Business Strategy for Unilever: PESTEL, SWOT, VRIO and Porter's Five Forces Analysis

This report provides a detailed analysis of Unilever's business strategy through PESTEL, SWOT, VRIO and Porter's Five Forces analysis. It evaluates the impact of macro environment, internal capabilities, competitive forces and strategic planning for Unilever. The report includes suitable growth strategies, monitoring methods and competitive advantage identification for Unilever.

Business strategy

Table of Contents
INTRODUCTION ..........................................................................................................................3
P1 The impact and influence of the macro environment.......................................................3
P2 Internal environment and capabilities of organisation using appropriate frameworks.....5
P3 Porter’s Five Forces model to evaluate the competitive forces.......................................8
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for organisation.......................................................................................................................9
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy is defined as amalgamation of every decision taken and and course of
action adopted by business firm to attain business goals and secure beneficial position in their
industry. The present report is based on UK based consumer goods company Unilever. The firm
was founded in the year 1929 and has employed 155,000 on a global scale. The product portfolio
of Unilever includes wide range of products including food products, well-being vitamins,
minerals beauty products and many more. The present report includes PESTEL, SWOT and
VRIO analysis of Unilever. Competitive environment of Unilever is evaluated with the help of
Porter's fiver forces analysis. Competitive advantage of Unilever is identified in this report and
valid strategies and tactics to attain strategic objective are provided for Unilever. In addition to
this different strategic directions are evaluated for Unilever and suitable growth strategies are
recommended. Monitoring methods which can be used by Unilever are also evaluated in this
report.
P1 The impact and influence of the macro environment
PESTEL analysis of Unilever
PESTLE analysis is referred to as a framework which is utilised by organisation for
evaluating and monitoring all the macro environmental factors which could create impact on the
firm and this analysis could be use in range of various scenarios (Lawton, 2017). In context to
the selected organisation, PESTLE analysis is mentioned below:
Political Factors: The primary political factor which affects Unilever are the political
issues present in European Union. Unilever is present in more than 130 countries and most of the
products offered by the company are manufactures locally. The UK based manufacturing
faculties will be affected by Brexit as it introduces new tariff laws.
Positive impact: The positive impact of Brexit for Unilever is that the company
will face limited long term impact because of Brexit as global manufacturing facilities are
localised.
Negative Impact: The UK supply chain will be disrupted by Brexit and increase
overall expenditure and supply chain complexity of Unilever in UK.

Economical Factors: Global economic downturn caused by COVID-19 pandemic and trade
restrictions affect supply chain of Unilever. In addition to this high growth rate of developing
countries also affects Unilever (Sun and et. al., 2020).
Positive impact: The positive impact of high growth rate of developing countries
is that Unilever gains the opportunity to gain higher profits from developing countries.
Negative Impact: The negative impact of economic factors is that trade
restrictions enforced due to COVID -19 disrupt daily operations of the company and stop timely
attainment of goals.
Social Factors: The main social factor which affects Unilever is growing global obesity. Rise in
cases of Obesity have made consumers more health conscious and governments more strict
towards consumer goods who lead to obesity.
Positive impact: The positive impact of this social factor is that Unilever gains the
opportunity to increase the sale of their well-being vitamins and minerals by attracting health
conscious consumers (Goodman, 2019).
Negative Impact: The strict regulations by government on food products which
cause obesity and avoidance of such products by general public can reduce profitability of
Unilever.
Technological Factors: The increase in online activity of consumers is the main factor which
affects Unilever. This is because the company can utilise People data centres to understand
consumer behaviour and gain highly accurate consumer insights.
Positive impact: The positive impact of increased online activity is that the firm
can leverage People data centres to gain accurate consumer insight and increase knowledge
about consumer behaviour.
Negative Impact: The primary negative impact caused by increased online activity
and usage of People data centres by Unilever is that it introduces the threat of cyber-security.
Cyber criminals can gain assess to sensitive consumer information the People data centres are
not protected.
Environmental Factors: The primary environmental factor which affects Unilever is the rising
concern of consumers and governments all over the globe to increase sustainability. In addition
to this consumers prefer sustainable brands and products to contribute to environment welfare
(Liu and et. al., 2019).

