Strategic Management Report: Analysis of Unilever Company's Strategy

This report presents a comprehensive analysis of Unilever's strategic management, examining its current strategic position, key performance indicators, and competitive landscape within the Fast Moving Consumer Goods (FMCG) industry. It explores Unilever's mission, vision, and the application of the balanced scorecard for performance monitoring. The report delves into the external environment using PESTEL analysis and a SWOT analysis to identify strengths, weaknesses, opportunities, and threats. Corporate governance, social responsibility, and ethical practices are also discussed, highlighting Unilever's commitment to sustainable living and ethical business conduct. The report applies Porter's Five Forces to assess Unilever's market position and competitive advantages. Furthermore, it examines the company's culture, organizational past, and the concept of strategic drift. The McKinsey 7S framework is utilized to analyze Unilever's capabilities, systems, structure, and staff. Finally, the report identifies key challenges, particularly consumer demand for variety and the need for agility in the supply chain. The analysis provides insights into Unilever's strategies and future direction in the dynamic FMCG market.

STRATEGIC MANAGEMENT
Strategic Management
Case of Unilever Company
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Question 1
A). Unilever Current Strategic Position
Introduction
Unilever is a multinational company that specializes in making of the best known brands
across the world. Some of the brands the company sells across every country includes Lux, Omo,
Lipton, Rexona, Magnum, Sunsilk, and Signal (Unilever, 2018). In overall, Unilever specializes
in manufacturing, marketing, and delivery of foods, beverages, personal care products, and
cleaning agents that all fall Fast Moving Consumer Goods (FMCG). The company has succeeded
in creating sustainable competitive advantage because of internal capabilities and competencies
from marketing and advertising, strong research and development, strong relationship with
communities where it serves, relationship with local farmers and suppliers of raw materials, as
well as international distribution network.
Key Performance Indicators
Unilever organizes its key performance indicators around; durable and effectiveness
quality products, production of environmentally friendly products, increasing wider accessibility
around the world, manufacturing healthy products (see figure 1 below), and achieving longevity
of all product brands.
Key competitors
Univeler operates in a competitive markets where other multinational companies
manufacture, market and distribute FCMG such as Coca cola, Procter & Gamble, Kinberly—
clerk, Colgage Palmolive, Herry Group, Kraft, and Nestle (Craft, 2018).
Unilever’s vision: “to double the size of business while reducing its footprint towards the
environment and ensuring an increased impact to society” (Unilever, 2018).

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Unilever mission: “to meet the everyday needs of people of people all around the world
for nutrition, hygiene and personal care. We do this with products that make people feel good,
look good and get more out of life” (Unilever, 2018).
Figure 1: Unilever brands
Source: (Unilever, 2018)
Summary Of Unilever Mission And Performance
The company current mission involves meeting everyday needs of people across the
world through delivery of nutrition, hygiene, and personal care products. The company does this
by ensuring that it continues to deliver products that mske people feel good, look good, and get
more out of life. The company balanced scorecard offers a strategic planning and management
system that helps to align Unilever activities to its vision and overall strategy. According to
Singh and Sethi (2017), a company can do this when it monitors its performance against strategic

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goals. As indicated in figure 2 below, the balanced scorecard of Unilever financial perspectives
shows the revenue growth, cost reduction, and asset utilization. Currently, the company
continues to performs well in returns on invested capital.
Figure 2: return on invested capital of Unilever vs. its peers
According to figure 3 below, it is clear that Unilever has succeeded in efficiency
allocation of capital to achieve profitable investment from 2015 to 2017. Similalry, the company
returns on equity (ROI) remains higher at 40.38%.
Figure 3: Profitabilty ratios

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Source: (Pendrous, 2017).
Summary Of External Environment
PESTEL Analysis
Unilever headquarters is situated in London in a British political system. The United
Kingdom is a member of European Union, which enables trade among member states by
harmonization of specific rules relating to business and removal of trade barriers. Household
consumption has gone down drastically all of Europe due to the recession. Unemployment and
stagnation of wages is a significant issue in economies where Unilever Company supplies
consumers. The drop in salaries brings about a decline in consumer demand for Unilever
products. In the UK there, has there been a high level of life expectancy. There is a significant
ramification of the business like Unilever. It might change the structure of demand since the
older people have special needs that Unilever will meet. Today individuals rely so much on the
social media, mobile and retailing websites to get information.
Table 1: SWOT Analysis
Strengths
 Strong brand portfolio
 Strong innovation and launch of new
products
 Strong strategic acquisition
Weakness
 Product recalls
 Revocation of product-line licenses
Opportunity Threats

