Strategic Decision Making: Unilever Case Study with Porter's Model

This report provides an analysis of Unilever's business strategy through the lens of Porter's Generic Competitive Strategies framework. It identifies Unilever's broad differentiation strategy and explores the cost leadership, differentiation, and focus strategies in the context of the company. The report further evaluates the benefits and limitations of each of these strategies, including advantages like improved profitability and market share, and disadvantages such as reduced product innovation. Ultimately, the report concludes that Porter's Generic framework is a valuable tool for organizations seeking to gain a competitive advantage, helping them to manufacture commodities as per their requirements and adapt to market dynamics.

Leading Strategic
Decision Making

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Question 1. Porter's General Competitive Strategies framework to determine the organisation's
strategy to evaluate its competitive advantage............................................................................1
Question 2. Identify the benefits and limitations of the Porter's General Competitive
framework ..................................................................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Strategy refers to the actions that are taken by manager in order to attain one or more
objectives of organisation. This is treated as one of the general direction set for the company
which has different components helping in terms of achieving desired state for the future of the
company. Leadership refers to the ability of an individual through which they can influence and
motivate the people under their guidance (Liu and Yu, 2022). For this report Unilever is
considered which is a UK based multinational consumer goods company that provides FMCG
products in the market. The organisation was founded in the year 1929 in United Kingdom and
has its headquarters in London, England. The respective organisation deals in diversified product
range that includes food, mineral supplements, cleansing agents, pet food, personal care,
condiments, air purifiers and many more commodities. This report covers the analysis of
Unilever's business strategy with the help of Porter's Generic Competitive Strategies framework
and further the evaluation of this framework in terms of advantages and limitations is also
discussed.
MAIN BODY
Question 1. Porter's General Competitive Strategies framework to determine the organisation's
strategy to evaluate its competitive advantage
Porter's generic strategies is a framework that is used by the company in order to analyse
the competitive advantages across the market scope. This is one of the most essential framework
which will help in terms of analysing the competition factor of the market. Unilever is one of the
most reputed FMCG firm and there are several companies that deal in this sector and therefore it
is essential for the firm to manage the competition by applying different range of tools that will
help in analysing the competitive factor of the company (Krasniqi and Statovci, 2019). This
framework is helpful in determining the strategy that can be applied in the business model which
will help in terms of attaining the objectives of business. Unilever has a broad differentiation
strategy for gaining competitive advantage. The main focus of this strategy is to emphasise focus
on the features and characteristics which will help the business in terms of differentiating the
products.
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Figure 1: Porter’s Generic Strategies: Cost Leadership, Differentiation and Focus
The different types of strategies that can be applied in the business model which will help in
terms of attaining business objectives are further discussed below in context of Unilever-
 Cost leadership strategy: This strategy is focused on gaining competitive edge in the
market with the help of reducing the cost of the products and services offered by the
company. The reduced cost will directly help in increasing profits of the company as the
less cost strategy will help in terms of attracting more customers towards the business.
This is one of the most effective strategy for the customers for whom cost plays a major
role in terms of purchasing product. Through this strategy, the company becomes cost
leader in the market as the company focuses on declining the cost of the product as
compared to the other competitors in the market (Tsotsolas and Alexopoulos, 2018). In
context of Unilever, if they are into grocery and FMCG sector which is one of the most
competitive sector and therefore it is essential for the company to apply strategies in
order to deal with competition. Unilever is not majorly concerned with cost leadership
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strategy but if they still apply this strategy in order to lead the market with a decent
margin.
 Differentiation Strategy: Accommodate to differentiation approach indicates that
companies would need to explore something about their business or commodities that is
unique or differentiate them from their competitors. In order to determine the
differentiation, factor the organisation are required to revisit their vision and mission
statements. In order to succeed while implementing this strategy companies are required
to have better research and development department that could find ways that would help
organisation in gaining competitive factors (Griol-Barres, Milla and Millet, 2019). In
terms of Unilever, if the company implements this strategy it would be able to gain
competitive advantage over its rivals in the same industry. For company to bring
innovative products in the market requires to execute aggressive promotional strategies
so that it could aware people about the commodities. It is also very essential for
organisation to remain flexible to adapt any modifications in the market so that it could
mitigate challenges or risk it might encounter with in future.
