21 Strategic Analysis of Unilever

STRATEGIC MANAGEMENT ANALYSIS

Strategic Management Topic: Strategic Analysis of Unilever

Submitted to: Ms.Aiza

Submitted by: Sana Rahat Rao Zeeshan Bilal Nadeem Ayesha Rasheed

Submitted on: 29 February, 2016 Department: Business Administration Lahore Garrison University

Introduction

Unileveris a British-Dutchmultinationalconsumer goodscompany co-headquartered in Rotterdam Netherlands, and London,United Kingdom. Its products include food, beverages,cleaning agentsandpersonal care products. It is the world's third-largest consumer goods company and its products are available in around 190 countries. Unilever owns over 400 brands, but focuses on 14 brands with sales of over 1 billioneuros-Axe/Lynx,reams,Hellmann's,Knorr,Lipton,Lux,Magnum,Rama,RexonaakaSure\Degree\Rexoena\Shield,SunsilkandSurf. It is adual-listed companyconsisting of Unilever N.V., based in Rotterdam, and Unilever plc., based in London. The two companies operate as a single business, with a common board of directors. Unilever is organized into four main divisions - Foods, Refreshment (beverages and ice cream), Home Care, and Personal Care. It has research and development facilities in the United Kingdom the Netherlands, China, India and the United States

History of Unilever

Mission StatementVitality is at the heart of Unilever. Our mission is to meet every day needs for nutrition, home hygiene and personal care with brands that help people feel good, look good and get more out of life.Vision StatementUnilever is a unique company, with a proud history and a bright future. We have ambitious plans for sustainable growth and an intense sense of social purpose.

Purpose and GoalsOur purpose is to make sustainable living commonplace. We work to create a better future every day, with brands and services that help people feel good, look good, and get more out of life.Strategy and long-term financial target At the heart ofUnilever's strategy is a concentration of resources on areaswhereit haveleadingcategoryandbrandpositionsand which offer excellent opportunities for profitable growth, especially in personal care, developing andemerging markets and Vitality. The focus is primarily on developing the businessOrganically but acquisitions and disposals can also play a role in accelerating the portfolio development. ToexecutethisstrategyUnilever have reorganizedthebusinessto simplify the organization and management structure and toimprove capabilities in marketing, customer management, and research and development. Theresultisbetter allocationofresources,fasterDecision-making and a lower cost level. This transformation, known as the One Unilever program, allows us to leverage its scale both globally and locally . Unilever's long-term ambition is to be in the top third of its peer group in terms of total shareholder return.

Organizational Structure of Unilever

Brands of Unilever

Unilever is adual-listed companyconsisting of Unilever N.V., based in Rotterdam, and Unilever plc, based in London. The two companies operate as a single business, with a common board of directors

SECTION # 1

MISSION STATEMENT ANALYSIS

Mission Statement Analysis of Unilever

Concept of Mission Statement Amission statementis a simple and concise statement which is used as a way of communicating the purpose and short term goals of the organization.Characteristics of a Mission Statement Broad in Scope Less than 250 words Inspiring Identify the utility of a firms products Include nine components Reconciliatory Enduring

In the analysis of Unilevers mission statement we could see that all elements with the exception of one were clearly and wisely highlighted Unilevers strategic management personnel have selected a very vast meaning word Vitality which explains most of the components namely- technology, self-concept and concern for employees Their three product categories are also highlighted which is also giving a clue of their customer category. Unilever want their customers to have best quality food and sterile surroundings which has revealed their philosophy. In our analysis we find that one component was not highlighted which was market geography Although there is also a possibility that companys mission statement experts may have revealed the companys market geography but as we are inexperienced so we could not find it.

Unilevers New-proposed mission statement After deeply analyzing the components in Unilevers current mission statement and pinpointing the missing one ,we designed our new mission statement for Unilever We have tried our best to include all nine components while designing it The detailed analysis of current and proposed mission statement is given on the next page

Unilever Mission Statement

No.ComponentsVerdict

Reasons

1.Customers

Yes

Unilever has customized its customers having needs of nutrition, home hygiene and personal care.

2.Concern for SurvivalYes

In this mission statement, Unilever is showing its products as everyday needs for people which is actually helping them in their survival and increasing their profit.

