Business Strategy Analysis of Unilever (Course Name, Semester)

This report provides a comprehensive analysis of Unilever's business strategy, examining both its internal and external environments. The report begins with an introduction to business strategy and Unilever, a multinational consumer goods company. It then delves into the impacts of the macro environment on the organization, utilizing PESTLE analysis to assess political, economic, social, technological, legal, and environmental factors. The analysis continues with an examination of Unilever's internal environment and strategic capabilities, including SWOT and VRIO frameworks, and the McKinsey's 7S model. The report also applies Porter's 5 forces model to assess competitive forces within the industry. The report concludes with a summary of the key findings and recommendations for Unilever's future strategic direction.

Business strategy
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Table of Contents
INTRODUCTION...........................................................................................................................2
LO 1.................................................................................................................................................2
P1 Impacts and influences of macro environment on an organization........................................2
LO 2.................................................................................................................................................3
P2 Analysis of internal environment & capabilities of an organization......................................3
LO 3.................................................................................................................................................3
P3 Application of Porter’s 5 forces and competitive forces........................................................3
LO4..................................................................................................................................................3
P4 Application of theories, concepts and models........................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4
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INTRODUCTION
A business strategy refers a combination of some actions which are being used and taken by
a business in order to compete successfully. This present report is based on Unilever that is a
British Dutch multinational consumer goods company. Headquarter of this company is in
London, UK and founded by William Lever and its partners in 1929. This report is going to
show several business strategies and models which are being used by this company in order to
analyse all internal as well as external factors that have impacts on its growth and performance.
With the help of PESTLE analysis and Porter’s 5 forces model it analyses external factors like
political, technological, competition in the same industry, bargaining power of customers etc.
Further it will also show importance of SWOT analysis and Ansoff matrix model as with this
help it analyses its own strengths, weaknesses and internal factors that have impacts in positive
and in a negative manner.
LO 1
P1 Impacts and influences of macro environment on an organization & its strategies
Business strategy can be defined as a plan of actions that is being designed by
organizations in order to achieve their long term goals and vision.
Mission: Mission of Unilever multinational company is to add vitality to life. For
accomplishing this mission, manager of this company try to makes strategies to meet needs of
their customers regarding personal care, nutrition and hygiene.
Vision & objective: Vision of Unilever company is to make sustainable living
commonplace and to make a long-term business growth.
Roles of strategy and techniques: For accomplishing vision, mission and objectives, the
company makes different strategies planning such as business plans, capability analysis, goal
setting, market analysis etc. All these strategies help them in accomplishing their goals and being
in a competition.
PESTLE analysis: There are several external or macro environmental factors that can
impacts on the performance and strategies of Unilever Company. All factors like political,
economic, social can have both positive and negative impacts. It is important for this company to
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analyse all external factors as it operates in 190 countries and take competitive advantages. With
the help of PESTLE analysis it makes itself able to decrease negative impacts and increase
positive impacts. Some external factors include:
Political: It is stated that Unilever offers products and services in around 190 countries with
having 400 brands so regulatory restrictions and guidelines of some countries can have impacts it
in a negative manner (Rastogi and Trivedi, M.K., 2016). Political instability and changes in trade
laws like restriction in the context of import, export of goods can hinder the success of this
company. On the other hand in the developing countries it has opportunities of expanding free
trade relations.
Economic: There are some economic factors like increasing labour cost in developing
countries, economic stability, and conflicts with distributors after Brexit and fluctuation in the
currency markets that impacting on its performance in both positive and negative manner. For
example, increasing labour & wages cost in developing countries is a threat as it can increase its
overall cost. Instability of politics in Asia & Africa can also impact it in a negative manner. On
the other hand its strengths and performance focus on the realm of products need that help it in
maintaining economic stability.
Social: Social factors includes attitude, needs and expectations of people of different culture and
society in which the company y operates. Rising health consciousness, growing demands of
premium skin care products on developing countries are some examples of social factors. It is
stated that Unilever in performing and focusing on developing a strong reputation. By providing
the best quality products and services it makes people and specially women feel their best from
inside out (Barba and et.al., 2016).
Technological: This includes implementation of integrated supply chain with ultra
logistic, advanced technology, increasing use of social media, rising research & development
investment are some factors of technology. Some factors have positive impacts and others have
negative impacts on its performance. For example, rising investment on research and
development can increase its overall cost which is not good for the company. This company is
now more focusing on developing digital marketing that can allow it to take competitive
advantages.
