Strategic Management Report: Analysis of Unilever Plc. (BUS 101)

This report provides a comprehensive strategic analysis of Unilever Plc., a major player in the consumer goods industry. It begins with an introduction to strategic management and its application to Unilever. The report then delves into Unilever's strategic direction, including its vision, mission, and core values. A key component is the analysis of the consumer goods industry using tools such as PESTLE and Porter's Five Forces models to understand the external environment and competitive landscape. The report examines the concept of strategic drift and its potential impact on Unilever, followed by an exploration of the interrelation between Unilever's mission and vision and the demands of the marketplace. Further, the report considers various strategic options Unilever could pursue to defend its core business and evaluates the resource implications of the recommendations. The report concludes with a summary of the key findings and recommendations, offering a valuable overview of Unilever's strategic position and future prospects.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Strategic Direction of Unilever Plc. And development of strategic thinking.............................1
TASK 2............................................................................................................................................2
Analysis of the industry in which Unilever Plc. is operating......................................................2
TASK 3............................................................................................................................................5
Strategic drift...............................................................................................................................5
Interrelation between mission and vision of Unilever with demand of workplace.....................5
Usage of Business Canvass Model:............................................................................................6
TASK 4............................................................................................................................................7
Possible strategies that can be followed by Unilever in order to defend their core business......7
TASK 5..........................................................................................................................................10
Evaluation of resource implications of recommendations........................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Strategic management is a process of identification and description of strategies that can
be followed by a organisation to achieve their organisational aims and objectives. This method is
used to enhance the performance by having a competitive advantage. This concept involves
several decisions and activities which are undertaken by the manager of the organisation in order
to attained desired results with profitability. In order to better understand this concept, Unilever
Plc. has been chosen for this project report. Unilever is a public limited company which is
engaged in consumer goods sector. Founded in 1930 by William Lever, this organisation has its
headquarters in Rotterdam, Netherlands. Unilever operates in multiple countries and product
range of this company includes health care goods, hygiene goods, general utility products etc.
In this project report, Strategic direction and strategic thinking of above mentioned
company is discussed along with analyses of the consumer goods industry with the help of
several analyses such as PESTLE and Porter's five forces model. Various strategies and models
are discussed of Unilever in order to analyse impact of strategic management in this company.
TASK 1
Strategic Direction of Unilever Plc. And development of strategic thinking
Strategic direction are the actions and activities which are performed in order to achieve
organisational goals. It includes all the central forces which provides clear direction towards
company's objectives, this concept involves plans and actions which needed to be considered to
work towards the vision of the future. There are few elements which contribute towards strategic
direction and they are vision statement, mission statement, core beliefs, values and tactics; these
elements helps in generating positive morale and synergy in the organisation (Barney, 2012).
Unilever Plc. is a public limited company which deals in general utility products such as
personal care products, food products etc. In order to develop this company, managers and other
upper level staff of this company considers strategic management as an integral part of their
organisation. Strategic direction which has followed by Unilever Plc. in the past years is
mentioned below:
 Vision of Unilever Plc.: Vision of this company is to make world a sustainable place to
live as they believe that this is that best possible way for their company to grow and
develop (Cattani, 2011). Vision statement of this organisation emphasis on sustainability
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according to which they frequently changes their products in order to satisfy customers
and maintain suitability in current market trends.
 Mission of this company: Mission of Unilever Plc. Is to add vitality in the life of their
consumers. The main aim of this organisation is to fulfil everyday requirements of the
customers such as nutrition, hygiene needs and personal care. This enterprise helps their
customers to feel good, look good and think better about themselves.
 Values and beliefs: Values of Unilever Plc. are integrity, responsibility, respect and
pioneering. They belief that every new talent should be guided in order to take decision
and perform tasks of everyday (Cohen, 2013).
Unilever Plc. is a multinational company which has developed their strategic thinking by
following various strategies and plans within the past 5 years which are discussed below:
 Market penetration: This is primary growth strategy of Unilever Plc. as according to
this, company increases their sales volume in order to increase revenues and
development.
 Product development: According to product development strategy, Unilever introduces
new products which can address increasing requirements of customer. This strategy
includes product innovation and development.
 Diversification: Diversification is the supporting growth strategy of Unilever Plc. as it
includes introducing new business to grow the company.
Strategic thinking and direction are both followed by this company in order to attain
growth and development.
TASK 2
Analysis of the industry in which Unilever Plc. is operating
Unilever Plc. is a large scale company which operates in consumer goods, which
according to current scenario is considered as growing sector. In order to analyse external
environment of this company, various elements such as political, economical, social.
