Strategic Management: Two Strategic Issues Faced by Unilever

This report discusses two strategic issues faced by Unilever in the context of strategic management. The issues are related to ice-creams and rigid organizational structure. The report provides recommendations to overcome these issues and improve the company's profitability.

Strategic Management

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................4
Two strategic issues and explaining why they are strategic, contextualized within the
organizational setting...................................................................................................................4
Recommendations to Unilever...................................................................................................11
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Strategic management refers the management of the organization which helps the
company to do proper planning, monitoring and analysing of the organizational needs in order to
achieve the planned goals. Changes in the macro environment will make the company to
continue work on the strategies made for achieving the success. Strategic management process
helps the organization to compare the present situation with the future in order to make the best
strategies for the company. It has both monetary and non-monetary benefits for the company. It
basically sets the proper direction for the organization and for employees as well which helps the
organization to have high operational efficiency and profitability. Unilever PLC is the one of the
largest organization which produces the consumer goods and having its headquarters in London.
The products produce by the company are foods, ice-creams, minerals, tea, coffee, breakfast
cereals, pet food, beauty products and personal care items. It has over 400 brands having a
turnover of 51 billion euros in the year 2020. This report will outline the two strategic business
issues and why they are strategic including an overview of relevant strategic decisions that had
led to the current position.
Two strategic issues and explaining why they are strategic, contextualized within the
organizational setting
Strategic issues are the critical issues that the organization has to face in order to achieve
goals of the organization. It has a major impact on the flow and direction of the business. These
are the critical problems of the company which unknown and creates problems in order to
achieve the planned target of the company (Strategic Issues: The Pivotal process for Strategic
Success, 2021). Strategic marketing issue in the company are increase in the competition and
rapidly changes in the technology can create problem in the organizational structure. Unilever is
also facing some strategic issues which may decreases the probability of the company. The
organization must focus on the strategic issues in order to be successful in the competitive
market. By reviewing the notes and taking the information that the company has made and
identifying the critical aspects that the organization is needed the company can identify the
strategic issues. The issues must be analysed by the organization in order to resolve that issues

and making the good strategic management in the company. The issue must be solved by the
company as soon as possible by the company.
Two strategic issues faced by the organization are:
1. Facing issue related to the ice-creams: The main problem faced by the
organization is health related issue from the ice-cream as it contains lots of sugar.
The issues like health and environmental related issues are the main strategic
issues of the organization (Monciardini, Bernaz and Andhov, 2021). As the
company is producing different types of food products it must use the health
conscious products in order to produce healthier products. An ice cream is a
product that cost less in order to produce more, this product is profitable for the
company having tropical climate in India and Indonesia. The fall in the
consumption of the ice-cream is due to the health issues of the customers in the
competitive market. The main issue is relating to the abundance of milk and sugar
used in order to produce the ice-cream in the industry. This milk is the contains
lots of fats in it which is not considered healthier for the customers. The
organization is more focused on producing the healthier products but it fails to use
the healthy products in ice-cream. This leads to the strategic issue in the
organization which may decreases the profits of the company in the international
market.
The company must understand the issues related to the health of the customers, as
customers are the main source of profit for the company. Nowadays the customers are so health
focused that they only prefer the products which contains low fats and cholesterol. Customers
always wanted the level of satisfaction of the price he has paid in order to purchase the goods.
The decision-making of the ingredients used in producing of the products must be very specific
and should be focusing on the health of the people. The managers of the Unilever must have the
clear understanding about the needs and wants of the customers in the market. The issue is so
strategic which must be taken into the consideration and it helps the organization to earn and
maximize its revenues. As in the current scenario it is seen that the people are more focused
towards their health and used to eat the good and diet food. This makes them to live health and
make them away from the various diseases. So the organization must make the sugar free ice
cream in order to have god profitability.

By having this issue it may have a bad impact on the products of the company. The
customers may think that the organization must not be using healthy ingredients in their other
foods products and may shift to the other products (Giubertoni and et.al., 2021). This issue may
arises because the organization must not be taking the feedback from the customers and does not
examining the macro-environment. This situation may lead to the facing the issues related to the
ice-creams. It must focus on the taste and preferences of the customers and must be more
focused on the health of the customers. The company must follow the different techniques in
order to produces good and healthy foods which can be preferred by the health conscious
customers as well.
Various techniques must be used by the company are:
Premises control- In this the company must first find out the strategy, as every strategy
in the company is related to the organizational forces. The organization must identify the
strategic issues happening in the organizational environment.
Implementation control: In order to overcome the issue the organization must
implement some plans and procedures in order to achieve the organizational goal.
Strategic Surveillance: This done by collecting and monitoring the information related
uncovered events by the company. The organization must focus on the uncovered events in order
to overcome with the strategic issue.
Special alert Control: It is the special technique which control the triggers of the
company in order to mange the strategy (Valtere, 2020). This makes the company to be alert in
the unforeseen situations which may affect the strategic decision of the organization.
Tool used by the organization in order to mange the strategic decisions of the company without
making it an issue are as follows:
The organization can use McKinsey 7s model tool in order to mange the issues which
are:
Structure: It makes the proper structure of the company by having proper strategy in the
organization which helps the company have proper accountability of products in the market.
Style: The attitude of the top-level management in the organization establish the good
strategy in the organization (Bismark and et.al., 2018). The decision-making style of the
company should be so good that makes the strategic decision structured.

