Strategic Analysis of Unilever Bangladesh: A Comprehensive Report

This report provides a comprehensive strategic analysis of Unilever Bangladesh, examining its operations, product portfolio, and financial performance. It begins with an introduction to Unilever, its global presence, and its establishment in Bangladesh. The report details Unilever Bangladesh's mission, organizational structure, product categories, and manufacturing facilities. It includes an overview of the company's brands and financial performance, including sales growth, turnover, and profitability. The analysis further explores the external environment, including economic, technological, socio-cultural, and global factors influencing the company. Porter's Five Forces framework is applied to assess the competitive landscape, including buyer power, competitive rivalry, and the threat of substitutes. The report also lists major competitors in the market. This document provides a detailed overview of Unilever's strategic position and market dynamics in Bangladesh.

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Introduction
About Unilever
Unilever is an Anglo–Dutch multinational consumer goods company. Its products include foods,
beverages, cleaning agents and personal care products. It is the world's third-largest consumer
goods company measured by 2011 revenues (after Procter & Gamble and Nestlé) and the
world's largest maker of ice cream.
Unilever owns over 400 brands, amongst the largest selling of which are Aviance, Axe/Lynx, Ben
& Jerry's, Dove, Flora/Becel, Heartbrand, Hellmann's, Knorr, Lipton, Lux/Radox, Omo/Surf,
Rexona/Sure, Sunsilk, Toni & Guy, TRESemmé, VO5, Wall's and Wish-Bone. It is a dual-listed
company consisting of Unilever N.V., based in Rotterdam, Netherlands, and Unilever PLC, based
in London, United Kingdom. Both companies have the same directors and they operate as a
single business.
Unilever was founded in 1930 by the merger of the British soap maker Lever Brothers and the
Dutch margarine producer Margarine Unie. It has made numerous corporate acquisitions,
including of Chesebrough-Ponds (in 1987); Best Foods, Ben & Jerry's and Slim Fast (in 2000);
and Alberto-Culver (in 2010). Unilever PLC has a primary listing on the London Stock Exchange
and is a constituent of the FTSE 100 Index. It had a market capitalization of £27.3 billion as of 23
December 2011, the 18th-largest of any company with a primary listing on the London Stock
Exchange. Unilever N.V. has a primary listing on Euronext Amsterdam and is a constituent of the
AEX index. Both Unilever PLC and Unilever N.V. have secondary listings on the New York Stock
Exchange.
Unilever started its onshore operations in Bangladesh in 1964 when its soap factory was set up
at Chittagong. Unilever Bangladesh Ltd. (UBL) is market leader in 7 of the 8 categories it
operates in, with 19 brands spanning across Home and Personal Care and Foods.
Unilever Bangladesh’s operation provides employment to over 10,000 people directly and
indirectly through its dedicated suppliers, distributors and service providers.99.8% of Unilever
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Bangladesh employees are locals. They have a large number of Company employees working
abroad in other Unilever companies as expatriates. Currently UBL has five departments to take
care all the activities within Bangladesh that includes
 Customer Development
 Brand Building
 Human Resource
 Finance and
 Supply Chain.
Though worldwide Unilever has numerous numbers of products, but surroundings in the
country made them launch total 19 products:
 Lux
 Surf Excel
 Close up
 Pureit
 Pepsodent
 Knorr
 Rexona
 Dove
 Wheel
 Lifebuoy
 Pond’s
 Taaza
 Sunsilk
 Axe
 Vaseline
 Clear
 Rin Power White
 Fair and lovely
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 Vim
Unilever at a Glance
Mission
Unilever's mission is to add Vitality to life, to meet every day needs for nutrition, hygiene
and personal care with brands that help people feel good, look good and get more out of
life.
Operations
Home and Personal Care, Foods
Constitution
Unilever - 60.75% shares, Government of Bangladesh - 39.25%
Product categories
Household Care, Fabric Cleaning, Skin Cleansing, Skin Care, Oral Care, Hair Care, Color
Cosmetics, Deodorant, Tea based Beverages.
Brands
Wheel, Lux, Lifebuoy, Fair & Lovely, Pond's, Close Up, Sun-silk, Lipton Taaza,
Pepsodent, Clear, Vim, Surf-Excel, Rexona, Dove, Vaseline, Pureit, Knorr and Axe.
Manufacturing facilities in Bangladesh
The company has a soap manufacturing factory and a personal products factory located in
Chittagong. Besides these, there is a tea packaging operation in Chittagong and three
manufacturing units in Dhaka, which are owned and run by third parties exclusively
dedicated to Unilever Bangladesh.
