Strategic System Thinking

This document discusses the concept of strategic system thinking and its relevance in business growth and sustainability. It focuses on the case of Unilever and its approach to core business diversification. The document also explores key future directions for strategic growth and suggests methods for business units to adapt for growth.

Strategic System thinking
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Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Unilever that can support for sustainable growth, should a company focus on its core business
diversification..............................................................................................................................3
Analyse the core idea and a business example you are going to use...........................................4
Identify the company’s offerings and conduct the Portfolio Analysis........................................5
Evaluate key future directions for strategic growth.....................................................................6
Suggest what methods the SBU can adapt in order to grow........................................................7
Recommendation that how Unilever to achieve long-term sustainability of the business..........9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Strategic analysis refer as process of conducting research on company and its operating
environment to formulate an efficient strategy. It is useful for organization identifying and
evaluating data relevant to the enterprise. Unilever is based on the British-Dutch transnational
consumer good organization. It provides various products such as food, energy drink, beverages
and cleaning agents, personal care item. Unilever is the largest producer of soap in the global
world.
The report is based on the diversification which always support for business in long-term
sustainability. The documentation will described about the core idea that support for business in
term of growth and development. It will identify the company offering and conduct Portfolio
analysis, evaluate the key direction for strategic growth. The assignment will discuss the method
that help for identifying internal as well as external development in the organization.
Furthermore, it will recommend that what organization should do in order to achieve their long-
term sustainability of enterprise.
TASK
Unilever that can support for sustainable growth, should a company focus on its core business
diversification.
Unilever is a multinational business selling consumer goods such as food, beverage, cleaning
agents and other personal care products. It is based on the dual listed company that consists of
Unilever NV and Unilever PLC. The organization remain committed to its core business to
deliver the sustainable growth. The Unilever core enterprise comprise foods, toiletries, detergent
and chemicals (Bista, 2019). In recently, it has completed the sales of its Bertolli and Ragu pasta
Sauces brand for $2.10 billion in order to maintain their product services.
On the other hand, Unilever has been diversifying its non-core enterprise and always
focus on essential resources. The organization focus on the sustainable living plan sets out to
decouple growth from environmental condition or situation. In order to increase the positive
social impacts. Unilever has made planned to achieve, underpinned by commitment and targets
spanning economic, environmental, social performance across value chain. In this way,
organization will continue to work with others, focus on the different areas where it can drive the
biggest change and support the Sustainable development goal.
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Nowadays, peoples are living in an increasingly uncertain and volatile world. It has
rapidly increasing the temperature. Therefore, it is directly impact on the food supplier, identify
the gap between poor and rich. Many people have not maintain proper hygiene and sanitation. At
that movement, it is becoming challenges to continue expand the business in global marketplace.
There are 2.5 billion people use various products and affected by change which pose new
challenges. With change though, come opportunity. Unilever is focused on the sustainable
development to deliver the goals and objective (Delabre, Alexander and Rodrigues, 2019). In this
way, it can easily tackle the problem while creating market opportunities. The sustainable plan is
helping to drive more profitability for save cost, brand, mitigate risk and build trust among
stakeholders.
Apart from that Unilever adapt the innovative model which provide the income
diversification opportunities. It is mainly targeting the farming communities to join the enterprise
and share innovative idea in business improvement. It always support for organization in term of
transformation in the product quality such as soap, detergent and personal care. Even they are
available in market but people may not aware about their benefits (Delabre, Alexander and
Rodrigues, 2019). In this way, it encourage the people and identify skills which help them
diversifying the brand value in global marketplace. However, sales that are generated by
operations build the resilience of enterprise. It became consider as continue positive cycle in
term of sustainable growth and diversification.
Analyse the core idea and a business example you are going to use.
Unilever believe that sustainable enterprise drivers superior performance and efficiency
that is way to create long-term value. For various stakeholders. Unilever want to help create
entire word where everyone can live well through natural things. In order to put extra efforts for
creating the sustainable living. It is mainly include standard behaviour of people towards product
and service. The company has been driving transformation change across the value chain.
