Business and the Business Environment: Unilever Report Analysis

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This report provides a comprehensive analysis of Unilever's business operations and its surrounding environment. It begins by defining different types, sizes, and scopes of organizations, including micro, small, and medium-sized enterprises, as well as distinctions between for-profit and non-profit entities and legal structures such as sole traders, partnerships, and limited companies. The report then delves into the interrelationship of various functions within Unilever, including marketing, finance, and human resource management, and how these functions are linked to the company's organizational structure. It examines the positive and negative impacts of the macro-environment on Unilever, and also conducts an internal and external analysis to identify the company's strengths and weaknesses. The report concludes with a summary of findings and references.
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Business and the business environment
Business and the business environment
Student's Name
Course
Professor's Name
Date
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Business and the business environment
Table of Contents
Introduction...............................................................................................................................................3
The interrelationship of the various functions within an organisation and their link to
organisational structure............................................................................................................................6
The interrelationship between different functions in Unilever and their linkage to objectives and
organisational structure........................................................................................................................6
Positive and negative impact of the macro-environment aspect of the business...............................9
The internal strengths and weaknesses of specific businesses and explain their interrelationship
with external macro factor..................................................................................................................11
Conclusion................................................................................................................................................15
References................................................................................................................................................15
Introduction
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Business and the business environment
The modern business environment globally is characterised of different types, sizes, and
scope of. This report is developed following the desire of The Chamber Of Commerce and
Enterprise team to understand different types and sizes of businesses in their jurisdiction. The
report covers various aspects relating to Unilever organisational functions and impact of macro-
environmental factors. Unilever is a popular global consumer goods organisation based in the
UK, This will begin with an explanation of the different types, sizes, and scope of an
organisation. In addition, analysis of different Unilever organisational functions and how they
relate with Unilever organisational structure will also be made. The report will also show the
positive and negative impact of the macro-environment on Unilever. The last section of this
report will entail an internal and external analysis to identify strengths and weaknesses in
Unilever and Toyota, and how these strengths relate to the external macro-environment in
Unilever.
Explanations of the different types, size, and scope of organisations.
The modern businesses in the world is characterised by different types, size, and scope of
organisations which are formed with a unique aim and to achieve certain objectives.
Different types, size of organisations
A microenterprise refers to a small business employing workers not exceeding ten and having a
turnover or balance sheet of less than a certain amount. (EUR 2 million). Globally, most of the
microenterprises are family businesses that employ not more than two people. Most of the
microenterprises are owners who are mainly focused on earning an income to support their
families.
Small enterprises are corporations, partnerships, or sole proprietorship that are privately owned
with fewer employees or less annual revenue than a corporation or regular-sized business. Small
business staff count is fewer than 50 employees having a turnover not exceeding EUR 10
million. (Hamilton &Webster,2018). The main business purpose of small enterprise is to make a
profit, they are also focused on increasing productivity and generating new customer service
processes.
Medium-sized enterprises are businesses that maintain assets, revenues, and a larger number of
employees compared to micro and small enterprises. Medium-sized enterprise staff count does
not exceed 250 and turnover is less EUR 50 million. Their main purpose is to generate profit
with the aim of business growth.
Different purposes of organisations
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Business and the business environment
Differences between for-profit and not for profit and non-government organisations
(NGOs).
For-profit organisations are set with the main aim of generating profits and operate in the
private sector which means they are owned by group entities or by individual and not by the
government or state unlike not for profit organisations which are formed for other purposes
rather than the purpose of profit gain. Not for profit organisations work for the benefit of the
public, their profits are not distributed among the members, unlike for-profit organizations
whereby the profits are distributed among the shareholders or business investors in relation to the
legal structure of the organisation, not profit organisation are owned by the government. On the
other hand, non -governmental organisations are non-profit organisations which their operations
don't depend on the state or the government although they may get funding from the state,
operate without government representations. (Aithal, 2017)
Legal structures
Sole trader: is also known as a sole proprietorship, which refers to the legal set up of
business controlled and owned by a single person who is responsible in all business aspects. This
includes losses and debts which can be shared with other people. Although the sole trader can
employ workers, the final accountability remains with the owner.