Employees
Unilever Operations in Bangladesh provide employment to over 10,000 people directly and
indirectly through its dedicated suppliers, distributors and service providers. 99.5% of UBL
employees are locals and there are equal numbers of Bangladeshis working abroad in other
Unilever companies as expatriates.
"Unilever brands"
The following 90 pages are in this category.
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A
 Elizabeth Arden
 Axe (grooming product)
B
 Becel
 Ben & Jerry's
 Bertolli
 Best Foods
 BiFi (snack)
 Birds Eye
 Boursin (cheese)
 Bovril
 Breyers
 Brooke Bond
 Bubble O' Bill
C
 Chicken Tonight
 Cif
 Colman's
 Conimex
 Continental (Brand)
 Cornetto (ice cream)
 Cotton swab
 Country Crock
 Cup-a-Soup
D
 Degree (deodorant)
 Domestos
 Dove (personal care
product brand)
F
 Fabergé (cosmetics)
 Findus
 Flora (margarine)
 Fudgsicle
G
 GB Glace
G cont.
 Golden Gaytime
 Good Humor
H
 HB Ice Cream
 HB Wall's
 Hellmann's
I
 I Can't Believe It's Not
Butter!
 Iglo
 Imperial Margarine
 Impulse (body mist)
K
 Kibon
 Klondike bar
 Knorr (brand)
 Kwality Wall's
L
 Lakme cosmetics
 Langnese
 Lifebuoy (soap)
 Lipton
 List of Unilever brands
 Lux (soap)
M
 Magnum (ice cream)
 Maille (company)
 Marmite
P
 PG Tips
 Paddle Pop
 Peperami
 Persil
 Persil Power
 Persil Service
 Pond's Creams
 Popsicle
P cont.
 Pot Mash
 Pot Noodle
 Pot Rice
 Prince Matchabelli
R
 Ragú
 Rexona
 Rinso
S
 Sana (margarine
brand)
 Sariwangi
 Scottish Blend
 Selecta (dairy
products)
 Signal (toothpaste)
 Skippy (peanut
butter)
 Slim Fast
 Snuggle
 Solero
 Splice (ice cream)
 Spry Vegetable
Shortening
 Squirrel (peanut
butter)
 Suave
 Sunsilk
 Surf (detergent)
 Surf Excel
T
 Twink (home perm)
V
 Vaseline
 Vermonster
 Viennetta
 Vim (cleaning
product)
W
 Wall's (company)
 Wish-Bone salad
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dressing
Volume growth ahead of Unilever markets
Underlying volume growth:
Financial Year Growth
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2008 0.1%
2009 2.3%
2010 5.8%
Underlying volume growth accelerated in 2010 to 5.8%, the best that Unilever has achieved
for more than 30 years. Unilever set out two years ago to reignite its volume growth and to
grow ahead of its markets. That is what Unilever are starting to do; its volume shares are up in
all regions and in most categories.
Volume growth was broad based. In its emerging markets business Unilever grew volumes by
around 10% over the year as a whole, with the key businesses of China, India and Turkey all
delivering growth well into double digits. Only in Central and Eastern Europe did Unilever see
more subdued growth, although even here volumes were comfortably up in difficult markets.
In the developed world, where growth has been very hard to achieve over the recent past, its
volumes were also up by around 2%, again ahead of the market, in both Western Europe and
North America.
Unilever gained volume share in all regions, with particularly strong performance in key
emerging markets such as China, Indonesia, South Africa and Argentina. Unilever stern Europe
also saw strong volume share gains, led by the Netherlands, France and Italy. Volume shares
were also up in most of its core categories, with deodorants, skin cleansing, household care,
ice cream and dressings all achieving notable gains during the year.
List of major players
1. Unilever Bangladesh
2. Marico
3. Nestle Bangladesh
4. Pran
5. Square toiletries Limited
Financial performance of Unilever
UNILEVER
FINANCIAL
PERFORMANCE
YEAR
2013 2012 2011 2010 2009
UNDERLYING SALES
GROWTH %
4.3 6.9 6.5 4.1 3.5
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TURNOVER (€
BILLION)
49.8 51.3 46.5 44.3 39.8
OPERATING
PROFIT (€
BILLION)
7.5 7 6.4 6.3 5
NET PROFIT* (€
BILLION)
5.3 4.9 4.6 4.6 3.7
NET CASH FLOW
FROM OPERATING
ACTIVITIES
(€ BILLION)
6.3 6.8 5.5 5.5 5.8
External environment analysis
A company’s external environment consists of all the relevant factors and influences outside the
company’s boundaries. Relevant means important enough to have a bearing on the decisions
the company ultimately makes about its direction, objectives strategy and business model.
