Unilever Strategic Report

8/3/2019 Unilever Strategic Report

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Organization Introduction

Lever Brothers Pakistan Limited is a multinational organization. Unilever PLC

London is its parent company. Unilever is a European based company with

headquarters in London, and their shares are quoted at the stock exchange of

several European countries. They deal in all kinds of products from animal

foodstuff to foods and detergents plus other personal and consumer products.

Unilever has its subsidiaries in over 80 countries of the world, to which it

spreads its vast knowledge and resources.

William Lever (its originator) commences business in England as a grocer. He

established Lever Brothers in 1827 in England Sunlight was the first product

of Lever Brothers, which makes the beginning of the marketing of branded

products at the same time Margarine Uni was established in Nether Land by

Simon Van Berg and Anton Jurgens. These two companies in term of:

yBuying raw material

ySelling finished goods

Consequently both the companies loosing out money in term of profit. These

problems led to think of the mergers in 1930. These two companies merged

together and renamed the business as Unilever PLC / the word UNI is taken

from margarine Uni and Lever is taken from Lever Brothers. Its head quarter

was established in England and Rotter Dam.

Unilever has 500 operating companies in 80 countries. It has 0.3 million

employees and turnover of sales in 23000 million pounds. The global

business proportion is 60% in Europe 20% in North America and 20% in rest

of the world. An identified board of directors control the activities of subsidiary

companies throughout the world. Lever Brothers Pakistan Limited started its

operations in 1948. A merger of Sadiq Vegetable Oils and Allied Industries

existed in Rahim Yar Khan was taken place with Lever Brothers and HVM


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company based at Karachi. As a result of merger Lever Brothers Pakistan

Limited was incorporated as an independent Unilever operating company in

1955. The company is quoted on the Karachi, Lahore and Islamabad Stock

Exchanges. Lever Brothers Pakistan Limited has around 1900 employees in

Pakistan.

Lever Brothers Pakistan Limited played a dynamic role in boosting consumer

products market. It stand at a unique position due to its honesty and integrity.

Lever Brothers Pakistan Limiteds main divisions of business are:

1 Merger With Brooke Bond

Brooke Bond Pakistan Limited was incorporated in 1948. Companys 40%

shares are held by Unilever, 21% by financial institutions, 24% by individuals,

and 10% by insurance companies. The company is quoted on Karachi and

Lahore Stock Exchange market. The company is manually engaged in the

blending, packaging and marketing of tea. It also has a small business in the

sale of packing apices. The company employ around 850 persons. And has

three manufacturing locations situated in Karachi and Khanewal. It also have

three regional sales offices. The head office of the company is located in

Karachi.

After the amalgamation of Lever and Brooke Bond, Unilever will have a

majority shareholding in the combined company and it will provide a

comparable level of technical, management and financial resources. The

proposed merger will benefit the consumer in term of price and quality.

Acquisition

Lever Brothers Pakistan Limited acquire the shares of Pakistan Industrial

Promoters Limited, Mehran International Limited and Ambrosia International

Limited, which is known as Polka Group of Ice Cream Companies.

Product Mix


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At present Lever Brothers Pakistan Limited is engaged in marketing of

diversified varieties and classes of products and playing a dynamic role in

boosting consumer product market. It stand at a unique position due to its

honesty and integrity. Lever Brothers Pakistan Limited has both product

length and depth i.e. it has by length a largest of product lines available and

under each product line there are lots of variants like different weights,

100mg, 500mg, 1000mg, sache pack, family pack or in case of ice creams

different brands have lots of flavor available which determines its product

depth. So different no of product lines are called product length and no of

products in each product line are called depth of product line. Lever Brothers

Pakistan Limiteds main product groups are listed below:

Home And Personal Care

Personal Wash (PW)

Toilet Soaps

Lifebuoy (Carbolic Soap)

Lifebuoy Plus

Lifebuoy Gold

Lux (in 4 varieties)

Rexona (in 2 varieties)

Liril

Hamman

Fair & Lovely Soap


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Fabrics And Home Care

Fabric Wash

2 Surf Excel

Power Surf

Sunlight Washing Powder

Soap Wheel

Home Care

Vim Dish Washer / Scourers

Vim NSD Bard (in 2 varieties)

Vim Powder Poly Bag

Personal Product

Hair Care

Sunsilk Shampoo (in 7 varieties)

Harmony Soap

Lifebuoy Shampoo

Skin Care

3 Fair & Lovely Skin Cream and Lotion


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Dental Care

Close-up Tooth Paste

Pepsodent

Oil And Dairy Based Foods

Banaspati

Dalda

Cooking Oil

Dalda Cooking Oil(Soya Bean)

Dalda Sunflower Oil

Planta

Margarine

4 Blue Band

Industrial Fats

A whole range of product for bakery and oils for the industry.

Beverages

Leaf Teas

Yellow Label

Yellow Label Danedar


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Richbru

Top Star

Taaza Leaf

Supreme

Brooke Bond

Dust Teas

5 Pearl DustRuby Dust

Laojee

Mixture Tea

6 Taaza

Ice Cream

Cornetto (in 3 varieties)

Feast (in2 varieties)

Feast Stickless

Top Ten

Star Cup (in 4 varieties)

Sundae ( 2 variant)


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Chocu Bar

Minimill

Sola

Jet Spot

Ice Lolly

Walls Kulfi

Panda

Pop Corn

g Three

Vision Of Lever Brothers Pakistan Limited

The vision of Lever Brothers Pakistan Limited is driven by is the commitment

to exceland we are here to sell aspiration not brand. So, the core vision is

integrating and that is to excel in every field whatever Lever Brothers do to

provide customer delight and value. The Lever Brothers have been able to

follow the track set by their vision and to achieve the standards set by their

customers.

Mission Statement of Lever Brothers Pakistan Limited

Lever Brothers Pakistan Limited will be the foremost consumer company in

Pakistan with the dominant position in laundry, personal wash, skin, ice

creams and spreads: a leading position in tea, hair, dental and household

care and a sustainably profitable position in cooking oil and fats.

1. We will aim at delivering a 15% UVG rate, hence doubling the size of our

business over 5 years and thereby delivering superior value creation.


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2.We will achieve this by adopting a broad view of our market by seeking the

new opportunities in the core categories of Unilever and by staying closer

to all consumers than competitors, understanding their evolving needs and

focusing on constant delivery of superior value for our brands through

innovation.

3.Competitive advantage will also be developed by driving down relentlessly on

relative cost positions and outpacing competition in operational efficiency

improvement.

4.We shall build on our strong network of distributors to maximize penetrations

and visibility in existing channels and to develop all new channels relevant

to our consumers.

5.We shall establish Unilevers core brands in Afghanistan, building brand loyalty

and strong distribution in the market.

6.To achieve these standards of performance, Lever Brothers Pakistan Limited

will develop a strategically focussed organization and will motivate its

personnel to use its full potential of creativity and commitment. It will also

leverage Unilevers best practices and maintain the highest standards of

operational control.

7.Through its commitment to high levels of care and safety for its employees, its

consumers and the environment, Lever Brothers Pakistan Limited will be

exemplary and will participate in the dissemination of such practices in

Pakistan.

Analysis Of Mission Statement

Mission Contents

Organization Philosophy

People


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Peoples are key to strengths of Lever Brothers Pakistan Limited. The

development of their potential is core to Lever Brothers Pakistan Limited

business.

So they provide extensive attention to developing human resources.

Customers

Lever Brothers Pakistan Limited is the customers focus organization. They do

delight customers with their products and service. Their brands always deliver

the high quality as they premise. Lever Brothers Pakistan Limited pays extra

attention to the complaints of consumers.

e.g. if the consumer complaints that detergent harmed any cloth or skin they

send the sample for lab test a team analyzes that customer complaint is right

or not and then they send the detailed response to customer along with gift of

their products. With a questionnaire for suggestion for further improvement on

the top of which is written WE CARE ABOUT YOU.

Suppliers

Suppliers are considered the partners of Lever Brothers Pakistan Limited and

Lever Brothers Pakistan Limited maintain mutually beneficial relationship with

them.

