Strategic Decisions of Unilever: An Analysis of Market Strategies

This report delves into three strategic decisions made by Unilever's management and their impacts on the company's business operations. The first decision involves Unilever's successful resistance to a takeover attempt by Kraft Heinz, demonstrating its strong market position and financial resilience....Read More

Running head: STRATEGIC DECISIONS OF UNILEVER
Section 1:
Strategic Decisions of Unilever
Name of the Student
Name of the University
Author note

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STRATEGIC DECISIONS OF UNILEVER
Section 2: Executive Summary:
The report shows that strategic decisions have positive impacts on the companies and
stakeholders. The companies should consider these factors while taking decisions. The strategies
though profitable and would definitely lead to strengthening the market position of Unilever, the
company should form an action plans which would consist of strategies stretching over years to
allow the management take effective decisions at each step.

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STRATEGIC DECISIONS OF UNILEVER
Section 3:
Table of Contents
Section 1:.........................................................................................................................................0
Section 2: Executive Summary:.......................................................................................................1
Section 3:.........................................................................................................................................2
Section 4: Introduction:...................................................................................................................3
Section 5: Aim:................................................................................................................................3
Section 6: Discussion:......................................................................................................................4
Three strategic influences of the strategic decisions:..................................................................4
Strategic influence 1: Re-establishing the market position of Unilever in the global market:....4
Strategic influence 2: Increased brand value and sustainability:.................................................6
Strategic influence 3: Empowerment of subsidiaries:.................................................................6
Strategic course of action of Unilever:............................................................................................7
Section 7: Conclusion:.....................................................................................................................9
Section 8: Recommendations:.........................................................................................................9
Section 9: References:...................................................................................................................10
Section 10: Appendices:................................................................................................................12

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STRATEGIC DECISIONS OF UNILEVER
Section 4: Introduction:
Strategic decisions taken in boardrooms in order to strengthen market position globally or
to adapt to macroeconomic changes have strong influences on the operations of multinational
companies. The moves have rippling effects on multiple stakeholders ranging from investors,
customers, the management of the companies concerned and even their competitors. The paper
would delve into the three articles reporting three strategic decisions taken by the apex
management of the British-Dutch multinational company, Unilever. The first article would be
from the English daily, The Guardian titled ‘How Unilever foiled Kraft Heinz's £115bn
takeover bid’ shows how Unilever resisted a takeover deal by its American competitor, Krafts,
once again exhibiting formidable market position globally (Davies, 2018). The second article has
been sourced from the English Daily, The Independent titled, ‘Marmite owner to make all
plastic packaging fully reusable or recyclable by 2025’ which points of the sustainable
product line strategy of the British-Dutch consumer goods giant (Rodionova, 2018). The third
articled reported by international news channel CNBC titled ‘UPDATE 3-Unilever in pole
position to swallow GSK's Indian Horlicks business – sources’ reports Unilever’s acquisition
and merger prowess combined with its marketing prowess can even give stronger rivals Nestle
and Coca Cola a run for market position. Unilever emerged as the top of GSK India’s bid to
divest in its Horlicks business in India leaving Nestle, the largest food company in the world
behind (Wu & Gruber, 2018). The paper would explore the outcomes of these strategies of
Unilever on its business operations.
.

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STRATEGIC DECISIONS OF UNILEVER
Section 5: Aim:
The aim of this report is to visit three strategic decisions taken by the management of
Unilever and their impacts on the business of the British-Dutch company. The first shows that
financial power of Unilever and its tremendous resistance power that ultimately foiled the
American multinational food marketing giant, Kraft Food’s attempt to acquire it, which itself
testifies the stronger position of the former (Davies, 2018). The second article throws light on the
sustainable product strategies of Unilever and its aim to reduce reduce plastic contents in its
products including packages by 2025 (Rodionova, 2018). The third and the final article shows
Unilever acquisition power when the company toppled its stronger rival Nestle to acquire the
Horlicks business of GSK in India (Wu & Gruber, 2018). The third article does not only show
the power of Unilever but its subsidiaries.
Section 6: Discussion:
Three strategic influences of the strategic decisions:
Strategic influence 1: Re-establishing the market position of Unilever in the global market:
The three strategies taken by the management of Unilever actually re-affirm the top
market position of the British-Dutch company in the global market. The first strategy which led
to Kraft Food abandoning its decision to take over Unilever actually showed the company’s
power to resist any intervention of its competitors in its operations and decision making (Davies,
2018). The strategy belongs to a financial strategy category in which Unilever succeeded
holding on its global position. This success of Unilever would have several positive implications
on the company and its stakeholders. The first positive implication of the strategy is that
Unilever reassured its investors the security of its investments and its power to give them high
returns on their investments. The outcome of this reassurance of Unilever to shareholders was

