. The threats of substitutes and new entry have minimal effect on Unilever and the consumer goods industry environment. In this regard, strategic action must prioritize competition and the bargaining power of customers. A recommendation is for Unilever to further build its competitive advantage through product innovation. For example, the company can increase its investment to produce better and more competitive variants of its current personal care and home care products. This effort should reflect Unilever’s generic strategy and intensive growth strategies, which emphasize product uniqueness as a strategic approach. It is also recommended that the company must enhance its customer relations to attract and retain more consumers. For example, in applying Unilever’s organizational culture of performance on customer relations processes, higher quality request and complaint processing can improve consumers’ perception on the company and its brands. The company has the strengths needed to strategically address these issues (Read: Unilever’s SWOT Analysis: Strengths, Weaknesses, Opportunities, Threats). References • • • •

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Dobbs, M. (2014). Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45. Grundy, T. (2006). Rethinking and reinventing Michael Porter’s five forces model. Strategic Change, 15(5), 213-229. Roy, D. (2011). Strategic Foresight and Porter’s Five Forces. GRIN Verlag. U.S. Department of Commerce – The Consumer Goods Industry in the United States – Select USA. Unilever – Investor Relations – Annual Reports and Accounts Overview.

Unilever: SWOT Analysis & Recommendations UPDATED ON FEBRUARY 21, 2017 BY DANIEL KISSINGER

A shelf in Kaufland supermarket in Ceska Lipa, the Czech Republic displays products sold as Axe, one of Unilever’s brands. (Photo: Public Domain) A SWOT analysis of Unilever indicates diversification as a way to grow the consumer goods business.

Unilever is a leading consumer goods business in the global market. A SWOT analysis of the company highlights business strengths that ensure long-term success. The SWOT Analysis model identifies the relevant strengths and weaknesses (internal strategic factors) and the opportunities and threats (external strategic factors). Unilever’s SWOT analysis shows significant opportunities that the company can use for further international growth and expansion. The business is in a strong position to withstand the threats in its external environment. However, Unilever must consider all of the factors outlined in this SWOT analysis to guide strategic formulation for global operations. A SWOT analysis of Unilever depicts the conditions of the business, as well as its external environment. Strategies based on business strengths and market opportunities can boost Unilever’s performance in the long term.

Unilever’s Strengths (Internal Strategic Factors) Unilever’s organizational and business strengths are identified in this section of the SWOT analysis. Strengths are internal strategic factors based on the company’s conditions, such as human resources, production processes, organizational structure and investments. The following strengths are significant in Unilever’s consumer goods business: 1. Strong brands 2. Broad product mix 3. Economies of scale 4. Strong global market presence Unilever has some of the strongest brands in the consumer goods industry. This strength enables the company to penetrate markets and effectively compete against other firms. The broad product mix shows the extent of Unilever’s business growth. For example, the company has increased its product portfolio through years of mergers and acquisitions, leading to organizational growth and corresponding increases in revenues. On the other

hand, economies of scale support production efficiency necessary for competitive pricing strategies, as shown in Unilever’s marketing mix. Through years of international expansion, the company has also increased its market presence, which is a strength that reinforces brand popularity. The internal strategic factors in this section of Unilever’s SWOT analysis show strengths that the company can use to sustain global growth and success in the consumer goods market.

Unilever’s Weaknesses (Internal Strategic Factors) Despite its strong market position, Unilever has weaknesses that limit its potential growth. This section of the SWOT analysis presents the internal strategic factors that impose barriers to organizational and business development. Unilever must address the following weaknesses: 1. Imitable products 2. Limited business diversification 3. Dependence on retailers One of Unilever’s weaknesses is the imitable nature of its products. For example, even though the company heavily invests in its product development processes, other firms can imitate Dove and Rexona products. Also, in spite of its broad product mix, Unilever is weak because of limited diversification in businesses outside the consumer goods industry. Moreover, the company lacks direct strong influence on consumers, considering that retailers are the ones who directly affect buyers. Thus, based on the internal strategic factors in this section of the SWOT analysis of Unilever, the weaknesses emphasize the importance of diversification, innovation, and enhanced marketing efforts.

