Analyzing Unilever's Competitive Strategies in the Global Market

This report analyzes Unilever's strategies for navigating the competitive global consumer market. It delves into four key strategic management tools: acquisition and merger strategy, niche marketing strategy, supply chain strategy, and product line strategy. The report examines how Unilever utilizes acquisitions to increase revenue and capital generation, sustain financial stability in diverse markets, and compete with major players like Nestle and Procter & Gamble. The analysis includes a review of Unilever's asset value compared to competitors, the impact of acquisitions like Lakme on capital generation, and the role of supply chain management in supporting its global operations. The report further investigates the company's focus on niche marketing and product line strategies to maintain a competitive edge in the food and beverage, personal care, home care, and water purifier segments. The findings highlight the importance of these strategies in enabling Unilever to sustain its position as a leader in the consumer goods market.

Running head: COMPETITION IN THE GLOBAL CONSUMER MARKET
Competition in the Global Market
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Table of Contents
Introduction:....................................................................................................................................1
About Unilever:...............................................................................................................................1
Main analysis:..................................................................................................................................2
Acquisition and merger strategy of Unilever...................................................................................2
Increase in revenue generation:...................................................................................................3
Capital generation:.......................................................................................................................4
Acquisitions and financial sustainability:....................................................................................9
Niche marketing strategy of Unilever:..........................................................................................10
Supply chain strategy of Unilever:................................................................................................14
Product line strategy of Unilever:..................................................................................................18
Conclusion:....................................................................................................................................21
Recommendations:........................................................................................................................22
References:....................................................................................................................................25

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Introduction:
According to Slack (2015), operations management refers to management and control the
of entire business operations including production in business organizations. The operations
manager in the recent times needs to control diverse areas of operations right from customers,
finance, marketing to human resources so that operations can be done in an efficient manner.
According to Jacobs, Chase and Lummus (2014), in the recent scenario it can be seen that the
operations managers are responsible for efficient operations of the business organizations. These
facts apply more to the multinational companies where the operations manager undoubtedly
account for their high market performances. The aim of the paper is to discuss a contemporary
issue of operations management which operational managers face. The issue which would form
the crux of the study are the competitive threats from the market which MNC companies
face in the competitive market. The paper would delve into four strategic management tool
namely, acquisition and merger, niche marketing, supply chain strategy and product line
strategy which multinational companies take to counteract this issue. The multinational
company on which the entire study would stand on is Unilever.
About Unilever:
Unilever is consumer goods manufacturing company which has its base in Rotterdam,
Netherlands and London, the United Kingdom. The multinational company is listed primarily on
the London Stock Exchange and Euronext Amsterdam. The company, founded in 1930 operates
in more than a hundred countries under the leadership of Paul Coleman, its CEO and Margin
Dekkers, its chairperson. The product umbrella of Unilever can be divided into four main
divisions namely, food and drink, home care, personal care and water purifier. An analysis of the
product umbrella of the Dutch multinational company would reveal reflection or outcomes of

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four strategic management decisions of the company to counteract the competitive threat it faces
(unilever.com 2018). The first umbrella, consists of brands like Bru Coffee ranges, Cornetto,
Magnum ice-cream and Brooke Bond. Unilever uses Bru that competes with Nescafe, owned by
Nestle, one of the biggest competitors of the company in the food market. Cornetto and Magnum
owned by the company competes with Movenpick, owned by Nestle and the ranges of ice creams
by Baskin-Robbins. The next division consists of home care brands like OMO, Surf and
Domestos. The major competitors of Unilever are P&G and Reckitt Benckiser (us.pg.com 2018).
The third class of products Unilever offers consist of personal care, both for men and women.
The brands like Lux, Axe, Brut, Lever and Lakme come under the product umbrella. Unilever
encounters competition from multinational companies like P&G and L’Oreal. The company
competes with electronic giants like LG and Samsung when it comes to Pureit, the water purifier
brands it owns. The product line of Unilever consists of two strategies so that it can counteract
the intense competition, niche marketing and acquisition and merger (Brown and Bessant 2013).
The level of competitive threat under which Unilever operates can be gauged by the fact that
Krafts Heinz wanted to acquire it and failed. Unilever, in order to sustain in this competition and
operate globally as a leader in the consumer goods market adopts the strategy of acquiring
companies all over the world. The deadly strategy which the company uses to support its
acquisition, product strategy and niche marketing is supply chain management strategy, which
again spreads all over the world (Kotler 2015).
Main analysis:
Acquisition and merger strategy of Unilever
According to Jay and Barry (2016), the acquisition and merger is a strategic tool which
multinational companies use to strengthen their global competitive positions. The acquisitions