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STRATEGIC DECISIONS OF UNILEVER
increased investment in its shares which is evident from the steeply rising share indices of
Unilever on the London Stock Exchange as shown in the graph below. Dou et al.(2016) points
out that increase in investments from investors can be interpreted as increasing financial strength
of the company.
Figure 1. Stock price Unilever on London Stock Exchange
(Source: Londonstockexchange.com, 2018)
The second implication of this growing financial position of Unilever can be reflected in
the next strategy which involves the company making decisions to reduce the plastic contents in
its products by 2025 (Rodionova, 2018). The second strategy belong the category of
sustainability strategies which obviously require immense capital allocation towards renewing its
manufacturing and supply chain strategies. The company would also require to withdraw
products containing plastic beads and introduce organic counterparts of these products. This
would require extensive innovation and R&D, obviously require enhanced support of
shareholders, which again points out to the first implication. The third strategy of Unilever in
which the company defeated its comparatively stronger competitor Nestle in bidding for GSK’s

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STRATEGIC DECISIONS OF UNILEVER
Indian business of Horlicks can be viewed can as the company’s allocation of capital to
strengthen its sustainable product line in order to offer customers more value creating products
(Wu & Gruber, 2018). It can be interpreted from the product line strategy of Unilever that the
company is not only capable of foiling acquisition attempts but also giving larger companies
tough competition in acquiring brands (Fernandes, 2016).
Strategic influence 2: Increased brand value and sustainability:
The three strategic decisions discussed above would lead to the strengthening of the
brand value of Unilever. The rejection of Unilever’s offer of acquisition actually showed the
brand value of the company. The company was able to strengthen its brand value further by
taking a resolution to reduce plastic content in its products. The third decision of Unilever to bid
for Horlicks in India and its victory as the top bidder leaving Nestle behind actually supports the
second strategy since Horlicks is made from natural ingredients like malt and barley (Ten
Klooster & de Koeijer, 2016). Thus, if Unilever succeeds acquiring Horlicks it would add to the
strategic change towards marketing of more products with natural ingredients giving tough
competition to Bournvita of Mondelez International and Milo of Nestle (Nestle.com, 2018). This
means that Unilever would be able to market of the top market position of Horlicks in India and
earn high profits, thus cementing its position in Asia. In other words, the three strategies would
drive the company towards high limits of sustainability. While the first strategy enforces
financial sustainability, the second and third strategies enforce environment and competitive
sustainability (Magnier & Schoormans, 2015).
Strategic influence 3: Empowerment of subsidiaries:
It can pointed out that the above decisions of Unilever clearly shows a strategy of the
apex management of Unilever which accounts for its global competitive advantage-empowering

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STRATEGIC DECISIONS OF UNILEVER
its subsidiaries. Koveshnikov, Ehrnrooth and Vaara (2017) mention that multinational companies
often empower their subsidiaries to lesser extent in order to retain its supreme power of the apex
management bodies over the operations. However, Demirbag, Tatoglu and Wilkinson (2016)
contradicts this statement and point that empowerment of subsidiaries instead of weakening the
apex management enable stronger operations in the host markets, thus enhancing the global
operations of the multinational companies altogether. An analysis of these strategies clearly
shows that Unilever follows the second ideology. This is because as far as foiling acquisition
attempt of Krafts is concerned, the triumph of Unilever can actually be credited to its American
subsidiary. This means that in the US, Unilever holds such position in spite of being a British-
Dutch company that Kraft, which is a resident company to the US was compelled to make an
attempt to takeover Unilever to manage the growing power of the former (Unileverusa.com,
2018). Again it can be pointed out that the management’s decision of reduction of plastic
component in its products would require wastage management and biodegradable management
operations from the subsidiaries as well. The third strategy of acquisition for Horlicks in India
actually shows that Hindustan Unilever, Indian arm of the MNC is powerful enough to compete
against Nestle and GSK. This clearly shows that the key to the global power of Unilever rests
with empowering of its subsidiaries.
Strategic course of action of Unilever:
Unilever can take several strategies to strengthen its business operations in three areas of
business pointed out above namely, financial, marketing and sustainability. The project would
start from December 3, 2018 and would involve all the subsidiaries of Unilever. The aim of the
project would be global position strengthening strategies of Unilever. The strategies would be
inspired by the three main discussed above namely, foiling of takeover attempts by other firms,

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STRATEGIC DECISIONS OF UNILEVER
reducing plastic content in packaging and acquiring of more sustainable brands (Appendix). The
actions which Unilever should undertake are as follows:
Activity
no Activity particulars Time
(months)
1 Releasing of new shares or IPO 24
2 Simultaneous market scoping to select
new subsidiaries 12
3
Identifying companies especially rivals
which may attempt to takeover
Unilever
12
4 Indentifying new organic packaging
firms located in individual host market
24
5
Indetifying new organic products
manufacturing firms in all three scales
like small, medium and multinational
companies
24
6
Identifying international brands which
Unilever can take over in future from
competitors or at least aim to take
over
24
7
Preparing report regarding all the
activities covered above and
submission of the same to apex
management
24
8 Apex management discusses the
matter with all the subsidiaries 12
9
Acquires new pacakging firms and
place them under control of respective
host subsidiaries
24
10 Acquires new organic products brand
and place them under charge 36
11 Acquire international brands 24
12 Acquire profitable local brands 12
13
Give power to national subsidiaries to
supervise the operations of the newly
acquired brands and firms in the
respective host countries
12
14 Create new designations to supervise
these newly acquired assets 12