Integrity

Lever Brothers Pakistan Limited never compromise on integrity management

adhere to high standards in all they do.

Environment responsibility

Management adhere to all national and Unilever standards to ensure health,

safety and protection of the environment in which they live and work.


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Profit

It is considered to be the ultimate measure of Lever Brothers Pakistan

Limiteds performance and it is required to maintain and grow their business.

Product Market Domain

This factor indicates where they are going to compete. Lever Brothers

Pakistan Limiteds field of operations is the consumer products and business

and this is very clearly stated in their mission statement.

Organization Key Value

It defines that what do they want. They people of organization to be good at or

how do they want them to behave and this very clearly stated in mission

statement as always stay responsive to change, go for innovation, employee

commitment to organizational objectives and mission and creating value for

customers. So, if we check the mission statement through this aspect then we

can easily state that they have clearly stated what should be the

organizational key values and how to reinforce them.

Critical Success Factor

The central issue of this factor is that what do they have to be good at to

succeed in this market or industry. The mission statement outlines this as

adopting a broad view of our market, by seeking the new opportunities in the

core categories and by staying closer to all consumers than competitors and

understanding their evolving needs and focusing on constant delivery of

superior value for our brands through innovation.

So far them critical success factor is consumer connectivity and commitment

to excel and to provide superior value to customers and products of superior

quality and value.


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Concern For Different Stakeholders

Mission statement describes that what are the obligations to different

stakeholders i.e. stockholders, employees, suppliers, customers and

community at large. Lever Brothers Pakistan Limiteds mission statement

contains concerns about all stakeholders. First be foremost consumers and

then other stakeholders and describes it as: Through its commitment to high

level of core and safety for its employees, its consumers and environment.

Lever Brothers Pakistan Limited will be exemplary and will participate in the

dissemination of such practices in Pakistan.

Form And Sources Of Competitive Advantages

Mission statement of Lever Brothers Pakistan Limited completely describes

the form and sources of competitive advantage as:

Competitive advantage will be developed by driving down relentlessly on

relative cost positions and outpacing competitors in operational efficiency

improvements and through building strong network of distributors and by

developing a strategically focused organization and by motivating its

personnel to use its full potential of creativity and commitment and by

maintaining the higher standards of operational control.

They are going for unique combination of cost reduction and superior value to

customers so they entirely provide the form and source of competitive

advantage that what they wanted to achieve and how they will achieve it.

Scope And Types Of Mission

Are the external dimensions covered?

7 Global

Mission

8 Organization


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Mission

9 Market10 Mission

11 No

12

Mission

YesNoYesNo

Are the internal

dimensions covered?

The mission of Lever Brothers Pakistan Limited covers both the externaldimension (product market domain, critical success factors) and internal

dimensions (philosophy, organization key values, form and sources of

competitive advantage, and concern for different stakeholders) so therefore,

we can say that the mission statement of Lever Brothers Pakistan Limited is a

global mission as according to the following exhibit.

Lever Brothers Pakistan Limited wants to be market leader in consumer

products. It enjoys greatest market share as compared to competitors byproviding superior quality products. And customer value is what they value.

And this is reflected in mission statement. The very first 3 points are all

customer focused and has provided customer value as their main focus.


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As both the dimensions are extensively covered so we can say that the

mission of Lever Brothers Pakistan Limited is global mission. Now we can

further go for rating of mission of Lever Brothers Pakistan Limited on a scale

of 1-10 for testing of mission, which is as under:

Testing The Mission

Does the mission statement make it clear what the organization

stands for and why it exists?

10

Does the mission statement makes it clear where we have to

compete and who are our customers?

5

Does mission statement tell us the values we should adhere to in

working of this organization?

8

Does mission statement make it clear what we have to be good at to

survive and prosper?

10

Do different parts of mission statement hand together, does it make

sense?

10

Is the mission statement short enough so that people can

understand it?

10

Is the mission statement well written enough so that people will

remember it?

5

Is the mission statement challenging and exiting, will it motivate us? 10Does the mission statement tell us what we should be doing and

what we should not be doing?

5

Total 83

Criteria: 100 = Excellent

50 = Medium

00 = Poor or no mission

The total score indicates that the mission statement of Lever Brothers

Pakistan Limited is approximately near to excellent standards and gives

complete help for setting priorities guide strategic decision making, and

performance evaluation or in short it fulfills the essential role i.e. to define the


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business in such a manner which is important in overall strategic

management.

Objectives Of Lever Brothers Pakistan Limited And Attainment Of Objectives

Objectives of Lever Brothers Pakistan Limited

1.Their main objective is to have a double-digit growth and resultant cash flows

will be utilized in improving the product quality and contents to enhance the

value to customer and final users.

2.Lever Brothers Pakistan Limited has an objective to have a responsive supply

chain and technological based processes.

3.They want to have consumer connectivity, i.e. they want to know what they eat,

drink, how they spend their lives, what are their preferences. So in this way

they wan to be very close to customer, to know their real insight and

desires so they can develop new strategy for product design and can

implement their strategy in better manner i.e. avoidance of hit and trial

approach and hitting the right target with right strategy at right time in right

and accurate manner.

4. They want to be cost efficient i.e. they want to reduce in their cost of

production, cost of transportation, distribution and packaging cost and

finally reducing all the human cost to offer a competitive price to customer

maintain the high standards of quality.

5. To have a partnership with their suppliers to enable them to provide high

quality low cost material.

6.Have entered and will be aggressively developing new markets.

7.Be exciting to their customers with stream of innovative products.

8.To be no in all their existing markets.

Attainment Of Objectives


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An objective or set of objective to be ideal must be SMART i.e.

1.Specific

2.Measurable

3.Attainable

4.Realistic

5.Time frame

Specific

The objective of Lever Brothers Pakistan Limited are specific not general e.g.

they want to be number one i.e. market leader in terms of market share. They

want to be cost efficient it is specific i.e. they have to reduce their costs

without compromising on quality. They want to have focused strategic thrust

i.e. they are to simply reduce non-valuable slow moving product. So the non-

value added products are quite obvious with their sale figure and popularity.

Measurability

Objectives of Lever Brothers Pakistan Limited are measurable as you can

easily measure the double-digit growth with their balance sheet footings and

cash flow analysis. Reduction in cost easily be measurable from reduced price

level and cost of production. Responsive supply chain objective can easily be

measured with quantity of real information available on computer terminals of

Lever Brothers Pakistan Limited.

Attainable

All of the objectives are attainable. They can be market leader e.g. they are in

Lux, Blue Band, Fair & Lovely, Lipton and Supreme. They have portfolio and

cash flows to invest in their product categories to achieve their quality


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standards thereby becoming market leader with their increased share, sales

and growth. Thereby getting brand loyalty among their customers.

Reliability

One has to be at the top so to be number one in its realistic objectives. Other

objective e.g. reduction in cost is realistic, you an reduce your cost by

focusing on value chain. Cost of inbound and outbound logistics.

The objective of launching innovative products is also realistic objective, it

comes only from creative ideas and implementation of these innovative ideas

comes up from investment.

Time Frame

All these objectives are to be attained in some specific time period.

Attainment Of Objectives

Lever Brothers Pakistan Limiteds strategy to attain the objectives is:

1.Maximum coverage of outlets

2.Desirable sales volume

3.Display and merchandizing of products

4.Developing quality and want satisfying product.

Since every company is formed to accomplish certain objectives. There is no

company, which had no goals. So Lever Brothers Pakistan Limited also has

targets before it.

These main targets and objectives are:

1.Profits


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2.Consumerism

3.Welfare of consumer

The first objective of Lever Brothers Pakistan Limited is to earn maximumprofit but keeping in view the customer demands as well company deals in

those products which are profitable.

If there are any indication that any item is not good from profit point of view, it

will try to find out the reasons. Will soon what steps should be taken to

overcome these reasons.

