M26BSS

STRATEGIC MANAGEMENT

Group A11Qilin Lou 5213030Yuqi Yang 4204079Fei Xue 4547851Aziza Bendera 5399219Mohammed Faham 5323052

1. Introduction

2. External Analysis

3. Internal Analysis

4. Product Diversification

5. Mergers & Acquisition

6. Corporate Social Responsibility

7. Conclusion & Recommendations

Contents

About Unilever

• Multinational firm (Dutch and British Joint Venture)

• Founded in 1930

• 400 brands, 100 countries, 174000 employees

• Fast-moving consumer goods

• To meet everyday needs of people everywhere in the

world

External Analysis

PEST Analysis

Technology:1. Development of e-business;2. High level of automation;3. Advanced technologies

becomes a threat as it makes copy easier.

Political: 1. Unilever is subject to laws

and regulations both locally and globally;

2. Volatile of emerging market;3. Involvement of governments

and regulatory authorities.

Economic: 1. Current economic recession

affects consumer’s behavior;

2. Reduced consumer wealth.

Socio-culture:1. Has developed a strong corporate

reputation; 2. Socially responsible company;3. Conscious about safety and

health of its employees.

PEST

SWOT AnalysisStrengths

1. Operates around many countries

2. Strong portfolio of brands

3. Diversified product range

Weaknesses

1.Slow sales growth compared with the

competitors.

2.Low cash flow, high operation cost

Opportunities

1. Move operations to developing

countries;

2. High market share

3. Increasing need for healthy products

Threats

1. Strong competitors;

2. Increasing store brand;

3. Company’s image destroyed

SWOT AnalysisStrengths

1. Operates around many countries

2. Strong portfolio of brands

3. Diversified product range

Weaknesses

1.Slow sales growth compared with the

competitors.

2.Low cash flow, high operation cost

Opportunities

1. Move operations to developing

countries;

2. High market share

3. Increasing need for healthy products

Threats

1. Strong competitors;

2. Increasing store brand;

3. Company’s image destroyed

Five Forces Analysis

Existing competitive rivalry between

suppliers

1. Number and size of competitors

2. Strong distribution network required

3. customers are loyal to existing brands

Threat of new market entrants

1. Large industry size

2. Economies of scale

3. brand strength

Bargaining power of buyers

1. Large number of buyers

2. Increasing amount of price-sensitive

consumers

3. loyalty to the specific retailer

Bargaining power of suppliers

1. Large number of substitute inputs

2.High competition among suppliers;

3.Own brand product

Threat of substitute products

1. Low alternatives price

2. high alternatives quality

3. low nature of switching costs.

Low

Low

Low

HighHigh

Internal Analysis

Resource AuditResource Competence

Threshold

capability

Threshold Resources

Tangible:

Human resource(174,000)

Intangible:

Technical

knowledge(innovation)

Threshold

Competences

Customer Care

Products& brands

variety

Capability for

competitive

advantage

Unique Resources

Joint Venture (Pepsi Co)

R&D locations

Core Competences

Brand strategies

IT infrastructure

Management(HP)

Stakeholder Analysis

Corporate-Level StrategyAnalysis One

“We add vitality to life”

Corporate Vision:

• We work to create a better future every day.

• We help people feel good look good and get more out of

life with brands and services that are good for them and

good for others.

Product Diversification

• Strategy 1: Brand Power

•Strategy 2: Innovation

•Strategy 3: The Best Talent

•Strategy 4: Sustainable Living

Source: Unilever compass strategy 2014Source: Unilever compass strategy 2014

BCG Matrix

Household care(6.2%)

(Surf Excel,Cif) Refreshment(1.8%)

(Supreme Tea)Food(2%)

(Wall's)

Mar

ket G

row

th

Market ShareHigh Low

High 10%

-10%

0

personal Care(10%)

(Dove)

Low

CBG Matrix(2012)

