Unilever Market Expansion Strategy

This assignment examines Unilever's potential for business expansion in Belgium. It analyzes various market entry strategies, focusing on licensing as a low-risk approach. The analysis also considers operational and managerial challenges, providing recommendations for effective market penetration through research, targeted marketing, and awareness campaigns.

GLOBAL BUSINESS

TABLE OF CONTENTS
1.0 INTRODUCTION.....................................................................................................................1
2.0 GLOBAL BUSINESS...............................................................................................................1
3.0 INDUSTRY ANALYSIS..........................................................................................................1
3.1 SWOT analysis of Unilever...................................................................................................1
3.2 Competitive analysis of Unilever..........................................................................................2
4.0 BELGIUM COUNTRY ANALYSIS........................................................................................3
4.1 C.A.G.E analysis of Belgium................................................................................................3
4.2 Potential market analyses......................................................................................................3
5. MANAGERIAL CHALLENGES...............................................................................................3
6. OPERATIONAL CHALLENGES..............................................................................................4
7.0 ENTRY STRATEGY................................................................................................................5
8. CONCLUSION AND RECOMMENDATIONS........................................................................5
REFERENCES................................................................................................................................7

1.0 INTRODUCTION
Globalisation has increased opportunities for organisation to expand their business across
the world and have supported firms in improving efficiency of business to great extent (Low,
2016). Present study is based on Unilever that operates in consumer goods industry. Firm offers
foods, beverages, personal care products to consumers. Enterprise is planning to expand its
business in Belgium, as it is its target market. It is targeting to families and professionals. Firm is
planning to enter into this location through licensing strategy, this will help in minimising risk of
failure and will support in establish the branch in Belgium successfully. Current assignment will
conduct industry analyses and target country analyses. Furthermore, it will describe managerial
challenges face by the firm in new location.
2.0 GLOBAL BUSINESS
Globalisation has made companies to spread its business across the world. Global business
refers to conducting business operations across the country's border. It is basically trading of
goods and services in the international markets by the organisations and such organisations are
called global business companies.
Unilever is a global business company carrying out its business in the different parts of
the world. Global business is necessary because with the advancement of technology and world
level business infrastructure for conducting the business has led the Unilever to enter into the
international markets, capture more customers across the globe, reduce its operational costs by
taking the advantage of economies of sales, have competitive edge over other competitive firms.
Global business also helps the company to grab greater talented and experienced people for it
and in improving the brand image of the company (Sassen, 2018).
3.0 INDUSTRY ANALYSIS
3.1 SWOT analysis of Unilever
Strengths
 Globally brand operating in more than 190 countries.
 Wide range of consumer products diversity.
 Economies of scale.
 Competitive pricing of the products.
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Weaknesses
 Cut throat competition in consumer products market.
 Easy availability of the substitutes.
 Increased cost due to long distribution channels such as retailers.
Opportunities
 Market expansion in developing countries.
 Increasing demand in skin care products.
 Chance of making grocery department more efficient.
Threats
 Easy entry of new firms in the industry.
 Global economic inflation rates and purchasing power of consumers.
 Competition from local retailers.
 Decreasing trend in sale of grocery items of Unilever (Covin and Miller, 2014).
3.2 Competitive analysis of Unilever
Unilever has an intense competition from Procter and Gamble and Nestle companies and
analysis is done below:
Criterion Unilever Procter&Gamble Nestle
Type Public limited Public limited Public limited
Global presence 190 countries 180 countries 189 countries
No. Of employees 160000 95000 323000
Revenue in 2017 1.9 billions pounds $65.06 billions CHF 89.791 billions
Unilever is facing severe competition from the Nestle in terms of its human capital and
its gross revenue. This serves as a competition factor for the Unilever to beat the P&G. However,
Nestle and P&G both deals in the wide range of products from consumer durable goods to the
grocery items which has led Unilever overall decline of sales in Global market especially in the
grocery segment of the company (Venkatesh, Rathi and Patwa, 2015).
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44.0 BELGIUM COUNTRY ANALYSIS
4.1 C.A.G.E analysis of Belgium
The C.A.G.E framework involves different factors such as cultural, administration, geographic,
economic through which an analysis is done of countries to find out whether the country's
conditions are favourable for conducting the business operations.
Cultural : Belgium is very rich in its culture and have a very high education rate. The country is
more driven to eco-friendly environment and people are welcoming in adapting new changes in
the country.
Administration: The country has an efficient and fully managed administration system which is
why there is very low ratio of administrative disruptions.
Geographic: It has three regions coastal, central plateau and Ardennes uplands. It has total land
border 1297 km, the longest river of 200km Schedlt and water area of about 250 km square
(Epstein, 2018).
Economic: In recent years, the economic rate of the country has increase gradually but with
stability. The GDP growth rate was increased by 1.2 in 2016 and 1.6% in 2017(Belgium:
economic and political outline, 2018). The country is the perfect destination for import/export
business however, different in culture between the neighbouring counties has created a political
tension in the country (Crane and Matten, 2016).
4.2 Potential market analyses
Economic condition of Belgium is very strong, GDP is improving with the rapid speed.
Thus, people have adequate job opportunities. Industry is performing well and contributing in
development of nation to great extent. If Unilever enters into this market then it would be
beneficial in gaining more profit in this market (Covin and Miller, 2014).
5. MANAGERIAL CHALLENGES
Unilever is planning to expand its business in new market “Belgium”. But in order to enter
into new market entity might have to face huge complications. Managerial challenges for
organisation are described as below: Financial risk: Unilever is performing well in the market. But in order to enter into new
