Analyzing Unilever's Business Strategy Using Porter's Framework

This case study examines Unilever's business strategies through the lens of Porter's Generic Competitive Strategies framework, focusing on cost leadership, differentiation, and focus strategies. It evaluates how Unilever applies these strategies to gain a competitive advantage in the consumer goods industry, highlighting the importance of strategic leadership in streamlining processes, promoting innovation, and fostering a productive environment. The study critically assesses the advantages and limitations of Porter's framework, offering recommendations to overcome these limitations, such as adopting the latest technologies, conducting systematic market research, and leveraging social media for broader customer engagement. Furthermore, it explores Unilever's organizational strategy at the corporate, business unit, and functional levels, as well as the company's corporate social responsibility (CSR) policies and their impact on maintaining a strong brand image and fostering relationships with stakeholders. This analysis provides valuable insights into how businesses can strategically position themselves in competitive markets while addressing the evolving needs and preferences of consumers.

Case study for Unilever
company

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Q1. Application of Porter’s Generic Competitive Strategies Framework for determining
business strategy of the company to evaluate competitive advantage.........................................1
Q2. Critical evaluation of Porter’s Generic Competitive Strategies framework through
identification of advantages and limitations as well as development of three recommendations
about ways to overcome limitation..............................................................................................4
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
The term strategy refers to general plan of action that is designed by business managers for
attaining long term or overall objectives within situations of uncertainty. Strategic management
process is sequence of steps through which managers devise choice of tactics for establishment
enabling better performance (Bel, 2018). Effective strategic leaders undertake actions, for
example, strategic planning, management, using available resources optimally and hence forth to
ensure organisational specifies addition to attain its goals. Central role of competitive advantage
is to distinguish an establishment from its rivals. With this, a company becomes more durable,
set sense of direction, enhance operational efficiency and improve market share. Unilever is an
international brand that operates with vision statement of making sustainable living
commonplace. In the year 2021, Unilever earned net income of € 6.621 billion, operating income
of € 8.702 billion and revenue of € 52.444 billion (Annual Report and Accounts 2021
Highlights, 2021). As of 2022, the company workers with approximate of 149000 employees
across the globe. Key strategic choices of Unilever includes accelerating development of
portfolio into high growth spaces, win with brands as force of good, accelerate growth in key
growth markets, lead in channels of future along with build a future fit establishment (Unilever,
2022).
The case study covers application of Porter’s Generic Competitive Strategies framework for
determining organisation strategy of business to evaluate competitive advantages. It also
highlights benefits and limitation of the framework.
MAIN BODY
Q1. Application of Porter’s Generic Competitive Strategies Framework for determining business
strategy of the company to evaluate competitive advantage
Competitive strategies are delineated to set of policies which are used in a company for
gaining competitive benefits in the market (Cavaleri and Shabana, 2018). In a company,
competitive strategies guide in identifying addition to executing actions or practices which
permit improvisation of organisational competitive position. Strategic leaders of company have
major effect on culture of company and are considered as source of sustained competitive
advantage (Zapletalová, 2022). In case with Unilever, strategic leadership plays role of
streamlining processes, promoting innovation, boosting strategic productivity as well as
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cultivating an environment which motivate people for pushing forward own ideas and being
productive to attain sustainable competitive edge.
Within the company, effective leadership is required for visualising, leading as well as
making best of resources for executing strategies successfully (Kaliappen and Hilman, 2017).
Strategic decisions of Unilever are characterised as major resource propositions for the
establishment, long term decisions, considered where future planning is associated and complex
in nature. Organisational strategy is long term plan which allocates the way in which an
establishment plans for using resources for supporting practices or operations (Stoian and
Gilman, 2017). Three levels of organisational strategy in case with Unilever are as discussed:
Figure 1: Three levels of organisational strategy. 2022
(Source: Three levels of organisational strategy. 2022)
 Corporate level: This level of strategy describes organisational overall directions for
product lines and businesses (Nayak, Bhattacharyya and Krishnamoorthy, 2022). Within
Unilever, top management level formulates corporate strategy.
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 Business unit level: It states basis on which an enterprise will compete (Schaltegger and
Wagner, 2017). In Unilever, senior managers of unit formulate business unit level
strategy. It entails all actions together with approaches to compete against rivals as well
as addresses ample number of strategic issues.
