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Company Profile

Overview

Unilever is a multinational corporation selling consumer goods including foods, beverages,

cleaning agents and personal care products. Unilever is a dual-listed company consisting of

Unilever NV in Rotterdam and Unilever PLC in London.

Unilever owns more than 400 brands including 11 "billion-dollar brands", which each achieve

annual sales in excess of €1 billion.

Revenue (£m and currency as quoted)

39,823 (2009)

Number of employees

163,000

Origin of ownership

UK/Netherlands

Geographical presence

Operates in 100 countries

Key contact

Santiago Gowland

Environmental Risks & Impact

• Measured by voliume, around half of Unilever's raw materials are agricultural or forestry

products. As a result, the company's principle environmental concerns are changing weather

patterns, water-scarcity and unsustainable farming practices.

• Unilever measures its product categories against four green indicators covering water, waste,

sustainable sourcing and greenhouse gas emissions.

• Most CO2 emissions associated with Unilever brands occur during consumer use as products

require energy to heat water for cooking and washing.

Targets & Performance

Emissions & Energy

• The company's aim is to reduce the carbon intensity of manufacturing operations by 25% by

2012 (measured as tonnes CO2 per tonne of production against a 2004 baseline).

• In 2008, the company reduced CO2 emissions by 1.6% per tonne of production compared to

2007.

• Unilever has reduced the carbon intensity of its energy use by 39% between 1995 and 2008.

This represents a 43% reduction in absolute terms.

• The company is investing in more efficient power and steam generation technology and the

development of less energy intensive manufacturing processes. For example:

- In Europe, Unilever has at least three CHP plants which use waste steam and hot water to

generate electricity.

- The Cu Chi factory in Vietnam uses solar panels to preheat water for steam generation.

- 2m point-of-sale ice cream freezer cabinets are being replaced with energy-efficient HC

alternatives.

• The company plans to reduce indirect impacts by working with customers and suppliers to

address wider impacts. For example, Ben & Jerry's has a Lick Global Warming campaign and an

ice cream flavour called Fossil Fuel.

• Around 4m tonnes of CO2 are produced each year because of Unilever's transport and

product distribution requirements.

Water

• Unilever relies on water for:

- Sourcing: the cultivation of agricultural raw materials

- Manufacturing operations: cleaning, cooling, as an ingredient

- Consumers: use of home care and personal products

• Unilever aims to:

- Reduce water in manufacturing

- Work with suppliers on issues such as crop irrigation

- Innovation on product design

• Since 1995, Unilever has reduced the amount of water used per tonne of production by 63%

by minimising water use and maximising water recycling.

• During 2008, there was a 3% reduction in water intensity compared to 2007 – from 3.05 m3

to 2.96 m3 per tonne of production.

• The water intensity of food production has dropped from 5.27 m3 in 2003 to 4.23 m3 in 2007

per tonne of production.

• Products aimed at reduced consumer water consumption include the One Rinse Comfort

fabric conditioner. In Vietnam, One Rinse Comfort reduces the water needed by two-thirds and

sales rose by nearly 30% in 2008.

Waste

• Waste intensity has reduced by 68% per tonnes of production between 1995 and 2008,

despite a 4.3% increase in the last year (7.56 kg/tonnes in 2007 to 7.89 kg/tonne).

• The company says this increase was due to:

- Legislative changes

- Under-capacity in effluent treatment

- Planned disposal of accumulated and inherited hazardous waste

• Changing packaging design is one of the ways in which the company wants to use to reduce

waste impacts.

• The PVC policy commits to replacing PVC in all packaging by the end of 2010, where there are

viable alternatives.

Resources

• Agricultural and forestry crops make up around half by volume of raw materials used by

Unilever.

• Unilever buys approximately 12% of the world's black tea, 6% of the world's tomatoes and 3%

of its palm oil.

• Unilever established guidelines for good agricultural practice based on 11 indicators including

water, energy, pesticide use and animal welfare. Growers and third-party suppliers are

encouraged to comply.