The core idea of Unilever is to grow business while decoupling environmental impact from
growth and development. It should consider the reduction of Greenhouse gases, wastage of water
across value chain (Deneffe and Vantrappen, 2019). On the other hand, it is focused on the
sourcing sustainable raw materials within manufacturing, operations and customer use. Unilever
consider as an idea to reduce the environment condition because there are excessive emission of
dangerous gases during product manufacturing. So as require to adapt a core idea to use
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sustainable raw materials in product development. In this way, it automatically control over
impact and also diversifying business in global world. The organization is tackling climate
change and reduce depletion of natural resources. It make enterprise sense to minimise the risk
by securing sustainable source for supply for raw materials. In this way, it appeal to consumers
with attract towards product and service while increasing the business production and sales in
global marketplace. It is directly positive impact on the revenue generation. That’s why, it is
going to use sustainable raw materials for product development.
Identify the company’s offerings and conduct the Portfolio Analysis
Unilever has more than 400 brands that is mainly focused on the wellbeing and health.
Their products are used safely millions of time in a day. The organization always understand that
people conscious about health and environmental issues. In this way, they always try to use best
quality of ingredient in the product development. The raw materials are related to the home,
beauty and personal care item (Gorvie, 2019). The first priority of Unilever is to build the people
trust and provide them with product that are safe for families, environment. It is the one of
leading organization that provide the personal care, food items and other company touches
whereas many people live in the different areas. Afterwards, it will conduct the portfolio analysis
through strategic planning tool or platform. Unilever has made us leader in every field in which
entire work done.
Porter’s five force is consider as tool that attempt to assess potential level of profitability
and productivity. It has increased the opportunity and risk based on the different factors within
organization. It can be used to develop strategic advantage over competing firm in competitive
environment. In order to identify five forces to identify long-term profitability in marketplace.
The Power of suppliers: Unilever that produce the goods which require better raw materials. It
has leads to buyers and supplier relationship between industries. Sometimes, it is depending on
the power lies and may be able to influence the production (Lanzolla and Markides, 2020).
Power of supplier is a moderate. It also increasing the prices without suffering from decrease
volume. It compete in environment with relatively few substitutes.
The Power of buyer: It is mainly describes the impact client that have on Unilever. The
power of buyer is strong when it has developed relationship with potential customer. As per
market condition, buyer always influence in identifying the price. In another way, it also
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increases when they have an ability to organise in proper manner. Unilever integrate with the
upstream to purchase the better quality of good and service.
Threat of new entrant: The possibility of Unilever is to impact on the competitive when
entering in marketplace. The most attractive segment that have high entry barriers with low
exists barriers. Furthermore, it has reduced the rate of entry of new firm and maintain the level of
profitability in global marketplace.
Threat of Substitutes: Various products that are available in the marketplace to meet an
identical need to end user. Unilever as become substitutes in which providing the better product
within affordable price (Lawrence, Rasche and Kenny, 2019). Substitutes can reduce the
Unilever revenue and strength of firm is the consumer good industry environment. Sometimes, it
also impacts on the substitution which determined the low switching cost, low substitute
availability and low performance to price ration.
Competitive rivalry: it is major force in Unilever environment that identifies external
factors which directly impact on the organization (Lawrence, Rasche and Kenny, 2019). The
strong force of competitive rivalry against the Unilever that is based on the high aggressiveness,
low switching costs. On the other hand, it external factor impose a strong force on the
organization. Unilever also experiences tough competition level due to low switching cost.
Evaluate key future directions for strategic growth
Unilever enterprise direction is based on the planning for both short-term and long term
development. It can be depending on the business which involves growth strategy that help for
enhancing overall business growth and development (Pfeffermann, 2019). In this way, Unilever
moving towards profitability and increase capabilities of enterprise operation. In order to achieve
the significant goal and objective.
Ansoff Matrix
It is based on the strategic planning tool that provide key direction of Unilever. It also
providing the framework to help executive, senior manager and other marketer’s device
strategies in future growth (Delabre, Alexander and Rodrigues, 2019).
Ansoff Matrix suggest four alternative marketing strategies which mainly focused on the
both existing as well as new product. Various strategies that are performed within organization to
identify the level of risk and challenges.
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 Market Penetration: Unilever uses market penetration strategy that always tries to grow
business with the help of existing product and service offering in marketplace. Unilever is
to increase its market share value in the current marketplace.
 Market development: Unilever firm is to expand the business into new market on the
basis of countries, geographic by using existing offerings.
 Product development: Unilever tries to create the new product as well as service. In order
to target at its existing marketplace (Lawrence, Rasche and Kenny, 2019). This strategy
will help for increasing production and sales in global world.
