Competition in the Global Market

Running head: COMPETITION IN THE GLOBAL CONSUMER MARKET
Competition in the Global Market
Name of the Student:
Name of the University:
Author Note:

1
COMPETITION IN THE GLOBAL CONSUMER MARKET
Table of Contents
Introduction:....................................................................................................................................1
About Unilever:...............................................................................................................................1
Main analysis:..................................................................................................................................2
Acquisition and merger strategy of Unilever...................................................................................2
Increase in revenue generation:...................................................................................................3
Capital generation:.......................................................................................................................4
Acquisitions and financial sustainability:....................................................................................9
Niche marketing strategy of Unilever:..........................................................................................10
Supply chain strategy of Unilever:................................................................................................14
Product line strategy of Unilever:..................................................................................................18
Conclusion:....................................................................................................................................21
Recommendations:........................................................................................................................22
References:....................................................................................................................................25

2
COMPETITION IN THE GLOBAL CONSUMER MARKET
Introduction:
According to Slack (2015), operations management refers to management and control the
of entire business operations including production in business organizations. The operations
manager in the recent times needs to control diverse areas of operations right from customers,
finance, marketing to human resources so that operations can be done in an efficient manner.
According to Jacobs, Chase and Lummus (2014), in the recent scenario it can be seen that the
operations managers are responsible for efficient operations of the business organizations. These
facts apply more to the multinational companies where the operations manager undoubtedly
account for their high market performances. The aim of the paper is to discuss a contemporary
issue of operations management which operational managers face. The issue which would form
the crux of the study are the competitive threats from the market which MNC companies
face in the competitive market. The paper would delve into four strategic management tool
namely, acquisition and merger, niche marketing, supply chain strategy and product line
strategy which multinational companies take to counteract this issue. The multinational
company on which the entire study would stand on is Unilever.
About Unilever:
Unilever is consumer goods manufacturing company which has its base in Rotterdam,
Netherlands and London, the United Kingdom. The multinational company is listed primarily on
the London Stock Exchange and Euronext Amsterdam. The company, founded in 1930 operates
in more than a hundred countries under the leadership of Paul Coleman, its CEO and Margin
Dekkers, its chairperson. The product umbrella of Unilever can be divided into four main
divisions namely, food and drink, home care, personal care and water purifier. An analysis of the
product umbrella of the Dutch multinational company would reveal reflection or outcomes of

3
COMPETITION IN THE GLOBAL CONSUMER MARKET
four strategic management decisions of the company to counteract the competitive threat it faces
(unilever.com 2018). The first umbrella, consists of brands like Bru Coffee ranges, Cornetto,
Magnum ice-cream and Brooke Bond. Unilever uses Bru that competes with Nescafe, owned by
Nestle, one of the biggest competitors of the company in the food market. Cornetto and Magnum
owned by the company competes with Movenpick, owned by Nestle and the ranges of ice creams
by Baskin-Robbins. The next division consists of home care brands like OMO, Surf and
Domestos. The major competitors of Unilever are P&G and Reckitt Benckiser (us.pg.com 2018).
The third class of products Unilever offers consist of personal care, both for men and women.
The brands like Lux, Axe, Brut, Lever and Lakme come under the product umbrella. Unilever
encounters competition from multinational companies like P&G and L’Oreal. The company
competes with electronic giants like LG and Samsung when it comes to Pureit, the water purifier
brands it owns. The product line of Unilever consists of two strategies so that it can counteract
the intense competition, niche marketing and acquisition and merger (Brown and Bessant 2013).
The level of competitive threat under which Unilever operates can be gauged by the fact that
Krafts Heinz wanted to acquire it and failed. Unilever, in order to sustain in this competition and
operate globally as a leader in the consumer goods market adopts the strategy of acquiring
companies all over the world. The deadly strategy which the company uses to support its
acquisition, product strategy and niche marketing is supply chain management strategy, which
again spreads all over the world (Kotler 2015).
Main analysis:
Acquisition and merger strategy of Unilever
According to Jay and Barry (2016), the acquisition and merger is a strategic tool which
multinational companies use to strengthen their global competitive positions. The acquisitions

