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Unilever Strategic Analysis Research Paper

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Updated: Dec 4th, 2019

Unilever is an international consumer product manufactures like foods, personal care products, cleaning agents, and beverages; the company is listed in Rotterdam stock exchange in Netherlands as Unilever and London stock exchanges in the United Kingdom Unilever PLC, the company was founded by Samuel van den Bergh, Antonius Johannes Jurgens, and William Hulme Lever Viscount Leverhulme on 1st January 1930.

To remain competitive in the changing business arenas, the company has enacted a number of strategic management tools aimed at creating competitiveness in the company.

Current chief executive officer and non executive chairman Paul Polman and Michael Treschow are keen on developing strategies that are responsive to changes in the international business environment; the company’s main competitors are Nestlé, Reckitt Benckiser Henkel, and Procter & Gamble (Unilever Official Website, 2011).

This paper takes an internal and external analysis of the company; it will uses S.W.O.T. and P.E.S.T.L.E. analysis as the strategic tools of analysis.

Strengths

Through the years, the company has been able to build a strong brand name as well as develop strategic alliances and partnerships with those companies that can lead to an effective business. For the last 10 years, the company has been sect oral leader in Dow Jones Sustainability Indexes an indication of the ethical behavior and code of conduct adopted.

One of the strongest areas that the company has is the sales and marketing strategies, the policies enacted ensures that the company’s products reach the target market in the right form and quality.

The marketing department in collaboration with the research and development departments surveys the market and advice the company on the kind of products they are supposed to make depending with the country of operation.

For example in developing countries, the company has come up with some products that cost less than a dollar; this has been made possible by packaging the products in smaller quantity and affording to sell cheaply (Zi-Lin, Kwanghui and Pho-Kam, 2006).

Unilever management has appreciated that human resources are the most valuable resource for the company; according to the company’s website, in 2010, the number of employees from all the companies branches amounted to 167 000, drawn from more than 22 nationalities.

The diverse human capital is well blend and managed by the company’s human resources department; they are encouraged to give their contribution to the business for an effective operation (Horngren, Srikant & George, 2006).

In modern business environments, technology is used for various purposes; Unilever uses the technology of different advancements to facilitate its businesses. Information systems are used as communication method within the company as well as when communicating with the external stakeholders like shareholders and customers.

Internally the computerized systems include supply chain management systems, human resources management systems (when talking of human resources, not all operation are computerized the computerized ones include leave applications, payments and rewards), and communication systems like internet and intranet.

It is the company’s policy to keep updating its systems for better functioning (Jones, 2005). Being a multinational, the supply of materials and finished products is an important segment; the company always ensures that products get to the final consumer in the best possible quality and quantity.

To get supply of quality materials at an affordable rate, the company has an effective supply chain management system and maintains health relationship with its suppliers, and distributors. The company has a program called business partner code and supplier audit program which has the main goal of ensuring there is good relation with suppliers.

Other than having employed qualified and experienced accounting officers in the Finance & Accounting department; they recruit officers at the level of experienced officer, professionals at different levels and graduate trainees.

The profit margin of the company has continued to grow, in 2008, it had a contribution margin of 17.7 % this was up from 6.7% in 2000. The strength of the company’s share has been on an upward rise a move that has contributed to an increased demand for the share in the stock exchange.

To remain relevant and produce products that meet consumer needs, Unilever has a robust Research & Development Management team; the team is mandated with the task of advising the company on the best method and approach to marketing and products development.

To get information, the department takes data and information from different places and countries so as it can advise the management effectively (Carlon, 2009).

Weakness of Unilever

Although the company has been successful in international business arenas, there are some weaknesses that can be seen in its production methods and strategies.

One weakness is how to manage diverse cultures and still maintain uniformity of products made; different people need different products when the company decides that similar products will be made across the globe, and then some people stand to lose.

Another challenge that the company has is how to differentiate its products from those of its competitors using other parameters other than packaging.

Building a strong brand name using such an approach is becoming a challenge to the management. In the wake of fast technological development, the company has been caught off guard with technologies that are driving the business of its competitors; this has lead to lose of business.

External analysis of the company

Businesses are affected by external environments that they are operating; the effects are either positive or negative. The world is having an increased growth in population and economic living; majority of the world’s population are the youth who are using Unilever’s products.

Increased population is an increased demand for the company’s products but at the same time it calls for the management to be robust in coming up with products that will meet changing demands of the demographics. As peoples living conditions improved, the company is enjoying an increased demand for its products leading to economical gains (Penrose, 1995).

The rate of technological development facing the world is a benefit to the company; at the same time there are some challenges that the fast development is posing to the company.

Technology has enabled the company to have effective business processes that are able to yield high returns to the company, they include computerized management systems like supply chain management and logistics management (Sadler, 2003).

The world economic situation is improving from global financial crisis of 2007; when the economy was undergoing the crisis, the company sales were negatively affected, however with the current recovery, things are lightening up. In 2009 and 2010, the company recorded increased sales which are a positive indication of the company’s growth in strength.

Business at the global level has been facilitated by globalization, technology and communication networks growth; Unilever is fast diversifying its operations to take advantage of new markets that are coming up as a result of improved global business environment.

In modern globalizing world, Unilever stands to benefit as it can sell its products in the international markets; the political environment in the scenes is favorable for business thus it can diversify its processes to other countries other than the country of incorporation.

When operating the different countries, the company has to respect and uphold the country of operation laws and code of doing business.

The improved business environment comes with some challenge to the company: the issues facing the company can be traced from globalization where it has created some challenges to the company; the challenges come because there is an increased competition from international companies offering similar services.

Competition is coming from multinationals and domestic companies thus the company has to be on its toes to ensure that it stands strong amiddt the high competition (Neave, 1998).

Recommendation to remain stronger amidst the changing market

It is a high time that the company invests in diversification of its products; it should consider producing other products in line with those it is doing now, for instance it can start making designer perfumes.

The company is doing well in the manufacturing industry, however there is need to differentiate its products not on the packaging only but involve other aspects like tastes and different products.

The changes and treads in business is calling for strategic management processes in all the companies units; the management should make use of the research and development department more and seek advice on the kind of strategies to adopt.

Some of the strategies that can see the company perform better are total quality management (TQM), six sigma management, international human resource management and talent management.

References

Carlon, S. et al. (2009). Accounting: Building business skills. New York: John Wiley & Sons.

Horngren, T., Srikant M., & George F.(2006). Cost accounting: A managerial emphasis. Boston, MA: Pearson Prentice Hall.

Jones, G. (2005) Multinationals and global capitalism: From the nineteenth to the twenty-first century. Oxford: Oxford University Press.

Neave, E. H. (1998). Financial systems: Principles and organization. London: Routledge,

Penrose, E. (1995). The theory of the growth of the firm. New York: Oxford University Press.

Sadler, P., (2003). Strategic Management. Binghamton: New Down Press.

Unilever Official Website.(2011). Unilever. Retrieved from <>

Zi-Lin, L. , Kwanghui and Pho-Kam, W. (2006). Entry and Competitive Dynamics in the Mobile Telecommunications Market. Research Policy. 35(8), pp. 1147-1165

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