Comprehensive Business Strategy Report: Unilever's Market Position

This report provides a comprehensive analysis of Unilever's business strategy, employing frameworks such as PESTLE, Ansoff Matrix, Stakeholder Analysis, Value Chain, VRIO/VRIN, and McKinsey's 7S model. The analysis covers Unilever's macro and micro environments, focusing on political, economic, social, technological, legal, and environmental factors, as well as internal capabilities and competitive forces. It evaluates Unilever's market penetration, product development, and diversification strategies, while also assessing its competitive advantages and potential areas for improvement in risk management, supply chain diversification, and employee training. The report concludes with insights into Unilever's strategic planning and recommendations for enhancing its market position and sustainability efforts. Desklib offers a range of solved assignments and past papers for students seeking to enhance their understanding of business strategy.

Unit 32
Business Strategy

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
P1 Application of appropriate frameworks to analyse the impact and influence of the macro
environment on Unilever.............................................................................................................1
P2 Analysis of the internal environment and capabilities of Unilever........................................4
M2 Critical evaluation of company's internal environment........................................................6
P3 Application of Porter's Five Forces for Unilever's Analysis..................................................7
M3 Unilever's strategies to improve market position and provide competitive edge..................8
P4 Application of theories to interpret and devise strategic planning of Unilever......................8
M4 Strategic Management Plan For Unilever...........................................................................12
D1 Application of environmental and competitive analysis to produce valid strategies..........12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................13

INTRODUCTION
Unilever is among the oldest and well established MNC's of Britain, its headquarters are
situated in London, the organisation specialises in 3 major domains such as, Home Care, Beauty
& Personal Care and Foods. Its primarily operational markets are in Netherlands, China, India,
The United Kingdom and The United States (Berman and Dalzell-Payne, 2018). Unilever is a
sustainable brand which believes in providing quality products which makes the customers feel
good as they receive their value of money because of which more than 25% of the world's
population uses at least one of the Unilever's Product. Currently Unilever is serving to 2 Billion
customers who are using Unilever's products on a daily basis, the needs of these 2 Billion
customers is being served by 15,000 Unilever Stores along with 10,000 truck delivery services,
with a range of 60,000 products with 440 distribution centres plus 250 factories owned by
Unilever. The brand is capable of combining its global market analysis with local beliefs, which
helps them to win the hearts and beliefs of its customers.
MAIN BODY
P1 Application of appropriate frameworks to analyse the impact and influence of the
macro environment on Unilever.
PEST Analysis also known as PESTEL Analysis is a commonly used business analysis
framework, to evaluate the factors under which the company's operates and plays a major role in
policy and decision making for themselves. The factors by which the analysis of Unilever will be
carried out are as follows:
Political Factor: The company needs to co-ordinate and adapt to the rules and regulations
implied by the countries, if under any circumstances they fail to do so, can lead to serious legal
repercussions which can even stop their business in that particular nation. As being a European
company, Unilever needs to abide by the rules and regulations formulated by the Food and Drug
Corporation of the United Nations, as The UN can come up with strict rules and regulations
which makes the survival of any foreign country difficult (Khalifa, 2020).
Economic Factor: A company like Unilever which operates in the FMCG sector do have a lot of
scope in economies such as India and China, where the economy is performing relatively well,
and provides the company the type of consumers which will purchase the commodities,
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irrespective of all there exists some disadvantages leading to unemployment, which will not be
beneficial for the organization as it drastically reduces the purchasing capacity of the nation
which directly impacts the company's revenue (Timms, 2021).
Social Factor: Unilever very precisely launches products based on the lifestyle of different
individuals considering different demographic needs. Marketing of products plays a major, it
should be done in a way which relates the customer with the product.
Technical Factor: In the business landscape the technological wave has been there. in order to
sustain, the companies need to keep up with the ever changing technologies, which will not only
drastically enhance the company’s production but will also improve relationship with the
customers.
Legal Factors: Unilever owns a product range of 400 products, which brings ton of legal work
to handle, for effective handling of such legal issues the company should have a well
experienced and qualified legal team, who should be able to take effective and measurable
actions.