3.Products and ServicesYes

The three everyday needs (nutrition, home hygiene and personal care) identified by Unilever reflects clearly what they are producing.

4.Concern for EmployeesYes

Vitality is incorporated in everyone linked with Unilever which reflects that their employees are creative, always seeks to bring energy, zeal and liveliness in their products

5.PhilosophyYes

Unilevers basic belief is to provide best quality with continuous creativity.

6.Self-ConceptYes

Unilever has wisely used a word vitality which has very vast meaning. It indicates their competitive edge of being creative

7.Concern for Public ImageYes

Unilever wants its customers to feel good, look good and get more out of life which shows its social concern towards its customers.

8.TechnologyYes

The word vitality reflects that there is energy, creativity and liveliness in their company which means they are constantly adopting new technologies.

9.MarketsNoThere is no geographical distribution of market in their mission statement.

Vitality8,5,6 is at the heart of Unilever4. Our mission is tofulfill every day needs2 for nutrition, home hygiene and personal care1,3 with brands that help people feel good, look good and gemore out of life5,8,7.

Unilever New Mission Statement

No.Components Verdict

Reasons

1.Customers

Yes

Unilever targets those people having needs of health, beauty, sterility related products.

2.Markets Yes

Geographically Unilever is serving all over the country.

3.Products and Services Yes

The products associated with Health, Sterility and Beauty indicates their brands.

4.Concern for Employees Yes

Unilevers employees are their valuable assets as they are working faithfully, and serving efficiently and whole heartedly.

5.Philosophy Yes

Unilevers basic belief is to provide quality products with integrity--sincerity, honesty and truthfulness.

6.Self-Concept Yes

Unilever has a competitive edge that it is leading consumer products company and provides people with superior quality products.

7.Concern for Public Image Yes

The phrase intense sense of social purpose shows that Unilever is deeply concern to invest in society thus reducing environmental footprint.

8.Technology Yes

The words leading consumer product company and operating creativity shows that Unilever is continuously trying to bring innovation through breakthrough technology.

9.Concern for Survival YesUnilever is committed to sustainable growth by providing daily needs becoming a leading consumer product company.

We are leading consumer products company 6, 8, 9 in Pakistan.2 Our mission is to fulfill daily needs 9 of our customers by superior quality products 5, 6 that will enhance their health, sterility and beauty1, 3. Our proficient employees4 are operating creatively6,8 with integrity5 and an intense sense of social purpose 7 to help position Unilever for sustainable growth 9.

Section # 2

SWOT Analysis of Unilever

STRENGTHS

WEAKNESSES

1. Wide Brand Portfolio(more than 400 brands)2. Pricing Power3. Innovative Culture4. Strong Supply Chain 5. Strong Brand Image6. Market Dominance (43% of market share) 1. High Debt Burden(78% Debt Financing)2. Nepotism(Khanewal Tea Factory Bribery Scandal)3. High Staff Turnover-35%4. Strategic Alliance5. Failure of Social Concern(Death of participant in Unilevers Clear men show due to lack of security)

OPPORTUNITY

THREATS

1. Enter into new product markets2. Social media presence3. High rate of population Growth4. Opportunity to diversify in Unrelated Businesses5. Capture market in developing countries. 1. Bad Publicity2. Possible increase of market share of Competitors like P&G 3. Rising Inflation4. Failure of Complex Supply Chain5. Continuous increase in Smuggling of tea and shampoos

SWOTMATRIX OF UNILEVERStrengths

Weaknesses

1. Wide Brand Portfolio1. Pricing Power1. Innovative Culture1. Strong & Complex Supply Chain 1. Strong Brand Image1. Market Dominance

1. High Debt Burden1. Nepotism1. High Staff Turnover1. Unusual Strategic Alliances1. Failure of Social Concern

Opportunities S-O Strategies W-O Strategies

1. Enter into new product markets1. Social media presence1. High rate of population Growth1. Opportunity to diversify in Unrelated Businesses1. Capture Market in Developing countries. 1.(S3-O1,04)Sustainable Growth2.(S2,S6-O3)Increase in purchasing power due to more customers3.(S1,S4,S5-O5)Improving Living Standard by fulfilling daily needs.1. (W4-O1,O4)Become self sufficient2.(O2-W2,W5)Create Awareness among people

Threats S-T Strategies W-T Strategies

1. Bad word of mouth1. Possible increase of market share of Competitors like P&G. 1. Rising Inflation1. Failure of Complex Supply Chain1. Continuous increase in Smuggling of tea and shampoos.

