Business Strategy for Unilever: Identifying Competitive Advantage and Strategic Directions
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This report provides a strategic plan for Unilever, analyzing its internal and external status, evaluating its competitive market environment, and exploring strategies for business success. It also examines different strategic directions available to Unilever and recommends suitable growth platforms for the organization.
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BUSINESS STRATEGY
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Table of Contents .........................................................................................................................................................1 INTRODUCTION...........................................................................................................................3 MAIN BODY...................................................................................................................................3 PART A...........................................................................................................................................3 1.3 Identifying and justifying Unilever's existing and potential competitive advantage-...........3 PART B............................................................................................................................................4 2.1 Evaluating different types of strategic directions that are available to Unilever-..................4 2.2 Justifying and recommending the most appropriate growth strategy for Morrison's...........6 2.3 Evaluating some ways that will ensure success to Unilever-................................................7 CONCLUSION................................................................................................................................8 REFERENCES................................................................................................................................1
INTRODUCTION Business strategy refers to and can be defined as an identified set of clearly laid out business tasks and activity framework that need to be planned beforehand (Abdulwase and et.al., 2020). These business strategies are varied in nature and require to be performed so that certain general and specific organizational goals and objectives can be achieved and accomplished. The leader plan is essential for the accomplishment of such strategies that vary such as corporate, business, operational, and departmental. A particular business organization independently selects itsown preferred needs and requirements so that the follow up strategies could revolve around the set instructional framework that defines what is to be done and what not to be done. For this precise purpose the Unilever organization has been chosen on which the following report is based. Unilever organization is a large scale public limited business firm that deals with a variety of consumer products (Habep, 2021). This report will provide a strategic plan in two parts the first part of which will critically analyte the company's internal and external status followed by an evaluation of its competitive market environment. It will also explore strategies for business success and the second part will examine the provided options and strategic directions and will assess whether they are justified or not. The report will also recommend suitable growth platforms for the organization and will analyse ways with which the selected strategies will be measured. MAINBODY PART A 1. Analysis of PESTLE and SWOT of the organization along with an evaluation of the organization’s resources and capabilities Unilever is a multinational organization who deals in clothing, food items, footwear and even beauty and personal care as well. To run any business, it is important for the management to identify the internal and external factors which influences their company in wider manner and results accordingly (Robertson, 2021). However, there are mainly two models for the analysis of macro and micro environment which are pestle and swot. Pestle analysis stands for political, social, economical, environmental, legal and technological whereas swot for strength, weakness, opportunities and threat. Thus, it is important for Unilever to identify and analyse the external and internal both environment for the betterment of the company.
Pestle Analysis PoliticalPolitical factor includes the areas of government rules and regulations which is essential to be followed by an individual. After the Brexit, there are many changes and modifications has been done by the government including the tax charges which affects Unilever in wider manner. EconomicalThis factor involves the inflation rates, interest and exchange rates, employment wages and such more. Unilever can get impacted by the changes in economical factor due to large number of employment rates all over the world. SocialSocialfactorconsiderstheage,education,gender,religionand demographicsofthepopulationwhichputstheimpactoverthe organization (Chitzos, 2018). Unilever can built their reputation and image in the market by providing the goods and services as per the needs and desires of the population of particular age and gender which deliver appropriate outcome. TechnologicalTechnology is increasing day by day in rapid manner where Unilever is alsousingthetechnologyindefinitemannerforthepromotional activities such as television, radio and even social media for the better advertisements of the brand of a company. LegalLegal factor includes the law and regulations which also puts the great impact over the organisation. Each and individual country has its own laws and legislations which the company needs to know and follow from which Unilever can diversify their products in various countries as well. EnvironmentalUnilever encourages the sustainability at their company which supports them to increase their business sale and influences the customers at the store in effective manner. Swot analysis
