Assignment – Report on Unilever Assessment Answer

Executive Summary

Unilever is a multinational consumer corporation with products available in over 190 nations with about 400 brands comprising Sunsilk, Dove, Magnum, and several others. In this report, the critical issues faced by Unilever have been studied. There is tough competition in the FMCG market due to which Unilever is losing its share in the market. The Pestle analysis has been performed to analyze the macro environment of the company. Unilever is making efforts in producing new items and selling them through online channels in the respective locations of brands. It has a higher level of automation enabling it to supply items to store sites quickly. Unilever, being the part of FMCG industry is facing various issues. COVID-19 has re-introduced the notion of conscious living, with a higher number of people making mental and physical wellness their top priorities. In respect of resources and capabilities, Unilever possesses and exercises control over the resources and this places the company in a favourable and superior business position. In order to excel, Unilever has been suggested with various recommendations concerned with cost leadership strategies

Background and critical issues

Unilever is a British transnational customer goods corporation having its head office in London. Its goods include condiments, food, baby food, bottled water, soft drink, ice cream, toothpaste, energy drink, cleaning agents, pharmaceutical and customer healthcare products, beauty products, breakfast cereals, and personal care (Jetvic and Milovanovic 2023). It constitutes the greatest producer of soap in the world and its products are readily available in over 190 nations. Its operations are organized into 3 main segments: Home care, food and refreshments, and personal and beauty care. It has research and development activities in India, China, the Netherlands, the US and the UK.

The major issue that the company is encountering for a long time is the rising imitative products. The popularity of Unilever's brand and the reach it possesses drives the local producers to imitate the items leading few to produce even the fake items. Fake items are observed highly in the rural markets. It greatly impacts the brand equity of Unilever (Lieu et al. 2021). Moreover, another issue is the rising costs of input because of the increase in the amount of raw materials. There is a probable influence on the corporation because of increasing inflation, raw materials and freight costs. There is stiff competition that the company is facing from Procter & Gamble, Nestle, Godrej, and Colgate-Palmolive. All these companies are competing toughly with Unilever via various brands that are market leaders. The competition got further intensified by various new players entering the market (Wood et al. 2021). This stiff competition was witnessed by Unilever's losing share of the market in various segments and also the rise in operating costs.

The report aims at analyzing the external environment, evaluating the industry and sector and the company's resources and capabilities followed by recommendations to excel in future.

Macro-environmental analysis – PESTEL

Pestle analysis is the framework that is applied by companies to study the macro-environment aspects that impact how the company functions.

• Political factors – Unilever corporation has a wide array of goods where it pacts with a broad variety of items. Most of the company's products, like food items, are fast-moving customer goods and thus, must process in line with the regulations included by Food and Drug Administration (Guo et al. 2019). Being a Britain multinational company, it should abide by the trade guidelines of every country wherein it operates. It is a notion that is compounded by Brexit and directly impacts the distribution and sales of the firm.
• Economic factors – The performance of Unilever hugely hinge on economic conditions wide across the world. Fiscal and monetary policies impact this corporate. For example, a rise in taxation rate poses a risk to the operation. Also, economic growth adversely impacts this firm in that raised growth extends the size of the market along with its value, and it acts as an opportunity for Unilever (Montiel et al., 2021). Increasing wages fall under the economic aspect and impact Unilever's operation. It led to higher sales potential but also raised the costs of business.
• Social factors – With various brands, Unilever focused on developing a robust reputation. It emphasized issues that are in relation to ecological and social aspects. Seeing several products of Unilever emphasize on well-being and individual care, the corporation entails a strong desire to aid individuals in feeling and looking good, while also offering the life they desire for (Narayana and Das 2022). Even their marketing, specifically with Dove, pay attention to aiding women to feel best from the inside out.
• Technological factors – The accomplishment of Unilever relies on how effectively the corporation embraces the know-hows in the consumer good corporate. The increasing advent of business automation act as both as prospect and a risk in that if Unilever is at the front to engross the given technology, then it builds efficiency. However, it raises the level of competition in the market.
• Environmental factors – These aspects impact the macro environment of Unilever, and here, rising business efforts on sustainability advantage the business. Unilever is destined to improve its sustainability agendas to raise its attractiveness as they improve its image to customers. Thus, with increasing efforts and prominence on sustainability, Unilever intends to use its CSR strategy to execute plans that indorse liveable ecological situations (Ding 2023). For example, Unilever operates towards making use of recyclable plastics for packing. In addition, it has to come up with measures that aid in minimizing the usage of plastics.
• Legal factors – Unilever should observe all regulations placed by laws in all authorities to minimize the barricades to the customers. It requires to abide by all regulations regarding employment, counting minimum wage regulations as implemented by leading bodies in areas of business processes. As a corporation having a huge portfolio of products, the company should also guard its patents and it will act as the prospect for acquiring a competitive benefit.