1.(S1,S6-T3)Retain customers2.(S3-T2)Gain more market share

1.(W2,W5-T1) Win back trust2.(W4-T2) Increase in revenue generation

SWOT Matrix of UnileverS-O Strategies1. (S3-O1,04) -Sustainable Growth By utilizing the strength of their innovative culture,Unilever can enter into new product markets and diversify in unrelated businesses For instance like pringles by P&G and Lays by PepsiCo, Unilever can come up with its chips. It can also introduce frozen foods or add a cosmetics brand in its personal care segment Like Nestle acquired an eye care products company Alcon,Unilever can also diversify itself in Unrelated business 2. (S2, S6-O3) - Increase in purchasing power due to more customers Unilever with the market share of 43% has a power to influence prices so they can easily handle high rate of Population growth i-e 2% increase per annum.

3 (S4, S5-O5) - Improving Living Standard by fulfilling daily needs. With their wide brand portfolio ,strong supply chain and strong brand image,Unilever can also capture markets in developing countries In their brand portfolio we can see cheap substitutes of almost every product Moreover they have a very strong supply chain which shows there is a timely connectivity of raw material to production units and to all retail stores and their brand image is very strong so they can easily access markets in developing countriesW-T Strategies1. (W2,W5-T1)-Winback Trust Unilever have a threat of losing trust of people if they did not gain trust of their people which was lost due to many scandals and rumors against them

2. (W4-T2)-Increase in Revenue Generation By reducing Unwanted strategic alliances like the one they did with Philips Unilever can increase its market share instead of losing it

W-O Strategies1. (W4-O1,O4)-Become self sufficient Unliver should lessen the unwanted strategic alliances which was actually done to double the revenue and focus on becoming self-sufficient by entering and diversifying into new markets2 (O2-W2, W5)-Create Awareness among people There are many scandals about Unilever that they do favoritism in recruitment and due to lack of security concerns ,one member in the Clear Men show died so through social media presence Unilever can regain trust of its customers through explain and clearing all complications

S-T Strategies1. (S1,S6-T3)-Retain customers With their wide brand portfolio and high market share ,Unilever can retain customers in the time of rising inflation i-e 8.1% It can provide inexpensive substitutes when prices are high

2. (S3-T2)-Gain more market share With its innovative culture, Unilever can make strategies that can help them to increase their market share, ultimately lessening the threat of competitors.

ConclusionAfter throwing light on some aspects of strategic analysis of Unilever we arrive at a conclusion that overall Unilever has considerable competitive edge in the market it is operating but despite these strengths the company has some shortcomings which might damage their reputation in future.Moreover Unilever has some potential opportunities which can help it to diminish these threats Furthermore this project has greatly benefited us and made us capable to understand what elements are vital and effectve in designing a mission statement and how companies analyze their internal and external environment and cope with challenges that exist around them

RecommendationFollowing are the couple of recommendations which might enhance Unilevers performance1. Show where they are serving geographically in their mission statement.2. Overcome weaknesses by utilizing strengths and availing opportunities Workout to decrease favoritisms in recruitment procedure and regain loyalty of their employees Cut down Unwanted strategic alliances thus reducing the weakness of losing market share Win back trust of people by organizing focus group sessions, seminars, and advertisements.3. Engage in related as well as unrelated diversification to maximize revenue.

LimitationsThe project on strategic analysis of Unilever proved to be very beneficial for us but we only analyzed some aspects of their strategic management due to time and budget constraints. Moreover our reference in Unilever was in another city due to which we became unable to visit the company In our next educational project, we aim to design all other models used in effective strategic planning of a company. Moreover we also aim to visit the companys strategic management department.

References:

www.Unilever.com.pk www.Unilever/Newspress.com www.Unilever Professionals.com www.the green supply chain.com www.Unilever Corporatewatch.com www.Unilever corporate crimes.com www.Unilever Scandals .com www.Scmr/Unilever.com www.forbes.com www.The News.com www.strategic analysis of Unilever.com.pk www.inbound logistics.com www.acadmis.edu.pk www.businesswire.com www.business world .com www.management study guide.com www.news.bbc.co.uk