Strategic

Management Analysis
of Unilever
 Hello!
Our team consists of:
Fany Kartika 16/392647/EK/2079
Kinanthi Hayuning 16/395940/EK/20912
Made Bilan A. B. 16/397187/EK/21143
Vanessa Speciale MEB3354
Table of Contents
I. Company Overview
Business Model.
II. Mission, Vision, Goals, Values.
III. External Environment Analysis.
Macro Environment Analysis (PESTEL)
Industry External Environment Analysis (5 Porter’s)
Position of Industry’s Rivals (Strategic Group
Mapping).
IV. Internal Environment Analysis.
Value Chain Analysis.
SWOT Analysis.
V. Generic Strategies Analysis.
Broad Differentiation Strategy.
Broad Low Cost Strategy.
VI. Strengthening Unilever’s Competitive Position.
Unilever’s Strategic offensive strategy.
Choosing which rivals to attack.
Timing Unilever’s Attack Moves.
Horizontal or vertical acquisition strategy.
Outsourcing strategy. 3
Table of Contents
VII. Strategies for competing in International Markets.
Unilever’s Strategic Offensives.
Unilever’s Horizontal Merger and Acquisition.
Evolving Transnational Company.
VIII. Diversification and the Multi-Business Company.
Unilever’s Diversification Strategy.
Weighted industry attractiveness score analysis.
Competitive Strength Score analysis.
9 Cell Industry Attractiveness.
IX. Case of Unilever’s Unethical Conduct in Palm Oil.
Drivers of unethical conducts.
Corporate Social Responsibility.
X. Superior Strategy Execution.
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 1.
Company
Background &
Business Model

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Company Background
-British-Dutch transnational consumer
goods company co-headquartered in
London, United Kingdom and
Rotterdam, Netherlands (Dual listed
company).
-Part of the Fast-Moving Consumer
Goods (FMCG) industry.
-One of the world’s top three food
firms beside Nestle and Kraft.
-World’s second largest packaged
consumer goods company after P&G.
-Main success factor is the continuous
development of R&D. 6
400 BRANDS

190 COUNTRIES

Whoa! That’s a big number.

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 Organised into four main divisions – Foods,
Refreshment (beverages and ice cream), Home
Care, and Personal Care.
.

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 Business Model

“
“ We believe that sustainable and
equitable growth is the only way
to create long term value for our
stakeholders. That is why we
have placed the Unilever
sustainable living plan at the
heart of our business model. ”
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Business Model
>Collaboration: >Logistics: >Sales:
Work with Centralising Work closely
governments, network through with retailers
NGOs & other global to ensure the
stakeholders. UltraLogistik brands are
control to always and
>Innovation:
improve properly
R&D mission to customer service, displayed from
build brands and use hybrid supermarkets
through vehicles & rail to e-commerce.
benefit-led instead of roads.
innovation.
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 2.
Mission, Vision,
Values, Objectives

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“To add vitality to life. We meet
everyday needs for nutrition, hygiene
and personal care with brands that
help people feel good, look good and
get more out of life.”
>create expectations.
>realistic.
>active and positive.
>adaptable Mission
“Unilever has a simple but clear
purpose - to make sustainable
living commonplace. We believe
this is the best long term way for
our business to grow.”
>short & easy to understand.
>focused - use of campaigns.
Vision

“The highest standards of corporate

behaviour towards everyone we
work with, the communities we
touch, and the environment on
which we have an impact.”
4 Core Dimensions of Values:
>Integrity, Responsibility,
Respect, Pioneering. Values
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 3.
External
Environment
Analysis

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Pestel Analysis

Political Economic Social

Trade barriers Unemployment Life expectancy
are possible and and low wages is increasing and
53% of increase in birth rate is
Unilever’s many areas. decreasing.
business comes Market in China Awareness
from developing and Latin about
markets which America sustainability
are not stable increases and health
consciousness is
increasing
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Pestel Analysis

Technological Legal Environmental

Strong increase Unilever keeps Environmental
in technological adjusting to aspects for
usage leads to a local laws due to example
need of their existence reducing the
adaptation in 190 countries carbon footprint
are becoming
more and more
important

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 Five Forces Analysis
-> Buyer Bargaining Power -> Threats of Substitution

