Introduction
This paper is about strategy implementation, which is the most difficult aspect of strategic management of the Unilever Company and provides justification on how this might be the case. Unilever is one of the world’s top manufacturers of consumer products, which include food and personal healthcare products.
According to DeLong and Srivastava (2010), Unilever operates in a highly competitive environment with Nestle and Kraft being the main competitors. In 1999, Unilever started to implement a strategy known as the ‘Path to Growth’ based on capital efficiency, global buying, operating costs, and brand focus.
However, the main problem was to implement the strategy to achieve the goals and objectives according to the mission and vision statements of the company (Iguchi & Hayashi, 2009; Stevenson & Hojati, 2007). Typically, strategy implementation is the most difficult part of the strategic management process because it involves making changes to allow for and to accommodate the new changes (Aaltonen & Ikävalko, 2002).
Change is the core element of strategy implementation and making the change requires a significant deal of sacrifice, commitment to hard work from employees, and discipline to change and align the company to its strategic mission and vision statements (Hubbard & Beamish, 2010).
Strategy implementation
Description of Unilever’s strategy implementation
Unilever’s strategy implementation is based on five steps, which include strategic analysis, external and internal environmental analysis, formulation of the business strategy, and overall implementation of the strategy (Aladwani, 2001).
According to Hubbard and Beamish (2010), once the core elements of the specific strategy and the mission and vision statements have been written, implementing the strategy begins (Atkinson, 2006; Hill & Jones, 2007).
The core business strategy must be aligned to the corporate mission statements and objectives based on the company’s existing business model. Here, Unilever’s mission statement consists of the values, major goals, and objectives (Bartlett & Ghoshal, 2002).
The mission statement elements provide guidelines to the management and the workforce to work towards implementing the strategy and to keep the strategy in control to ensure workers do not deviate from the strategic path (Cravens & Piercy, 2008).
The mission provides an explanation of the existence of the company, and Unilever’s business strategy to ‘think-global and act-global’, using the cross-market subsidisation strategies (Clark, 2000; Cleland & Ireland, 1999). To effectively address the situation, the company has formulated finance, acquisition and merger, human resource, product development, and corporate strategies into the ‘Path to Growth’ strategy.
Hubbard and Beamish (2010) argue that the process of implementation is the most difficult part because it involves taking actions on different levels of the organisation, which include the provision of leadership, changing the organisational culture, organisational structure, and organisational controls to support and accommodate the new changes (Clark, 2000).
The company’s implementation of the ‘Path to Growth’ strategy was formulated and started in 2000 with the aim of sustaining the firm to achieve growth, reduce the cost of doing business, reduce the dependence on less qualified human resources, and to align the company to the goals and objectives defined in the strategy (Hubbard & Beamish, 2010; Fleisher, & Bensoussan, 2003).
The elements defined in the growth strategy include concentrating on product innovation, marketing better performing brands in the global market, concentrating on investment, reducing the brands to concentrate on profitable brands, and strongly focusing on brand development to achieve the projected annual growth of 6% and the profit margin of 16% (Hubbard & Beamish, 2010).
Leadership
According to Hubbard and Beamish (2010), leadership is one of the key elements of Unilever’s approach to strategy implementation because leadership provides strategic direction, effective management of the company’s resource portfolio, sustaining an effective organisational culture, putting measures in place to ensure ethical practices within the company affairs, and establishing balanced organisational control for brand building, innovation, market leadership, and brand awareness (Yusof & Aspinwall, 2000).
Here, Unilever’s leadership is about providing direction on what to be done and how it should be done in multicultural, local and foreign environments. In addition, the leadership provides direction on how to expand globally in the company’s activities (Hubbard & Beamish, 2010).
Unilever sometimes outsources the leadership services to companies which have specialised personnel, who interact with the senior leadership of the company to create the mission and vision statements of the company, which reflect the desired changes to implement in the organisation (Pearce & Robinson, 2000).
In addition to that, the leadership relies on total quality management techniques in some subsidiary plants, and not on the entire organisation. In the context of Hubbard and Beamish’s (2010) and Barney and Hesterly’s (2009) arguments, the company’s leadership focuses on the enhanced work organisation, team building techniques, which were very successful in certain centers including the personal products division.
