Strategic Analysis of Unilever: Macro Environment & Market Competition

This report provides a comprehensive analysis of Unilever's business strategy, examining its internal and external environments. It utilizes PESTLE and SWOT frameworks to assess Unilever's capabilities and the impact of macro-environmental factors. The report also evaluates Unilever's internal resources and capabilities through the VRIO model, identifying strengths and weaknesses. Furthermore, it conducts a competitive market analysis using Porter's Five Forces, offering insights into Unilever's strategic direction and competitive positioning. The analysis considers various factors influencing Unilever's operations across its global presence, including political, economic, social, technological, environmental, and legal aspects.

BUSINESS STRATEGY

Contents
INTRODUCTION................................................................................................................................1
TASK 01............................................................................................................................................2
P1 CAPABILITIES OF UNILEVER BY APPLYING PESTLE AND SWOT FRAMEWORKS......................2
M1 CRITICAL ANALYSIS OF MACRO ENVIRONMENT...................................................................7
TASK 2..............................................................................................................................................9
P2 & M2 ANALYSIS OF INTERNAL ENVIRONMENT AND CAPABILITIES OF UNILEVER.................9
STRATEGIC CAPABILITY..........................................................................................................10
VRIO MODEL..........................................................................................................................11
STRENGTHS AND WEAKNESSES.............................................................................................14
TASK 03..........................................................................................................................................15
P3 & M3 COMPETITIVE MARKET ANALYSIS...............................................................................15
TASK 04..........................................................................................................................................17
CONCLUSION.................................................................................................................................23
REFERENCES...................................................................................................................................24
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INTRODUCTION
Business strategies are the key factor used by the organizations to gain competitive advantage
and maintain sustainable growth. With continues changing market, organizations are focusing
on improvising their marketing strategy on a periodic basis. To get a better understanding of
this segment, Unilever Corporation is chosen for this assignment.
Unilever is a transnational company with headquarter based in Rotterdam, Netherlands and
Unilever House based in London UK. It owns more than 400 brands and operates in almost 190
countries; additionally, they provide products ranging from foods, personal care, and
beverages. The company was founded by margarine Unie and Lever Brothers in 1930. Their
current CEO is Paul Polman, and they set a vision to provide a sustainable living to the people.
The company provide employment to over 161,000 people of which 47% of managers are
women. Its turnover in the year 2017 was around €53.7 billion of which 12 brands had sales
over €1 billion. Unilever focuses on sustainability and maintained zero non-hazardous waste to
landfill in 2017.
The following assignment is distributed in four parts that, which includes critical analysis of the
capabilities of Unilever by applying PESTLE and SWOT analysis. In section second, Unilever’s
internal environment and capabilities are assessed. Additionally, the competitive forces are
evaluated by applying Porter’s Five Forces. Lastly, strategic direction of Unilever us interpreted
by applying various theories, models and concepts.
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TASK 01
P1 CAPABILITIES OF UNILEVER BY APPLYING PESTLE AND SWOT
FRAMEWORKS
Every external factor on which the organizations has no or little control like legal, political,
environmental etc. are considered as the macro environment. It affects the whole economy
rather than a specific sector or organization. To get a better understanding of the external
factors that can have an impact on the Unilever, PESTLE analysis can be conducted. Since the
company operating in over 190 countries and owns over 400 brands, there are several external
factors that have the influence on the productivity and performance of the company. PESTLE
analysis of Unilever is conducted below:
Figure 1: Business Model of Unilever
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ConsumerInsightCollaborationInnovationSourcingManufacturingLogisticsMarketingSales

