Professional Documents
Culture Documents
Group Report
Unilever was created when British firm Lever Brothers and the Dutch-owned
Margarine
Unie signed an agreement
William Lever thought his first business lesson: there had to be potential in
improving
things
William want to package his quality soaps from several suppliers all under the
Sunlight
brand name
With the help of two soap-making experts they made a winning recipe formula
based on
Copra oil, tallow, cotton oil, and resin.
Production for packaging the soap with full-colour visual on the box started in
January
1885.
Two years later, his factory was bursting at the seams, making 450 tons a week
Laundry powder with Omo first conceived simply as a bleaching powder in 1908
William never forgot the lesson as a salesman: scale was a big benefit
1915 was his greatest triumph being the snaring of the famous Pears soap company
In 1892, he begun the integration back up of his supply chain of Copra oil to an
arduous
journey to Fiji and Samoa
In 1920, an investment in Nigeria was near disastrous and terminal for Williams
leadership
The Niger Company purchase had precipitated, installed one of the companys
accountants, Francis DArcy Cooper, as the new managing director
In 1921, the company's head office was moved from Port Sunlight to London
British Unilever Ltd. listed on the London Stock Exchange and capitalized in
sterling
The largest U.S. manufacturer of tea, the Thomas J. Lipton Company, was acquired
In the war years, Lifebuoy soap provided a free washing and bathing service to
bomb out
civilians in Britain
The most notable acquisition in 1943 was the purchase of Batchelor Foods
Unilever had majority stakes in Frosted Foods, owned by Birds Eye brands
according to
U.K. rights
In 1954, they launched Sunsilk in U.K. and by the end of the decade it was being
sold in
18 countries
Unilever runs the very first television advertisement for Gibbs S.R. toothpaste
In 1960, bought The Streets in Australia (now Magnum Bar) and Frisko in Denmark
Their U.S. Operations bought the Breyers Good Humor brand in 1961
1962 acquisition of Italys Spica, with Cornetto in its portfolio brought success
into the
company
Cif/Jif, the first liquid abrasive household cleaner, quickly spread around the
Unilever
empire
It is set to expand their slaughter house business for the Walls and Hartog Meat
Brands
The company was also expanding its operations in animal feeds, chemicals, paper,
packaging and transportation
Unilever was now in over twenty countries and taking on work from any non-
competing
advertiser
United African Company was the main agent for Caterpillars heavy earth-moving
equipment
Also for Africas largest brewer through joint ventures with Heineken and
Guinness
The company opened up operations in the Middle East and Pacifica Islands
Unilever enjoyed a 12% global market share, 50% of the market share accounted for
by
butter
In personal care, the company was barely beginning has a global share of 4%
In 1983, the supplier launched a brand of its own, a low-fat spread called
Country Crock
It has a production technology protected by patent with many years left to run
The French personal products division created Axe body spray (branded Lynx in the
U.K.)
Dove had been relaunched in the United States and then became the countrys best-
selling soap bar
GLOBAL EXPANSION
Belgium, Germany, France, Switzerland and Holland were the thriving Lever
Brothers
sales agencies by 1889
In 1906, 25% of the capital employed were from Belgium, Germany, Switzerland,
Canada, Australia and US
Sunlight Soap became the largest selling soap in the world in 1880s.
One of the best example of any western company cracking an emerging market is
India
India, as a leading part of the British Empire, first sold Sunlight in their
market by 1888,
soon followed by Lifebuoy in 1895
Two years later a modern soap factory was up and running in Bombay, followed by
the
setting up of third subsidiary, United Traders Limited
The three companies merged to form Hindustan Unilever Ltd. (HUL) in 1956
In the mid-1970s, the leading detergent brand Surf was decimated due to a low
cost
competitor
Launched Wheel in 1987, which six years later had a market share of over 20%
Came a merger between Hindustan Unilever Ltd. and Tata Oil Mills Company in 1993
In 1996, HUL formed a 50:50 joint venture with another Tata subsidiary, Lakme
In 1994, HUL and Kimberly Clark had a joint venture to market Huggies and Kotex
In 1994, Brooke Bond India and Lipton India (BBILI) merged to form Brooke Bond
Lipton India Ltd.