Technological, legal and environmental are required to be discussed (David, 2011).
PESTLE analyses of Unilever Plc.:
 Political factors – According to political influencers, governments impact performance
and functioning of Unilever Plc. This organisation operates in various European countries
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which has high political instability due to current reforms, which levies negative impact
of this company. Growing free trade reforms in the world can result in political
opportunity for this company.
 Economical factors – Unilever operates in numerous countries, increasing wages in
developing countries can result in increased cost of goods. Despite of these challenges,
economical impact on Unilever is quite positive due to high growth and economic
stability in developing countries.
 Social factors – Social influencers are the changing trends of market and dynamic
preferences of customers. Overall impact of these influencers is positive as they deals in
healthful products which can never go out of fashion and also reflects a positive brand
image of the company in the eyes of public (Godoy, 2012).
 Technological factors – In order to upgrade the technology of Unilever Plc. management
of the organisation has to spend a ample of amount on Research and development
activities which result in increased cost of goods. Another technological factor which
impact functioning of Unilever is rising business automation.
 Legal factors – Legal factors also has a positive impact on Unilever plc. This company
has an opportunity to enhance their brand image by increasing their CSR activities. Due
to strong patent laws and consumer right laws, this organisation can grow their
organisational activities and functions.
 Environmental factors – These influencers are related to the ecology of the
organisation. These factors has positive as well as negative impact on Unilever. Increased
efforts on sustainability and complexity of environmental programs has positive impact.
Whereas, uncertain natural factors like disasters has negative impact on environment.
To evidently analyse company's competitive advantage and competitors, Porter's five
forces model analyses has been performed (Greco, 2013).
Porter's five forces model:
 Buyer power – Business growth and profitability of Unilever Plc. is dependent on the
response of consumer against their products. Low switching cost is the most influenced
force on Unilever's functioning.
 Competitive Rivalry – Competition is the major force for any organisation. Here,
Unilever's business operations are influenced by high number of firms engaged in same
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industry. Competitive firms of this company are aggressively competing for major market
share. Some of the competitors of Unilever Plc. Are P&G, Nestle and many more who
introduce various offers and services in order to attract majority of customers.
 Threat of substitution – Substitutes are the firms who deals in same products but have
competitively low prices. These substitutes can reduce revenue generating power of
Unilever along with strengths of the company. Loyal customers of this company can get
attracted to the low switching cost. These force has low impact on Unilever as there is
low availability of substitutes (Hill, 2014).
 Threat of new entrant – Threat of new entrants is considered as comparatively weak
force. Cost involvement in establishing a new brand is high due to which there is less
new entrants in the sector of consumer goods. Despite of weak force, low switching cost
can impact business of Unilever strongly.
 Supplier's power – This force has a moderate level of impact on Unilever's business
operations. This company provides products to their suppliers with a surety which helps
them in preventing suppliers from switching to other competitors. Unilever facilitates
their suppliers by influencing them in order to increase their productivity.
Unilever operates in a competitive industry due to which it faces several issues regarding
growth and development. Few industry scenarios facing by Unilever within its existing market
domain are:
 Sustainability – According to the current market trends, sustainability is the most
important factor which needed to be considered by organisations. Unilever Plc. believes
that sustainability is significant for customers and environment. There are few activities
which are performed by this company in order to increase sustainability level in their
business operations and they are avoid usage of green house gases, water availability and
usage etc.
 Supply chain – In order to grow and develop the business of Unilever, they decided to
operate globally for which they needed to supply their products in various countries.
This company has prepared various plans regarding efficient supply chain management
which can deal from the risks such as physical disruptions, environmental and industrial
accidents etc (Hitt, 2012).
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 Customer relations – In order to attain growth, Unilever adopted current market trend
of customer relation which help them in supplying their premium branded products. In
order to enhance these relations, company uses their strengths such as innovation and
competitive advantage.
Unilever Plc. operates in the industry of consumer goods and in order to analyse this
sector various above analyses are performed such as PESTLE analyses, Porter's five forces
model and analyses of industry scenario.
TASK 3
Strategic drift
Strategic drift is a situation when a company is loosing its strategic direction and is no
longer progressing towards its organisational goals. It is a concept of strategic management in
which company is getting influenced by the changing environment. It includes several aspects
such as unexpected challenges and dynamic business situations. This concept is considered as the
reason of organisational failure (Strategic drift, 2018). Unilever Plc. is large scale company
which was founded in 1929 due to which it has huge brand equity. Unilever Plc. has defined
their objectives in the mission statement which are needed to be achieved by the management.
