7/28/2019 Specification Mapping and Key Topic Briefing

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UnileverSpecificationMap&Issue/TopicSpotterThis

document

highlights

the

main

areas

of

the

AQA

GCSE

specification

that

arise

in

the

Unilever

case

study.

We

pointed

out

the

key

points

to

considerinyourrevisionwereturntotheseintheexamstylerevisionnotesandQ&A. Forthemostimportantissuesandtopics,wehave

notedbelowthemainthingsthatyouneedtorememberfortheexam. Makesurethatyouincludethesenotesinyourpreexamrevision!

SpecificationTopicAreas CaseStudyReferences&IssuesTheBusinessEnvironmentWantsinrelationtoscarce

resources,howtheyleadto

choiceandthedemandfor

goodsandservices

AstheUnileverwebsitestates:Wecreate,marketanddistributetheproductsthatpeoplechoosetofeedtheirfamiliesandkeepthemselvesandtheirhomescleanandfreshDemandforUnileverproductsdrivenbyconsumerspending whichinturnisaffectedbyfactorssuchasconsumer

confidence,howmuchincomethehouseholdhas

Natureofdemand:Unileversproductstendtobehouseholdessentials(e.g.soap,detergents,spreads)where

spendingwill

be

reasonably

predictable

ButrememberthatUnileverfocusesonitsbrandsaimingtoencourageconsumerstodemandgoodspartlyonthe

basisofthestrength(i.e.reputation,recognition,quality)ofitsbrands

Supply Unileverusesmanyrawmaterials(resources)initsproductsandprocesses.Palmoilisascarceresource.

Satisfactionofwantsthrough

thesupplyofgoodsand

services

Peopleneedhygieneandfood.Theywantbetterhygiene,tastierandmoreconvenientandhealthierfood.Unilever

brandsmeetsthoseneeds

Unileverproducesproductsdesignedtomeetdaytodayneedsandwantsofconsumers;fastmovingconsumer

goods(FMCG)

Specialisation,tradeand

exchangeand

interdependenceUnileverhasspecialisedintheproductionofhouseholdconsumergoods;ithasdevelopedgreatexpertiseinthese

productsandtheprocessesrequired,whichenablesittoproduceatlowercostthanmanycompetitors

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UnileverCase

Study

Specification

Map

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SpecificationTopicAreas CaseStudyReferences&Issueslocal

/central

government,

publicownership/

privatisation,European

UnionimpactonbusinessEconomic,social,

environmentaland

technological

effects

impactonbusinessdecisions

Twoveryimportantpartsofthespecificationareaddressedinthecasestudy.Youmustfocuson:

TheEconomyeffectoftherecession&theimpactofexchangerates TheEnvironmentUnileverandsustainability

TheEconomyThisisakeypartofthecasestudyitisspecificallyreferredtointheissuesforthefuturesectionattheend.

TheglobalrecessionandcreditcrunchhavereduceddemandforUnileversbrands.Thecasestudyindicatesthat

maintainingprofitabilitywithouthavingtomakelargenumbersofemployeesredundantisaconcern.

Other

case

study

references

to

the

economy

include:

RapideconomicgrowthintheeconomiesofIndiaandChina(emergingmarkets)whichhasincreaseddemandforpalmoil

TheeffectonUnileversprofitsofchangesinexchangeratesSomekeypointstobearinmindinrelationtotheeconomicenvironmentareasfollows:

Unileverisaglobal,multinationalbusinessitisexposedtochangesinjustabouteveryeconomyaroundtheworld,

not

just

the

UK.

That

means

that

Unilever

management

will

have

great

experience

of

dealing

with

economicdownturns,whereasforsomesmallercompetitorsintheUK,therecessionwasthefirsttheUKhad

experiencedformanyyears.

Unileverbeganamajorbusinessreorganisationsometimebeforethearrivaloftheglobaleconomicdownturn.Thisprogramme(calledOneUnilever)hasinvolvedalargenumberoffactoryclosuresandchangestothe

organisationalstructureofthebusiness,resultinginlargescaleredundanciesacrossthegroup. Thereasonfor

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SpecificationTopicAreas CaseStudyReferences&Issuesthis

rationalisation

programme

was

to

ensure

that

Unilever

was

able

to

remain

competitive

(efficient)

in

what

areverycompetitiveandtoughmarkets. Thisrationalisationprogrammecontinuedthroughouttherecent

recessionindicatingthatUnilevermanagementwerenotafraidofmakingredundanciesiftheirstrategysaid

thatsuchchangeswereneeded. YoucanreadmoreabouttheUnileverrationalisationprogrammeontheir

websitehere.