Opportunities for Unilever (External Strategic Factors) Unilever must take advantage of growth opportunities in consumer goods markets around the world. This section of the SWOT analysis determines such opportunities or external strategic factors that can facilitate business development. The following opportunities are significant in Unilever’s external environment: 1. Business diversification 2. Product innovation for health 3. Business enhancement for environmental conservation 4. Market development Unilever has opportunities to diversify by entering businesses outside the consumer goods industry. Diversification reduces market-based risks and improves business resilience. On the other hand, product innovation can increase Unilever’s product attractiveness by addressing the needs of increasingly health-conscious consumers. Similarly, the company has an opportunity to make its business more sustainable and environmentally friendly to attract and retain environmentally conscious consumers. In addition, market development can grow Unilever’s business by increasing revenues from the sale of its current products in new market segments. For example, the company can market its Lipton products as health drinks for consumers with special diets. The external strategic factors in this section of Unilever’s SWOT analysis point to major opportunities to grow the business despite its weaknesses.

Threats Facing Unilever (External Strategic Factors) A variety of external factors can limit or reduce Unilever’s business performance. The SWOT Analysis model considers these external factors as threats that the company must strategically tackle. The following are the threats relevant to Unilever’s consumer goods business: 1. Tough competitive rivalry 2. Product imitation 3. Increasing popularity of retailers’ house brands Unilever faces tough competition, which is a threat based on the strengths of other firms in the industry. Competitors threaten to reduce the company’s market share and corresponding financial performance. Product imitation is also a major threat against Unilever. For example, local firms can develop products highly similar to Unilever’s. Also, retailers impose a threat by selling their own brands. These brands are known as house brands, store brands or generic brands. For example, Costco uses Kirkland Signature as a house brand, and Walmart has its own house brands that directly compete against Unilever’s products. Based on the external strategic factors in this section of the SWOT analysis of Unilever, strategies must focus on improving the company’s competitive advantage.

Unilever’s SWOT Analysis – Summary & Recommendations This SWOT analysis of Unilever highlights a number of internal and external strategic factors that managers must include in strategy development. For example, the weaknesses of limited business diversification and imitable nature of products are significant because they influence business stability and performance. In this regard, a recommendation is to diversify Unilever’s business through acquisition of related firms not in the consumer goods industry. Also, Unilever needs to consider product innovation as an opportunity to boost business performance. It is recommended that the company must use its strengths, such as economies of scale, for product innovation to address competition and the threat of imitation. References • • • • •

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Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). Recent research on team and organizational diversity: SWOT analysis and implications. Journal of Management, 29(6), 801-830. Leigh, D., & Pershing, A. J. (2006). SWOT analysis. The Handbook of Human Performance Technology, 1089-1108. Nikolaou, E. I., Ierapetritis, D., & Tsagarakis, K. P. (2011). An evaluation of the prospects of green entrepreneurship development using a SWOT analysis. International Journal of Sustainable Development & World Ecology,18(1), 1-16. U.S. Department of Commerce – The Consumer Goods Industry in the United States. Select USA. Unilever – Investor Relations – Annual Reports and Accounts Overview. Valentin, E. K. (2001). SWOT analysis from a resource-based view. Journal of Marketing Theory and Practice, 54-69.

Unilever: Generic Competitive Strategy & Intensive Growth Strategies UPDATED ON FEBRUARY 21, 2017 BY JUSTIN YOUNG

Products sold as Rexona, one of Unilever’s brands. (Photo: Public Domain) Unilever’s generic strategy (Porter’s model) and intensive growth strategies maintain the company’s competitive advantage in the consumer goods industry.

