Strategic Management - Strategy evaluation

The report discusses the critical assessment of various processes used by Unilever for determination of strategy. It evaluates the various models that can be used by Unilever to determine the strategies of the organization. The application of these models to determine the strategies in aspect of Unilever is also discussed.

STRATEGIC
MANAGEMENT
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Table of content
Table of Contents
Introduction......................................................................................................................................3
Provide a Critical assessment of various processes used by the organisation for determination
of strategy....................................................................................................................................3
Evaluate the various models that can be used by the organization in order to determine the
various strategies of the organization..........................................................................................5
Apply the models to determine the strategies in aspect of the primary organization.................5
Critically appraise the importance of change management on the basis of complexity on the
basis transformation process, its costs, risks and sustainability. ................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12
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Introduction
Strategic management is referred to the set of various managerial decisions that help the
organization to determine the performance of the organization in long run. Strategic management
deals with formulation of decisions and further putting them into action. The process of strategic
management consists of various stages such as environmental scanning of internal as well as
external environment., formulation of strategy that can be long term as well as short term,
implementation of strategies and further evaluation of the strategy performance and control. The
concept of strategic management focuses upon monitoring and evaluation of the various
opportunities and threats for an organization (Barbosa, Castañeda-Ayarza and Ferreira, 2020).
In this report, the concept of strategic management will be discussed in aspect of
Unilever. Unilever is a United Kingdom based organization that has its headquarters situated in
London, England. Unilever is a multinational organization that deals in consumer goods. The
products that are traded by Unilever are food products, hygiene products, personal care and
beauty products. Unilever was founded in the year 1929 and presently serves in over 190
countries across the globe. Unilever owns and operates more than 400 brands under its name and
has a turnover of 51 billion euros.
Provide a Critical assessment of various processes used by the organisation for determination of
strategy.
There are various processes that can be used by an organization to determine the
strategies of the organization. The various strategies used by Unilever are discussed below-
Vision- The vision statement of of Unilever is “to make sustainable living a common
place. We believe this is the best long term way for our business to grow.” The vision statement
focuses upon the concept of sustainability among the clients of the organisation. The vision
statement of Unilever comprises of the following concepts namely, Common place sustainability
living, Best long term way and Business growth. Common place sustainable living is referred as
a crucial component of vision statement of Unilever that states that the organization is making
constant efforts in order to innovate the products so that they match the needs of the market.
Unilever aims to provide a sustainable living to their customers through home and personal care
products. The organization aims to understand the importance of various sustainability as well as
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market trends in order to shape the industry. The vision statement reflects sustainability of the
organization in order to enhance the business growth. The vision statement of Unilever is in
alignment with the corporate social responsibility strategies and business stakeholders in the
industry.
Mission Statement: The mission statement of Unilever is “to add vitality to life. We
meet every day needs for hygiene, personal care and nutrition with brands that help people feel
good, look good and get more out of life.” The mission statement underscores the ways an
organisation aims to satisfy the customers at various aspects of lives (Berisha Qehaja, Kutllovci
and Shiroka Pula, 2017). The crucial component of mission statement of Unilever are discussed
below-
 adding the vitality for life
 Meeting nutritional, hygienic and personal care needs of the customers.
 Helping people to feel good, look good and get more out of life.
The organization aims to add important value to the products that are expected by the customers
from the organisation. Further, the organization aims to attract more customers in order to make
them feel good, look good and get more from the life. The mission statement focuses upon the
product mix foundation of Unilever.
Purpose- Unilever has a purpose beyond profit. The purpose of Unilever is to make
contribution towards positive changes in order to address the challenges faced by the market and
thus it will help the business to succeed.
Objectives- The business of Unilever has various objectives to fulfil. The various
objectives of Unilever consist of working with integrity, living by the code and also a
responsible partnership. Working with integrity refers to the process wherein the operations are
conducted with respect and integrity in context to people, environment and organisation which is
a part of corporate responsibility of Unilever. The objective of Unilever is to work in accordance
with the business principles as per the standards. Unilever has an objective of aligning with the
suppliers that aim to have same standards at the workplace (Bonsu, 2019).
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Evaluate the various models that can be used by the organization in order to determine the
various strategies of the organization.
There are various models that can be used by Unilever in order to evaluate the various
strategies. The various models that can be considered are PESTLE analysis, VRIO analysis and
porter's five forces model. Each has its own significance and factors that are discussed below-
PESTLE analysis- PESTLE analysis is a tool which is used to identify the external forces which
affect the organization. The acronym PESTLE stands for Political, Economic, Social,
Technological, Environmental and Legal. In some organizations Ethical can also be considered
as an acronym whereas in some organizations it can be reduced only to PEST. It is a situational
analysis which is mandatory to be conducted in an organization in order to formulate and
implement the strategies for business growth and success. The PESTLE analysis facilitates
scanning of environment of a business organization of an industry (da Silva And et.al., 2019).
VRIO analysis- VRIO is referred to an analysis of business that was developed by Jay B.
