Leading Strategic Decision Making: Analysis of Unilever and Porter’s Competitive Strategy Framework

This report analyzes the strategic decisions of Unilever using Porter’s competitive strategy framework. It discusses the advantages and limitations of the model and provides recommendations for improvement. The report is relevant for students studying strategic decision making in business and management courses.

Leading Strategic Decision
Making

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Analysis of Unilever....................................................................................................................3
Porter’s generic competitive strategy framework:.......................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................1
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INTRODUCTION
The strategic decisions can help an organization in improving its performance and
implementing changes that will be beneficial for the day to day operations of the organization.
This helps the business in forecasting about their future performance on the basis of their
analysis. The data helps the organization in making business decisions that can improve the
performance in the global market (Meglio and Park, 2019). The Unilever is one of the leading
organizations in the industry that makes various types of strategic decisions. The decisions are
effective enough that the organization is successful in taking benefit of the strategies in their
operations.
The decisions help the organization in improving the performance of their work and day to
day tasks of the company. The report will consist of the information that will help in
understanding the various business strategies of the Unilever by application of various methods
and framework. This report will also discuss the various aspects of the company based on their
recent data of performance. Furthermore, the report will explain about the various criticisms of
the Porter’s generic strategy framework. The main aim of the report is to critically evaluate and
understand the various outcomes that can be a result of the application of the models.
MAIN BODY
Porter’s competitive strategy framework
The Porter’s competitive strategy framework explains about the different types of the cultures of
the organization.
The model is consisted of Three main aspects that are as follows:
 Cost leadership- This aspect explains that the organization can lead the market in
terms of cost by keeping the cost of their products low than their rivals. This helps
the organization in achieving the customer focus when it comes to the prices of the
products. The customers are very concerned about the money that they are paying
for.
Unilever uses this technique of the porter's competitive strategy framework by reducing
the costs profits of the company and increasing the sales by keeping the prices of their products
competitive. The organization provides various types of the products at a premium quality but an
affordable cost. The business is to provide the customers with the affordable products without
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increasing the prices of their products. The company has successfully managed to increase their
sales by keeping the profits low. The financial reports of the Unilever explains that the
organization has been reducing the prices of their products but keeping the quality premium
(Financial statements, 2022). This helped the organization in increasing their sales during the
recent years. The profits of the organization has decreased a little this is because the organization
has been focusing more on the price factor of the market. The organization has been reducing
their costs on the various aspects so that they can increase the investments in their products and
its quality. The customers always looks for the best and the most affordable product in the
market so that they can get more for what they are paying. The company is been providing the
best quality of their products without making any cost cuttings or increasing the cost of their
products.
 Differentiation- This aspect explains about the factor that the company can increase their
growth in the market by differentiating them from its rivals in terms of uniqueness of the
product.
Unilever uses this strategy of differentiating their products and their brand by making
various types of the strategies related to their operations. The company uses the strategy of
differentiation as the strategy to achieve the competitive advantages. Looking at the case study it
can be said that the Unilever focuses on differentiating their products and their brand by selling
their products to variety of the retailers. The company sells its products to the various countries
and the retailers so that the products of the Unilever can reach to every customer across the globe
(Kim and Kim, 2022). This strategy helps the Unilever in making their brand to be known in
every type of market. Company sales its products to the various supermarkets of the developed
countries and where the supermarkets are not available than the products are sold at the local
shops. This type of strategy makes the local people of every market to be familiar with the brand
so that they can build the monopoly in the customers as the brand is more customer reachable.
Looking at the chart it can be said that the Unilever has seen a downfall in their profits in as
compared to previous financial year. This is because the organization has been implementing the
strategy of reducing the cost on their products. The company has been trying their best to make
their products to be affordable for everyone in the market.
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 Focus- This explains that the organization is required to focus on various aspects of
the market that can make an impact on the performance of the company. This
model mostly focuses on cost focus and differentiates focus.
The Unilever focuses mainly on the product quality and the cost factors of the market.
The company always keeps the cost of its products very effective and competitive as they mainly
use the strategy of cost focus. This helps the organization in achieving customer attraction. The
company is also moving towards the sustainable developments with the motive of keeping the
various aspects in mind. The organization tries their best that they can benefit the nature by using
non harmful methods of productions (Vision, 2022). This is the vision of the organization as they
focuses on the various aspects of the market. They are trying their best to make their productions
and operations more environment friendly. This helps the organization in achieving the trust of
the customers and various other communities as they are working for the betterment of the
environment.
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0
10,000
20,000
30,000
40,000
50,000
60,000
2018 2019 2020
Turnover
Operating turnover
Net profit
Growth is in (Є Millions)
Advantages and Limitations of Porter’s generic competitive strategy framework:
The porter’s competitive strategy framework is one of the most successful models used
for analysing the current and the future situations of the company (Bharadwaj, 2018). This
strategy helps in improving the focus of the company so that the organization can make changes
on the weak areas of their operations. The model has various advantages and limitations.
Advantages of the concept
 Customer attraction- The model has an advantage that the organization can take
advantage of the strategies that can be used by keeping the cost of their products more
competitive. This helps the organization in achieving the attraction of the customer as
they are always looking for the products that can provide them with better quality at an
affordable cost. The organization can keep the prices of their product low so that the
organization can attract the focus of their customers. The company can take the benefit
by keeping their profits low so that the cost can be affordable for the customers
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(Zapletalová, 2021). This can help the organization in gaining advantage by having the