Advantages. Sole proprietorship are easy to set and operate. As well, the owner makes
business decisions and gives full control of their assets. It is easy to change the business structure
if there is growth in the business or if the owner wishes to close the business or wind up things
(Prajogo, 2016).
Disadvantages. I instances when the business incurs loses, the owner is liable alone.
Partnership: refers to the form of business that is owned by two or more parties, who are
responsible for managing the company and the incomes or losses that the company creates. the
relationship between the parties is regulated by partnership deeds that define the structure and
scope of the partnership, specifies the responsibilities of the parties, how the profits will be
distributed, investment responsibility of each party and how losses will be shared. Income is paid
to the partners, who claim it on their personal tax returns and the business is not taxed separately.
Merits of partnership structure.
Partners can share the rewards of the business and the workload.
They are fairly easy to start and manage over a time
Partners can use their resources to fund the partnership start-up.
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Business and the business environment
There is a deed of partnership that governs the partnership operations and which acts as a control
among the partners.
Demerits of partnership.
Unlike corporations, which help cover owners from liability, the partnership has both individual
and joint liability in that all partners are liable for their own actions on behalf of others' actions
and company.
Where there is the existence of more than one owner, differences opinions may emerge which
will act as a threat to the business
Although any profits that the business generates are distributed among the partners, if the pay-
out does not correspond with each partner's contribution to the company disagreement can
emerge.
Private limited companies. They are small business entities held privately and limit the liability
of the owner by shares. The small and private ownership nature of these companies makes the
business limited to a small number of shareholders and restricts shareholders from trading shares
publicly. In the UK, there is no minimum capital required to start a private limited company
apart from the existence of a share that is issued at incorporation time.
Public limited companies. There are limited liability companies that can trade and sell their
shares freely in the market on the stock exchange. Unlike Private limited companies, there are
subject to a minimum capital requirement. In the UK, a Public limited company cannot sell its
shares without a trading certificate from Company House that must include the company to their
name.
The main advantage of a Public limited company is its ability to raise finance from selling shares
to the public. And its disadvantageous in that the cost to set the company is not always available
to smaller businesses which struggle to generate finances from elsewhere.
Size and scope of various types of Coca-Cola company
Organisation can be classified based on products such as primary, secondary, and tertiary.
Primary are the ones producing the raw materials from natural raw materials and pass them to the
secondary organisation where the raw materials are converted into products and transferred to
tertiary organisations who are mainly the retailers availing or selling the products to the
consumers.
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Business and the business environment
The scope of organisation depends on the product's type. The scope of Coca-Cola
company is to manufacture and supply soft drinks such as fruit juice, concentrates, carbon
hydrated drinks, sport energy drinks, ready to drink juices, bottled water, and tea. The scope of
Toyota is to produce and supply automotive products. Unilever is UK based company whose
scope is to sell a wide range of consumer products in the UK and other countries. It operates at a
global level with over 400 brands such as Omo, Dove, Axe, and Rexona
The interrelationship of the various functions within an organisation and their link
to organisational structure.
Figure 1: organisational structure of unilever (Source:
Scheer,2012)
The interrelationship between different functions in Unilever and their linkage to
objectives and organisational structure.
Marketing Function
The main aim of the organisation's marketing efforts is to develop a gratifying
relationship that benefits both the organisation and the consumer. The marketing effort direct the
organisation to a significant role in most organisations and society. This function makes sure that
the finance function gets more access to funds to control due to huge number of customers.
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Business and the business environment
Marketing information assist human resource function to decide on the staff to be hired and the
training nature required to achieve the increased customer desires. The increased teamwork
encourages the company organisational structure to achieve set goals and magnify its worthwhile
image in the market.