Barney that allows on organization to analyse the various resources such as material resources,
financial resource, non material resources and human resources. The VRIO analysis is basically
identifying resources as valuable, rare, Inimitable and organization. The VRIO analysis helps the
organization to understand the various competitive advantages and weaknesses that will facilitate
the organization to build a unique image in the market.
Porter's five forces model- Porter's five forces model is referred as a competitive analysis. The
model helps in analysing the competitors of the organization in the market. The porter's five
forces model analyses the bargaining power of the buyer, bargaining power of the supplier, threat
of new entrants, threat from the substitutes and the competition in the market. These five forces
helps the organization to analyse the attractiveness of the market along with the competitive
intensity that further contributes towards the profitability of the organization in a specific
industry (Dzwigol, 2020).
Apply the models to determine the strategies in aspect of the primary organization.
The models that can be used by Unilever is order determine the strategies are PESTLE
analysis, Porter's five forces model and VRIO analysis. The various analysis in aspect of
Unilever are discussed below.
PESTLE Analysis
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 Political factors- There are various political factors that can have an impact upon the
working of Unilever. The various political factors that will allow Unilever to grow under
the unstable consequences by reducing the various challenges and issues in the country.
The political issue in terms of European can be considered a threat for the business
operation of Unilever in the consumer market. Unilever has a widespread business across
various countries and hence the organization needs to comply with the various guideline
in aspect of trade. The various restrictions can have a negative impact over the trade of
Unilever.
 Economic factors- The economic factors are considered with the various environmental
elements such inflation, that may have an impact over the business organization.
(Fitriyah, 2019). The global recession of 2008 had a huge impact as the people had lesser
purchasing power and thus the business of Unilever was affected. In this situation, the
individuals are less likely to opt for luxurious or expensive products.
 Social factors- It is very important for the organizations to cope up with the social
factors in the economy. The social factors can be basically referred to the various trends
that take place in the economy or the region. The organizations like Unilever need to
comply with the various trends in order to accelerate the sales of the organization so as to
meet with the demands of the consumers in the market. The various social trends that
have been highly significant can be, people shifting towards organic products that can be
considered by Unilever to enhance its financial stability in the market.
 Technological factors- The technological factors have a huge and significant role to play
in the performance of an organization. Similarly, it can be analysed that Unilever has
been positively effected by the up gradation of technology in the market as well as in the
organization. The technological advancements have helped the organization to have a
wider reach in the market and sell its products in the quickest and the most feasible way.
 Legal factors- Unilever need to follow and work according to various rules, regulations
and legal formalities as the entity is operating as a consumer goods company. There are
around 400 brands which are flourishing under the name of Unilever under in sectors like
food, health, personal care and several other industries. All the respective brand of
Unilever are subject to follow the copyright, product safety and other related laws
regarding health and safety of employees and general public. Along with it, tax laws both
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international and regional level are need to be kept in focus and followed by the
organization.
Environmental factors- This is a component of external surroundings which refers to
those elements of the environment that are necessary for the company to build themselves
in a sustainable and more stable surrounding by offering back to the society in return to
the resources used. Unilever made potential steps in promoting and sustaining the
renewable resources. The products and services which company offers are designed as
per the safety standards for consumers. Moreover, the organization aims to provide an
eco-friendly and safe products to their customers for maintaining the ecological balance
and offering back to the society a positive and healthy offering (Gallo and Tomčíková,
2019).
VRIO ANALYSIS
The VRIO analysis of Unilever is discusses below-
Valuable
 Unilever has a valuable brand image in terms of corporate social responsibility as the
organisation has a well defined corporate social responsibility function. The organisation
regularly engages in social responsibility and further makes them transparent.
 Unilever is a unique brand and has huge brand integrity. The brand image of Unilever has
been developed through a lot of efforts and quality products. The brand image of
Unilever has developed trust and honesty under its brand name that is quite valuable.
 Unilever has a strong relationship with suppliers that is quite valuable. The reason behind
good relationships with the customer is due to the efficient distribution system that
facilitates access of the products globally (Honggowati and et.al., 2017).
 The propensity for innovation is valuable for Unilever as the organisation is capable of
offering various products and services in the market. The innovation tends to expand
various functional areas of the organisation such as marketing. The organization has an ability to raise capital that is considered valuable for Unilever.
This allows the organisation to expand and diversify.
Rare
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 International presence of Unilever can be considered as rare. The organization operates
its business in various countries in order to expand its customer base while earning
revenues as well. This is rare as it requires a lot of efforts and finance.
 The problem solving skills of Unilever are rare as it requires a suitable amount of
innovation and teamwork that is not possible by every organization to accomplish. The organization has adaptability skills that are quite rare. The reason behind rareness of
adaptability skills is that, Unilever has a wide spread business in various countries and is
hence is exposed to various cultures over the globe (Jabbar and Hussein, 2017 ).
Imitable
 The quality products offered by Unilever are not imitable as they help Unilever to
achieve the competitive advantage in the market with the help of their high quality. Thus
it facilitates repetitive purchases of the organization.
