1. State the strategy of Hindustan Unilever in your own words.

Answer :

To answer this question, we first need to understand what really strategy is. It is the strategy that
encompasses the overall competitive theme a company chooses to stress the way it positions itself in
the market place to gain a competitive advantage and the different positioning strategies it can use in
different industry. HUL is FMCG company competing in the highly dainty market. It is restructured in
two divisions: Food and Home or Personal Care products. The different strategies that HUL adopted
in India are summarized as follows. Its pioneering strategies are in the areas of marketing and
distribution.

The five elements that make up strategy according to Hambrick and Fredrickson are arenas, vehicles,
differentiators, staging and economic logic.

Arenas comprises of products, services, distribution channels, geographic markets, etc. HUL’s new
style packaging and distribution through women entrepreneurs are the witness of stronghold in
arenas. Its deep rooted reach into rural areas through effective distribution channel is noteworthy.

Vehicles are the means for promoting the products through media, newspapers, and hoardings. HUL
is successful in this case because it came to India in 1931 and since then its promotional base has been
very strong because today every Indian perceives HUL as a domestic company.

Differentiators are the features and attributes of a firm’s products that differentiate it from others like
difference in price, quality or reliability of products. HUL’s prices are comparatively low as the Indian
people are price conscious, quality better than others and reliability is extremely high as in the case
of Lifebuoy or Dalda, these products hold high regard in the minds of the senior citizens in India.

Staging is the timing and the pace of strategic moves, determining when a firm moves into a market
and at what speed. HUL came to India in the way back in 1931 when India was not at all affluent in
spending on commodities. Now that the purchasing power has increased over the years, HUL’s
offerings and prices has also changed. It aligned its tactics in accordance with the needs of the Indians.

Economic logic explains how to earn maximum profits. HUL is the largest FMCG company in India. That
explains that the company is doing tremendously well as it has got highest returns, financial statistics
say the company’s turnover is 17,523 in 2009-10.
So these are the different parameters to understand the strategies of HUL. HUL has molded its
strategies time to time to cater with the needs of Indians therefore making itself the largest in India.

2. At what different levels is strategy formulated in HUL?

Answer :

STRATEGIC FORMULATION

Environment appraisal Organisation appraisal

SWOT analysis

corporate level strategy

business level strategy

strategic analysis and strategic plan

SWOT ANALYSIS

STRENGTH

Strong brand portfolio, price quantity and variety

Innovative aspects

Presence of established distribution networks in both urban and rural areas

Social base of the company

Corporate social responsibility

WEAKNESS

Me -too products which illegally mimic the labels and brands of the established brands
Low export levels

High price of some products

High advertising costs

OPPORTUNITIES

Large domestic market – over a billion population

Changing lifestyles and rising income levels, i.e. increasing per capita income of consumers

Export potential and tax and duty benefits for setting export units

THREATS

Tax and regulatory structure

Mimic of brands

Removal of import restrictions resulting in replacing of domestic brands

Temporary slowdown in economy can have impact on FMCG industry

COORPORATE LEVEL STRATEGY

Their core strategy is to focus on core business

CORE BUSINESS

HOME AND PERSONAL FOOD

CARE

There are 20 consumer categories.

strategy management is headed by chairman under him are 5 independent director and whole time
director.

OPERATIONAL MANAGEMENT
operations management is an area of management concerned with overseeing, designing, and
redesigning business operations in the production of goods and/or services. It involves the
responsibility of ensuring that business operations are efficient in terms of using as little resources as
needed, and in effective meeting customer requirements.

Is looked after by management committee which comprises vice chairman , CEO , managing director
, executive directors of two business divisions and functional areas

BUSINESS LEVEL STRATEGY

DIVISIONAL COMMITTEE

business level decision making is done by divisional committee

it comprises executive director and head of functions of sales , commercial and manufacturing

FUNCTIONAL LEVEL STRATEGY

it is responsibility of functional head

it has two type of structures

Decentralized structure -

Example- a marketing manager has team of managers looking after individual brand

Centralized structure -

It comprises finance , human resource management , research , technology , information technology

and corporate and legal affairs

strategic analysis and plan -

In past HUL strategy was to align its strategies to the special need of the Indian business environment
. For instance HUL is known for its capabilities in rural marketing, effective distribution systems ,
human resource development now its corporate strategy has changed to an attempt to leverage
global scale while retaining local responsiveness to some extent

This caused change in strategic decision making which shifted from

subsidiary to headquarters- Unilever formulated a new global realignment under which it will develop
brands and stream line product offerings across the world and the subsidiaries will sell the product .
They also decided to focus managerial attention to a limited set of high potential products . There
focus changed to limited number of international brands rather than a large range of local brand.

