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Strategic Plan of Unilever

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Strategic Plan of Unilever

Description of the company

Unilever was founded in 1929 by the merger of British soapmaker Lever Brothers and

Dutch margarine producer Margarine Unie. Unilever produces transitional consumer goods,

including food, beverages, cleaning agents, and personal care products (Murphy & Murphy,

2018). By the year 2012, Unilever held the largest share of the market in the consumer goods

category. The company has approximately 160,000 employees across its branches. The annual

turnover for the year 2019 was 52 billion Euros with an operating margin of 16.8%. Beauty and

personal care products were responsible for 42% of the annual turnover for 2019, while food and

refreshment and home care products took 37% and 21% of turnover, respectively.

Micro Analysis

Industry description

Fast-moving consumer goods (FMCG) are products that sell quickly at a relatively lower

cost. They include non-durable household goods like packaged foods, beverages, candies,

toiletries, cosmetics, dry goods, and other consumables. Top players in the field globally include

Nestle, Procter & Gamble, Pepsi, Unilever, JBS, Coca-Cola, BAT, Heineken, Mondelez, Philip

Morris International among other companies. The global FMCG industry is valued at about 12

trillion.

Industry attractiveness

This is one of the most lucrative industries in the world. A substantial percentage of the

goods in this sector is essential consumer goods that each household must use to survive. The
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industry is expected to grow by $5 trillion US dollars by 2025. That’s is a growth of almost 41%.

The industry is therefore lucrative and should attract more investment.

Industry structure

Competitor analysis

Leading FCMG companies in 2019 based on net sales in million U.S. dollars

Source: Statista

Unilever ranks 4th in the global FCMG market behind Nestle, Proctor & Gamble, Pepsi

which occupy first, second and third respectively. These ranks are based on net sales for the year

2019. Unilever is at a strategic advantage in the FCMG market.

Key success factor analysis

Success factors for the FMCG industry include sustainable competitive advantage,

production of quality goods, superior branding image, investment in promotion and marketing,

the institution of competitive prices, fidelity to diversity, and a strong organizational culture that

prioritizes integrity and corporate social responsibility.

Segmentation and strategic group analysis

Demographic segmentation Psychographic implementation

-cuts across all market demographics -Everyday people consumer these goods

-all income earners require these goods -luxury goods are mostly consumable during

festive seasons
-Women are more likely to be customers but

men have a substantial share too.

Geographic segmentation Behavioral segmentation

-All cities and villages use consumer goods -There is widespread brand loyalty

-each day people care about consumer goods

and must at least use one every day

PESTLE Analysis
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Unilever’s PESTLE analysis assists in explaining the consequences of political,

economic, social, technological, legal, and environmental factors to the company. These factors

have a substantial impact on the operation of this international brand. Since it is located in many

countries, the company faces diverse concerns from its wide market. Political concerns in one

market may be different from those in another market. Unilever operates in 190 countries across

the world and presides over 400 brands. The company must abide by the laws and regulations of

the numerous markets that it operates in.

Political

The increase of trade protectionist policies across many major markets has reduced the

ability of Unilever to effectively deliver its services to its customers. Trade wars have taken

control in the international market with a ripple effect on supply chains, flow of goods and

services. This has led to an increase in the cost of production. The global political landscape has

also been volatile with the rise of nationalism and unpredictable political events.

Economical

The currency impact of Brexit has precipitated conflicts with distributors because of

product price. Brexit has brought an operation dilemma for British companies with a strong

European presence. The negotiation will result in trade agreements that are not necessarily to the

benefit of Unilever. There have been sharp fluctuations in currency markets hence making the

international business outfit of Unilever very volatile. This has the potential of creating losses

and reducing the strength of the company.

Social
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There is a growing need for premium skincare products in many emerging markets. This

provides a more profitable business opportunity for Unilever. Expanding investment in skincare

products can therefore be a great business strategy for Unilever.

Technological

Unilever has an opportunity to implement an integrated supply chain with intralogistics.

This can help streamline the volatile logistics field and make it easier for the company to

navigate unexpected outcomes. The company can leverage customer data to target

advertisements and make use of the growing online market. The implementation of teleworking

technology will assist the company in operating efficiently despite the pandemic that has

disrupted the traditional officer space.

Legal

The legal landscape is going to be hard for Unilever to navigate even as it implements its

change strategy. The dynamics around Brexit and trade protectionism will limit the ability of the

company to comply with existing laws. The emergence of new treaties and trade agreements will

precipitate a change in how the business operates to attain legal compliance.