POLITICAL
As the company operates in several countries, therefore different laws made by each country
bound it. For instance, the company to avoid legal actions must effectively follow guidelines
provided by food and drug administration of USA and European Commission. Improving free
trade relations and political stability in several countries like India, China etc. has provided an
opportunity to the company to accelerate their business.
On the other hand, political unrest in the European Union and BREXIT has negatively affected
the growth of the company. The supply chain of the company is greatly affected by this political
decision. Since the input cost is raised the company had to increase the rates of their products
significantly, which created conflict. The manufacturing stage is also somewhat affected, as the
company now have to focus on localizing the manufacturing base (Kew, and Stredwick, 2017).
ECONOMICAL
Economic situation around the world affects the performance of the company. Several
economic factors determine the performance of the Unilever such as, increased wages in
developing country has increased the amount of disposable income, that created an
opportunity to their company to increased their sales (Cadle, et al., 2010). This same factor also
acts as a threat since many manufacturing facilities of Unilever is situated in developing nations.
Additionally, the opportunity of expanding business in the developing countries also cause
profit to the business since investing in such nations can ensure higher return rate. Moreover,
the economic stability of the developed nations ensures slow and steady growth in business.
SOCIAL
Unilever owns more than 400 brands, thus maintaining a strong reputation in the market is
essential for them. Their products focus on increasing the daily lifestyle of the consumers and
make them feel better. With the changing, market sociocultural factor creates several
opportunities for the business such as, customers around the world are becoming more health
conscious therefore products that address this factor can be offered. Additionally, the rise in
environmentalist behaviours can also be used for attracting large customer base (Cadle, et al.,
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2010). The company can use methods to minimize its energy usage. Unilever already uses
hybrid transportation system in order to minimize their carbon emission.
TECHNOLOGICAL
The increase in technological advancement creates several opportunities as well as the threat
to the company. Factors like increasing business automation provide an opportunity to the
company to ease up the supply chain process by implementing IT systems. The same factor
raises the threat to the company, since competitors, including the local retailers, can also take
advantage and affect the profitability of Unilever. Increase in the R&D investments causes a
threat to the company as it creates opportunities for the competitors to enter the personal care
industry (Cadle, et al., 2010).
ENVIRONMENTAL
The raised concern about the sustainable growth of the business has created several
opportunities for the business. Unilever can focus on implementing strategies and utilizing
technologies to minimize their carbon emission and energy usage level, in order to, control the
impact of business on the environment. Through corporate responsibility, Unilever can gain
competitive advantage (Kew, and Stredwick, 2017).
LEGAL
Unilever operates in many countries each having different laws and guidelines to follow that
creates difficulty for the business to keep up with different guidelines. Though, this also creates
opportunity, since the company can design complex environmental guidelines. Additionally, the
strong international patent law has provided great opportunity to focus on their R&D sector
and develop new products (Sadgrove, 2016).
In order to get a better understanding of the internal and external factors that have an impact
on the growth of Unilever, SWOT analysis can be conducted that will provide detailed
information about the strength, weaknesses, Opportunities and threats.
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SWOT ANALYSIS
STRENGTHS
 Company owns over 400 brands
 Heavily funded R&D department
provides innovative products
 Their products are based on
customer’s vision and requirement
 Assets spread across more than 190
countries
WEAKNESSES
 Products offered by Unilever can be
replaced in the markets of Asia and
Africa, since traditional alternatives
can replace the products
 Competitors like Nestle Pepsin Co.
and other local business
continuously challenge Unilever by
raising the stakes
OPPORTUNITIES
 Company can improve their social
image by investing in sustainable
growth and improving their
environmental guidelines
 Investment in developing countries
can be beneficial as it will increase
their customer base
 Implementing technological
advancement to improve the
productivity of supply chain
THREATS
 The global economic crises reduces
the disposable income that causes
reduction in the sales of the products
 Competitors like Nestle, Pepsi Co.
who are capable of investing large
amount on R&D are major threat as
well
 Local products that are provide at
reduced rates also challenges the
growth of the company
(Helms,. and Nixon, 2010)
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M1 CRITICAL ANALYSIS OF MACRO ENVIRONMENT
Figure 2: Macro Environment Factors
In the above section, several external factors are discussed in detail that has an impact on the
productivity and growth of the organization. The demographic factor had caused a mixed
impact on the Unilever. The company can invest in the developing countries like China and
India in order to increase their customer base and gain the advantage of their political
guidelines due to their large population and increased disposable income (Grekova, et al.,
2016.). Moreover, by improving their environmental policies as well, they can create an image
of socially aware and eco-friendly business organization that will provide them with a
competitive advantage (Kalyandurgmath, and Mohanty, 2015). On the other hand, BREXIT has
caused a negative impact on the sourcing and manufacturing process in their business model.
To cope with other effects of political decisions, the company moved their headquarter to
Netherlands Unilever has already implemented strategies to minimize their carbon emission by
using hybrid transportation services and following strict waste disposal policies for their
factories. The management of the organization can also use increased disposable income in
developing countries as this can result in increased sales. By investing in health care products a
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UNILEVERDemographic
Forces
Natural
Forces
Technologica
l Forces
Economic
Forces
Cultural
Forces
Political
Forces

