I.

The Company

A. Company Background

1. Industry Affiliation and Start of Operation

Unilever's corporate mission – to add vitality to life – shows how clearly the

business understands 21st century-consumers and their lives. But the spirit of this

mission forms a thread that runs throughout our history.

In the 1890s, William Hesketh Lever, founder of Lever Bros, wrote down his

ideas for Sunlight Soap – his revolutionary new product that helped popularise

cleanliness and hygiene in Victorian England. It was 'to make cleanliness

commonplace; to lessen work for women; to foster health and contribute to personal

attractiveness, that life may be more enjoyable and rewarding for the people who use

our products'.i

This was long before the phrase 'Corporate Mission' has been invented, but

these ideas have stayed at the heart of the business. Even the language - and the

notion of only women doing housework – has become outdated. 

 In a history that now crosses three centuries, Unilever's success has been

influenced by the major events in the history – economic boom, depression, world wars,

changing consumer lifestyles and advances in technology. And throughout they created

products that help people get more out of life – cutting the time spent on household

chores, improving nutrition, enabling people to enjoy food and take care of their homes,

their clothes and themselves.

In the late 19th century the businesses that would later become Unilever were

among the most philanthropic of their time. They set up projects to improve the lot of

their workers and created products with a positive social impact, making hygiene and

personal care commonplace and improving nutrition by adding vitamins to foods that

are already daily staples. 

Today, Unilever believes that success means acting with 'the highest standards

of corporate behaviour towards its employees, consumers and the societies and world

in which they live'. Over the years they have launched or participated in an ever-growing

range of initiatives to source sustainable supplies of raw materials, protect

environments, support local communities and much more.  

Throughout this timeline Unilever’s brand portfolio has evolved. At the beginning

of the 21st century, its Path to Growth strategy focused on global high-potential brands

and the company’s Vitality mission is taking people into a new phase of development.

More than ever, its brands are helping people 'feel good, look good and get more out of

life' – a sentiment close to Lord Leverhulme's heart over a hundred years ago. William
Lever, one of the key persons behind Unilever, uses “Lord Leverhulme’s” when he

participates in philanthropic activities.

Timeline

19th Although Unilever was not formed until 1930, the companies that joined

century forces to create the business that known today were already well

established before the start of the 20th century.

1900s Unilever's founding companies produced products made of oils and fats,

principally soap and margarine. At the beginning of the 20th century their

expansion nearly outstrips the supply of raw materials.

1910s Tough economic conditions and the First World War make trading difficult

for everyone, so many businesses form trade associations to protect their

shared interests.
1920s With businesses expanding fast, companies set up negotiations intending

to stop others producing the same types of products. But instead they

agree to merge - and so Unilever is created. 

1930s Unilever's first decade is no easy ride: it starts with the Great Depression

and ends with the Second World War. But while the business rationalises
 operations, it also continues to diversify.
1940s Unilever's operations around the world begin to fragment, but the business

continues to expand further into the foods market and increase investment

in research and development.

1950s Business booms as new technology and the European Economic

Community lead to rising standards of living in the West, while new

markets open up in emerging economies around the globe.

1960s As the world economy expands, so does Unilever and it sets about

developing new products, entering new markets and running a highly

ambitious acquisition programme.

1970s Hard economic conditions and high inflation make the '70s a tough time for

everyone, but things are particularly difficult in the Fast Moving Consumer

Goods (FMCG) sector as the big retailers start to flex their muscles.
1980s Unilever is now one of the world's biggest companies, but takes the

decision to focus its portfolio, and rationalise its businesses to focus on

core products and brands.

1990s The business expands into Central and Eastern Europe and further

sharpens its focus on fewer product categories, leading to the sale or

withdrawal of two-thirds of its brands.

The 21st The decade starts with the launch of Path to Growth, a five-year strategic

century plan, and in 2004 further sharpens its focus on the needs of 21st century

consumers with its Vitality mission.

2. Products Offered

Unilever is a multi-national company which just expands its business to the

Philippines late in 19th century. Known until over a decade ago as Philippine Refining
Company (PRC), Unilever Philippines started as an oil milling business which at its

peak produced nearly 100,000 tons of coconut oil annually. Today the company is a

leading manufacturer of home and personal care products, foods, and ice cream. 

