Impact of External Environment on Unilever: Challenges and Recommendations

This report evaluates the impact of macro environment on Unilever, key challenges faced by Unilever, and recommendations to resist with the challenges. It also includes a PESTLE analysis of Unilever and its response to challenges in business strategy of functions.

Individual report

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK ..............................................................................................................................................3
Pestle analysis.............................................................................................................................3
Key challenges faced by Unilever...............................................................................................5
Response of challenges in business strategy of functions...........................................................6
recommendation .........................................................................................................................7
CONCLUSION ...............................................................................................................................7
REFERNCES:..................................................................................................................................9
Books and Journals:....................................................................................................................9
Online..........................................................................................................................................9

INTRODUCTION
This aim of the report is to carry out an understanding of positive and negative factor of
external environment. Business surroundings are dynamic and uncertain in nature. Due to this
fact, there are some key challenges around the world which impact on business function and day
to day operation. External challenges are broad in nature that consists society and its related
aspects that must be balanced to survive into market. Many business face hurdles in taking
growth and achievement due to macro environment factors that are frequently changing and also
drive to change internal operations(Ullah2021). This report is going to evaluate the impact of
macro environment on Unilever. The company was founded in 1929 and has head office in
London, UK. It is shattered in worldwide area with a wide range of varieties in goods. The main
products of Unilever are grocery, daily essentials like tea, soap, beauty products, minerals and a
lot more. So that, with the help of this report, it is going to understand the impact of Brexit and
other external environment. Also, key challenges and recommendations to resist with the
challenges are a part of discussion.
MAIN BODY
TASK
Pestle analysis
It is a theoretical framework that evaluates industry impact through external market
requirement. Business is surrounded with key phenomena that emphasize on their internal
working. It is necessary to identify market condition, regulation and society requirement so that,
an organisation will seek growth internally and externally. Therefore, this analysis is beneficial
to identify broad environment consequences and factors that requite appropriate strategies. In
context of Unilever, all these factors are broadly discussed below:
Political: there are a lot of political interferences which directly or indirectly influence on
business functioning. As the environmental is filled with corruption, personal biasses,
bureaucracy and terrorism, some organisation could not be able to survive. In UK, retail industry
has been affected with trade regulations, tariffs and taxation across countries. With the impact of
Brexit as it imposed trade regulation in European Union which being a threat for Unilever.
Apart from this, Unilever is facing positive impact of free trade in other countries which opens

gate for growth and opportunities. Therefore, the company require to keep connected with trade
laws, import and export duties in order to ascertain growth into market.
Environmental: Society is largely connected with environment and nature. It is
something that cannot be defined In terms of money and if one destroyed, society may bear
many problems in living,. Therefore, today's businesses are future of society which plays an
important role and responsibility towards environment well being. Business are closely
connected with nature so that, any positive or negative impact will directly reach to
sustainability or disruption respectively (Birahim, 2020). Retail industry is scattered all over in
UK due to which country get impacted from carbon emission, pollution and unsustainable
practices. Therefore, Unilever is concerned about this fact and work on promoting sustainable
business function. The products are manufactured and packaged with renewable resources
which does not destroy natural substances and safe for consumers. This factor has positive
impact on Unilever due to their effective practices of carbon control, avoid use of plastics and
waste, provide healthy and organic product supplement.
Social: an organisation works among million of people and take an opportunity to serve
them best of their products and services. These products must be valuable and match with
society's culture, beliefs, income level, age, size and co,lour. All these factors influence on the
product decision of Unilever. Retail sector of UK has global approach and huge competition due
to which, there are number of products which raise bargaining power of customer. Therefore,
the organisation needs to have positive impact by providing products which are currently in
demand and requirement of potential customer. Unilever seeking these opportunities by giving
healthy and dairy goods which are immunity boosters. This way, the company has reputed brand
image into market.
Technological: By putting highlight on current modern scenario, technological existence
and advancement are become a crucial part for development of an organisation as well as
country. UK comes under developing country that creates many technological advancement and
promotes its usage among billions of people. Therefore, business are required to do the same.
Unilever has positive impact of this factor as the company is indulged in E-commerce platforms
by providing product through retailers and involve digitalisation. But there could be more
advancement in technology as the company may IT software which will help them to reach large
customer by eliminating mediators.

Legal: This factor influence on legal compliance that an organisation needs to undertake.
Legal provision and laws are a part of business operations which impact on its existence. An
organisation which has good image in the eyes of law has various positive impact In terms of
working and survival (Papenfuss,2019). Therefore, Unilever is obliged with many laws such as
Equality and diversity, health and safety, food licensing and many more. The company works
and compile each law which make their working better and follow all legal standards. Hence,
Unilever found under some serious allegations of unhealthy food which contain heavy amount
of sugar which has impacted negatively on companies products that become threat for company.
Economical: This factor emphasize on giving great contribution in economies of Scale.
This will enhance countries GDP and consumer income. Therefore, a business is a vital part in
balancing money flow due to which chances of recession decreases. Retail industry is vitally
contributing 11% in economy. Covid-19 has created negative impact on country as inflation
rises and sales power of powers declines. So that, Unilever needs to make effective Strategies to
balance the money flow by providing products which are necessary during the period of time.
Hence, it has evaluated that, external factors has drastic influence on organisation
practices and functions (Fitchuk, , 2021). Unilever needs to take effective actions towards
setting up political interference and technological up gradation so that, the company could look
towards height of achievement.
Key challenges faced by Unilever
According to the pestle analysis, There are many key challenges that are faced by
Unilever. As external factors include impact of political interferences, societies concern,
environment welfare, economic balance and legal provisions. Unilever needs to look at more
consumer products which satisfy their needs and wants (Murphy, and Murphy, 2018) . At this
level, the company fails to provide products with great efficiency due to lack of technological
factor. The key challenge faced by Unilever is the impact of Covid-19 due to which sales got
decline and competition rises. With the impact of these crises, the company could not perform
sustainable acts during the year 2021. as the organisation is conscious about health and standard
of living, it is unable to achieve their promise to reduce water consumption level according to per
consumer use. It shows that, the company face challenges in environmental protection which
may create hurdles on brand image and people have faith of Unilever and its operations which
should not be outdated (The five challenges facing Unilever’s new CEO, 2018). One of the