Staff: It involves the skills and talent management in the organization. These are the
important human resources which implement the made strategies in the organization. They must
produce the quality of the products which are health-focused. As the customers preferring the
heath and diet conscious food in the market.
Skills: These are the capabilities and competences of the organization that makes the
employees to achieve the organizational objectives. The staff recruited by the organization must
be skilled and talented in order to overcome with the strategic issues faced by the company.
Strategy: The organization should have a good plans and procedures in the strategic
planing of the business (Gökdeniz, Kartal and Kömürcü, 2017). This makes the organization to
cope up with the issues in the market. They must also plan the strategy for the unforeseen events
may be happening in the market.
Shared values: The vision, mission and objectives are the base of the company as it play
a crucial role in implementing the strategic decisions. The organization must focus on these
values in order to mange the ice-cream strategic issue in the micro-environment.
The above elements of the McKinsey model helps Unilever to cope up with the strategic
issue facing by them and must produce the health related food for their customers.
According to Spieth, Laudien and Meissner (2021), it suggests that the organization must
follow the strategic control management in order to manage the strategic issues in the business
activities and its products. The organization must produce quality of products which manages the
strategic decisions and reputation of the organization.
On the contradictory note Sarker and et.al., (2018), says that the company must be more
focused on the organizational goal rather than strategic goals of the company. As organizational
goals covers the strategic issues and objectives of the company. It makes the employees to be
motivated and make them train in order to produce the expected outcomes. As the organizational
and strategic goals of the organization are improved the customer satisfaction, response to the
drawbacks receive from the customers, etc.
As per the suggestion of Rao‐Nicholson, Khan and Marinova, (2019), it says that the
organization must be strategic focus and must not deal with the strategic issues in the market.
The strategic issues affect the competitive advantage of the company and may slow down the
profitability of the company. The resources used by the company in order to produce the
products must having good quality which does not affect the demand in the competitive market.

For example, the organization must avoid having the strategic issues as leads to the decrease in
the strategic competencies and competition.
2. Having rigid structure in the company: The rigid structure in the organizational
creates issues in order to earn and survive in the market. In this structure the
employees are only focused on the doing the production without having vertical
or horizontal communications. The policies and plan made by the company is fix
and rigid as it makes difficult for the company to survive in the market. As
Unilever is having the rigid structure in their business activities. The plans and
strategies set by the company are rigid in nature. So it is a strategic issue for the
company as taste, preferences and market conditions changes on the continuous
basis. The good structure gives the clarity to the organization in order to compete
in the competitive market. Unilever must have the good and soft structure of their
premises which helps them to have more good talent and skilled labour in the
organization.
The rigid structure bounds the company to recruit and hire the top and skilled labours in
the company. It makes the company to follow the traditional path for promoting their products.
The organizations are always learned about the new things from the market but rigid structure
was making it difficult to implement the changes in the activities of business (The impacts of
business strategy on organizational structure, 2021). It still focuses on the traditional methods in
order to promote their products in the market. It must use the new and innovative technology in
order to fast production in the market.
Having rigid structure in the organization has a bad impact on the growth of the
organization (Torkzadeh, Izadi and Mezginezhad, 2020). As it makes the company to follow the
fix pattern and procedures which can be difficult for the employees to work in this organization
structure. It creates lots of problems in the activities of business. As the consumer trends and
demands are changing the organization must not have the rigid structure which helps them to
survive in the market.
Unilever is following the centralized organizational structure in the market. It makes the
company inefficient in the competitive market as all the decisions in the organization are taken
by the top-level authority only. The consumer marketing structure must be followed by the