Environmental Factor: Unilever abides by the UN sustainability goals and from the preceding
years, the focus of the company is on making the plastic packaging 100% reusable, this will not
only reduce the company's carbon footprint, but will also reduce its consumer’s carbon footprint.
Environmental factor has turned out to be a reasonable addition to analysis, as it has drastically
affected the working of the company in a positive perspective.
Ansoff’s growth vector matrix also known as Product-Market Matrix, was developed by the
met mathematician H.Igor Ansoff. It is a strategic framework which helps businesses to create
strategies to access growth for both new and existing products. This matrix is divided into four
quadrants and each quadrant specifies different growth strategies. These strategies are Market
Penetration, Market Development, Product Development, Diversification.
Market Penetration: this strategy has been
proven beneficial to Unilever, as it has
contributed in the success of the company.
Unilever do not target a small market; they
launch a product with the ambition to penetrate
the market. Along with it the company
Market Development: is the strategy through
which the company has widen its geographical
operations. Unilever has always focused on
growing and expanding as much strategically as
they can, primarily the company grew all over
the Europe and then stepped out in the other
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understands the FMCG economic scale, which
has helped the build a customer base of 2.6
Billion.
booming global markets, as this expansion has
bought complexities, in the operations.
Product Development: Innovation and
creativity are the primary elements which leads
to product development. Improvement in the
present products and consistent launch of new
products targeting consumers’ needs is the
primary focus of the Unilever. The product
development strategy of the organisation has
always brought success and has increased the
scope of the company (Yilmaz and Flouris,
2019).
Diversification: Unilever has performed some
related as well as unrelated diversification. In
case of relative diversification, the pattern of
consisting success is observed. Some unrelated
diversification of Unilever includes Tatcha
LLC, Dermalogica, etc.
Stakeholder analysis: Stakeholder
mapping
Keep Satisfied
Unilever's decisions should be useful to the
customers and to the government
Key Players (Critical Stakeholder)
Business Partners, Investors and suppliers are
considered as critical stakeholders.
Least Interested
Nothing is considered as least considered
Keep Informed
Keeping the team involved in the management
and creation of the product informed
M1 Critical analysis of macro environment.
Pestle Analysis identifies the macro environment of the business, it’s a tool which helps in
understanding the factors and discover scope for international market. Higher business
performances can be achieved through practising strategies.
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P2 Analysis of the internal environment and capabilities of Unilever.
Value analysis provides a broader view which helps to identify the functionalities or processes
that needs to be added or eliminated from the final deliverables. With the help of this in depth
analysis the project will turn out to be cost effective, as unnecessary expenses will be eliminated
while analysis.
Inbound Logistics
- Unilever's Inbound Logistics is well laid and well executed, its
products are globally scaled and are available locally in the
traditional markets.
- The brand has created a strong and reliable network of trusted
and loyal suppliers.
- Owning 19 tea estates is an example of strong backward
integration of the brand.
- Unilever has never involved any intermediators in their
processing, they source directly from the farmers.
Operations
- Unilever believes in sustainability because of which they do
manufacture their products from 100% non – hazardous
substances
- The brand is consistently working towards the goal of
reducing waste, and it do eliminated waste per tonne from their
production
- Unilever have been successful in reducing their carbon count
as well as their customers.
Outbound Logistics
- Unilever has launched project 'Shakti' to reach rural areas
- The brand has created 70,000 micro women entrepreneurs to
reduce and ultimately eliminate unemployment.
- Has created strong reputation by serving the needs of small.
Marketing Activities - Appropriate store structures are designed to represent the
brand ideology and create plans for the presentation of the
products in the store.
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- Using other mediums then TV's, to reach out to the audience
who do not indulge with it.
Customer Service - Customer care is being delivered via emails, chats, social
media, and through calls.
- engagement of the consumers is essential via new
technologies, and digital communication, for increasing their
user experience.
VRIO/VRIN is a framework which analyses the internal strengths and weaknesses of an
organisation and discovers, will they be able to sustain competitive advantage.