Industry and sector analysis

Unilever belong to the FMCG industry. This industry has maintained a sustainable pace of progress and returns on investment in the last few years. It is the only sector that has constantly expanded even during the COVID-19 outbreak. However, in 2022, there was a shift in customer trends, behaviour, buying habits and more, thereby impacting this industry (Zwanka 2022). After national and worldwide pandemic-induced lockdowns, there have been a lot of changes that have revolutionized the FMCG sector. The pandemic has raised the demand for online customer goods. It has compelled the FMCG corporations like Unilever to choose for direct to customer approach and digital platforms for providing those goods (Venkatesha and Ramanagara 2022). In the US, online grocery sales have indicated a growth of 17%, inferring that the demand for FMCG goods online will just increase in the coming time. Furthermore, in the last decade, customer demand has moved to a highly environment-friendly and sustainable front. Therefore, major FMCG companies are changing their approach to offer customers highly eco-friendly and ethical goods.

The major competitors of Unilever are other FMCG corporations having similar structures and sizes. For instance, the American customer goods international Procter & Gamble, the major food corporation in the world Nestle, the British Reckitt Benckiser Group that harvests hygiene, home and health goods, international producer Mars, the New York corporation Colgate-Palmolive, Johnson & Johnson consumer goods and pharmaceutical American multinational, Kraft Heinz corporation that is the fresh merger and German chemical and consumer things Henkel (Ajwani-Ramchandani et al. 2021). All these companies operate at the international level.

FMCG is well-positioned to record a growth of $310.5 billion between 2022-2026, basically determined by the increasing consumption of ready-to-eat diet items. In fact, by 2025, the total customer spending on food is assumed to touch over $8.85 trillion. In addition, rising awareness among customers and expansion of organized retailing will also be hurling the demand ramp over the next few years (Avigur-Eshel and Filc 2023).

Resources and capabilities analysis

Unilever has an effective infrastructure in standings of buildings, technology, maintenance and office supplies and apportionment of power possessions like electricity to its segments by Unilever. The infrastructural establishment is a vital source for the corporation for ensuring higher performance, and ease of processes for the corporation. However, it might be accessed simply by the rival players that might progress similar possessions for their merchandise and roles in future (Baragiola and Mauri 2022). The brand status for Unilever is framed over past exclusivity where the brand has operated hard to offer superior quality goods and earn the trust of customers over the years. The brand status of a corporation – grounded on its administrative culture and exclusive relation with consumers – cannot be counterfeit by players and might become the source of viable benefit.

Moreover, Unilever offers an exclusive consumer experience to the clienteles via its brand events, contributions and marketing operations. Though advertising activities might be derived by contending players, the tactical intent and track with which consumer involvement and brand actions are prearranged is unique and conceits an exclusive source of viable benefit to Unilever (Schauman et al. 2021). The corporation is also effective in its businesses and operations and has a huge customer ensuing that is trustworthy and does constant buying due to its trade secrets – which also consist of the secret method for product rivalry. Also, Unilever tends to frequently develops and integrate progressive technology that is internally advanced and is thereby, patented.

The capability of the company also lies in unique supplier and customer relationships. The company has developed the same over time via steady behaviour, faith building and transparency in the processes (Laursen and Andersen 2023). All this aids the company in informing worldwide networks that are well-served, easily undertaken and hugely incomparable by competitors in the upcoming future.

Recommendations – Generic competitive strategies

The competitive advantage of Unilever is grounded on its approaches to product progress that integrate research to discourse the requirements of the market. Furthermore, the company maintain huge growth via a suitable blend of intensive approaches. Unilever shifts arrangement of its rigorous growth strategies grounded on the state of the customer goods market.

Unilever makes use of wide differentiation as its generic policy for competitive benefits. The major emphasis of this is on attributes that make the products of the corporation stand out against players (Alhosseiny 2023). For instance, Unilever produces personal care substances like Dove cream bars to content the need of customers for cleansers that are not drying or harsh on the body. In spite of its relatively higher selling cost, these Unilever goods are viable as they stand up from the mainstream of soaps that just focuses on cleaning and moisturizing.