Environmental

Unilever is still cited as one of the largest environmental polluters in the world. The

company packages most of its products in plastics that are not recycled and end up polluting the

environment. The emergence of stringent laws against pollution will impact the ability of

Unilever to operate at a normal level. The company risk is facing further blacks from
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conservationists if it doesn’t change its pollution tendencies. Investing in biodegradable packing

is also expensive and might drain the investment capital of the company.

Resources and Capabilities

Unilever has a strong financial position that can allow it to effectively navigate any

change process. Unilever is the leader in the industry hence enjoys a huge market base that can

be used to support its business ventures. The company has approximately 160,000 employees

across its branches. The annual turnover for the year 2019 was 52 billion Euros with an operating

margin of 16.8%. Beauty and personal care products were responsible for 42% of the annual

turnover for 2019, while food and refreshment and home care products took 37% and 21% of

turnover, respectively.

Financial Performance

Evaluation and Diagnosis of The Performance

Performance Metric 2020 Value

Underlying sales growth 1.9%,

Turnover decreased -2.4%

Underlying operating profit decreased -5.8%,

Free cash flow up €1.5 billion to €7.7

billion

Diluted earnings €2.12 per share

The performance of the company has been hit by the events around the pandemic in 2020

(Pandey et al., 2021). The financial results of 2020 have seen the company take a slight reduction

in turnover and other essential metrics. The Underlying sales growth was 1.9%, with 1.6%

volume and 0.3% price. Unilever experienced its turnover decreased 2.4% while underlying

operating profit decreased 5.8%, but increased by 0.7% at constant exchange rates. Underlying

earnings per share decreased 2.4% but increased 4.1% at constant exchange rates. Free cash flow

increased €1.5 billion to settle at €7.7 billion. The company has, however, maintained returns to

customers with increasing dividends in the last quarter of 2020. Dividend maintained through the

year and increased in the fourth quarter by 4% to €0.4268 per share.

A Strategic Audit

Compared to its peers, Unilever is still functioning at par. The company has focused on

the right points of investment to increase profitability for its shareholders and improved services
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for its customers. The company intends to develop a portfolio in high growth spaces to drive its

future development strategy. The company seeks organic investment, acquisitions, and disposals.

The company still concentrates on purpose and innovation at the heart of its strategy. The

company also plans to increase investments in the United States, China, and India. These

countries have been responsible for 35% of turnover to the company. A focus on technology and

e-commerce has also formed a key portion of the business prospects of Unilever. The

implementation of a new teleworking technology system will therefore be beneficial towards the

strategic growth of Unilever.

The Generation of Strategic Change Options

Implementation of new technology

Unilever has various strategic change options that it can pursue to maintain its market

share and improve its standing in the market even further. The COVID-19 pandemic has affected

all companies in the world (Hook et al., 2020). Many companies have been compelled to seek

remedial measures that assist in complying with COVID-19 containment regulations. Many

governments have advised employees to consider working from home or ensuring social

distancing at the workplace if they have to physically visit the office. Technology has been

installed in various companies to assist in enabling teleworking and coordinating workers from

home to their normal duties. Meetings are today held virtually instead of the usual physical

meetings at the ordinary boardrooms. Companies have acquired teleworking information systems

to enable their workers to deliver as they would at the comfort of their homes. Unilever can

consider employing this technology in its management processes. This will ensure that

employees who can work at home are released to work at home yet still monitored to deliver
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effectively. The implementation of new teleworking technology at the company can be grouped

as a compulsory measure that the company must undertake to prosper (Belzunegui-Eraso &

Erro-Garcés, 2020).

Mergers and acquisitions

Unilever has been very efficient in striking mergers and acquisitions that can be very

efficient in improving company profitability. There are still strategic mergers and acquisitions

from different brands that can cement the position of Unilever at the top of the global market.

Many companies have been affected by the reduction in business efficiency in the world today.

Many companies have filed for bankruptcy, and others have been making losses. Those making

losses may be doing so because of a reduction in operating capital and other levels of

management. Unilever can take this opportunity to seek the position of acquisition in companies

that are going under to bring them back to profitability (Carvalho, 2020).

Reduction in the number of employees

Another dreadful change that Unilever must consider is the reduction of the number of

employees to match the regulations imposed by governments on COVID-19 and reduce the cost

of production because of reduced sales. The pandemic has disrupted supply chains and the

ordinary usage of various products from Unilever. The profitability of the company may not be

as high as had been projected in the year 2021. With teleworking, there are some roles that will

be redundant in the ordinary officer setup. Jobs like physical officer managers, cleaners, and

other roles that are dependent on the physical presence of the workers at the workstations have

now become redundant. Reducing these positions can help the organization to stay afloat.