Their brands are divided in four major divisions; the food and cooking, beauty

and style, healthy living and around the house. These divisions are named on what they

are and their purposes. Totally, Unilever have 17 brands namely AXE, Best Foods,

Clear, Close Up, Comfort, Cream Silk, Sun Silk, Domex, Dove, Knorr, Lady’s Chioce,

Lipton, Ponds, Rexona, Selecta, Surf and Vaseline. These brands are one of the basic

consumption goods for Filipinos with regard to their taste of food, hygiene and personal

care. (See appendix for brand and products example.)

Unilever is a corporation that has historically concentrated on two product

lines derived from oil and fat like butter and soap. Now these main elements are still

visible in the product categories Foods & Personal Care.

Today, Unilever's mission is "to add vitality to life and to do this in a sustainable

way”. The values the company has selected are those of a corporate company of the

size of Unilever; integrity, positive impact, continuous commitment (to a longer term

goal), aspirations, working with others. The values are quite neutral.

Unilever has started a Corporate Change Program where the two main

categories - Foods and Home and Personal Care-- that have long divided the company,

are subject to a (internal) merger.

3. Type of Organization and Top Management

Unilever Philippines is a corporation in terms of ownership. It is a combination

and venture of different companies. In addition, Unilever engaged its operation in

bringing the Filipino people their products from other countries such as Ponds and Axe.

These two products are owned and manufactured by Unilever Malaysia and Unilever

USA. Since it is a multi-national company, they expand their business from country to

country. The business has grown in strength with the presence of its four operating

companies: Unilever Foods, Unilver Foodsolutions, Unilever Philippines, and Unilever

RFM Ice Cream. Unilever is proud of its 78 years of heritage in the Philippines and is

dedicated to growing its operations in the country in the future.

In every company, there will always be a people behind its success, glory and

laurels. Unilever Philippines has a great team to operate and grow the business. Here

are the persons who comprising to top management: Fernando Fernandez- Chairman

and CEO, is a Unilever veteran of 20 years. His last job was as Global SVP for the Hair

Category based in London. Benjie Yap - Managing Director of Foods, Mr. Yap has been

with Unilever for over 14 years, starting as a Management Trainee in Supply Chain.

Chito Macapagal - Vice President for Corporate Development, Mr. Macapagal joined

Unilever, then Philippine Refining Company, as a management trainee after finishing his

Mechanical Engineering course in De La Salle University in 1977. Franklin Gomez -

National Finance Director, who joined Unilever as a Management Trainee more than 16

years ago and has since assumed management roles in the Commercial function in the
Philippines. John Concepcion - Managing Director and CEO – Selecta Wall’s Inc. Mr.

Concepcion is currently the Managing Director of Unilever RFM Ice Cream,

Incorporated. Prior to this, he was President and COO of Selecta Dairy Products and

the Liquid Milk & Juice Division.

4. Personnel Complement

With an annual sales of over Php 24 billion in the year 2006-2007,

Unilever Philippines employs over 2,000 people nationally. The company has been a

leader in introducing new technologies into the country since the early days of its

existence - margarine production in the 1930’s, non-soap detergents, shampoos and

toothpaste in the 1960’s and 1970’s and state of the art sulphonation technology and

cogeneration power plant in the 1980’s. 

The nineties had seen the company focusing on several improvements in the

environmental front one of which was the introduction of the first 100% biodegradable

detergent bar in the Philippines. Unilever works closely with the community and other

NGOs to protect and improve the environment. In year 2000, the company received

recognition for its environment management systems with an ISO 14001 accreditation. 

The company has adopted the Total Quality approach during the last ten years

and was the first in the industry to receive the ISO 9002 accreditation in 1994.  Unilever

has since worked with the government, customers and suppliers (including SMEs) to

spread the Total Quality approach in the Philippines. Unilever in the Philippines is a

leading company in the area of Human Resources Management and Development. 