• Most of the world's oil palm is grown in South-East Asia where the clearance and burning of

forests contributes to global warming.

• Following a public challenge by Greenpeace, Unilever has agreed to draw all their palm oil

from certified sustainable sources by 2015.

• Unilever have also agreed to support a moratorium on further deforestation in South-East

Asia.

• At the end of 2009 around 80% of Lipton Yellow Label and PG tips tea sold in Western Europe

came from Rainforest Alliance Certified farms.

• Unilever also uses paper and board, plastic, glass, aluminium, steel and mixed material

laminates (for sachets and pouches) in its manufacturing processes.

Relationships

• Founding member of the Roundtable on Sustainable Palm Oil (RSPO), which it continues to

chair.

• Worked with Greenpeace to build a global coalition of companies, banks and NGOs to break

the link between deforestation and the cultivation of oil palm.

• Unilever worked alongside Tesco to persuade the Consumer Goods Forum, a global alliance of

300 leading manufacturers and retailers, to work together to end deforestation.

• Working with Greenpeace on climate-friendly refrigerants in an alliance called Refrigerants

Naturally!

• Founding members of the Carbon Disclosure Project's Supply Chain Leadership Collaboration.

• CEO Paul Polman co-chairs a sustainability steering group of The Consumer Goods Forum with

Sir Terry Leahy. They have set out the vision for the sustainability programme to drive and

communicate sustainability improvements throughout the value chain of the consumer goods

industry.

• Participated in a 2008 event hosted by Wal-Mart on water stewardship, sharing expertise on

reducing water use at all steps of a product lifecycle.

• Participated in an initiative with Kenya Tea Development Agency (KTDA), the UK Department

for International Development and Wageningen University to train smallholder farmers in

sustainable tea cultivation.

Company Background

The company was formed by a merger of Dutch Margarine Union and British soap-makers Lever

Brothers in 1929.

Unilever was one of the world’s first genuine multinationals with operating companies in more

than 40 countries.

The company produces and distributes a vast number of well known brands in the areas of

nutrition, hygiene and personal care that are used by consumers all over the world.

The history of Unilever dates back to 1885, William Lever established a soap manufacturing

company in the UK with his brothers and named the company Lever Brothers in 1885.

William Hesketh Lever was born at Bolton, Lancashire in 1852 was the son of grocer. Together

with James Lever, William Lever opened soap factory at Warrington, England, in 1885.

Their products, Sunlight, the world’s first packaged soap, was very successful. The soup they

made in ready moulded tablet.

Previously laundry soap was marketed in bars and grocers cut off pieces and sold them by

weight.

Until 1919 Lever was wholly own an controlled by the founder. By 1919, as a result of ingle

minded expansionist, commercial policies, his firm accounted for 60 percent of soap production

in Britain.

Two butter makers, Jurgen and Van den Berghs formed Margarine Union in 1927. The Dutch

Margarine Union merged with Lever Brothers of United Kingdom in 1929 to form Unilever.

During the 1930s, the structure and management do Unilever has been describe as a

professional largely non-family managed hierarchy.

For tax, purpose, two separate entities were established, one in London and another in

Rotterdam.

Historically, Unilever has grown to be a very multilocal company. However, while the company

used to work with regional supply chains on regional brands,

Unilever started to globalize their brands in the early and mid 1990s.

Known until the early 1990s as Philippine Refining Company (PRC), Unilever Philippines started

as an oil milling business which at its peak produced nearly 100,000 tons of coconut oil

annually. Today, the company is a leading manufacturer of home and personal care products,

foods, and ice cream. Its roster of brands include Axe, Best Foods, Block & White, Breeze, Clear,

CloseUp, Cream Silk, Domex, Dove, Eskinol, Master, Pond’s, Knorr, Lady’s Choice, Lipton,

Rexona, Selecta, Sunsilk, Surf, Tresemme and Vaseline.