leadership in terms of cost factor in the market.
 Catching up with trend- One of the main advantage of the model is that it can help the
organization in taking advantage of the market trends. It helps the business in making the
strategies based on the market trends that can be used to achieve more customer base so
that the new customers will also be introduced to the organization. This factor helps the
organization as the company can make their products to be more attractive and different
from others. The business can use various techniques for making their products unique
such as, the organization can make various investments in the research and development.
This can help the organization by making their product more advanced so that it can be
an attraction point for the company.
 Customer Loyalty- Another advantage of this model is that it helps the organization in
gaining the customer loyalty. This factor helps the organization that the customers
whenever is looking for something in the market their first preference will be the brand
that provides them better quality and services. The organization can make their products
more trust able and more cost friendly by making their vision to be more customer
focused. This can help the organization in making the customers to trust the organization
for the products. The company by assuring the customers that they are getting premium
quality of product at the affordable cost will be able to gain the loyalty of the customers
(Schweizer, and Koscher, 2021).
 Competitive advantage in sustainability- The organizations can have another advantage
that they can achieve competitive advantages in the market when it comes to the
sustainability (Echchakoui, 2018). The organization will be able to achieve growth in
their day to day operations and initiatives with the implementation of this model.
Limitations of the concept
 Customer’s view of products- One of the limitations of this mod is that it makes the
organizations more focused on making the products according to their preference. The
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priority and the preferences of the customers are not given much importance in this
model as the organization makes the strategies based on their motive of leading the
market. This creates a problem that the point of customers is still unlisted. The customers
are always trying to give suggestions according to their preference so that the company
can create better products according to their preference (Walia, 2021).
 Rapid changes- Another limitation of this model is that it cannot help the organization in
meeting the daily and rapid changes of the market trends. The organization gets bounded
to their old strategies based on the traditional methods and the old data that has been
collected at the time of making that strategies which makes the process of
implementation of change hard for the organization. This is because the model mostly
relies on the researches and the price factors that can be used for the improvement of the
performance. The organizations are unable to match the rapid changes as they are
required to first make researches for the factor that can slow down the operations of the
organization.
 Narrow options- The model also has a limitation that the model lacks the option of
modifications. The business does not have a lot of ways in this model in which they can
make changes. The organization is mostly relied on the cost and the leadership factors the
organization can not make improvement in the other departments using this model. The
organization after using the method does not have a lot of ways in which they can make
the changes that will benefit the operations of the organization. The model mostly focuses
and allows making changes in the product and the price strategies. This creates a lack of
options that can be used for the growth of the organization (Echchakoui, 2018).
 Reduced scope of investments- One of the limitation of this model is that it reduces the
scope of investments and focus of the organization only to the few aspects of the
business. This makes the company to invest only in a limited factors that is cost and
uniqueness of their products (Bharadwaj, 2018). This makes the other departments of the
organization such as the employees and the marketing unfocused.
Recommendations
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There are many recommendations that can be given to the organization so that the
company can overcome these limitations: Keeping information of the market- This can help the organization by collecting the
proper information of the market and the preference of the customers. This can help the
organization in understanding the requirements of the customers. Applying change management tools- The organization can use various tools that can
help the company in matching the changes in the market. This can help in understanding
the sudden changes in the market so that the organization can make necessary changes
that are required to perform better in their global operations.
 Analyzing the factors- The organization can analyze the key factors of both internal and
external environment of the company. This can help the organization in focusing on the
factors that can help the organization by making changes for them. The organization can
make necessary changes so that the factors can make a positive impact on the operations
of the company.
CONCLUSION
Thus, it can be concluded that the organization can make necessary changes in their
strategies based on the factors of the porter’s generic competitive advantage theory. This can
help the organization in making various and necessary changes in the techniques of the company.
The changes help the organization in matching the trends and the needs of the market and the
customers. The model has a lot of advantages that can be taken by the company such as,
attracting the customers and catching up the trends. It helps the organization in taking advantages
of the factors and improves them so that the company can perform better in their operations. This
model makes a lot of impacts on the organization by making the organization to change the
strategies according to the factors of the market and the external environment. The model has a
lot of limitations such as, there are not a lot of ways in which the company can make changes for
the improvement. The limitations can be overcome by using various new strategies and making
the necessary changes in the strategies of the operations of the company. Organization can
analyse the external and the internal factors for the better understanding of the company’s
situations.
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REFERENCES
Books and journals
Bharadwaj, N., 2018. Strategic decision making in an information-rich environment: a synthesis
and an organizing framework for innovation research. In Innovation and Strategy.
Emerald Publishing Limited.
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Echchakoui, S., 2018. An analytical model that links customer-perceived value and competitive
strategies. Journal of Marketing Analytics. 6(4). pp.138-149.
Gray, D., 2021. What makes successful frameworks rise above the rest. MIT Sloan Management
Review. 62(4). pp.1-6.
Kim, D.G. and Kim, H.C., 2022. Probability matching and strategic decision making. Journal of
Behavioral and Experimental Economics. p.101850.
Meglio, O. and Park, K., 2019. Strategic decisions and sustainability choices. Palgrave
Macmillan.
Schweizer, L. and Koscher, E.M.K., 2021. Competitive Advantage. In Encyclopedia of
Sustainable Management (pp. 1-3). Cham: Springer International Publishing.
Walia, C., 2021. Creativity and Strategic Decision-Making by Top Management Teams.
In Creativity and Strategy (pp. 21-33). Springer, Cham.
Zapletalová, Š., 2021. Internationalisation and Competitive Strategies of Enterprises.
In Contemporary Entrepreneurship Issues in International Business (pp. 139-168).
Online
Financial statements. 2022. Available through: < https://www.unilever.com/investors/annual-
report-and-accounts/archive-of-annual-report-and-accounts/>
Vision. 2022. [Online] Available through: <https://www.unilever.co.uk/>
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