Unilever’s generic strategy (based on Michael Porter’s model) builds competitive advantage by satisfying consumers’ specific needs and preferences. In Porter’s model, generic strategies are used to ensure organizational competitiveness necessary for business growth and resilience. In the case of Unilever, competitive advantage is based on product development approaches that integrate research to address market needs. In addition, the company maintains growth through a suitable combination of intensive strategies. Unilever shifts the prioritization of its intensive growth strategies based on the condition of the consumer goods market. The overall combination of such generic competitive strategy and intensive growth strategies ensure Unilever’s continuing success in its global operations. Using a generic strategy (Porter’s model) that directly addresses market needs, Unilever maintains competitive advantage in the global consumer goods industry. Such competitive advantage also enables Unilever to apply intensive growth strategies that match business needs, thereby supporting growth.

Unilever’s Generic Strategy (Porter’s Model) Unilever uses broad differentiation as its generic strategy for competitive advantage. The main focus of this generic strategy is its emphasis on features or characteristics that make the company’s products stand out against competitors. For example, Unilever produces personal care products like Dove Cream Bars to satisfy consumers’ need for soaps that are not harsh or drying. Despite their relatively high selling prices, such Unilever products are competitive because they stand out from a majority of soaps that focus more on cleaning than moisturizing. In this strategy, the company attracts customers to specially designed products. Thus, such a generic strategy aligns with Unilever’s vision statement and mission statement, which aim to support global sustainability and to increase vitality in consumers’ lives, respectively.

A strategic objective based on the differentiation generic competitive strategy is to grow Unilever through intensive efforts in product development. This objective focuses on developing products that stand out from the competition and attract customers. On the other hand, a financial objective linked to the generic strategy is to grow Unilever’s revenues in developing countries, which offer high growth opportunities. These opportunities are identified in the PESTEL Analysis of Unilever. The combination of these strategic objectives leads to competitive advantage reflected through products and a strong financial performance in the consumer goods market.

Unilever’s Intensive Strategies (Intensive Growth Strategies) Market Penetration (Primary Strategy). Unilever applies market penetration as its primary intensive growth strategy. In this intensive strategy, the company increases its sales volume to improve revenues and corresponding business growth. For example, in the home care market, Unilever aggressively sells its products in current markets, such as the United States and Canada. Such aggressive efforts increase the company’s ability to capture customers away from competing home care firms. Unilever successfully applies this intensive strategy by using the generic strategy of differentiation to make its products more competitive and attractive than others. A strategic objective linked to this intensive strategy is to grow the business through aggressively marketing Unilever products in the global consumer goods market. Product Development (Secondary Strategy). Product development functions as a secondary intensive strategy that Unilever uses for business growth. The company applies this intensive growth strategy by introducing new products that address consumers’ needs. For example, entirely new or new versions of Unilever’s personal care products are released over time to maintain or increase the company’s market share. This intensive growth strategy is in line with the company’s differentiation generic strategy for competitive advantage in the consumer goods industry. For instance, differentiation requires product uniqueness, which is applied in Unilever’s product development processes. This intensive strategy leads to the strategic objective of growing the company through continuous product innovation. Such innovation improves the product mix in Unilever’s marketing mix. Diversification (Supporting Strategy). Unilever uses diversification as a supporting intensive growth strategy. This intensive strategy focuses on establishing new businesses to grow the company. For example, to achieve diversification, Unilever acquires other businesses over time, such as the acquisition of the personal care business of Sara Lee Corporation in 2009-2010. The generic competitive strategy of differentiation supports this intensive growth strategy by ensuring that Unilever’s acquired brands offer unique features that attract target consumers. A strategic objective connected to this intensive strategy is to achieve growth by continuing the company’s trend of mergers and acquisitions. Such trend strengthens Unilever’s reach in the global consumer goods industry. Market Development (Supporting Strategy). Market development is used as a supporting intensive growth strategy in Unilever’s business. In this intensive strategy, the company grows by entering new markets or market segments. For example, Unilever can grow by marketing its current products as a new solution to unaddressed needs in certain market segments, such as infant care needs. However, the company already has significant presence in practically every consumer goods market segment worldwide. Thus, this