Finance and account function
Finance is related with the usage of organisational resources for different activities or
expenditures within the organisation. The financial function gives valuable reports of financial
performance and position relating to the business plan. The finance department facilitate smooth
running of other functions by ensuring enough finances are allocated to each department during
budget preparation. Unilever's company has assigned funds to various sectors of the organisation
in line with the budget and measures the usage of financial resources against the budget allocated
for performance. For example, the finances required by marketing department to conduct market
research must be approved by the finance department, human resource depends on Finance
function to conducts it activities such as training and employee compensation. This type of
relationship can be enhanced in a well-set organisation structure.
Accounts in an organisation like Unilever will be tracing all daily transactions of the
sales, purchases, and internally and externally business resources utilisation to the organisation.
This ensures wise utilisation of the funds allocated to each department within Unilever. Unilever
cash flow ensures that the organisation assigns sufficient funds to control business liabilities
when the organisation needs to pay. The tracing of all daily transactions is seen as a framework
within which the organisation structure is based on. The finance team is responsible for
accessing additional funds for business expansion gain more profits and achieve the company
objectives. (Hilton & Platt, 2015).
Human resource management
Unilever has advanced human resource management department that looks at the needs
of the employees Unilever. It is concerned with employee's management to attain good
performance and efficiency. It also concerned with policy and legislation. The role of the human
resource management department in Unilever includes job design, administrations, recruitment,
training, and development of employee's skills, managing employee relations, compensation, and
maintain employment laws. (Baron, 2012) Human resource management is interrelated with the
operational management in Unilever as the two work together to achieve the company
objectives. Development of employee’s skills by human resource department ensures that
productivity is promoted and thus ensuring the company meets its objectives of high
productivity. Employees receive their salaries through finance department. Human resource in
Unilever ensures that the marketers have the relevant knowledge and skills and also recruits the
qualified personnel in the most sensitive department in the organisation such as managers and
finance department. All these functions work together to meet the company objectives.
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Business and the business environment
Organisational structure of Unilever
Functional structure.
This structure entails operations like coordination supervision, coordination and assigning
of duties therefore influencing performance of the company relating on department like
marketing, production and finance. The workers become efficient skilled although the company
may face challenges like slow decision-making process and rigidity. In Unilever employees are
grouped according to their specific skills and knowledge. Each department is structured with the
roles from manager to finance and sale department, to customer service, and to employees
assigned with one product or service.
Divisional structure.
It provides a hierarchy of various branches in the Unilever: for example, Unilever offers
different products and therefore this structure is used on every product offering which has its
own affirmation, accounting, and transaction workplaces. Unilever has product type divisional
organisational structure. The company is divided into sectors according to their product focus.
For example, Unilever has a division for home care products, foods, refreshment and personal
care products. The benefit of this structure is that each division has the ability to perform the task
it is assigned to and thus attaining the company set goals and objectives. (Stverkova &Pohludka,
2018).
Matrix structure.
To achieve its formulated goals and objectives, managers in Unilever have applied the use of
matrix structure to direct it’s the daily business operations. Matrix structure aid command flow in
both vertical and horizontal direction therefore promoting adequate planning, maximum
resources utilisation, strengthening team work and task coordination within all departments.
structure is used in Unilever to alter authoritative ability to change organisational needs. Matrix
structure in Unilever combine functional and divisional structure by uniting them and giving
them firmness. It is mostly used in product management because it communicates both to the
functional manager and product manager.
Impacts of interrelationships between organisational functions.
Interrelationships between various department in an organisation enhance staff expertise which is
shared among all the workers, efficiency in task coordination, teamwork and formulation of new
ideas and increased productivity. The main demerits of this interrelationship are in confusion and
conflicts among different staffs and increased costs in operations.
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Business and the business environment
Positive and negative impact of the macro-environment aspect of the business.
Macro-environment. These are forces outside an organization that influence the company's
marketing strategy can create a threat or an opportunity. These factors include legal forces,
social/cultural forces, political forces, economic forces, environmental and technological forces.