Legal: Unilever sells approximate 400 brands related to health, food, personal care and
many more, so it is important for this company to follow all laws like products safety, copyright,
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taxes etc. Delay in regulatory approvals can hinder its decision making process. Whereas,
strengthening consumer rights laws give it opportunity to improve products and service quality
for preventing itself from lawsuits.
Environmental: Climate change, environmental laws, sustainability are some
environmental factors that need to be considered by Unilever in order to satisfy environment
needs (PESTLE analysis, 2019). It is stated that Unilever is now more focusing and promoting
renewable as well as sustainable eco-friendly products that can give it opportunity to attract more
customers towards buying its products.
Stakeholder analysis: In order to satisfy stakeholders like employees, consumers, suppliers,
Unilever focuses on its systematic strategy with the main aim of fulfilling corporate social
responsibility. According to this strategy, its CSR prioritization puts its consumers and its
stakeholders at top. Rather than these strategies and models it also makes use of Porter’s 5
forces, organizational audit or SWOT model etc.
LO 2
P2 Analysis of internal environment & capabilities of an organization
Components of strategic capabilities: Strategic capability refers the ability of an organization
to use and harness all its resources, skills and abilities as well. Strategic capabilities of Unilever
can help them in accomplishing its goals and increase profitability. There are mainly 6
components of strategic capabilities including some tools for analysis, purpose of strategy,
values, vision, goals and action planning.
SWOT analysis: There are various internal factors that can also impact on the performance and
growth of the company. With the help of SWOT analysis it can identify its own Strengths,
weaknesses, opportunities and threats and can take long term success and opportunities. Some
strengths and weaknesses of this company are described as below:
Strengths
The main strength of Unilever which makes it able to take growth and success is it has a strong
financial strategy along with popular brands (Bull and et.al., 2016)
 It has a diversified products range by which it can take opportunities by changing
consumer preferences across the world.
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 It has unique & flexible pricing strategy and also uses different distribution channels that
make it able to take competitive advantages and attract wider range of customers.
 It has a strong global market presence which increases its sales and profitability.
Weaknesses
 The main weakness of this company is it has products that can be imitable by other
companies and its competitors.
 Other weakness of Unilever that can snatch some opportunities in its hand is it is highly
dependent on retailers and distributors which have bargaining capacity.
 It operates in uber competitive market where other multinational companies like Nestle,
P&G in addition to a host local players have a dominant power which is a weakness for
this company (SWOT analysis, 2019).
Opportunities
 The main opportunity which it gets in its premium skin care products as there is a
growing demands of premium products.
 It also focusing on products innovation for health in beauty care and food segment.
 Increasing use of social media in its marketing strategy also give it several opportunities
and help it in attracting larger range of customers.
Threats
 Some multinational companies like Nestle, P&G put pressure on it to invest a lot in R&D
which is a big threat for Unilever.
 There is a growing popularity of organic and Ayurveda products are also a big threat for
the company.
 There is a shortage of skilled workforce and increasing labour turnover is also a threat for
Unilever which can decrease its brand image.
VRIO/VRIN framework: VRIO is also a tool that tell Unilever about its products value,
imitability, rareness and organization. There are some resources of this company that have value
and rareness where other resources have imitation and other competitors can easily imitate. With
the help of VRIO model it can easily identify all products and resources (Hernández and Garcia,
2018)
Resources Value Rare Imitation
Ability to attract talent Yes it has value as its Yes, skilled Difficult to imitate.
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in global markets strategy is being built
on successful
innovation.
workforce is critical
to the company’s
growth.
Financial resources Yes it has value. No As market liquidity is
available to all the
nearest competitors.
Distribution
competitiveness
In the context of value
it can be said that it
helps them in
delivering lower cost
No it is not rare. It is difficult but Yes
this resource can be
imitated by
competitors.
 McKinsey’s 7S model: It is other main strategic analysis model that can be used by
Unilever in order to analyse its strengths and weaknesses. This 7 S model includes
company’s strategy, systems, shared values, style, staff, skills & structure. Strategy is
called a plan that is being developed by an organization. According to this model it is
important for the company to make an effective and long term strategy. Structure defines
the way of performing things. For taking competitive advantages Unilever needs to focus
on adopting the best way. System includes all processes that show the company’s daily
activities (Aithal, 2017).