Corporate-Level StrategyAnalysis Three

M&AUnilever emerged from a merger.Trend: From 1937 – 1978 Unilever made numerous acquisitions under the

strategy: Rigorous Growth (Fwd. & Back integration and related & unrelated diversifications)

From 1980-1995, the management of smaller brands slowed growth -> Unilever seemed too large, too diverse and experienced integration difficulties – Synergy unachievable. Hence = divest, focused growth

From 1995- Shrink to grow, focus on company’s core competences Strategy: Sustainability through restructuring From centrally-driven expansion to branched expansion

Resource: Riley,J (2010)

Corporate Strategy: Path to Growth (2000-2004)Downsized from 1600-400 brands, make room for high profile

brands like Ben & Jerry, Sara-Lee and Alberto CulverShifted from: “Merge as a path to Growth” to “Shrinking to Grow”Laid off 10% employees, 100 manufacturing units for cost reduction

“Nourishing the core” – RestructuringFocus on Key Brands Brand management & advertisingAdvantages of this strategy: Sales shot up by 16% Unilever’s share price recovered 30% Top line growth 4%-5% achieved

Corporate Strategy: Growth to vitality 2004-2010

Focus on 40 Mega world brands > billion $

Focus on developed and emerging markets

Concept of “One Unilever” to boost Focused Growth,

divestment and acquisitions were employed

The good news is… Unilever’s acquisition has:

Increased market power, Optimization - supply chain,

economies of scale, reduced risk & cost to new products and

their speed to market.

Reshaped the firms comp. scope = reduces dependence on

specific markets

Risks associated with M&A: Too large (too diverse) + decentralised structure= slow growth Inability to achieve synergy• When synergies do not generate real cash flows Workers lay offs• Employee rights• Effects on employee morale• Loss of human capital + lower performanceRestructuring strategies: 1. Downsizing 2. Down scoping: divest ( 210 disposals) for non core business

“Leads to greater focus” 3. Unilever complementary acquisitions create value and

revenue schemes4. Gives Unilever strategic positioning in markets it competes in

Corporate-Level StrategyAnalysis Four

CSRUnilever in the Victorian England era•Motives : Strategic leadershipUnilever during world war I, II post war activities•Motives: market forces.The Lady Lever Art gallery USLP • Responsible investment• Stakeholder theory: focused from mass employees to mass

consumers..• Utilizes a powerful integrated business strategy – not a hold on

(selective/invisible approach) Product & brands + Brand strategies • The power of brands and that brands do drive behavioural change

for the better

Unilever Sustainability Living Plan (USLP) 2010-2020Has three main goals Improve hygiene & nutrition (People) Halve greenhouse gases impact (Environment) Source 100 percent of a product’s raw materials sustainably.

(Profit)How sustainability works for Unilever? Links Financial success and sustainability• Cost reduction along the supply chain “environmental case” Sustainable brands grow market share and profits• sustainability and revenues is achieved by offering healthier

and more sustainable brands • engaging current and prospective customers through

awareness outreach campaigns

USLP … ‘Glocal’ Marketing strategy and social projects e.g. Project sunlight, “love your heart” and “Brush Day and Night” oral health campaign The changing Social contract: Using BRANDS and strong roots in the local market (D&E)

and first hand knowledge of the local & regional culture Competitive Rivalry => Brand Royalty

The triple bottom line:

People: USLP activities

reached 303 million people

2013

People: USLP activities

reached 303 million people

2013

Profit :marketing increases sales+

cut cost throughout supply

chain + Profit margin

Profit :marketing increases sales+

cut cost throughout supply

chain + Profit margin

Planet: GHG emission man.

dropped by 32% as at 2013

Planet: GHG emission man.

dropped by 32% as at 2013

Conclusion and

Recommendations

Conclusion

• Unilever offers value in terms of price and quality

• Initiating projects to improve and manage the

environmental impacts

• Huge transformation in terms of geographical and product

portfolio

• Decreasing turnover in western Europe: from 65% to 34%

overall sales

Recommendations

Although Unilever is already on the brink of its success but there is

always room for improvement.