 The marketing communication of Unilever is highly inimitable as Unilever uses the
marketing communications strategically that lead to higher consumption. These have
facilitated the organization to develop long term competitive advantage. Unilever has developed competitive pricing in the market that facilitates the organization
to operate at the economies of scale and enhances the production levels of the
organization. The competitive pricing of Unilever is referred as inimitable.
Organisation
 Unilever has a strong financial position that has facilitated the organization to explore
opportunities for new product development. The financial system of Unilever is
considered well organized and broad (Khrystyna and et.al., 2021).
 Technological up gradation of Unilever can be considered as well-organised as it helps
the organization to operate it business process effectively and efficiently. It helps
Unilever to achieve the competitive advantage in the market.
 Employee training of Unilever can be considered as organized as, the organisation
provides training to its employees in the most concise, effective and efficient manner in
order to enhance the skills of the employees. It promotes professional growth as well as
growth of the organization as well.
Porter's five forces model
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The porter's five force model is used to analyse the competitors of the organization in the
market. The competitor analysis of Unilever is discussed below-
 Potential of the buyer- The potential of the buyer is low in case of Unilever. Unilever
has a huge number of buyers all over the world. Unilever provides high quality products
for which the customers do not have the strength to bargain. The buyers have lesser
potential but they look for ample satisfaction from the products offered by the
organization. It is important for Unilever to offer the quality products in accordance with
the prices of the products (Quarm and Busharads, 2020).
 Potential of the supplier- The potential of the suppliers of Unilever is quite low. The
organisation focuses upon the satisfaction and loyalty of the customers. This helps the
organization to have consistent suppliers in the market by providing them fair prices in
return. Unilever has various agreements with the suppliers in order to facilitate them with
the concerns and this further makes the suppliers weak. Hence it reduce the capability of
the supplier to bargain with the organization. The agreements have helped Unilever to
have healthy relations with the suppliers that has helped the organization to earn loyal
suppliers (Wan and et.al., 2019).
 Threat of substitutes- The threat of substitutes in case of Unilever is moderate. It is
considered that when a new substitute is launched in the market, the customers are likely
to try the new products that might affect the sales and revenues of Unilever for a short
period. But it is analysed that the loyal customers are not likely to switch upon the
substitutes that helps the organisation to experience consistency. The reason behind
moderate threat of substitute is that Unilever focuses upon services rather than the
products and also focuses upon increasing the switching cost (Somov, 2018).
 Threat of New entrants- The threat of the new entrants is moderate in case of Unilever.
Unilever has a wide market across various countries over the globe and thus it is
considered that a new entrant will not have potential to affect the market share of
Unilever in major terms. Though, the new entrants might affect the market share and
revenues in specific areas or regions. The loyal customers are not likely to switch to the
new entrant as the organisation has a good brand image in the market.
 Rivalry in the market- The rivalry among the organizations can be considered high. The
reason behind high rivalry in the market is that number of organization is quite huge. In
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order to deal with the competition, it is important for Unilever to have sustainable
differentiation. The organization can also look for opportunities to collaborate with the
competitors that will help in increasing the market share of the organization.
Critically appraise the importance of change management on the basis of complexity on the basis
transformation process, its costs, risks and sustainability.
Change management is referred to a systematic process that helps an organization or an
individual to deal with a transformation or a transition of goals, technologies and processes that
occur in a business environment. The change management is necessary in order to facilitate
implementation of strategies in an organization that further facilitates the effect and control of
changes while helping individuals to adapt the changes. The concept of change management
plays a crucial role in an organization. The importance of change management at Unilever is
explained in various aspects.
 Complexities of transformation process- The change management process at Unilever
might result in various complications during the changes being introduced at the
organization. The complexities can arise where in the employees might deny to adapt the
changes at the workplace. It is important for the individuals of the organisation to accept
the changes at the workplace whole heartedly to extract the best outcomes from the up
gradation (Steiss, 2019).
 Cost- The change management in an organization has an impact over the cost of the
organization. The change management process might increase the cost of the
organization at the initial stage but the changes are introduced in order to reduce the cost
of organization in order to maximise profits in the near future.
 Risk- The changes in organization comes with risk. Hence it is very important for the
organization to conduct the change management approach in order to minimise the risk
or uncertainties at the workplace.
 Sustainability- The change management facilitates sustainability of an organization. If
the changes are introduced in an effective and efficient manner, then it further helps the
organization to grow and achieve success in the long run (Wheelen and et.al., 2017).
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CONCLUSION
It can be concluded from the above study that strategic management plays a significant
role in every organization. It is important for the organization to practice the concept of strategic
management that helps in enhancing the performance of the organisation. The process of
strategic management consists of various stages such as environmental scanning of internal as
well as external environment., formulation of strategy that can be long term as well as short term,
implementation of strategies and further evaluation of the strategy performance and control. The
study focuses upon the various strategy formulation such as vision, mission, objectives and
purpose in aspect of the organization. The study focuses upon various tools to analyse the
strategies such as VRIO analysis, PESTLE analysis and Porter's five forces model. The report
analyses the environment of the business ion context of the organization. The report further
highlights the importance of change management in context of risk, cost and sustainability.
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REFERENCES
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