organization in order to fulfil the demands of their customers. In order to have good profitability
and have good structured the company must follow the Hierarchical organization structure.
It is the best structure for every company to follow in order to manage the strategic issues
in the business activities. It is the pyramid shaped organizational structure which is very common
and used by organizations. In this organizational structure the chain of command flows from top
to down. Top level includes the CEO and mangers of the organization whereas down includes
the low-level management, employees or workers. Each employee in the company has supervisor
who used to supervise the work of the employees and workers in the company. By this the work
can be done on the proper and given time because they are always supervised by the supervisors.
The work in this organizational structure is properly divided and they are having power to talk if
they have any issue in the production. This structure has many advantages which are- it defines
the authority and responsibility at every level of management, the workers are known about to
whom they with talk if they have any problem, employees and workers are motivated by giving
them training or by doing promotion, etc. With some advantages this structure also have some
cons that are it slows down the changes and new things in the company because of increase in
bureaucracy, employees are supervised on continue basis, etc.
Unilever can use the hierarchical organization structure in order to maintain the flexibility
in the business activities. This makes the organizational employees having specific responsibility
and authority to do work. By this company can improve its structure and adopt the innovations in
their rigid structure. By having speciality to every employee it makes the employees valued in
the organization. It is the best structure for every company to follow in order to manage the
strategic issues in the business activities and this will make the company to have the proper
management.
Unilever can also adopt the divisional organizational structure, as in this structure the
organization divides their own resources in order to have good productivity at a large scale. This
division is applied on that companies which have many departments and each department has its
different work. The best structure of the organization lead the company to achieve its target in
the competitive market. The division of the organization can be market-based, product-based or
it can be geographic-based. It makes the large companies to be flexible and adopt the innovation
and needs of the customers quickly.

According to (Chebiego and Kariuki, 2018), it suggests that structure of the organization
is the main thing as every organization has its different structure. The structure of the
organizations divides the management related to the jobs, systems, process, people and group.
The good structure helps the organization to earn god profitability and reputation in the market.
For example, the free-structure in the company maintains the co-ordination between the staff
and the managers. By having the free-structure this will help the cited company to have more
flexibility in their working and this will increase the employee engagement. Internal structure of
the organization only decides strategic issues faced by business.
On the other hand Raj and (Aithal, 2018), it believes that the structure of the organization
should be centralized as it keeps the employees in supervision and to do their work properly. As
employees cannot communicate and are only focused to the work so the given work can be
competed on the time. For example, the cited organization structure should be designed in such a
way that people working must be motivated and increases the production.
But by using the rigid structure the company cannot work in effective manner because it
creates the lack of confidence and coordination in the organization. The decentralized structure is
good for the company because it makes the employees to work effectively by accepting and
producing the new and innovative products in the market. This helps the company to increase its
competitive advantage in the global market and also to increase the profits.
Comparison of the Unilever with the other organization
Unilever and Nestle both are the multinational companies and have tough competition in
the market. The success of both organization has seen over the years and they are meeting with
the needs of the customers (Williams, Whiteman and Kennedy, 2021). The improvement in
promoting and advertising has made both the companies to be successful in the big market.
Unilever organization Nestle organization
The company has a total staff of 163000 in
the year 2010.
On the other hand, Nestle has a staff of
283000 individuals.
The company is specialized in producing
more than the food products and beverages
which includes cleaning agents, as well as
personal use products which are shampoos,
The company is specialized in foods and
nutrition products which used to produce the
products includes baby food, bottled water,
diary products, breakfast cereals, coffee and

soap, deodorants, oils, etc. pet foods.
It produces both food and non-food products
in order to be successful in the market. It has
joint venture with the other companies in
order to produce differentiate products.
This organization is having 26.4%
stakeholders and it is the largest beauty
products producer. This beauty products are
known as L'Oreal. It has joint venture with
many companies like coca-cola, Galderma,
etc.
The net income of the company in the year
2009 was around 3,65 million.
On the other hand the net income of the
Nestle corporation in the year 2009 was
10.43 billion.
The operating profit of the company was
around 5,020 in the year 2009.
The operating profit of the company was
more than compare to Unilever that was
15.70 billion in year 2009.
It has a centralized organizational structure
which makes it difficult to adopt the new
technology and innovation in the market.
It has decentralized organizational structure
following the matrix structure.
The company is facing issues related to the
product like ice cream and issues regarding
having the rigid organizational structure.
Nestle is facing issues related to the external
factors which includes the food and
beverages.
The strategic issue can be solved by using
the McKinsey model and organizational
structure model.
The company solved its issues by using the
porters five forces model.
Unilever has the slightly low innovative
products as it is having the rigid
organizational structure.
Nestle is having new and innovative products
as it has decentralized organizational which
helps to adopt the innovation.
Unilever use the celebrity approach
technique in order to promote and advertise
their products in the market.
Nestle don't prefer celebrity approach rather
than it uses the mass and print media in order
to promote and advertise their products in the

