Unilever's Strategy: Enterprise, Innovation, and Market Analysis

This report provides a comprehensive analysis of Unilever's strategy, enterprise, and innovation. It examines the internal environment using SWOT and VRIO analysis, identifying strengths, weaknesses, valuable resources, and competitive advantages. The external environment is assessed through PESTLE analysis, covering political, economic, social, technological, legal, and environmental factors impacting Unilever's operations. Furthermore, the report employs Porter's Five Forces framework to evaluate the competitive landscape, including the bargaining power of suppliers and buyers, the threat of substitutes and new entrants, and the intensity of competitive rivalry. The analysis concludes that understanding both internal capabilities and external forces is crucial for Unilever to maintain its market position and achieve sustainable growth, highlighting the importance of strategic adaptation in a dynamic business environment. Desklib offers a variety of similar solved assignments and resources for students.

Strategy Enterprise
and Innovation
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Analysis of internal environment ...............................................................................................3
Analysis of external environment
.....................................................................................................................................................6
Analysis of competitive forces within the industry.....................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES:.............................................................................................................................11
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INTRODUCTION
In today's business environment, every day the competition and complexities for
organisations are increasing. This results in generating challenges for organisations. In order to
deal with the challenges of business environment, companies need to analyse their internal
capabilities as well as resources so that they can formulate effective strategies (Lishchynska,
2018). In this context, Unilever is undertaking which is UK based organisation that deals in
consumer goods. They are running their business in global market and providing various types of
products to the customers. The success and growth of an organisation is depend on their internal
resources and capabilities. In addition to this, this report will be discussing the external
environment which affects the organisational operations. This report will also be cover Porter's
five forces analysis that helps an organisation to analyse profitability and competitive structure
of market.
MAIN BODY
Analysis of internal environment
Internal environment of an organisation is playing a crucial role in the success and
growth of a firm. It is necessary for Unilever that they should identify their internal resources
and capabilities in order to analyse that which resources are helping in gaining competitive
advantage (Falko and et.al., 2018). In order to analyse internal resources and capabilities,
Unilever need to apply SWOT analysis and VRIO analysis. These framework are assisting in
analysing the internal resource and capabilities.
SWOT analysis
SWOT analysis is the framework which is used for the purpose of analysing internal
strengths and weakness of an organisation. It includes strengths, weaknesses, opportunities and
threats. The SWOT analysis of Unilever is mentioned below:
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Strengths Weaknesses
 Unilever has the global footprints that
means they are selling their products
and services in the large market.
 It has diversified product range that
helps an organisation to reduce the
chances of product failure in the market
as well as they are able to fulfil the
needs and wants of customers.
 Unilever is running their business in
uber competitive market where large
other brands are also providing same
type of products and services to the
customers.
 One more important weakness is that
their products which are easily replaced
their substitute products.
Opportunities Threats
 It is found that Unilever has the good
image in terms of social and
environmental responsibility which
helps an organisation to attract more
and more customers.
 Unilever has a great opportunity to
capture the market segment in which
customers are becoming health
conscious.
 Due to the globalization, it is found that
the competition is increasing and
creates complexities for Unilever in
order to deal with them.
 The ongoing economic crisis are found
to be become threats for organisation in
which COVID-19 is one of the
important crisis that affects on the
organisational operations.
VRIO analysis
VRIO analysis model is very effective for organisation in order to analyse the resources
that generate competitive advantage for company. When company is able to know the resources
which are important for them then they are able to take decision for investments in which
products. Unilever's VRIO is mentioned below:
Resources/
Capabilities
Valuable Rare Imitable Organization Competitive
advantage
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Leadership
team
Yes Yes No Yes Strong
competitive
advantage
Positive
market
reputation
Yes Yes Yes Yes Long term
competitive
advantage
High
customer
rating
Yes Yes Yes Yes Realised
sustainable
competitive
Awareness of
brand
Yes Yes No Yes Sustainable
competitive
advantage
VRIO analysis includes four elements that helps an organisation to identify and evaluate
the resources and capabilities which gain competitive advantage (Syntia and Mulya, 2020). The
explanation of each resources are mentioned below under VRIO analysis:
Valuable
 It is found that financial resources of Unilever are highly valuable. It is found that these
assets are helpful in investing in external opportunities.