Cooperate structure
Unilever’s cooperate structure consists of executive directors and non-executive directors. In addition, the company has senor leadership executives responsible for managing profit and loss to ensure the cooperate strategy of reducing losses and increasing profits are achieved and sustained (Maon, Lindgreen & Swaen, 2009).
The senior cooperate officers are interested in providing the required information on the success and other trends in strategy implementation to the executives for decision making (Morgan & Rego, 2009; Swayne, Duncan and Ginter, 2012).
Based on the company’s pursuit to achieve the growth strategy, Unilever streamlined the management and carried out some cooperate restructuring, which led to greater clarification on the roles and responsibilities of the management, the removal of bureaucracies and other unnecessary complexities, and the simplification of operations within the company’s different branches (Hubbard & Beamish, 2010).
The results were a reduction in operational costs and better performance in the global market.
Under the human resource strategy, the company’s human resource management undertakes to recruit competent staff that is responsible for the successful implementation of the growth strategy (Eisenstat, 2000).
Under the strategy, the management is responsible for the employee recruitment and placement to ensure the right people with the right skills are assigned to the jobs. In addition, the right human resource strategy is responsible for the replacement planning, employee compensation, employee training and development, and rotation in the departments (Eisenstat, 2000).
Strategy control
Control is one of the strategic approaches the company uses to ensure strategy is aligned to the goals and objectives of the growth strategy during the strategy implementation process (Graetz, 2000). Typically, the organisation uses strategy control mechanisms to provide incentives for the employees and the management to pursue the right activities to achieve the growth strategy.
In addition, the company has control systems in place to facilitate the performance and ensure effective monitoring and progress of the performance objectives (Von Krogh, Nonaka & Aben, 2001).
Here, the control systems provide the management with the ability and tools to take action to ensure correct decisions are made provide the management with the ability to respond to unexpected events in appropriate ways, and reward mechanisms, which are used to determine the approaches used to reward employees in executing their activities (Graetz, 2000).
To ensure strategic controls, the company struggles to accomplish strategic control through the behavioral, output, and personal controls. The company sets targets for the employees to achieve to ensure that the company gains for the synergy of group dynamics (Hubbard & Beamish, 2010).
Organisational culture
Organisational culture is one of the tools the company uses to implement its growth strategy. Typically, organisational culture is “the specific collection of values, norms, beliefs and attitudes that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organisation” (Von Krogh, Nonaka & Aben, 2001).
Unilever uses culture as one of the strongest tools to achieve coordination and integration of different strategies, which include financial strategies, human resource strategies, acquisition and mergers when they happen and when they are necessary, product development and innovation strategies, and the cooperate strategies in the pursuit of the growth strategy.
According to Hulland (1999), financial strategies enable the company to operate within the available resources, keep the debtors; stock as little as possible while ensuring that the working capital is appropriately maintained at the desired levels, adhere to the authorised accounting laws and practices, ensure that the sales revenue are consistently maintained and within the target, and ensuing that the purchasing function is kept at appropriate levels (Hulland, 1999).
Other the supporting strategies such as the corporate strategy is achieved and maintained by managing good relationship with governments where the company has its assets and operations, and becoming a leader in the consumer goods market (Hubbard & Beamish, 2010).
Towards the pursuit and fulfillment of the growth strategy, the company provides the management and the workers with the ability to effectively communicate decisions, guide the daily business relationships, and to develop a collective identity.
The core values of the organisation are controlled by a belief system, which controls the core values of the Unilever Company, which are linked to its growth strategy in a multicultural environment (Hubbard & Beamish, 2010).
Analysis and critique of the benefits and limitations of strategy implementation in the organisation
An analysis of the benefits accruing from the implementation of the strategy will follow after the company’s strengths, weakness, opportunities, and threats are analysed.
Analysis
A critical analysis of the company shows that when Unilever successfully implemented the new strategy, the company achieved a strong global brand strategy and became effective in brand marketing because it enjoys geographic and sectorial diversity with the ability to develop brands quickly using efficient control structures (Von Krogh, Nonaka & Aben, 2001).
