Analyzing Macro and Internal Environment of Unilever Plc

This assignment analyzes the macro and internal environment of Unilever Plc using PESTLE and SWOT analysis. It also evaluates the competitive forces by Porter's five force model and applies different theories, models, and concepts to create a strategic management plan.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK...............................................................................................................................................4
P1. Analyzing the influence and impact of macro environment.................................................4
M1. Critically analyze the macro environment...........................................................................5
P2. Examine the internal environment and capabilities of ASDA organization.........................5
M2. Critically evaluate the internal environment of business.....................................................8
P3. Evaluating the competitive forces by Porter's five force model...........................................9
M3. Devise relevant strategies to enhance competitive edge and market position...................10
P4. Applying different theories, models and concepts..............................................................11
M4. Create a strategic management plan that has tactical and tangible strategic objectives and
priorities....................................................................................................................................12
D1. Critique and interpret data and information applying competitive and environmental
analysis to create a set of valid strategic objectives directions and strategic and actions.........13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
Books and journals:...................................................................................................................15
Online:.......................................................................................................................................16

INTRODUCTION
Business strategy is very significant for any organization seeking to expand its business
in a strategic way. Business strategy is meant by a set of competitive actions and moves that an
organization uses to compete successfully, attract consumers, strengthening performance,
attaining business goals. It enables how an organization should be carried out to accomplish its
long term objectives. It is the backbone of any organization. Nowadays, it is very important to
develop an effective and result oriented strategies for the business. This assignment is based on
the Unilever Plc i.e. multinational consumer goods organization in British Administration. The
headquarter of company is in London, England (Amini, Bienstock and Narcum, 2018). It offers
broad range of products include wellbeing vitamins, condiments, food, minerals and
supplements, ice cream, coffee, breakfast cereal, tea, pet food, cleaning agents, air and water
purifiers, beauty products, toothpaste as well as personal care. This company is very famous for
producing soap in the entire world. It has allocated their operations of business in more than 190
countries. Additionally, it owns over 400 brands, with a turnover of 51 billion Euros in 2020. The
assignment will discuss various theories and models in order to analyze internal and external
environment of business organization. The competitive environment of a company is analyzed
through porter's five force model. There are many types of strategic decisions are available for
the company. A plan for strategic management is also produced with goals strategies and tactics.
TASK
P1. Analyzing the influence and impact of macro environment.
Pestle analysis is a proven framework that examines the company on its business
strategies. There are several factors involved in the analysis such as political, environment,
economic, social, technological and legal. In context of Unilever, this framework is significant
for the company as it assists to understand the market dynamics and enhance its business
continuously. The Pestle analysis of the Unilever is mentioned underneath: Political factors: The chosen company has a broad product portfolio majorly working in
the three divisions such as food and refreshment, beauty and personal care, home care, air
and water purifier. The company created their most revenues from the fast moving
consumer goods. That is why, Unilever requires to abide by the rules and regulations set
by the food and drug administration (Bhattacharyya and Verma, 2019). Moreover, in
foreign countries, where they allocated their business, requires to abide by the local laws.
The political factors in UK are stable which offers Unilever a great opportunity to grow. Economic factors: The more booming economy offers more revenues and profits for the
business. There is an increase chance for growth and development in developing nations
such as China and India. Also, there are some kind of risks involved with this. Whereas,
developed nations delivers an ease to carrying out the activities. Employment is also a
vital factor in deciding the prospects of company in a nation. If the country has huge
amount of unemployed people then it can support in costs reduction. While, it can also
mean that there will be less amount of customers to buy the products.