- Low switching costs - Low switching costs

- Easily accessible to wide array of - Low-moderate substitute availability

information - low performance to price ratio
- Small size of individual buyers Weak Force
Strong Force -> Threat of New Entrants

-> Supplier Bargaining Power - High cost of brand development

and economies of scale
- Moderate size of individual supplier
Weak Force
- Moderate population of suppliers
-> Competitive Rivalry
- Moderate overall supply
- Big and aggressive competitors
Moderate Force - Low switching costs
Strong Force 16
Strategic Group Map

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 Key Success Factors

- 2010 Unilever launched organizational transformation

plan
- Use of supply chain sustainability changed processes,
politics and people’s mindset

1. Incorporate sustainability into long-term strategy

2. Create a vision and 10 year plan
3. Create a division that focus on the alignment of the
strategy and the sustainability
4. “Weed” out suppliers that don’t align with vision

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 4.
Internal
Environment
Analysis

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Unilever’s Value Chain
Main goal: reduce impact on environment
while growing as a business

100s of Unilever factories add up to 3% of

greenhouse gases and 26% of
environmental impact are from suppliers

68% of environmental impact are from

consumer
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- Strongest brands on the market - No uniqueness
- Diverse products - Easily substituted
- Strong market presence - No direct influence
- Expertise of distribution channels - Strong competitors therefore
need for innovation
- Transnational strategy leads to
adaptation
- Economies of scale
- High funded R&D Strength Weakness

- Globalization offers many - Strong competitor

opportunities - Easily substituted
- Rising awareness about health - Independence of retailer
and sustainability - Asian Multinationals
- Ability to diversify - Sustainability and Health
consciousness

Opportunities Threats
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Unilever’s internal factor evaluation
Strengths Weight Rating Weighted Score

1. Contribution of home and personal care to net 0.12 4 0.48

sales is 72.9%

2. Marketing and selling expenses increased by 0.08 2 0.16

12.5% to Rp6.6 trillion

3. Strong portfolio of brands and diversified 0.09 3 0.27

product range

4. Contribution to Total Turnover is 57% in 2017 0.08 3 0.24

(Emerging markets)

5. Shares outstanding reaching the number 7.63B 0.11 4 0.44

6. Cash position in 2014 increased by 13.7% or 0.09 4 0.36

Rp31.5 billion

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Unilever’s internal factor evaluation
Weakness Weight Rating Weighted Score

1. Finance income decreased by 61.5% to Rp14.5 0.11 4 0.44

billion

2. Sales growth for the year 2017 was 3.1%, lower 0.05 2 0.10
than the previous year growth of 3.7%

3. The Company’s collection period weakened 0.06 3 0.18

from 30 days in 2012 to 33 days in 2013

4. No direct connection with customers 0.08 4 0.32

5. Excellent R&D; lead to high quality products 0.06 3 0.18

and higher prices

6. As of Dec 31 2017, employ 161,000 employees 0.07 3 0.21

globally

Total 1.00 3.38

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Unilever’s external factor evaluation
Strengths Weight Rating Weighted Score

1. The diversity of Unilever’s competitors is low 0.06 2 0.12

2. Unilever Indonesia goes into 2018 on the back 0.10 3 0.30

of market share gains and robust growth in
almost all categories

3. Keeping with product innovation based on 0.08 3 0.24

customer expectation

4. The high customer satisfaction can be seen 0.13 4 0.52

from the title of prime index of consumer
satisfaction

5. Since 1962, PT. Unilever Indonesia, Tbk has 0.12 4 0.48

been listed on the Indonesia Stock Exchange

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Unilever’s external factor evaluation
Weakness Weight Rating Weighted Score

1. Substitute products in the market 0.15 4 0.60

2. The company sells its products through a 0.06 3 0.18

network of about 370 independent distributors
covering outlets throughout Indonesia

3. In the second half of the year, the Indonesian 0.10 3 0.30

macro economy experienced another test with
high inflation (post-fuel subsidy cut), weakening
the Rupiah.