The analysis shows that the company is weak in industry focus, non-core brands, risk neglect, lacks major patents, and has a pronounced absence from premium markets ((Von Krogh, Nonaka & Aben, 2001).
Studies show that the company is experiencing intense competition from other companies, is becoming stagnant in markets such as the North American market, and niche brands are gaining favor (Hubbard & Beamish, 2010). However, the opportunities include building on brand equity, widening consumer base, products for ageing population, and potential of developing markets.
In this analysis, it is clear that the motivation of the company was to gain access to a wide customer base in the world by taking the services and products closer to the consumer by the company’s rapid expansion into different markets in the world.
In addition to that, the company has continued to invest in innovation to make better and higher quality products through research and development programs. Here, the company has made significant investments in brand recognition, showing that its strategy implementation has been successful.
Another area of success was the restructuring that was carried out to ensure that direct responsibility was assigned the regional marketers could communicate directly with the top management to resolve problems and any other issues that could arise as a result of operations in overseas markets in the company’ growth strategy.
In addition, the restructuring has enable people working in different areas such as in Asia to move to Singapore to work as a team in product innovation and development (Hubbard & Beamish, 2010). In addition, the restricting enabled regional managers to be directly responsible for their own countries to reduce the time required to resolve issues of urgency (Hubbard & Beamish, 2010).
Benefits
Several benefits were realised when the company implemented path to growth strategy implementation. The benefits include better strategy formulation and implementation, which led to the reduction of core product categories to focus on (Hubbard & Beamish, 2010).
The reduction in the number of core products has enabled the company to concentrate in the provision of better quality services and products at lower costs, and has a achieved a reduction in the cost of production, leading to the elimination of unnecessary investments and costs in activities, which do not add value to the organisation.
In addition, the company has steadily gained competitive advantage over rival companies with the same product offerings (Von Krogh, Nonaka & Aben, 2001).
On the other hand, it has been demonstrated that the company has become the market leader in the core products the company decided to focus on. However, it is not the case for all countries the company has its operations in, but the trend is clearly demonstrated in the acquisition of national companies and in its investment in core activities (Ramos‐Rodríguez & Ruíz‐Navarro, 2004).
Prior to strategy implementation, the company was operating with 2000 brands, which were reduced to 1600 brands. In addition, the company has managed to stretch well-known and famous brands and categories such as Lipton into different beverages and brands.
In addition to the success in strategy implementation, it is clear that the company has successfully increased revenue and profits generated from its core brands, turnover of over 90% of its products have been experienced, new mergers have occurred, higher levels of brand awareness have been achieved, and higher profits continue to be registered in the company’s financial books (London & Hart, 2004).
For instance, by 2013, the company registered impressive financial growth compared with the previous year, by recoding a 10.5% products turnover, a 2.2 acquisition rate, and a 1.1% net of disposals because of the growth strategy. In addition to that, core earnings increased by 11% in the same period, showing that the global growth strategy was a success.
Critiquing
Unilever’s implementation of the path to growth strategy was successful in driving the organisation to achieve its growth strategy in the global market. However, several issues have emerged in the process of strategy implementation. For instance, the company identified the core strategy was to reduce the number of brands and concentrate on certain core brands (Hubbard & Beamish, 2010).
Typically, the company’s decision to concentrate on the core brands and leave other brands was a means to jeopardize its growth strategy because no research was done to determine the underlying reasons, which led the brands to underperform.
In addition to that, neglecting other brands could give rivals the opportunity to use the neglected brands to penetrate the market and provide the platform the competitors to enter the highly competitive market (Hubbard & Beamish, 2010).
In addition to that, the strategy for growth does not clarify the points where culture, which is an important asset of strategy implementation, is given the required emphasis. The company operates in a multicultural environment and seems not to be sensitive to the values, beliefs, and norms of different cultures in product innovation and development.
A study by DeLong and Srivastava (2010) shows that there is no effective strategic leadership and planning for strategy growth and development defined by the company.
