Unilever Case Analysis (2017)
Unilever Case Analysis (2017)
Unilever Case Analysis (2017)
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 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
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.
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 energy-
efficient 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.
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 macro-
environment shown in this section of Unilever’s PESTEL analysis, there are opportunities to
improve business performance by making the organization more environmentally
sustainable.
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.
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.
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Oxford University Press, USA.
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Business Horizons, 17(5), 27-38.
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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
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.
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.
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.
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.
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
• 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
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 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.
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.
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.
References
• 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.
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• U.S. Department of Commerce – The Consumer Goods Industry in the United States. Select
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• 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
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.
References
• 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.
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research note. British Journal of Management, 8(2), 175-181.
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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.
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Journal of Business Research, 10(4), 503-522.
Unilever: Organizational Culture Characteristics,
Analysis & Recommendations
UPDATED ON MARCH 25, 2017 BY LAWRENCE GREGORY
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.
References
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performance link. The International Journal of Human Resource Management, 23(15), 3114-
3132.
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• Unilever – Our leadership.
• U.S. Department of Commerce – The Consumer Goods Industry in the United States. Select
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Unilever: Organizational Structure Characteristics,
Analysis & Recommendations
UPDATED ON SEPTEMBER 8, 2018 BY JUSTIN YOUNG
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.
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
References
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adaptation in M-form firms. Organization Science, 24(4), 1102-1119.
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• Unilever – Investor Relations – Annual Reports and Accounts Overview.
Unilever: Operations Management, 10 Decisions,
Productivity
UPDATED ON FEBRUARY 21, 2017 BY ANDREW THOMPSON
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).
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.
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)
References
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