Recognised annually amongst the Top 20 Tax Payers in the country, Unilever Philippines

employs over 1,000 people directly, as well as provides jobs for 10,000 indirectly (i.e.

distributors and suppliers), as a result of its business presence in the country. Employees and

business partners recognise that energy, creativity, the resilience to face changes and make

things better are all needed for business and people to grow together.

Unilever is known to be one of the few companies in the industry that has succeeded in keeping

majority of its manufacturing base in the Philippines. Its Personal Care unit made news by

securing the right to manufacture deodorant mini-sticks for local and export markets. It has

succeeded in entering the US market and achieved the milestone on producing its 100 millionth

stick in 2004.

The company has been a leader in introducing new technologies into the country since the

early days of its existence - margarine production in the 1930s, non-soap detergents, shampoos

and toothpaste in the 1960s and 1970s and state of the art sulphonation technology and

cogeneration power plant in the 1980s. The nineties has seen the company focusing on several

improvements in the Environment front one of which was the introduction of the first 100%

biodegradable detergent bar in the Philippines. Unilever works closely with the community and

other NGOs to protect and improve the environment.

Unilever Philippines is also a leading company in the area of Human Resources Management

and Development. Unilever has for decades also been known in the industry as a sound training

ground for young Filipino graduates. Some of its managers have progressed to senior levels in

government and public life. Unilever seeks to manage and grow its business sustainably,

focusing on three pillars as set out by the Unilever Sustainable Living Plan – Health & Well-

Being, Environmental Impact and Enhancing Livelihoods. We will develop new ways of doing

business if we are to meet the needs of the billions of people in the developing world who are

yet to become consumers and deserve a better quality of life.

Supply Chain Strategy

In 2010, Unilever launched an organizational transformation plan that completely switched

their gears. They decided to utilize supply chain sustainability to drive their growth. This was

not an easy conversion and had to start from the core. Not only processes and policies

changed, but people’s mindset changed, which is one of the most difficult challenges to

accomplish within an organization.

Their first key step was to incorporate sustainability as part of their long-term strategy. They

were no longer being sustainable just because other companies were doing so or external

factors were forcing them to do so. They created a vision for growth in sustainability, sales,

positioning, and consumption that would span for the next 10 years. Today, they can

confidently say that sustainability is part of their backbone.

To reach where they are today, Unilever maximized their available resources and went as far as

creating a dedicated division that focuses on aligning strategy to sustainability. This division not

only includes experts in engineering and business, but also agronomists that can provide a

different perspective and add the necessary skillset variety to the team. In addition to that,

Unilever has also redesigned some of their transportation processes to lower shipping and

handling costs; moreover, they also modified manufacturing by investing in eco-friendly

equipment to incorporate in their production line.

Last, but not least, they assigned a Chief Sustainability Officer and made every effort to learn

more about their suppliers’ business practices. The latter helped them “weed out” those

suppliers that were not aligned with their vision of being sustainable and could hurt their

reputation. The appointment of a CSO was crucial as this became a business unit that has

grown into the organization’s core beliefs.

In sum, there were two main “keys to success” that Unilever adopted to become a

Sustainability-Driven grown company:

1 1. Identifying, accepting, and committing to the need for change.

2 2. Aligning every party involved in the chain to their strategy to make sure they all moved

towards the same goals. Those who were not on board were left behind.

It sounds so simple, yet it completely changed their business, and they continue to grow

stronger today. How difficult might this approach be to replicate?

Unilever's impressive supply chain

We are ranked in the Top 10 supply chains in world by Gartner (number one in Europe)

We are one of the largest contract logistics companies in the world, second only to DHL

We are on track to reduce our carbon footprint by 40% by 2020

We have 150,000 customers globally who we serve with a range of almost 60,000 products

We source more than 200,000 different materials from 160,000 suppliers who work with up to

a million smallholder farmers

We run more than 250 factories which produce 130,000 tea bags every minute, 1 billion

deodorants annually and 2 billion Magnums every year

We collaborate with the Lotus F1 grand prix team to build a performance culture in our Supply

Chain.