 Employees of Unilever is also very valuable as it is identified that they are highly skilful
and trained. Employees are important for the success and growth of an organisation.
Rare
 According to the VRIO analysis, it is found that local food products are not rare as these
products are easily provided by other organisations. This results in competitive parity for
Unilever.
 It is also found that Unilever's distribution network is rare as there are many organisation
which invest lots of amount for making effective distribution network of an organisation.
Imitable
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 Unilever's financial resources are not easy to imitate as they are costly which cannot
imitate by any other organisations.
 Local foods products and employees of an organisation is not costly to imitate as these
resources are easily provided by other organisations.
Organisation
 It is necessary for an organisation that they should make strategy for their financial
resources. These resources needs to organise in a proper way so that they can capture the
value.
 The patent of Unilever is not well organised and that's why they are unable to gain
sustainable competitive advantage.
Analysis of external environment
External environment is the outside surroundings that affects an organisation operations.
Unilever run their business in global market and that's why there are many external environment
factors which affect their business organisation (Salman and Al-Omari, 2021). In order to
analyse external environment of an organisation, company uses PESTLE analysis which includes
many external factors that are mentioned below:
Political Factors
It is very important for Unilever to identify the political factors as they are running their
business in many countries. Due to this, they need to follow many laws and policies of different
governments in different countries. These all affects on their operations. For example, Brexit is
the political factors which separate trade relations of European Union and UK. Due to this, they
are now separate rules and regulations to trade in other countries of Europe. This may be impact
on their export and imports. Taxation policy is another factor that cover in political factors. It is
found that different countries has different taxation policy which pressurize Unilever to accept
all the policy and impacts on their business practices.
Economical Factors
Economical factors are included many factors such as economic growth rate, inflation,
unemployment rate, interest rate, etc. These all factors should be considered by organisation so
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that they can reduce the negative impact of external factors on organisational operations.
Pandemic is becoming the most influential external environment factors that affects on the
economic conditions of nations (Varelas and Georgopoulos, 2017). It is very important for an
organisation to measure the destruction caused by COVID-19 in order to deal with the. It is
found that pandemic declined the economic growth rate. In pandemic situation, government
announced lock down and restricted organisations for opening of stores. This gave a bad impact
on the organisational growth. Now it becomes necessary for Unilever to make strategy in order
to deal with the decline economic conditions. Customers' purchasing power is also decline and
due to this they are not purchasing products of Unilever. This is becoming a challenge for an
organisation.
Social Factors
Social factors are the factors that concerned with the traditions, customs, social attitudes,
religious beliefs, etc. Every day it is found that there is regular change in tastes and preferences
of customers which create complexities for Unilever to understand customer behaviour.
Technological Factors
Technology is becoming key element of the success and growth of Unilever and due to
this they need to do regular updates in their technological tools and techniques. So that they can
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become competitive in the market. But it is found that it is not easy for organisation as regular
updates is becoming complex.
Legal Factors
Legal factors are concerned with the rule and regulations that are mandatory for Unilever
to follow in order to run their business legally. Some important legal factors are employment
laws, health and safety laws, etc.
Environmental Factors
It is very important for an organisation that they should understand the importance of
environment. It is found in the case of Unilever that they are doing good practices in sustainable
business. This will results in achieving a goal of sustained business. They are reducing the
carbon footprints in the environment.
Analysis of competitive forces within the industry
There are many competitive forces available in the market that provides a great impact on
the organisational profitability and entrepreneurial activities (Omsa, Abdullah and Jamali, 2017).
