Business Strategy: Analyzing Unilever's Market Position and Growth

This report provides a comprehensive analysis of Unilever's business strategy. It begins with an introduction outlining the report's objectives and the scope of the analysis. Task 1 focuses on external and internal environmental factors impacting Unilever. The PESTLE analysis examines political, economic, social, technological, legal, and environmental factors. The VRIO model assesses Unilever's internal resources and capabilities, while Porter's Five Forces model analyzes the competitive environment of the consumer goods industry. A SWOT analysis identifies Unilever's strengths, weaknesses, opportunities, and threats. Task 2 evaluates strategic directions available to Unilever, justifies and recommends growth strategies, and presents a strategic management plan. The report concludes with a summary of key findings and recommendations, supported by relevant references. The report highlights the importance of understanding external factors, internal capabilities, and competitive dynamics for effective strategic decision-making in the consumer goods sector.

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
PESTLE Analysis to assess potential scenarios for your organisation. .....................................1
Identifying the organisational capabilities by using appropriate frameworks............................3
Five Forces model to analyse the competitive environment. .....................................................4
SWOT analysis of Unilever........................................................................................................5
TASK 2............................................................................................................................................6
Evaluation of strategic directions available to Unilever.............................................................7
Justification and recommendation of growth strategies..............................................................8
Strategic management plan.........................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy comprises of long range sketch of desired direction and destination of
organisation. It can be understood as course of action which helps an organisation in
achievement of its specific business objectives. It plays an major role in planning, environmental
research and in examining organisational strength and weaknesses. This report is based on
Unilever which is a British Dutch transnational consumer goods company. Its products include
food and beverage, cleaning agent, beauty product and personal care products. This report will
analyse the impact and influence of business strategy on Unilever. It will also examine the
organisational internal environment in relation to the organisational capabilities through SWOT
and organisational external environment through PESTEL analysis. For analysing competitive
environment porter five force model is used in this report. Then the last part of the report will use
appropriate theories and concepts to analyse strategic direction.
TASK 1
PESTLE Analysis to assess potential scenarios for your organisation.
PESTLE analysis is a tool to used by companies to take decisions by analysing how
much external factors are affecting it. It consist of political, economical, social,technological,
environmental and legal factors (Akter and et. al., 2016). Unilever UK's consumer good
company also apply this tool to their company for knowing about the impact of these external
factors-:
 Political- this factor helps to know about the impact of government intervention in the
company. Unilever is working in different countries and every country's political factor
affect the company. Like company had some regulatory restriction by food and drug
administration in USA but this impacted Unilever completely by putting restrictions on
imports & exports for so many countries. This restrictions has reduced the sale of the
company as well as the revenue.
 Economical- these factors include inflation rate, exchange rate, economic growth rate,
unemployment rate etc. In case of Unilever, inflation rate of UK has been reduced which
lowers down the purchasing power of its people and now it is affecting the business of
Unilever because it has reduced the sale of the company by increasing the price of the
product.
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 Social- this factor is about how the consumer behaviour, culture, attitude,education level
etc. affect the company. Now days people are getting much more conscious about their
beauty and skin, they prefer to use those products which make them look good and feel
good. This social factor impacted the company and they took a decision to make products
which is in demand by the customers & which make them satisfied. This has increased
the demand of their product as well as the sale of the company. This factor has positive
impact on company because it make them bring something new in its product which
attract customers more (Bansal and DesJardine, 2014).
 Technological- this is the factor related to technology and how it is impacting the
company. Technology automation has a good effect on company because it is making
them more competitive to their competitors. Unilever has higher level of automation
which help them in supplying their products to the store very quickly. It save their time
and reduces their unwanted expenses. Technological development also help them to sale
their products online which is a good method for the company to increase its sale and
revenue.
 Legal- these are the factor which comprises health and safety law, employment law,
copyright, patent, discrimination law etc. Unilever is working in different areas in
different countries which make it hard for company to follow the laws. So this factor is
impacting company not in a good way. Like when they want do bring something new or
advancement into their production process they need to have a regulatory approval which
in return delay decision making as well as business growth because it takes a long time
for approval.