4. Government laws and regulations are quite 0.12 3 0.36

challenging to maneuver around

5. Many smuggling of products from outside of 0.08 3 0.24

Indonesia

Total 1.00 3.38

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Unilever’s CPM
Unilever Nestle

Critical Success Factors Weight Rating Score Rating Score

Advertising 0.10 3 0.30 2 0.20

Product Quality 0.20 4 0.80 4 0.80

Price Competitiveness 0.15 3 0.45 4 0.60

Management 0.10 4 0.40 3 0.30

Financial Position 0.15 4 0.60 4 0.60

Customer Loyalty 0.05 2 0.10 3 0.15

Global Expansion 0.20 4 0.80 3 0.60

Market Share 0.05 4 0.20 3 0.15

Total 1.00 3.65 3.4

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Strategic Challenges

“SUCCESS IN OUR
OPERATIONS, BUT VALUE
CHAIN CHALLENGES REMAIN”

“UNILEVER IS HALF WAY THERE

ON THE KRAFT CHALLENGE”

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 5.
Generic Strategies
Analysis

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Differentiation Approach
-The company has intended to distinguish its brand from its two
main competitors - Nestle and P&G.

-Won over new features of attributes, and over time hoping to

increase customers loyalty.
-Eg: Dove Cream Bars with features not harsh/ drying, OMO Black
in Middle East.
-Cost? Revamp the value chain but kept its coordination with
retailers, distribution & dealers to keep its cost as low as possible.
-Eg: Give discounts to shop owners when put their products at
front.
-High investment in its Human Resources Management to
encourage differentiation approach.

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Low-cost Approach
-Approach used in Developing Countries.
-Eg: In Philippines, the company tried a small size of Rexona in stick
form costing 35 cents - but it wasn’t cheap enough. Then unilever
developed a cream version in a single use sized packet that cost
about 10 cents.

-Captive product pricing strategy is another low cost to high cost

pricing strategy. Captive products are products that are designed
to be used with another product, the core product.
-Eg: Dove Shampoo and Dove Conditioner. While the shampoo is
low cost, the conditioner is priced relatively higher.
-Also the use of sachets.

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Unilever’s unique drivers
▷ Seeking out high quality inputs - Based on
Unilever’s code of business principles.
▷ Investing in production related R&D activities
- “Discover, Design, Deploy”.
▷ Pursuing continuous quality improvement -
Food Safety System Certification FSSC 2000
for its 140 Unilever Foods & Refreshment
Sites and support with the British Standard
Institute & Industry Partners for Beauty and
Personal Care.
▷ Emphasize HR activities to improve skills,
expertise and knowledge - People is a key
success for Unilever using aims to “develop
strong talent, employee engagement, assess
readiness etc.” 31
 6.
Strengthening Unilever’s
Competitive Position

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Unilever’s Strategic Offensives
● Giving discounts to shop owners to put their
products right up front,
● Selling smaller, cheaper versions of products that
people can actually afford
● Millions of free sachets to boost marketing

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Choosing Which Rivals to Attack
● In the latest quarterly results in 2017 suggest some relative
minnows are nibbling away Unilever’s sales in developed
countries (ex. Halo Top company in US)
● Sales fell by 2.3%
● So far, Unilever has responded by cutting costs and raising
prices, as mentioned by Charles Higgins, fund manager at
Unilever shareholder Hargreaves Lansdown
● However, these are short-term fixes.

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Timing the Attack Moves
● Introducing the sustainable living plan early before all
their rivals in 2010

● Based on the company’s research

33% already purchase products with sustainability in
mind
Over 50% of all consumers want to buy sustainably
21% do not

● By applying the strategy early, Unilever is a few wide

steps ahead of its rivals, in terms of attracting
customers with environmental causes
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Horizontal Merger & Acquisition
Strategies
- Unilever has penetrated almost every part of the retail
industry, from beauty products, food items, and detergents
- The company logo is one of the most recognized logo in the
industry.
- In the last twenty years, Unilever has succeeded to make
more than 40 acquisitions throughout the world.
- Unilever’s steady stream of mergers and acquisition
strategy has helped them stocked consumers shelves over
the years

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Outsourcing Strategy
● Dividing the functioning of this company into various division of
consultation, distribution, operations, maintenance and finance
analysis to other global firms like IBM and Accenture to name a few.
● Unilever follows 4 steps approach to outsourcing:
- Prioritize : decides on which functions to outsource
- Select : focuses on marketing and selling its brand names
- Trust : Unilever maintain full confidence in the outsourced
company
- Monitor : Constant monitoring and checks have to be kept

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 7.
Strategies for Competing in
International Market