The positive and negative impacts on Unilever as discussed by PESTLE analysis:
A pestle analysis model is a tool used by managers to understand the impact of the
external environment on business. In the case of Unilever, these external factors change
significantly, considering the global scope of the business. Although, the company must strive to
maximise business performance. The PESTLE analysis of Unilever shows growth opportunities
in the global market consumer goods. While the company encounters some threats from its
macro-environment, growth is attainable by focusing on product innovation.
Political factors
The political setting impact Unilever's performance. This part of the PESTLE analysis recognises
the effect of government on the firm's macro-environment or remote. The following political
external forces are notable in Unilever business:
The political firmness in most countries gives an opportunity for Unilever to expand with
minimal political tension. For example, the political firmness of the UK helps reduce threats in
the company's strategic execution in the country. On the other hand, political concerns in the
European Union are a challenge to Unilever's business operations in the zone of consumer
market goods. The company has also an opportunity for international growth based on the
broadening free trade relations, particularly those involving third world countries. Based on the
political external forces in this part of the PESTLE analysis, there is the availability of
opportunities in the market, and also Unilever should deal with the threats associated with the
political condition of the European Union.
Economic factors
The situation of the economies globally is what Unilever's business performance depends on.
This part of the PESTLE analysis shows the effect of economic conditions on organisations and
their macro- environment or remote. Below are economic factors determining the Unilever
performance of the consumer goods trade:
The increasing wages in third world countries provide the opportunity for Unilever to gain more
profit from high prospective sales, as customers gain higher cash flow. Although this same
external factor can be a threat in terms of rising costs, taking into account that the company has
many manufacturing industries located in developing countries. (Dockalikova and Klozikova,
2014). The growth in developing countries in terms of consumer market goods value and size
gives an opportunity for Unilever's business expansion. For example, the UK gives a major
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Business and the business environment
expansion opportunity for the company. Besides, the stability of the economy in the developed
countries cover the business from risks in other markets, while facilitating gentle but stable
growth. Hence, this part of the PESTLE analysis of Unilever focuses on opportunities for
international growth.
Sociocultural factors
Sociocultural issues and trends influence the performance of Unilever's business and remote or
external factors. The socially-oriented behaviour aspects of markets are the main aim in this
segment of PESTLE analysis. Below are the sociocultural external forces important in Unilever
consumer commodities business:
Unilever can expand through manufacturing products that directly focus on consumers
increasing attention on healthful benefits. Moreover, rising ecologist behaviours provide a
chance for the company to lure more consumers by improving on its ecological impact. For
example, Unilever can reduce its energy consumption by embracing new and more energy
technologies that are efficient. Besides, the company can also grow through higher sales assumed
from improved incomes among female consumers globally. (Gillespie, 2007). The external
factors in this segment of Unilever's PESTLE analysis portray the significance of product
innovation in expanding the consumer goods business.
Technological factors.
Unilever depends on the technologies available to support its business operations. This part of
the PESTLE analysis recognises the effect of technological trends on companies and their remote
or external factors. Below are the important technological external factors in Unilever's case:
Rising business computerization is an opportunity for Unilever in increasing operational
effectiveness and efficiency. For example, new business refining equipment will intensify
inventory monitoring to reinforce distribution efficiencies and supply chain. Nevertheless, this
technological external force can also be a threat because it will increase the competition from
other companies' inclusion of small firms in the local market. (Roper, 2012). Moreover, rising
research and development acts as a threat to Unilever because it generates the competitive
advantage of other companies in the consumer goods market. Besides, the decreasing
transportation cost results in a lower rate of operational cost, which leads to business expansion,
however, the decreasing transportation cost threatens Unilever because it results in competition
from other firms. This part of the PESTLE analysis of Unilever shows growth opportunities and
competitive issues of technological factors in the macro-environment or remote.