intensive growth strategy takes only a supporting role in Unilever’s business. The generic strategy of differentiation supports this intensive strategy by creating competitive advantage, based on product uniqueness necessary to successfully enter new market segments. A strategic objective based on market development is to grow Unilever by implementing marketing campaigns that highlight other potential benefits of its current products. References • • • • • •

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Dess, G. G., & Davis, P. S. (1984). Porter’s (1980) generic strategies as determinants of strategic group membership and organizational performance. Academy of Management Journal, 27(3), 467-488. Glazer, R. (1999). Competitive Advantage Through Information-Intensive Strategies. Handbook of Services Marketing and Management, 409. Merchant, H. (2014). Configurations of governance structure, generic strategy, and firm size. Global Strategy Journal, 4(4), 292-309. Parnell, J. A. (1997). New evidence in the generic strategy and business performance debate: A research note. British Journal of Management, 8(2), 175-181. Spry, A., & Lukas, B. A. (2016). Brand Portfolio Architecture and Firm Performance: The Moderating Impact of Generic Strategy. In Looking Forward, Looking Back: Drawing on the Past to Shape the Future of Marketing (pp. 866-867). Springer International Publishing. Unilever – Investor Relations – Annual Reports and Accounts Overview. Varadarajan, P., & Dillon, W. R. (1982). Intensive growth strategies: A closer examination. Journal of Business Research, 10(4), 503-522.

Unilever: Organizational Culture Characteristics, Analysis & Recommendations UPDATED ON MARCH 25, 2017 BY LAWRENCE GREGORY

Headquarters of Unilever Holland. (Photo: Public Domain) Unilever’s organizational culture of performance is supported through leadership and HR practices for optimal integrity of the consumer goods business.

Unilever is one of the largest consumer goods firms in the global economy. The progress of this company is linked to its organizational culture and the kinds of activities and policies leaders have implemented over time. Organizational culture, leadership and the human resources of a firm are all interrelated. Unilever is an integrated global firm. Any change in one area leads to changes or developments in other areas. The characteristics of these components also affect each other and the rest of the organization of Unilever. The company is successful because of the overall effectiveness of its leaders in supporting improvements in the organizational culture. Unilever’s corporate culture contributes to improvements in other areas, such as production and human resources. Unilever’s organizational culture supports high performance of human resources. The effects of this corporate culture are reflected on the company’s stable performance in the consumer goods industry.

Unilever’s Organizational Culture Type & Features Unilever has an organizational culture of performance, which emphasizes the significance of employee output. This corporate culture also points to the importance of criteria or measures used to determine required output and adequacy of output. Unilever’s organizational culture of performance has the following characteristics: 1. Focus on performance – individual performance and organizational performance 2. Focus on quality – quality of output in all areas 3. Efficiency – efficient work through technology and other tools Unilever’s organizational culture is focused on performance and quality. This corporate culture is observable in the long history of the company. The business has grown from a small firm to a global powerhouse. Such success is significantly based on the ability of Unilever’s organizational culture to instill high performance and quality in employees’ work ethic to maximize business output. For example, because of high quality, the company’s consumer goods remain competitive in the global market despite tough competition. This

emphasis on quality is also a reflection of the emphasis on product effectiveness in the firm’s mission statement (Read: Unilever’s Vision Statement and Mission Statement). Unilever has also mastered efficiency through technology and innovation in its internal business processes, including human resource development.

