Analysis of Transnational Corporation Unilever Essay

Introduction

The new economic environment and globalization have a great impact on retail companies and their position in the global market. Unilever is one of the multinational corporations influenced by technological and social changes. The competitive nature of many markets and the likely prospect of continued economic turbulence as national and global economic fortunes vary, require that business managers continue to look for opportunities to improve performance. This will primarily be achieved by improving effectiveness in the areas of winning/retaining customers, developing organizational competence and financial control. Unilever is a multinational company founded in 1911 by William Lever. Today, Unilever is the largest producer of branded consumer goods including food and beverages, personal care products and cleaning products. Unilever is a global company that operates in 100 countries with 227,000 employees (Unilever Home Page 2009).

Economic Changes

Economic changes involve low barriers to trade and tariffs, closer relations between nations and governments of different countries. These economic changes competition and rivalry between international and national corporations. Competition refers to the creation of differential advantage particularly by the effective management of innovation to meet changing marketing opportunities. Programmed innovation is the corporate method of achieving continuous market adjustment; competition is its stimulus (Fill, 1999). Keenly competitive situations stimulate new products, new processes, new services, new ideas, and new techniques as well as price adjustments. The degree of competition is suggested not only by quantitative measures of newness and number of competitors, but also by qualitative considerations. The recently formed alliances among European retailers such as Eurogroups, ERA, and AMS are believed to be a response of retailers to collaborations and mutual agreements among leading consumer goods manufacturers such as Nestlé, Unilever, and Procter & Gamble to optimize opportunities from the economic programs (Fill, 1999). For Unilever, a strategic alliance is a reaction of internationally active retailers to collaborative moves on the part of suppliers/manufacturers in a region where significant economic growth is likely to occur. By allying, members seek to combine their distinctive strengths to exploit an existing market opportunity together rather than waste time and money duplicating each other’s strengths. Unilever slowly shifted from its previous strategy of decentralized decision-making and began centralizing its marketing and distribution in response to the rapid emergence of regional and global markets (Bearden et al 2004).

Technological Changes

Unilever tries to improve its product range and market operations, so it invests in technological innovations. For Unilever, technological innovation and marketing are closely intertwined. While technology is science based, it is market dependent. The rate of technological change and the actual adoption of technology is market related. Just as technology influences our lifestyle, so marketing influences the environment that stimulates, accepts, and infuses technology (Fill, 1999). Estimates made of research and development expenditures, which indicate that half of all the R & D expenditures made in the U.S. have been made in the last ten years, point to the nature of future marketing implications. Increasingly, there will be a greater investigation of the intersection of marketing and technology (Bearden et al 2004). Various branches of engineering are becoming more relevant for the marketing discipline. Human engineering has a direct carry-over. Systems engineering, with the development of new analytical techniques for depicting and analyzing marketing systems, has already been mentioned (Drejer, 2002). Technological advances, to be sure, have resulted in high productivity and great economic gains. Nevertheless, neglect in considering the impact of technological pressures on environments has generated environmental imbalances and living problems. Unilever carries out extensive research, invests vast resources in designing and making a product, offers products for sales in the marketplace, develops supporting marketing programs, and yet finds consumers unresponsive (Paley 2006). There are few buyers, the product then has relatively little value, and resources have been wasted. Although this approach may appear to decrease economic efficiency, such a system maintains the consumer’s freedom of choice and has led to the achievement of the highest standard of living known to mankind. But in a market-focused economy, there is a trade-off between more efficient manufacturing processes and the free exercise of consumer choice (Bearden et al 2004).