Operations Management Strategy

As one of the strong and healthy companies in the world with many successful brands, Unilever

has an opportunity to expand into foreign markets that it is not yet operating in, in order to

gain access to customers around the world. Supported by strengths of its four key global brands

– Dove, Sunsilk, Rexona and Lux, Unilever firstly entered in foreign market to compete

internationally by entering just one or select few foreign markets. Once successfully introduced

its product in several market, Unilever expands its success brand to many other markets and

starting to compete globally.

In entering and competing in foreign markets for its cosmetics and toiletries product, Unilever

follows a global strategy, also called by a think-global and act-global strategy, The strategy using

essentially the same competitive strategy approach in all country markets where the company

has a presence (with only minimal responsive to local conditions), sells much the same products

everywhere (make minor adaption to local countries where needed to accommodate local

countries preferences), strives to build global brands, and coordinates its actions worldwide

(centralized).

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.

Once Unilever became one of the most successful global companies in the world, it has many

profit sanctuaries. By having multiple profit sanctuaries, Unilever has strong competitive

advantage over its competitor with a single or few sanctuaries.

In the cosmetics and toiletries globally competitive industry, there are no doubt that Unilever’s

major rivals over the next few years will be Procter & Gamble and L’Oréal, both of which give

significant resources to new product development activity, and respond to changes in the

market faster than Unilever. L’Oréal also has the benefit of being exclusively involved in

cosmetics and toiletries, unlike both Unilever and Procter & Gamble which both have cross-

industry involvement, such as in packaged food. Much the same group of rival companies

competes in many different countries. Therefore, the competition pursues the company to be

more innovative in developing its products and maintaining its brands. The following diagram

shows the market performance of Unilever’s skin care and hair care market share:

To win customers and sales away from select rivals in country markets, Unilever employ cross-

market subsidization. This offensive strategy is appropriate for Unilever which is compete in

multiple county markets with multiple brands and wide variety of products. Finally in entering

the emerging-country market Unilever prepare to compete on the basis of low prices. Unilever

pursued this strategy because consumers in emerging markets are often highly focused on

price, which can give low-cost local competitors the edge unless a company can find ways to

attract buyers with bargain prices as well as better products.

All strategies executed by Unilever for competing in foreign market resulting in moderate 5%

sales growth in 2006 – just above market performance – ensured that Unilever kept its position

as third largest player in cosmetics and toiletries with a 7% market share. Second-placed L’Oréal

fared a lot better, increasing the gap between the two companies in part thanks to its

acquisition of The Body Shop. Market leader Procter & Gamble remained over five percentage

points ahead of Unilever’s share. In 2006, Unilever remained comfortably ahead of Colgate-

Palmolive in fourth place. Unilever decision to introduce its product on emerging market such

as Asia-Pacific, Latin America and North America implies to the high contribution of Unilever

total revenue by 26%, 21% and 16% respectively.

On January 1st, 2013 Unilever released its results for the fourth quarter and full year 2012

which show good quality, profitable growth ahead of our markets. This underscores the good

progress we are making in transforming Unilever into to a sustainable growth company. The

past year performance of the company was as follows:

Turnover increased by 10.5% to €51.3 billion with a positive impact from foreign

exchange of 2.2% and acquisitions net of disposals of 1.1%

Underlying sales growth 6.9% comprising volume growth of 3.4% and price growth of

3.3%

Emerging markets underlying sales growth 11.4% now representing 55% of turnover

Core operating margin up 30bps to 13.8%; gross margin up 10bps, advertising and

promotions up €470 million at constant exchange rates

Core earnings per share increased by 11% to €1.57; free cash flow of €4.3 billion

ANALYSIS

Before analyzing the Unilever strategies for competing in foreign market, it’s important to

identify company’s resource strengths and weaknesses and its external opportunities and

threats, commonly known as SWOT analysis. This analysis provides a good overview of whether

the company’s overall situation is fundamentally healthy or unhealthy. Therefore, for a

company’s strategy to be well-conceived, it must be:

- Matched to its resource strengths and weaknesses

- Aimed at capturing its best market opportunities and erecting defenses against external

threats to its well-being

SWOT Analysis of Unilever Cosmetics and Toiletries

Based on the SWOT analysis we can infer that the company has very healthy and strong

condition in overall. Therefore, this condition provides high capabilities to the company and

offers wide opportunities for the company to compete in foreign market. Based on this analysis,

Unilever firstly entered foreign market in the year of 1950 by offering its product to European

community.