Leadership’s Role in Unilever’s Organizational Culture Unilever’s success is partly based on the ability of leaders to support a culture of performance and quality. For example, the firm’s leaders use market-based and resultsbased approaches to manage the business and drive performance higher. Market-based management uses market data to make changes in management tactics. On the other hand, results-based management focuses on the achievement of desired outcomes. These tactics facilitate human resource productivity and organizational performance in the consumer goods business. Thus, Unilever’s leadership and managerial approaches are a factor that maintains the company’s organizational culture. Unilever’s leadership-based approaches support the integrity of corporate culture implementation, especially in mergers and acquisitions. Integrity is important in mergers and acquisitions, where human resource integration is needed for successful organizational merging. For example, Unilever applies results-based management to implement its organizational culture throughout the newly merged organization. In this way, the company’s leadership supports integrity for the continuity of the organizational culture of performance and quality even after mergers and acquisitions.

Organizational Culture, Leadership, & Human Resource Structures & Practices Leadership reinforces the development of the organizational culture of Unilever. This organizational culture affects human resource structures and practices. Unilever reinforces the corporate culture of performance and quality through leaders’ regular monitoring and evaluations, as well as commitment and support. For example, the results of evaluations are used for guiding HR practices that reinforce Unilever’s organizational culture of performance and quality. Employees’ needs are identified and integrated in HR program enhancements. Through this cultural reinforcement, the company instills quality as a defining factor in employees’ performance and productivity.

Unilever’s Organizational Culture – Evaluation & Recommendations Unilever’s culture is a culture of performance. The different components of the business are focused on improving financial performance and quality of products. Through effective leadership, individual performance is supported. Through collaborative efforts of leaders from different departments, the firm also ensures an organizational culture of performance. Thus, this culture of performance is manifested at the individual and organizational levels in Unilever’s consumer goods business. Unilever’s organizational culture has room for further improvement. A recommendation is to improve policies to accommodate diversity. Higher diversity is inevitable in global business,

and the company must take advantage of it. Also, Unilever can implement improvements in information technologies. For example, these technologies can support workers in all areas through advanced tools for market research, customer relations and internal communications. These improvements can help strengthen the firm’s organizational culture of performance. References • • • • • • •

Chow, I. H. S. (2012). The roles of implementation and organizational culture in the HRperformance link. The International Journal of Human Resource Management, 23(15), 31143132. Jackson, T. A., Meyer, J. P., & Wang, X. H. F. (2013). Leadership, Commitment, and Culture A Meta-Analysis. Journal of Leadership & Organizational Studies, 20(1), 84-106. Jones, G. (2005, Nov. 28). Unilever: Transformation and Tradition. Harvard Business School. Ou, A. Y., Hartnell, C. A., Kinicki, A. J., & Karam, E. P. (2013, January). A Meta-Analytic Path Analysis of Leadership, Organizational Culture, and Unit Performance. In Academy of Management Proceedings (Vol. 2013, No. 1, p. 10037). Academy of Management. Ulrich, D. (2014). The future targets or outcomes of HR work: individuals, organizations and leadership. Human Resource Development International, 17(1), 1-9. Unilever – Our leadership. U.S. Department of Commerce – The Consumer Goods Industry in the United States. Select USA.

Unilever: Organizational Structure Characteristics, Analysis & Recommendations UPDATED ON SEPTEMBER 8, 2018 BY JUSTIN YOUNG

The Unilever building and Marco Polo tower in HafenCity, Hamburg, Germany in 2011. (Photo: Public Domain) Unilever’s organizational structure facilitates product innovation for competitiveness in the consumer goods industry..

Unilever’s corporate structure is responsible for ensuring adequate support for product innovation in the firm’s global business. A company’s organizational structure or corporate structure is the design that defines the arrangement and systems used to build and interconnect various organizational components, such as offices and teams. Unilever’s organizational structure adapts to changes in the consumer goods industry and global market. At present, the company maintains a structure that addresses corporate needs in terms of managing product types across the world. As a leading consumer goods firm, Unilever has an organizational structure that suitably supports diversified global operations. With an organizational structure that enables effective product development, Unilever continues its position as one of the biggest consumer goods companies in the world. Such organizational structural design ensures Unilever’s continuing success despite the complexity of its global operations.