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 Growth in emerging economies
 Increased opportunitis in consumption
of health and wellness space
 Growth in home and personal care
 Ever increasing labor wages
 Risk from fluctuation in foreign
currencies
 Growth in counterfeit goods
Corporate Governance
Unilever acknowledges the significance of adopting good corporate governance and
behaviour. The company has succeeded in designing the code of business principles as the
standard guiding rules for employees working in all departments (Kalsoom, 2013). Unilever is
guided by six tenets of corporate governance (legal and regulatory framework, organizational
hierarchy, monitoring and internal controls, transparency & accountability, policies &
procedures, and the board of directors and committees). Management ensures that all employees
do the right thing that applies to legislation. All the principles are as extension to its values as
well as a reflection of its commitment to regulatory compliance and ethical practices (Unilever,
2018). Employees working in different departments believe that they need high levels of
standards and behaviour to work with everyone in the community. Unilever is committed to
communicate its performance in a regular manner and in a transparent manner. The company has
continued to report on its sustainability performance since 1996 (Unilever, 2018. Besides,
Unilever conducts its operations according to internationally accepted principles of good
governance and best practices.
Social Responsibility & Ethics
Unilever applies Sustainable Living Plan to set out decouple growth from the
environmental footprint while ensuring that it achieves positive impact in a society. The plan

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outlines three goals to achieve: social, environment, and economic performance across its value
chain. The company uses ethical principle of working with others to focus on major areas that
management use to create biggest impact and support sustainable development goals established
in United Nation goals. For instance, the three goals of social responsibility includes improving
health and well-being of over 1 billion people, reducing environmental impact, and enhancing
the livelihoods of millions (as indicated in the figure below).
Figure 4: Sustainable Living Practices At Unilever.
(Source: https://www.unilever.com/sustainable-living/)
How your company is placed in its market, (use your Porter’s five Forces)

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Strategic management plays an important role in driving the objectives of the
organization. Unilever Company is a well-known organization in Europe, which deals with
various consumer products, detergents, and foodstuff (Winston, 2014.)
In deaing with horizontal strategic management policies, Unilever has an advantage over
its competitors because of its flexible pricing policy and a well-organized distribution channel.
The strategy has proved critical for the business because it has edged out Proctor and Gamble in
the industry. Unilever has also gained a competitive advantage over new entrants in the company
by leveraging its economies of scale, which arise from its operations. Thus, its strategies have
worked well with its potential customer across the globe (Thompson, 2005.). Moreover, its
distinct nature of their products provides a unique flavor from its customers who prefer to come
for their products each time they need them. (Goffin, 2005).
On the vertical threats from the competitors, Unilever provides a flexible pricing strategy,
which allows its customers to bargain with their customers and arrive at a fair price without
making losses. Similarly, the company has friendly suppliers who subsidize products, and their
prices are flexible for the business. The company works by combining local execution and global
thinking hence winning the trust of many customers across the world.
Culture And Its Organisational Past
Unilever corporate culture revolves around principles, shared values, and traditions.
Management designs all these to influence employees. Currently, the head office acknowledges
the need to develop common cultures across all units in different countries. For instance, the
company establishes formal training programs to “Unileverize” all managers (Maljers, 2018).
Unilever’s past shows how the company has come to manage different business units to start

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sharing common culture. Over a period of time for instance, the company has succeeded in
weathering numerous changes. Over a period of three decades, the foods business has undergone
two important reorganizations. Such a past reorganization shows how the company focuses on
culture of flexibility and formality. Most importantly, the culture of innovation and risk taking
encourages employees remain innovative and take risks of adopting new products that add value
to customers. The company has transformed itself from selling margarine to a global fast food
company that now specializes in production of three categories of brands; food & drink, home
case, and personal care. Besides, management has achieved all these by making decisions that
take into account the effects on people in the organization.
Strategic Drift
This refers to the tendency for which strategies designed by the company to start
developing incrementally because of influence from historical as well as cultural impacts but
fails to keep pace with an every changing market competitions (Johnson, Scholes and
Whittington, 2008). Unilever has ensured that it remains the market leader in FCMG by
designing and implementing its strategies. The company utilizes its strategies to achieve
improvement in health and targets to achieve this 2020. The company seeks to continue helping
more that 1 billion people to take action in the best way that they could improve their well-being
as well as health status. The company has also established strategies that helps the company
compete by reducing the impact by 2020. It now seeks to half the environmental footprint and
use the products as it grows. The company future strategy also involve enhancing the livelihood
of hundreds of thousands of people as it grows the business.