 Diversification: by using diversification, Unilever tries to increase the business while
introducing new offers in marketplace. Sometimes, it is very risky strategy since both
market and product development.
As per evaluation, it can be understands about the theory and practices which always support for
implementing suitable strategies. in order to diversifying the entire business in global
marketplace.
Suggest what methods the SBU can adapt in order to grow.
Strategic Business units
It is consider as fully functional as well as distinct unit of enterprise that can develop its
own vision and direction. Unilever can be considered the strategic enterprise unit within existing
products such as Personal care, Food and drink, Home care (Lawrence, Rasche and Kenny,
2019). The business units are always supporting the Unilever to improve entire business current
situation and condition. in order to grow the business in global marketplace. Strategic business
units are considerations internal as well as external environment.
SWOT Analysis
It refers as vital strategic planning platform or tool that can used by Unilever. In order to
identify the current situation or condition of organization. It is the most useful technique to
determine strength, weakness, threat and opportunities (Delabre, Alexander and Rodrigues,
2019). Furthermore, Unilever maintain their current position in marketplace by analysing and
reviewing.
Strength
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 In Unilever, It is high level of customer satisfaction because organization with it
dedicated towards customer relationship. Each and every department has able to achieve
the customer satisfaction and increase business profitability.
 Unilever adapt the product innovation which easily track record of information or data.
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Weakness
 The attrition rate is high within workforce and have to spend a lot compare to other
competitors during training and development.
 Financial planning is not properly done so that it can affects on the entire business
performance.
 Inventory is high as compare to other competitors which making firm increase more
capital to invest in multiple channels.
Threat
 The competition level is high so that it become difficult to maintain position in global
marketplace.
 As organization is operating in different nations that will expose to currency fluctuations
during political climate.
 Unilever have no such regular supply in the innovative product and service. There is
shortage of skilled workforce.
Opportunities
 Unilever adapt the new environmental policies and procedures that will create extreme
level to enhance business capabilities. It became great opportunity for Unilever to drive
home advantage through new technology (Lawrence, Rasche and Kenny, 2019).
 Government support for Unilever to open an opportunity related procurements of product
by Federal contractors.
 Advanced technology provides opportunity to Unilever practices differentiated pricing
strategy in marketplace.
Pestle analysis
It is based on the framework to analyse key factors such as political, Economic, social,
technological, legal, and environmental influencing an organisation from outside. It is mainly
offering the people insight into external factors impact on the organization.
Political Factor: The factor affects on the overall efficiency and performance of Unilever.
In order to identify the impact of government on company remote or macro environment
(Lawrence, Rasche and Kenny, 2019). The political stability presents as opportunity for Unilever
to grow business in global marketplace. On the other hand, political issues in the Unilever which
increases as potential threat against business operations and function.
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Economic Factor: The performance of Unilever depends on the current situation of
economic in global world. Through analysis, it can outline the influence of current economic
situation or condition on firm. In most of cases, it is increasing the wages in developing countries
and present the opportunity for Unilever to profit generation.
Social Factor: There are various trends, social culture that affects on the Unilever
enterprise performance. Social factor depends on the behavioural aspects of market. It also
increasing the health conscious, increase environmental behaviours. Unilever can grow the
business while directly addressed interest of consumers.
Technological Factor: Unilever is mainly depending on technologies which always support
for customers goods enterprise (Delabre, Alexander and Rodrigues, 2019). It can be identified
the impact of modern technology trends on the organization. Unilever uses the automation which
has increased opportunities for Unilever to increase performance and efficiency.
Environmental Factor: The factor is based on the ecological trends and condition which
always influence Unilever remote macro environment. Sometimes, it effects on the natural
environment and also relates to the issues that considered as per analysis. Nowadays, it is
increasing the business efforts on the sustainability, increase complexity of environmental
program.
Legal Factor: Unilever is mainly focused on the rules and regulation to reduce the barriers.
In order to identify the impact of legal system on Unilever. Sometimes, it is increasing the
complexity within regulation environment. Unilever has an opportunity to enhance the overall
organization social responsibilities.