 Social factors: With so many other companies in the market, the selected company has
decided to concentrate on creating a strong reputation. They emphasize issues associated
to environmental and social factors. While considering many products of the firm that
focuses on the well-being and personal care, the Unilever shows a strong desire to
support people look and feel good while also living the life they deserve. For instance,
marketing for Dove is also focusing on supporting women. Technological: The company consistently creating new goods and services and selling
them online in their brand locations. It focuses on digital marketing and selling methods.
Also, it has higher level of automation, in comparison with its rivalries. It is necessary for
the company to keep a pace with the technology with an intent to sustain in the
marketplace or stay ahead among competitors. Essentially, sufficient amount of resources
should be put into research and development sections (Boryshkevych, 2019). Legal factors: As the respected firm has allocated their business in varieties of locations,
it is necessary to take care of several laws and regulations. The company also requires to
safeguard its patents. Fraudulent organizations often make use of other organization's
patents as their selling points as well as it creates confusion in the minds of customers.
 Environmental factors: The chosen organization promotes renewable and sustainable
resources in their process. The products are designed to be safe for customers wherever
they distribute. From packaging to design, all materials they used are eco-friendly.
Therefore, they are focusing on creating an eco-friendly organization and have worked
for nearly past 10 years to do so.
M1. Critically analyze the macro environment.
It is critically analyzed that pestle analysis is a significant tool to examine the different
factors available in macro environment of business. These factors are political, social,
technological, environmental, economical and legal. This facilitate an insight about the role of
external macro environment within the context of Unilever. By analyzing these factors, a
company can know its strong and weak areas (Bradley, Hirt and Smit, 2018). It is found that
factors such as political, social, economical, environmental and technological, these all are
supporting the opportunities for business. Furthermore, the respective company will gain its
benefits from these factors.
P2. Examine the internal environment and capabilities of ASDA organization.
SWOT analysis of Unilever-
A Swot analysis is a framework that outlines business strengths that ensure long term
success for the business. This framework helps an organization to know its strengths and
weaknesses (internal factors) and threats and opportunities (external factors). As the business
already achieves a strong position in the market to oppose its threats in the external business
environment. The following is the SWOT analysis of the Unilever Company which shows a
significant growth and expansion opportunities:
Strengths of Unilever-

 Top of the mind brand recall among customers: Over the decades, the organization has
been able to place the brand name as one of the tops in the mind of customers which is
strong point for the company as Unilever become the first choice for consumers. Global footprint with operations over 190 nations: The brand enjoys its significant
growth and expansion in more than 190 countries. It is beneficiary to enhance the brand
image at international level (Chege and Wang, 2020). Deep brand portfolio with diversified range of goods: The chosen organization has
something for each individual. This type of product portfolio has been a strength for the
business where they try to guarantee that a consumer should not go back with empty
hands. Flexible pricing: As the company has a huge product portfolio, it enables them to play on
their pricing strategies as per their willingness to pay of buyers. This guarantees that the
company are never on market share losing side. Effective advertising and marketing: Unilever completely understand the requirement of
right and effective marketing and advertising for the right people. This is a strong point
for the company to come up with right ways of promoting goods in the target market. Strong workforce: The company has a significant strength of more than 1,70,000
employees from parts of the world. It believes in diversified work culture in the
workplace.
Weaknesses of Unilever- Huge dependence on retailers: There is a disadvantage in having a direct impact on
customers as they are directly affected by the retailers' behaviour in the retail industry. Limited business diversification: It is a drawback that Unilever is weak in business
diversification outside the consumer products industry. Imitable products: All the consumer goods are easily imitable in the market like any
other reputed brand, the chosen organization has similar issues in dealing with such kind
of issues. Availability of alternatives and low switching costs: For the final consumer, there is
almost zero costs of switching to consume other available alternative products. And
consumers can easily avail the products and services which makes this point as one the
weaknesses of the Unilever.
Opportunities of Unilever- Growing demand for health-conscious products: More and more consumers are
becoming health conscious and move towards the healthy goods which are creating
opportunities for the Unilever. Millennial generation and their lifestyle needs: Now a days, millennial generation is
becoming a significant part of the marketplace of Unilever and by noticing and fulfilling