Skills are called abilities & competitiveness which can make the company able to take
opportunities. Staff is concerned with number of skilled employees that are recruited and need to
be trained. Style refers the way of managing things. Shared values are norms and standards that
help the company in guiding. So it can be said that by analysing all these internal factors,
Unilever can easily increase its strengths and decrease its weaknesses.
LO 3
P3 Application of Porter’s 5 forces and competitive forces
Porter’s 5 forces model: It is stated that Unilever company deals with several external
factors as it offers products into worldwide. There are some factors that have impact on its
performance and also impacts on its market situation. With the help of Porter’s 5 forces model it
can identify and analyse market condition and competition level in the same industry. Porter’s 5
forces includes:
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Bargaining power of buyers: It is stated that consumers and buyers of Unilever are all
around the world and are in Trillions. They have more power to change the price and bring them
down. Well-built and potential buyers can force sellers to minor prices and get good quality
products. So it is important for the company to analyse this factor and identify buyers as they are
weak and well-built. In this context Unilever can focus on building a large base of customers it
can help them out in reducing bargaining power of their consumers.
Threats of substitute products: As it is stated that products and resources of Unilever are
imitable and competitors can easily imitate their products. Consumers in this industry always
seek and want to try something new & better. When a product has similar features then it can be
a big threat for Unilever. Substitute products can offer a value proposition that can be different
from present offering. So it is essential for Unilever to focus on consumers and after knowing
their needs provide them the products that can satisfy them (Botu and Ramprasad, 2015).
Bargaining power of suppliers: Suppliers on this industry also have a bargaining power.
It is stated that Unilever is dependent on suppliers, retailers which is the main weakness. When a
company purchase their raw materials from several suppliers than they take advantage of their
position. They have the ability of decreasing profit margins which Unilever Company can earn.
In order to solve this problem, it needs to focus on building an efficient supply chain with
multiple suppliers.
Threat of new entrants: Unilever operates in consumer goods & new entrants in this
personal products industry try to bring out creativity and innovation. When customers find
products with having unique features and innovative products then they are more likely to
purchase products from new entrants. It can put pressure on Unilever to focus on lower pricing
strategy. By focusing on pricing strategy and providing innovative products to customers it can
make it strong position in the market.
Rivalry among existing players: There are several existing competitors in this industry
such as Nestle, P&G that also offer several products to customers. Intense competition can drive
down prices and can also decrease the overall profitability of Unilever. It can minimize and limit
of consumers.
So it can be said that with the help of Porter’s 5 forces model it can decrease all factors that have
negative impacts and become the market leader (Halperin and et.al., 2017)
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Balance score card: Balance score card is other main model which can help the company in
measuring performance level. Starting point of this model are vision and strategy that are viewed
from 4 perspectives such as financial, customers, internal business process and learning &
growth. Financial perspective includes company’s sales, income and expenditures that are being
used by them for understanding financial performance in the market. In the customer perspective
they measure customers’ satisfaction with price, quality and availability of products & services.
Business processes are also evaluated by seeing the way and effectiveness of manufacture
process.
LO4
P4 Application of theories, concepts and models
Porter’s generic strategy: There are several strategies which are being used by Unilever
Company in order to accomplish its goals and objectives. With the help of Porter’s generic
strategy it can take more competitive advantages as it shows 4 growth strategies.
Cost leadership: It is a growth strategy in which the company focus on becoming the low cost
producer in the industry. Unilever Company competes for a larger range of customers that is
mainly based on the price. This cost leadership strategy can be fit when the products & services
are standardised and have generic qualities that can fulfil needs of customers at lower prices. Foe
becoming a cost leadership it requires to build efficient production facilities, minimize cost of
R&D and sales.
Cost focus: In this cost focus Strategy Company seeks to take cost advantages in its target
market. In this company requires offering products at the lowest price in a niche market. By
identifying needs of customers, Unilever can satisfy them and need to ensure that the costs
remain low (Bertozzi, Ali and Gul, 2017).
Differentiation focus: In this growth strategy, an organization requires to focus on a niche
market that have a little competition & products should be unique. The main aim of this strategy
to increase loyalty of brand among customers.
Differentiation: It is also a growth strategy in which organizations try to be unique in the
industry. It is also stated that Unilever is offering value to its customer’s b y adding unique
features on its products. The main aim of this strategy is to add more value and being in a
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competition and for that the company focus on sustainability create high switching cost through
uniqueness.