Environmental factors
Environmental conditions and trends affect the Unilever macro environment or remote. The
impact of the natural environment and correlated issues are considered in this segment of
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Business and the business environment
PESTLE analysis. Below are environmental external factors affecting Unilever's business of
consumer goods:
The rising concern in business environmentalism acts as an opportunity of Unilever to advance
its environmental projects to attract customers interested in the environment. Moreover, the
company can increase its sustainability projects to reinforce its competitiveness from other firms
in the market. Unilever's corporate social responsibility should implement these effect projects
all over the organisation. For example, the plan should consider the internal business processes
and product innovation to reduce the business environmental effect. These attempts must also
help Unilever's ability to content increasingly complex environmental projects. These external
factors are a drive for the company to advance its competitive advantage through collective
responsibility. Based on the state of the macro-environment or remote portrayed in this part of
Unilever's PESTLE analysis, there exist opportunities to advance business performance by
making the company more environmentally friendly.
Legal factors.
Unilever must adhere to policies and regulations to reduce barriers to its consumer goods
business. This part of the PESTLE analysis discovers the effect of the legal regime on
organisations' macro environment or remote. Below are the legal external issues Unilever should
satisfy:
Increasing the complexity of environmental legislation provides an opportunity to
Unilever to boost its corporate image by linking the firm's corporate social responsibility
schemes with environmental legislation. Moreover, conforming to global patent laws can lead to
company growth. (Yüksel, 2012). For example, new patent laws in third world countries assist in
minimising patent- concern issues Unilever encounters from its macro environment. In addition,
making consumer rights laws strong generates an opportunity for the company to advance the
quality of customer service, along with standards quality products. These attempts can improve
the image of Unilever's brands in the market. The macro-environment in this section of the
PESTLE analysis of Unilever designates the merits of improving legal systems globally.
The internal strengths and weaknesses of specific businesses and explain their
interrelationship with external macro factor
Internal and external analysis of Toyota company
Strengths of Toyota
The strengths of Toyota show that the organisation is capable of maintaining its position as one
of the best manufactures worldwide. Below are the major strengths of Toyota:
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Business and the business environment
Toyota poses one of the strongest brands in the whole world automotive industry. The company's
worldwide supply chain that facilitates flexibility and minimise market-based threats. In
addition, the organisational structure of Toyota enables rapid innovation, which is essential for
long term competitive advantage. (Jackson et al., 2003.)
Weaknesses of Toyota.
The weaknesses of Toyota indicate the possible incompetence in the organisation. Below are the
primary weaknesses of Toyota:
Toyota's worldwide hierarchical organisation structure inhibits maximum pliability of operations
in the region. Secrecy in the company's culture is also a weakness that minimise feedback time
in dealing with emerging issues. Moreover, product recall weakens the company because they
absorb business capacity which instead can be used for product dissemination.
Internal and external analysis of the Unilever company.
Strengths of Unilever
The strengths of Unilever that the organisation has the ability to maintain its position as one of
the leading consumer goods in the worldwide market. Below are the major strengths of Unilever:
Unilever has the strongest brands in the consumer goods industry, this facilitate easy market
penetration and effective competition with other firms. The broad product mix gives a picture of
Unilever’s business at a larger extent. Besides the economy of scale enable production efficiency
required in competitive pricing techniques. The company has a strong global market presence
which is a strength used to increase brand popularity around the world.
Weaknesses of Unilever
The weaknesses of Unilever indicate the factors that impose barriers and hinder business
development in the organisation. Despite its strong position in the market, it has factors that
hinder the potential growth. below are the major weaknesses in Unilever:
The major weakness is the mimicable nature of the Unilever products. For example, although
there is heavy investment on product innovation in Unilever other organisation can still imitate
Rexona and Dove products. Unilever is weak due to its limited business diversification outside
the industry of consumer goods. It also lacks a firm impact on customers, in mind that the
retailers are the ones who directly influence buyers.
SWOT analysis of Unilever company
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Business and the business environment
Strengths:
They have the strongest brands in the
consumer goods industry.
They have a wide product mix that
portrays their business expansion.
They have the economy of scale that
reinforce efficiency in production required for
pricing techniques.
They have a very firm international
market presence which supports its brand
popularity in the market.