It is suggested that Unilever must also use cost leadership approach to reserve the market headship position via competent value chain administration. This strategy will enable Unilever to enlarge its market share by directing the middle class group which marks up the greatest quantity of the inclusive customer market mix in most nations (Bettencourt 2022). Furthermore, the company must place emphasis on the easy accessibility and affordability of its produce wide across the world, which will direct it toward higher brand awareness and higher growth in sales and offers a stronger competitive benefit basis. In addition to charging lower prices by lowering the cost of production and optimizing the efficiency of the supply chain, Unilever must try to frequently offer coupons and discounts to accomplish sales boards and grip the competitive burden from its nearby rival (Noor Upoma 2021). The envisioned outcome of such discount and sales promotion operations is to raise the popularity of the brand and inspire consumption.

The strategic objective of Unilever linked with the market penetration approach is to raise sales by dropping prices via cost leadership. Here, the correlation is assumed between lower cost and lower price headship. Another path to accomplish this growth prospect is to incorporate innovation for setting a clearer differentiation base. It will assist Unilever in extending its base of customers in spite of the market becoming saturated (Bhuiyan and Rahman 2021). However, it is significant to note that market dissemination becomes expensive when the market reaches the satiety point. In such a scenario, outlay in diverse marketing and publicity measures brings lower returns that inspire corporations to consider other intensive strategies like product development, diversification, etc.

References

Ajwani-Ramchandani, R., Figueira, S., de Oliveira, R.T., Jha, S., Ramchandani, A. and Schuricht, L., 2021. Towards a circular economy for packaging waste by using new technologies: The case of large multinationals in emerging economies. Journal of Cleaner Production, 281, p.125139.

Alhosseiny, H., 2023. How Do Porter’s Business-Level Strategies Affect Competitive Advantage in the Food and Beverage Industries? Journal of Entrepreneurship Education.

Avigur-Eshel, A. and Filc, D., 2023. Growth models and the question of popular legitimacy. Globalizations, pp.1-16.

Baragiola, G. and Mauri, M., 2022. SDGs and the private sector: Unilever and P&G case studies.

Bettencourt, A.S.D.A., 2022. Market share as a key sensitive factor to Unilever-s profitability (Doctoral dissertation).

Bhuiyan, M. and Rahman, A., 2021. Marketing Strategy of Unilever Bangladesh Limited (Doctoral dissertation, Sonargaon University (SU)).

Ding, Y., 2023, March. Exploring the Necessity and Benefits of Ethical Business Practices. In 2022 3rd International Conference on Big Data Economy and Information Management (BDEIM 2022) (pp. 529-536). Atlantis Press.

Guo, Z., Bai, L. and Gong, S., 2019. Government regulations and voluntary certifications in food safety in China: A review. Trends in Food Science & Technology, 90, pp.160-165.

Jevtić, A. and Milovanović, G., 2023. Impact of digital marketing on sustainable business: Case of the Unilever company. Economics of Sustainable Development, 7(1), pp.15-28.

Laursen, L.N. and Andersen, P.H., 2023. Resource and supplier interaction in network innovation governance: The case of innovating at Unilever. Journal of Business Research, 156, p.113465.

Lieu, P.T.H., Arunjit, N., Buapradabkul, S. and Nathaniel, D., 2021. Unilever Company Strategic Business Analysis.

Montiel, I., Cuervo-Cazurra, A., Park, J., Antolín-López, R. and Husted, B.W., 2021. Implementing the United Nations’ sustainable development goals in international business. Journal of International Business Studies, 52(5), pp.999-1030.

Narayanan, S. and Das, J.R., 2022. Can the marketing innovation of purpose branding make brands meaningful and relevant? International Journal of Innovation Science, 14(3/4), pp.519-536.

Noor Upoma, N.S., 2021. How E-Business Is working during pandemic.

Schauman, S., Heinonen, K. and Holmlund, M., 2021. Crafting customer insight: What we can learn from the revival of the vinyl record. Business Horizons, 64(2), pp.261-271.

Venkatesha, G.K. and Ramanagara, R.D., 2022. Complications and forecasts of fast-moving consumer goods in India: A review in view of COVID-19 pandemic.

Wood, B., Williams, O., Nagarajan, V. and Sacks, G., 2021. Market strategies used by processed food manufacturers to increase and consolidate their power: a systematic review and document analysis. Globalization and health, 17(1), pp.1-23.

Zwanka, R.J., 2022. COVID-19 Impacts to the Supermarket Industry: A Framework of Major Long-Term and Short-Term Changes in Consumer Behavior. Cell, 518, pp.698-8204. 

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