Unilever's PESTEL Analysis: Environmental Factors and Challenges

This report provides a comprehensive analysis of Unilever's business environment using the PESTEL framework, examining the political, economic, social, technological, environmental, and legal factors that impact the company. It discusses both the positive and negative impacts of these factors on Unilever's operations, highlighting challenges such as political restrictions, changing consumer behaviors, competitive pressures, and technological advancements. The report further explores how Unilever is responding to these challenges through strategic initiatives, including workforce training, adapting to legal requirements, leveraging online platforms, promoting sustainable products, and continuously innovating to meet customer needs. The analysis concludes with recommendations for Unilever to enhance its competitiveness and sustainability, such as adopting advanced technologies, developing unique products, promoting sustainable practices, and conducting thorough market analyses before entering new markets; Desklib provides access to similar solved assignments and past papers for students.

Business in Context

Table of Contents
Introduction .....................................................................................................................................1
Main Body.......................................................................................................................................1
Discuss the positive and negative impact of the PESTEL environmental factors.................1
Assess the key challenges faced by the chosen organisation.................................................4
Discuss how organisation is responding to such challenges in context to its business strategy. 4
Recommendation....................................................................................................................5
Conclusion.......................................................................................................................................5
References .......................................................................................................................................7

Introduction
Business environment is defined as the sum total of all the factors present inside and
outside the business environment and directly impacting on the operations and functioning of the
business. There are number of internal and external factors present in the business environment,
in order to enhance their performance it becomes essential for the business organisation to
analyse these factors (Zahari and Romli, 2019). For this report Unilever is taken as the base
company. Unilever is one of the well established consumer goods company headquartered in
London, England. Unilever was founded in 1929 having more than 400 brands and biggest
producer of soap around the globe. This report highlights the detailed analysis of the business
environment using the pestel analysis along with its positive and negative impacts which will
lead to influencing the organisational strategies. Also the main challenges faced by the company
are also mentioned in this report. In addition to this, how company is responding to these
challenges in context to the business strategy along with the proper recommendation are also
highlighted in this report.
Main Body
Discuss the positive and negative impact of the PESTEL environmental factors
Business environment includes the sum of all the internal and external factors that
directly creates huge impact on profitability and performance of the business (Schaltegger,
Hörisch and Freeman, 2019). In context to Unilever, in order to analyse the business
environment of the company the PESTEL analysis is taken into consideration as mentioned
below:
PESTEL analysis: It is one of the most essential strategic framework used by the marketing
manager in order to effectively analyse their business environment and various factors creating
challenges as well as opportunities for the company. In context to the Unilever, the various
factors of the analysis along with their positive and negative factors are mentioned below:
Political factors: It includes any kind of changes in the government policies and rules which will
directly influence the functioning of the company. In case of the Unilever, company is operating
in the global market and has to deal with the different political policies of different countries.
Recently the decision of Brexit has created direct impact on the company (Merkulova and
Zhavoronkova 2018). Also company is facing political restriction imposed by the European
1

Commission and the foods and Drugs administration in the US. If these are not followed by the
company effectively they can face the legal issues also.
Positive Impact: following all the political laws will allow company to smoothly carry
out their activity also the political stability will create favourable environment for the company.
Negative Impact: Restrictions related to various import and export of goods and services
can create barriers in the success of the company.
Economic factors: It includes the factors like the interest rate, inflation rate, consumers
spending power and so on which can create impact on the functioning of the business. In case of
Unilever, the company is working in well developed economy which will helps them to enhance
their profitability. Developed economy will allow the consumers to buy more products which
will automatically help them to increase their profitability. Company is operating many
developed markets around the globe which helps them to enhance their performance and gain
competitive advantage (Kuna, 2020).
Positive Impact: Working in the developed country allows company to enhance their
profitability and productivity through attracting large number of customers.
Negative Impact: Consumers of the company directly influence the supplies of the
company, if the company products are not in demand in the marketplace the profitability and
cash flow of the company will be directly influenced.
Social factors: The social factors includes the characteristics and the cultural factors of the
company which will directly influence the demand of the product and services in the
marketplace. Not satisfying the social needs of the customers leads to reducing the profitability
of the company. In case of the Unilever, operating at the global level the social factor becomes
the major factor behind the growth and success of the business, the company mainly focus on
enhancing their brand image in the marketplace and effectively considering the social needs of
the customers. In order to satisfy the needs and wants of the customers the company is producing
personal care and well being products with the main focus of helping the individual to good and
feel goods (Gibbs, 2019) .
Positive Impact: Effectively satisfying the social needs of the customers will helps the
chosen company to get positive impact of the chosen factor.
Negative Impact: Changing social needs of the customers will lead to creating negative
impact of this factor on the chosen company.
2