From all these strategy Unilever is mainly focus on differentiation strategy and make their
products unique and different from its competitors.
Hybrid strategy: It is contrasted strategy of porter’s generic strategy in which the company
wants to take differentiation advantages and integrate cost.
Sequential: According to this strategy the company first focus on 1 of the 2 strategic options and
then on others. For example, Unilever who is a innovative company so it first focus on
differentiation in which it markets a new unique features of products that have a high value.
Further it requires to push back its competitors by making a strategic shift with the main aim of
gaining cost leadership. Simultaneous: The main purpose of this strategy is to take differentiate
advantages & also generate cost at a same time. For making these strategies successful it needs
to focus on innovative strength, focus on customers’ needs & organizational learning. So at a
same time it can focus on 2 strategies.
Vertical/horizontal integration: This strategy is also called competitive strategy which can be
used by Unilever in order to take competitive advantages. In vertical integration, company take a
complete control over 1 or more than 1 stage in the process of production as well as in
distribution of products. It has several types such as forward integration, backward integration
and balanced integration. On the other hand in the type of horizontal integration strategy,
acquisition of a related business merge with a same type of business in other country in order to
take advantages and attract wider range of customers. It can be beneficial for the company when
the industry is growing & also the company manage operations of the bigger companies
efficiently (Dingeldey and Steinberg, 2016).
So it can be said that Unilever multinational company can become the market leader and
also take several competitive advantages. By using several strategies, models of identifying and
analysing all internal and external factors it can also increase its strengths and decrease its
weaknesses.
CONCLUSION
From the above study it has been summarized that business strategies played a vital role in
accomplishing goals and vision of an organization. It has shown several models, theories and
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strategies by which help the selected company made itself able to evaluate and analyse all
business environmental factors that have impacted on its actions. With the help of PESTLE
analysis and Porter’s 5 forces analysis model it evaluated all external factors including economic,
social, buying power of suppliers, market position and many more. SWOT analysis model also
helped the selected company in analysing internal factors like opportunities, strengths etc. Lastly
it has also shown different applications of theories which includes Porter’s generic, hybrid,
diversification which also helped them in accomplishing its pre determined vision and
objectives.
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REFERENCES
Books and journals
Aithal, P.S., 2017. A critical study on Various Frameworks used to analyse International
Business and its Environment. International Journal of Applied Engineering and Management
Letters (IJAEML). 1(2). pp.78-97.
Barba, F.C. and et.al., 2016. A technical evaluation, performance analysis and risk assessment of
multiple novel oxy-turbine power cycles with complete CO2 capture. Journal of cleaner
production. 133. pp.971-985.
Bertozzi, F., Ali, C.M. and Gul, F.A., 2017. Porter’s five generic strategies; A case study from
the hospitality industry. International Journal For Research In Mechanical & Civil Engineering
(ISSN: 2208-2727). 3(2), pp.09-23.
Botu, V. and Ramprasad, R., 2015. Learning scheme to predict atomic forces and accelerate
materials simulations. Physical Review B. 92(9). p.094306.
Bull, J.W. and et.al., 2016. Strengths, Weaknesses, Opportunities and Threats: A SWOT analysis
of the ecosystem services framework. Ecosystem services. 17. pp.99-111.
Dingeldey, I. and Steinberg, L., 2016. Strategies to improve labour market integration of young
people: Analysing linkages between horizontal and vertical policy coordination.
Halperin, I. and et.al., 2017. The effects of attentional focus instructions on punching velocity
and impact forces among trained combat athletes. Journal of sports sciences. 35(5). pp.500-507.
Hernández, J.G.V. and Garcia, F.C., 2018. The link between a firm´ s internal characteristics and
performance: GPTW & VRIO dimension analysis. Revista de Administração IMED. 8(2).
pp.222-235.
Rastogi, N.I.T.A.N.K. and Trivedi, M.K., 2016. PESTLE technique–a tool to identify external
risks in construction projects. International Research Journal of Engineering and Technology
(IRJET). 3(1). pp.384-388.
Online
PESTLE analysis. 2019 [ONLINE] Available through: < https://pestleanalysis.com/pestle-
analysis-of-unilever >
SWOT analysis. 2019. [ONLINE] Available through:
<https://www.managementstudyguide.com/swot-analysis-of-unilever.htm>
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