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and mergers serve several important roles for the multinational companies. The following are the
strategic factors which multinational companies seek to achieve through acquisitions of firms:
Increase in revenue generation:
The most important objectives that the companies try seek through the merger and
acquisition strategy is increase in revenue. As far Unilever is concerned, the company’s product
line is composed of food and drinks, personal care, home care and water purifier, all of which are
extremely competitive markets. For example, in terms of food and drinks, Unilever brands like
Cornetto, Magnum, Knorr and Lipton are present in the market. As far as Cornetto and Magnum
are concerned, Unilever faces competition from Nestle, which is the world’s largest
manufacturer of food products. Nestle is a multinational company listed on the Swiss Stock
Exchange (bloomberg.com 2018). Nestle just like Unilever is present all over the globe and in
fact, the two competitors share most of the markets. Nestle owns Movenpick which competes
with the ice cream brands like Magnum that is owned by Unilever. Unilever is already facing
stiff competition from its competitor based in the US, Baskin-Robbins. The latter is the world’s
largest ice cream chain. The two companies give tough competition to Unilever in the ice cream
market. The company in addition faces competition from low ice cream manufacturers in the
world. This means that Unilever faces financial risk of losing revenue due to extreme
competition in one of the market it operates (Zucchella et al. 2016). Acquisition of firms in
different and diverse market allows Unilever to sell a large number of products globally and
generate immense revenue. A classic example of one such acquisition was that of Lakme, the
Indian beauty brand in 1996. The brand also offers salon services as well. Thus, acquisition and
merger of Lakme allowed Unilever to enter the high-end beauty market. It is a high end beauty
and fashion product and its consumers are mostly upper class consumers. Lakme Fashion Week

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is a high end fashion show attended by international designers. Thus, by acquiring Lakme,
Unilever boosted its revenue generation power (Yamin and Mavondo 2015).
Capital generation:
Figure 1: 5 years stock comparison between Unilever, Nestle, P&G and Samsung
(Source: bloomberg.com 2018)
Acquisitions and mergers are formidable tools that multinational companies use to
expand their capital base in which in turn renders them their competitiveness. The figure above
shows comparison between Unilever and its three competitors Procter & Gamble, Nestle and
Samsung (us.pg.com 2018). The graph shows that the performance of Unilever has been better
than Procter & Gamble and Nestle but not as good as Samsung. One must note that all of these
companies are public limited companies listed on various stock exchange around the world.
Unilever, like its consumer base shares its investors’ base with them. Acquiring companies from
diverse markets not only allows Unilever to serve a diverse consumer base, but get access to to
the capital of these companies. The operations managers of Unilever can use the assets of these
companies as well to manufacture and operate in the international market more efficiently
(unilever.com 2018)

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.
Figure 2: Table showing asset of Unilever
(unilever.com 2018)

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Figure 3: Table showing asset value of Nestle
(Source: nestle.com 2018)
The two tables shown above compare between the assets held by Unilever and one of its
largest competitors, Nestle. The table shows that compared to approximately 109060 million
Euros asset value of Nestle, the asset value of Unilever is mere 60285 million Euros according to
the financial figures of 2017. One can also point that as far as food market is concerned, Nestle
occupies the top position. This means that acquisition of assets in form of companies contribute
directly towards the operational efficiency of multinational companies (Sheen 2014). This factor
has made Unilever acquire companies from diverse industries to boost its asset value. Unilever
acquired Lipton in 1971 and Brooke Bond for GBP 390 million in 1984. These two acquisitions
strengthened the position of Unilever in the tea market in England. Unilever acquired
Chesebrough-Ponds in 1987 which earned the company a great share in the beauty market in

