Business Environment Analysis Report: Unilever Case Study

This report provides a comprehensive analysis of Unilever's business environment. It begins by classifying Unilever as a private company, comparing it to public and voluntary companies like NHS and Oxfam, respectively. The report explores the scope and size of Unilever, examining its global presence and objectives. It delves into the organizational structure, highlighting the interrelationships between departments such as marketing, finance, and production. The core of the report examines the positive and negative impacts of the macro environment on Unilever, using the PESTLE framework. Political, economic, social, technological, legal, and environmental factors are considered. The report then applies a SWOT analysis to Unilever, assessing its strengths, weaknesses, opportunities, and threats, and concludes by examining how strengths and weaknesses interrelate with external macro factors. This analysis provides insights into Unilever's strategic positioning and its ability to navigate the complexities of the global business landscape.

BUSINESS AND THE
BUSINESS ENVIRONMENT

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1 Types and purpose of organization.........................................................................................1
P2 Scope and Size of the Company.............................................................................................2
P3 Relationship of Organisation Structure..................................................................................3
LO3..................................................................................................................................................4
P4 Positive and negative impacts of macro environment on business operations.......................4
LO4..................................................................................................................................................6
P5 SWOT Analysis......................................................................................................................6
P6 Strengths and weaknesses interrelate with external macro factors.........................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment is the sum of all internal and external factors of a business like
employees, customer needs and demands, supply and demand, management, clients, supplies,
owners, social trends, etc. It is very important for the organization to understand business
environment so that further decisions can be made accordingly. There are a lot of factors which
can make organization get a competitive advantage and a lot of factors which can influence
working of an organization which has to be improved by organization.
Unilever has a multinational company which is having its headquarters in London,
United Kingdom. There are more than 155,000 employees working in the organization which is
going to make organization function more productively and effectively (Unilever, 2020).
The report is covering the internal and external environment of company and that will
help organization have a better functioning for them and make company have a better name for
future. There are a lot of changes which are taking place in internal and external factors of
company so that there is a better functioning. This would be covered in further report.
LO 1
P1 Types and purpose of organization
Private Company
Private companies are those companies in market which does not allow the public to buy
their shares and the maximum board members they have been not more than 200. The rules and
regulations which they have been different from other types of organizations and anyone can
start their own private company with how much ever capital they have in hand. Unilever is a
company in United Kingdom which is a private company (Batocchio, Ghezzi and Rangone,
2016). The company is dealing in food, refreshments, home care, beauty and personal care, etc.
Any decisions taken in the organization have to be agreed upon all the parties in the organization
only then the decision can be implemented. Legally there is a limit on the shareholders in the
organization.
Purpose
 With a limited income of resources Unilever focuses on making low cost products and
quality so that there the customer’s needs and be met and the company can make profit. Focus of the company is to increase their sales so that they can increase their profit.
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Public Company
The shares of the company are distributed with all the shareholders of the company.
There are a lot of shareholders in the company and there are more than 200 members in the
company. Anyone can become a shareholder and the rules and regulations for the company are
different from other types of companies in market. NHS is a public company which is a United
Kingdom based company. This company provides health care to customers at a low cost so that
there is a high satisfaction level of customers. Legally there is no restrictions on the number of
shareholders in the organization which can make the organization expand even more and get
more customers. The employees also have to be given their rights so that the organization can
function effectively.
Purpose
 There are free health care services which are being provided to the customers so that
there is high satisfaction. Purpose of the company is to provide the customers with better health facilities in
country.
Voluntary company
These companies are in the market so that there is welfare of the society and anyone can
donate investment for the functioning of this company. Their work in to inform the people and
make them aware of the lifestyle they can have with the help of these companies which are non
governmental and non profitable. Oxfam is a voluntary company in United Kingdom so that the
condition of the people can get better. This charity is spread worldwide and there are 290
different charities under this company (Kluza and Nalepa, 2017). Trust plays a very important
legal factor in the organizations which are voluntary and can help the organization achieve their
objectives faster. The objectives have to be legally approved and so does the voluntary
organization in the country which has no personal benefit but social benefits.
Purpose
 Improve poverty level in the country and provide education to poor so that they know
their basic rights.
 The company does not work to earn profit but have a better society in the country.
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P2 Scope and Size of the Company
Bases Unilever NHS Oxfam
Size The company is spread
across 190 countries and
has come online so that it
can capture a larger market
base for themselves. There
are more than 155,000
employees working in the
company.
There are more than
150,000 doctors and
320,000 nurses which are
working in the hospital.
This is the largest health
care service in the country
which is a great advantage
for the company.
There are more than 20
charities which come
under this company so
that the poverty in the
organization can be
resolved.
Scope Unilever has a huge scope
of expanding themselves
and have a competitive
advantage and that is a
very good factor for the
organization. They can
maximise their profits by
increasing the scale of the
organization (Alaloul,
Liew and Zawawi, 2017).