 Cost Focus Strategy: This strategy in Porters Generic model explains that organisations
select niche market where there is less competition and offer lowest price of products or
services. Under this strategy, organisations choose to offer their products or services to
very small market through understanding the dynamics of market segment and demands
of customers where they ensure to provide commodities on low price. In context to
Unilever, if the organisation executes this strategy than it must target those market
segment which are untapped by its rivals and offer products or services at low price.
 Differentiation Focus Strategy: This approach of Porters Generic is also associated with
small market segments where organisations offer unique products or services which are
not previously provided to customers. This strategy includes strong brand loyalty in
consumers. Through adapting this strategy, it is very essential for organisation to make
sure that commodities they are offering are unique in the market (Karlsson and
Westermark, 2021). In terms of Unilever, if the organisation executes this strategy than it
must be able to understand need of market and manufacture products that are different
from others and provide satisfaction to customers.
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From the above discussion about different strategies under Porters Generic it has been
observed that Unilever implements Differentiation approach in order to achieve competitive
advantage over others. For example, the respective organisation manufacture personal care
products such as Dove Cream soap bars so that it could satisfy needs of customers related to
soaps which are not harsh or dry on skin.
Question 2. Identify the benefits and limitations of the Porter's General Competitive framework
There are several advantage and disadvantages that are related to each strategical
approach of Porters Generic framework. Benefits and limitations of each factor are discussed
below in detail:
Cost leadership strategy
The advantages and disadvantages of this factor of competitive framework are provided
as follows:
Advantages
Provide better profits: This method is more focused on developing low-cost operations
in the market and industry. Through decreasing cost associated with production and
development, it could become easy for organisation to accomplish higher profits (Abatecola,
Caputo and Cristofaro, 2018).
Enhance market share: Organisations implementing this cost leadership strategy are
able to acquire large market share as consumers who seek for low cost products with higher
value would help them in gaining large market.
Improves sustainability: When companies provide commodities at low cost than there
are very little chances of financial threats that organisation could face in the market. this
sustainability become more big benefit when economic crisis take turn for the worst.
Disadvantages
Reduce product innovation: The companies while implementing this cost strategy focus
more on providing products at lower prices rather than developing innovative commodities for
meeting market needs. The possibilities of manufacturing new and unique products become low
which could increase competition for companies as their rivals might focus on producing new
products.
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Reduce importance of customer feedback: When organisations focus on lowering the
prices of products then it become easy for them to avoid shifts in the market over time. It has
been observed that costumers always evolve their taste and preferences with time lead to new
trends in the market (Grigore, 2021). Therefore, this strategy would divert customers to choose
products according to their requirements over low-prices.
Differentiation strategy
The several advantages and disadvantages related to differentiation strategy are defined
below in detail:
Advantages
Develop additional value: Differentiation in products or services will provide companies
prospective consumer value. This value could either emerge from commodities or facilities or
from brand representation. Customers begin to attract towards the organisation more and try to
use the products offered by companies that could provide them extra value to enhance their
market share.
Allows organisation to compete: Through implementing this strategy companies are
able to compete effectively in areas other than cost. They could be able to innovate new
products, add new services, improve quality and more factors according to their decision in
which they want to implement differentiation (Giones, Brem and Berger, 2019). Organisations
could gain competitive advantage overs their rivals in the market.
Disadvantages
Perceived value could decline: After consumer become savvier and technology along
with products could become advance than it might be possible that the differentiation factor
related with product might declined. The organisation are required to evaluate how longer the
differentiation strategy would be last in the market for their new products.