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Europe. Thus, it is evident that acquisition and merger plays an important role in evaluating the
competitive strength and asset value of the company. Since, Unilever is a public limited
company, it is dependent on the trust of the investors so that capital can be generated for
international operations. The decisions regarding acquisitions and merger have deep impact on
the decisions of the investors to invest in the funds of the company. This was further evident
when Unilever rejected the offer of Kraft Heinz to acquire it. This decision of Unilever actually
advertised and reinstated its prowess to sustain its global operations and give its investors
positive returns on their investments. The investors support increased for the company and its
share price soared to £ 39.78 (ft.com2018). The apex management of Unilever further pledged to
give short term return through its growth-driven operation model. Apparently the growth driven
model

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Figure 4: Unilever operating profits from its product umbrella
(Source: ft.com2018)
The figure above shows that operating profits of Unilever personal care increased from
2010 to 2016 compared to other products. This can be aligned to the fact that Unilever has
acquired more personal care product companies compared to the other segments.

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Figure 5: Share price of Lakme
(Source: bseindia.com 2018)
One can point out that acquisition and merger plays an important role in capital
generation and competitive strength of Unilever. The figure above shows the stock price of
Lakme Limited, which is one of the biggest acquisitions of Unilever. The graph shows that the
stock prices of Lakme is increasing which means that the company can generate more capital by
floating shares in the stock market. Since, Lakme is owned by Unilever, the latter can use the
capital of the former to enhance the efficiency of its international operations (ft.com2018). Thus,
this analysis shows that as far as Unilever is concerned, its acquisitions consist of public limited
companies which are capable of generating capital themselves. This adds to the capital base of
Unilever which ultimately adds to its financial power. This financial power acts a security to the
investors from around the globe in invest in the shares of Unilever which generates immense
capital for the company.

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Acquisitions and financial sustainability:
The acquisition and merger strategy enables Unilever to establish itself in the host
countries which already have competitive resident companies, thus making it operations
financially more sustainable. As pointed above the Unilever faces stiff completion from Nestle
and Baskin-Robbins in terms of desserts. Nestle is listed on the Swiss Stock Exchange as already
pointed out and shares both revenue and stock market with Unilever. However, it must also be
pointed out that Baskin-Robbins, the next big competitor of Unilever in terms of frozen dessert is
owned by Dunkin’ Brands though it is not a listed company. Dunkin’ Brands is listed on
NASDAQ and thus contributes to the capital of Baskin-Robbins which attributes for the latter’s
competitive strength (nasdaq.com 2018). Thus, to counteract the competition of Baskin-Robbins
and Nestle, Unilever acquires several ice cream brands all over the world. The company acquires
Breyers which is also based in the US like Baskin-Robbins in 1993. This acquisition enabled
Unilever to establish itself as the largest manufacturer and seller of ice cream in the United States
which is one of its important markets (unilever.com 2018). One can also say these acquisitions
has enable the company to gain more competitive strength in the market and gain higher degree
of financial stability. The same can be pointed out in case of the acquisition of Dollar Shave Club
in 2016, a mens’ grooming company based in California which makes razors and grooming
products for men. One can also point out that though Unilever already owned Axe as its mens’
grooming brand, Axe does not make razors. Gilette, the men’s grooming brand owned by P&G
makes both shaving creams, gels and other accessories including razors (us.pg.com 2018). Thus,
by acquiring Dollar Shave Club, Unilever strengthened its position in mens’ grooming market
(fortune.com 2018). Again, one can point out that the traditional rivals of Unilever like Nestle
and P&G have stronger position that the former which challenge its revenue generation. The