location and operate business in new market successfully firm should have to spend huge
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amount. Legal fees, expansion expenses may increase economic burden on enterprise.
One of the major risks that are associated with international business is changes in
exchange rates (Sassen, 2018). If firm operates its business in other country then it will
have bear this challenge. Foreign exchange market, international crises may enhance
financial burden on the organisation to great extent. Belgium’s economic condition is
good but changes in interest and exchange rate may increase costing of Unilever and this
would decrease net profit. In such condition company will fail to sustain in this market
for longer duration. Economic instability may also create challenge for Unilever and it
might fail to work in new location successfully (Covin and Miller, 2014). Strategic risk: For expanding business in new geographical location each firm have to
make several strategies. If strategies are not effective then it may increases risk for the
organisation. Unilever may face strategic managerial risk Poor supply chain, improper
marketing tactics may increase burden of the entity and it would get fail to establish its
business in new market successfully (Venkatesh, Rathi and Patwa, 2015).
 Monitoring and controlling risk: This is another challenge that would have to face by
Unilever in global expansion. If managers of the firm not monitor the progress and
working of company in Belgium effectively then it would increase the chances of failure.
It is essential for the authorities to control over each activity and monitor it properly so
that issues can be resolved timely (Epstein, 2018).
6. OPERATIONAL CHALLENGES
Global expansion or working in international market engages with several operational
challenges. These are explained as below: Financial risk: This is major operational challenge for Unilever. In such case citizens
would face issue in raise capital form finance market. People can avid investment plan,
which affect the operation of company. Currency also affected in this situation because
most of the trade are stopped in army administration for some time. Lower currency
value affects the export import decision as well as local business decision (Crane and
Matten, 2016). Societal risk: Citizens of Belgium like to get quality services and other business as well
emphases on providing great services to consumers rather than maximizing profit. If
Unilever fails to meet their needs then it might increase challenge for business to sustain
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in this market for longer duration. Heavy public debt, employment issues affect spending
power of consumers. This may increase risk for Unilever in sustaining in Belgium for
longer duration.
 Geo-political risk: Political condition plays significant role in business unit. If
government is unstable then it would increase risk for the firm. Trade restriction, export
laws, importing licenses may affect Unilever progress in Belgium. Political condition of
Belgium is very stable and government have made effective trading norms. But Unilever
will have to face issues due to tough regulation related to import and export that would
increase risk for the business to great extent (Epstein, 2018). Belgium government has
transparent competition policy. Increasing geopolitical concerns are creating risky
situation for global organisation, due to political risk companies are losing their revenues.
Political violence, export embargoes may enhance operational risk for Unilever.
 Environmental risk: Unilever will have to follow environmental law and if it fails to
follow it well then it would create issue in conducting operations in Belgium.
7.0 ENTRY STRATEGY
There are several ways through which business can enter inter into new location
successfully. Unilever wants to expand its business in Belgium for that it would have to take
support of suitable strategies through which it can successfully establish its branch in this
location (Crane and Matten, 2016).
Direct exporting
This is the way in which companies sell their products and services into new market.
Unilever may establish unique sales programs or may contact with distributors for selling its
consumer products into Belgium. These distributors and agents work as representatives of
business in new location.
Licensing
This is another great market entry strategy, this is considered as sophisticated
arrangement in which includes transfer of rights to other firm to use products of company and
sell into market (Market Entry Strategies, 2018). Unilever can generate licences to other party or
can make an agreement for selling the products of Unilever in Belgium. This would be suitable
option because this will decrease risk of the firm. As enterprise will not have to bear risk
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associated with foreign market. Furthermore, licensing strategy would help Unilever in
expanding the business in this location by investing limited capital.
Joint venture
This is another market entry strategy in which firm may pursue joint venture with other
company. Both organisations share risk of investments. Two companies work together and share
profit of risks equally (Low, 2016).
8. CONCLUSION AND RECOMMENDATIONS
Conclusion
From the above study it can be concluded that Unilever has potential to expand the
business in new market. Before entering into global environment entity is required to emphases
on operational and managerial challenges. Licensing is the best market entry strategy that helps
in minimising the risk of failure in new geographical area and support in enhancing revenues of
the organisation to great extent.
Recommendations
Unilever should conduct market research first before entering in to new market. This will
help in analysing political, societal situation of that country. This would be beneficial in order to
make effective strategies that may help in minimising risk of failure in new location.
Unilever should implement effective marketing strategies for increasing sales in new market.
Use of social media and promotional campaigns will help in attracting more people towards
brand in Belgium. This would be helpful in making people aware with the products and
influencing their mind as well.
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REFERENCES
Books and Journals
Covin, J. G. and Miller, D., 2014. International entrepreneurial orientation: Conceptual
considerations, research themes, measurement issues, and future research directions.
Entrepreneurship Theory and Practice. 38(1). pp.11-44.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Epstein, M. J., 2018. Making sustainability work: Best practices in managing and measuring
corporate social, environmental and economic impacts. Routledge.
Low, P., 2016. International trade and the environment. UNISIA. (30). pp.95-99.
Sassen, S., 2018. Cities in a world economy. Sage Publications.
Venkatesh, V.G., Rathi, S. and Patwa, S., 2015. Analysis on supply chain risks in Indian apparel
retail chains and proposal of risk prioritization model using Interpretive structural
modeling. Journal of Retailing and Consumer Services. 26. pp.153-167.
Online
Belgium: economic and political outline. 2018.[Online]. Available through
<https://en.portal.santandertrade.com/analyse-markets/belgium/economic-political-
outline>
Market Entry Strategies. 2018.[Online]. Available through < http://www.tradestart.ca/market-
entry-strategies>
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