Positive impact: This positive impact of increased environmental awareness is
that Unilever can market actions taken to enhance sustainability and ensure that positive brand
image of the company is created.
Negative Impact: The negative impact of this increased environmental awareness
is that Unilever has taken steps to enhance sustainability which requires huge ongoing
investment. This can harm profitability of the company.
Legal Factors: The primary legal factor which affects Unilever is requirement of regulator
approvals in different countries. This affects the supply chain of the company.
Positive impact: The positive impact of completion of regulator approvals by
Unilever is that the the company is able to conduct business operations in more than 130
countries in a lawful manner (Oyewo, Vo and Akinsanmi, 2021).
Negative Impact: The main negative impact of regulator approvals is that it delays
decision making and hinders timely delivery of products to the consumers.
P2 Internal environment and capabilities of organisation using appropriate frameworks
SWOT analysis of Unilever
SWOT analysis is tool which is used for evaluating the competitive position of the
organisation as well as for developing strategic planning. This analysis is done to access the
internal and external factors and its present as well as future potentials. In context to Unilever,
SWOT analysis is mentioned below:
Strengths Weaknesses
 The primary strengths of Unilever is
market presence in more than 130
countries. The company does not rely
on single market and is able to earn
high amount of profits (Hawking and
Sellitto, 2017).
 Unilever has the strength of having
brand portfolio of globally popular
brands which enable the company to
easily expand in new countries and gain
 The main weakness of Unilever is
decline in global grocery sales.
Competition from regional and global
firms have decreased grocery sale of
Unilever.
 The recent COVID 19 has impacted the
organisation which lead to decrease in
the revenue of the organisation. This
has made several customers purchase
cheaper substitute products in effort to

competitive advantage over their rivals. cope with the new economic realities.
Opportunities Threats
 Unilever is the largest organisation
across the globe and this provides a lot
of opportunities for expanding their
operations. The organisation could
utilise its financial strengths for
expanding and diversifying strategies
so that they could lower the threat of
substitution.
 The organisation is currently working
for Microbac Laboratories for
developing a mouthwash which could
reduce the viral of COVID 19. This
provides a great opportunity for
organisation to expand their operations
(Schultz, 2021).
 There are various organisation such as
Proctor & Gamble, Colgate Palmolive
and many more put a high pressure on
the organisation (Lude and Prügl,
2021). This high competition could
shake the organisation and could have a
major negative effects. on the pricing
strategies and profits.
 The organisation is trying to cope with
the economic crisis which was due to
COVID 19 pandemic. The lock down
which was imposed by the government
turn the economies upside down. The
organisation is still wondering about
the possible outlooks which is based on
the duration of the lock down and the
influence of restricted living.
VRIO analysis of Unilever
VRIO framework is a strategic analysis which is designed to assists organisation for
protecting their capabilities and resources which provides them with the long term competitive
edge. VRIO framework for the selected organisation is mentioned below:
VALUABLE RARITY INIMITABLE ORGANISED
Brand image Yes - - -
Adaptability Yes Yes - -
Customer Yes Yes Yes -

experience
Financial
strength
Yes Yes Yes Yes
Valuable: There are competencies which are valuable assists Unilever in exploiting the
opportunities. These competencies enables them to develop, grow and expand. Unilever brand
image is unique and it contain high brand integrity. Their brand image has been developed
through continuous efforts and the qualities which is offered by them (Dellermann, Fliaster and
Kolloch, 2017). The brand image of Unilever is source of competency as it cannot be imitate by
other organisations.
Rarity: The resources which could be acquired by few organisations are stated as rare.
Both valuable an rare resources are regarded as competitive edge. The selected organisation has
a global presence which is having high exposure to the global culture and they has distinct
societal values and norms. As the organisation is a global conglomerate, they show as high
adaptability to distinct culture by engaging in localization activities and marketing
communication with different managerial function. This would assists the company in gaining
penetration in various local markets. The ability to adapt to the different external environmental
and regional culture is rare for Unilever which allow them to have improves accessibility, great
visibility, strong brand recall and a higher penetration (Franceschelli, Santoro and Candelo,
2018).
Inimitable: A resource would be costly for other organisation. Unilever offers a unique
customer experience to the consumers. They provide a high brand engagement which is
memorable and relevant for the target entities. The organisation make sure to engages with the
consumer at various touchpoints and provides a great experience which leads consumers to
repeat their purchases. Along with a great range of product offering, they also evolved in
providing and engaging customers with the content generation which the brand elevate their
equity.
Organised: Unilever is having a substantial financial strength along with its brand
strength. This supports the organisation in exploring of all the opportunities for a new product
development and its introduction in the market. Along with this, it allows the organisation for
analysing all the potential mergers and acquisitions to gain competitive edge (Løw, 2018). It