YouneedtothinkaboutthenatureofdemandforUnileversbrandedproducts.TherearemanynewspaperarticlesandonlinevideoswhichexplainhowUnileverhasbeenaffectedbytherecessionaroundtheworld. The

keypoints

to

come

out

of

these

resources

are

that:

EmploymentandconsumerconfidencearetwovitalfactorsthatdeterminehowfastUnileversmarketsgrowoflongtermmarketgrowth. UnfortunatelyforUnilever,unemploymenthascontinuedtoincreasein

manyofthecountriesinwhichittradesandconsumerconfidencehasremainedlow.

Unileverhasaveryhighshareofmanyofthemarketsinwhichitoperates. Thatsnormallygoodnewsforprofits(firmswiththehighestmarketsharestendtomakethebestprofitmargins). However,ifsalesinthe

overallmarket

fall

due

to

the

weaker

economy,

then

Unilever

will

suffer

along

with

the

market

simply

becauseitissobig

Consumerbehaviourhaschangedduringtherecession. TheMarketingDirectorofUnileverhasdescribedhowconsumershavetradeddownduringtheirsupermarketshoppinglookingforlowerpricedgoods.

Increasingly,consumersarealsopreferringownlabelgoods(e.g.Tescoownlabel),leavingUnileverbrands

ontheshelves

SothechallengeforUnileveristoensurethatitsleadingbrandsarestillabletocompeteeffectivelydespiteintense

competition

from

supermarket

brands

and

amore

price

conscious

consumer.

To

be

able

to

do

this,

it

isvitalthatUnilevermaximisesitsproductivity,producingatthelowestpossiblecostbutstillmaintaining

highquality. ThatiswhyUnileverhascontinuedtorationaliseitsproductionfacilitiesandorganisation

structuresduringtherecession

Exchangerates

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SpecificationTopicAreas CaseStudyReferences&IssuesExchange

rates

are

another

important

part

of

the

AQA

case

study.

HerearethekeypointstorememberabouthowexchangeratesaffectUnilever:

Unileveroperatesasamultinational. Itssalesandprofitsineachtradingcountrywillbeearnedinlocalcurrency. SoitssalesandprofitsintheUKwillbemadeinpounds,whereasinJapantheywillbeinYen,and

US$intheUSA.

Unileverisagroupacollectionoftradingbusinesses.ItistheGroupthatreportstheoverallfinancialresultstoUnilevers

shareholders

which

are

presented

in

one

currency

only

(euros).

That

means

that

the

financial

resultsofeachbusinessandcountrywithinUnileverneedtobetranslatedfromlocalcurrencyintoEuros.

Rememberthatexchangerateschangeeveryday. ThevolatilityinexchangeratescanhaveasignificanteffectontheresultsofamultinationalgrouplikeUnilever

Forexample,iftheEurofallsinvalueagainstthepound,thenthevalue(inEuros)ofprofitsearnedintheUKtoUnileverwillfall,sinceitrequiresmorepoundsofprofittoproducethesamevalueofprofitsineuros.

Lookingatcosts,manyofUnileversrawmaterialswillbepricedandboughtaroundtheworldinUSDollars($).Itiscommonforcommoditieslikesugar,oils,cocoaandotherkeyingredientstobeboughtandsoldinUSdollars.

IftheUS$fallsinvalueagainstacountryscurrency,thenitmakesgoodsboughtbyUnileverfactoriescheapertheyneedlesslocalcurrencytopaythesameamountofUSdollars.

Unileverusesacomplexseriesoftechniquestoreducetheriskandeffectsofchangesinforeignexchangerates.Forexample,itmakesextensiveuseofforwardcontractswherethepriceofacurrencyiseffectivelyfixedin

orderfor

Unilever

to

have

greater

certainty

about

their

revenues

and

costs.

TheEnvironmentThekeyissueraisedinthecasestudyissustainability.SpecificallythecasestudyraisesthepointaboutUnilevers

extensiveuseofpalmoilasakeyrawmaterialinmanyofitsproducts,andtheenvironmentalissuesresultingfrom

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SpecificationTopicAreas CaseStudyReferences&IssuesThe

case

study

refers

to

outsourcing

as

atopic

with

implications

for

one

stakeholder

group

employees.

Makesureyouknowwhatoutsourcingis,andwhatthepotentialbenefitsanddrawbacksare. OurQ&Aquestions

coverthis.

Differentaims,objectives,

formsofownership,funding

andliabilityofbusinessesUnileverisaverylarge,quotedcompany. Thefinancingstructureofthebusinessisnotaddressedexplicitlyinthe

casestudy.

Howownership,financeand

controlcanbecome

separatedwhereliabilityis

limited

Notreallyarelevanttopicinthiscasestudy.