Technological factors: It includes the any kind of technology changes or any kind of
advancement in the technology will lead to creating impacting the operation of the business
environment. Use of well advance technology as per the requirement will help the company to
attract large number of customers and gain competitive advantage in the marketplace. In context
to the Unilever, the company is effectively moving towards the online technology and selling
their products using online platforms also enhancing their digital marketing and advertising
methods in order to attract large number of customers and directly interest with them. The
technology factor has created huge opportunities for the company in case of using top level of
automation allowing to supply goods more effectively (Ghorbani and Kazemizad, 2019).
Positive Impact: The use of well advance technology helps the company to gain
competitive advantage also use of online promotional platforms also help company to attract
large number of customers.
Negative Impact: Any kind of technology changes will lead to creating negative impact
for the chosen organisation.
Environmental factors: It includes the working towards the welfare and suitability of the
environment, each and every business has a responsibility to work towards the welfare and
sustainability of the environment. In context to the Unilever, the company is effectively working
towards the welfare and sustainability of the environment. The company is actively involved in
reducing the carbon footprints, reducing the carbon emission also working towards the reducing
deforestation and forest degradation and using sustainable products (George, 2021).
Positive Impact: Fulfilling the environmental responsibility helps the company to attract
large number of customers and gain competitive advantage in the marketplace.
Negative Impact: Not fulfilling the environmental responsibility will lead to creating
negative impact on the company's image and can lead them towards failure also.
Legal factors: It include the legal laws, regulations and legislation that is needed to be followed
by each and every organisation in order to smoothly carry out their activity. The legal laws
allows the company to effectively carry out their activities in the marketplace. In case of
Unilever, the company is effectively following all the necessary legal rules and regulation in
order smoothly carry out their activity and create strong brand image in the marketplace.
Company operates around the globe which lead them to follow the different legal laws of the
3

countries so that activities can be carried out effectively. Strict legal laws creates barriers for the
company directly influencing their functioning (Chassé and Courrent, 2018).
Positive Impact: Effectively following all the necessary legal laws will help the company
to smoothly carry out their activities.
Negative Impact: Not following the legal laws will create negative impact on the
functioning of the company.
Assess the key challenges faced by the chosen organisation
Challenges are the various obstacles faced by the business organisation while carrying
out their activities in the marketplaces. There are number of challenges present in the
environment which leads to creating barriers in the success of the business (Xie and Redding,
2018). Not handling the challenges will lead the business towards the failure also. In context to
the Unilever, the various key challenges faced by the company are highlighted below:
 One of the main challenges faced by the Unilever is strictly facing the political restriction
created by the European commission and the foods and Drugs administration in the US
 Another challenge faced by the company includes trying to make their target consumers
to change to more sustainable behaviours in order to protect the environment.
 Unilever is also facing challenges in terms of changing customers needs, taste and
preferences .
 Company is also facing relevant challenges from its large number of competitors
available in the marketplace also.
 Unilever is one of the strongest brand in the marketplace but also facing various risk
ranging from the political risks, natural disasters to changing consumers taste and
preferences effectively, these challenges are directly influencing the financial position of
the business effectively (Adatiya, 2021).
 In addition to this any kind of changes in the technology advancement or technology
changes will also create challenges for the company.
Discuss how organisation is responding to such challenges in context to its business strategy
In order to effectively overcome the challenges the chosen organisation is carefully
analysing and evaluating the challenges and implementing various necessary strategy in order to
overcome these challenges (Chen and Lin, 2021). Unilever has hired skilled and potential
workforce and essential training is given to them them so that they can handle the challenges
4