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Strength Unilever operates in 190+ countries and diversified their products all over the world which provides the effectiveness in their business sales and productivity. Thecompanyalsoencouragesthe sustainabilityattheirplacewhich motivate and influence the people to savethenaturalsurroundingsfrom which they can easily customer's can get influenced respectively. Weakness Theretailindustryisgrowingand developing in rapid manner where the competition is also increasing day by day (Cools and Terry, 2018). However, due to high competition in the market, Tesco is not able to deal with all the companies in effective way where they put their best efforts and hard work to stay at the higher position than other retail companies. Opportunity Withthedevelopmentofthe digitalizationandtechnologies,the retailindustryisgrowinginwider mannerwhereUnilevercangetthe opportunity to grow and develop by increasing their promotional channels whichhelptobuildthebusinessin successful way. Threat The company have a threat because of globaleconomicpandemiclike Covid19 which puts a great impact over the Tesco and can make them to obtain theineffectiveoutcomeandresults which makes the company to obtain lower productivity. 2. Critical evaluation of the competitive environment using Porter’s Five Forces model Threat of New entrants:Today, in this growing and developing world the retail industry is able to grow at definite level where Unilever is having a great competition and even a threat from the new entrants retail organization who can take the higher place in the market. Establishment and increase number of different retail organizations is providing a great impact over the Unilever
and leads them to offer better and affordable range prices of the products so that they can maintain and influence the customers at their store respectively. Power of suppliers:Power of supplier simply means where the suppliers are dominated upon the buyers. Unilever has many suppliers at their business that supply oils, papers and much more which is moderate. However, power of supplier can easily decrease the revenue of the company. Unilever has many suppliers, but they have higher power compare to others from which dealing with this type of suppliers becomes a difficult task for the business. Company can deal with different suppliers to avoid these kinds of situations accordingly. Power of buyers:As, it has been already known that customer's have the higher power of bargaining where it can put the impact over the organization. Unilever is required to understand the power of buyers and should keep the prices and products in effective manner from which they can obtain the profitable outcome and results (Nwachukwu and Chladkova, 2019). Unilever can adopt the way to survive bargaining power of the consumer by innovating unique products and streamline those products by using different ways of promotion techniques. Competitive Rivalry:The retail industry is developing in wider manner where the competition is also increasing day by day. There are many firms who operate in consumers good industry where it can impact the company in highly manner. Unilever also can experience tough competition in the market because of low switching costs. Tesco is one of the competition for the Unilever which is providing the tough competition to Unilever. Threat of substitution:Threat of substitution is very low for Unilever because the company operates in 190+ countries and have a great demand of their brands in the overall marketplace. However, Unilever is able to increase their sales and productivity level with the help and support of their uniqueness which drives their business at successful level. 1.3 Identifying and justifying Unilever's existing and potential competitive advantage- Unilever company operates in 190+ countries and this is the because of the reason that company offers something unique to the consumer. The uniqueness of the company has given it an competitive advantages and that competitive advantage are as follows- ï‚·Department of research and development is the biggest competitive advantage that Unilever has. From starting Unilever has always invested heavily into the research and development in order to create those products and services that are way above their
competitors. Company has high tech team that research different markets and their trends in a way that it feels the gap between the demand and supply of that market. ï‚·The prices of the products that company offers are different in different countries. Prices of product and services differs in different countries according to the demand of the products. Company tries to leverage prices when demand of products are low in order to raise the products demand. Different prices are set according to the situation and the economies of different countries. ï‚·The supply chain distribution system of company is best as there are many suppliers in market that are interested in sellingproducts that are been produced by the company. Unilever also has its own retail stores in many country in order to reduce the cost of mediators (Kumar and et.al., 2020). ï‚·Offline and online marketing of company has always been the best. Marketing has given company an advantage over the other companies that are operating in market. Online and offline both has given presence to the company. Online marketing is done through various social media platforms while offline includes TV, newspaper, Billboards etc. (Ugolkov and et.al., 2020). ï‚·Diversified product ranges and almost 400 + is the another competitive advantage that is availableto the company. Global footprint of company has given company large consumer section with higher profits and engagement towards the products and services that Unilever sales in market (Tanasiichuk and et.al., 2019). Company already has an edge over the other competitors and this has been the reason behind the success of the company in market. Business strategy of Unilever has always been best since the starting of it in 1992. Strategies to achieve overall strategic objectives The strategies that should be used by the Unilever Plc. within their organization in order to achieve the overall business objectives of the company are as follows: Low price and low value added One of the leading strategy that can be used by the Unilever Plc for the purpose of enhancing its profitability within the market (Tien, 2019). In this strategy, the company aims to provide its customers with products and services that have low quality and offers the same at low