It is significant for an organisation to identify the competitive forces so that they will be able to
analyse the impact on profitability of firm. This can be done with the help of Porter's Five Forces
Framework. It is including five important forces which should be considered by an organisation
in their business practices. The explanation of all five forces are mentioned below:
Bargaining power of Suppliers
In Unilever, it is found that the bargaining power of suppliers is low. The reason of low
power is moderate size of suppliers. It is found that Unilever has good relations with the
suppliers and due to this they have reduces the chances of switching suppliers. They have blanket
agreement with their suppliers and this results in weakening the bargaining power of suppliers.
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Bargaining power of Buyers
It is identified that there are many buyers in all over the world. It is very important for
Unilever that they should provide reasonable products' prices to the customers so that they are
always become happy and satisfied. The bargaining power of buyers is high as customers have
many choices to switch to other organisations.
Threat of substitutes
Unilever provides local food products and services that are easily replaced by other
organisations. It is found that there are many organisations which are providing substitute of
Unilever's products. That shows Unilever's products are easy to substitute, that's why they has a
threat of substitutes in the market.
Threat of new entrants
It is identified that globalisation is increasing the threat of new entrants in the market.
Unilever is selling common products which can be easily imitable by any other organisation.
Due to their success and growth, other organisations are influenced and they also come in the
market with new innovative products (Wellner and Lakotta, 2020). But Unilever is highly
recognisable brand in the global market and they are selling their goods and services in
worldwide market. That's why the threat of new entrants is low in case of Unilever. It is also
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found that Unilever has also a good experience of market which is not found in new entrants.
This will reduce the threat of new entrants.
Competitive rivalry
Every day the competition is increasing at a fast rate especially in retail sector. Unilever's
products are very common and that's why it is found that they are highly imitable. Due to this, it
is found in the market that there is high competitive rivalry. Unilever is selling their goods in
global markets where other brands are also selling similar types of products and services. This is
increasing the competition in the market.
It is analysed that Porter's five forces framework is very helpful in order to run business
in the market. This is necessary for an organisation to analyse all competitive forces so that they
will reduce the threats' impacts.
CONCLUSION
It can be concluded from the above discussion that it is very important for an organisation
to analyse the environment in order to survive in the market. It is analysed that internal and
external environment both are necessary to analyse so that organisation is able to decide the
further steps. In internal environment, an organisation should analyse all the internal resources
and capabilities in order to analyse competitive advantage. This is analysed with the assistance of
VRIO and SWOT analysis framework. It is crucial for an organisation that they should analyse
the external environment which can be possible with the application of PESTEL analysis
framework. This report also discussed competitive forces with the assistance of Porter's five
forces analysis. It is including five important forces which assists an organisation to analyse the
market for competitive position in the market.
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REFERENCES:
Books and Journals
Falko, V.I., and et.al., 2018, November. Ecology of External and Internal Environment in the
Socio-natural System. In Proceedings of the International Conference on Contemporary
Education, Social Sciences and Ecological Studies (CESSES 2018). Series “Advances in
Social Science, Education and Humanities Research (pp. 953-957).
Lishchynska, V.V., 2018. The strategic analysis of the external and internal environment of
bakery enterprises. Business Inform, (4), pp.405-410.
Omsa, S., Abdullah, I.H. and Jamali, H., 2017. Five competitive forces model and the
implementation of Porter’s generic strategies to gain firm performances.
Salman, D.D. and Al-Omari, M.M.A.H., 2021. The impact of internal and external factors of the
competitive environment on the competitive performance of the Iraqi Company for Seed
Production (ICSP). Materials Today: Proceedings.
Syntia, R. and Mulya, M.B., 2020. The Effects of Internal and External Environment on SMEs
Empowerment-based Environmental Management.
Varelas, S. and Georgopoulos, N., 2017. Porter’s competitive forces in the modern globalized
hospitality sector–the case of a Greek tourism destination. J Tour Res, 18, pp.121-131.
Wellner, S. and Lakotta, J., 2020. Porter's Five Forces in the German railway industry. Journal
of Rail Transport Planning & Management, 14, p.100181.
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