Weaknesses:
The mimicking nature of its products
is a weakness because some of its products
can be imitated such as Rexona and dove
products.
It is weak because of its limited
diversity businesses outside the consumer
goods industry.
It lacks a firm impact on customers, in
mind that the retailers are the ones who
directly influence buyers.
Opportunities:
They can diversify their business by
engaging in business outside the consumer
goods industry.
They can increase product
attractiveness by the innovation of products
that address the need for emerging health
awareness consumers.
They can make the business more
environmentally friendly and sustainable to
attract and retain environmentally awareness
customers.
They can expand their market by
increasing income from the sale of its latest
products in the new market sections.
Threats
Faces tough competition from other
firms in the industry due to their strong
competitive nature.
Product imitation also threaten
Unilever business because local firms can
produce similar to Unilever's
Retailers pose a threat to Unilever by
selling their own brands which are generic
brands, store brands, and house brands.
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Business and the business environment
Figure 2: (Landmann et al 2020)
SWOT analysis also entails the identification of an objective of the internal as well as
external factors that are suitable and unsuitable for the attainment of an objective of Unilever
Company. SWOT analysis can be applied in Unilever to clarify and summarize the main issues
and opportunities in the business and help the organisation to make suitable decisions to build up
new strategies and objectives. It also helps the organisation business to minimise their
weaknesses and maximise strengths so that they can reduce market threats and take
opportunities.
How Strengths and weaknesses interrelation with external macro factors.
Strengths and weaknesses of Unilever are directly related with external macro
environmental factors and therefore the management makes a comparison of the strengths with
the existing macro environment factors such as political, economic, technology, cultural and
social and them make operational and strategic policies. A change of environmental factors
influences the management decisions in Unilever, below are the interrelationship between macro
environment factors and Unilever’s strengths and weaknesses:
Environmental factors: environmental laws must be followed to minimise misuse of the
available natural resources. So, Unilever management system of Unilever must formulate
strategies on how to effectively use the available natural resources which will be followed all the
time. The strengths, weaknesses and macro environment factor relate and affect each other. For
example, if Unilever fails to identify its weaknesses and strengths, then it will not be able to
analyse its macro environment forces which will lead to inability of formulating tactical plans
and strategic plans. (Fernández-Olmos &Ramírez-Alesón, 2017).
Economic factor: economic factors include inflation rate exchange in the market, and
change in interest rate. When Unilever is financial stable it will have enough financial resources
and therefore the changing rate will not influence the marketing and pricing strategy in Unilever.
Unilever should always be ready to deal with the changes emerging due to change in economic
factors. (Jacob, 2013).
Technological factors: If Unilever has the strengths of upgrading its current technology
with new emerging technologies then it will adopt the new changes emanating from the
technological factors that require sufficient funds to upgrade. Failure to these will lead to
inability of the company to deal with competition from firms with more advanced technologies.
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Business and the business environment
Legal and political factors: these includes policies, rules and regulations. Changes of
policies, rules and regulations have a negative effect on the company because it will face legal
challenges. The company should therefore have specialised and expertise to assist its to deal with
the legal challenges emanating from the change in political and legal factors. (Gupta, 2013).
Cultural and social factors: To deal with the challenges emerging from changing cultural
and social factors, Unilever should have qualified staff, feasible financial and natural resources.
The company should have the ability of satisfying the customer preferences and taste as per their
desires that are based upon their values and beliefs.
Conclusion
In summary, this report was able to discuss various aspects relating to Unilever
organisational functions and impact of macro-environmental factors Based on the discussion,
there is need to evaluate the various type, size, and scope of organisation that is necessary to
attain the various needs of the societies within which they operate. As well, organisation factor
and how they relate with organisational structure were discussed. The report was also able to
show the positive and negative impact of the macro-environment on Unilever. The last section of
this report provided an analysis of internal and external to identify strengths and weaknesses in
Unilever and Toyota and how these strengths will relate to the external macro-environment in
Unilever.
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Business and the business environment
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Business and the business environment
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