Relationshipbetween

growthandobjectives

Unileverfacesapotentialdilemmaoverwhethertobemoreethicalattheexpenseofmaximisingprofitsinthe

shortterm.Thisisexplicitlyaddressedintheissuesforthefuturesection,sopreparetobeexaminedonthis

topic!

WehaveincludedsomeexamstylequestionsonthistopicintheQ&Asection. Keypointstorememberinyour

revisionare:

Unileverhasleadingmarketpositionsinsomeofthemostcompetitiveconsumermarketsaroundtheworld Thesemarketsareverymaturetheydonttendtogrowfast(e.g.justabouteveryonealreadyusesshampoo,

orbuysicecream)

ThesemarketsarehighlycompetitiveUnileversprofitsarecloselytiedtotheperformanceandpopularityofitsleadingbrands

Unileversshareholdersarelocatedaroundtheworldandaredominatedbylargerinstitutionalshareholderssuchaspensionfundsandotherinvestmentmanagers. TheyexpectthatUnilevermanagementwillfocuson

achievingthebestpossiblereturnsforshareholders

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SpecificationTopicAreas CaseStudyReferences&Issueschanges

in

size

on

the

businessanditsstakeholders

OrganisingtoAchieveObjectivesMarketing Contextisthekeyhere. RememberthatUnileverisamultinationalgiantwithareputationasoneofthemost

formidablemarketingoperatorsintheworld. MarketingisnotaweaknessatUnilever!

The

key

marketing

issues

referred

to

in

the

Unilever

case

study

are:

Brandingtheroleofbranding;whatadvantagesdoesitbringtoUnilever? Shouldbrandsbedevelopedtotargeta

globalaudienceorarenationalbrandsmoreeffective

PromotionalmixUnileverhastraditionallyusedextensiveadvertisingtolaunch,developandpromoteitsbrandsinthefaceofintensivecompetitionfromlikesofProcter&Gamble,KraftandNestle

Marketsegmentationusingproductinnovationandmarketresearchtoexploitopportunitiesinexistingandnewmarketsegments

Importanceofmarket

researchinidentifying

markets/marketsegments

athome/abroad,suitability

ofmarketresearchmethodsApplymarketresearch

techniqueswithin

simple

contexts

Unileverwilluseextensiveandwiderangingmarketresearchmethodstosupportitsinvestmentinresearch&

development.Akeyissuewillbehowwellaproductwillsellindifferentconsumermarketswheretastes,

preferences,fashionsandculturevarysignificantly.

However,thecasestudydoesnotfocusonmarketresearchasakeymarketingtopic.

Marketingmixandthe

principalmethodsof

marketingPromotionisakeyaspectofUnileversmarketing.Itusestelevisionextensivelytopromoteitsproducts.Italsouses

sponsorship(likeFloraLondonMarathon).

Oneareatofocusoniswhytelevisionadvertisingissoimportant(andeffective)forconsumerproductslike

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SpecificationTopicAreas CaseStudyReferences&Issuesshampoo,

washing

detergents,

other

personal

care

products,

ice

cream

etc

TVadvertisinghasbeencrucialformanyyears. YouveheardofsoapsonTV. Theyweregiventhatnamebecause

theprogrammesweredesignedtoallowforseveralwashingpowderandsoapcommercials.

BepreparedtoconsidertheadvantagesanddisadvantagesofTVadvertising.

Internationaldimension,

particularlyinthecontextof

theEU,

and

the

impact

of

currencies

ChangesinexchangesrateshaveimpactedonUnileverbecauseitisaglobalbusinessoperatinginmanydifferent

countries.

Refertothemoredetailednotesaboveonexchangeratesthisisakeytopic

Productlifecycleincluding

thewayitinfluences

marketingstrategyHeartbrandsisanexampleofextensionstrategytohelptheproductlifecycleoficecream.Itwasintroducedto

increaseinternationalbrandawareness.

Roleofdistribution,andthe

changingnatureof

distributionchannelsUnileverskeycustomersremainthemajorgroceryandhouseholdproductretailersaroundtheglobe. Unilever

reliesonthemfordistributionitdoesntselldirectlytohouseholds.

ProductionRelationshipbetween

marketing,product

developmentand

production;importanceof

qualityandqualityassurance

QualitywillbeakeyfactorforUnileverproducts. Unileversbrandshaveastrongreputationforqualityitisoneof

themainreasonswhyconsumersarepreparedtopayapremiumforaUnileverbrandcomparedwithalowerpriced

supermarketown

label

alternative.