Product- Life boy
Resources Value Rare Imitation Organisation Competitive
Advantage
Brand
Awareness
Yes Yes No Has used its
leading
position in
various
segments
Sustainable
Competitive
Advantage
Project
Execution
Yes Yes No, none of its
competitor can
copy it
Yes,
successful
execution
Sustainable
Competitive
Advantage
McKinsey's 7s model was developed by the consultants of McKinsey&Company Tom Peters
and Robert Waterman, they discovered seven elements that determines the success of an
organisation.
The 7's of McKinsey are as follows:
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 Strategy: Unilever is focusing to create a balance between the competitive advantage
and cost saving through strategies. Unilever is known to deliver “value of money” in the
search of cutting its market competition, Unilever should not cut its cost.
 Structure: Unilever is focusing on the diversification of its geographical suppliers,
which prevents the company from facing any worsening effects. The supply from China
should be reduced because of the increasing political issues between US and China.
 Systems: Unilever needs to develop a system around its risk management, CRM , and
around data representation to enhance the organisation's internal efficiency.
 Staff: After the pandemic, the working environment has changed immensely, as work
from home was introduced. Unilever needs to formulate procedures for on boarding of
applicants remotely, there should be more transparency within the owners, top
management and employees, which can be done by launching open chats.
 Skills: Structured/well planned training sessions should be created for the employees
working from home as well from the office.
 Style: The adapted styles for the mangers who are managing their teams in the office,
and those who are maintaining them from home. To be effective the team mangers and
leads should be more flexible and should understand the motivation of the teams.
 Shared Value: Unilever has developed an effective vision and mission, the organisation
should put more focus on sustainability as the investors are focusing on the same.
M2 Critical evaluation of company's internal environment.
Under the P2 analysis of Unilever, Value Chain framework, VRIO/VRIN and
McKinsey's 7s model was used for the internal analysis of the organisation. Value chain analysis
provided in- depth knowledge about the Inbound Logistics, Operations, Outbound Logistics,
Marketing Activities and Customer Service. It suggested several ways through which the internal
efficiency of the organisation can be improved. Later the VRIO/VRIN analysis helped to figure
out the organisation strengths and weaknesses, a 4 step analysis helped to analyse products
sustainable competitive advantage. Followed by McKinsey's 7s.
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P3 Application of Porter's Five Forces for Unilever's Analysis
Porter's Five Forces is an effective framework which investigates the competitive
surroundings of an organisation. The ways to gain advantage from one's competition can be
learned through Porter's Five Forces, the expansion of company’s rival is a direct threat to the
organisation, as it can supersede or can even engulf the business. It’s a business model which
helps in the analysis of different businesses and explains, the ways by which other businesses can
achieve certain level of profitability and sustain it.
Analysis of Unilever on the basis of Porter's Five Forces is as follows:
 Threat of new entrants: Unilever needs to deal with new as well as established entrants,
low switching cost have a strong impact on the company, as the customers can switch to
other products delivered by other organisations (Zhuang, 1995). In contrary to this, it’s
not easy for any other company to build a strong brand name like Unilever. It proves to
be advantageous for the brand.
 Competitive Rivalry: As a lot of big brands execute in FMCG sector, and its proven that
they have strong impact on Unilever, because of low switching cost. As the other
competitors are also well established in the business, it becomes necessary for Unilever to
consider competitive rivalry as its priority and take precautionary measures.
 Bargaining Power of customers/buyers: Each and every business relies on customer
relationship, but there exist some external factors which results in the bargaining powers
of the customers which creates a strong impact in a negative way on businesses and on
Unilever as well (Moktadir, Ali, Paul, Sultana Rezaei, 2020). Primarily the low switching
cost plays a major role, as it allows customers to easy switch to other products
manufactured by other brands, which immensely impacts the businesses. Along with it
availability of high quality information, makes it more convenient for the customers to
switch to other brands. These two factors can outweigh the other factors and will create
disturbance for other companies.