The External Analysis examines opportunities and threats that exist in the particular industry
environment. The External analysis is a constructive instrument for understanding risks
associated with market growth or decline, and as such the position, potential and direction for a
business or organization. It uses a framework of external factors for macro-environmental
scanning of the industry and Porter five forces analysis to help in taking advantage of
opportunities and making contingency plans for threats.
The central components of external analysis are:
1 The macro-environment.
2. Industry Structure.
3. Strategic group mapping.
4. Competitor analysis.
5. Critical success factors.
Macro Environment Analysis
The general environment is composed of factors that can have dramatic effects on firm strategy.
Typically, a firm has little ability to predict trends and events in the general environment and
less ability to control them. General environment of paint industry of Bangladesh is divided into
four segments- economic, technological, socio-cultural and global.
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Economic Factors
The economic environment refers to the nature and direction of the economy in which a firm
competes or may compete. The economic condition of the country probably has the largest
effect on the possibility and failures of UBL. As the raw materials are imported the currency
exchange rates and inflation of the country has an immense influence in determining the fate of
the business.
Technological Factors
New advanced technologies are now used to manufacture different consumer goods. Some big
companies like P&G, Nestle, local square toiletries are using up to date technology to
manufacture their products. . Exploitation of new technologies are helping the companies to
come up with upgrades and best quality products that can fulfill customers need tastes and
preferences. With the new technologies companies can advertise their products through many
channels which enabled them to be more competitive in the market.
Socio-cultural Factors
This segment is concerned with society’s attitudes and cultural values. Lifestyle based spending
by Bangladeshi middle class. Because as UBL mainly focuses on the middle class market of
Bangladesh. So they need to identify what are their life style what are their attitude towards
consumer goods. How much they would like to spend for consumer goods. Who would be their
targeted potential customer.
Global Factors
Raw materials of some of their products are available in Bangladesh. And the materials which
are not available they have to depend on global market for that.
Legal /Political Factor
Unilever subsidiaries are encouraged to promote and defend their legitimate business
interests. They co-operate with governments and other organizations, both directly and
through trade associations or chambers, in the department of or amendment of rules or
regulations, which may affect their legitimate business interests. In the process they neither
support political parties nor contribute to the political funds.
Porter’s five forces analysis of Unilever Bangladesh
Bing a global company Unilever has very strong competition not only from other strong
multinational companies like P&G , kraft and Nestle but also from other regional retailers.
Porters five forces model is one of the most recognized frame work for analysis of competitive
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environment of an organization. Porters five forces model which determine the competitive
industry and therefore the attractiveness of the market where Unilever is operating. This model
describes the attributes of an attractive industry and thus suggest when opportunities will be
greater and threats less in these of industries.
Attractiveness in the context refers to the overall industry profitability and also reflects upon the
profitability of unilever. An unattractive industry is one where the combination of forces acts to
drive down overall profitability. A very un attractive industry would be one approaching “pure
competition” from the prospective of pure industrial economic theory.
This model is based on five important elements of an organization and uses both internal as
well as external competencies and threats faced by business organization. And these five
elements are
Buyer bargaining power
Unilever buyer are scattered all around the country. And in true sense they are not so powerful
to pull the price down. But on the other hand its easier for the customer to switch to the other
brand. So Unilever has to be very precious in deciding about prices and keep the customer
satisfied.
Competitive rivalry
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In consumer product business Unilever has a large number of competitors and these are really
very strong. They range from local companies from big giants like P&G and Nestle, and these
competitors almost provide quality and attractive products and services and sometimes better.
These competitors have a power to attract and influence the customer by more attractive
substitute, prices and marketing technique.
Threat from the substitute
Continues research and development in the customer and household products has brought
about a revolution in the customer market and today customer like to try something new and
better. This trend has reduced customer loyalty and product life cycle. Unilever is under
continuous threat of substitute products and its competitors are already spending huge sum on
R&D and new product development. Unilever has to be very adoptive and closer to its customer
so as to get what exactly its customer want.
Threat of new entry
As Unilever operates in different geographical market so threat will be based on geography. In
developed countries where big players like Unilever have a very strong brand image. Its very
hard for a new player to enter because of the high cost and setup business. On the other hand it
less developed market like Bangladesh it’s easier to enter as legal requirements and capital
needed is not as much as in a developed market. Unilever has it presence almost in every
market. Its brand image is a strong barrier to enter in its market.
Supplier’s power
Unilever has a policy of local buying and local manufacturing. Which provide itself an edge to
break power of its suppliers and make them weaker to negotiate at its own terms. Most of
times Unilever has blanket agreements with its supplier to provide for a certain period of time
at a certain rate. This strategy helps to prevent suppliers from switching to other competitors
and charge higher rates. Also Unilever treat as suppliers fairly so as to create more loyalty
among them like customer.