3. Comment on the strategic decision-making at HUL.

Answer :

Strategic decision making largely relates to the responsibilities of the senior management, as we know
that with reference to the case study as there was a shift in the corporate level strategy, Unilever’s
(52% stake in HUL) urge to form a new global realignment would be dangerous for Hindustan Unilever
(HUL), these shifts (subsidiaries---------->headquarters),(foreign CEO’s),(food business in India) can
prove to be a double –edged sword i.e. there are chances of both; having the expected favorable
results as well as unanticipated unfavorable results which can be substantiated with the underlying
facts given below:

a) New global realignment formulation under which Unilever will develop the brands and
streamlined product offerings (By eliminating and rationalizing tail-end stock keeping units,
we expect to bring in substantial simplification and cost savings) and the subsidiary will sell
the products.
Implication: This can have a positive impact as HUL’s Branding under parent company with
the concept of streamlined product offerings which means an opportunity to drive for
business unusual on costs —- re-engineering core processes, declaring a war on waste,
dynamic performance management and cash conservation.

b) Chances of appointing a new British CEO after nearly 40 years during which there were Indian
CEO’S
Implication: A new global CEO operating from its global headquarters may not take a right
decision as he/she may not be well versed with the market conditions domestically which an
Indian CEO is well acquainted with.
 c) Unilever global strategy focusing on 30 power brands may not be fruitful.
Implication: This decision may be sensible but on HUL perspective as HUL’s strong position in
soaps and detergent market share around (46% ) and derives 80% and 85% of sales and net
profit from home and personal care businesses.

d) Unilever’s premium pricing forced to HUL product mix.

Implication: As Unilever major revenues comes (nearly 50%) from its food business which is
not the case with HUL around (4%) from food business which can be a target industry as an
opportunity in terms of domestic and export markets but this opportunity may not capitalize
as HUL’s own strategy of offering low price is been suffered at the cost of Unilever’s premium
priced, high end products sold through modern retail outlets.

4. Give your opinion on whether the shift in strategic decision-making from India to Unilever’s
headquarters could prove to be advantageous to HUL or not.

Ans:

According to us the shift in decision- making from India to Unilever’s headquarters would not be an
advantage to HUL.

Shift in strategic decision making from India to Unilever’s headquarters , the locus of strategic decision
making seems to have moved from the subsidiary to the headquarters. Unilever formulated a new
global realignment under which it will develop brands and streamline product offerings across the
world and the subsidiaries will sell the product. The Unilever is going to give authority to British CEO
rather than Indian CEO so it will not be beneficial for Unilever because In past HUL align its strategies
to the special need of the Indian business environment . For instance HUL is known for its capabilities
in rural marketing, effective distribution systems , human resource development now its corporate
strategy has changed to an attempt to leverage global scale while retaining local responsiveness to
some extent, British cannot estimate and analyze the Indian market well, the demand of the consumer
and behavior of Indian customer respective to India CEO, A Indian CEO can easily predict the Indian
customer mindset. Also there is cultural change in Indian market respective to Britain so British CEO
also face problems regarding this.

Shifting of decision making to headquarter then it will communicate through subsidiaries and the
person who is sitting and observing the market trend in India will be in a better position to take
decision which will suit the market environment. So if the decision making is given to subsidiaries
rather than headquarters it will be more beneficial because subsidiaries can apply a strategy in Indian
market fastly and effectively respective to Unilever headquarter. Indian subsidiaries can easily
perceive Indian consumer mindset.

Shifting of strategic decision making to headquarter will give benefit and better edge to its competitor
in Indian market because the headquarter will control and focus on its product globally. HUL are
mainly two type of business one is home and personal care and second is food. Although it does not
have a strong position in the food business in India but it is attractive both in terms of consumption
as well as export markets. In India there is rural marketing is also at very necessary and if Unilever will
not concentrate on here then domestic player take an advantage here, as domestic player are very
near to Indian consumer mindset and those companies which apply decision making from here in India
only.

By shifting the image of the company will be less in Indian consumer mindset as they take HUL as
Indian company and now by shifting they will not take it as Indian company as also there are British
CEO and it is regulated by Unilever Headquarter not by subsidiaries which are here in Indian market.
It will affect the company business in Indian market.