Strategic Management: Analysis of Unilever's Competitive Positioning

This report analyzes the competitive positioning of Unilever in the consumer goods industry using models such as Porter's Five Forces, PESTLE analysis, Porter's generic force model, and Bowman's Strategy Clock.

Strategic
Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Porter five forces..........................................................................................................................3
Pestle Analysis.............................................................................................................................5
Porter generic force model...........................................................................................................7
Bowman’s Strategy Clock...........................................................................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Top management is responsible for framing various strategies so that company can earn
more profit margin and market share in competitive environment. There are several changes in
competitive market so manager of company need to make changes in its strategies so that it can
retain its positioning. Unilever is firm that operates in consumer able good to earned maximum
customers satisfaction and profitability. This report have make use of various model such as
porter five force, pestle analysis and Bowman clock is examine success of company.
MAIN BODY
Porter five forces
It is another effective model that is used to analysis and evaluates competitive
positioning of any enterprise in particular industry so that appropriate strategies can be
formulated for growth and sustainability of firm. Therefore, Porter five forces model can be used
to analysis strategic position of Unilever in market. Such as:
Existing rivalry (High)
There are large numbers of stores and competitors in Consumer able good industry with
range of products and services to meet needs of individuals. Unilever by providing unique,
qualitative and varieties of products to diverse people within single store is able to motivate
customers to select specific products of firm (Ethiraj, Gambardella and Helfat, 2018). Therefore
despite of tough competition level in Industry firm is able to build and maintained its strategic
positioning by innovating its products as per expectancy of customers.
Threat of new entrance (High)
Various individual and entrepreneurs are planning to start and operates their business in
comsumerable sectors as it is one of the growing industries and includes necessary products and
services for customers. Lot of amount of resource, capital needed to be invested by people to
start their business in particular industry which create barrier for new firms to enter into market.
At the same time there are numerous competitors with large products portfolio, strong brand
image or reputation and market share like Unilever so it is difficult for new enterprise to easily
expand its business operation (Muriuki, Thomas and Joyce, 2017). Globalisation has also
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contributed in increasing threat of new entrance but company by providing products as per its
promise made to customers is able to grow and expand.
Power of consumers (High)
It is another element that can be used to understand the way Unilever have gained
competitive positioning in consumerable good industry. UK have huge population with different
needs and preference thus they have more power to influenced operating and strategy of
companies. There are large number of enterprise in industry Unilever operates so there is low
switching cost for customers to select one company product to another for better satisfaction of
their basic requirements (Phillips and Moutinho, 2018). Unilever by manufacturing highly
qualitative and effective products and services those are beyond their expectancy of customers is
able to reduce power of consumers to some extend and promote its operation.
Power of suppliers (Low)
Every company require raw material for manufacturing finished products which can be
delivered to end user in market for earning maximum profit margin. There are large numbers of
suppliers that offers similar quality products so company have opportunities to select best
possible alternative at lower prices in order to render maximum value to end customers. Strong
brand image, credit score and effective relationship between suppliers and company have helped
enterprise to get products at reasonable rates (O’Neill, 2016). Thus low power of suppliers
contributed in reducing overall cost and offering maximum value products to range of individual.
Threat of substitute products (Moderate)
Substitute products refer to products that can be used in place of specific goods such as
tea and coffee can be interchangeably used for satisfaction of individual needs. There are several
small and medium enterprise which in order to attracted or influence customers manufacture
similar products to large organisation so that they can earn huge profitability (Drobyazko and
et.al., 2019). Therefore Unilever in order to protect products or method of delivery being copied
have made use of intellectual property such as patent and copyright. Thus used of patent and
copyright lead to development of strong reputation, brand image of enterprise.
Therefore it can be stated from above analysis that Unilever by changing its strategies as
per market condition able to manage and enhanced its share of sales volume and profitability.
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Unilever in order to sustain its business in future circumstance have to make changes its
strategies so that more and more customers want to be part of organisation.
Pestle Analysis
It is model that is used to identify external factors such as policies of government,
economic condition, customers taste and preference and environment have impact on
competitive position of firm. Manager of Unilever have effective changed its strategies as per
various external changes so that it can retain customers loyalty and satisfaction level (Adegbile,
Sarpong and Meissner, 2017). Several factors that have helps Unilever to gained competitive
positioning in industry can be illustrated as follows:
Political Factors: UK is facing unstable economic condition because of Brexit as most of the
people have voted form leaving European Union to have independent decision making. At the
same time government in order to grow and develop economic have make free trade regulation
policy. Thus, it has provided opportunity to Unilever to expand its business across worldwide in
order to earn more sales volume and profit margin. Uncertainty regarding future policies of
government has lead to decrease in overall investment thus Unilever have to face less
competition and can easily grow its business.