 Functional level: It is divisional or departmental strategy that is designed for each and
every function of company (Van Duren, Martin and Westgren, 2019). In Unilever,
functional level strategies are formulated for attaining certain objectives of specific
business unit with the help of maximising resource productivity.
Porter’s Generic Competitive Strategies Framework emphasis on choice of narrow
competitive scope in a market (Geurin and Burch, 2017). For Unilever, it is a useful tool which
assist management, profitability addition to growth of company for creating sustainable
competitive edge. Generic competitive strategies stated by Michael Porter in case with Unilever
are as follows:
Figure 2: Porter's Generic Strategies. 2021
(Source: Porter's Generic Strategies. 2021)
From the above image, it has been analysed that Porter’s Generic Strategies states the ways
in which an organisation pursues competitive advantage across their selected market scope
(Johnson and Et. Al., 2017). In case with Unilever, generic strategies of emphasis rests on
selection of narrow competitive scope in the consumer goods industry. Managers of the
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enterprises uses Porters’ Generic Strategic model for determining direction or strategy. The
strategies of Porter’s Generic Competitive Framework in context to Unilever are as applied:
Cost leadership: A strategy used by establishment to gains market advantage through
controlling cost is cost leadership strategy (Janes and Sutton, 2017). Low cost and best value are
elements of cost leadership strategy. If managers of Unilever apply cost leadership strategy, they
can increase profits by declining costs while maintaining industry average prices. With this
strategy, Unilever can gain competitive edge by focusing on costs of products and speed of
delivery.
Differentiation: The strategy used by enterprises for finding something related to offering
which is special or distinct from other companies in the industry is differentiation strategy. With
differentiation strategy, Unilever can develop new specialised offerings or rebrand itself for
offering under existing brand. Furthermore, the company can become attentive as well as
responsive to wants of customers, encourage them for pay prices that might be higher than
business revivals (Johnson, Whittington, Regnér, Angwin and Scholes, 2020).
Focus: The strategy which provides option to company for using either differentiation or
cost strategy in a niche market is termed to focus strategy (Shao, 2019). If managers of Unilever
opt focus strategy, they can develop, market addition to sell offerings to niche market. It can help
in improving pricing structure for the venture, limit competition, build string relationship within
target market and bring expertise in products.
For evaluation of evaluate competitive advantage, differentiation strategy is opted by
Unilever with focus on emphasis on features which make organisational offering strand out
against rivals. With this strategy, Unilever has achieved distinct competitive benefit over its
nearest rivals due to flexible pricing together with expertise in promotions, distribution channels,
etc which manage to reach cornet and nook of the globe (Young, 2022). With this strategy,
managers of business attract target market to specially designed commodities.
Q2. Critical evaluation of Porter’s Generic Competitive Strategies framework through
identification of advantages and limitations as well as development of three
recommendations about ways to overcome limitation
Porter’s Generic Competitive Strategies framework includes three strategic options that are
undertaken by organisation with the objective of gaining competitive advantages (Volberda,
Morgan, Reinmoeller, Hitt, Ireland and Hoskisson, 2011). It is important for any organisation to
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evaluate all strategies on the bases of its effectiveness than implement it in business to run
business operations in efficient manner. Advantages and limitations of Porter’s Generic
Competitive Strategies framework are explained below:
Strategy Advantages Disadvantages
Cost leadership strategy:
Cost leadership strategy is
business level strategy that
enable business to gain
competitive advantages
through being low-cost
producer in market.
 Cost leadership strategy
is beneficial for gaining
higher profitability and
attaining higher market
share through provide
products and services at
lower prices.
 It reduces competition
level because other
competitors cannot
survive at this pricing
policy for longer period
of time (Grant, 2021).
 It is quite risky strategy
because business need
to identify innovative
ways for reducing
prices of products and
services.
 In this strategy, it
difficult to maintain
perceptions of quality
as well as it depends on
producing higher
volume of products to
reduce cost
(Greckhamer, and Gur,
2021).
Differentiation strategy:
Differentiation strategy is
related to provides
something unique and
innovative to customer over
other competitors that helps
to gain higher market share
and customer base
(Grayson, 2017).
 This strategy is related
to providing unique
feature and quality
products that attract
customers and improve
overall profit margin of
business.