• Being a global company it needs to operate according to local

preferences

• Needs to make its brand name stronger in order to make sure they

don’t go unnoticed

• Improving the quality instead of increasing the price- adds value

• Better strategy to maintain its level over the local competitors

ReferencesAngwin, D., Cummings, S. and Smith, C. (2007) The Strategy Pathfinder: Core Concepts and Micro-cases, Oxford : Blackwell Publishing. Library classification to be advised.Cashian, P. (2007) Economics, Strategy and the Firm, Hampshire: Palgrave Macmillan.Johnson, G., Scholes, K., and Whittington R., (2008) Exploring Corporate Strategy, 8th Edn., Financial Times/Prentice Hall, Harlow . Library classification 658.401 JOH. Lynch, R. (2006) Corporate Strategy, 4th Edition,Harlow: Financial Times Prentice Hall. Library Classification 658.4012 LYN.Stacey, R (2007) Strategic Management and Organisational Dynamics: The Challenge of Complexity, 5th edition, Harlow : Financial Times/Prentice Hall, Library Classification 658.4012 STA DeWit, B & Meyer, R (2004) Strategy, Process, Context and Content: An International Perspective, 3rd edition, Thomson International Business, Library Classification Reader, W. J. (1980) Fifty years of Unilever, 1930-1980 London:HeinemannUnilever annual report (2012) [online] available from <http://www.unilever.com/images/ir_Unilever_AR12_tcm13-348376.pdf > [27 Feb 2014] Figures &business facts (2014) [online] available from<http://www.unilever.com/aboutus/introductiontounilever/unileverataglance/index.aspx> [27 Feb 2014] Unilever mission (2014) [online] available from<http://www.unilever.com/aboutus/introductiontounilever/ourmission/> [27 Feb 2014] Supply management (2013) Unilever named best supply chain in Europe [online] available from<http://www.supplymanagement.com/news/2013/unilever-named-best-supply-chain-in-europe> [27 Feb 2014]Value Chain picture [online] available from<http://www.smartersolutions.com/blog/forrestbreyfogle/wp-content/uploads/2010/07/Michael-Porters-Value-Chain-Cc984967_BusDrivenEvalofDistComp02en-usMSDN_10.jpg > [27 Feb 2014]

ReferencesUnilever HR management (2013) [online] available from<http://www.unilever.co.uk/Images/6550_Unilever_MBY_6pp_HR_tcm28-365478.pdf > [28 Feb 2014]Unilever innovation (2014) [online] available from<http://www.unilever.co.uk/innovation/> [28 Feb 2014]Unilever procurement (2014) [online] available from<http://www.unilever.com/aboutus/supplier/unileverprocurement/> [28 Feb 2014]Distribution &transport (2014) [online] available from<http://www.unilever.com/sustainable-living/greenhousegases/transport/> [28 Feb 2014]Unilever & PepsiCo to expand ready-to-drink tea joint venture (2007) [online] available from <http://www.unilever.com/mediacentre/pressreleases/2007/UnileverPepsicotoexpand.aspx> [27 Feb 2014]Stakeholder analysis maphttp://leadershiplearning.org/blog/zoe-madden-wood/2013-01-29/project-management-starting-your-project-change The World Bank. (2007) ‘Tools for institutional political, and social analysis of policy reform’. Journal of writing studies [online], 125-126. Available from <http://books.google.com.hk/books?id=gZWncS4cd4gC&pg=PA126&dq=stakeholder+analysis&hl=zh-CN&sa=X&ei=vKsQU9ilCcmshQfoz4GgDQ&ved=0CEYQ6AEwAw#v=onepage&q=stakeholder%20analysis&f=true> [28 Feb 2014] Our suppliers (2014) [online] available from<http://www.unilever.com/aboutus/supplier/> [28 Feb 2014]

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