major challenge is decreasing profits margins at Unilever. The company wants to be competitive
from new players in retail sector. Rise in price would not be a successful strategy. Therefore, the
company is not able to cover their products costs due to which they get less margins and
profit(Cheng,2021). Due to impact of Brexit and governmental interferences, people are become
factual about its purchase and think before spending money at any products. In addition to this,
due to less social presence and upgraded software, the company is unable to reach customers
directly. It becomes a serious threat as the company usually deals with other retailers and
mediators that eliminate its own brand composition and activeness into market. There comes a
challenge in balancing economies of scale which is required to encourage development of
nations and keep the good work still on.
Response of challenges in business strategy of functions.
Business strategy is required to grow and achieve organisation aims and objective.
Mainly, every organisation has its motive to earn highest profit and create a recognisable brand
exposure into market. It perform many functions in an effective manner to resit with the
challenges and welcome the opportunities. These functions are vital and required to keep up a
good and smooth flow towards achieving objectives and targets. Unilever responses its external
challenge by indulging in effective functioning which is described below:
Human resource: it is the key function for organisation to involve effective and
efficient human resource. They must be capable, talented and able to use creative mindset and
deals with companies challenges to achieve success. As Unilever face challenges due to broad
market environment. As the company sometimes is not able to respond to workforce effectively.
So that, the company enhance their motivation by giving seasonal off and provide incentives and
beneficial plans by giving health and other benefits (KERR, BILLAUD, and HJORTSHOEJ,
2020). Their business strategy involves great participation of employees who manages the work
appropriately. Therefore, it is required e to keep them loyal and dedicated to avoid termination
and separation.
Marketing: this function is required to reach to large number of people. Marketing plays
a vital role in connecting with customers directly or indirectly. An organisation should use
effective marketing strategy which gives successful results of the motive. Unilever lacks in
reaching to customer directly. So that, it promotes through other challenges like advertisement,
holding and newspaper. The customer find about any new product of its features through these

platforms. It contributes in making great sales of Unilever but does not attain huge profits
margins as products first move from wholesalers, retailers and then at the end to customer.
Financial management: A good financial positions keeps the organisation at the path of their
success. This could be done through taking effective decision as where to invest and what benefit
it would give. Therefore, Unilever face cost consumption issues, ineffective budgetary control
so that, the company focuses more on internal working by finance manager and come up with
effective strategy to increase profit margins so that, the company could re-capture its potential
market.
Information system: in the current modern world, information technology plays a vital role as
all the work is done through computers, software and internet. These technological advancement
impact on Unilever. as the company have its online presence but could not get indulge with
them directly. This is because of non-use of AI, CRM software which are become to analyse
customers actions that helps in taking product decisions. Unilever respond to this challenges by
collaborating with other brands that indulge mediators and other retailers.
recommendation
From the understanding of key challenges and impact of external factors on Unilever, there are
some recommendation which needs to be follow by company to ascertain good growth and
relaxation form key challenges because of market uncertainties. These recommendation are
discussed below:
 The company needs to be more superficial in technological advancement by adopting
various platforms like Twitter, Instagram and Facebook. It is required to update regularly
about new products and its features which will helps to gain consumer insights.
 Th company must make effective strategies and plans to achieve environmental
protection by creating awareness in general people and launch campaigns for their
participation.
 Unilever needs to enhance brand potential by being active into market through
generating ways of direct communication to provide great customer services.
CONCLUSION
The report has concluded that external factors has great impact on the profitability and survival
of organisation. These external factors require effective strategies and plans to avoid

uncertainties. It has concluded that, the company may face some challenges but it could be resist
by adopting new ways of working and technology.

REFERNCES:
Books and Journals:
Birahim, S.A., 2020. Internal and external factors of Nestle and comparison with Unilever.
Cheng, Y., 2021, February. Analysis on the Opportunities and Challenges of Unilever’s
Differentiated Competition by Using SWOT and PEST. In 6th International Conference
on Economics, Management, Law and Education (EMLE 2020) (pp. 280-284). Atlantis
Press.
Fitchuk, C., 2021. Creating a Sustainable Business Strategy for a SME.
KERR, W.R., BILLAUD, E. and HJORTSHOEJ, M.F., 2020. Unilever’s Response to the Future
of Work.
Murphy, P.E. and Murphy, C.E., 2018. Sustainable Living: Unilever. In Progressive Business
Models (pp. 263-286). Palgrave Macmillan, Cham.
Papenfuss, I., 2019. Ben & Jerry’s: introducing linked prosperity to a multinational (Doctoral
dissertation).
Ullah, N., 2021. A Comparative Analysis between Unilever and Johnson & Johnsons.
Online
The five challenges facing Unilever’s new CEO, 2018. [online] Available through:
<https://www.marketingweek.com/the-five-challenges-facing-unilevers-new-ceo/>