 The company has excellent relations with its employees as evidenced by the last

two Collective Bargaining Agreements. At the heart of the employee relationship is a

Skills Development (multi-skilling) Programme that enhances worker productivity. These

efforts have been given due recognition by the Personnel   Management Association of

the Philippines when they awarded Unilever as 1999 "Outstanding Employer of the

Year". Unilever has for decades been known in the industry as a sound training ground

for young Filipino graduates. Some of its managers have progressed to senior levels in

government and public life.

B. Corporate Vision

1. Vision and Mission Statement

“Our vision is to be enthused with vitality, health and nutrition from inside and

out.”

Unilever’s vision is to develop products which will help add health, beauty and

nutrition to their consumers. The institutions main goal is to develop and manufacture

products that will help people in enhancing and reshaping their natural beauty and

nutrition. Moreover, they are entitled to bring out the best of products available in the

market.

“Our mission is 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.”

 Their vitality mission commits them in growing their business by addressing

health and nutrition issues. They focus on priorities including children and family

nutrition, cardiovascular health and weight management.

2. Corporate Values

Unilever’s corporate purpose states that to succeed requires the highest

standards of corporate behaviour towards everyone they work with, the communities

they touch, and the environment on which they have an impact. Here is a list of values

they promulgated to their employees, workers, top management and owners.

Passion for excellence. They commit to the exceptional standards of

performance and productivity within the business. They basically share a "passion for

excellence.” They are in joined hands in aiming, directing and achieving the goals and

missions of their company.

Teamwork. Teamwork is the heart of their relationship. They are all talented

individuals who achieve more by working together. Teamwork is the best values that

companies should acquire. With this they will able to work more productive and more

efficient.

Respect for each other. Respect for each other is a deeply held value. They

encourage openness while upholding the dignity, worth and self-esteem of every

individual. They assure that everybody will have and will be given a due respect

especially in terms of culture, tradition and beliefs. In Unilever, they do not judge people

according to physical aspect hence they more up to the intellectual and social aspect of

their employees.
 Continuous learning. Continuous learning is a battle cry. They seek and provide

opportunities to learn, develop and grow to become the best that they can be. Things in

this world do not stop until death. This is what Unilever is imparting to their workers, that

they still need further development so that their learning will continuously be in process.

Yearly, they assure that their regular workers, labourers up to the top management, will

join a seminar or convention to be able to mingle with people around their workplace

and environment and widen their skills and knowledge.

Working with others. They want to work with suppliers who have values similar to

their own and work according to the same standards they do. Their business partner

code is aligned to their own Code of business principle which comprises ten principles

covering business integrity and responsibilities relating to employees, consumers and

the environment. They work not only for the profit and gain of their company, but they

also consider its environment and the people they work with. Unilever is also after in

creating good relationship with their manufacturers, employees, suppliers, retailers and

consumers.

Integrity. Integrity is the cornerstone of their business. They conduct their internal

and external affairs within a strict code of business principles and fairness. Unilever is

promulgating fair and honest business and competition in the marketplace. They say

only what they know is true about all their products based on laboratory studies and

personal satisfaction.

Balanced life. They live a balanced life. Their work allows them to have the time,

energy and resources to pursue a joyful and fulfilling life with their family, friends and
co-workers. Unilever’s management is not only after developing the social and

intellectual aspects of their workers hence but also into enhancing all the aspects -

emotionally, socially, mentally and spiritually aspects of an individual.

Social responsibility. They have a social responsibility to the Filipino society.

They ensure the safety of their workers and partners. They care for the environment

and develop the communities they live in.

3. Corporate culture

Their culture also embodies Vitality. Adding Vitality to life requires the highest

standards of behaviour towards everyone they work with, the communities they touch

and the environments on which they have an impact.

The growing demand for more Vitality in life provides them with a huge

opportunity for growth. The way they work and the products they develop are shaped by

consumer trends, along with the need to help raise health and hygiene standards in

both the developing and industrialised regions of the world. Unilever’s culture is a

combination of Western and Filipino beliefs and way of trading. They are more into the

development of their labourers and employees. In addition, their first goal is to satisfy

their consumers and earning profit is only a secondary concern. Building up a superior

credibility in the marketplace is what they after, said Ms. Joan de Roxas, Corporate

Development Manager of Unilever Philippines. They are also adopting the Filipino

culture in terms of taste in food and supplying the trends here in the country. One

example of this is their brand Knorr. Before, Knorr was only known as a steak and beef
seasoning. Since they adopted the culture of Filipinos they developed their product into

producing Sinigang mix and Paksiw Mix, which are popular cuisine in our country.