Unilever’s Organizational Structure Type & Features Unilever has a product type divisional organizational structure. The organization is divided into components based on their product focus. For example, the company has a division for personal care products and another division for home care products. The following are the main characteristics of Unilever’s organizational structure: 1. Product type divisions (most significant feature) 2. Corporate executive teams 3. Geographic divisions (least significant feature) Product Type Divisions. A product type division functions as a unit that enables Unilever to manage the development, manufacturing, distribution and sale of its consumer goods. For example, corporate managers use this feature of the organizational structure to match markets needs with appropriate products. An advantage of this structural characteristic is its facilitation of the company’s efforts to apply product differentiation, which is Unilever’s

generic strategy for competitive advantage. This corporate structure is beneficial, especially because the company already has a diverse portfolio of products. Unilever maintains the following product type divisions in its organizational structure: 1. Personal Care 2. Foods 3. Home Care 4. Refreshment Corporate Executive Teams. Corporate teams are a secondary characteristic of Unilever’s organizational structure. This structural feature is based on business functions. For example, Unilever has a team for finance and another team for marketing communications. These teams make up the Unilever Leadership Executive (ULE) group. The following are the corporate executive teams in Unilever’s organizational structure: 1. Chief Executive 2. Human Resources 3. Research & Development 4. Supply Chain 5. Refreshment 6. Personal Care 7. North America 8. Home Care 9. Finance 10. Legal 11. Foods 12. Marketing & Communications 13. Europe Geographic Divisions. Geographic divisions are a minor feature of Unilever’s organizational structure. The company uses this structural characteristic to support regional strategies. For example, Unilever’s marketing strategies for Europe are different from strategies applied for Asian consumer goods markets. Also, this corporate structure feature is used to analyze the company’s financial performance. The following geographic divisions are maintained in Unilever’s organizational structure: 1. Asia/AMET/RUB (Africa, Middle East, Turkey; Russia, Ukraine, Belarus) 2. The Americas 3. Europe

Unilever’s Organizational Structure – Advantages & Disadvantages, Recommendations An advantage of Unilever’s organizational structure is its support for product development and innovation. For example, each product type division has its semi-autonomous capabilities to develop products that directly suit the needs in consumer goods market segments. This corporate structure is also advantageous because it enables Unilever to differentiate its products despite the large size of its global operations. A disadvantage of Unilever’s organizational structure is its minimal support for regional strategic implementation. Even though geographic divisions are one of its structural features, the company focuses more on product type divisions. As a result, there is limited

support for market-specific or regional strategic reforms. Thus, to improve this organizational structure, a recommendation is that Unilever must increase its emphasis on geographic divisions to empower regional managerial teams. Such structural change improves strategic effectiveness in regional consumer goods markets. References • • • • • •

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Gaba, V., & Joseph, J. (2013). Corporate structure and performance feedback: Aspirations and adaptation in M-form firms. Organization Science, 24(4), 1102-1119. Liao, C., Chuang, S. H., & To, P. L. (2011). How knowledge management mediates the relationship between environment and organizational structure. Journal of Business Research, 64(7), 728-736. Markides, C. C., & Williamson, P. J. (1996). Corporate diversification and organizational structure: A resource-based view. Academy of Management journal, 39(2), 340-367. Martin, R., Muuls, M., de Preux, L. B., & Wagner, U. J. (2012). Anatomy of a paradox: Management practices, organizational structure and energy efficiency. Journal of Environmental Economics and Management, 63(2), 208-223. Menguc, B., & Auh, S. (2010). Development and return on execution of product innovation capabilities: The role of organizational structure. Industrial marketing management, 39(5), 820831. Tang, F., Mu, J., & MacLachlan, D. L. (2010). Disseminative capacity, organizational structure and knowledge transfer. Expert Systems with Applications, 37(2), 1586-1593. Unilever – Investor Relations – Annual Reports and Accounts Overview.