more effectively. Also they are modified their strategies and policies as per the political and legal
requirement effectively. In addition to this in order to effectively deal with the technology
changes the company started using the online methods in order to sell their products and services
and also actively using various social media platforms in order to attract large number of
customers and make them aware of the companies product and services effectively. Also in order
to effectively deal with the environmental issues the company is making their consumers aware
of the use of sustainable products. Unilever is also continuously offering unique products
specially the personal care products and well being products in order to satisfy their needs
(Eldor, 2020).
Recommendation
In order to become successful and continue to grow in the competitive environment and
also effectively overcome the various challenges certain recommendation can be taken into
consideration by the chosen organisation such as company can use well advance technology such
as use of Al technology in their operations to effectively carry out their activities. Also another
recommendation that can be considered by the company includes producing some unique and
distinctive products in order to satisfy the needs and wants of their target customers. Company
can also offer more number sustainable products in order to create sustainable environment,
various promotional tools can be used by the company in order to move their target customers
towards the use of sustainable products. This will also helps company to enhance their brand
image at the global level and gain competitive advantage also. Before entering into new market,
proper analyses of the political environment and accordingly formulating the strategies will also
help company to effectively sustain in that market for long period of time and smoothly carry out
their activity. Unilever can also regularly modify their products in order to satisfy the social
needs of their customers around the globe (Huang, 2018).
Conclusion
From the above report it has been analysed that effective analysis and evaluation of the
business environment helps the business organisation to analyse the various factors present
inside and outside the business environment and how they can create various opportunities and
threat for the business. This report helps in analysing the positive and negative impact of the
business environment using the PESTEL analysis. Also various challenges faced by the business
5

organisation in terms of political risk, economic risk or technology changes are also analysed. In
addition to this various steps considered by the chosen organisation to overcome these challenges
are also analysed in this report along with various recommendation.
6

References
Books and Journals
Adatiya, K. P., 2021. Implementation of the new market research tool for TATA Consultancy
Services (Doctoral dissertation, Instytut Organizacji Systemów Produkcyjnych).
Chassé, S. and Courrent, J. M., 2018. Linking owner–managers' personal sustainability behaviors
and corporate practices in SMEs: The moderating roles of perceived advantages and
environmental hostility. Business Ethics: A European Review, 27(2), pp.127-143.
Chen, Y. and Lin, Z., 2021. Business intelligence capabilities and firm performance: A study in
China. International Journal of Information Management, 57, p.102232.
Eldor, L., 2020. How collective engagement creates competitive advantage for organizations: A
business‐level model of shared vision, competitive intensity, and service
performance. Journal of Management Studies, 57(2), pp.177-209.
George, R., 2021. The Tourism and Hospitality Marketing Environment. In Marketing Tourism
and Hospitality (pp. 183-219). Palgrave Macmillan, Cham.
Ghorbani, D. and Kazemizad, S., 2019. An Analysis of Effective Factors on Urban
Competitiveness Based on Scenario, Case Study: Tabriz City. Geography and
Territorial Spatial Arrangement, 9(30), pp.19-38.
Gibbs, J., 2019. Business news in a Loyalist Press environment. Journalism,
p.1464884919878352.
Huang, W.Y., 2018. Influence of Transparency on Employees’ Ethical Judgments: A Case of
Russia. Journal of Business Ethics, 152(4), pp.1177-1189.
Kuna, I., 2020. Analiza potencijala za rast kuće za odmor Majesty (Doctoral dissertation, VERN
University of Applied Sciences).
Merkulova, N. V. and Zhavoronkova, N. S., 2018. THE METHODS FOR THE ANALYSIS OF
ORGANIZATION EXTERNAL ENVIRONMENT AS A MEANS OF STRATEGY
DEVELOPMENT. Modern Science, (4-1), pp.127-130.
Schaltegger, S., Hörisch, J. and Freeman, R. E., 2019. Business cases for sustainability: A
stakeholder theory perspective. Organization & Environment, 32(3), pp.191-212.
Xie, E. and Redding, K.S., 2018. State-owned enterprises in the contemporary global business
scenario: Introduction. International Journal of Public Sector Management.
Zahari, A. R. and Romli, F. I., 2019. Analysis of suborbital flight operation using
PESTLE. Journal of Atmospheric and Solar-Terrestrial Physics, 192, p.104901.
7