Global Strategic Management: Unilever PLC Case Study Analysis

This case study provides a comprehensive analysis of Unilever PLC, a British-Dutch multinational consumer goods company. The study begins with an examination of the competitive forces shaping the industry using Porter's Five Forces model, including the threats of new entrants, bargaining power of suppliers and buyers, and the impact of substitute products and industry rivalry. The analysis then delves into Unilever's strategic responses, including product differentiation, customer base, supply chain management, innovation, and economies of scale. Part 2 focuses on Unilever's purpose, mission, core competencies, organizational culture, and management style. The core competencies are detailed, along with an extract from the income statement. The organizational culture, value chain, and management and leadership style are discussed. The report concludes with a discussion of the company's recent performance, challenges, and strategies for future growth, emphasizing the importance of innovation and technology.

Running head: CASE STUDY
Case Study
Name of the Student:
Name of the University:
Authors Note:

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Contents
Part 1:...............................................................................................................................................2
Threat of new firms entering the industry:......................................................................................2
Bargaining power of suppliers:....................................................................................................3
Powers of buyers in the industry to bargain:...............................................................................3
Substitute products and its threats:..............................................................................................3
Competition and rivalry amongst the existing organizations in the industry:.............................4
Despite the number of issues mentioned above the company has used the following strategies
to achieve organizational objectives:...........................................................................................4
Part 2:...............................................................................................................................................4
Purpose and mission of the company:.........................................................................................4
Core competencies of the company:............................................................................................5
Organizational culture:................................................................................................................7
Management and leadership style:...............................................................................................8
Part 3:...............................................................................................................................................8
References:....................................................................................................................................11

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Part 1:
A British Dutch company Unilever PLC is involved in manufacturing and supplying
consumer goods to the customers. The company has its headquarters both situated in London,
United Kingdom and in Rotterdam, Netherlands. The products of the company include foods,
beverages and personal care products. As per the revenue measured in 2012 the company was the
largest consumer goods company in all across the globe. An organization involved in business
operations must take into consideration the competitive forces and other external; issues to
effectively conduct the business operations in the future (Lawrence, Rasche & Kenny, 2019).
The management of Unilever over the years have done an exceptional job of using the external
elements to achieve competitive advantage in the market place. The analysis of competitive
forces and strategic issues shaping the Unilever industry is explained below with the use of
Porter’s Five Forces model.
Threat of new firms entering the industry:
The number of new firms entering the consumer, household and personal goods industry
is significantly large as the industry provide attractive opportunities to the firms to earn
significant amount of profit from business operations. The new entrants in the market use
advanced technology to improve the quality of goods and with lower pricing the new firms often
create huge pressure to the existing firms in the Unilever industry. However, the effective use of
strategic advantage has helped the company to create barriers for the new entrants in the market
(AGBOWO, 2018).

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Bargaining power of suppliers:
The bargaining power of suppliers in the personal, consumer and household goods
market often created a number of challenges for Unilever PLC to earn required amount of profit
from business operations. The industry is full of powerful suppliers and the bargaining powers of
suppliers have adversely influenced the profitability of Unilever and other companies in the
industry. The company has used effective strategy to neutralize the bargaining power of large
suppliers to earn significant amount of profit form business operations (Robson, 2015).
Powers of buyers in the industry to bargain:
Buyers have huge demand in the market and with number of firms operating in the
industry, the buyers have significant amount of bargaining power in the industry. It is important
for an organization to improve the quality of its products and services to neutralize the
bargaining powers of the buyers in a perfectly competitive market. The bargaining powers of
buyers in Unilever industry have ensured that the company and other such firms are constantly at
their toes to provide top quality products to the consumers (Doz, 2017).
Substitute products and its threats:
As the company is in the consumer, personal and household goods industry, the risk of
substitute products is significantly higher. There are number of organizations within and outside
UK and Netherland which are supplying personal beauty, consumer and household goods to the
customers. Unilever has done an exceptional job to provide quality products in all segments of
the business to reduce the risk of substitute products manufactured and supplied by other
companies in the industry. Proving service oriented satisfactory goods to the consumers instead
of product oriented satisfactory services, Unilever PLC has been quite successful in dealing with
the risk of substitute products in the market (Morden, 2016).