Company will introduce different marketing strategies if there are problems inmarketing. Here I would like to code two very famous examples, 1st of Sunlight

soap and Sunlight washing powder of Lever Brothers Pakistan Limited.

Lever Brothers Pakistan Limited initially developed a sense of consumer to

use washing powder other than washing soap, consumer switched s a result

towards Sunlight washing powder, i.e. popular segment of washing powder

and than the market share for Sunlight soap declined with passage of time,

now the consumer who realized the convenience of washing powder startedusing it, but at the same time, as a result marketing strategy of Lever Brothers

Pakistan Limited awareness of people, people switched to surf and wheel i.e.

premium segment detergents. Finally due to the decrease in the market

shares and sales volume of Sunlight soap and was light powder Lever

Brothers Pakistan Limited management finally decided to stop the production

of this very product i.e. it is now obsolete.

Second example is related to the change of brand name of Surf to Surf Excel.The reason behind was introduction of competitors brands like Arial by P&G

which had brightness features, which caused the people to switch from Surf to

Arial, Lever Brothers Pakistan Limited realized the fact due to disturbance in

sale volume of Surf and introduced new brand name Surf Excel with extra

brightness power.


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Company also takes into consideration the welfare of the consumer. It takes

into mind the taste and habits of the customer. They pay much attention on

the customers complaints. It also works for the welfare and interest of

Pakistan, as it is an environment friendly organization.

Strategic Management At Lever Brothers Pakistan Limited

Now we will proceed with strategies being pursued by the Lever Brothers

Pakistan Limited at different organizational level. First we will discuss the

corporate level strategy.

Corporate Level Strategy

At corporate Lever Brothers Pakistan Limited is pursuing the strategy of

vertical diversification i.e. driving away from the previously adopted strategy of

vertical integration i.e. now they dont want to perform more than one step of

the processes involved in converting raw materials into a product delivered

and ready for consumption. Lever Brothers Pakistan Limiteds operations are

so complexed and involves 200 brands in Pakistan so now they wanted to

reduce the operational complexity and going for strategic alliances with their

suppliers, instead of producing themselves and going into complex operations

now they want their suppliers to produce for them.

The outsourcing the production so that they dont have to invest heavily in the

production and to reduce the capacity problems, they now going for the third

party contracting to produce themselves and now they want them to be

restricted to marketing and distribution of products.

Diversification strategy is being pursued by the Lever Brothers PakistanLimited but they mainly go for related diversification as against unrelated

diversification for conglomerates, they are diversified into number of

businesses as mentioned earlier but they are all related to consumer

products. Through vertical diversification they will be able to eliminate the

operational complexity and costs of buying and selling i.e. the transactional


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costs. Now they mainly wanted to step away from operations and want to

focus more on customers.

As means of diversification which are being utilized by the Lever Brothers

Pakistan Limited as all the time, been acquisition, neither joint ventures i.e.

strategic alliances nor the internal development. Here we can take the

example of the acquisition of Brooke Bond and Polka for example which have

Brother acquired through a hostile takeover. And to step away from

operational complexities now they go for subcontracting with the suppliers and

want them to produce for Lever Brothers Pakistan Limited as in case of oil and

ghee and soap and with the passage of time will also be implemented in other

categories as well.

Business Level Strategy

At business level Lever Brothers Pakistan Limited is adopting a very unique

and interesting set of strategies. First and foremost strategy they want to

follow is the cost leadership. They wanted to control cost as much as possible

and want to reduce cost by every mean.

First cost efficiency is achieved through outsourcing operations and stop

producing themselves and go for cost efficient subcontracting.

Second they want to achieve cost efficiency through responsive and cost

efficient supply chain, want to be in touch with suppliers all the time and for

that they have connected themselves with the suppliers and to their suppliers

as well to minimize cost related to forecasting now they want better

forecasting through computer networks so to get the real time information

about the inventory, stock, demand and supply. They are now reducing the

inventory as well as average carrying the inventory of only 3 days and getting

closer to the concept of just in time except for those products for which they

have to brought in raw materials from far flung areas like tea and moreover

routings of logistics as well like air routing or ship routing to curtail the costs


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other than cost efficiency, they have adopted the strategy of consumer

connectivity i.e. want to stay closer to consumers rather to operations and

want to focus all alternations to consumers through more research and

customer profiles and demographics and wants to explore new customers and

usage of products.

To get customer connectivity they do the market research to check the trends

of their customers. The do pre-launch, post-launch research, e.g. their did

before and after lunching while antidandruff Sunsilk. The response was quite

encouraging. Hence basically customer and market research and customer

feedback, free samples distribution before and after launching new product /

brand/ variant is aiming their basic strategy to implement and achieve thecustomer connectivity and to fulfill their customer demand.

Here Lever Brothers Pakistan Limited has used the strategy of product

development i.e. by modifying and improving their Sunsilk it into Sunsilk

antidandruff (white), they have increased their sales. They are applying

Market and Development Strategy as well in which by introducing present

product (Sunsilk) into a new demographic area i.e. dandruff conscious market

segment with the launch of only new variant i.e. Sunsilk antidandruff white.They have added conditioner in it as initially the conditioner was missing in all

shampoos of Sunsilk. While it is available in competing brands of P&G.

Other than these two strategies another very important strategy is being

followed by tge Lever Brothers Pakistan Limited i.e. focusing on core

brands orwant to have a very focused on brand portfolio in which they

wanted to get rid of the slow moving brands like in Surf you will get number of

further variants like Surf Ultra, Surf Micro, Power Surf etc. and in Sunsilknumber of variants, Black, Green, Pink, etc. to name a few and how they have

curtailed all these slow moving brands like focusing attention to Surf Excel

only and in case of Sunsilk Black and White (antidandruff) and discarding slow

moving items like Sunsilk Pink and Green etc.


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So, to avoid cannibalization effect now instead of number of brands to flood in

the market only few better and improved brands, cash generating and more

focused towards customers.

Operational Level Strategy

At operational level, Lever Brothers Pakistan Limited has always adopted the

strategy of TQM only never went for CPR i.e. they have not come up with a

new brand in last few years. Only the improvements or new variants in

existing brands or using the same old brand name to introduce a new product

like Lifebuoy Shampoo or Fair & Lovely Soap. So it can easily be said that

they believe more in adopting changes rather generative ones or go for single

loop learning only because according to them its very very expensive to

introduce a new brand name.

Strategy Evaluation

Now after outlining the objectives and discussing the strategies we can now

evaluate these strategies that whether they are in harmony with the objectives

of Lever Brothers Pakistan Limited or not. And then we will evaluate these

strategies on three types of evaluation criterion.

Now as against the objectives, if we go through all the strategies being

mentioned earlier, then we can see that all strategies are true reflection of the

objectives being targeted by Lever Brothers Pakistan Limited. As an objective

of consumer connectivity, responsive supply chain getting on line computer

network with suppliers and more stronger R&D department and the objective

of cost efficiency is supported by the vertical diversification in an sense that

how they are outsourcing production and going for sub contracting with their

suppliers and having more responsive and cost effective supply chain and to

achieve growth more focused strategy in case of reduction of brands, etc. So

these strategies are true measures to achieve those objectives. But other than

objectives there is some other criterion which each strategy has to fulfill to be


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of any worth and that criteria is as follows: its basically three types of

evaluation criterion i.e.

1.Suitability

2.Acceptability

3.Feasibility

Suitability

Suitability is a broad assessment of whether the strategy addresses the

circumstances in which the organization is operating. For example, the extent

to which the strategy would fit with the future trends / changes in the

environment or how the strategy might exploit the core competencies of the

organization. Now if we evaluate the strategy of Lever Brothers Pakistan

Limited on these factors that whether the strategies fit with its existing

circumstances would able to compete with the future trends like the strategy

of cost reduction and focused brands and outsourcing production and

consumer connectivity and more responsive value chain. All these strategies

are not only suitable to the present condition but are prerequisite for futuresuccess as well i.e. by outsourcing production more focus towards customer

needs and wants would be provided and it would help Lever Brothers

Pakistan Limited to achieve even higher customer satisfaction level and

market share and not only that lowering the cost would not only be beneficial

for Lever Brothers Pakistan Limited but for consumers as well i.e. now they

would receive better quality at relatively lower cost and Lever Brothers

Pakistan Limited would be able to provide superior products quality and value

to customers. Now a days, success lies at cost reduction and superior quality

which the Lever Brothers Pakistan Limited has successfully opted for. Other

than this, next factor is that whether strategy can exploit the core

competencies of the organization or not. The answer is very simple that by

reducing operational complexity and brands complexity more resources would


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be available to focus more on the quality of the products as compared to the

previous situation. So on the basis of these factors it can easily be said that

the strategies being implemented are very suitable to Lever Brothers Pakistan

Limited.