Could restrain resources: In order to develop new products for the market, companies
require to invest lot of energy, resources, time and other factors that could help them in
differentiating from others. This might develop pressure on production as well as research and
development department to manufacture products that could enhance profit.
Focus (Differentiation and Cost focus)
The benefits and limitations that this strategy acquire are explained below in detail:
Advantages
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Build strong relationship: To execute this strategy companies must listen consider and
listen needs of targeted market segment. Then a specific value is developed due to products or
services created around requirements of customers (Schildkamp, 2019). This strategy helps
organisations in developing effective and positive attitude among customer towards products
which lead to their loyalty.
Improve Pricing Structure: When organisations observed that there are higher demand
and loyalty towards certain products then they would be able to increase price of their
commodities. This occurs because customers find value in becoming loyal towards brand as they
are able to meet their demands.
Disadvantages
Limit initial demand of commodities: Operating business in very limited market could
lead to exceptional results but it could also manufacture zero results. When companies are
manufacturing products for specific market, then the number of sales developed in the market
might be minimal. Even if organisation produce or design products for specific market to meet
certain need of customers, the reputation of brand might not become strong to grab attention of
customers.
Could limit future growth: If organisation would only focus on manufacturing products
for niche market then it would become difficult for them to expand their business on global level.
The procedure of focus strategy should be repeated to develop new possibilities as what has been
developed already was certain to the demographic (Phipps and Shelton, 2020). The companies
are not able to tap new market and would be stuck to focus on small market.
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CONCLUSION
From the above report it has been concluded that Porters Generic framework helps
organisations in examining suitable component that could help them in gaining competitive
advantage in the market over their rivals. From the above analysis about different strategies
which are Cost leadership, Differentiation and focus method it could be said that all these
methods assist companies in manufacturing commodities as per their requirements. The cost
leadership strategy assist organisations in providing products or services at very low prices
which helps them in grabbing large market segment. The differentiation strategy assist
organisations in manufacturing products or services that are unique and provide them chance to
attract large base of customers. Under cost focus strategy, organisations in selecting niche market
and offer them products on lower prices that might make them more competitive in the market.
While in differentiation focus organisations try to offer different products or services to the
selected market. There are several advantages and disadvantages associated with all these
strategies which helps companies in selecting their approach more accurately.
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REFERENCES
Books and Journal
Abatecola, G., Caputo, A. and Cristofaro, M., 2018. Reviewing cognitive distortions in
managerial decision making: toward an integrative co-evolutionary framework. Journal
of Management Development.
Giones, F., Brem, A. and Berger, A., 2019. Strategic decisions in turbulent times: Lessons from
the energy industry. Business Horizons, 62(2), pp.215-225.
Grigore, L.M., 2021. Strategic Leadership in Hybrid Warfare. In International conference
KNOWLEDGE-BASED ORGANIZATION (Vol. 27, No. 1, pp. 47-50).
Griol-Barres, I., Milla, S. and Millet, J., 2019. Improving strategic decision making by the
detection of weak signals in heterogeneous documents by text mining techniques. AI
Communications, 32(5-6), pp.347-360.
Karlsson, M. and Westermark, A., 2021. Perceiving resistance to strategic organizational change:
A barrier to success or an opportunity for improved decision-making?.
Krasniqi, I. and Statovci, B., 2019. The role of leadership and strategic decision on regional
development in developing countries.
Liu, T. and Yu, X.A., 2022. Micro-foundations of strategic decision-making in family business
organisations: A cognitive neuroscience perspective. Long Range Planning, p.102198.
Phipps, K.A. and Shelton, C., 2020. A “North star:” spirituality and decision-making among
strategic leaders. Management Decision.
Schildkamp, K., 2019. Data-based decision-making for school improvement: Research insights
and gaps. Educational research, 61(3), pp.257-273.
Tsotsolas, N. and Alexopoulos, S., 2018. MCDA Approaches for Efficient Strategic Decision
Making. In Preference Disaggregation in Multiple Criteria Decision Analysis (pp. 17-
58). Springer, Cham.
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