their wants and preferences they can achieve a rapid growth and higher revenues for the
business. Growing economies demand more: The advent of developing economies is increasing
the living standards of consumer all over which is a huge opportunity for the business to
put right goods in right places (Zucchella and Previtali, 2019). Put social-media to use for advertising: A big population is influenced by many social
media platforms and the chosen firm can divert from TV commercials to social-media.
This can be also cost effective for the company (Dawson, Ginesti and Sciascia, 2020).
Threats of Unilever- Competitors are no less: There are many competitors in the market who creates
difficulties for the brand such as P&G or Nestle. They are also focus on continuous
launch of new products and services with competitive pricing. Increasing popularity of private label brands: In the market, there are lots of retail stores
who are coming up with their own private label organizations and since the chosen firm is
highly dependent on the retailers, this can be a huge threat for the brand. Growing popularity of Ayurveda products: There is a rapid growth of consuming the
Ayurveda products in the market. This is a great threat for the commercial organizations.
VRIO analysis of Unilever-
The VRIO analysis will focus on each internal resources of the company in order to know
whether these resources are facilitate a sustainable competitive benefits or not. It also discusses
at each stage whether such resources could be enhanced to facilitate a big competitive advantage.
Lastly, the resources examined are summarized as to whether they provide sustainable
competitive benefits, has temporary competitive benefit, unused competitive benefit, competitive
parity or disadvantage (VRIO Analysis of Unilever, 2018).
Valuable:
 The company have highly valuable financial resources in order to invest into external
opportunities that occurs.
 The local food products are also valuable to the company as they delivered highly
differentiated products. Due to differentiation, the products are also valued by the
consumers in the market.
 Employees are also valuable to the company. Unilever highly focused on their workforce
training which leads higher productivity for the business. Patents are also valuable to the Unilever as these allows the to sell their goods and
services without the interference of competition.
Rare:

 Employees of the company are rare as they are highly skilled and trained which is quite
different from other organizations (de Vasconcelos Gomes and et.al.,2018).
 The local food products of the Unilever are not rare as consumers avail these products
very easily in the market by other companies. That means, the local food products result
in competitive parity.
 Patents are the rare resource for the company. These cannot be possessed by its
competitors and are not easily available. Financial resources of the company are rare as strong financial resources are only carried
by few competitions in the market.
Imitable:
 The financial resources are costly to imitate.
 The local food products are not that expensive to imitate. This can be acquired by other
firms as well if they make a reasonable investment in R&D. It will also not necessitate
years long experience.
 Patents are not easy to imitate as it is not allowed in legal terms to imitate a patented
good or service. Employees are not costly to imitate because other companies also train their workforce to
enhance their knowledge and skills. Other companies can also provide same benefits,
work environment, compensation packages, growth opportunities and many more.
Organization:
 The financial resources of the chosen organization are organized as these are used
strategically to make an optimum use of opportunities, invest in right places and
combating threats.
 Patents of the company are not well-organized i.e. the company is not using their patents
with its potential.
 Employees are well-organized in the company (Dokukina and Petrovskaya, 2020).
M2. Critically evaluate the internal environment of business.
From the above section, it is examined that company's strengths are more than its
weaknesses. It is very beneficial for the company to be focused on its strong areas that can create
new opportunities for the expansion. Additionally, the weaknesses of the organization is common
to other companies in the retail market. It is also observed that Unilever is doing very good at
online platforms to deliver its messages and attract more customers. Such strong areas may be
tailored to acquire growth and expansion opportunities. Overall, the company is well-established
in the global market.