Acceptability

Acceptability of strategy is concerned with the expected performance

outcomes such as the returns and risk if the strategies are implemented and

the extent to which it would be in line with the expectations of the

stakeholders.

In case of returns, its pretty much assured that returns would definitely be

enhanced when the cost would decrease and strategies would result in better

quality products. But the elements of risk is there which could be quite

significant in the case of subcontracting, whether the suppliers would be able

to meet the quality standards or not. And as we inquired it from the branch

manager of Lever Brothers Pakistan Limited, he said, that we have very

strong quality control system and moreover we are entering into strategic

partnership with our suppliers so to maintain quality is in their favor too and

they would be beneficial from the better quality as well and it would not

increase the cost in case of maintaining control over the suppliers as its

partnership more as compared to only placing and receiving order we will

work for mutual benefits and complete harmony which we already have.

As far as the stakeholders are concerned first and foremost effect would be on

the employees as the production is out-sourced so they would definitely

feared the unemployment but they said that we will arrange it with our

suppliers and will try to accommodate them as much as possible and in case

of shareholders, they would receive benefits of this strategy and would receive

higher returns on their investments and they would be able to maximize their

earnings and in other stakeholders suppliers would now play more important

role by entering into strategic partnership with the organization. Consumers


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receive more attention now and would get more satisfaction as more and

more products would be developed on the basis of the targets being set by

the consumers. So after analyzing these factors it can easily be said that

strategies being pursued by Lever Brothers Pakistan Limited has higher

returns and lesser risks and more benevolent to stakeholders as well.

Feasibility

Feasibility is concerned with whether the strategy could be made to work in

practice or not. And its more concerned with the assessment of practicalities

of resourcing and strategic capabilities i.e. quantitative assessment, which is

beyond the scope of this report, so, as an overview, all strategies seems

feasible and some of them has already been implemented as well like the

reduction in brands etc. So assessing;

Is this a good strategy?

Is the positioning viable?

Does it improve value?

Does it exploits core competencies?

Will it lead to good financial performance?

All these factors seems work in favor of Lever Brothers Pakistan Limited after

analyzing the strategies of Lever Brothers Pakistan Limited.

Structural Analysis

Organizational structure and management of Lever Brothers Pakistan Limited


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Lever Brothers Pakistan Limited restructure the organization after the merger

with Brooke Bond Pakistan Limited. The chairman is the executive officer of

Lever Brothers Pakistan Limited. He leads the seven members management

committee, which is the top of decision making. The management is

responsible for corporate strategy of Lever Brothers Pakistan Limited and for

initiating policies and overall planning as well as their general management

duties. Management committee members are each responsible for specific

function. Reporting to the management committee members are departmental

heads who are responsible for advising the management committee for

planning and implementation of policies for ensuring that targets are reached.

The committee includes:

Mr. Lain Strachan Sangster (Chairman & Chief Executive)

Mr. Mashkoor Alam (Vice Chairman)

Mr. Mujib-ur-Rehman (Technical & Logistics Director)

Mr. Perwaiz Hassan Khan (Director Personnel)

Mr. J. A. Lee (Director Sales)

Mr. A. D. Bandaranayake (Director Commercial)

Mr. N. I. Khockhar (Business Unit manager ODF)

Mr. Clive David Welland (Director Food Business)

Board Of Directors

The board of directors control the whole operation of the organization it

includes the following personalities:

Mr. Lain Strachan Sangster


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Mr. Syed Babar Ali

Mr. Fateh Ali W. Vellani

Mr. Mujib-ur-Rehman

Mr. Perwaiz Hassan Khan

Mr. J. A. Lee

Mr. Clive David Welland

Mr. Dr. A. D. Bandaranayake

Mr. S. N. Patel

Mr. M. Asadullah Sheikh

Mr. Abdul GhaniBachani

Mr. Azim Azmat Osman

As we can notice that the management of the company is composed of a mix

of international and Pakistanis business professionalists. The management of

the company includes Syed Babar Ali as director, who is also involved in

many other organizations i.e. Packages and other industries. It includes in its

board meetings one member from each province i.e. Punjab, Sindh, NWFP

and Baluchistan. The top management of the company is fully professional

specially marketing department which is headed by Mr. Jeff Lee who have

world wide experience in this field.

Hierarchy

Branch structure


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All over Pakistan 6 branches of Lever Brothers Pakistan Limited are working.

Its head office is located in Karachi at Avari Towers. The chairman and

management committee as well as the most of the department heads have

their offices there.

Structural Analysis

Lever Brothers Pakistan Limited has a functional structure i.e. its based on the

primary tasks that have to be carried out such as production, accounting,

finance, marketing, etc. and then there is separate department for each

function and these functions are carried out by directors and they are assisted

by managers of that very particular function like marketing manager and those

managers have divided each product category into home and fabric care

category, spread and cooking category, etc. And these categories are headed

by one product manager and assistant manager.

We cannot say that the structure of Lever Brothers Pakistan Limited is an

ideal or exact functional structure as in functional structure CEO is in direct

supervision of each primary activity but Lever Brothers Pakistan Limited have

also included layers of vice chairman and very important management

committee as described earlier. This structure maximizes the basic advantage

of functional structure that the CEO is in charge and well informed about each

primary activity and minimizes the basic disadvantage of functional structure

that an organization become larger or more diverse, then CEO, senior

management can be over burdened with everyday operational issues, which

is true in the case of Lever Brothers Pakistan Limited and to offset this

disadvantage they have created additional layer of management committee

which is responsible of coordination between CEO and chairman, vicechairman, and the functional directors to take a strategic perspective on

problems. So, Lever Brothers Pakistan Limited has an ideal structure to

oversee the whole organization and to control the operations of the

organization which in turn create problems as of very slow decision making

process and very centralized too.


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To continue with structure analysis discussion, now lets turn our discussion to

five basic forces, which determines an organizations structure i.e.

1.Threat of new entrants

2.Threat of substitutes

3.Buyer power

4.Supplier power

5.Competitive rivalry.

Threat Of New Entrants

This potential threat always exist in every organization. But an organization

like Lever Brothers Pakistan Limited this threat is very minimum because you

need a giant to compete with another giant like Lever Brothers Pakistan

Limited and in a relatively small market like Pakistan, they are enjoying the

highest market shares in most of their product categories like ghee, oil, soaps,

spread, fabric care, etc. so, they face no threat of any new entrant.

Threat Of Substitutes

Same as in the case of new entrant no as such threat they are facing.

Buyer Power

To determine buyer power one condition is always necessary i.e. the buyers

are few so they exert power over an organization. But this condition is not

present in case of Lever Brothers Pakistan Limited, they have very diversified

product categories and within each category they have brands targeted at

almost each and every segment of the market so they dont face the buyers

power as such but still customer is king and they do have to pay a lot of

attention to buyers being a consumer product company.


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Supplier Power

Suppliers dont exert any power over Lever Brothers Pakistan Limited rather

Lever Brothers Pakistan Limited provides buyers power in this case, no body

would like to loose a buyer like Lever Brothers Pakistan Limited so, they dont

face any significant supplier power.

Competitive Rivalry

Competition is intense but not cut throat competition and all of them avoid

frontal assault or direct attack. So, situation of healthy competition exist.

Competitive rivalry would be discussed more in detail in the section

competitor analysis.