Economic condition: It is factors that include components such as employment level, income of
individuals, demographical structure and interest rate within economy. Unilever provide
products and services for all age group, income level thus cater need of each individual that live
in society. Company offer qualitative, essential products and services at reasonable rates thus
large number of customers are motivated to make purchased of products from it as compared to
other in industry (Leiblein and Reuer, 2019). Unilever is large organisation that requires lots of
employees for delivering services to customers so it has contributed in generation of employment
opportunities for society. Therefore increased sales volume and profitability have contributed in
adding value to GDP of country and better satisfaction of customer’s requirements.
Social Factors: People taste and preference changes as per innovation in technology or
launched of new products or due to increase and decreased in price of products so company need
to adapt to such changes to grow and sustain in market for longer period of time. Due to
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increasing number of diseases and health problem in UK people are more interested in hygiene
and organic products range for satisfaction of needs. At the same time company provide safe
and secure working environment to employees for work that lead to establishment of strong
brand of enterprise in consumer able sector (Fitri, and et.al., 2019). Unilever by understanding
increasing preference of customers to have online shopping have planned to offer its products
and service through its official websites. Thus it have contributed in better satisfaction of
customers requirements and getting competitive position in market.
Technology Factor: It can be illustrated that technological development lead to growth and
expansion of economic, better living standard of people and effective satisfaction of customers
requirements. Unilever manager continuously monitor and analysis changes or updation in
technologies so that new or innovative method can be used to delivered products. Company have
use of innovative technology such as information technology, increasing its presence in various
social sites like Facebook, twitter and Instragram. People across worldwide can easily view
varieties of products and services offered by company, feedback or comment of previous
customers thus take correct decision to make purchased for fulfilment of their respective
requirements (Sugahara, Daidj and Ushio, 2017). Online payment is another strategy that is used
by Unilever to provide ease and comfort to customers as they can easily make payment while
staying safe and secure at home. Therefore adaptation to technology have lead to reduction in
overall cost by brining economic of scale and better satisfaction of needs thus increasing market
share of firm.
Environmental Factor: Recently most of company are becoming socially responsible due to
increasing awareness among customers and government regarding immerse amount of wastage
released by firm for earning profit. Enterprise operates its business in society so it is their
responsibility to take numerous steps to protect natural resources from various harm and threat.
Unilever have taken several steps to reduce amount of wastage of resources, efforts and time
such as provided training and guidance to employees about the way task needed to be completed.
Use of innovative technology and continuous monitoring by senior manager has lead to
reduction in error and mistake thus delivered of best services to end users and retention of
strategic positioning in market.
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Legal Factor: There are various legal laws, rules and regulation that are formulated by
government to protect interest of customers and employees that are working in firm (Wunder,
2016). Unilever while operating its various function have adhered to legal laws such as health
and safety, discriminative, employment law and equality that lead to enhanced company overall
profitability and market share in industry.
Porter generic force model
This can be understood as one of the most innovative business model used by companies
for analysing business situations and competitively growing with expansion in wider business
scenario where the marketing, resource planning and wider advanced competitive activities can
be functionally enhanced onto wider paradigms:
Cost leadership: Uniliver for targeting broad market and larger customer segments within
business development has to focus onto keeping lowest possible price, through which comapny
is able to enhance its position within industry. Cost leadership is highly important for
recognising growth fundamentals, new work opportunities and for gaining synergy of
competitive functional advancement. This will enable brand to technically be efficient within
company decisions and for entering into wider scale services by leading the price factor among
industry. Cost leadership will enable to encompass bigger competitive place within industry and
for yielding onto wider potentialities and new scale services, with focus onto working with major
management analysis and for gaining stronger focused synergy.
Differentiation: The Uniliver company needs to focus onto differentiation factor where features
and services of products needs to be competitively different and unique for occupying strong
place among customer demands within industry. This also enhances wide importance for
including innovation, high creativity and new relative demand within use of technology to
potentially reach onto wider functional scale services. This also focuses onto development of
growth with unique factors, higher customised preferences and also potentially wider goals
through which brand is able to leverage new goals of business profitability (Vieira and Ferreira,
2020)
Cost focus: The cost focus shall be functioned onto wider goals by working onto new relative
goals, by developing strong synergy of cost focus where management shall focus onto bringing
on functional horizon through which price is also stable and relatively organised. Cost focus will
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enable Uniliver for developing strong place within competitors, where consumers choices for
choosing company products vary competitively based on keen factors of strength and relatively
focused cost factors. This factor holds wide importance for stronger efficiency with long term
time utilisation and wider potential development which will enhance business objectives also
majorly. Cost focus also pertains new relative goals completion within Uniliver business
scenario onto where there are wider opportunities and new functional horizons present for brand
to achieve.