The company thinks of
the customers benefit and
the government is
supporting these
companies so that the
objectives of the
organization are met
which will make the
organization function
well. The scope of the
organization is huge
because they are giving
the services at a very low
price in market.
There are education
which is being provided
to the people so that they
can have a better living
for themselves which is
going to be a great
advantage for the
organization to achieve
their objectives.
Objectives The company focuses on
getting their objectives
faster which is by
providing the customers
with low price products so
With no discrimination
there has to be good
services and facilities
which the NHS are
providing to the patients.
Oxfam is focused of
getting justice for the
poor people of the
country so that they are
aware of their rights and
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that the company can get a
lot of profit. This is only
possible when the
company increases their
sales by using the right
methods and strategies.
The objective of the
organization is to provide
the patients with the right
services and not on money
factor.
if they are not receiving
that they can fight for it.
This will get safety and
security in the country
which the Oxfam is
tended to achieve
(Nguimkeu, 2016).
There are a lot of methods which can be used by SME’s in the world so that they can
expand and become recognised globally. This is going to make the organization have more
customers and the revenue generation of the organization will increase. Joint ventures, mergers,
franchises are different methods which can make the SME’s get more knowledge of the existing
market and also get to have better experience sharing which can be very good for the future
growth.
P3 Relationship of Organisation Structure
There has to be an interrelationship between all the departments and managers of all the
departments with one another of Unilever so that they can have a smooth and effective
functioning in market. All the departments of the organization are inter-dependent on one
another so that there is direction and clarity in organization.
Interrelationship between marketing manager and others
 Human resource and marketing
Human resource can play a major role in increasing the sales of the organization which is
only possible when the human resource makes the right skilled and talented people in the
company have the right training so that the productivity in the organization can increase (Hair Jr,
Page and Brunsveld, 2019). Marketing and human resource have to work together so that the
demands of the customers can be met by motivating the employees and understanding the
customer’s needs so that they can have a better functioning for themselves.
 Marketing and Finance
Marketing has to be done so that the sales can increase of the products in Unilever which
is only possible when the finance department is providing the marketing department with the
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right funds so that the promotions can be done of the products. It is very important for the
company to increase their sales in order to make more profits so that the company can have a
larger base for themselves in market.
 Production and Finance
There is a need of financial help in the production of the products in the organization. It is
very important to have transparency between the two departments so that the raw materials in the
organization can come in.
 Production and Marketing
The production team can only produce the right products which can satisfy the needs of the
customers but the marketing team has to take out the full information of the product from the
production team so that they can promote it in the market.
This is a structure which helps the organization to understand the functioning departments in
the organization and helps the company to make decisions accordingly. This is good for the
organization because each department knows as to how they should be with the other
departments. There is a hierarchical structure which is present in the organization which needs to
be followed so that they can have a better functioning. The target of Unilever is to provide the
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best of products and services to the customers by meeting their demands and needs on time. This
is going to help the company to have a better productivity and the company will be able to have
high profit margins.
LO3
P4 Positive and negative impacts of macro environment on business operations
Macro environment consists of external factors which have high influence on working
operations of company and strategies to enhance company performance levels along with focus
on political, environmental, social, technological, legal and environmental factors. Pestle enables
top management and leaders to analyse how these factors will affect company performance
levels and enlarge profitability margins. Unilever is one the biggest company offering large
varieties of products and services to consumers worldwide in all stores, for expansion into new
countries company can build strategies by analysing positive and negative impacts through Pestle
(Achinas, Horjus,Achinas and Euverink, 2019).
Political factors
 Positive impact- Political stability of most countries and growing free trade opportunities
has high positive impact on Unilever business opportunities, as there lies great business
value in expansion of business scale globally into new countries. This will enable
company to enhance its position and reach new segments of customers with large
availability of stores.
 Negative impact- Political issues of UK with European union can have high negative
impact on business to upscale its business in European countries.
Economic factors
 Positive impact- There lies high growth opportunities in developing countries where
there is high level of economic stability, Unilever business largely performance depends
on situations of economy around the world as ot is global brand. Economic stability of
countries signify high growth in sales with large disposable income of customers. For
example china as one of the fastest growing economy presents large opportunities for
company to expand the business.
 Negative impact- The slowdown of UK economy due top Brexit has negative impact on
company performance levels as it becomes imperatively hard to grow when there is crisis
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build up. Unilever has low growth in European market due to increased tariff barriers and
separation from EU has disabled company to enhance its business scale.
Social factors-
 Positive impact- People have become highly health conscious regarding their living
standards which increase the sales market of Unilever products and services, as company
delivers high satisfactory quality in goods.
 Negative impact- There lies high investment needs of capital by company to introduce
new products and services with increasing preferences of customers due to highly
competitive business world. Increased living standards of people bring pressure on
company's performance levels to cope up with customer market share as there is high
competitive growth among new brands (Dobbs,2019).
Technological factors
 Positive impact-Unilever focuses on building advanced working structure with
innovative technology usage in company operational functioning structure. It increases
business automation where company has high opportunities to enhance its productive
strength.