Market.
The company should follow the strategy of
using the healthier ingredients in their
products in order to cope up with the
strategic issues faced by the company.
Organization is already producing the
products which are related to the nutrition.
Due to having rigid structure the company is
eliminating the products from its profile, so
the company must make good strategy in
order to cope up with these strategic issues.
Nestle is having matrix organizational
structured so it is easy for the company to
enhance their new products in the
competitive market.
Both companies have the same strategy as both are focused on health of the customers.
Nestle is more focused on the corporate wellness rather than customer wellness whereas
Unilever focuses on the actual needs and desires of the customers. So, it is a good strategy that
the company follow in order to overcome with the strategic issue the company should be more
customer focused.
As both companies have their different marketing strategies which makes the company to
differentiate them from each other. The organization must be focused on the strategic
management which neither does nor leads to any issue in the company.
Recommendations to Unilever
Unilever is a huge company with several loyal customers yet at times they have lacked in
their strategy that could cost them conflicts among themselves and trust of customers. To retain
those customers and make the company more flexible, below are the recommendations:
Resolving Issues related to Ice-creams:
Unilever prides itself as a firm with sensitiveness towards the consumer needs, yet they
are facing issues in getting their trust in their Ice-cream product lines because of many issues.
Their strategy is failing in many other nations as the product line recognition is not built there
and in known countries, the ingredients of the product is creating concern among their
customers. The company has mostly targeted younger generation/ kids for their product but
because of high inclusion of sugar and milk fat it is coming off as unhealthy for them which is
causing loss of revenue (Başar, 2018). They also lack in gathering feedback from the consumers

that creates drawbacks while strategizing and acting upon the issues. The organization can also
use the sugar-free ingredients in order to manufacture the ice-creams. It can also be
recommended to the company that they can bring new flavours and sugar free ice cream for
those customers who are more health and diet conscious. This can be helpful for diabetic patients
as the new flavoured ice-cream can be eaten by them as it is sugar free and contains less milk.
It would be recommended to the company that they resolve their issue of getting
feedback from the consumers by creating appropriate strategies like taking online reviews,
creating campaigns (Ekberg, 2020). They should change their practices of using poor milk
products and lessen the sugar inclusion in the product to attract more customers with healthy and
safe products that does not harm even the kids. Also, they should create better financial strategy
with taking the operational expenditure into consideration; it should be taken within corporate
funds and should be able to budget within company's follow-ups. They should also expand their
market with better strategies in other countries by more focusing on the customers' health
(Tebekin, 2021). The company can use the cow's milk as it contains the carbohydrates and this is
good source for the diabetic patients to have carbohydrates counts.
Flexible Structure in the Company
The company has recently centralized its market completely with local marketers directly
connecting to the global marketing team rather than market general. The massive change in the
company structure strategy may help them in some ways but there are many cons that comes
with. Although they'll connect to consumers directly in the glob but there would be difficulty in
differentiating consumer behaviour in different locations (Ionescu-Somers, and Brassey, 2019).
The problem with integration and marketing will arise as the marketing will be global yet the
sales team will be global and without there coordination the company can face many issues.
Rigid structure will only create more distance between the departments (Dadashpoor and
Yousefi, 2018). With no decentralization of powers, many misunderstanding trust among the
company can rise and issue has to solved
Every company structure is flawed in one way and beneficial in other. The best solution
for their issue is better communication and not the structure changes. The company should
rethink about their decision and focus more on communicating those issue. They should also
make it flexible for every issue because of endless cycle of company structure and the issues it
follows. These big decision could damage company's operations and create consumer trust issues

too, with other solutions and strategy they can resolve other problems that could be created after
the centralization (Grote, Waterson and Rudolph, 2021). It must be advisable to the company to
have good and flexible structure by having hierarchical organizational structure or divisional
organizational structure which makes the company to divides its work, authority and
responsibility among the members and helps them in better flow of the work.
CONCLUSION
From the above study it is concluded that the organization faces the strategic issues
related to the product that is ice cream that the customers was facing problem related to the
strategy as the company was using abundance of milk in order to produce the ice-creams. As the
customers were health-conscious they don't prefer buying those ice-creams. This strategic issue
should be solved by using the McKinsey model which contains the 7s and literature review as
well. Another strategic issue the company was facing was the rigid organizational structure. The
structure of the company is very rigid which makes difficult for the company to survive in the
competitive market. There should be proper and flexible structure of the organization which
makes them to survive in the competitive market. This issue can be solved by using different
organizational structure that is hierarchical organizational structure or divisional organizational
structure.
This report evaluates the comparison between two organizations and their strategic issues
and method to overcome from that issue. At last, this report describes the recommendations
related to the strategic issue that they can take feedback from the customers related to their
products and it is also recommended that the company can use the flexible organizational
structure.

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Strategic Issues: The Pivotal process for Strategic Success. 2021. [Online]. Available through:
<https://www.cssp.com/CD0799/ProcessForStrategicSuccess/>
The impacts of business strategy on organizational structure. 2021. [Online]. Available through:
<https://www.emerald.com/insight/content/doi/10.1108/JMH-01-2016-0003/full/html>