also enables the firm in concentrating on innovation in regards to the offered good and
maintaining a constant quality in various countries in which they cater. This is vital in realising
all the opportunities in the organisation in regards of internal and external.
P3 Porter’s Five Forces model to evaluate the competitive forces
Porter's five forces model
Porter's five force is a model which is used to determine and evaluate the five competitive
forces which assists in shaping of firm. This model could be applied to any division of the
economy for understanding the competition level within the organisation and elevates the long
term profitability of the organisation (St-Hilaire and Boisselier, 2019). In context to the selected
organisation, Porter's five force model is mentioned below:
Threats of new entrant (low): The economic of scales if difficult to reach in the industry
in which the selected firm operates. This make simpler for all those which produces huge
capacitate to have cost advantage. Also, this makes the production cost more for the new
entrants. Along with this, the product differentiation is solid in the industry where the
organisation is selling differentiated good rather than a standardised commodity. All these
components makes threats of new entrants low. Moreover, the government policies in the
industry requires to have a strict licensing and legal requirements which is to be fulfilled prior an
organisation starts to sell. Unilever could concentrate on innovation for differentiating their
commodities from new entrants. This could be invest on market for developing a solid brand
identification. This would assists in retaining of their consumers rather losing them to the new
firm.
Bargaining power of suppliers(low): The number of suppliers are more in the industry
which means that suppliers doesn't have control on the prices and this makes a low bargaining
power of suppliers. The suppliers do not contend with other commodities in the industry which
means that there is no substitute for the product which is provided by a particular supplier. This
would make the bargaining power of supplier high. The selected organisation could new
purchase resources from their suppliers at a very low cost. If the commodity or cost are not
suitable for the selected organisation, it could be then switch their vendors as switching costs are
low.
Bargaining power of buyers(low): The number of suppliers is more in the industry in
which the selected organisation function which depicts that the buyers have few organisation to

select from and they do not have much control on the price (Betz, 2018). Through this, the
bargaining power of buyers is low. Along with this, the income generation of the buyers are low
which represents that there would be pressure to buy a low prices and that makes the buyers
more price sensitive. Here the selected organisation could develop a large customer base and this
could be done by marketing which has aimed for creating the brand loyalty.
Threat of substitute product or services(low): There are very few substitute which are
available for the commodities which are manufactured in the industry and the substitute which
are produced are manufactured by low profit industries. This makes the threat of substitute
products low. Along with this, there are substitute products which are of high quality but they
are expensive. Organisation which are producing within the industry where the selected firm is
operating sells commodities at lower rate than the substitute. It depicts that buyers are likely to
shift to substitute commodities and services (Galpin, 2020). The selected organisation could offer
a greater quality in its goods and as a result, the purchasers will select the products which are
having good quality as compared other substitute product which offers a greater quality but at a
higher cost.
Rivalry among existing firms(low): The number of rivals of Unilever is very few which
means that organisation in this industry would not make move without getting unnoticed. The
very few rivals which is having a large market share which means that they will engage in
competitive acts for gaining positions and becoming the leaders. This makes the competition
between existing organisation a solid force with the industry. Unilever is growing every year and
they are expected to continue for few more years which indicates that rivals are less likely to
engage in the completive actions as they do not need to captivate the market share from each
other. The selected organisation needs to concentrate in differentiating their commodities so that
there actions of rivals would be having less effect on their consumers which is seeking their
commodities (Sanders and Wood, 2019). Also, the organisation could concentrate on new
consumers.
From the above, the organisation could be able to comprehend how distinct elements
affects the organisation's profitability. Here a high power means a lower profitability where as a
low power depicts greater profitability.

P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for
organisation
Porter's generic model
Porter's generic strategies is a way that how organization could maintain their long term
advantage over their rivals. Michael Porter has given this concept that firm utilizes for
developing the key operating processes. In context to the selected organization, Porter's generic
strategies are mentioned below:
Cost leadership: In cost leadership, the organization sets out themselves for becoming a
low cost producer in the industry. The key objective of selected organization is to preserve the
market leadership position by efficient value chain management (Green, 2019). It would allow
the organization to expand its market share through targeting the middle class groups that would
makes the largest proportion of the entire customer market in almost all the nations. These
groups places a high importance in terms of pricing factors. The organization emphasis on
affordability and accessibility of their commodities in the world that leads them to a high brand
awareness and high sales growth and offers a solid competitive edge. Unilever commonly
provides with coupons and discounts to reach its sales target and handle the competitive pressure
by its rivals. The outcome of offering discount and coupons is to elevate the organization's
popularity and motivating consumption.
Differentiation: Unilever uses differentiation as their generic strategy for its competitive
edge. The major emphasis is on the characteristics which makes the products or services of the
organization stand out of the crowd. The product such as Dove Cream Bar of Unilever for
fulfilling the requirements of the consumer for soap which is not harsh or drying. Despite of its
high pricing, Unilever's products are competitive as they stand out of the crowd in terms of soap
which concentrate more on cleaning than moisturizing.
Cost focus: Cost focus refers to the firms which seek to develop a lower cost advantage
in only in a small market segmentation (Mathews, 2018). There commodities would be basic and
similar to the average market leading commodities and this would be acceptable to a sufficient
number of consumers to effort to make profit. Unilever has adopted this strategy by serving the
needs of a niche market segment at the lowest price.
Differentiation focus: The organization would look to product differentiation and only to
a smaller market segmentation. The firm would try to appeal to the wants and needs of this