 Threats of substitutes or submission: Easy availability of cheaper alternatives, impacts
the revenue and profit margins of an organisations. The low switching cost allows
customers to easily switch to cheaper alternatives, but on contrary the availability of the
alternatives that could compete with Unilever's products is comparatively less. But there
exists the possibility for brands to copy goods and deliver them at cheaper rates, but
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copying the value is comparatively tough for such brands. Thus this results in a weaker
impact on Unilever.
 Bargaining power of Unilever's suppliers: There are several factors that affects the
bargaining powers of the suppliers, out of which suppliers size, population and overall
supply is considered the most, as they have immense impact (Cappelli, 1999.) Unilever
deals with large as well as moderate size suppliers, which creates a significantly lesser
impact and carries moderate consideration in the FMCG industry.
M3 Unilever's strategies to improve market position and provide competitive edge
As Unilever is creating its portfolio in high growth arenas like Hygiene, Skincare, Prestige
Beauty, Functional Nutrition and plant based foods will ultimately improve the market position
of the organisation. Unilever products are sustainable and are improving the health of the planet,
build confidence in people and promotes well-being, working towards to create a transparent
world will provide a competitive edge to Unilever.
P4 Application of theories to interpret and devise strategic planning of Unilever
Unilever's uses Porter’s generic strategies to develop brand competitiveness for the
product growth. In Unilever's case the market competency goes hand-in-hand with product
development.
The strategies are formulated with the combination of generic and intensive strategies which
ensures global success of the product.
Generic Strategies: helps to analyse the market needs, for the analysis of the market needs
Unilever uses differentiation for its competitive advantage. It helps the product to stand out
within the market competition (Lemak and Arunthanes,1997). A great example of Unilever's
generic strategy is the market presence of Dove Soap Bard which focuses on providing
nourishment, which make the product to stand out from the soaps which focuses majorly on
cleansing rather than moisturising.
Intensive Strategies: helps to analyse the business needs which helps to formulates strategies to
make the product a market hit.
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Market Penetration: It is considered as primary strategy of the product, Unilever launches its
product with an intension of penetrating the market, product is considered successful it its able to
penetrate the market, with the use of intensive strategy the brand increases its revenue and
overall brand presence. Combination of predetermined objectives with intensive strategy results
in aggressive brand growth.
Product Development: Product Development is counted as a secondary strategy that the brand
uses for the business profits, intensive strategy can be applied to products which developed to
encounter customers need.
Diversification: It is considered as a supporting strategy, primary focus of diversification is on
developing new business aspects to grow the organisation. The expansion of the brand takes
place through mergers and acquisitions.
Market Development: Is the part of the organisation's supporting strategy, this strategy helps
the businesses to grow by making them enter into new segments, providing a support to the
business, by using the product uniqueness they enter the market segment, Unilever by starting
effective marketing campaigns showcases the potential of the product to the targeted consumers.
Bowman’s strategy clocks: is an effective and easily understandable tool, which helps the
brands to analyse and secure different positions in the market. In totality there are 8 positions
that are being represented by the bowman's strategy clock, highlighting different level of
achievements.
Positions Functioning
Position 1: Low Price & Low Value Added
- It is the combination of two lowest factors,
such as low price and low value
- acquires less significance in the clock strategy,
as it primarily focuses on the lesser variables
- majorly concerns with the quantity sold and
benefits Unilever.
Position 2 : Low Price - the brand is focusing on providing cheaper
product alternatives for the customers to fight
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the market competition
- for the successful attainment of this position,
primary focus should be on cost reduction.
Position 3 : Hybrid - this position stands between low price and
differentiation.
- Unilever ensures the products price to be
competitive enough to compete in the market
- The organisations primary focus is to sustain
good product margins while balancing cost and
differentiation.
Position 4: Differentiation - With the help of differentiation, Unilever tries
to provide a unique identity to their products so
that they can stand out.
- this position is also a part of Ansoff Matrix
and 4P's frameworks
Position 5: Focused Differentiation - Unilever believes in providing value of money
and focused differentiation helps organisations
in in achieving that.
Position 6: Risky High Margins - Unilever knows this well that buyers goes for
cheaper alternatives, even after knowing the
market scenarios if they still continues with the
high margin perspective, they should know that
it is being followed by high risk percentage too
(Laverty,2001).