Differentiation focus: This factor explains how much different business ethics, management
paradigms and functional roles are there when company is focusing ahead onto differentiation
factor for bringing on wider goals of efficiency and new synergy of goals. This also
competitively explains various marketing paradigms, wider demands for emerging within global
demands among consumers and wider technical goals where there are wider functional effective
factors worked within company. Uniliver has to focus onto this factor for yielding onto this
synergy where brand shall also focus onto bringing on innovation, new relative goals and
stronger determinants with creative business services and for gaining onto wider demands with
new relative goals and for technically be advanced onto new work goals (Islami,Mustafa and
Latkovikj, 2020)
Bowman’s Strategy Clock
The Bowman’s Strategy Clock is a strategic model that can be used by the leadership and
senior management of Uniliver with the intention to analysing its overall position in the market
in relation to its competitors. The creator of the Bowman’s strategic clock believed competitive
advantage to be more powerful and significant than cost advantage, with the strategic clock
model choosing to emphasise the strategic positioning of the business organisation and the
positioning of the business’s products in the consumer markets (Echchakoui, 2018). The
Bowman’s strategic clock model is based on two dimensions: price and value, with the
combinations of these 2 dimensions in the model giving rise to eight possible strategies to be
used by a business organisation such as Uniliver in order to gain a sustained competitive
advantage against their competing business organisations. Starting at the top and moving in a
clockwise direction, the Bowman’s strategic model has the following key positions:
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Figure 1: Bowman’s Strategy Clock
1. Low Price and Low Added Value:
This is not amongst the most competitive positions for a business organisation such as Uniliver,
because businesses at this position do not possess differentiated products and the customers also
perceive little value from the business’s products, even though they might cost less. Maintaining
lower prices is the only viable option for the business to compete with other businesses in the
industry.
2. Low Price:
Business organisations such as Uniliver at this position tend to manufacture increased quantities
of products for their customers, with the customers also able to possess some value from the
manufactured products (Tukdeo, 2016). Increased manufactured quantities allows for the
business to generate increased profit margins by making use of the principle of economies of
scale, even though the individual price of a singular product is relatively less. At this position,
businesses such as Uniliver can be forced into price wars with each other.
3. Hybrid:
This position involves business organisations that possess and manufacture differentiated goods
and services, which makes the manufactured products of these businesses highly valuable to the
customers. On the other hand, businesses at this position also place increased emphasis on low
prices for their products, which assures the customers that they are getting increased value from
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purchased products. This is a highly effective position of the Bowman’s strategic clock model
provided that the business is consistent regarding the value they are able to provide to their
customers.
4. Differentiation:
Business organisations such as Uniliver, while at this position do their best in order to provide
their customers with high quality differentiated goods and services, while at average or
competitive prices. Businesses at this position do their best to provide highest value to their
customers while placing focus on the overall quality of their manufactured products, brand
awareness and reputation and ability to retain the loyalty of customers (Pikor, 2018). Customers
of such businesses remain sensitive to high quality products of popular brands and therefore
become loyal to the operations of the business even if the price should increase in the future.
5. Focused Differentiation:
This is the strategic position that exclusive and luxury oriented business organisations tend to
place focus on, as business at this strategic position tend to offer very high quality goods and
services to the consumers at relatively high market prices. Businesses at this position tend to
service a specific targeted customer segment and engage in increased promotion and
advertisement operations, in order to possess large customer base. Competing businesses at this
position both force each other to maintain high product prices.
6. Risky High Margins:
Business organisations such as Uniliver, using this strategy charge extremely high prices for their
manufactured goods and services, even though the customers might perceive the overall value of
their purchased products to be mediocre. This position is highly risky for a business organisation
to operate in for sustained periods of time and is most likely to fail as eventually the customers
move to more value providing products which are available in the consumer markets for
decreased prices.
7. Monopoly Pricing:
Business organisations at this position have become a monopoly in the market, with the business
being able to effectively set the prices of their products to their preferences and demands without
any external factor forcing them to set a particular price. Customers of such businesses do not
have any other alternatives except for to engage in financial transaction and purchase the
products sold by the monopolistic business organisation (Desai, 2019). Such businesses do not
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face any competition in the markets and the operations of such business organisations have to be
regulated in most countries in order to deter the business from using unethical practices.
8. Loss of Market Share:
Last position laid out by the Bowman’s strategic clock model, in which business organisations
such as Uniliver are not able to offer valuable goods and services to the consumers, with the high
prices further alienating the loyal customers of the business organisation and resulting in an
eventual decrease in the total customer base and market share possessed by the business
organisation. Businesses at this position tend to opt for standardised prices in order to remain
somewhat competitive in the market.
CONCLUSION
Through this report’s findings, it can effectively be concluded that for a business
organisation such as Uniliver to conduct its operations in a successful manner over a sustained
period of time, the business organisation is required to possess some kind of competitive
advantage against its competing business organisation within the operational industry. This
report makes use of various strategic models and frameworks, such as the Porter’s Five forces
model, Pestle framework, Porter’s Generic Strategies model and the Bowman’s Strategy clock
model in order to effectively analyse the competitive environment in which Uniliver operates in
and strategies the business organisation can make use of in order to gain a sustained competitive
advantage against their perceived competitor business organisations operating in the same
operational industries, which would allow for Uniliver to effectively conduct their daily
operations in a much more successful manner over a sustained period of time.
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REFERENCES
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