Recommendation that how Unilever to achieve long-term sustainability of the business
Unilever is a company which is operating worldwide and have its operation in many countries
and its products are available in around 190 countries. This suggest that Unilever has access to
almost all the countries and this is why scope of for expansion has been completely utilized by
the Unilever. Now strategies according to Ansoff Matrix remained with Unilever are market
penetration, product development and diversification (Noori and Tatari, 2016). Among these
strategies diversification includes development of new product and development of new market
and in case of this development of new market it is difficult as Unilever has wide range of
products which are available to cater needs of every segment of customer and they being served
at 190 countries. This is why diversification strategy is also not suitable now option that remains
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with Unilever is that it adopts Market Penetration strategy to ensure its long term sustainability.
Product development will require starting from ground as products of Unilever are known as
different brand rather than products of Unilever so Unilever cannot use its identity for growth of
new product.
Market penetration includes that company make efforts to increase customers in existing
market and with existing products of the company. This is one of the most suitable strategy
which can help Unilever to sustain in market for long term. The strategies that Unilever can
adopt to penetrate the existing market are;
Price Adjustment- Under this strategy Unilever has to adjust its price this means that Unilever
has to reduce its price to attract more customers towards its products (Noori and Tatari, 2016).
Products of Unilever are already affordable but slight adjustment in the price will contribute in
attracting more customers towards its products. Price adjustment will not only attract new
customers by will also increase utility of products by the existing customers of the products.
Increased Promotion- Promotion and marketing has become tested strategy to increase
customers of the products. This helps in increasing awareness and visibility of the products.
Unilever has managed to successfully grow and develop it in many countries but countries where
Unilever has limited presence this is the most suitable strategy for the company. For its
promotion Unilever can adopt latest promotional techniques like experience marketing, social
media and influential marketing strategies can also be applied by the Unilever. This will ensure
sustainability of the Unilever in markets where it is not very successful.
Present existing product in new form- This is also strategy which Unilever can apply for
penetrating market. In this strategy Unilever will require to present its existing products with
new characteristics (Jafari and Heckelei, 2017). Company can add some element in the product
or presenting the old product in new type of packaging can also contribute in its success. The
new presentation of the product can also include improved characteristics of the products.
Increasing Scale of Distribution- Products of Unilever are available in 190 countries and
Unilever can increase scale of supply so that products are available at all even the remote
locations of these countries.
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CONCLUSION
As per discussion, it concluded that Strategic analysis consider as a process of conducting
research on company and its operating environment to formulate an efficient strategy. It is useful
for organization identifying and evaluating data relevant to the enterprise. The report is based on
the diversification which always support for business in long-term sustainability. It can be
analysed the core idea that support for business in term of growth and development. In above
discussion, it can identify the company offering and conduct Portfolio analysis, evaluate the key
direction for strategic growth. There are various methods that is always support for identifying
internal as well as external development within organization. Furthermore, it has been suggested
to recommend the strategies that can increase the organization performance. in order to achieve
their long-term sustainability of enterprise. As per discussion of Market Penetration strategy to
ensure its long term sustainability.
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REFERENCES
Book and Journals
Bista, S., 2019. Sustainability in Business (A critique of environmental sustainability practices in
Coca-Cola and Unilever).
Delabre, I., Alexander, A. and Rodrigues, C., 2019. Strategies for tropical forest protection and
sustainable supply chains: challenges and opportunities for alignment with the UN
sustainable development goals. Sustainability Science, pp.1-15.
Deneffe, D. and Vantrappen, H., 2019. Fad-Free Strategy: Rigorous Methods to Help Executives
Make Strategic Choices Confidently. Routledge.
Gorvie, F.Y., 2019. An analysis of the impact of cultural diversity on grievance handling: A case
study of Unilever Nigeria (Doctoral dissertation, Dublin Business School).\
Jafari, Y. and Heckelei, T., 2017. Firm Sales and Export Behavior: Evidence on the Role of Firm
Markups, Market Size, and Market Penetration Costs (No. 2060-2018-324).
Lanzolla, G. and Markides, C., 2020. A Business Model View of Strategy. Journal of
Management Studies.
Lawrence, J., Rasche, A. and Kenny, K., 2019. Sustainability as opportunity: Unilever’s
sustainable living plan. In Managing Sustainable Business (pp. 435-455). Springer,
Dordrecht.
Noori, M. and Tatari, O., 2016. Development of an agent-based model for regional market
penetration projections of electric vehicles in the United States. Energy. 96. pp.215-230.
Pfeffermann, N. ed., 2019. New Leadership in Strategy and Communication: Shifting
Perspective on Innovation, Leadership, and System Design. Springer Nature.
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