Brooke Bond India and Lipton India (BBILI) merged with Hindustan Unilever Ltd. in
1996
It was followed by the merger of Pond's (India) Limited with Hindustan Unilever
Ltd. in
1998
In 2000, Unilever had 74% of the government-owned bread business, Modern Foods
Unilevers first soap powder brand sold in Brazil had been the cheap and cheerful
Rinso
Excluding North America and Europe, Unilever India was accounting for 24%, South
Africa 11% and Turkey 7%
In 1913, Lever had built a soap factory in Japan but was sold after 10 years.
By 1990, Unilevers sales in China had reached a respectable $32 million a year
Though, the figure was still small in comparison to the companys total overseas
sales
(excluding Europe and North America) of nearly 5 billion a year
In Czech Republic, Hungary and Russia by 2001 the company had seven manufacturing
sites
It included a margarine factory in Moscow, dressing, tea, home and personal care
factories in St Petersburg, and food and ice cream factories in Tula and Omsk
MODERN BUSINESS
The company embarked on its first-ever hostile takeover bid, that is winning
through in
September 2004 at a price of 390 million
Brands such as Vaseline and Ponds catapulted Unilever to 4th largest global
skincare
company
This deal was consummated in 1989 for 996 million and soon followed by Calvin
Klein
with its highly successful Obsession and Eternity brands
One small acquisition that would pay back many times over was that of a small
U.S.
margarine manufacturer, J. H. Filbert
The same year that the Magnum brand appeared as a response to the entry of Mars
into
the ice cream category
The same year that the chemicals division was sold to ICI for a hefty 4.9
billion
Significant acquisitions includes the Helene Curtis hair-care business, Ben &
Jerrys,
Slimfast in early 2000
Breyers ice cream was also bought which made Unilever Americas largest ice cream
company
Bestfoods brought some leading brands into the fold like Knorr and Hellmans
40% of Unilever sales is from outside North America, an ideal fit with the
globalized
Unilever
The collateral damage was that 100 of the 350 factories would go along with
25,000
employees
Only a year later the company portfolio was down to 900 brands as 87 businesses
were
sold off
FEATURES THAT AFFECTED THE COMPANYS
INTERNATIONALIZATION AND THE STRATEGY OF ITS
DEVELOPMENT
Great Depression in 1930s The unfavorable economic conditions made the freshly
united
enterprise adapt and streamline as fast as possible.
World War II. Unilever was fragmented during the years of war as no connections
between German and Japanese enterprises This resulted in development of the
distinct
corporate culture.
local Unilever companies started to operate with high level of independence and
focused
on particularities of local markets.
The postwar European prosperity and growth of wealth influenced new Unilever
strategy.
The company starts to pay additional attention to perfection of process
solutions and
establishes R&D units.
In 1990s the company changed the strategy abruptly: the strategy of brand
portfolio
diversification was replaced with the strategy of focusing on key products and
best
selling markets with high growth potential.
By the end of 20th century Unilever decreased the number of marketed product
categories from 50 to 13 and, the company launched first environmental
efficiency
programs.
UNILEVERS XXI CENTURY GROWTH PROGRAM.
The company sold 140 various brands and focused on leading brands.
!
COMPANY STRUCTURE
Unilever was set up with two distinct capitalized entities. Those entities
shared the same
board of directors and had separate chairmen. It has an agreements in place
to ensure
dividends were paid equally
The first board meeting of each year has each country delegated executive to
the Special
Committee which had two British and one Dutch member who collectively acted
as the
CEO
There was an understanding that the Dutch side would run continental Europe,
while the
British side run the rest of the world
By 1960, an existed structure beneath the Special Committee and the boards to
manage
around five hundred operating companies
By 1960, Product Committees had set up for detergents, foods, toiletries and
edible fats,
all based in Rotterdam
In 1972, McKinsey (Unilever CEO at that time) had recommended extending co-
ordination to all the other European countries
In 2001, Unilever was organized into two global divisions, Food and Home and
Personal
Care, with the aim of optimizing synergies across the product portfolio
In early 2005, this was simplified into a matrix structure, with the two
divisions
responsible for strategy and brand development
The regional groups of each division were merged, with the regional level
responsible for go-to-
market execution
LEGAL STRUCTURE
The two parent companies, NV and PLC, together with their group companies,
operate as
a single economic entity
NV and PLC have the same Directors and are linked by a series of agreements,
including
an Equalisation Agreement, which are designed so that the positions of the
shareholders
of both companies are as closely as possible the same as if they held shares
in a single
company.
