Global Business Environment Analysis: Unilever Strategies and Impact

This report provides a comprehensive analysis of Unilever's global business environment, examining the impact of globalization on its operations. It delves into how globalization influences Unilever's corporate governance, leadership, and organizational culture, using the McKinsey 7S model and Hofstede's cultural dimensions for evaluation. The report explores various market entry strategies, their associated barriers, and mitigation strategies. Furthermore, it offers strategic recommendations for Unilever's organizational structure and decision-making processes, aiming to optimize its global presence and performance. The report also includes an overview of the challenges faced by multinational corporations in the context of globalization, emphasizing the need for adaptability and ethical practices.

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Introduction
In the current business scenario, globalization is the major trend, which is having both
positive as well as negative impact on the business entities. One of the major challenges being
faced by the multinationals such as Unilever is coping up with the rapid change in the global
market. This is due to the reason that with the emergence of the concept of globalization, markets
are getting change with the change in the global trends (Breemer 2014). On the other hand,
globalization has also provided the opportunity to the multinationals in extending their presence
across the world, which is requiring them to adhere to the diverse sets of the external factors in
different countries. Moreover, in this case, it should be also noted that globalization is having
influence on the corporate governance and leadership and other business functions. These
business functions should be adhered to the changes in the global scenario in order to have the
maximum utility and outcome (Cunningham and Ferrell 2015).
This essay will discuss about the impact of globalization on the business operation of
Unilever as Unilever is one of the leading and most extensive multinational organizations in the
current time. McKinsey’s 7s model and Hofstede’s dimensions of culture will be used to
critically evaluate the impact of the globalization on their organizational structure and culture. In
addition, different market entry strategies will be discussed along with their barriers and
mitigation strategies. Lastly, this report will discuss about recommended strategies that should be
initiated and followed by Unilever in terms of their organizational structure and decision making
processes.
Influence of globalization on corporate governance and leadership

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One of the major influences of the globalization in the corporate governance of the
business organizations is considerations of the global factors. This is due to the reason that in the
case of national business operations, the global trends are not being considered in designing the
corporate governance. However, due to the emergence of globalization, global factors and trends
are influencing on the business decision (Reader 2017). For instance, in the case of Unilever,
their corporate governance approach includes determination of the global factors. There are
number of standardized products being offered by Unilever across the world, which should be
marketed and promoted on the basis of the global preferences. On the other hand, due to the
trend of globalization, Unilever is currently having diversified workforce with having employees
from different social and cultural backgrounds. Thus, in the case of leadership, cultural factors of
the workforce are being considered. Moreover, due to the intensity of globalization, the approach
towards the leadership cannot be specific. For example, a national organization without having
their global presence can have the specific leadership approach such as transformational
leadership and autocratic approach. On the other hand, in the case of multinationals such as
Unilever, situational style of leadership is more effective (Nikolova, Rodionov and Afanasyeva
2017). This is due to the reason that different regions are having leadership requirements along
with different management styles for different employee groups. Thus, it can be concluded that
globalization is changing the factors to be considered in designing the leadership approach. In
the current time, upper level managers have to consider the trends in the foreign countries in
designing the leadership and corporate governance approach. This is also posing challenges for
the leaders because of the fact that it is difficult and complex to consider the global trends in
initiating the particular approach of the corporate governance.
Influence of globalization on the culture functions and ethics

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As discussed in the previous section, cultural factors are important to consider in the
decision making process in the current global scenario. In terms of the culture functions,
globalization is posing complexities for the managers in managing the employees. This is due to
the reason that globalization is leading in having employees from different social and cultural
groups. Thus, the managers should consider the differences between the cultures of the
employees and the extent to which these differences are contradictory to each other. Thus, in the
case of global organization, these differences should be managed and ethical practices should be
also being considered (Claessens and Van Horen 2015). The approach towards the ethical
standards and principles is different for different employees. With the emergence of the
globalization, equal representation of the employees from different social backgrounds is
important and considered as an ethical practice. Thus, it can be concluded that globalization is
having major influence on the business functions majorly for the multinationals.
Influence of global market on organizational structure of Unilever
Unilever being a major multinational is having high level of impact of their global market
operations in their organizational structure. McKinsey 7s model will be used in determining the
impact of the global market on their organizational structure. According to this model, there are
major seven elements that denote each of the functions important in designing the efficient
organizational approach. The first element is strategy, which refers to the planning being
initiated in gaining competitive advantages. In the case of the global market operation, Unilever
is having the requirement of having different planning process for different market regions (fan,
Wong and Zhang 2013). This is due to the reason that different markets are having different sets
of competition and rivalry and on the basis of this state, planning is being done. For example, the
market scenario of Unilever is different in India and in Australia and thus their planning process