 Environmental- this factor means climatic condition, weather condition and whole
surrounding. It is affecting company in a good way because Unilever is producing safe
and eco friendly products for customers. They are using this method for packaging also
by using renewable resources in it. Company has been promoting sustainable and
renewable resources in making their products because of which it is able to increase its
sale and attract more customers as people are becoming more environment friendly these
days.
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Identifying the organisational capabilities by using appropriate frameworks
VRIO Model
It is an tool which is being used by different organisation to identify and analyse its
internal resources in comparison to its capabilities. It is designed to help organisation uncover
and protect the resources and capabilities that have the ability to give them a long term
competitive advantage. The term VRIO stands for value, rarity, imitability and organisation.
These terms can be further elaborated below:
 Valuable : This step help in finding that whether a particular resource will be valuable or
will it be able to add value to firm in future by exploring different opportunities while
defending threats. If the resources of Unilever are valuable then they will help
organisation to get benefit which will help organisation in gaining competitive edge over
other competitors (Cavusgil and et. al., 2014). It is important for organisation to
continually review the value of resources because constantly changing environment can
harm them. It may decrease their value over time.
 Rare : Resources which can only be acquired by few companies are referred to as rare
resources. Rare resources grant competitive advantage to the organisation. The
competitive advantage they provide are valuable and it normally sustains for a shorter
duration of time. As rivalry will immediately try to imitate the resources and by using
identical resources they will try to hamper the organisations superior performance. Firm
should not neglect the resources that are valuable because losing valuable resources
would effect an organisation as they are essential for survival of organisation to stay in
the market.
 Imitability : In order to imitate resources organization needs money. Imitating resources
is a costly affair it can be done in two different ways such as direct imitation and
substitution. In this Unilever can attain a sustained competing advantage with its
valuable, rare and costly to imitate resources.
 Organisation : In order to gain advantage of different resources companies needs to
value them. Organisation must be able to manage its different organisational processes in
an effective way that will help them to fully utilise organisational rare resources. (Eaton
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and Kilby, 2015).Which will help them to gain a competitive edge over its competitors
through proper and optimum utilization of its valuable and rare resources.
Organisational capabilities is a company's ability to manage its resources in such a way
that they help organisation to gain a competitive edge over its competitors. The company will
analyse business ability in relation to its ability to meet customer demand. companies unique
capabilities will help to prevent replication by competitors. Unilever will manage its valuable
resources in a effective ways in order to use them in way that it will provide them a competitive
edge over other competitors.
Five Forces model to analyse the competitive environment.
Porter Five Force model is used to understand how the five competitive forces affecting
the competition in an industry. Five forces of porter's model is bargaining power of suppliers,
bargaining power of buyers these two are the vertical forces while threat of new entrants,
industry rivalry & threat of substitute, these are the horizontal competitive forces. Unilever is a
consumer goods industry so this model help understand the level of competition in it.
 Bargaining power of buyers- Buyers have strong force in consumer goods industry.
This is because switching cost is low in this industry (very strong reason), as there are so
many company selling almost same products as Unilever so customers can easily shift to
other company. Other reason is buyers have good information about product, company,
price and it substitutes which again make their bargaining power more (Yuliansyah,
Rammal and Rose 2016). Other factor is small size of individual buyer, this is the weak
force which make bargaining power of customers low.
 Bargaining power of suppliers- It has a moderate force on competitiveness of the
industry because there are moderate size of individual supplier which can not much affect
the supplies of Unilever(Higgins, Omer, and Phillips, 2015). Every company in this
industry is buying raw material from numerous suppliers which makes their bargaining
power moderate. Moderate population of suppliers also has moderate effect on bargaining
power of suppliers.
 Threat of new entrants- This factor has weak force on industry because there are so
many companies which are working in it from a long time one of them is Unilever and it
has their fixed customers who trust the brand and will not shift to other brands. So in this
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case switching cost is not very high which make the entry of new entrant a weak force.
