Unilever Case Study

Seminar Paper, 2008

16 Pages, Grade: 1,3


Table of content

1 External Analysis
1.1 Introduction
1.2 The macro environment
1.2.1 Political
1.2.2 Economical
1.2.3 Socio-cultural
1.2.4 Technological and environmental
1.2.5 Legal
1.3 Extent to which the industry and markets are global
1.3.1 Market drivers
1.3.2 Cost drivers
1.3.3 Governmental drivers
1.3.4 Competitive drivers
1.3.5 Conclusion

2 The logic of Unilever’s strategic development, acquisitions and divestments
2.1 Introduction
2.2 Strategic directions
2.3 Acquisitions
2.4 Divestments

3 The sources of Unilever’s competitive advantage
3.1 International structure and culture
3.2 Control systems
3.3 Research and development

4 Key strategic issues

5 References

1 External Analysis

1.1 Introduction

In order to conduct an external analysis it is of utmost importance to identify the industry and markets in which a company operates.

This assignment will analyse the global consumer good industry, particular the food and personal care/ household goods industry. The key players of this industry are Unilever, P & G (market leader in personal care products) as well as Nestlé (market leader of the food industry).

1.2 The macro environment

In order to analyse the macro environment of Unilever, it is necessary to conduct a PESTEL or, STEP analysis (Pettinger, 2004). This framework investigates the major environmental influences which affect organisations in a particular industry, such as political, economic, social, technological, environmental and legal influences (Johnson, Scholes & Whittington,2006).

1.2.1 Political

According to Pettinger (2004) certain activities of organisations may be affected by developments in the political environment. Consequently, organisations need to be aware of legislations and restrictions placed upon organisations by government bodies such as Anti trust committee (USA) or Competition commission (UK).

Owing to the fact that many organisations are also operating in emerging markets, governmental stability of the concerning countries have to be taken into consideration.

1.2.2 Economical

Due to the high market growth in certain developing countries, such as China or India, there is a rise of disposable income and, consequently, a rising standard of living which might lead to an increasing demand in e.g. personal care products.

On the other hand, many Western markets can be considered as mature and some countries are likely to face an economical recession, such as the US which is also affected by a weak currency. Consequently, due to the limited growth potential in Western markets, there is the need to expand to emerging markets in order to benefit from their promising growth potential.

Moreover, low labour costs, e.g. in China or Indonesia, make companies to relocate their production facilities to emerging countries in order to benefit from considerably cost-savings.

1.2.3 Socio-cultural

In the last years, consumers, particular in developed countries, have become increasingly health and environmental conscious and attach now great importance to healthy eating and organic products.

Nevertheless, it should be taken into consideration that there are different approaches to food and personal care habits, which differ significantly between cultures all over the world (e.g. the use of deodorant). Consequently, it is necessary to address these different cultural habits and needs accordingly.

1.2.4 Technological and environmental

Nowadays there is an increasing awareness of environmental issues, such as environmental packaging and waster reduction. Companies have to consider such issue and also provide certain technology in order to address these matters of concern accordingly.

1.2.5 Legal

When operating on a global scale, companies are affected by numerous laws and regulations, such as differences in competition and employment laws, which might motivate or even force companies to relocate.

Moreover, companies have to consider different domestic-driven health and safety regulations, e.g. the ban of certain ingredients or substances in consumer goods.

1.3 Extent to which the industry and markets are global

In order to analyse the extent to which industries and markets are global, Yip’s globalisations driver framework has to be used (Stonehouse et al., 2000).

1.3.1 Market drivers

Market globalisation drivers assume that customer needs are homogeneous in many markets (Levitt, 1983, cited in Stonehouse, 2000). In general, it can be stated that there is a common requirement for food and personal care. However, specific needs vary significantly across different cultures and countries. Consequently, customer needs have to be addressed locally.

Although there are global brands, such as Unilever, P & G, Nestlé, etc, marketing strategies have to be adapted locally due to differences in customer needs. In fact, as many companies are also operating in emerging markets, availability of or accessibility to media in the different countries have to be taken into account when designing marketing strategies.

Nevertheless, the industry is characterised by global distribution networks as global channels as used to offer products worldwide.

After having characterised all market drivers, it becomes clear that the market tends to local.

1.3.2 Cost drivers

It can be claimed that nowadays companies have to operate globally in order to achieve economies of scale. Indeed, due to the limited growth potential in many Western countries, it is essential to expand globally in order to take advantage of country related cost benefits, such as labour costs.

Moreover, due to the need to improve and innovate products constantly, product and development costs are very high.

Consequently, it can be concluded that cost drivers in this particular industry are global.

1.3.3 Governmental drivers

Due to the decrease of trade policies and regulations, and consequently, the encouragement of host governmental policies which favour global business, there is evident that the industry can be considered as global.

Moreover, global trade organizations, such as the World Trade Organisation (WTO) also exercise a certain power which should not be disregarded.

However, it has to be bore in mind that marketing regulations still vary locally, such as comparative advertising (Copley, 2006), which requires a certain local adaptation.

1.3.4 Competitive drivers

The industry can be characterised as highly competitive due the number of global competitors, such as Unilever, P & G and Nestlé etc. Indeed, according to Stonehouse et al. (2000), it is of paramount importance for companies to implement a global strategy, in order to be able to compete on a global scale and to stay competitive.

Moreover, the high volume of imports and exports within the consumer good’s industry clearly support the globalisation of the industry.

Nevertheless, despite the fact that countries within the industry can rather be considered as independent, country-specific trend can influence global businesses considerably, such as health and environmental issues.

1.3.5 Conclusion

Yip’s globalisation driver framework illustrates that the consumer good’s industry can generally be regarded as global. However, the market drivers indicated that there is a requirement to adapt to certain local needs. Indeed, attitudes to food and personal care products vary considerably across different cultures and countries and can therefore not approached with a single, global strategy.


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Unilever Case Study
University of Newcastle  (Northumbria University)
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Strategic Management, Unilever, global consumer good industry, key players, P&G, Nestle, food industry, PESTEL;, STEP;, analysis, macro environment, political environment, market drivers, globalisation, costumer needs, cost drivers, innovation, governmental drivers, political drivers, framework, strategy, global strategy, development, acquisition, divestment, strategic directions, Ansoff matrix, synergies
Quote paper
Sabrina Marisa Wolf (Author), 2008, Unilever Case Study, Munich, GRIN Verlag, https://www.grin.com/document/177151


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