Structure Types In Multinational Companies

The growth in the size and importance of multinational business warrants

some special mention, since the structural implications can be significant. In

deciding the structure of multinational critical aspect or factor or issue is the

extent to which local independence and responsiveness take precedence over

global coordination. On the basis of these factors there are generally fourtypes of multinational structures, such as:

In all the four structures, Unilever has assumed the structure of transnational

corporations in which they have developed structure, which attempts to

combine the local responsiveness of the international subsidiary with the

advantages available from coordination found in global product companies.

The key is that they wanted to create an integrated network of interdependent

resources and competencies, in which:

1. Each national unit operates independently, but is a source of ideas and

capabilities for the whole corporation.

2.The corporate center manages a global network by first establishing the role of

each subsidiary, then sustaining the culture and system to make the


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network operates efficiently or in a way we can say that they have

combined global and multi-domestic strategy, staying independent and

responsive towards local or national market and yet not loosing touch or

coordination with the worldwide network and parent company.

There are interesting differences between countries in the way that global

strategy tend to develop. Companies, which originated in many European

countries such as Unilever or Nestle needed to internationalize their activities

at an early stage, owing to the small size of their home markets. This took the

firm of international subsidiaries but now their challenge is to reduce the

local autonomy and increase global coordination. But in contrast US

companies with a large domestic market tended to favor internationaldivisions and now they face two challenges:

1.The issue of local autonomy.

2. Barriers between their separate strategic views of the domestic and

international business.

Unilever has well coped with these challenges by adopting the transnational

corporation structure.

Value Chain Analysis Of Lever Brothers Pakistan Limited

This method for accessing strengths and weaknesses divides the business

into number of linked activities that may each produce value for the customer.

Customer value is a function of factors that usually fall into one of threebroad categories those that differentiate the product, those that lower its

costs, or those that allow the organization to respond to customer needs more

quickly.


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The value chain frame work helps analyze the contribution of individual

activities in a business to the overall level of customer value the firm produces

and ultimately to its financial performance. If each part of the business

produces value, the firm should be able to change more and/or incur lower

costs either of which will lead to higher profit margins.

The value chain analysis frame work of Lever Brothers Pakistan Limited

appears as follows and is basically seeking cost leadership as their source

competitive advantage.

Explanation Of Value Chain

Lever Brothers Pakistan Limited is basically focusing on cost leadership in

branded shampoos market. For their raw material procurement they have

opted outsourcing strategy. Many contents of shampoos are procured from

Europe, America, Far East and some of raw material is locally available it

increases the lead-time. Lever Brothers Pakistan Limited handles this

situation with near to JIT system i.e. called Automatic Replenishment

System. Through this system the suppliers of raw material are well connected

through computer terminal, the detail and current level of all raw materials,

inventory level is reflected on supplier terminal and on specific interval they

ship the raw material automatically which reduces time for repeated

requisition.

After releasing the material from customs the ingredients are shipped to

Rahim Yar Khan Plant. These ingredients are processed (both local and

imported) in the machinery specifically designed for this purpose. Normally for

sache packs 8 lanes are processed at a time in one lot.

8 lanes = 8 reels

1 r eel = 1 ton or 1000 kg of shampoo in quantity


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Its cutting and packaging is completed as final step. Packaging material is

typically not available around factory area. Lever Brothers Pakistan Limited

has to purchase all packaging material from Packages Limited Lahore.

Hence both primary and secondary packaging material comes from Packages

Limited Lahore. Primary packaging material includes bottles and sache

packaging while that of secondary material includes the cartons. After

packaging of shampoo bottles and sache passes through distributor to

retailer.

Outbound logistics start from here on demand of 6 depots of Lever Brothers

Pakistan Limited, the lot is packed and delivered to the wholesaler.

Now we will discuss that how each individual activity of value chain (both

primary and supporting activity contributes towards the maximization of profits

to deliver value to final customer.

Supportive Activities

Firm Infrastructure

Lever Brothers Pakistan Limited has a well established infrastructure. They

have knowledgeable expert top management and middle management who

have expertise in the consumer goods fields. Moreover they have some

arrangements with hair exports to furnish their product knowledge.

They have a very good and effective management information system, which

not only shares the information within the organization i.e. Lever Brothers

Pakistan Limited but also with their suppliers and wholesalers as well. Thissaves their time and gives them real-time information.

Marketing research department is also sharing consumer research data to

improve their standards according to customer demand and trends e.g.

conditioner was missing in Sunsilk Research and Development searched out


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and found that competitors are providing conditioner also in shampoo which

Sunsilk and Lifebuoy shampoo didnt have in them. But this has been done

very late and implementation is also very slow. Production people (manager)

upon sharing this information from marketing research department has

recently launched the antidandruff white Sunsilk with conditioner which has

shown a very successful performance in market and has improved the sales

of Sunsilk of Lever Brothers Pakistan Limited especially of this white variant.

One important thing to be noticed is that though they have integrated

information sharing network but the implementation on the needed strategy by

production people is seeming to be very late as their decisions are centralized

and are in hands of parent company and the implementation is also very slow.This problem of absence of conditioner was identified by marketing research

people very earlier and was communicated to production department as well

but a implication and action has been taken after a very long time when

problems of sales become visible. We can say this is due to long term

approach to strategy formation and implementation of Lever Brothers Pakistan

Limited. Hence infrastructure contributes as a supporting activity for providing

value to the customers and on some aspects e.g. centralized decision making

and late implementation it proves to be a weak support.

Human Resource Management

Human resource management is the one of the most important supporting

pillar of the value chain and it is useful for its analysis. A firms higher

technological and financial resources cannot do any thing for the betterment

of company unless these two and rest of the resources are handled by the

good appropriate human resources. We can surely say that Lever BrothersPakistan Limited has a skilled, qualified, expert, communicative management

and officers staff.

They have both formal and informal network of communication in their

organization to complete the tasks and target efficiently and effectively. Hence


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we can say that there is healthy type of network among Lever Brothers

Pakistan Limited staffs department.

Lever Brothers Pakistan Limited offers the training programmes and arranges

seminars for further skill development and career development purposes of its

brand managers, marketing managers, research and development managers,

and other staff, which enhances their efficiency to support the primary

activities of value chain of shampoo product line of Lever Brothers Pakistan

Limited.

Due to necessary training, healthy pay scales, balanced empowerment,

informal and formal combination of communication network the job

satisfaction of each and every employee is very high. Which reduces the

employees turnover to minimal. All of them contribute a lot and positively for

the support of value chain primary activities i.e. procurement manager putting

his efforts for the purchase of high and right quality making inbound logistics.

Operations / brand manager is focusing ensuring the relationship of the

shampoo production.

Sales and distribution manager of Lever Brothers Pakistan Limited is ensuring

the complete coverage of retail outlets of Pakistan. He ensures that all

variants and sache and shampoos of Lever Brothers Pakistan Limited are

available on each shopping outlet of Pakistan i.e. from large shopping stores

to small shop covering both rural and urban areas.

But here we would like to add that one thing is missing as a support of value

chain i.e. good relations of Lever Brothers Pakistan Limited marketing and

sales manager with their retailer and distributors. Due to this retailer give

preference to the competitors brands of shampoos e.g. P&G. Hence Lever

Brothers Pakistan Limited is providing training and job satisfaction to its

human resources in turn there is low employee turnover and they support


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value chain except good relationship and incentive to retailers which is of

primary importance.

Technological Development

By technological development as a supportive activity we mean that how

much organization is bringing further improvements in its products and

product development. Lever Brothers Pakistan Limited mainly through its R&D

department has recently brought a major improvement in its Sunsilk shampoo

i.e. launch of antidandruff white shampoo. Hence this very element has also

been supportive in value chain of Sunsilk and Lifebuoy shampoo. But still

Lever Brothers Pakistan Limited are laggards in bringing this improvement.