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STRATEGIC DECISIONS OF UNILEVER
15 Market them under the brand of
Unilever 6
Section 7: Conclusion:
It can be concluded that Unilever is able to form strong strategies which have strong
impact on the entire global operations. The recommendations can be made against the discussion
conducted above which would strengthen the market position of the company. The above
analysis clearly shows that market environment of Unilever is extremely competitive. This
means that company should take more aggressive decisions by collaborating with its subsidiaries
as well.
Section 8: Recommendations:
The following are recommendations which the apex management of Unilever should
consider:
Strengthening of weak subsidiaries:
Unilever should strengthen its weak subsidiaries, especially in poorer host countries like
South Africa and Egypt. This would enhance its competitive strengths in the global market
altogether.
Introducing new products:
StartMo
n
12/3/18
Finis
hFri
7/13/
40
2
0
1
9
2
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2
0
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2
4
2
0
2
5
2
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2
6
2
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2
7
2
0
2
8
2
0
2
9
2
0
3
0
2
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2
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7
2
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3
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4
0

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STRATEGIC DECISIONS OF UNILEVER
The company in pursuit of its second strategy should introduce more organic products
using natural ingredients. This would empower the sustainability goals of the company.

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STRATEGIC DECISIONS OF UNILEVER
Section 9: References:
Davies, R. (2018). Theguardian.com. Retrieved from
https://www.theguardian.com/business/2017/feb/20/how-unilever-foiled-kraft-heinzs-
115m-takeover-bid-warren-buffett
Demirbag, M., Tatoglu, E., & Wilkinson, A. (2016). Adoption of High‐Performance Work
Systems by Local Subsidiaries of Developed Country and Turkish MNEs and Indigenous
Firms in Turkey. Human Resource Management, 55(6), 1001-1024.
Dou, Y., Hope, O. K., Thomas, W. B., & Zou, Y. (2016). Individual Large Shareholders,
Earnings Management, and Capital‐Market Consequences. Journal of Business Finance
& Accounting, 43(7-8), 872-902.
Fernandes, M. M. A. (2016). Mergers & acquisitions: acquisition of Boulder Brands by Hain
Celestial Group(Doctoral dissertation).
Koveshnikov, A., Ehrnrooth, M., & Vaara, E. (2017). Headquarter-subsidiary relations in the
multinational corporation as a discursive struggle. In Multinational corporations and
organization theory: Post millennium perspectives (pp. 233-264). Emerald Publishing
Limited.
Londonstockexchange.com. (2018). Retrieved from
https://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/
company-summary-chart.html?fourWayKey=GB00B10RZP78GBGBXSET1

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STRATEGIC DECISIONS OF UNILEVER
Magnier, L., & Schoormans, J. (2015). Consumer reactions to sustainable packaging: The
interplay of visual appearance, verbal claim and environmental concern. Journal of
Environmental Psychology, 44, 53-62.
Nestle.com. (2018). Retrieved from https://www.nestle.com/brands/allbrands/milo_foodservice
Rodionova, Z. (2018). TheIndependent.com. Retrieved from
https://www.independent.co.uk/news/business/news/unilever-marmite-dove-lynx-plastic-
recyclable-2025-environment-a7530266.html
Ten Klooster, R., & de Koeijer, B. (2016, June). Utilising the potential of design briefs in
sustainable packaging development. In IAPRI World Conference on Packaging (Vol. 14).
Unileverusa.com. (2018). Retrieved from https://www.unileverusa.com/
Wu, K., & Gruber, A. (2018). CNBC.com. Retrieved from
https://www.cnbc.com/2018/11/28/reuters-america-update-3-unilever-in-pole-position-to-
swallow-gsks-indian-horlicks-business--sources.html

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STRATEGIC DECISIONS OF UNILEVER
Section 10: Appendices:

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STRATEGIC DECISIONS OF UNILEVER
Global position
strengthening strategies of
Unilever
Releasing of new
shares or IPO
Simultaneous
market scoping to
select new
subsidiaries
Identifying companies
especially rivals which
may attempt to
takeover Unilever
Indentifying new
organic packaging
firms located in
individual host
market
Indetifying new
organic products
manufacturing firms
in all three scales like
small, medium and
multinational
companies
Identifying
international brands
which Unilever can
take over in future
from competitors or at
least aim to take over
Preparing report
regarding all the
activities covered
above and
submission of the
same to apex
management
Apex management
discusses the matter
with all the
subsidiaries
Acquires new
pacakging firms and
place them under
control of respective
host subsidiaries
Acquires new
organic products
brand and place
them under charge
Acquire international
brands
Acquire profitable
local brands
Give power to
national subsidiaries
to supervise the
operations of the
newly acquired
brands and firms in
the respective host
countries
Create new
designations to
supervise these
newly acquired
assets
Market them under
the brand of Unilever