Position 7: Monopoly Pricing - Unilever has its monopoly in FMCG sector,
most of its competitors cannot compete with it,
but still the company needs to keep an eye.
Position 8: Loss of market share - As being considered as the world’s 4th largest
FMCG
- Unilever has lost 10% share of the global
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antiperspirant market.
Devise Strategic Management Plan
 Background: Unilever operates in three different divisions; Home care, Beauty and
Personal Care and food and refreshments. The major execution of the brand take place in
the United Kingdom, the United States, India and China. The companies primarily focus
is to diversify the product range and expand its geographical horizon.
 Organisation Structure: Unilever recently declared that they will not move away from
their present matrix structure, as they have launched two more business, which includes
Nutrition and Ice cream. Respective Presidents have been allotted to different business
accompany by chief operating officer, chief supply chain officers (Phillips, 2003 and
Matthews,1992).
 Vision: Unilever vision is to create a “sustainable living commonplace”.
 Mission: Unilever's mission mentions that 2 Billion people uses their products to look
and feel good and get more out of life. With the help of the products Unilever is able to
perform activities which promotes hygiene, empowers and spread environmental
awareness.
 Marketing Matrix: the company has been widening up its geographical operations
through the matrix. Unilever has always focused on growing and expanding as much as
they can, primarily the company grew all over the Europe and then stepped out in the
other markets, as this expansion is has bought complexities, in the operations.
 Strategy formulation (VRIO): a framework which analyses the internal strengths and
weaknesses of an organisation and discovers that will be they be able to sustain
competitive advantage. Because of which Unilever has been able to formulate its
strategies.
 Implementation: Strategy implementation of Unilever is executed in 5 steps (Strategic
Analysis, External Analysis, Internal Analysis, Business Strategy formulation,
Implementation)
 Evaluation: The evaluation of company’s business strategies can be done through the
business reports, Unilever is a well-structured and coordinated organisation, which
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develops work ethics as well as business ethics among the employees, which has
constantly improved the company’s operations globally.
M4 Strategic Management Plan For Unilever
Strategic management plan for a company like Unilever should evolve around their
mission and vision which is sustainable development, for which the company can put its
emphasis on expanding the business in key growth market such as India and US (Sultan,2001).
More focus should be devoted to accelerate the growth of their product portfolios by providing
products that will deal with the issues related to the social and environmental issues, by taking
over the opportunities in e-commerce.
D1 Application of environmental and competitive analysis to produce valid strategies.
For the analysis of macro environment Pestle analysis comes in hand as it analysis and
helps businesses to understand the factors affecting the environment and discover scope for
international market, through which higher business performance can be achieved.
McKinsey's strategy, structure, system, staff, style and shared values and Value Chains Inbound
Logistics, Operations, Outbound Logistics, Marketing Activities and Customer Service helped
business to analyse their internal business, and formulates tailored business strategies for specific
needs.
As Unilever is creating its portfolio in high growth arenas like Hygiene, Skincare,
Prestige Beauty, Functional Nutrition and plant based foods will ultimately improve the market
position of the organisation (McCall 1992 Peng,2017). Unilever products are sustainable and are
improving the health of the planet, build confidence in people and promotes well-being, working
towards to create a transparent world will provide a competitive edge to Unilever.
Unilever's operational success is based on 5 factors: Primarily by creating purposeful brands
will be good for companies long run, as Unilever launches products with the thought of
penetrating the market, the product creation is based on customer’s needs which makes them
unique and let them stand out.
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CONCLUSION
This report primarily focused on the application of different frameworks for the analysing
the influence of macro environment on Unilever. In this report application of Pestle analysis,
Ansoff’s, and stakeholder analysis was implied to analyse the impact of macro environment.
Pestle focused on the political, economic, social, technological, legal and social factors of the
environment, and Ansoff analysis focused on the market penetration, market development and
product development and diversification strategies. Followed up by McKinsey's, Value chain and
VIRO frameworks for the analysis of the internal environment. Porter's Five Forces was applied
to provide the competitive edge and market position of Unilever.
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REFERENCES
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