Industry attractiveness
Analyzing the external environment we can say that the industry is mostly attractive.as buyers
have weak positions and also the suppliers position are getting reduced. As UBL is the market
giant compare to others, so threat of substitute products are moderate, hence strong rivalry can be
seen among competitors.
Critical success factor
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An industry’s critical success factors are those things that most affect the industry members
ability to prosper in the market place. The key success factor of UBL can be referred to as the
quality of their product, and also they keep on innovating time to time.
Competitive Analysis
In the market of consumer goods Unilever Bangladesh Ltd is considered as the
market leader. As a market leader there is always a risk to be attacked by the market
challengers. Unilever’s strategy is to defend their market share by being premium in
service, having full-line strategy, extensive and efficient dealership system and good financing.
In Bangladesh the major two challengers for Unilever is ‘Square Toiletries Ltd’ and
‘Proctor & Gamble Ltd’.
Internal Environment Analysis
Core competency
It refers to resources and capabilities that serve as a source of competitive advantage for a firm
over its rivals and competitive advantage refers to any factor that allows an organization to
differentiate its product from those of its competitors.
Core competencies of UBL are, it has a valuable rare and costly to imitate, and non-substitutable
Corporate and Brand image, quality of product is valuable rare and also costly to imitate but
substitutable, and technology orientation is also valuable rare and costly to imitate but
substitutable. And its supply chain its valuable rare and also costly to imitate.
Supply chain
As a multi-national company, UBL Procurement team is purchasing from tens of thousands of
suppliers worldwide. They have made the strategic decision to introduce a global Supplier
Qualification System (USQS) to manage the complexity of their supplier information. Their
procurement organization first selects our suppliers, then those selected are invited to register
in USQS (Unilever’s Supplier Qualification System) and this system is how we qualify those
suppliers to do business with Unilever. One of the main drivers for the Unilever Supplier
Qualification System is to make the process of doing business with globally less complicated.
The use of the USQS will enable us to standardize and streamline the way we engage with
suppliers no matter where they are located. It is a single system that allows all suppliers to
demonstrate to Unilever their capabilities. Being invited to join the system enables selected
suppliers to qualify to work with Unilever and gives visibility throughout Unilever’s global
business.
Brand Image
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Lever Brothers Pakistan limited started its operation in East Pakistan (present day Bangladesh)
on a larger scale. In 1964, a new soap manufacturing facility was setup in Kalurghat, Chittagong.
The production of the company started off with Sunlight soap and Lifebuoy soap. With time the
company diversified into manufacturing other personal products like skin care creams,
shampoos, toothpastes, detergent powders etc. In 1971, after the Liberation War of
Bangladesh, when Bangladesh became independent, Lever Brothers Bangladesh Limited. was
constituted with Unilever owning 60.75% shares and the Government of Bangladesh owning the
remaining 39.25% shares. In December 2004 the company changed its identity to Unilever
Bangladesh to align their corporate identity with global Unilever.
They are doing business in Bangladesh almost 50 years.Throughout the years, UBL has
successfully positioned itself as provider of reliable and superior quality consumer goods. The
company has always taken care in strategically positioning itself as a superior class of its own in
Bangladesh. As a result, its products are more recognized and appreciated.
Improved technology
The new technology allows us to produce a common, unperformed base for its aerosols, adding
the fragrance only at the very last stage. This gives us the flexibility to make many more variants
without incurring higher costs. It’s good for us because it has contributed greatly to lower stock
levels; around 70% of its stock-keeping units have seen their minimum order quantity halved; its
product change-over time has reduced from 40 minutes to just fit; and Unilever produce less
waste. But more importantly it benefits customers, who have improved shelf stock levels and
reduced lead times, and consumers, who can get a wider choice of fragrance at no extra cost.
Products quality
UBL selects the raw materials from some of the best-known suppliers.The superior quality of
Unilever's products has been possible because of support from its advanced plants and an
international-standard of strict quality. Following TQM it ensures the best to managing its
efforts. Unilever has always tried to respond promptly to market feedback. As a result, Unilever
enjoys competitive advantage over its competitors, though it’s a very competitive market
SOWT Analysis of Unilever Bangladesh
Strengths
 Strong management
 Financial leverage
 Asset leverage
 Innovative culture
Weakness
 Online presence
 Absence from premium market
 Lack of high volume brands
 Focus on short term strategy
STRATEGIC ANALYSIS OF UNILEVER BANGLADESH