Other factor is high cost of brand development, companies already working in consumer
good industry have a strong brand development which create a tuff competition of
survival for new entries.
 Threat of substitution- This has a weak force on consumer good industry because there
are very few substitute available in the market. Customers of Unilever have low
switching cost which is a strong force for the company to survive in the market without
any threat. For example it will be easy for customers to get close up tooth paste from the
grocery store than to get a substitute like home made organic paste.
 Competitive rivalry- Competition has a strong force on consumer good industry because
there are number of companies working in this industry and they have a good brand
development which create a cut throat competition for Unilever to maintain its position in
the market. Other factor is low switching cost which has a strong force on the Unilever
because every company in this industry is producing almost same products which attract
customers to switch from one company to other (Leonidou and et. al., 2017).High
aggressiveness is also a strong factor for competition in consumer goods industry. For
example if Unilever is reducing the price of its toothpaste to attract more consumers, their
competitors will also follow the same plan and reduce the price of their products to
maintain the competition in the market.
SWOT analysis of Unilever
It is a technique which help company to understand their strength, weakness (these two
are internal to the company) opportunity and threat (are external in nature). Just like every
company, Unilever also apply this technique into their business.
 Strength- It is a good factor of any company which make them strong competition for
others. Unilever has a strong brand recognition in the market which is an advantage for
the company as it is able to maintain its competitiveness in the market. Other than this
company has a broad product mix which is also the strength of the company, because it
capture different segments with large customer base (Wheelen and et. al., 2017). Unilever
even have strong global market presence which make it a globalised company and
increases its revenue because when company working on such a big platform its profit
level increases with the increase in sale.
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 Weakness- These are the factors which is important for company to understand so that
timely they can take some measures to improve it. Like in case of Unilever, their
products are of imitable in nature which other companies can easily copy and can bring
same product in the market, It increases the competition in the market. Other weakness of
Unilever is limited business diversification i.e. it is producing lot of products but in same
sector or industry, they are less diversified which always create a risk for the company.
They should also work in sectors other than consumer goods and cosmetics. Company is
so much dependent on retailers they do not have any other way of selling their products
like online stores etc. which reduces the sale of company.
 Opportunity- it is about what company can achieve from outside the organisation .
There are some opportunities available for Unilever which it can grab, like business
diversification (Mi, 2015). Company can diversify itself by entering into the different
segments of the market for example company can start its clothing stores, can sell sports
item or can produce accessories for both girls & boys. This will increase market share of
the company and also increase its customers. Another opportunity for Unilever is product
innovation for health because people are getting very much health conscious these days
so this will help the company to target those customers. Company can even opt for the
market development and improving its advertising methods it will also act as the
opportunity for the company and By doing so it can reach to the every customer and
attract them to buy their products.
 Threat- these are dangerous for companies because it decreases the revenue of the
company. Unilever too have some threats like tough competitive rivalry, it is the biggest
threat for the company because Unilever is a very big and renounced company and it has
number of rivals to pull it down (Razak and et. al., 2016). Other threats are product
imitation in which rival companies copy strategy of Unilever to reach at their point.
Increasing popularity of retailers' house brands which is not in favour of the company
because in this situation retailers try to advertise and sell their home brand product more
in comparison to Unilever's product.
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TASK 2
Evaluation of strategic directions available to Unilever
Ansoff model was developed by H.Igor Ansoff which was published in Harvard business
review 1957. It helps an organisation to focus on its present as well as potential products. This
model is essential for strategic marketing planning which is used by organisations to grow
revenue through development of new products and services or by tapping new markets. It is used
to evaluate opportunities for companies in different areas through which they can increase sales
through alternative combinations for new market. Unilever will use this model in order to
determine its product and market strategy so that it can increase its market share and through its
product offerings.
Market penetration: It happens when existing products are marketed in a way to that it
increases the market share of the firm. Organisation can adopt this strategy because it involves
minimal risk as the firm is already presented in the market on a large scale all it has to do is to
increase its marketing efforts and increase its market share(Veit and et. al.,2014). Aggressive
efforts increases the company's ability to capture customers from other competitors.