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is also different. Unilever is following higher product assortments in gaining competitive
advantages in the Australian market and cost leadership strategy in the Indian market. In the case
of organizational structure, Unilever is having the requirement for scattered organizational
structure based on regions. Thus, they are having strategic business units operating in different
countries with having centralized control approach. Each of the business units are operating on
the basis of respective market situations (Van der Voet 2014). This is preventing Unilever in
having standardized approach towards their organizational structure in their global operations.
The next element is structure that denotes that approach of the organizational design
being followed. In the case of Unilever, high hierarchy level is being maintained due to the
reason that their operation is complex and huge, which requires for intermediaries in the
structure. In each of the strategic business units of Unilever, CEO heads the entire operations
along with the high level of hierarchy (Lee, Kozlenkova and Palmatier 2015). The organizational
structure of Unilever is further classified based on the product class and types. This is due to the
reason that Unilever is having different types of products and each of these operations is being
headed by managers. Thus, it can be concluded that due to the global market operation of
Unilever, they have to maintain high hierarchy level in their organizational structure.
The next element of this model is system that denotes the daily activities of Unilever
accomplished by the staffs. In the case of global operation of Unilever, diverse and different
global activities are evident and thus the responsibilities of the staffs are also more and diverse.
This is creating the needs for Unilever in having more designations in organizational designs.
Hierarchy level is designed on the basis of the responsibilities such as marketing department,
operations and finance (Goetsch and Davis 2014). If they are having national market operation,
then the responsibilities would have also been low. However, in the case of global operations of

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Unilever, they are having the requirement to fulfill different activities in their daily operations,
which is influencing them in having higher level of hierarchy in their organizational structure.
Shared value is next element, which refers to the fact that core values of the company are evident
in different organizational functions. Thus, in the case of Unilever, the core value of them
includes right people with right level of skills in right place. This is leading to have more
stakeholders in the organizational structure of Unilever. In addition, the corporate culture of
Unilever is based on the market adaptable approach, which denotes that different cultural
approaches are being followed in different regions. This is also influencing Unilever in having
decentralized organizational structure in different countries (Ravanfar 2015)
Style refers to the approach of leadership being followed in the organization. In the case
of Unilever, same and standardized leadership style is being followed across their global
operations. However, even though the approach is same, the leaders are different in different
strategic business units. Thus, horizontal structure is followed in the upper level management of
Unilever as well. The leadership style of Unilever in different regions is also based on the power
distance of the particular society and thus the organizational structure of Unilever in terms of
their higher level management is also scattered. Staff refers to the employees and their respective
capabilities. In the case of Unilever, geocentric approach is being followed, which involve
recruitment of employees of different countries and cultures (llin et al. 2016). This is helping
Unilever in having employees based on the culture of the particular region but is creating
challenges in terms of managing standardized approach. Thus, they are having decentralized
global organizational structure with having business strategic units in different countries. Skills
refer to the competencies of the employees. Unilever is having diverse workforce across their

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global operation and they are based on their respective home cultures. In this case also, Unilever
is not being able to have narrower organizational structure (Král and Králova 2016).
Influence of global market on the culture of Unilever
Global market operation of Unilever is also having impact on their organizational culture.
This is due to the reason that different countries are having different cultures and with the market
adaptable approach of Unilever, their organizational culture is getting influenced. According to
the Hofstede’s cultural dimensions, there are six cultural elements that differentiate between the
countries and regions. For example, power distance is one of the major cultural dimensions that
state the extent to which inequality is evident between people and the extent to which people are
accepting the unequal distribution of power in the society. In the case of Unilever, they are
having their operations both in European and Asian regions (Kattman 2014). Asian regions are
majorly having higher power distance while European countries are having lower power
distance. Thus, Unilever is having different organizational culture in different regions. The
employees of them cannot be able to complete a task without being guided in the Asian regions,
while the employees in the European region prefer more autonomy in their job process.
Accordingly, Unilever is following different organizational culture in different regions.
Hofstede’s cultural dimensions also states that level of masculinity followed in the society is
another major differentiating factor. This refers to the extent to which the society is driven by the
success and materialistic approach. Due to the fact that Unilever is operating in the global
market, they are having different level of masculinity in different regions and based on that the
organizational culture of them is determined (Kasemsap 2017). In some of their operations,
employees are being motivated by offering benefits and success while in other regions; they are