Here, strategic leadership is one of the core principles of strategy implementation and if not properly factored, leads to the failure to achieve the goals and objectives if strategy implementation (Hubbard & Beamish, 2010). Here, the leadership style is critical in providing the strategic direction for strategy implementation and when not well articulated might not lead to the desired results.
Analysis of why implementation might be the most difficult part of the strategic management process in the organisation
Implementation is the most difficult part of the growth strategy because the company has not clearly demonstrated the point at which the different strategies get combined to provide the pillars for the overall growth strategy (Hubbard & Beamish, 2010). It implies that the management and the workers at different levels have to develop their own objectives to support the overall implementation of the overall growth strategy.
Such an approach could be very difficult to achieve the solid implementation of the overall strategy because each department has their own ways of approaching the implementation process.
In addition to that, providing leadership is very difficult because the company operates in an international environment with many countries, which have their own laws and regulations concerning labor rights, employment laws, and taxation and other laws, which are difficult to synchronize into a single package when implementing the strategies.
It is also important to consider the problem of diversity of beliefs, norms, and the values of different customers in a global environment.
The above scenario creates a situation where it becomes difficult for the company to distinguish the strategy to be implemented when different strategies need to be implemented and the scope of implementing the support strategies (Hubbard & Beamish, 2010). The reason is that each strategy requires different approaches to be implemented.
For instance, implementing the financial strategy means that different laws and regulations governing taxation and salaries among other laws have to be evaluated for each country the company has its operations. The dilemma is to determine the strategy to implement at a specific location not to contradict the final strategy (DeLong & Srivastava, 2010).
Another problem is that when managers and workers misinterpret the strategy, it becomes a problem for the managers to implement the strategy. For example, the workers might concentrate on old products or regions, and the managers want the workers to concentrate on specific products and regions, which they figure could lead to the success of the growth strategy.
Such misunderstanding could lead the team to leave the brand and product portfolio and concentrate in activities, which do not broaden the scope of the strategy. In addition to that, the process should start with preparation of complete details of the changes that are necessary to implement the strategy.
The “problem is because the management and the workers do not know what they don’t know” (Hubbard & Beamish, 2010). The solution in most instances is to look for an outside team to help in the provision of advice on what is not known.
If the company resources are inadequately aligned with the new strategy, the results make the strategy implementation process difficult to achieve. The problems related to resources include employing personnel with the wrong skills and lack of time to implement the strategy.
Other issues include unanticipated major problems such as wars and changes to laws and regulations, environmental factors, inadequate leadership, loss of focus, poor coordination, lack of information systems to monitor the implementation progress, and poorly done tasks.
Recommendations on how strategy implementation could be enhanced
The results from the study show that the company has to start the overall implementation strategy by communicating the case for change and ensure that all stakeholders understand the details and reasons for new change. In addition, the company needs to build consensus on how to start the implementation process.
The consensus should cover all employees including the top management. Once a common consensus has been reached, it is important to position key allies and people with skills in key positions and empowering them to move the implementation process. Rewards are necessary for achievers and resources should be reallocated to the key areas, which drive success.
The need for an implementation plan is critical because it clearly defies the scope, main activities and their implementation strategies, timeline for change, risk identification, contingency plans, communication efforts, and reporting and monitoring framework.
Conclusion
In conclusion, it has been established that strategy implementation is the most difficult part of strategic management because organisations, which operate in multicultural environments with different values, and beliefs find it difficult to provide leadership for strategy implementation. In addition, strategy controls to realign the company to its mission and mission statements are additional sources of difficulties.
Companies find it difficult to determine the strategy to implement among different strategies, employees do not understand the big picture of strategy to implement, lack of details on the approach to implement the strategies, leaving the product portfolio untouched, and failure to communicate and prepare people to get involved in strategy implementation.
Results from the study show that the organisational culture should be factored into the decision making process when starting the strategy implementation process to accommodate the organisational culture when new changes are introduced into the company.
In addition, the study shows that for Unilever to be successful in strategy implementation, the company should adopt and integrate the concept of total quality management into the strategy implementation process. It is important for organisations to communicate strategy change and the need for change, organisations can better prepare employees to be proactively involved in strategy change.
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