Unilever: Operations Management, 10 Decisions, Productivity UPDATED ON FEBRUARY 21, 2017 BY ANDREW THOMPSON

Unilever produces Magnum ice cream under the Heartbrand product line. (Photo: Public Domain) Unilever’s operations management considers the 10 strategic decisions for optimal productivity in all areas of the consumer goods business.

Unilever’s operations management (OM) is responsible for keeping high productivity throughout the global organization of the consumer goods business. Operations managers develop procedures and processes to support the organization in achieving higher performance in the 10 strategic decisions pertaining to operations and productivity. Unilever’s operational performance directly supports financial performance. Thus, it is essential for the company’s operations management to address concerns in these strategic decision areas to maintain high productivity. As a leading consumer goods firm, Unilever has evolving operations management approaches to keep the business highly productive. In the 10 strategic decision areas of operations management, Unilever focuses on high productivity through effectiveness and efficiency in business processes. The resulting high performance ensures Unilever’s long-term success in the global consumer goods market.

Unilever’s Operations Management, 10 Decision Areas 1. Design of Goods and Services. The objective in this strategic decision area is to develop products that suit the organization. Unilever’s operations management attends to product development issues and challenges. Success is achieved through continuous innovation to address consumer expectations. In Unilever’s marketing mix, the high variety of consumer goods creates a complex set of needs for this decision area. For example, the company must maintain high productivity in developing new variants of soaps and lotions, while keeping beverage development highly productive. Operational requirements are based on these productivity and process needs to support the development and production of Unilever’s consumer goods. Operations managers at Unilever ensure design for effective output levels. These output levels correspond to market demand and organizational capacity. 2. Quality Management. In this strategic decision area, operations managers deal with satisfying consumers’ expectations on product quality. Unilever’s approach involves implementing quality standards in operational processes to satisfy product quality

requirements. For example, the company applies a threshold for defects and related issues in production operations. These operations management standards are derived from Unilever’s market research data, as well as conventions in the consumer goods industry. To maintain high productivity in quality management, corporate standards and local standards are applied for certain product lines to support the company’s generic and product development strategies (Read: Unilever’s Generic Strategies & Intensive Growth Strategies). 3. Process and Capacity Design. The objective of operations management in this strategic decision area is to ensure adequate resources and develop processes to support production. Unilever applies robotics and automation in most of the production processes under its control. This approach maximizes operational efficiency and productivity. For example, Unilever’s automation of the production of its home care products prevents inconsistency in quality. Operations managers can also adjust production capacity to address fluctuations in demand based on seasons and special occasions. Moreover, Unilever conducts regular evaluations of processes and capacity requirements to keep the business productive, while minimizing issues in operations. 4. Location Strategy. Efficiency and cost-effectiveness of locations of operations are the objectives in this strategic decision area of operations management. Unilever aims to minimize production costs and transport costs of its consumer goods to reach target markets. The company’s operations managers maintain facility locations that optimize proximity to labor markets, suppliers, and target consumers. For example, Unilever’s production hubs are typically proximal to the largest consumer goods markets. The company also avoids locations that have political and cultural issues that adversely affect operational productivity. This approach contributes to keeping Unilever’s business processes productive. 5. Layout Design and Strategy. Efficient movement of information and resources is the operations management objective in this strategic decision area. Efficient flow of information is achieved through computing technologies and networks in Unilever’s facilities. For example, operations managers easily access pertinent data through mobile and online consoles. Such data is applied to decide on business process adjustments to ensure productivity in Unilever’s facilities. Also, the company’s operational requirements are the direct basis for layout designs. For instance, Unilever maintains productive inventory operations through aisle layouts that minimize the travel distance of consumer goods across distribution facilities. 6. Job Design and Human Resources. This strategic decision area of operations management considers the sufficiency of human resources to support business operations. Operational efforts in this area support Unilever’s organizational culture of performance. For example, operations managers ensure job design and corporate culture alignment to support productivity and business performance. In this organizational aspect, Unilever’s operations management directly influences human resource capacity and the financial performance of the consumer goods business. 7. Supply Chain Management. In this strategic decision area, operations managers must ensure that the supply chain supports business strategies. Unilever’s consumer goods supply chain is extensively automated. The company’s operations management approach leads to high productivity. For example, managers focus on decisions based on supply and