Procurement

Procurement especially of raw material contents and packaging material is

critical to the product and ultimately to the organizations success. Lever

Brothers Pakistan Limited purchases its most of the contents of shampoo from

foreign countries like America, Europe and Far East. The procurement system

of Lever Brothers Pakistan Limited is mostly globally centralized and is long

term as well. For purchase of local raw material Lever Brothers Pakistan

Limited is outsourcing with its suppliers. They have get very good long term

relationship with their suppliers of local raw material as well. Hence they get

the quantity discounts and manage lead time as well.

Primary Activities Of Value Chain Of Lever Brothers Pakistan Limited

Inbound Logistics Of Value Chain Of Lever Brothers Pakistan Limited

1. Lever Brothers Pakistan Limited is focusing on the outsourcing for the

purchase of basic inputs with their suppliers. Instead of backward

integration they believe in outsourcing which reduces their cost.

2.Lever Brothers Pakistan Limited faces high lead-time for the global purchase of

its imported raw materials but automatic replenishment system has solved


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this problem. Lever Brothers Pakistan Limited is all the time connected via

its management information system with their suppliers.

3.Quality and reliability of raw material for shampoo product line is checked and

reconceived by the Lever Brothers Pakistan Limited at fixed intervals asthey have centralized buying system.

Operations

1.Lever Brothers Pakistan Limited has been in shampoo product line since 1984.

Within these 16 years they have got experience. Experience effect has

raised efficiency, they have very old operations and product method as

there has been no major turn around in production methods of itsshampoo.

2.Lever Brothers Pakistan Limited has a factory at Rahim Yar Khan in which they

produce different products array with shampoo, capacity of this plant has

been designed in such a way that in current demand they get the

economies of scale very easily which reduces cost of manufacturing of

Sunsilk and Lifebuoy on this basis they offer lower prices as compared to

P&G.

3.Since Lever Brothers Pakistan Limiteds buying is centralized same is the case

with production and operations methods as well. Rahim Yar Khan has to

follow the predefined production process given by parent head office of

Lever Brothers Pakistan Limited. Hence production process of both Sunsilk

and Lifebuoy is reliable i.e. there is no fluctuation. This element gives

reliability to final consumer.

Out Bound Logistics

1.Final product of shampoo of Lever Brothers Pakistan Limited is shipped to its 6

depots via truck on the demand of these depots. Whole Sellers have to

add value themselves. They bear this cost of transportation. Hence Lever


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Brothers Pakistan Limited has suppliers and Whole Sellers power over its

wholesalers and gives cost cutting edge.

2. Lever Brothers Pakistan Limited covers all the retail and shopping outlets of

Pakistan. Lever Brothers Pakistan Limited ensures availability and visibilityof its shampoos as each and every large store, medium size stores, small

shops. 100% coverage of outlet is the major strength of Lever Brothers

Pakistan Limited.

Marketing And Sales

1. Poor Marketing

Lever Brothers Pakistan Limited has very poor marketing of their product.

They concentrate only on Nabila as their celebrity. They mainly focus on

females for Sunsilk and ignore the rest potential market; males and kids. In

case of Lifebuoy they focus only on males and ignore females and kids which

reduces their market share as compared to P&Gs shampoo Penteane, Head

& Shoulder.

2. Lever Brothers Pakistan Limited has no strategy to make good relations

with retailers. This element destroys their repute in retailer class they do

prefer P&G and competitors shampoo to recommend it to buy and they

give more shelf space to P&Gs shampoos as compared to Lever

Brothers Pakistan Limiteds Sunsilk and Lifebuoy.

3. Lever Brothers Pakistan Limited has never offered any major incentive,

discount or prize scheme to retailers on its shampoos which the retailers

often demand. Retailers think that prize incentives with product or any

other prize scheme offered to retailers or consumer etc enhance sales.

Lever Brothers Pakistan Limited has never paid any head to it.

Services


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Lever Brothers Pakistan Limited has good service in terms they offer free

samples for the relaunch of Sunsilk, which helps as a primary activity.

A Transition In Value Chain

Lever Brothers Pakistan Limited is now focusing as extended value chain i.e.

they are outsourcing with their suppliers and subcontracting with them to

ensure reliability of raw material.

Before this suppliers outsourcing they already have connected with their

customers with their strong R&D Department. But one of thing in which they

lags in they have centralized long term strategy, formulated on system and

implementation of results of R&D Department research based on customer

connection in very late.

Hence all the above individual activities (i.e. primary and supportive activities)

contribute to enhance customer values and ultimately improves firms financial

performance.

Lever Brothers Pakistan Limited becomes able to incur lower costs which

leads to higher profit margins.

SWOT Analysis

The SWOT analysis of Lever Brothers Pakistan Limited are as follows:

Strengths

1.Unilever PLC England the parent company all over the world gives assistance

to Lever Brothers Pakistan Limited so Lever Brothers Pakistan Limited

enjoys a high level of support from Unilever.

2. Another major source of strength for Lever Brothers Pakistan Limited is its

product targeting all income groups. Lever Brothers Pakistan Limited is


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providing products total income groups i.e. providing quality with economy

as well e.g. Wheel washing powder, Breeze beauty soap, Taza Chai, etc.

3.Lever Brothers Pakistan Limited is the oldest company operating in Pakistan

which gives him a commanding position is Pakistan to certain extent. 4. Lever Brothers Pakistan Limited enjoys the services of highly professional

management in the area of sales, marketing, technical and production.

5.Lever Brothers Pakistan Limited has such a strong goodwill in the market that

some of its brand names has become the generic names for those

products such as Surf for detergents and Dalda for ghee.

6.Lever Brothers Pakistan Limited is the largest producer of consumer products

in Pakistan and has strong brands in every field such as Close Up, Dalda,

Surf, Lifebuoy, Lux, etc.

7. Lever Brothers Pakistan Limited having the biggest shares in tea market

having the biggest brand Lipton and Brooke Bond.

8. They are market leader in ice cream business of Polka i.e. horizontal

integration with hostile takeover they have captured their competitors

thereby reducing competition.

9.The company has the assets of more than 5 billion. So, it can invest further

product innovation and development.

10.It has the largest and efficient distribution network then any its competition.

11.Lever Brothers Pakistan Limited is the only company in Pakistan which has its

own corner research department.

12.The company is very strong financially.

13.The company is working for almost 50 years in Pakistan. Thats why it has

many advantages. Which other do not have. They have know how of the

market. They understand the market very well. Similarly during this period

they have developed a very organized distribution network all over the

country. Another advantage is there wide range of products, which give

them a position to monopolize the retailers shop. It is estimated that over

more than 30% of a retailers shop items are by this single company.


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Weaknesses

1. Lever Brothers Pakistan Limited unable to capture shampoo and toothpaste

market i.e. low market share.

2.New variants of the company were not able to sustain in the market such as

harmony.

3. Lever Brothers Pakistan Limited is relatively week in their innovation

department i.e. being first to introduce Surf but after that has no major

innovation.

4. Emphasizing only few products while ignoring others which could give them

potential market shares e.g. beverages section.

5.Lever Brothers Pakistan Limited go for long term strategies for all their product

categories which prove to be a weakness with change in the

circumstances and taste, trends of people

Opportunities

1.With the help of further advertising their non competing brands can increase

their market share i.e. market penetration strategy. People will definitely go

for these products as Lever Brothers Pakistan Limited has a sound image

in peoples mind. Whatever the brand is being sold is mostly on the basis

of brand loyalty.

2. They have capital to invest they can explore new product categories e.g. in

food and beverages they can develop new products like Rafhan has

launched custard, jelly, kheer mix, rasmalai mix, etc. through it again will

broaden their product categories and will make their operations complex

but this could be avoided with sub contracting i.e. strategic partnershipwith their suppliers. These products can prove a cash cows as customer

in Pakistan always welcome food items especially they will welcome due to

brand image of Blue Band and Dalda ghee in food category and due to

Lipton and Supreme in beverages category.