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pieces in the market. This helps the company in saving the cost and thus increase the profit margin. Low price This strategy suggests the company to offer a range of products and services within the market at highly competitive prices within the market. In this strategy, the company aims to deliver the products and services at low prices with premium quality. Hybrid The hybrid refers to combining the low cost with the differentiation in the market. In this strategy, the Unilever can provide the customers with a range of products and services within the market that are different from each other at the lowest possible price in the market. Differentiation The Unilever Plc can also make use of the option to differentiate their product offerings within the market as compared to other existing brands (Papadas, and et.al 2019). When the customers will get products and services that are not available within the market with other brands, then the Unilever Plc. will get an opportunity to attract a number of customers towards the business operations of the company and help the company in increasing their profitability and revenue within the market. Focus differentiation The Unilever Plc can also opt for the strategy of Focused differentiation approach in order to achieve the overall business objectives of their brand within the market. In this approach, the organization aims to attract a wide range of consumers towards the company by offering them with new and different products at premium prices in the market. PART B 2.1 Evaluating different types of strategic directions that are available to Unilever- The term strategic direction is referred to the plan that should be implemented and applied in the organization for fulfilling the goal of the organization (Direction, 2020). As the word itself is strategic direction which simply means that it give direction to the company for achieving goal of the company. There are various kinds of strategic direction available to the company but it depends on company what strategy is pursued in order to gain that level of
competitive advantage. Unilever can opt any of direction what suits for the organization the most. The strategic direction are as follows- Mission- Mission helps company to organize plans accordingly. Mission helps company to frame plans according to it. The strategies are always formed according to the goal of the company. Unilever already has mission that is to create a better planet for the society as they are ultimate goal is to serve consumer better products and services in market than other competitor that are serving. Culture- offering cultural environment to the organization is another important thing as cultural environment provides better services to the consumer. The diversity that company has is going to satisfy consumer as culture involves every employee in it. Culture is referred to the behaviour of the employees that will create an positive environment in the Unilever. Unilever is operating in 192+ countries and this is the reason behind the success of company today. Unilever has diversity and different employees that belong to different cultures that is the best direction to survive in international environment today. Outsourcing- Strategicdirectionalsoincludesoutsourcingwhichsimplesaysoutsourcingthose activities that give brings cost- efficiency in the organization. It is not possible at the company's end to create all the products by their own and this is the major reason many companies have started outsourcing. Outsourcing will cut the cost of the products in order to attain a good level of competitive advantage. Competition- choosing the right competition that will enhance the productivity of the company is an utmost important thing. This is best strategic direction as it give chance to company to improve products in marker. This is because only unique products will give chance to company in order to survive in the market. Market survival is essential for companies and Unilever already exist in market that has higher competition. This has become reason behind the success of the company. Elimination- Eliminating unnecessary activities is also an important strategic direction that will give higher profits to the company. Identifying unnecessary actions is the prime task involved in