demand variations in Unilever’s target markets. Minimal managerial time is consumed in addressing information flow for parties involved in the supply chain because online databases enable easy access to pertinent supply chain operations data. Also, operational efficiency of Unilever’s supply chain is maintained through regular monitoring and proactive problem solving. The resulting productive supply chain supports business performance and adds to the company’s strengths (Read: Unilever’s SWOT Analysis: Strengths, Weaknesses, Opportunities & Threats). 8. Inventory Management. Optimal inventory ordering and holding are the objectives in this strategic decision area of operations management. Unilever is concerned with maintaining an adequate inventory of consumer goods to enable the business to respond to changes in the market. For example, the company’s inventory size is sufficient to address sharp increases in demand. Thus, operations managers must accurately determine how much materials and consumer goods are needed in Unilever’s inventory. These amounts must sufficiently support the company’s productivity goals in its operations. To do so, Unilever applies the perpetual method and periodic method of inventory management. In addition, operational goals for the inventory are met through just-in-time (JIT) inventory management. JIT minimizes holding time and corresponding costs in Unilever’s inventory operations. 9. Scheduling. This strategic decision area focuses on short-term and intermediate schedules for resource utilization. For human resources, Unilever relies on localized operations management to address needs in local or regional consumer goods markets. For example, regional operations managers implement and adjust schedules based on regional market conditions. This approach makes Unilever’s operations flexible in satisfying target consumers. The flexibility also contributes to high operational productivity. 10. Maintenance. Operations managers aim at high reliability and stability of business processes in this strategic decision area. Unilever maintains redundancy measures to ensure process capacity when demand suddenly peaks. Also, the company’s operations management involves a flexible scheme that allows some degree of organizational movement of personnel within facilities. For example, Unilever assigns designated personnel to other areas for sufficient capacity and productivity when demand fluctuates in the consumer goods market. In addition, operational issues are proactively addressed through regular monitoring, evaluation and problem solving. For instance, Unilever has dedicated teams that analyze business processes to preventively implement solutions that keep operations highly productive.

Productivity at Unilever The productivity of Unilever’s operations is evaluated using a number of criteria or measures. With a global consumer goods organization and a diversified product mix, a wide variety of these measures are used to support operations management decisions. The following are some notable productivity criteria used at Unilever: 1. Batches shipped (Distribution facility productivity) 2. Units produced (Manufacturing productivity) 3. Inquiries addressed (Unilever’s consumer advisory service productivity)

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Liu, S., & Jiang, M. (2011). Providing Efficient Decision Support for Green Operations Management: An Integrated Perspective. INTECH. Najdawi, M. K., Chung, Q. B., & Salaheldin, S. I. (2008). Expert systems for strategic planning in operations management: a framework for executive decisions. International Journal of Management and Decision Making, 9(3), 310-327. Schrunder, C. P., Galletly, J. E., & Bicheno, J. R. (1994). A fuzzy, knowledge‐based decision support tool for production operations management. Expert Systems, 11(1), 3-11. Unilever – Investor Relations – Annual Reports and Accounts Overview. Verdaasdonk, P., & Wouters, M. (2001). A generic accounting model to support operations management decisions. Production Planning & Control, 12(6), 605-620.

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