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Competition and rivalry amongst the existing organizations in the industry:
The industry of consumer, household and personal beauty products is one of the most
fiercely competitive industries in the world. As the competition in an industry increases the firms
in the industry drive down the prices of products to attract customers to their products and
services. As a result the profits of the firms decreases significantly. Unilever operates in one of
the most fiercely competitive industries and the existing rivalries with the firms in the industry
have taken a toll on the profitability of the company. However, it is the effective management of
the company which has helped the company to achieve significant objective in the future.
Despite the number of issues mentioned above the company has used the following
strategies to achieve organizational objectives:
I. Product differentiation.
II. Large base of customer.
III. Having efficient supply chain with suppliers.
IV. Innovation of new products and services.
V. Using of economies of scale.
Part 2:
Purpose and mission of the company:
The purpose and mission of the company includes use of organizational resources in an effective
manner to earn maximum amount of profit from business operations. To establish relevant
controls and procedures within the company to comply with the corporate laws and other
standards applicable to the companies in the country (Wheelen, Hunger, Hoffman & Bamford,
2017).

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Core competencies of the company:
It is always important for the management to have complete understanding about the core
competencies of the organization. The core competencies of the company, i.e. Unilever PLC
include the following:
I. Huge economy of scale.
II. Availability of funds.
III. Loyal customer base.
IV. Ability to innovate new products.
V. Use its influence to dictate price with suppliers.
VI. Keep on improving the quality of products (Welford, 2016).
The extract from income statement of the company over the last five years will be helpful in
understanding the issues faced by the company in last five years:
INCOME STATEMENT OF UNILEVER PLC
EUR in millions 2013-12 2014-12 2015-12 2016-12 2017-12
Gross revenue 49,797.0
0
48,436.
00
53,272.0
0
52,713.
00
53,715.
00
Less: Revenue costs 28,387.
00
30,229.
00
30,547.
00
Gross profit 49,797.0 20,049. 53,272.0 22,484. 23,168.

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0 00 0 00 00
Less: Operating expenses
Expenses on research and
developments
955.
00
978.
00
900.
00
Administrative expenses 11,114.
00
13,705.
00
13,411.
00
Other operating expenses 94.
00
94.
00
96.
00
Total operating expenses 12,163.
00
14,777.
00
14,407.
00
Operating income 49,797.0
0
7,886.
00
53,272.0
0
7,707.
00
8,761.
00
Less: Interest
Expenses
500.
00
482.
00
372.
00
568.
00
565.
00
Other income
(expense)
(42,183.0
0)
242.
00
(45,680.0
0)
330.
00
(43.
00)
Earnings before tax 7,114.
00
7,646.
00
7,220.
00
7,469.
00
8,153.
00
Less; Income tax 1,851. 2,131. 1,961. 1,922. 1,667.

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00 00 00 00 00
Profit after tax 5,263.
00
5,515.
00
5,259.
00
5,547.
00
6,486.
00
The extract of income statements of the company since 2013 makes it clear that the financial
performance of the company over the years have not declined but it is also true that there has
been no significant improvement in financial performance over the last five years (Kolk, 2016).
Organizational culture:
The organization has a culture of innovation and technology. The management
continuously looks to improve the quality of products and services to attract new customers in
the market as well as keeping the existing loyal customer base intact. The organizational culture
allows employees and workers to share the ideas between about the products of the company
with the objective of improving the overall sales and revenue from sales. Value chain:
In order to understand the value of Unilever PLC the following diagram shall be extremely
helpful to the readers.