 It reduces competition
on the bases of price in
market and enhances
loyalty of customers
because it enables
 In the process of
bringing innovativeness
in products overall cost
of business is enhance
that impact on
profitability as well.
 In this strategy it is not
guaranteed that
revenues are enhanced
on regular bases.
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business to provide
quality products to
customers (Kirchoff,
and Falasca, 2022).
Focus strategy: Focus
strategy is related to
concentrating on marketing
and selling products and
services in specific niche
market (Laszlo, 2017). After
analysing niche market,
business adopts cost-
leadership focus strategy or
differentiation focus
strategy in order to gain
competitive advantages.
 Focus strategy helps in
maintaining strong
relationship with each
segment of market.
 Implementation of focus
strategy enables to
identify future
customers with
specificity as well as
provide them quality
customer services that
retain customers with
business for longer
period of time (Nedopil,
Steger and Amann,
2017).
 In focus strategy, initial
demand of products,
services and future
growth is limited that
impacts sustainability
of business in
competitive business
environment (Ali and
Anwar, 2021).
 Focus strategy
concentrates on too
specific market so other
segment of market
could be neglected that
impacts overall
performance and
efficiency.
Recommendations to overcome the limitations
As business strategies possess various limitations that impacted their effectiveness (Yadav,
and Veettil, 2021). It is important for business to analyse these limitations and implement
effective solutions with the objective of overcoming these limitations that help business to gain
competitive advantages (Pidun, 2019). Some recommendation is explained below:
 It is recommended to Unilever to adopt latest technologies in production that enables it to
reduce per unit cost without compromising quality of products and services.
Implementation of latest technologies helps business to attain higher market share and
customer base (Turkerand 2018).
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 It is recommended to organisation to concentrates conducting systematic market research
that enable business to gain information and data of specific segment and provide them
products accordingly. Market research helps business to analyse customers need,
demands and preferences as well as current market trends that enables it to being
appropriate innovations in existing products accordingly (Strickland, 2021). It helps
business to gain competitive advantages over other competitors.
 In order to overcome the limitations of focus strategy Unilever need to social media
advertisement to reach wider customer base and influence them to purchase
organisational products and services. Effective marketing strategy helps business to
spread awareness regarding their new or innovative product in market and attract
customers towards these products (Tavakoli, Schlagwein, and Schoder, 2017). It
enhances overall sales and profitability of organisation and lead towards growth and
development.
Level of organisation strategy:
There are three level of organisational strategies such as corporate level strategy, business
level strategy and functional level strategy. In Unilever corporate level strategy is developed by
top managers that are related to gaining competitive advantages through entering multiple
industries or markets. In business level strategy, Unilever create value for defined activities in
specific market (Sar, 2018). Business defined all competitors, rivalry interaction, structure and
position of organisation in specific market. In functional strategy, business develops strategy for
its functional operations such as marketing, finance, operations and other to gain competitive
advantages over other competitors.
CSR policies of Unilever
Corporate social responsibility in Unilever is related to maintaining broad range of
interaction with society. Respective organisation responsibly managing multiplicity of
relationship with customers, shareholders, suppliers, local communities and other society (Sheth,
Uslay, and Sisodia, 2020). It invests in environmentally conscious businesses, improve labour
policies, purchase fair trade products and manage waste to reduce carbon footprints. All these
CSR activities maintains organisational strong image in exiting market place.
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CONCLUSION
As per above report, it can be concluded that in current business environment businesses
faces higher competition that impacts their overall performance and efficiency. It is important for
business to analyse different internal as well as external factors that can impact business
performance. After analysing these factors business to need to adopt effective strategy and
develop planning that will provide competitive advantage to organisation for longer period of
time. Organisation need to evaluates different business strategies on the bases of their advantages
and disadvantages than adopt effective strategy to lead business towards growth and
development. Porter's generic strategy is the framework or model that is sued by organisation to
gain competitive advantages over other competitors. There are three strategies are included in
model such as lost leadership, differentiation and focus strategy. In cost leadership strategy,
organisation tries to reduce cost of its products and services through adopting latest technologies
and systematic process that enables business to provide low cost products. In differentiation
strategy, business implement various innovations and add additional aspects in products in order
to attract larger number of customers. On the other hand, in focus strategy, business concentrates
on providing its products and services to specific market segment.
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