Global Strategy of Unilever: An AAA Framework Analysis

This essay analyzes Unilever's global business strategy, focusing on its alignment with Pankaj Ghemawat's AAA framework (Adaptation, Aggregation, and Arbitrage). It begins by providing an overview of Unilever, a British-Dutch transnational consumer goods company, and its global presence across approximately 190 countries with over 400 brands. The essay then explains the AAA framework, detailing how companies adapt to local markets, aggregate standardized products, and utilize arbitrage to achieve a competitive advantage. The paper argues that Unilever effectively employs a "think-global, act-global" strategy, adapting products where necessary, targeting populated and developed countries for standardized product sales, and leveraging differences to gain market advantage. The essay concludes that Unilever's global strategy of competence aligns with Ghemawat’s AAA global strategy, emphasizing the importance of market analysis and relationship maintenance for global expansion. The essay includes citations from relevant sources to support the analysis.

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Unilever Global Business Strategy Case
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Management 1
“Global Business Strategy of Unilever”
The fact is true that a firm needs to make various important decisions before implementing
business expansion decision in the market. Along with assets and opportunities, the business also
gains various liabilities and unseen conditions for the business as well which fluctuates its
growth during the expansion strategy. However, after analyzing the external market
opportunities it becomes clear with the management of companies that benefits of expanding in
international markets are much more than the threat present in the environment due to which
they take such decisions for the profitability of the business. So, this paper discusses about the
business expansion strategy of the company Unilever in alignment to Pankaj Ghemawat’s AAA
global strategy (Ghemawat 2017). Unilever is British-Dutch transnational consumer goods brand
that is headquartered in London along with Rotterdam, Netherlands. Major share of the company
is earned from food and beverages sector. Unilever is world’s seventh most valuable company
and is one of the oldest companies present in worldwide market with its global presence in
around 190 countries. The company owns more than 400 brands with a net profit of 9.8 billion
euros. The company was founded in the year 1929 by the merger of Margarine Unie (Dutch
Margarine producer) and British soap maker Lever Brothers. It should be noted that the company
Unilever has grown its profitability by expanding the scope of business in different parts of the
world (Unilever 2019).
Talking about the global expansion, it should be noted that Pankaj Ghemavat has rightly defined
global expansion strategy by the way of AAA framework presented in the environment.
Adaptation, Aggregation and Arbitrage (AAA) is a framework used to understand the diverse
economic conditions of a foreign country and organize actions accordingly in order to grow.
Adaptation refers to the strategy under which the company organizes a global business strategy
that will help them to enter in new international market. This strategy helps the company to start
local operations in country and deliver products and services that are customized in the local
country (Ghemawat 2015). Aggregation refers to the strategy in which the company arranges a
global strategy where they try to capitalize the economies of scale by imitating the success of the
product and service in the home country and aims to promote the standardized product in the
new environment. Further arbitrage refers to the strategy under which the company arranges a

Management 2
global business strategy that helps them to distribute the production process in various regions
worldwide (Ghemawat 2018).
Companies like Unilever make use of combination of all the three strategies to attain competitive
advantage in the target market. Unilever make use of an effective business strategy that is also
called think-global, act-global. Unilever attains the competitive advantage in worldwide market
by initially analyzing the market and maintaining an extended relationship with them. The
company provides standardized products in the market with fewer changes which helps them to
grow (Unilever 2019). Relating the strategy with Pankaj Ghemawat’s AAA global strategy, it
should be noted that Unilever make use of similar strategy to grow in the external market. The
company makes minor adaption to local countries where it is needed to accommodate according
to local countries preference and they target populated and developed countries to expand the
business. This helps them to increase sales of standardized products and under the process of
aggregation, they imitate the home country activities in host country to attain similar success in
that market also. Lastly, under arbitration strategy, after attain a reasonable success in their
market by avoiding risks, the company Unilever then welcomes adoption of differences and
exploit them to attain competitive advantage in the market (Young 2017). Thus, in this way
Unilever global strategy of competence aligns with Pankaj Ghemawat’s AAA global strategy.

Management 3
References
Ghemawat, P., 2015. From International Business to Intranational Business. In Emerging
Economies and Multinational Enterprises (pp. 5-28). Emerald Group Publishing Limited.
Ghemawat, P., 2017. 11 Why managers still need to take account of comparative
advantage. Cloth for Wine?, p.87.
Ghemawat, P., 2018. The New Global Road Map: Enduring Strategies for Turbulent Times.
Harvard Business Press.
Unilever., (2019) About Unilever [online]. Available from <
https://www.unilever.com/about/who-we-are/about-Unilever/ > [Accessed on 8 April 8, 2019].
Unilever., (2019) Our Strategy [online]. Available from < https://www.unilever.com/about/who-
we-are/our-strategy/ > [Accessed on 8 April 8, 2019].
Young, J., (2017) Unilever’s Generic Strategy & Intensive Growth Strategies [online]. Available
from < http://panmore.com/unilever-generic-strategy-intensive-growth-strategies > [Accessed on
8 April 8, 2019].