The Equalisation Agreement provides that both companies adopt the same
accounting
principles.
It also requires that dividends and other rights and benefits attaching to
each ordinary
share of NV, be equal in value to those rights and benefits attaching to
each ordinary
share of PLC, as if each such unit of capital formed part of the ordinary
share capital of
one and the same company.
ORGANIZATIONAL SET-UP OF UNILEVER
Chief
Executive
Director
5 Executive Directors (for
Finance, R&D, HR, Supply Chain, and
Marketing
!
BOARD OF DIRECTORS
The organization has a matrix structure, with the following basic departments
by
function:
Other departments: Human Resources, Finance, IT, Legal, and PR. Each
Department
is headed by a Vice President.
UNILEVERS ORGANIZATIONAL STRUCTURE FOR PRODUCT
INNOVATION
1. Personal Care
2. Foods
3. Home Care
4. Refreshment
1. Chief Executive
2. Human Resources
4. Supply Chain
5. Refreshment
6. Personal Care
7. North America
8. Home Care
9. Finance
10. Legal
11. Foods
13. Europe
2. The Americas
3. Europe
As one of the strong and healthy companies in the world with many successful
brands, Unilever
has an opportunity to expand into foreign markets that it is not yet operating in,
in order to gain
access to customers around the world. Supported by strengths of its four key global
brands
Dove, Sunsilk, Rexona and Lux, Unilever firstly entered in foreign market to
compete
internationally by entering just one or select few foreign markets. Once
successfully introduced
its product in several market, Unilever expands its success brand to many other
markets and
starting to compete globally.
In entering and competing in foreign markets for its cosmetics and toiletries
product, Unilever
follows a global strategy, also called by a think-global and act-global strategy,
The strategy
using essentially the same competitive strategy approach in all country markets
where the
company has a presence (with only minimal responsive to local conditions), sells
much the same
products everywhere (make minor adaption to local countries where needed to
accommodate
local countries preferences), strives to build global brands, and coordinates its
actions worldwide
(centralized).
In the cosmetics and toiletries globally competitive industry, there are no doubt
that Unilevers
major rivals over the next few years will be Procter & Gamble and LOral, both of
which give
significant resources to new product development activity, and respond to changes
in the market
faster than Unilever. LOral also has the benefit of being exclusively involved in
cosmetics and
toiletries, unlike both Unilever and Procter & Gamble which both have cross-
industry
involvement, such as in packaged food. Much the same group of rival companies
competes in
many different countries. Therefore, the competition pursues the company to be more
innovative
in developing its products and maintaining its brands. The following diagram shows
the market
performance of Unilevers skin care and hair care market share:
!
Unilevers marketing strategy for competing in foreign market
For its marketing strategy Unilever combines its strategy with social project in
many countries.
Educational campaigns have been important tools for raising awareness for Unilever
brands such
as Close-Up and Dove. The companys partnership with the World Dental Federation
has seen it
become involved in oral healthcare projects in both developed and emerging nations,
including
Austria and Brazil. In 2006, Unilever developed a low-cost toothbrush, the
Pepsodent Fighter,
which retails at a price equivalent to just EUR0.20 and is distributed in India and
Indonesia.
The company also has more directly brand-related programs, including Close-Ups
Project Smile
in Nigeria, which used small kiosk outlets to showcase both its products and oral
hygiene
information, and the Dove Self-Esteem Fund, which has joined with organizations
such as the
Girl Scouts of the USA and the UKs Eating Disorder Association to fund educational
Body Talk
programs in schools to improve body-related self-esteem.
In the 1990s, Unilever began to transform its worldwide detergents activities from
a loose
confederation into a tightly managed business with a global strategy. The shift was
prompted by
Unilevers realisation that its traditional way of doing business was no longer
effective in an
arena where it had become essential to realise substantial cost economies, to
innovate, and to
respond quickly to changing market trends.