There are few forces due to which Unilever is facing strategic drift and they are:
 Unilever is manufacturing quality consumer products which are of relatively higher
prices than its competitors due to which consumers of this company are more likely to
switch their brand choices. Due to these high prices, Unilever is facing issues of
strategic drift they are facing problems regarding achievement of their goals.
 Unilever deals in consumer goods which is a growing industry and due to continuous
new entry in this market, this organisation is drifting from its strategic direction which is
sustainability. It is difficult for above mentioned company to stay competitive in the
market along with performing sustainable activities.
Interrelation between mission and vision of Unilever with demand of workplace
Vision statement of Unilever focuses on making world a sustainable place as they think
this is the best way possible to develop their organisational business operations. Sustainability
and business growth are the main elements of their vision statement. This statement emphasize
on market trends which shape the industry (Killen, 2012).
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Mission statement of Unilever includes fulfilling needs of customers which is related to
nutrition, hygiene and personal care. The aim of this organisation is to serve quality products to
their customer so that they can live a standard life by getting more out of life. Focus of mission
statement is on adding vitality in their consumer's life.
From the above mission and vision statement of Unilever plc. It can be said that these
statements are aligned with demand of the marketplace. According to the current scenario, major
demand in consumer good market place is to serve products which are good for environment as
well as for consumers and Unilever focuses on manufacturing sustainable quality products which
can add vitality in the lives of their consumers.
Strategic capabilities of Unilever
Strategic capabilities refers to the ability of an organisation to successfully implement
competitive strategies in order to survive and increase the profitability of the organisation.
Unilever is an large scale organisation which has developed various strategies in order to grow
and develop. Strategic capabilities of this company are:
 Quality products – Unilever deals in consumer goods with the aim of facilitate their
consumer by adding vitality in their lives. In order to satisfy their consumers, Unilever
has attain certain strategic capabilities of manufacturing quality products which can
provide highest level of satisfaction to customers (Luo, 2011).
 Sustainable management – Sustainable management includes business practices which
are advantageous for environment and customers. This concept includes producing and
procuring products which are environmental friendly and does not have any harmful
impact on consumers.
 Diversification in products – In order to gain more profitability and growth, Unilever
Plc. Has diversify their products. Product range of this organisation includes nutritional
goods, personal care goods, hygiene products etc. This company frequently launches
products in order to introduce diversification in their product line.
Usage of Business Canvass Model:
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Key activities:
- Web design management.
- Customer service
- Inventory management and
logistics management
- Re engineering and product
development
Customer relationships:
- After sales customer
service
- Customer interactions via
web portals.
Customer segments:
- Men aged from 18-60.
- Women aged from 15-50.
Cost structure:
- Shipping and distribution
cost.
- Promotional and marketing
cost.
- Inventory warehousing cost.
- Selling and production cost.
Revenue streams:
- Sales revenue generated
from sold products.
Key sources:
- Product designers.
- Customer service professionals.
- Vendor management buyer.
After developing business canvass model of Unilever to portray rationale and core logic,
it has been observed that this company focuses on sustainability value and beliefs. This company
operates in consumer goods industry which has their major focus on satisfying needs of
consumers. Unilever has created their values and captured them in order to gain trust of
customers.
TASK 4
Possible strategies that can be followed by Unilever in order to defend their core business
Unilever is large scale business organisation and in order to attain growth and defend
their core business, it has developed various strategies which are prepared by managers and other
upper level staff of this company. Various possible strategies which are either developed by
Unilever or which can be followed in order to defend their business are discussed below in
detail:
 Product range choices – Unilever Plc. can adopt strategies of product range choices.
According to this, company should manufacture those products which are of general
utility such as personal care, food products, home care and refreshments. As these
products has high utility level and can satisfy customers to the fullest (Michael, 2017).
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 Active portfolio management – Unilever produces and procures numerous products,
due to which managing all those products is a complex task. In order to manage all the
goods and services, this company should follow the strategy of portfolio management.
Under which they can focus on attractive segments where products can be managed on
global scale.
 Innovative approach – Unilever operates in consumer goods market, which is a highly
competitive sector and in order to attain competitive advantage this company should use
the strategy of innovation. Under this strategy, the main of focus of this company should
be on producing innovative products which can fulfils the requirements of customers and
can attract more prospect buyers towards their brand. In order to manufacture innovative
products, Unilever should have a efficient research and development team (Molina-
Azorin, 2012).