large segment of health, conscious customer segment can be attracted. The technological
factor can be used for competitive advantage by using it in the supply chain management, this
will not only help in balancing the supply and demand in all the operated areas it will also
reduce the carbon emission of the business through which the company can maintain their
image as an eco-friendly business (Hasan, 2015).
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TASK 2
P2 & M2 ANALYSIS OF INTERNAL ENVIRONMENT AND CAPABILITIES OF
UNILEVER
Unilever has several competitors including Colgate Palmolive, Kerry Group, Nestle, and local
retailers. Nestle is considered to be a sound competitor of Unilever as it operates in a wider
sector and provides comparatively broader range of products. Unilever has to conduct
stakeholder analysis that will help them in determining the impact of their decisions on
shareholders. Investments made by the shareholders are key factor for expanding the business
and compete in the market (Andriof, et al., 2017). The stakeholder analysis can be conducted in
three steps that are described below:
Figure 3: Stages of Stakeholders Analysis
IDENTIFY STAKEHOLDERS
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Understand
Key
Stakeholders
Prioritize
Identify
stakeholders

Identification of potential stakeholders can be done by analysing the individuals that are
affected or are interested in business. These may include alliance partners, team members,
staffs, consumers, suppliers, government, shareholders and many more (Miles, 2017).
PRIORITIZE
After identification, the stakeholders have to be prioritized based on based on their loyalty
towards the company and total investment they can make. From highest to lowest priority,
Unilever’s stakeholders are Consumers, employees, investors, suppliers, and communities
(Tricker, and Tricker, 2015).
Figure 4: Power- Interest Graph for Prioritizing Stakeholders
[Source: Thompson, 2018]
To get a better understanding, critical analysis of internal environment of Unilever is conducted,
which are described below:
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STRATEGIC CAPABILITY
The ability of a company to employ different plans to ensure its sustainable growth in a
competitive environment is termed as its strategic capability. This is highly dependent on the
core concepts such as business foundations, cost efficiency of the products, sustainability,
organizational knowledge, market analysis, and development objectives and goals of the
organization. Unilever uses, financial, physical, intellectual properties to provide effective
strategic methods. The tangible and intangible resources of Unilever spread across 190
countries are also needed to be identified. The strategic management of the Unilever is majorly
dependent on the needs of the customers along with the competitive strategies. Decisions
involving management, marketing HR and supply chain are affected by the core capabilities of
Unilever. Skilled and experienced people are responsible for Unilever to take ternary decisions,
whereas, major decisions regarding the operational strategies are taken by the board of
directors (Rothaermel, 2015).
VRIO MODEL
This tool is used for determining and analysing the internal resources and capabilities of the
organization, this helps is gaining competitive advantage. It consists of four questions that
determine the sustainability of the product and company (Karakowsky and Guriel, 2015).
VALUABLE
The foremost question in the model is that, is the resource valuable? I.e. is it valuable enough
to help the company in overcoming the issues. If the answer is yes then it is valuable; if not,
then it results in a competitive disadvantage. Unilever owns around 400 brands, together they
have the potential to provide an advantage during the tough competition. Additionally, the
assets or properties in 190 countries are also valuable in case of Unilever.
RARE
Is the resource rare enough? If yes then it is essential for the organization; if not then it results
in competitive parity. In case of Unilever, most of the products offered by them are replicable
that creates a competitive market (Afuah, 2014). Heavily funded Research and Development
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