P3. Evaluating the competitive forces by Porter's five force model.
Unilever is one of the well-established company who competes in the global market of
consumer goods. Porter's five force model helps to understand the need to tactically prioritize
bargaining power of consumers and competition (Farhoomand and et.al., 2021). This is one of
the most powerful management tool that helps to acknowledge the impacts of external factors in
the business environment. In this analysis, competitive rivalry is viewed as one of the most
impactful external forces along with the bargaining power of customers. It is essential that
Unilever must ensure its long-term success by weighing all the external forces.
Implementation of Porter's Five Forces model-
 Competitive rivalry: Unilever is a multinational company which is famous in all over the
world. That is why, the competition of rivalry is very strong and high. Competitions are
not only the small retailers but also big giants in the industry such as Nestle, Kraft and
P&G. These are such competitions which confuses the consumer by launching the
equally best performer and attractive products in the industry. Low or zero switching
costs allow buyers to switch to other companies very easily. Threat of substitutes: It is all about the research of consumers' nature is that they want to
try alternative and new products at least once in their life span. They will surely go for
the alternatives that is available in the market in order to convert their mind from
Unilever. By considering the price, products and quality of the goods, a consumer can
easily shift to another brand. But the consumers who are addicted to use the Unilever
products will also think about the reputation and brand name in the industry. Therefore,
the threat of substitutes of Unilever is high (Foss and Saebi, 2018). Threat of new entrants: As the Unilever spread its business throughout the world, the
threat of new entrants will be very low for the company. These things majorly depends on
the society, place and with several range of people, it will vary. In the countries and states
which are commonly go for the working on brand reputation and name will never go for
the new entrants. Hence, the threat of the new entrants is low as consumers will rarely go
for the new brand. Bargaining power of suppliers: It is quite common that all the organizations in consumer
food products and personal products purchase their raw materials from countless number

of suppliers. Suppliers are very dominating in the market as they can reduce the profit
margin of the Unilever. Powerful suppliers use their negotiating power to get higher
prices from the companies. The overall impact of suppliers' bargaining power is that it
can reduce the profitability of the company (Kreiser and et.al., 2021).
 Bargaining power of buyers: Customers are often demanding a lot in the market. They
are always looking for the offers in which they will get maximum benefits by paying the
minimum amount as possible. This delivers high pressure on the chosen company as it
affects the long-term profitability. Therefore, the smaller but powerful customer base is
higher the bargaining power of buyers and also higher the ability to seek raising offers
and discounts.
M3. Devise relevant strategies to enhance competitive edge and market position.
It is important to understand the growth and success of the company. The Ansoff matrix
or product grid is a proven framework that allows sustainable sourcing to find the growth and
development opportunities by leveraging both external opportunities as well as internal strengths.
In context of Unilever, the Ansoff matrix allows four generic strategies for growth: Market Penetration: This is a strategy used by the Unilever in order to increase its
market share in the current market (Martínez and et.al., 2019). It contains sales driven
approach in the existing business environment. This can be done through reaching
directly to consumers, boosting sales touch points, enhancing the dealer network,
boosting the basket share of consumer total spending, boosting the consumer life time
value and many more. Product development: In this strategy, the company focuses on the product development
which is linked with the creativity or innovation in the products. The main focus on the
development of product means either the company improves its current offerings or
launch something new to the market. In context of Unilever, they knows the significance
of enhancing the product line while keep on launching the new goods for attracting a
different customer base of the organization. Market development: This is a strategy through which an organization enters into new
market to expand its operations and business. In context of Unilever, the company never
aimed to stay at the domestic market but it always implemented the market development
strategy in order keep their business growing. Hence, the company has its presence in
more than 150 nations throughout the world which louds its volume of the success.
 Diversification: The firm has been adapting the diversification strategy through
unrelated and related means of diversification. The ownership and acquisition of several
subsidiaries are done to have unrelated diversification by the firm. Tatcha LLC, Seventh
Generation and Dermalogica are some of the unrelated diversification. In related
diversification, the nonstop growth in the product line is done from the perspective of
related diversification.