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3. Lever Brothers Pakistan Limited relaunches most of its products with same

name or little change in the name e.g. Surf Micro to Surf Extra, ,then to

Surf Ultra and then to Surf Excel, with little change of name and little

changes in its formula. If Lever Brothers Pakistan Limited launch its

products with in prevailing product categories, with entirely new name and

new formula then they can capture new market shares as it will gain

capture the attention of its target market more as compared to existing

one. Though apparently it will increase the advertising cost but it will be

compensated with exciting sales as you have to advertise more even in

case of relaunch of products with little change in names and formulas. So

why not to go for new name and new formula as it will increase your brand

portfolio, it can satisfy the needs of customers which were unsatisfied with

the previous brands, its names, its formula, e.g. people used to say Surf

fades the clothes, they changed formula and not name only gave it a suffix

of Excel i.e. Surf Excel now the people who developed this perception that

it fades the color, remain reluctant for long time even after its relaunch and

heavy advertisement.

Threats

1. P&G is giving very serious threats to Lever Brothers Pakistan Limited in the

business of detergents and personal wash and shampoos.

2. No of local companies producing detergents and market them at very low

prices which is a threat to Surf.

3.In the case of ghee and oil business Habib is giving very tough competition to

Lever Brothers Pakistan Limited by introducing its variety of products.

4.

Treat is promoting Bodyguard very much and trying to produce a competition inthe carbolic soap market.

5.Increasing inflation in the country, persistently reducing the purchasing power

of the people and dropping people from high price products to low price

products e.g. the detergents and providing fuel to the expansion of

unorganized sector.


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6. Increased import duties are also adding to the prices of the products and in

Pakistan which is a very price for all the firms not only Lever Brothers

Pakistan Limited who are using imported raw material.

7.

Threats of new entrants are also present. As ICI is a potential threat indetergents industry, because they are already involved in chemical

business and providing raw material for detergent production to different

manufacturing companies like Lever Brothers Pakistan Limited and

Colgate Palmolive.

PEST Analysis

PEST analysis is used to assess that what environmental factors affecting

different organization and which of them are more important and how they

affect the organization. It is indicator of political, economical, social and

technological influences on organization.

Political & Legal Factors

As far as the Lever Brothers Pakistan Limited concerns according to them that

political instability have do affect but not particularly Lever Brothers Pakistan

Limited same as it affects any other organization around and specially they

are in consumer products business which never make them out of business.

In case of legal factors, any trade policy or import duties is not affecting

particularly Lever Brothers Pakistan Limited. In Pakistan right now following

liberalization policy under SAP by IMF made which they have to waive off all

restrictions and moreover due to huge investment by Lever Brothers Pakistan

Limited no government can afford to create hurdles in the way of an

organization like Lever Brothers Pakistan Limited.

And they dont have to go for only lobbying or what so ever as not action of

Pakistan government has affected them adversely as such.

Economical Factors


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Economical factors affect Lever Brothers Pakistan Limited in the same way as

it affect any other organization like current economic situation in Pakistan and

inflation has reduced consumers disposable income too, which in turn has

reduced the purchasing power of consumer but affect is same for every

organization and according to them Lever Brothers Pakistan Limited have

edge that they have targeted all possible segments through their vast product

category i.e. the width and length too. So one way or other they find way to

cover it up.

Capital Markets

In other economic factors like interest rates and inflation has affected the

borrowing ability of organization but Lever Brothers Pakistan Limited stayed

unaffected as a company having business in billions and when in need of

financing no single bank can fulfill the need, they have to make a consortium

to finance Lever Brothers Pakistan Limited and with very good credit standing

and very low risk definitely they get the lowest or justified interest rate as well.

Socio-Cultural Factors

In socio-cultural factors, factors like lifestyle changes and level of education

affects an organization. In case of change in lifestyle, the world has converted

into global town now and people have readily access to every sort of

information and they are becoming more quality conscious. Now more

concerned towards environmental issues now and demand more social

responsibility on the part of organizations now. To cope up with all these

factors now Lever Brothers Pakistan Limited which always maintained the

quality standards needs to work towards other social factors like social

responsibility and environmental concerns like P&G did in its Arial campaign

and image of a society responsible organization.

Technological Factors


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In technological factors comes R&D first and foremost that how much an

organization spending in terms of product improvement or development of

new products or improvement in production process or in the raw material etc.

and what is the trend in the industry as Pakistan is not that big and not very

much innovation seeking as the other developed countries. Yet they keep on

finding new ways of doing things and new things as well they continuously

launched variants in brands etc. and moreover in the market like Pakistan in

product categories of consumer products rates of obsolescence is not very

high rather very slow so no great pressure to launch new products,.

Other than the factors smuggling affects Lever Brothers Pakistan Limiteds

sales very negatively. This issue would be discussed more in detail in theproblem statement.

Problem Statement

Our problem statement is regarding the shampoo segment of Lever Brothers

Pakistan Limited. They have managed such a deep and broad product

category and manage to do so well that some of their brand name has

become the generic names for that particular product but this is not the story

with Sunsilk and recently launched Lifebuoy Shampoo. Our problem

statement is that what are the causes, which kept Lever Brothers Pakistan

Limited away from market leader position in shampoo market.

Problems

Whenever we look for the problems of company its problems can be

bifurcated into two broader categories.

1.Internal problems

2.External problems

Internal problems


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These problems are normally faced by organization due to elements, factors

and weaknesses which are present inside or which are existing internally in

the organization e.g. problems due to organizational policies, culture,

structure, information sharing networks, organizational strategies or even

employees, they can be positive force and the problem child as a source of

internal problem as well.

1.Companys management rely on long term strategies which they receive ready

made from their parent company, head office as a modus operandi. And

hence a strategy or a policy approval, formulated and implemented 50

years back becomes obsolete and discard in prevailing scenario and

changing environment e.g. in their advertising campaigns of Sunsilkshampoo they only use Nabila as their celebrity (Hair Expert) and they

have never tried any other sports or film media celebrity for the promotion

of their product which their competitors use extensively. Here in this field

they lag behind due to their long term strategy even in field of advertising

given by their parent head office.

Hence being an influenciable organization they exhibit bureaucratic

management style they want to maintain their status quo before these

environmental changes like advertising trend.

2.Offices and branches of Lever Brothers Pakistan Limited are normally placed

in domestic setup especially Multan branch, since it is a marketing

organization, its office outlook and location must be in professional and

well to do area which will contribute in proper functionality of branch and its

employees as well. This severe problem is being faced by Multan branch

of Lever Brothers Pakistan Limited as well.

3. Management team of Lever Brothers Pakistan Limited normally arrange

excessive operational meeting, they have less emphasis on the strategy

implementation part as compared to strategy formulation and planning.

4. All the decisions regarding product planning, development, distribution and

even targets of the branches are centralized and are in hands of central


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sales office of Lever Brothers Pakistan Limited. They dont believe in MBO

(Management by objectives). Branches are given inflexible targets of sales

though data on these branch managers negotiate this figure but it takes

too long.

5. Due to heavy capital investment in their brands Lever Brothers Pakistan

Limited is unable to observe their slow moving brands which create a cost

burden.

6. Since removing old/discarded brand is very expensive due to expensive

installed machinery, technology and capital investment, launching new

brand is also very expensive for Lever Brothers Pakistan Limited due to

the same reason. As to launch a new brand complete research and

development setup is required which is inflexible and can not be re-utilized

for another brand along with its consumer market is heavily flooded with

products, there is very low probability that market will absorb new brands.

7.Whenever Lever Brothers Pakistan Limited launch any product they first launch

it in India if product proves a big success they try it in Pakistan which is

not a good strategy due to cultural difference and religious differences.

8.Lever Brothers Pakistan Limited has very poor relationships with their dealers

and retailers. They are far away form their competitors like P&G, in case of

retailer relationship. Their brand manager makes very rare visits to the

retailers to know their problems, very little discounts are offered by Lever

Brothers Pakistan Limited to their retailers. No prize scheme and incentive

is given to dealers, retailers, wholesalers of Lever Brothers Pakistan

Limited. Even Lever Brothers Pakistan Limited brand manager never

bargain on the proper and prominent shelf space of their shampoos

(Sunsilk and Lifebuoy).