eliminating. Unilever is already trying to eliminate all the task that are decreasing their profits in the market and is also building brand image of the company. 2.2 Justifying and recommending the most appropriate growth strategy for Morrison's. This has been identified that Unilever can utilize some strategic direction in order to grow and diversify its business. It is important to develop an organization that survive in every condition and at the end gives profit to the company. By applying Ansoff Matrix company can grow into the market. Ansoff matrix is as follows- Market Penetration- This strategy of Ansoff matrix defines that company can increase its profits by launching existing products and services with some variations into the existing market. This strategy says that Unilever can increase market share by introducing current products and services with some variations that will ultimately be increasing market share of the Unilever. The company can also focus on reducing prices of the current products in order to attract new consumers and new market segment that will be increasing margins of the company. Market Development- This factors help companies to enter new market with the same existing products. This is also defines as enhancement of market segment that will be increasing revenues of the company. Unilever is already operating in 190 + countries and has almost 400 + brands that means company already has a good market share and that market is already been developed for the Unilever. There is no opportunity for the company in this strategy of Ansoff (Alkasim and et.al., 2018). Product Development- product development strategy of the company simply says to invest in research and development activities in order to launch new products. Company can introduce those products and services that are unique and new as this will give company an chance to increase its market share. The more the products the company have, the more promotion technique company will be requiring and this promotion technique will ultimately give good results to the company. Demands of goods produced by the company must be raised in market by using various promotion and marketing techniques. This will create a drive in mind of the people to purchase that particular product. Diversification-
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diversification is related to launching new product into the new market (Oladimeji, and Udosen, 2019). This strategy of Ansoff is most risky as here both product and market are new to the company. Unilever is already trying to create new products as the market area of company has already become wider because of its operations in 190 + countries. By applying Ansoff matrix it has been clear that the company should focus on product development strategy in order to gain higher profits. This is the best strategy for Unilever as company have large market size and large consumer base. This strategy requires investment into research and development departments to innovate new products and new services for its consumer base. 2.3 Evaluating some ways that will ensure success to Unilever- Unilever is a successful company but still there is lot that can be done. The below things can be adopted by company to create that environment which will ultimately give more benefits to the company. This benefits will ensure success of the company in coming times they are as follows- Creativity- The more the products the company creates the more consumer will be attracted towards the company. Being creativity is the main demand of the market today and specially in businesses as competitors are increasing day by day it has become more important to generate unique products and sale them to their ultimate consumer. Unilever has almost 400+ brands but every brand has some or other competitors that provides substitutes for the products that Unilever is offering in market. So being creative is only thing that will ensure success to the company (Reiter-Palmon, Mitchell and Royston, 2019). Financial management- the company that focuses on financial management system has the capacity to become the highest profit making company in the market. Unilever already has good financial resources with them that has enables company a higher level of profits. It is difficult to manage finances in any organization as they are many financial activities that are happening simultaneously. Managing all those financial activities will cut the cost of the product that the company is selling in the market. Training and development – Training and development is define as the process that helps company to enhance skills of the employees that are working in the organization. It is very important step as skills that
develop during the process of training will benefit company in the future. Moreover, company needs those employees that innovate new products and provides same constant services to its consumer in the market. Training and developing all the employees definitely ensure success to the company (Burhan and et.al.,.2021). By using this measures Unilever company can ensure its success. Company is already been running on good platform but still this above techniques will become the reason behind product and market expansion of the company. CONCLUSION From the report above, it has been concluded that forming a business strategy in order to achieve goal of the organization is a very important process as it not only helps company to maximize profits instead it will give competitive advantage to Unilever as well. This report has been discussed in two parts where part A deal with SWOT, PESTLE, PORTER' 5 FORCES and different type strategic direction that are available with the company. Moreover, the report has also discussed Part B by evaluating different strategic direction that are available to Unilever and justifying most appropriate strategy for the company to achieve its goal. Lastly, the report has also discussed some ways that by which the performance should be monitored in order to ensure success in the organization.
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Tanasiichuk, A., and et.al., 2019. Influence of transformational economic processes on marketing management by an international diversified conglomerate enterprise.European journal of sustainable development .8(3). pp.448-448. Tien, N.H., 2019. International economics, business and management strategy.Dehli: Academic Publications. Ugolkov, I.,and et,al., 2020. The evaluation of content effectiveness within online and offline marketing communications of an enterprise. Innovative Marketing .16(3). pp.26-36. 2