 Market development – Market development is a process of entry in new emerging
markets in order to increase productivity and profitability of the company. Unilever is a
large scale company and to increase their market share and annual income they should
adopt strategy of market development. With the help of this strategy, the above
mentioned company can expand their business operations and can develop a stronger
base to improve their sales volume and revenue.
 Zero based budgeting – Unilever should follow strategy of zero base budgeting as it can
help this company by reducing the cost and ensuring competitiveness. Under this method,
an organisation can improve their transparency and visibility. They can also improve
their cost accountability and cost management.
 Developing talent – Human resource is the most significant asset of an organisation
which helps in increasing productivity. Unilever should use strategy of developing talent,
as it includes six core capabilities which can build a successful business.
 Attracting talent – In order to employ efficient employees. Unilever should attract
talented candidates. This strategy will help this company to appoint effective personnel
which is considered as key element of success (Moutinho, 2011).
In order to defend their core business, Unilever can use various growth strategies which
will help them in attaining highest level of growth and development. Some of these growth
strategies are mentioned below:
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 Consistent – Unilever is a large scale company which is engaged in consumer good
industry. According to this strategy, Unilever can gain high core operating margin and
free cash flow by consistency in continuous investment. Here, consistency refers to
continuous investment in supply chain and brand marketing which provides a long term
sustainable business.
 Competitive – In order to attain growth, Unilever should adopt strategy of competitive.
Under this strategy, organisation should enter in new market and new segments such as
premium brand category.
 Profitable – The above mentioned company should adopt strategy of profitability. Under
this strategy, company should produce high class products in order to earn more returns.
 Responsible – In order to attain growth and development, organisation should follow
responsibility strategy. Under which they can take responsibility of positive social impact
and reduced environmental impact (Witkamp, 2011).
Unilever Plc. is a growing company which needs to follow few competitive strategies
from which they can defend their core business. Some of these competitive strategies are
discussed below:
 Differentiation – Unilever plc. can use differentiation as their generic strategy as this
strategy helps in attaining competitive advantage. This strategy allows organisation to
emphasis on features which can make the company's products more stand out so that they
can have a separate position in the market. If a company is following this strategy, they
can have the advantage of more profit earning. For example, if a product of Unilever is
relatively pricey but innovative, than customers of that product will not switch their
choices because they don't have any other substitute for that product. This generic
strategy will result in betterment of their organisation as the this strategy is perfectly
aligned with vision and mission statement of the organisation. The focus of this strategy
is growth through product development. A financial objective is being linked with this
generic strategy in order to earn more sales revenue from developing countries.
 Collaboration – Unilever should collaborate with several organisations which are
engaged in charity and society welfare work. In order to gain positive public image, this
company should collaborate with non profit organisations so that they can drive change
which is good for society. By working with various partners, they can enhance their
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supply chain management and can create new innovate products. Under this strategy,
company can work with other stakeholders so that they can make their management
system more efficient and trustworthy.
 Innovation – Innovation is a process where a company produces products which stand
out in market. The aim main of this strategy is to gain competitive advantage. Unilever is
a public limited company which delivers general utility products, in order to gain increase
their productivity and profitability this company must follow this strategy. In order to
attain innovation, Unilever has to build brands through science and technology.
 Consumer insight – Unilever has a huge brand equity and loyal customer, in order to
maintain this reputation this company should follow the consumer insight strategy.
According to this strategy, manufactures should produce such goods which fulfils all the
needs of consumers and satisfy them. This strategy is used by almost every firm as the
current trend focuses on customer satisfaction.
 Supporting strategies – Supporting strategies are the intense growth strategies which
focuses on establishing new business units in order to attain growth. Some of the
supporting strategies are diversification and market development which helps an
organisation to grow. These strategies helps an organisation to grow by expanding their
business operations. According to these plan of actions, Unilever can expand their entity
by two ways. First is to introduce new business units which has no relation with existing
products and second is to enter in new market segments so that they can capture major
market share.
 Primary strategies – Unlike secondary strategies, primary strategies are most intense
and significant plan of action. Example of this strategy is market penetration which helps
an organisation to increase its sales revenue by improving sales volume. The main motto
of this strategy is to penetrate the market by implying aggressive efforts towards their
promotional activities.
TASK 5
Evaluation of resource implications of recommendations
Unilever Plc. Operates in multiple countries which has adopted various strategies which
results in beneficial as well as non beneficial for the company. There are few recommendations
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