SUKKUR INSTITUTE OF BUSINESS ADMINISTRATION

FACULTY OF BUSINESS ADMINISTRATION

Name: Ventakash Pawan Bodani
CMS: 123-15-0017
Strategic Business Management
BS VII (A&F)
Fall 2018
Unilever Case Answers:
Case Questions:

1. Pastel Analysis and any identify key factors.

Pastel Define Reasons Counter
(Strategies)
Political These factors verify the  Part of UN post-2015 They have to
extent to that a development agenda. comply with
government might influenc  Foreign exchange risks. all the laws
e the economy or a  Employment laws in and
precise trade. various countries regulations of
countries in
which they are
operating
Economical These factors are  Developed markets are They should
determinants of associate stalling focus on their
degree economy’s  Emerging markets are strategy of
performance that directly slowing down sustainable
impacts a corporation and  Poor Economy growth.
have ringing long  Not predicting Through this
run effects. significant they can deal
improvement in market with any
conditions in 2015 economic
 Increased affluence in difficult
developing countries situation.
Social These factors scrutinize the  Partnership with NGOs They have to
social setting of the market, will help population in change the
and gauge determinants like need consumers’
cultural trends,  Consumer use behavior
demographics, and accounted for 68% of through
population analytics. Unilever’s GHG impact different
and 85% of its water sessions and
footprint. the majority campaigns that
of both off-target emphasized on
metrics was due to the need of
consumers’ use of hot sustainability.
water for bathing, hair
washing and laundry
  It takes long time to
break consumer habits.
Technological These factors pertain to  Growing customer They should
innovations in technology usage in focus on
technology which will have developing countries innovative
an effect on the operations  Any bad publicity can ways to
of the trade and therefore be heard quickly achieve their
the market favorably or unf through social media strategy.
avorably

Environmental These  Sustainable program They have to

factors embody all those will reduce get the
who influence environmental impact remaining two
or are determined by the  Increased concern over pillars on track
encompassing setting. climate change and with
importance of CSR. performance.
 Concern about the Build external
business environment, partnerships
characterizing it as a that support
“volatile and complex” the USLP.
with more headwinds
than tailwinds.

2. Analyze the changing industry structure in which EACH Company is operating by

using Porter’s Five Forces Model. How did Company counter the changes and challenges
of the industry competitive forces in which Company is operating by using Porter’s Five
Forces Model?
Five Forces Level of Reasons Counter (Strategies)
Threat/Bargaining
Power
Competitive  There are many A recommendation is
rivalry or
High firms operating in for Unilever to further
competition the consumer goods build its competitive
industry. advantage through
 This external factor product innovation. For
imposes a strong example, the company
force on Unilever. can increase its
 In addition, these investment to produce
firms are generally better and more
aggressive, further competitive variants of
adding to the its current personal care
intensity of and home care products.
competition. This effort should
 Unilever also reflect Unilever’s
experiences tough generic strategy and
competition because intensive growth
of low switching strategies, which
costs. emphasize product
 For example, it is uniqueness as a strategic
easy for consumers approach.
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  The low switching It is recommended that

power of
High costs make it easy the company must
customers for consumers to enhance its customer
transfer from relations to attract and
Unilever’s products retain more consumers.
to other companies’ For example, in
products. applying Unilever’s
 This external factor organizational culture of
contributes to the performance on
strong intensity of customer relations
the bargaining processes, higher quality
power of buyers. request and complaint
 In addition, processing can improve
consumers have consumers’ perception
access to high on the company and its
quality of brands. The company
information about has the strengths needed
consumer goods, to strategically address
making it even these issues.
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  While Unilever has The bargaining power of
power of
moderate large suppliers like suppliers is also
suppliers foreign firms that important, but has
supply paper and limited impact on the
oil, the average company.
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  The low switching The threats of
substitute
Low costs enable substitutes have minimal
consumers to easily effect on Unilever and
use substitutes to the consumer goods
Unilever’s products. industry environment.
 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  The low switching The threats of new
new entrants
Low costs enable new entry have minimal
entrants to impose a effect on Unilever and
strong force against the consumer goods
Unilever. industry environment.
 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.
3. You are also advised to conduct a strength, weaknesses, opportunities and threats
(SWOT) analysis for EACH Company and provide strategic suggestions based on
analysis.
Identify
Opportunities:  Continue to improve Unilever goal of reducing GHG and
water usage
 Continue improving sustainability goals
 It has to leverage its scale, its influence and its resources to
bring about a market transformation and engage other
companies to take broader responsibility
 They have to source 100% of its palm oil from certified and
traceable sources by 2020
 They have to champion sustainable agriculture and the
development of smallholder farmers
 They have to improve health and hygiene particularly for the
2.5 billion people without access to adequate sanitation or
safe drinking water
 They need more in brand mix
Threats:  Poor economy
 Shrinking demand in emerging markets
 Developed market stalling
 Competitors such as P&G
 Not predicting significant improvement in market conditions
in 2015
 Huge undertaking to halve the environmental footprint
 Lots of Skepticism from media and press such as Marketing
Week and Financial Times with the USLP
 Concern about the business environment, characterizing it as
a volatile and complex with more headwinds than tailwinds
 Developed markets had stalled and emerging markets growth
slowed.
Strength:  Rich history
 Operates as a wide selection of brands, a total of 400 brands
like Dove, AXE, Lipton etc
 Part of the UN Post- 2015 development agenda
 Taking leadership roles
 Partnered with NGOs such as Oxfam UNICEF
 Employee engagement is at 75% , higher than its competitors
 Brand workshops available for all brand leaders to help brand
imprint throughout company brands
 Unilever recorded its fifth consecutive year of top- and
bottom- line growth
 Cost savings programs had lifted core operating margins from
14.1% to 14.5%
 Investors had been rewarded with an 18% rise in total
shareholder return
 Strong employee engagement scores very strong at 75% well
ahead of the 63% level of 2009
 Third place position on LinkedIn’s list as “The World’s most
in Demand Employers in 2014
 Included in the Dow Jones Sustainability Index
  Number one on the 2014 list of “Sustainability Leaders” in
GlobeScan’s annual survey of worldwide sustainability
experts.
Weakness:  2014 Sales growth is at its lowest
 2014 revenues were actually down 2.7% from 2013
 2014 stalled stock price
 Some brands are harder to rebrand like AXE
 Doubt within the company view that creating sustainable
living brands do not support the large investments
 Some within the company view the goals of reducing GHG
and water usage as out of reach
 USLP not been fully embraced by some parts of the
organization
 Significant upfront investments to implement USLP
 Unilever was far short of objectives that encompassed its
whole value chain from sourcing to consumer use and
disposal
 GHG impact per consumer had actually increased 4% since
2010 and water use per consumer had fallen by only 2%
 Polman does not provide earnings guidance or publish
quarterly reports
 Of Unilever top 30 brands, only 11 were classified as
sustainable living brands