entity. This strategy would be emphasizing over the size, taste and design of the commodities
which could matches with the needs of the consumers.
Bowman's strategy clock
Bowman's strategy clock was developed by Cliff Bowman and David Faulker. The key
emphasis of the model is to make the organization aware of its position in the market as
compared to its rivals. This assists the firms in evaluate its position in the market. In context to
Unilever, Bowman's strategic clock is mentioned below:
Low price and low added value: This strategy is revolve around quantity selling where
the commodities are low in value and the price point is lowest as possible. For Unilever, this
strategy would makes the least competitive as the customer would be perceiving a little value.
Low price: The low price strategy means that the commodities are the lowest cost option
in their marketplace. Unilever could leverage this strategy as they are manufacturing products in
large quantity as well as cost effective.
Hybrid: In this strategy, the customer perceive added value by the collaboration of
competitive low pricing and product differentiation. Unilever could utilize this strategy as this
would assuring that price is competitive with low perceived price from the purchasers while
marketing and promoting added value aspect of the commodities (Sutjipto, Sule and Kaltum,
2019). This would balance among cost and differentiation attempting to elevate while
maintaining a good margin.
Differentiation: The differentiation strategy is equated with a high perceived value
resulting in high brand equity which would allow Unilever to accomplish in highly competitive
markets.
Focused differentiation: This strategy is applicable to that organization which
concentrate on the luxury and exclusive product which are high on quality and they are sold at
high rates.
Risky high margins: A risky high margin strategy used by that organization which set
high prices without providing much value in return and rely on brand equity for driving the sales.
Monopoly pricing: In monopoly market, a single organization would be controlling the
pricing and product so that all other factors such as value, rivals, price point would play a less of
a factor.

Loss of market share: It is considered to be the worst position and suggested the
organization to exit the industry. Unilever could use this strategy for move into the newer
markets.
Business plan
Executive summary: Unilever is a British organization which has headquarter in UK
specialized in offering products such as supplements, cleaning agents, condiments and many
more. They own more than 400 brands with having a turnover of 51 billion euros in year 2020.
Mission: The mission statement is to add vitality to life. They meed the daily needs for
nutrition, hygiene and personal care with the brands which assists that people feel good, look
good and get more out of life.
Vision: The vision statement of Unilever is to make a sustainable living common place.
They believe that this is the best long term manner for their organization to grow.
Strategic objective:
 To emphasis in increasing the sales of the organization by introducing a new product. To diverse a unique and new line of product.
Tactics: The organization could use marketing and promoting for the new product so that
individual could get aware of that. The firm could leverage social media as it is a powerful
marketing tool to interact with large number of people at same time (Blackwell, 2017). In order
to diversify the new line of product, they could invest in research and developing for getting
innovative ideas for the new product.
Monitoring and controlling: It is vital for an organization to monitor the progress
towards the business plan. Unilever could use routine progress reports for monitoring a certain
component of execution of the business. These reports would be responsible for the execution of
the strategy. Controlling the execution is the assigning a clear and concise responsibility and
have direct sight line to the accountability. With a clear sight lines on the responsibilities, the
organization would be able to identify which indicators are at risk so that it could be rectified
immediately.
CONCLUSION
From the above discussion, it can be concluded that business strategy is considered as a
blueprint for distinct aspect of running of an organisation which is initiated from recruiting to
organisational structure. In this report, it includes frameworks for analysing the impact of the

macro environment using PESTLE analysis. It also include SWOT analysis and VRIO
framework for analysing the internal environment and capabilities of the firm. Moreover, for
evaluating the competitive forces, Porter's five forces model is included and at last, range of
theories such as Porter's generic strategies and Bowman's strategy clock with a business plan for
strategic planning is mentioned.

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