P4. Applying different theories, models and concepts.
It is important for the Unilever to formulate strategies with the support of various
theories, concepts and models such as Porter's generic strategies, Bowman's strategies and many
more (Sandoval, 2020). These are explained underneath:
Porter's generic strategies-
This includes mainly four strategies which can be chosen by the company as per their
needs-
 Cost leadership: It suggests the company to reduce the costs of their products in order to
improve their current customer base. Differentiation: It suggests the company to create differentiate goods and services from
other brands in the market so that they can competitive benefits. Cost focus: The company focuses on the certain things in order to reduce the costs while
achieving consumers' loyalty (Santos, Murmura and Bravi, 2018). Differentiation focus: In this strategy, company focuses on the missing feature in their
products and services which results in switching brand by the consumer.
Bowman's Strategies:

 Low price and low value added: This strategy focuses on the reduction of costs. But it
will also reduce the quality in products. Low price: This strategy makes company to reduce the costs of goods by boosting the
productions (Streimikis, Miao and Balezentis, 2021). Hybrid: This can be an effective strategy as company adds value to the products and
services. It includes both low price with high value to be delivered with the products. Differentiation: In such strategy, the company mainly focuses on the product
differentiation rather than price factor. Focused differentiation: This strategy is best suitable for the high-end brands as they
consider differentiation on the top and do not worry about the costs. Risky high margins: It is the most riskiest strategy where company puts high prices on
the products. Monopoly pricing: This one fits for those companies which are try to create monopoly in
the business.
 Loss of market shares: In order to attract a lot of customers, the company are losing its
market shares. In order to stay relevant, they use standard prices.
M4. Create a strategic management plan that has tactical and tangible strategic objectives and
priorities.
Strategic management plan- Vision: The vision is to create a sustainability in the business. Mission: To provide the basis needs for hygiene, nutrition and personal care with brands. Objectives: To improve the well-being and health of consumers. Strategies: Market development strategy is best suited for the company to expand its
market (Todorov and Akbar, 2018). It is very easy for the Unilever to target consumers.

 Tactics: It can be understood by the efforts to achieve goals of company. For such, the
company outlines 4Ps' of marketing mix for the market development.
Product Place Price Promotion
Personal care, foods,
beauty products, home
care.
Stores, retailers,
kiosks.
Personal selling,
advertising, direct
marketing, public
relations, sales
promotion
Premium price
strategy, product
bundle pricing
strategy, market
oriented pricing
strategy. Implementation: It is beneficial for the company to implement plan for which they are
require to allocate the business resources (Valenti and Horner, 2020). Unilever can
allocate their funds with the support of marketing budget produced by financial
department of the company. While to control and evaluate the business performance, KPI
is useful to measure and improve the business performance.
 Evaluation: It determines the collection of information while following up the strategic
management plan (Waspodo, Ratnawati and Halifi, 2018). It mainly focuses on the issues
that affects the business performance. While expanding the market the chosen firm will
examine and compare the actual and desired performance of marketing department.
D1. Critique and interpret data and information applying competitive and environmental analysis
to create a set of valid strategic objectives directions and strategic and actions.
With an intent to develop a strategic management plan, a company can use a range of
information and data through environmental and competitive analysis (Yousefzadeh and et.al.,
2020). Nevertheless, the macro environmental analysis is done through pestle framework where
in order to get the knowledge about competitive analysis Porter's five forces model seems to be
very beneficial. Also, the company needs to consider all the facts in order to work in the most
effective manner.
CONCLUSION
It is concluded that business strategy is a most significant tool that supports company to
achieve its final goals. With an addition to Unilever, it is observed that the success of the
business depends on the business strategy. For that cause, it is necessary for the brand to analyze

its internal and external business environment with SWOT and PESTLE analysis respectively.
VRIO is also helpful to know the internal capabilities of the company. This assignment also
covered a range of concepts and models such as Porter five forces to know the competitive
position in the market, Porter's generic strategy to create a strategic management plan and many
more.

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Online:
VRIO Analysis of Unilever, 2018. [Online] Available Through <https://www.case48.com/vrio-
analysis/13891-Unilever>