Product development: This strategy is involved with introduction of new products that
will address consumer needs more efficiently. The firm develops a new product to cater to its
existing market. It requires extensive research and development which will help the organisation
to expand its product range. When organisation have a strong understanding of their current
market then only they are being able to provide innovative solutions to meet their current needs.
As organisation is providing new product offering to customers it will be able to influence a
larger number of audience.
Market development: In this strategy company will focus on entering into new market
with their existing product. It focusses on expanding into new markets that will include
expanding into new geographies, customer segments and regions etc. It will help organisation to
cater the needs of those market sectors which have not been addressed by the companies so far.
Organisation will foster certain marketing campaign that will highlight different potential benefit
to potential customers in order to create brand awareness and for influencing new market
customers (Rosemann and vom Brocke, 2015). As the organisation already have significant
presence in every consumer goods across different segments. Thus this strategy will serve as a
intensive growth strategy that will act as a supporting role in organisations business.
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Diversification: In this market development strategy in which corporate enters in a new
market segment in which it does not operate, currently while creating new product to cater new
market. It helps organisational business to grow by opening new possibilities for the business. By
adoption of this strategy organisation not only diversifies its product offering in the target market
but also expands its business horizons. Unilever will launch entirely new or new version of
Unilever's personal care product over time in order to increase its market share. Customer tent to
be attracted towards innovative product which will help company to increase their market share.
Justification and recommendation of growth strategies
From the above analysis Unilever will adopt market development strategy which involves
entering in new market or market segments for example in Afghanistan . Organisation can grow
by marketing of its current product into market segment that have not been taped yet by the
organisation. As the company already have presence in the every consumer goods market
segment entering into a new market will help the organisation to grow its existing market share
(Rugman and Verbeke, 2017). In this strategy organisation will focus on market development
through implementation of several marketing campaign in order to enlighten the potential benefit
of its current product to the new market segment.
Strategic management plan
Strategic management plan is a document which is being used to communicate
organisation goals, priorities, configure resource and operation strength .In order to ensure that
everybody in the organisation is working towards the achievement of common goals. It involves
organizations goals analyses in relation to the action required to achieve those goals and other
element developed during the planning process. Organisation will develop strategic management
plan to get an overview of the market it is entering through marketing development strategy.
SMART Objective: To increase its sales by 10% in the new market segment
Vision: organisation vision is to create a better future every day by inspiring people and
developing new ways of doing business.
Mission: To add vitality to life.
Market analysis: It is a basic analysis of market in quantitative and qualitative terms.
Organisation will look into the size of market both in terms of value and volume and will also
analyse certain other concern such as customer segment and buying pattern, number of
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competitor existing in the industry etc. Organisation will do this in order to get easy entry in the
new market segment (Sia, Soh, and Weill, 2016). Organisation will have to analyse market into
following way:
Segmentation: It involves analysing what kind of customers exists in the market and also
about their need preference. It refers to the process of creating small groups or segment of
customers within a large market to bring out the similarities between their needs and interests.
Targeting: It is the stage which involve use of various marketing plan and schemes by
organisation in to order to target their products among the various segments. Once segmentation
is done organisation needs to develop different marketing strategies and promotional schemes
according to the taste of different individuals of particular segments.
Positioning: It is the last stage which comprises of organisation deciding on its target
market, which involves organisations efforts to create an image of its products in the minds of its
customers Through effective positing organisation can create a effective first image of their
product in the mind of customers.
CONCLUSION
From the above report it has been concluded that company have to conduct internal
analysis on a daily basis because it assist them to find out their strengths and weakness which
could help them to perform better in the market. Apart from this, company have to scan the
external environment and then change their operations accordingly because it can not be
controlled by them. Organisation also need to analyse its competitiveness in the market
periodically to that it can maintain its position in there. At last, VRIO is a essential framework
for company as it assist them to find out their internal capabilities and how they could use to
enhance their productivity and efficiency level.
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REFERENCES
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