Opening new product lines

The company can also consider a change in the direction of opening new product lines or

rebranding existing products to give users the impression of freshness. Opening new consumer

goods lines is a necessity in the business that Unilever engages in. Users of these products

require to constantly have fresh tastes of the product they use. The introduction of new

fragrances in beauty commodities is a perfect way of capturing the attention of users and

increasing the chances of profitability.

Evaluation of Strategic Change Plan in Terms of Feasibility, Acceptability, And Suitability

Criteria

The implementation of new teleworking technology for the company is the most

necessary strategic change item that Unilever should pursue. The company needs to adapt to the

change that has been brought about by the pandemic and create a better future for its business.

Various companies have acquired teleworking information systems to enable their workers to

deliver as they would at the comfort of their homes. Unilever can consider employing this

technology in its management processes. This will ensure that employees who can work at home

are released to work at home yet still monitored to deliver effectively. The implementation of

new teleworking technology at the company can be grouped as a compulsory measure that the

company must undertake to prosper. The feasibility, acceptability, and suitability criteria of the

teleworking technology implementation will depend on how carefully it is implemented.

A feasibility study of the change process indicates that the company has the potential to

complete it successfully. The company has an appropriate financial muscle that can acquire all

the necessary technologies and make relevant investments to enable workers to effectively work

from home and deliver as if they were in their respective work stations. The company IT
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department has explored all the possible avenues of implementing the change process and given

a verdict that the technical aspects of the project can be successfully implemented. The

acceptability of the project will be above average but not necessarily 100%. Most employees

who are eligible for teleworking have preferred the benefits of the system and how it helps them

to organize their work without necessarily having to visit the physical workstation. In addition to

its health benefits, this system is economical in that it preserves the cost of transportation from

places of residence to workstations (Smith et al., 2018).

An Action Plan for Implementation

The implementation of the teleworking process will take six months, considering the

large employee base that the company has. The implementation will be developed to regional

company headquarters and will be monitored by the IT department of each region. The members

of the IT department of each company region will combine efforts to ensure that all the necessary

infrastructure is set up to allow the employees to effectively discharge their duties (Groen et al.,

2019).

The implementation process will begin under maximum communication between the

employees and the management. Since this, a massive plan that will dramatically shift the

direction of the organization, the input of the employees will be highly regarded and

incorporated into the end product. The employees will be active in the decisions that will be

made and participate in the implementation of the same. The budget required for the

implementation of the process will be provided and managed by the finance department of each

regional branch of Unilever.

References

Belzunegui-Eraso, A., & Erro-Garcés, A. (2020). Teleworking in the Context of the Covid-19

Crisis. Sustainability, 12(9), 3662.

Carvalho, A. M. A. (2020). The proposed acquisition of Danone by Unilever (Doctoral

dissertation).

de Bruin, E. I., van der Meulen, R. T., de Wandeler, J., Zijlstra, B. J., Formsma, A. R., & Bögels,

S. M. (2020). The Unilever Study: positive effects on stress and risk for dropout from

work after the Finding Peace in a Frantic World training. Mindfulness, 11(2), 350-361.

Groen, B. A., Van Triest, S. P., Coers, M., & Wtenweerde, N. (2018). Managing flexible work

arrangements: Teleworking and output controls. European Management Journal, 36(6),

727-735.

Hook, A., Sovacool, B. K., & Sorrell, S. (2020). A systematic review of the energy and climate

impacts of teleworking. Environmental Research Letters, 15(9), 093003.

Jurietti, E., Mandelli, A., & Fudurić, M. (2017). How do virtual corporate social responsibility

dialogs generate value? A case study of The Unilever Sustainable Living Lab. Corporate

Social Responsibility and Environmental Management, 24(5), 357-367.

Murphy, P. E., & Murphy, C. E. (2018). Sustainable living: Unilever. In Progressive Business

Models (pp. 263-286). Palgrave Macmillan, Cham.

Pandey, R., Massand, A., Mulya, V. T., Sin, L. G., Naresh, V. P., Zamara, F. B., ... & Aditi, A.

(2021). The Impacts of Covid-19 on Unilever. Journal of the Community

Development in Asia (JCDA), 4(1), 34-43.

Smith, S. A., Patmos, A., & Pitts, M. J. (2018). Communication and teleworking: A study of

communication channel satisfaction, personality, and job satisfaction for teleworking

employees. International Journal of Business Communication, 55(1), 44-68.