 Negative impact- Rising R& D investments increase pressure of company financial
departments to bring on board more capital funds, which has large impact on company
performance levels.
Economic factors
 Positive impact-Increasing business efforts to attain sustainability along with focus on
environmental factors enhance company performance level globally.
 Negative impact- It negatively impacts Unilever performance levels as company has to
emphasize on building high capital funds to prioritize environmentally friendly products
and services.
LO4
P5 SWOT Analysis
It is a strategic planning tool which supports people or company to recognize their
strength, weakness, opportunity and threats that can relate to firms competition, task planning
etc. generally it is used by organization to analyse competitive position of their business in global
market. It is used to analyse internal environment of organization and helps them to identify their
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capabilities resources and their threats (Madsen, 2016). Unilever is a British-Dutch transnational
consumer goods company. It is applied SWOT analysis model to analyse internal environment of
company. It is described below:
Strengths: Unilever has strong brand name which is a major strength of company that
supports employees to improve selling behaviour of products. Organization has strong financial
position in global market that supports them to promote their firm in other countries. Due to
good financial position focuses on innovation, so invests high funds on R&D department.
Company has good distribution network which is also a important strength of organization. Due
to this strength can easily reach itself potential market. Unilever focus on customers' satisfaction
which is the best strength of company (Niranjanamurthy,Nithya and Jagannatha, 2019). To keep
customer, satisfy in high level involves customer relation management (CRM) who helps
company to build good relation with them. CRM also gives values to customer to encourage
them shares their suggestion about services and products. Company operates more than 190
countries through their franchises that helps to improve brand image in internation market.
Organization keeps deep brand portfolio along with diversified product line which supports
company to take sustainable competitive advantage from competitors. Unilever keeps flexible
pricing by the product portfolio. It assists company to cover each type of customers by offering
different price on wide variety products. Company is market leader due to wide variety product
portfolio. It is also considered as a strength of company.
Weaknesses: Organization keeps diversification in product portfolio but most of the
product are imitated nature or in simple word can easily imitate by others. It is a major weakness
of Unilever. Another weakness is that organization is highly dependent on retailers. For example
Unilever retails their product through retail stores to consumers. When retailer doesn't retail their
products to consumers it directly gives impact on company selling. Financial planning is not
effectively aligning in company that causes they unable to use cash more efficiently. Profitability
ratio and net contribution % of company are below from the industry average.
Opportunities: Organization has various opportunities to growth firm in other countries.
For example, emerging market is Asian market which is the best option for company to enhance
product demand among different customers. Additionally, it improves brand image in different
market among different customers (Phadermrod, Crowder and Wills, 2019). Unilever is
especially famous for nestle product so, it has golden opportunity to grow demand for premium
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and specialized products I.e. Nestle coffee in skin car segment. It is the latest product which is
highly demanded in customers for skin remedies. New technology also offers opportunity to
Unilever to differentiate pricing strategy in emerging market. This opportunity can build loyalty
among people for company and their products.
Threats: Currency fluctuation is major threat for company because each country has
different currency which can directly impact on Unilever's financial performance. Growing
strength of local distributor can become challenge for organization because it can't get profit
margin on products. Lack of regular supply of innovative products can create threat for company
because most of the products of Unilever can imitate by the competitors. Thus, it can create
major threat for company.
P6 Strengths and weaknesses interrelate with external macro factors
Tows Matrix
Tows Matrix is referred to the tool for analysing, generating, comparing and selecting
business strategies to achieve overall goals and objectives of the organization such as higher
sales, increase brand value and enhance profit also (TOWS Analysis: A Step by Step Guide,
2019).
Interrelation between pestle and tows matrix:
TOWS Matrix External Opportunities
 Free trade
opportunities
 Emerging
technology
External Threats
 Brexit causes slowdown of
UK economy.
 Currency fluctuation
Internal strengths
 Good R&D
department
 Good financial
performance.
SO
 Organization has
good R&D
department so it
can trade its
innovative
products with
potential
ST
 R&D department will
overcome this issue by
offering sustainable products
in optimum price. So
Unilever can retail it’s
products at lower cost.
 Unilever has good financial
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countries.
 Organization has
good financial
position so it can
invest on
emerging
technology as
result improves
business
performance.
performance so it can
overcome this threat as well.
Internal Weaknesses
 Financial planning is
not good.
WO
 Organization has
opportunity to
trade in different
countries but due
to lack of
financial
planning unbale
to achieve profit
margin.
WT
 Due to lack of financial
planning cannot overcome
currency fluctuation threat as
result have to face financial
loss by Unilever.
Pestle and Swot are beneficial approach for company because Pestle analyse external
environment while Swot analyse internal environment of company. Both approaches keeps close
interlinks together (Gürel and Tat, 2017). Pestle stands for political, economic, environmental,
legal, technological and socio-cultural which gives impact on organization performance. On the
other hand, Swot analysis stands for strength, weakness, opportunity and threats. It is considered
as situational analysis tool which helps company to identify their capabilities and resources.
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