4
COMPETITION IN THE GLOBAL CONSUMER MARKET
and mergers serve several important roles for the multinational companies. The following are the
strategic factors which multinational companies seek to achieve through acquisitions of firms:
Increase in revenue generation:
The most important objectives that the companies try seek through the merger and
acquisition strategy is increase in revenue. As far Unilever is concerned, the company’s product
line is composed of food and drinks, personal care, home care and water purifier, all of which are
extremely competitive markets. For example, in terms of food and drinks, Unilever brands like
Cornetto, Magnum, Knorr and Lipton are present in the market. As far as Cornetto and Magnum
are concerned, Unilever faces competition from Nestle, which is the world’s largest
manufacturer of food products. Nestle is a multinational company listed on the Swiss Stock
Exchange (bloomberg.com 2018). Nestle just like Unilever is present all over the globe and in
fact, the two competitors share most of the markets. Nestle owns Movenpick which competes
with the ice cream brands like Magnum that is owned by Unilever. Unilever is already facing
stiff competition from its competitor based in the US, Baskin-Robbins. The latter is the world’s
largest ice cream chain. The two companies give tough competition to Unilever in the ice cream
market. The company in addition faces competition from low ice cream manufacturers in the
world. This means that Unilever faces financial risk of losing revenue due to extreme
competition in one of the market it operates (Zucchella et al. 2016). Acquisition of firms in
different and diverse market allows Unilever to sell a large number of products globally and
generate immense revenue. A classic example of one such acquisition was that of Lakme, the
Indian beauty brand in 1996. The brand also offers salon services as well. Thus, acquisition and
merger of Lakme allowed Unilever to enter the high-end beauty market. It is a high end beauty
and fashion product and its consumers are mostly upper class consumers. Lakme Fashion Week

5
COMPETITION IN THE GLOBAL CONSUMER MARKET
is a high end fashion show attended by international designers. Thus, by acquiring Lakme,
Unilever boosted its revenue generation power (Yamin and Mavondo 2015).
Capital generation:
Figure 1: 5 years stock comparison between Unilever, Nestle, P&G and Samsung
(Source: bloomberg.com 2018)
Acquisitions and mergers are formidable tools that multinational companies use to
expand their capital base in which in turn renders them their competitiveness. The figure above
shows comparison between Unilever and its three competitors Procter & Gamble, Nestle and
Samsung (us.pg.com 2018). The graph shows that the performance of Unilever has been better
than Procter & Gamble and Nestle but not as good as Samsung. One must note that all of these
companies are public limited companies listed on various stock exchange around the world.
Unilever, like its consumer base shares its investors’ base with them. Acquiring companies from
diverse markets not only allows Unilever to serve a diverse consumer base, but get access to to
the capital of these companies. The operations managers of Unilever can use the assets of these
companies as well to manufacture and operate in the international market more efficiently
(unilever.com 2018)

6
COMPETITION IN THE GLOBAL CONSUMER MARKET
.
Figure 2: Table showing asset of Unilever
(unilever.com 2018)

7
COMPETITION IN THE GLOBAL CONSUMER MARKET
Figure 3: Table showing asset value of Nestle
(Source: nestle.com 2018)
The two tables shown above compare between the assets held by Unilever and one of its
largest competitors, Nestle. The table shows that compared to approximately 109060 million
Euros asset value of Nestle, the asset value of Unilever is mere 60285 million Euros according to
the financial figures of 2017. One can also point that as far as food market is concerned, Nestle
occupies the top position. This means that acquisition of assets in form of companies contribute
directly towards the operational efficiency of multinational companies (Sheen 2014). This factor
has made Unilever acquire companies from diverse industries to boost its asset value. Unilever
acquired Lipton in 1971 and Brooke Bond for GBP 390 million in 1984. These two acquisitions
strengthened the position of Unilever in the tea market in England. Unilever acquired
Chesebrough-Ponds in 1987 which earned the company a great share in the beauty market in