From the Unilever mission statement, we can conclude that the company expands into foreign

markets in order to gain access to customers around the world. Unilever recognized that its

product is commonly used for all people worldwide. The company’s objective to bring their

wealth of knowledge and international expertise to the service of local consumer pursues the

company to produce many nutrition, hygiene and personal care product with successful brands.

Therefore, Unilever are moving rapidly and aggressively to extend their market reach into all

corners of the world.

For its cosmetics and toiletries product, Unilever start to compete internationally by entering

just one or select few foreign markets. Unilever launched Axe/Lynx/Ego deodorant body spray

in the US and Canada in autumn 2002 and introduced Dove initially in Italy, France and Belgium

in 2002. Once successfully introduced its product in several market, Unilever expands its

successful brand to many other markets and starting to compete globally.

Through its successful growth strategy, Unilever has continued to build on the strengths of its

four key global brands–Dove, Sunsilk, Rexona and Lux–and by doing so, created strong

platforms for further growth in a number of cosmetics and toiletries sectors. This has been

particularly evident in deodorants, men’s grooming products and bath and shower products,

with strong growth for the Axe, Dove and Rexona brands. However, competition in the

cosmetics and toiletries industry remains tough, and while the current strategy is providing

results, greater product innovation and marketing support, as well as further development of

functionality in products will be needed to keep up with the market. There are no doubt that

Unilever’s major rivals over the next few years will be Procter & Gamble and L’Oréal, both of

which give significant resources to new product development activity, and respond to changes

in the market faster than Unilever. L’Oréal also has the benefit of being exclusively involved in

cosmetics and toiletries, unlike both Unilever and Procter & Gamble which both have cross-

industry involvement, such as in packaged food.

In a globally competitive industry faced by Unilever, much the same group of rival companies

such as Procter & Gamble and L’Oréal competes in many different countries, but especially so in

countries where sales volumes are large and where having a competitive presence is

strategically important to building a strong global position in the industry. Therefore, a

company’s competitive position in one country both affects and is affected by its position in

other countries. In this case innovation plays an important role. Thus, in a market where

innovation is often the key to growth, Unilever has invested in improving its research and

developing procedure further including speeding up the process of getting new products to

market. Through a mass-market positioning, much of the company’s organic growth strategy is

to leverage the value of key brands by cross-sectoral brand extensions, thus taking advantage

of customer brand recognition and loyalty, and creating marketing efficiencies. The Dove brand

is one of the examples of a recognized soap brand being successfully extended into skin and

hair care, deodorants, baby care and men’s grooming products.

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.

The company also has more directly brand-related programs, including Close-Up’s Project Smile

in Nigeria, which used small kiosk outlets to showcase both its products and oral hygiene

information, and the Dove Self-Esteem Fund, which has joined with organizations such as the

Girl Scouts of the USA and the UK’s Eating Disorder Association to fund educational Body Talk

programs in schools to improve body-related self-esteem.

Less directly, a Brazilian recycling partnership with Pao de Acucar, a major Brazilian retailer, not

only helped employ more than 300 people in a local recycling co-operative, but also gave

Unilever’s products greater in-store prominence as well as raising the profile of brands

including Rexona by having their logos on point-of-sale information and educational materials.

The company’s successful brand innovation program is supported with a high level of marketing

and advertising activities including most media. As there are many opportunities in the foreign

markets but the tendency of threats is also same as opportunities. The powerful R&D,

diversified and differentiated product line and market analysis are all important factors that

make a company enjoy its potential and good market share in foreign market.