Marketandproduct

orientation Itisamarketledproduct,withconsumergroupsbeingtargetedandproductsfittedtotheirneeds:Dovetorealwomen,PotNoodlestoyoungmalemarket.

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SpecificationTopicAreas CaseStudyReferences&IssuesWays

in

which

production

maybeorganised,including

specialisationanddivisionof

labour;howproductionmay

beimprovedthroughlean

productiontechniques,

automation,newtechnology

Limitedreference

to

production

organisation.

ThecasestudybrieflymentionstheuseofbatchproductionatBen&Jerrysbepreparedtoansweraquestion

askingfortherelativemeritsofbatchversusfloworjobproduction.

Infactthecasestudyisntquitecorrect. WhilstbatchesoficecreamaremadebyBen&Jerrys,themostsignificant

partoftheirproductionprocessinvolvesflowproduction!

Influenceofproductionona

companyslocation OriginallytheMerseyfactorywaspositionedtotakeadvantageoftheclosenesstoshipping.Moreimportantly,asreferredtoabove,Unilevernoworganisesitsproductiontobeclosetoitscustomers.Soithasnumerousmanufacturing,salesandR&Dlocations.

AccountingandFinanceSources,uses,management

offinanceNatureandimportanceof

financialandbudgetary

control,e.g.stockcontrol,

cashflowforecasting

Notsignificantissuesinthiscasestudy

Elementaryinterpretationof

finalaccounts:gross/netprofitpercentage,current/

acidtestratios,ROCE

SeecompanyaccountsinTable1onpage10.

Importanceofprofitasa

rewardforrisktaking;the

Adilemmaofethicsversusprofits.

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SpecificationTopicAreas CaseStudyReferences&Issuesethics

of

profit

taking

Classifycosts,e.g.fixedand

variable Palmoilisavariablecost.HeadofficeinHollandafixedcost.Otherwise,nosignificantreferencesinthecasestudyComparecostswithrevenue

todetermineprofit,

distinguishbetweengross

andnetprofit,applyconcept

ofbreakeven

SeecompanyaccountsinTable1onpage10.

Alternativewaystojudge

success,e.g.ROCE,market

share,ethicalconsiderations.

ROCEimproving.Highlevelofethicalconcernwithinthecompany.

PeopleinOrganisationsTypesofrolese.g.

employees,managers,

shareholders

Internalorganisation

structures

Roles,relationships

and

management

Limitedreferencesinthecasestudysonotsignificant

EmployeesarediversetohelpUnileverunderstanditscustomers.

Recruitmentand

appointment

Recruitmentgivesfairconsiderationtoalljobapplicantsregardlessofgender,nationality,race,creedanddisability.

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SpecificationTopicAreas CaseStudyReferences&IssuesMethods

of

remuneration,

financialandnonfinancial

motivators/benefits,

workingconditionsandjob

satisfaction

Limitedreferences

in

the

case

study

Unileversstatusasaquotedcompanywillenableittoofferadditionalremunerationoptions,includingincentives

suchasshareoptionschemes,whereemployeesareabletobuysharesatanagreed(usuallylower)pricethanthe

marketvalueofUnilevershares

Motivationandmanagement

theorists,such

as

Maslow,

MayoandTaylor

Maslow:selfesteemfrombeingpartoftoporganisation.

Maslow:self

actualisation

from

ethical

work

of

business

Reasonsfor/benefitsof

trainingtoemployersand

employees;roleof

governmentintrainingand

retraining

Trainingforsafetyandefficiency.AlsoUnilevertriestoensurethereisahealthywork/lifebalance.

Briefreferences,butnotamajortopicinthecasestudy

Impactofgroupsonbusiness

decisions,e.g.consumers,

pressuregroups,trade

unions

TradeunionspersuadedthebusinessnottoshutdownitsWelshfactory.

Environmentalgroupscomplainabouttheoveruseofpalmoilinproductsbecauseofthedetrimentaleffectsof

replacingrainforestswithpalmplantations.

Impactofconsumer

protection

and

health

and

safetyregulations

Unileversproductswillbegovernedbystricthealthandsafetylegislatione.g.personalcareproductswillhave

had

to

pass

safety

tests

Consumerprotectionintelevisionadvertisingisalsoanissuethereareclearguidelinesaboutwhatcanbeclaimed

byproductsinadvertising

Theneedforeffective

communicationinbusiness

NotsignificantintheUnilevercasestudy

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SpecificationTopicAreas CaseStudyReferences&IssuesMethods

of

communication

includinguseininternaland

externalsituations

Notsignificant

in

the

Unilever

case

study

Waysinwhichmodern

technologyhasaffected

stakeholders,e.g.itsimpact

oncommunication

and

employment

NotsignificantintheUnilevercasestudy