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As can be seen in the above diagram that the company’s value chain is mainly consists of
primary and secondary activities. The primary activities of the company include inbound
logistics, operations, outbound logistics, market and sales and services. Secondary activities on
the other hand is about managing the procurement infrastructure and human resource and
technological development. Managing the supply chain solutions for the company is also part of
primary activities of the company highlighted as out bound logistics in the above diagram
(Harangozó & Zilahy, 2015).
Management and leadership style:
As already mentioned that subsequent to the appointment of Paul Polman as the CEO of the
company the emphasis of the company has been to use new and advanced technology to improve
the quality goods and products and launch new products in the market. Creating a friendly work
environment and culture within the organization to foster innovation is one of the important
factors behind the company’s growth over the years.
Part 3:
Despite growth in sales the turnover of the company decreased in recent years:

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In recent years despite sales growth the turnover the company declined. This is mainly due to the
effects of changes in currency. Dealing with issue of currency change is equally important for the
Chief Executive Officer Paul Polman as any other operational issues in the company. The core
competencies and strengths of the company shall be used to deal with the existing issues in the
company (Barkemeyer, Holt, Preuss & Tsang, 2014).
I. Use its huge scale of operations to use benefits of large scale of economies.
II. The reduction in cost of products and services of the company can be achieved by using the
scale of economies of the company. It is important to note that Unilever is the largest
consumer, household and personal beauty Product Company in the whole world.
III. The ability of the company to use innovative technology to improve quality of products and
achieve product differentiation in the market is second to none (Kates, 2018).
IV. Ability to innovate new products to create barriers to the new entrants in the market and
achieve competitive advantage over the existing organizations and competitors in the market.
V. The company being the largest company in the industry has necessary resources to use on
research and development activities to improve not only the quality of existing products but
also to manufacture and development new products to attract customers in the market.
VI. The competitive advantage in the market allows the company to have its own price strategy
without bother about the price of the other competitors in the market as it has the ability to
differentiate and improve the quality of its products significantly from the quality of products
of its competitors (Schaltegger, Hansen & Lüdeke-Freund, 2016).
The CEO Paul Polman since his appointment in the concern position of the company in January
2009 has always emphasized the importance of keep on improving the quality of products by
using innovative and modern technologies. Organizational culture defines the path of an
organization and its future endeavours are dependant to a large extent on such culture. With the

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emphasis on technology and innovation Unilever has always tried to improve its existing
products and innovate new products to present to the customers with the objective of improving
the financial performance and position of the organization. Use the innovation and technology
will help the company to achieve its organization objectives and deal with existing issues faced
by the company.
The company should use its loyal customer base to improve its revenue in the future by taking all
necessary steps to introduce new products in the market. Use of aggressive advertisement and
promotional activities would be extremely helpful in achieving sustainable growth in the future.

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References:
AGBOWO, C. H. (2018). AN APPRAISAL OF INVENTORY MANAGEMENT AND CONTROL
IN MANUFACTURING FIRMS. A STUDY OF NIGERIA BREWERIES AND UNILEVER
PLC (Doctoral dissertation, Godfrey Okoye University).
Barkemeyer, R., Holt, D., Preuss, L., & Tsang, S. (2014). What happened to the ‘development’in
sustainable development? Business guidelines two decades after Brundtland. sustainable
development, 22(1), 15-32.
Doz, Y. L. (2017). Strategic management in multinational companies. In International
Business (pp. 229-248). Routledge.
Harangozó, G., & Zilahy, G. (2015). Cooperation between business and non-governmental
organizations to promote sustainable development. Journal of Cleaner Production, 89,
18-31.
Kates, R. W. (2018). What is sustainable development?.
Kolk, A. (2016). The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business, 51(1), 23-
34.
Lawrence, J., Rasche, A., & Kenny, K. (2019). Sustainability as Opportunity: Unilever’s
Sustainable Living Plan. In Managing Sustainable Business (pp. 439-459). Springer,
Dordrecht.
Morden, T. (2016). Principles of strategic management. Routledge.

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Robson, W. (2015). Strategic management and information systems. Pearson Higher Ed.
Schaltegger, S., Hansen, E. G., & Lüdeke-Freund, F. (2016). Business models for sustainability:
Origins, present research, and future avenues. Schaltegger, S., Hansen, E. G., & Lüdeke-
Freund, F. (2016). Business models for sustainability: Origins, present research, and
future avenues.
Welford, R. (2016). Corporate environmental management 3: Towards sustainable development.
Routledge.
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management
and business policy. pearson.