Institutional Change

The government influences marketing practice through various laws and acts not designed to restrain. For example, patent laws, which permit companies to maintain monopoly positions for specified time periods, encourage innovation and market development. Also, nonlegal government actions have far-reaching significance. Unilever has to adapt to new legal and social demands imposed by the government on retail companies. The main issues involve environmental concerns and green technology, healthier products and new quality standards. This alignment depends on organizational arrangements, both internal an external. Since markets are dynamic and consist of threatening competitors, managers must continually review their organizational patterns. Although marketing organizations are dynamic, they must exhibit stable tendencies (Unilever Home Page 2009). They must seek “stable adjustment” or homeostasis — a tendency toward continuing equilibrium. Survival is, of course, a primary objective, although organizational objectives may shift through time. Once survival is assured, other goals, such as profitability or industry position, become important. As the goal focus changes, so does the influence of various executives, and the organizational networks change (Fill, 1999). Expanding sales, diversification, mergers, and cooperative linkages that intensify the pace of Unilever growth also place pressures on organizational functions and mechanisms that must be altered to cultivate market opportunity. Whereas technology influences organization, organizational arrangements also bring about the conditions and stimuli to advance technology (Kotler & Armstrong 2005). The advantages of global companies lie not only in their ability to mass produce, but also in their capacity to organize the marketing forces. Environmental forces and the existing business system together are critical factors shaping marketing organization. A balanced state of adjustment must be reached between them. Even though company environments establish conditions that marketing organizations and behavior must fit, internal and external organizational balances can be achieved. Internal adjustments occur through changing authority-responsibility relationships and departmental structures. External adjustments occur through the marketing mix and through the distribution network (Unilever Home Page 2009). There need be no wide chasm between the profit motive and socially responsible marketing decisions, between corporate marketing objectives and social goals, between marketing actions and public welfare (Company Profile of Unilever 2004).

Globalization

Unilever navigates the new business environment and adapt new products for existing markets. The advantage of product originality will allow Unilever to create a strong brand image. Brand loyalty will also be important factor in increasing the costs for customers of switching the products of competitors. Using mar­ket development strategy (Unilever Home Page 2009). Unilever will capture a larger share of a market for current products through market saturation and market pene­tration (Fill 1999). Taking into consideration cosmetics market, it is not enough to operate only on a national market. Global marketing will help Unilever substantially increase the level of sales (Company Profile of Unilever 2004).

PEST

Political stability in Europe and a Singe Market opens new opportunities for Unilever to meet customers’ demands and needs. Unilever can raise the level of competition. In order to compete on this market and remain profitable, Unilever should introduce aggressive advertising campaign informing potential consumers about new products and their benefits. To get the message different types of media will be used in accordance with particulate audience. “If deeper penetration into the same target market, for example, is required, then vertical advertising in the media that reach the same target market will be sought” (Hollensen 2007, p, 98).

Economic liberalization allows Unilever to enter Eastern Europe and expend its business. Low cost of the products can help Unilever to achieve better differentiation in market segments. Tech­niques used here include: temporary price reductions; extra value offers, including offers relating to future purchase; premium offers (incentives), including free mail-in premiums, banded free gifts (Bearden et al 2004). Often a critical determinant to estimating demand is the availability of information. The obtaining of such information can be extremely difficult and costly in many countries, particularly developing countries. Focusers, like Unilever, may be able to achieve better differentiation or lower cost in market segments, but they may also lose to broadly targeted competitors when the segment’s uniqueness fades or demand dis­appears (Unilever Home Page 2009).

Social factors involve cross cultural communities and improved standards of living. The marketing manager establishes offerings in accordance with his perception of both actual and potential consumer demand; he continuously monitors the marketplace to adjust to changing consumer wants and needs; gathers marketing intelligence to delineate market opportunities; and integrates, coordinates, and controls marketing resources to achieve more efficient systems of action. Marketing managers must set objectives for the marketing department that are in line with overall corporate objectives. Market opportunities stem from both external and internal forces (Kotler and Keller, 2005).

Technological forces demands innovative solutions and methods in production and marketing operations. Technological developments and changing market environments are externally based, whereas research and development, and modifications of products, packages, marketing channels, and advertising campaigns, are internally based. Opportunity assessment must account for both (Hollensen 2007). Corporate resources are balanced both internally and externally. Internal balance is achieved by the coordination of all marketing activity and its integration with the other areas of the business (McDonald 2002). External balance is concerned with the continuous adjustment of Unilever to its market environments through changes in product, price, package, channels, advertising, and selling. In this sense, marketing forces are viewed as shaping the total organization and all the business functions (Unilever Home Page 2009).

Conclusion

New economic, social and technological changes open new opportunities for Unilever to expend its business and enter new markets. Unilever is now becoming part of the total marketing system. The Single Europe programs have led to a gradual emergence of Pan-European consumers and to the unification of consumer attitudes. These trends encouraged major manufacturers to think in terms of European brands rather than regional or local brands.

Bibliography

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