But regardless of the process, Unilever has become a transnational company in the
most basic
sense: they think globally as well as act locally. The very nature of their
products requires
proximity to local markets; economies of scale in certain functions justify a
number of head-
office departments; and the need to benefit from everybodys creativity and
experience makes a
sophisticated means of transferring information across their organization highly
desirable. All of
these factors led to their present structure: a matrix of individual managers
around the world who
nonetheless share a common vision and understanding of corporate strategy.
In essence, Unilevers story is one example of how a single company has come to
manage far-
flung units that share a common culture. Over the course of its particular
lifetime, the company
has successfully weathered numerous changes. Within just the last 30 years, for
example,
Unilevers most important product group, the foods business, has gone through two
major
reorganizations. The details of how the foods business has reshaped itself in
response to new
market trends illustrate Unilevers overall combination of structural formality and
managerial
flexibility.
Linking Corporate Strategy to HR Strategy and Leadership
Development
At the same time, however, Unilever has continued to emphasize its willingness to
operate most
effectively in local markets as a multi-local multinational company.
Unilevers Corporate
Purpose Statement points out Unilevers focus on local culture, describing what the
company
aspires to be, as well as expressing its values and beliefs. In this multi-local
multinational
company, local operating companies are able to draw on the resources of a global
corporation
and bring together global scale and local relevance.
BRIEF BACKGROUND
This acquisition gave its internationalization strategy a big push as Stanley Works
was a fortune
500 company and had operations spread across a lot of regions across the world.
A key element of this strategy is maintaining local responsiveness along with cost
effectiveness.
Hence the company owns a lot of different subsidies in different countries. As
mentioned earlier
a big step in this direction was being acquired Stanley Works.
MAJOR ACQUISITIONS
Black and Deckers modus operandi in internationalizing itself has been inorganic.
Hence to put
it differently they have acquired a lot of companies to spread themselves
internationally. Some of
the acquisitions are listed hereunder.
1989 Acquired Emhart Corporation which includes the brand names Kwikset,
Price
Pfister faucets, Molly wall anchors, POP rivets, True Temper golf club
shafts and other
consumer and commercial products.
2010 Black & Decker merges with Stanley Works to become Stanley Black &
Decker
A pictorial representation of the subsidiaries of Black and Decker
ORGANIZATIONAL STRUCTURE
The organizational structure of this particular company is a Product Based Matrix
Structure.
Matrix structure is an organizational structure that facilitates the horizontal
flow of skills and
information. It is used mainly in the management of large projects or product
development
processes, drawing employees from different functional disciplines for assignment
to a team
without removing them from their respective positions.
Due to its strong brand name In 1950s and 1960s ,the company has got monopoly in
the market
of their products ,during this time company has expanded rapidly in international
market ,at that
time company has adopted localization strategy which focused on increasing
profitability by
customizing goods and services of the company in order to match taste and standard
of
consumers in different part of world .However in this strategy pressure of the cost
is low and
pressure of local responsiveness is localization is appropriate when consumer
tastes and
preferences differ across nations and cost pressures are not too intense.
Black & Decker has adopted decentralization organization structure rather than
centralization at
that time .Company choose decentralization because it gives top management time to
focus on
critical issues by delegating more routine issues to lower level managers,
decentralization favors
motivational research, its permit greater flexibility in an organization, its
results in better
decisions In decentralization, decision can made on information by any individual
rather than
any manager. moreover decentralization can increase control, decentralization can
be used to
establish self-contained subsidies within organization there was monopoly of the
companys
product in the market, it was best time to expand at international level, company
decided to
choose decentralization as they wanted to explore domestic market of every country,
moreover
there were no cost pressure at that time and company had more chance to increase
their
profitability. As company is adopting localization strategy, it creates strong
pressure for
decentralization operation decisions to foreign subsidiaries.
In 1980s company was still following decentralization and had 23 wholly owned
subsidiaries in
foreign nations and two joint subsidiaries. However by mid1980s decentralization
structure has
started becoming untenable as new competitors arrived in market such as Bosch,
Makita and
Panasonic as a result black & Decker monopoly eroded in market .due to stagnant
demand and
high cost ,company forced to shut down some of their production unit and company
move
towards the global standardization strategy where cost and demand became intense.