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Unilever’s Strategic
Offensives

● Focusing on emerging market

(Indonesia, India and China) → $10
trillion by 2020
● Think-global & act-global strategy
● Building strong character brand
● “An early mover”
● 33% of the consumers thinking about
sustainability and 21% would like to

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Unilever’s Horizontal Merger
and Acquisition Strategies
● Extending to new product categories
● Creating more cost-efficient operation
● Expanding geographic coverage
● Gaining quick access to new
technologies or resources & capabilities
● Total of 40 acquisitions

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Evolving Transnational
Company

● OMO sells well in almost any

countries
● Introducing “OMO Perfect Black”

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 8.
Corporate Strategy:
Diversification and the
Multibusiness Company

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Unilever’s Diversification
Strategy

● Widening product offerings

beyond traditional ice cream and
diversifying the price mix
● Bru World Café by Hindustan
Unilever → $185 million

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Calculating Weighted Industry
Attractiveness Scores
Rating scale: 1 = Very unattractive to company; 10 =
Very attractive to company

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Calculating Weighted Competitive
Strength Scores for a Diversified
Company’s Business Units
Rating scale: 1 = Very weak; 10 = Very strong

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9 Cell Industry
Attractiveness/Business Strength
Matrix

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 9.
Unethical conduct and a
road to a more sustainable
living

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Unethical behaviour - Palm Oil Case
-Unilever, alongside with Nestle and P&G
was involved in human abuses of workers
of hazardous working environment from
Wilmar, North Sumatra.
-The use of palm oil is important to 50%
common end consumer products in foods
such as packaged bread, margarine and
others, alongside in soaps, shampoos,
detergents.
-Roundtable on Sustainable Palm Oil
(RSPO) was set up in 2004 and worked
with Amnesty International to investigate
any labor exploitation.

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-> Abuses found by Amnesty International:
1. Minimum wages are low:
-Whilst the workers are working overtime -
insufficient to meet family needs as towns were also
quite afar. Exploitation of workers are due to the
system of piece rates and consequences of workers
not meeting target was serious.
2. Child labor to meet targets:
-Or faced with serious consequences (not being paid,
no bonuses etc). They do hazardous work.
3. Forced labor;
-Women forced to work long hours earning as little as
$2.5 a day with no health insurance.
-Workers worked outdoor with no safety
requirements.
-Exploitation in terms of using heavy manual
equipment to cut fruit from 20m tall.
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-> Unilever’s Respond to Amnesty
International:
-In 2013, Unilever played a role to engage with
Wilmar to release its sustainable palm oil policy
and commit to the principle of “no
deforestation” & “no exploitation of people”.
-Unilever is committed to full traceability for all
the crude palm oil - including dedicated
plantations, plasma smallholders and
independent smallholders.
-The release of Sustainable Palm Oil Sourcing
Policy:
“We ask our suppliers to adhere to Unilever’s
responsible sourcing policy as it stipulates the
mandatory working requirements on human
rights and protection of workers.”
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 10.
Superior Strategy
Execution

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Allocating Resources to
Strategy-critical Activities
In 2010, Unilever has formed Unilever Sustainable Living Plan that
includes its blueprint for sustainable growth
- Profitable growth: helping more than a billion people improve
their health and well-being by 2020, with 397 million counted by
the end of 2014.
- Save costs: already invested in new technology such as the
roll-out of the compressed deodorant sprays and its new body
wash bottles to save costs
- Fuel its innovation: sourcing more than half of its agricultural
raw materials sustainably. 800,000 smallholder farmers
provided with training and help facilities 52
Unilever’s Procedures to Strategy
Execution
- The Sustainable Living Plan premise is to apply the best practice
everywhere
- The approach is called “design once deploy everywhere”
- A “virtual knowledge network” encourages employees to adapt
the best solutions to their problems
- Runs a ring-fenced capital investment pool, allocated at factory
level, that funds more than 200 of the best projects each year.

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The use of rewards & incentives to
promote better strategy execution
● Unilever believes in a fair compensation policy.

● To get employees sustained and always committed

● This is also the core to achieving the Sustainable Development

Goals

● Unilever Compensation Procedures and Policies:

1. Fair and liveable compensation policy:

2. Market based competition policy:
3. Open and explainable compensation policy:
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Thank you!
Any questions?

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