9.Lever Brothers Pakistan Limited has not been able to place any check on its

smuggling shampoos into Pakistan e.g. Indonesian Sunsilk is made

according to the demographic of Indonesia, when it will be used in


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Pakistan it will damage the hair of people, which deteriorate the brand

image. Which create problem on local sales of Pakistan.

10. Employment insecurities in Lever Brothers Pakistan Limited also contribute

negatively towards the performance of branch operations. All branchmanagers, brand managers and operation are transferred within branches

of Lever Brothers Pakistan Limited allover Pakistan. This create an

uncertainty among management team, new managers takes much time to

settle in new branch and to understand new setup of branch and new

dealers network. This affects the branch operations and performance.

External problems

Lever Brothers Pakistan Limited is not facing any prominent external problem

as already analyzed in PEST analysis.

Introduction Of Sunsilk And Lifebuoy

Sunsilk Shampoo

Lever Brothers Pakistan Limited stepped into shampoo business in 1984 with

Sunsilk initially with only two variants:

1.Sunsilk (egg shampoo)

2.Sunsilk (shikaki shampoo)

This was the first branded shampoo in Pakistani market then they launched

another shampoo named as Clinic in 1985. For the reason that no other

competitor was there in the market their sales figures was high in start, but as

shampoo market started to develop and imported shampoo and other

competitors entered into the market their sales started declining so they re-

launched it as Clinic Plus. Due to their poor marketing in 90s Clinic Plus


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faced big failure. The sales of Clinic Plus was not up to the expectations of the

company and they abandoned the production of Clinic Plus. They have

recently launched the brand with the new name and new formula (as they

claim) named as Clinic All Clear dandruff shampoo.

Company re-launched Sunsilk shampoo with following five variants in 1998:

Sunsilk Black for dull hair

Sunsilk Yellow for normal hair

Sunsilk Green for thin hair

Sunsilk Pink for dry hair

Sunsilk Orange for oily hair

They promoted these 5 variants heavily but this could not get them their

market share back due to entry of strong competitors like P&G (Pentene, Pert

Plus, Rejoice, Head & Shoulder), Bio Amla & other imported shampoos as

these shampoos got more shelf space in the retail outlets.

Lever Brothers Pakistan Limited again re-launched the Sunsilk at the end of

1999 with 12 different variants with new name of fruitamines. Now the focus

was on different kind of hair i.e. how many variation of Sunsilk are there with

aspect of ingredients and contents. Then they reduced their frutamines

Sunsilk to six variants. Now with launch of White Sunsilk they have seven

variants of Sunsilk.

Lifebuoy Shampoo

Lever Brothers Pakistan Limited also tried to encash its another very popular

brand name Lifebuoy soap which was popular among lower income segment.

They launched Lifebuoy shampoo using this brand name in 1998. Initially it

was successful according to the retailers every one was asking about it and


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asked for retailers opinion as well. But it flopped badly because it was mainly

targeted towards lower and middle income segment and Lever Brothers

Pakistan Limited wanted this segment to switch from bath soap to shampoo

and wanted to develop shampoo market in this segment as well. But this class

did not switched to Lifebuoy shampoo because they were in habit of using

soap for washing their hair, more over they did not find any thing unique and

new about the shampoo. Other than being liquid. So, they again returned to

Lifebuoy soap.

SWOT Analysis Of Shampoo Product Line

Strengths

1. Lever Brothers Pakistan Limited has a good name as a market leader in

consumer products this image always help its shampoo product line.

Customer are brand loyal and of shampoo product line.

2.People have favorable opinions about Sunsilk that its contents do not include

any harmful chemicals which could damage their hair.

3.First trial image of user are positive and they are generally brand loyal.

4.Sunsilk and Lifebuoy shampoos users believe that it is economical. Due to costleadership strategy of Lever Brothers Pakistan Limited in shampoo product

line.

5. They have recently launched antidandruff shampoo (white variant) with

additional feature of conditioner which has been highly valued by the

customers. It is competing successfully with P&Gs shampoos which were

already having conditioner in them.

Weaknesses1. Packaging of Sunsilk and Lifebuoy shampoo is the biggest weaknesses of

Lever Brothers Pakistan Limited. Retailers complaint that one leaked bottle

of Sunsilk spoils the whole lot. But Lever Brothers Pakistan Limited do not

pay any head to it.


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2. Advertisement of Sunsilk does not promote the product very well rather its

celebrity like Nabila is promoted. They dont switch their celebrity as they

have to follow long term promotion and advertising designed by their head

office as Elida (France) has always used beauty expert as their celebrity.

3.They focus on only females in their advertisement and they have ignored their

bigger segment of males.

4.Lever Brothers Pakistan Limited does not pay any attention on the incentives

and discounts given to the distributors and retailers.

5.Sales manager, brand manager and sales representatives do not conduct any

personal visits to the retail stores which gives them dissatisfaction.

6.Lever Brothers Pakistan Limited does not pay any attention to the shelf space

given to the Sunsilk in the retail stores. The store manager of Range told

us that the brand manager of Lever Brothers has never been visited their

store and they even never bothered about their shelf space.

7. Due to very huge number of variants in Sunsilk, Lever Brothers Pakistan

Limited fined it very difficult to focus on particular variants and it created

confusion among customers as well and increased complexity of

operations to a large extent and created cannibalization effect. Though

recently they have reduced their variants of Sunsilk from 12 to 6 and then

launched another one Sunsilk white. Still it needs further reduction.

Opportunities

1. Due strong company image and strong distribution network if they promote

their products through incentives, bonuses, allowances and discounts to

the retailers they can get better shelf space in the display stores of retailers

especially in shampoo product line.

2.

Lever Brothers Pakistan Limited has very strong and resourceful researchdepartment. They can conduct through their personnel in all over Pakistan

both in rural and urban areas and hence they can launch the new

shampoo with new formula and with new name. For this they have such a

big portfolio that they can afford its cost and returns will be maximized as a


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result of increased sales which will definitely offset the cost and will result

in maximum market shares.

3.People have ignored the relaunch of Sunsilk and its different offered variants.

Lever Brothers Pakistan Limited should implement the idea of launching

the new shampoo with new name and new formula because of this they

well be better able to attract target market.

Threats

1. All new and existing and important shampoo and branded soaps, which are

used, as shampoos are the threats for the shampoo product line of Lever

Brothers Pakistan Limited especially Sunsilk. Since people are not that

much price sensitive in case of shampoo but they have more concern

about the ingredients, formula and quality of their shampoo.

2. Competitors of Lever Brothers Pakistan Limited like P&G have very strong

relations with retailers and distributors which is greater threat to the

Sunsilk. The detail of discounts offered by P&G re as followed:

Order in Rs. Discount in %Below 50,000 2-3%

Above 50,000 5-6%

While Lever Brothers Pakistan Limited offers even less than the above stated

discounts on Sunsilk and Lifebuoy shampoos.

Competitors Analysis

The major competitors of Sunsilk can be categorized in two ways (all

percentages have been provided by Lever Brothers Pakistan Limited:

1.Direct competitors 75%

2.Indirect competitors 25%

Direct Competitors


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These competitors are in terms of product category. With reference to the

product category we can divide users of shampoo into following segments:

Upper Class

This class normally use Pentene, Head & Shoulder, Pert Plus. These

shampoos are giving tough competition to Sunsilk.

Middle Class

This segment is normally using shampoos in following percentage:

*All the percentages have been provided by LBPL.

Sr. No. Shampoo Percentage

1 Bio Amla 10

2 Head & Shoulder 203 Pentene 354 Pert Plus 255 Sunsilk 10

Bio Amla

Normally young girls and women want lengthy hair and try to avoid split edges

of hair so they prefer Bio Amla. This is a shampoo which has the largest

number of liters sales in Pakistan. Only lower middle and middle group people

are using Bio Amla.

Head & Shoulder

20% shampoo users are using Head & Shoulder as they are dandruff

conscious people. 99% of the people are influenced by the advertisement of

Head & Shoulder on daily use to get rid of dandruff and more over they re

getting the promised results. They have targeted both males

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