In 2000s, Black & Decker reduced workforce by 700 people to 4500 and they have
shut long
time established factories in US and Britain and shifting production to low-cost
locations,
cooperation separate their business into two global division one was charged with
global
development ,manufacture ,and marketing of corporation and other one charged with
professional DE Walt brand. As they were no changes in cost pressure reduction and
demand
was also minimal for local responsiveness ,company was following same strategy of
global
standardization strategy as they were following over the decade.
Basic Organization structure of the company was centralized as corporation has kept
shifting
production to low-cost locations ,since company is following global standardization
strategy
corporation implemented partly worldwide product divisional structure as well as
with domestic
product divisional structures, each division is self-contained and responsible for
their value
creation activities. Headquarters retain responsible for overall strategic
development and finance
control of the firm .World-wide division structure was planned to overcome
coordination
problem that arises with international division and worldwide area structures .This
structures
facilitates the transfer of core competencies within division worldwide operations
and facilitates
introduction of new product
Organizations are big and its very difficult to change structures and strategies,
its takes time to do
that. Since black & decker is big organization having their subsidiares in lots of
countries and
most substantive changes in an organization requires a change in structure and
change in
distribution of power .We can take an example of Phillips in 1990s increased the
roles and
responsibility of global product division and decrease the roles and
responsibilities of foreign
subsidiary which means the power influence of global division inclined and on other
side power
influence of foreign subsidiaries declined .as expected some managers of foreign
subsidiary did
not like the change and resist it which slowed down the speed of structure change .
Another problems comes while changing the strategies and structure is existing
organizational
culture ,every organization have some set of values on which whole organization
runs .if the
formal and informal social element in organization have been emphasizing consistent
set of
values for long period and if hiring ,promotion and incentive system have all
enforced these
values and then suddenly announces that these values will no longer be appropriate
in
organization that change effect employees .
Moreover national regulations including local content rules and policies pertaining
to layoff
might be difficult for organization to alter their global value chain. If the
organization wish to
take control of manufacturing away from local subsidiaries and give it to foreign
subsidiaries
and consolidate manufacturing at few locations .however if local content rules
required some
degree of local production and if regulations regarding layoff make it difficult
for multinational
to close it operations in the country ,a multinational may find that these factors
make it very
difficult for organization to adopt new structures and strategy .that the reason
company has
taken more than two decades to change its strategy and structures .
In the U.S. Consumer Products Group, sales decreased by more than 20% due to lower
consumer
spending. Similarly European sales decreased approximately 20%, as weakening
economic
conditions were compounded by inventory reductions by retailers. However on other
hand
Latin America has continued to deliver solid sales growth. Companys product has
been
diversified such ad DE-WALT, stud and joist drill, 36 volt stringer trimmer.
We can say that from last 50s years company has faced lots of challenges in terms
of making
their strategy and their organizational structure according to market situation
.They started their
company with decentralization and localization strategy as company had monopoly in
the market
and expanding their base at international level as well that was the appropriate
strategy and
structure implemented at that time as more competition arrived in market
in 1980s and
company has shifted their base to low-cost production locations like china and
Mexico ,they
move towards centralization structure and globalization standardization strategy
with time .
Till 2000s company has kept same global standardization strategy however they
partially
implemented world-wide product divisional structures. It depends upon company what
they use
either centralization or decentralization ,depending upon firms strategy and type
of
decision .black & Decker has experienced modest growth in 2000s but some of their
market has
been mature and saturated like in USA and Britain ,however Asian and Latin America
market is
still unexplored and not matured yet .
The black& Decker has taken more than decade to change their structures as
it is big
organization its difficult to change structures as organization culture ,national
regulations are
other problems arises while changing structures.
Staffing
Staffing is the process of filling positions in the organization with adequate
and qualified
personnel.
3.Job satisfaction
Importance of staffing:
Effective co-ordination
College level graduates who gain entry level professional employment in sales
with B&D
traditionally receive their training via a three ring binder that provides
information about
B&D products.
B&D has came up with a new employee training program where new hires go
through a
combination of classroom courses, online training and hands on learning about
construction and tool uses.
B&D sends its new hires to B&D university where they are trained about the
basic
application of tools which they can use in selling the products to retailers.
References
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.
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), 820-831.