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Unilever Capability (McKinsey 7S Framework)
Unilever systems covers the use of a workday as the leading provider of enterprise cloud
applications to support its finance and human resource. The company can now manage its
finances, human resources, human capital, and other assoiated activities designed to achieve
competitive advantage. Furthermore,the Workday HCM allows Unilever to standardize all its
processes globally. It now operaes through a streamlined operations while at the sane time,
ensuring that there are reduced complexities to achieve a high level of productivity and
efficiency. Unilever uses structures of a four-tier hierarchical structure. This helps the company
in funneling all the information through the business and senior teams to come up with decisions
from from the available information.
Unilever's scientists are developing the next generation oral care, Household care
products, and Deodorants. In addition, there is significant microbiology facility, Unilever Global
Fragrance Centre with a unique kind of expertise as well as the pilot plant that allows the
company to manufacture prototype shampoos, laundry liquids, and deodorants, tubes of
toothpaste and fabric conditioners. Unilever Company has excellent scientific strength
furthermore expertise in substrate, processing, materials, and formulation of products. The
company is pioneering high throughput experimentation.
The company has staff that range from neuroscientists, physical chemists, sociologists,
biologists, sociologists and chemical engineers. The Unilever company groups of the scientist in
the UK work hand in hand on a daily basis with external partners through company's innovation
program. The company's local strategic partners include; the University of Liverpool, Daresbury
Laboratory, and Manchester University. Consumer connection is an essential aspect of Unilever

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Company. The company's consumer understanding helps it deliver quality products and satisfy
them in return.
Figure 5: Unilever McKinsey 7S Framework
b) Key challenges
a. Consumer Demand for Variety
Unilever consumers are now more demanding than ever. There is an increased urgency to
produce new products when inclinations change which subsequently implies an expanding
shorter product lifecycles. This results to complexity in product improvement, sourcing,
satisfaction, production and higher transportation expenses to take care of demand (Dhawan,
2010). This likewise adds to the pressure for the company to better oversee stock. Moreover, the
company is expected to meet the needs of consumers globally which increases complexities in
producing variety for all the customers.

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There is also increased pressure to create agility in the supply chain. The supply chain
ought to respond to any adjustments in consumer inclinations so that the vital changes can be
organized across the end-to-end supply chain (Singh and Sethi, 2017). Consumer demand is also
fragile due to the increased competition from other companies mentioned above such as Nestle,
Kraft, P&G, Mars, and Coca-Cola that operate in the fast moving consumer goods industry
(FMCG). Volume development has also slowed further in the business sectors in which the
company operates, with weak market growth in emerging markets, which is evident in North
America and Europe. Consumers keep on seeking out bargains before purchasing goods and
Unilever shares have fell as well (Sanna, Quatrebarbes and Probert, 2015).
b. Sustainability
Unilever has made a strategic move towards sustainability. The move presents Unilever
with a key challenge given that Unilever’s biggest opportunities in sustainability are in the
extension in emerging and developing markets and the development of socially cognizant
consumers. Developing nations confront a plenty of issues including major environmental
change issues, poverty, and mal-nutrition, which may appear to be overwhelming for the
organization to respond to. This will require the company to use most of its resources in the
sustainability of the developing nations (Dhawan, 2010). The company is also expected to create
products that meet the utilitarian needs of the developing nations while factoring in the social
and environmental issues, which is additionally complex.
Unilever's sense of duty regarding sustainability also displays a major challenge in
maintaining the sustainability from the sourcing of their raw materials, to production, and the
distribution , to the customer use and disposing of items (Lingard, 2013). Unilever's biggest
sustainability challenges originate from the places it has minimum controls over, in the sourcing