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being based on work life balance. Thus, it can be concluded that the organizational culture of
Unilever is highly influenced by their global market operations.
Critical evaluation of global market entry strategies
There are different market entry strategies that can be initiated by the business in their
international business. One of the most common and widely used entry strategies is direct
exporting. This refers to the process of exporting from the manufacturing units in the home
country to the foreign countries in final form and directly being sold to the end customers. Thus,
in this case, the investing company will not require having physical presence in the host country,
which will reduce the requirement of high investments and liabilities. However, in terms of this
entry strategy, there are few barriers also being faced by the organizations. The most important
and relevant barrier is the tariff and custom duties (Kang and Montoya 2014). These duties are
being imposed by the countries in restricting the trading process. This is majorly evident between
the countries with political and diplomatic issues. Hence, the price of the exported goods will get
increased, which will reduce their viability in the market of the host country. Another major
barrier in the process of direct exporting is involvement of the high cost and complex
transportation process. In majority of the global exporting process, geographical distance
between the host and come country is more, which involves complex shipping process. This
increases the cost of the products in the host market. In addition, the risks involved in the
transportation such as accidents increases the barriers in the exporting process (Holtbrügge and
Baron 2013).
It is recommended that direct exporting process should be initiated between the countries
with favorable political relations. This should be determined prior to the initiation of the foreign

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business process. In addition, it is also recommended that direct exporting process should be
followed only for the expensive and premium product and not for the mass market and
affordable products (Tulung 2017). This is due to the reason that added cost in the case of export
process can be adjusted with the premium positioning but not with the mass market products.
Another market entry is joint venture, which refers to partnership between the foreign
entity and the domestic firms. In this case, the foreign company comes in partnership with a local
firm in tapping the local market. This helps the foreign entity in getting the entry in the host
country with limited investment along with gaining the local market insights of the host country.
On the other hand, with the help of the joint venture, local firms also gain the expertise of the
investing firm along with gaining the financial capability in operating in the market. Thus, with
the help of the joint venture, both the entities gains competitive advantages (De Beule, Elia and
Piscitello 2014). However, in the case of joint venture, the major barrier is the selection of the
partner in the host country. This is due to the reason that the local firm should have to be
effective and efficient enough in matching the objectives of the foreign firm. In addition,
different countries are having various rules and regulations in terms of initiating joint venture in
the country such as transfer of technologies to the local firm. These regulations pose barriers for
the foreign firms in initiating the joint venture strategy. On the basis of these barriers, it is
recommended that the foreign firm should partner with the local firm that is having favorable
brand value and identity in the market (Ang, Benischke and Doh 2015). This is due to the fact
that goodwill of the local firm will influence the brand value of the joint venture in the host
country. In addition, it is also recommended that the corporate objectives of the two firms should
be analyzed prior to the initiation of the joint venture strategy.

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The last but most popular market entry strategy in the recent time is the direct investment,
which refers to the process of directly investing in the host country and having own
manufacturing and operational facility. The major advantage that can be gained from the
initiation of direct investment is the extensive market presence in the host country. This is due to
the reasons that direct investment help the foreign firm in getting the foothold in the host country
and with having own manufacturing facility, their exposure will also be more in the country. In
addition, flexibility can also be gained by the help of the direct investment (Laufs and Schwens
2014). This refers to the fact that if the foreign entity is directly investing in the host country,
then they will be able to follow the market adaptability approach and offer the products
according to the local market trends. However, on the other hand, the major barrier for the direct
investment is the regulations in different countries. There are number of countries, which capped
the percentage of foreign investment in the country. Another barrier is the investment required in
the process. Huge investment is required in starting the business in the foreign country, which is
a major challenge for the foreign firm (Stevens and Dykes 2013). It is recommended that the
foreign investors should review the market opportunities of the host country prior to the
investment. This will help in identifying the potential challenges in investing in the target
country. Foreign investors should invest in the host country in phased manner based on the
profitability being gained to reduce the risks of investments.
Conclusion and recommendations
It is recommended that Unilever should initiate geocentric staffing for the lower and
middle level employees while polycentric approach for the upper level managers. This is due to
the reason that polycentric approach will help Unilever in recruiting home country executives in
the upper level management in the host countries. Thus, the organizational culture of Unilever

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will be standardized across their global operations. On the other hand, it is also recommended
that the decision making process of Unilever should be made centralized due to the reason that
centralization of the decision making process will help Unilever in standardizing their business
processes across the world. In this case, the upper level management in the existing
organizational structure of Unilever should be involved. They will have the consensus based
decision making process across all the operations. This essay concludes that the global business
environment is posing both challenges and opportunities for Unilever in terms of their worldwide
operations. It is identified that the concept of globalization is having high influence on the
organizational structure and culture of Unilever. In this essay, analysis on the basis of McKinsey
7s model and Hofstede cultural dimensions identified that the existing business process of
Unilever is well aligned with their global business. There are different market entry strategies
also being discussed and critiqued in this essay and it is identified that all the market entry modes
are having both advantages as well as disadvantages for the investing firms.

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