4. Global Business Strategy?

A global strategy used by the Unilever is preferable to localized strategies because Unilever can more
unify its operations and focus on establishing a brand image and reputation that is uniform from
country to country. It strategy implies to the Unilever success in building strong character brand such
as Dove, Sunsilk, Rexona and Lux. Moreover, with a global strategy Unilever should coordinated its
marketing, operational and distribution worldwide. Unilever is increasing its efforts to build on its
long-established local roots in developing regions. Through its well-established distribution network
in both the traditional and modern retail outlets and with a good ability to adapt successful global
brand concepts to suit local markets, Unilever is in a good position to be able to capitalize on the
growth forecast in these regions.

5. Unilever’s 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 company’s 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.

6. Who are Company’s competitors?

 P&G
  Johnson & Johnson
 Nestle
 Reckitt Benckiser

7. What are Core Competencies of Unilever?

Unilever's competencies are:

a. Growth mindset
You have a positive attitude about the company's future and a passion for growth and winning. You
take the lead and seek fresh opportunities; insist on innovation and never settle for 'good enough'.
b. Consumers and Customer Focus
You have a passion to improve the lives of our consumers and customers and bring their voice into
everything we do and the decisions we make. You are externally focused and go the extra mile in
order to exceed consumer and customer expectations.
c. Bias for action
You bring a sense of urgency to getting things done and making tough decisions, avoiding over-
debating or over-analyzing issues. You're results-focused, and drive for simplification by keeping the
end goal in sight at all times.
d. Accountability and Responsibility
You make commitments and hold yourself accountable for delivery. You take pride in delivering
work to the highest standards and acknowledges when things are not up to scratch. You let people
know clearly, at the beginning what is expected in terms of performance and hold them accountable
for delivery.
e. Building Talent and Teams
You inspire through action and lead by example. You challenge people to do their best work and
spend time coaching individuals and teams to ensure that they realise their full potential. You
constantly challenge yourself to grow and improve.

8. What are Key Success Factors of Unilever?

 Think long term
 Accept that no business is an island - create new networks
 Embed sustainability into the business – accept this is a journey of cultural transformation
 Don’t wait for the pull – push sustainability out to consumers
 Change in the system
 Quality products
 Attractive prices
 Cost leadership
 Brand Equity Awareness
 Corporate social responsibility
 Production output i.e. Plant utilization
9. Why company’s first strategy plan? How it different from current?
Ans:
Initially, enter in the market through joint venture. This is a joint venture of a Dutch-British
companies. 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. After establishing a brand, 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.

10. What they done differently?

Ans:
Don’t wait for the pull – push sustainability out to consumers
A common barrier to progress towards mainstreaming sustainability is deciding to wait until
consumers demand more sustainable products and services. Paul Polman, quite rightly, has decided
not to wait, and sees taking sustainability pro-actively to the millions of people that buy Unilever
products as a real priority.

Accept that no business is an island - create new networks

Unilever is clear that it can’t deliver a sustainable future on its own. Paul Polman is consistently clear
on this, “the issues that we are facing, issues of food security climate change obviously are issues that
cannot be solved at the level that they have been created; we really need a step change…companies
like ours…need to work with multiple stakeholders”.

11. How does competitive rivalry, competitive behaviour, and competitive dynamics effect
Company?

 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

12. How is the Company using its resources and capabilities to get competitive advantage and
why is it so successful in it?

Ans: Resources

The internal analysis emphasizes on the resources that the company possesses. The
competitive advantage of Unilever depends on the nature and the competency of the resources. The
more competent the resources are the more the company will enjoy sustainable competitive
advantage.

It is the manufacturer of more than 400 brands over 190 countries

The major advantage of this corporation is its brand recognition and longevity. It is the oldest
multinational corporation.
 The volume of skills; knowledge; experience embodied in the employees of the company and
excellent managerial skill are the strengths of Unilever.

Strong supply chain of the company has put it to an advantageous position.

Capabilities

Unilever have a broad range of scientific capabilities that enable us to serve consumer
demand for healthy and great tasting food. Unilever work in multidisciplinary teams to meet
consumer demand for healthy and great tasting food.

13. Recommendation?
This 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.