Unilever's Business Strategy: A Comprehensive Analysis

BUSINESS STRATEGY

Contents
INTRODUCTION............................................................................................................................. 1
TASK 01.......................................................................................................................................... 2
P1 CAPABILITIES OF UNILEVER BY APPLYING PESTLE AND SWOT FRAMEWORKS.....................2
M1 CRITICAL ANALYSIS OF MACRO ENVIRONMENT..................................................................7
TASK 2............................................................................................................................................ 9
P2 & M2 ANALYSIS OF INTERNAL ENVIRONMENT AND CAPABILITIES OF UNILEVER.................9
STRATEGIC CAPABILITY........................................................................................................ 10
VRIO MODEL........................................................................................................................ 11
STRENGTHS AND WEAKNESSES........................................................................................... 14
TASK 03........................................................................................................................................ 15
P3 & M3 COMPETITIVE MARKET ANALYSIS.............................................................................15
TASK 04........................................................................................................................................ 17
CONCLUSION............................................................................................................................... 23
REFERENCES.................................................................................................................................24
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INTRODUCTION
Business strategies are the key factor used by the organizations to gain competitive advantage
and maintain sustainable growth. With continues changing market, organizations are focusing
on improvising their marketing strategy on a periodic basis. To get a better understanding of
this segment, Unilever Corporation is chosen for this assignment.
Unilever is a transnational company with headquarter based in Rotterdam, Netherlands and
Unilever House based in London UK. It owns more than 400 brands and operates in almost 190
countries; additionally, they provide products ranging from foods, personal care, and
beverages. The company was founded by margarine Unie and Lever Brothers in 1930. Their
current CEO is Paul Polman, and they set a vision to provide a sustainable living to the people.
The company provide employment to over 161,000 people of which 47% of managers are
women. Its turnover in the year 2017 was around €53.7 billion of which 12 brands had sales
over €1 billion. Unilever focuses on sustainability and maintained zero non-hazardous waste to
landfill in 2017.
The following assignment is distributed in four parts that, which includes critical analysis of the
capabilities of Unilever by applying PESTLE and SWOT analysis. In section second, Unilever’s
internal environment and capabilities are assessed. Additionally, the competitive forces are
evaluated by applying Porter’s Five Forces. Lastly, strategic direction of Unilever us interpreted
by applying various theories, models and concepts.
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TASK 01
P1 CAPABILITIES OF UNILEVER BY APPLYING PESTLE AND SWOT
FRAMEWORKS
Every external factor on which the organizations has no or little control like legal, political,
environmental etc. are considered as the macro environment. It affects the whole economy
rather than a specific sector or organization. To get a better understanding of the external
factors that can have an impact on the Unilever, PESTLE analysis can be conducted. Since the
company operating in over 190 countries and owns over 400 brands, there are several external
factors that have the influence on the productivity and performance of the company. PESTLE
analysis of Unilever is conducted below:
Figure 1: Business Model of Unilever
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Consumer
Insight
Collabora
tion
Innovatio
n
Sourcing
Manufa
cturing
Logistics
Marketing
Sales

POLITICAL
As the company operates in several countries, therefore different laws made by each country
bound it. For instance, the company to avoid legal actions must effectively follow guidelines
provided by food and drug administration of USA and European Commission. Improving free
trade relations and political stability in several countries like India, China etc. has provided an
opportunity to the company to accelerate their business.
On the other hand, political unrest in the European Union and BREXIT has negatively affected
the growth of the company. The supply chain of the company is greatly affected by this political
decision. Since the input cost is raised the company had to increase the rates of their products
significantly, which created conflict. The manufacturing stage is also somewhat affected, as the
company now have to focus on localizing the manufacturing base (Kew, and Stredwick, 2017).
ECONOMICAL
Economic situation around the world affects the performance of the company. Several
economic factors determine the performance of the Unilever such as, increased wages in
developing country has increased the amount of disposable income, that created an
opportunity to their company to increased their sales (Cadle, et al., 2010). This same factor also
acts as a threat since many manufacturing facilities of Unilever is situated in developing nations.
Additionally, the opportunity of expanding business in the developing countries also cause
profit to the business since investing in such nations can ensure higher return rate. Moreover,
the economic stability of the developed nations ensures slow and steady growth in business.
SOCIAL
Unilever owns more than 400 brands, thus maintaining a strong reputation in the market is
essential for them. Their products focus on increasing the daily lifestyle of the consumers and
make them feel better. With the changing, market sociocultural factor creates several
opportunities for the business such as, customers around the world are becoming more health
conscious therefore products that address this factor can be offered. Additionally, the rise in
environmentalist behaviours can also be used for attracting large customer base (Cadle, et al.,
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2010). The company can use methods to minimize its energy usage. Unilever already uses
hybrid transportation system in order to minimize their carbon emission.
TECHNOLOGICAL
The increase in technological advancement creates several opportunities as well as the threat
to the company. Factors like increasing business automation provide an opportunity to the
company to ease up the supply chain process by implementing IT systems. The same factor
raises the threat to the company, since competitors, including the local retailers, can also take
advantage and affect the profitability of Unilever. Increase in the R&D investments causes a
threat to the company as it creates opportunities for the competitors to enter the personal care
industry (Cadle, et al., 2010).
ENVIRONMENTAL
The raised concern about the sustainable growth of the business has created several
opportunities for the business. Unilever can focus on implementing strategies and utilizing
technologies to minimize their carbon emission and energy usage level, in order to, control the
impact of business on the environment. Through corporate responsibility, Unilever can gain
competitive advantage (Kew, and Stredwick, 2017).
LEGAL
Unilever operates in many countries each having different laws and guidelines to follow that
creates difficulty for the business to keep up with different guidelines. Though, this also creates
opportunity, since the company can design complex environmental guidelines. Additionally, the
strong international patent law has provided great opportunity to focus on their R&D sector
and develop new products (Sadgrove, 2016).
In order to get a better understanding of the internal and external factors that have an impact
on the growth of Unilever, SWOT analysis can be conducted that will provide detailed
information about the strength, weaknesses, Opportunities and threats.
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