Basically, Unilever’s culture is flexible.

C. Stakeholders

1. Identification of Stakeholder

A corporate stakeholder is a party who affects, or can be affected by, the

company's actions. The stakeholder concept was developed and championed by R.

Edward Freeman in the 1980s. Since then it has gained wide acceptance in business

practice and in theorizing relating to strategic management, corporate governance,

business purpose and corporate social responsibility. Other definition of stakeholder is

people who will be affected by the project or can influence it but who are not directly

involved with doing the project work. These people can or might affect the decision of a

company. Below is an illustration of Unilever’s acting stakeholders, the actors in the

business environment which influence and surrounds all the decision and action of

Unilever.
 Figure 1.1 – Stakeholders of Unilever

2. Stakeholders’ Objectives

Stakeholder Objective/s Response of Unilever to its

objective

Employees
- To earn and work - Unilever gives its

honestly and employees the right

dedicatedly to the amount of salary and

 company we work for. other benefits. In

- To have an experience addition, they help their

and to apply what they employees in applying

learn in school to the for insurances and

workplace and market other loans. They are

environment. not only securing

- To develop our skills, employees’ needs for

knowledge and today hence extending

intellectual abilities. it to the future.

- They offer their

employees seminars,

conventions and other

workshops for further

enhancement of their

skills. They do this

because they believe

that learning should be

experiential.

Consumers
- To satisfy their needs - Unilever premises to

and to be able to provide good,

acquire the best affordable and quality

products offered in the products to their

market. consumers. They are

 - To have a wide variety after in complying with

of choices in the the needs and the

market. demands of the market.

Hence, they developed

and expand their

products from flavour to

flavour. They always

consider the trends

within the marketplace,

and apply it to their

products.

Shareholders (Owners)
- To bring health and - The business respond

wealth to the institution to its objective by

they established. having at least PhP24

million of profits per

quarter to the

company, said Ms.

Joan de Roxas.

Government
- In terms of public
- Our corporate purpose
service ,which in
states that to succeed
comprises the
requires "the highest
company’s objective to
 the community, critics
standards of corporate
rate them with a high
behaviour towards
degree because it is
everyone we work with,
very active in fund
the communities we
raisings, tree planting
touch, and the
and other charitable
environment on which
deeds. It continues to
we have an impact.
make progress towards
Our commitment to
our long-term
communities and the
ecoefficiency
environment is integral
objectives, as well as
to the way we do
driving forward to the
business.”
three main initiatives on

sustainable agriculture,

fish and water. All

these activities are

central to the

company’s commitment

to contribute to

sustainable

development.
Suppliers - To build partnerships - They are committed to

based on shared work with all their

values with thousands business partners to

 of suppliers around the raise standards,

world who help them including social and

source and produce environmental impacts.

their brands.

Table 1.1 – Unilever’s Objective to Stakeholders

and the Strategies they employed

3. Stakeholder’s Map
 Figure 1 .2 – Stakeholder’s Map

Employees- Staff, crews, labourers and workers of Unilever Philippines are with

high interest but low power in influencing corporate decisions because they are not in

authority to implement rules in the company. However, they are of high interest in as

much as their effort, skills, talent, knowledge and time are dedicated to and focused on

their respective jobs. They are also following an organizational responsibility implement

by a person higher than them like the rules of their management. In addition, employees

a work hard since their jobs at Unilever, is their very source of livelihood.

Owners (Shareholders) – The owners and the shareholders of Unilever are the

most influential stakeholder group compared to others. Their interests are Profit,

Performance, and Direction. A company's shareholders collectively own the company.

Thus, the company strives to enhance shareholder value. Stockholders or shareholders

are considered by some to be a partial subset of stakeholders, which may include

anyone who has a direct or indirect equity interest in the business or someone with

even a non-pecuniary interest in a non-profit organization. In addition, they are also

most in interest, consider that their investment is at stake. Thus, if they will not put their

dedication, hardwork and interest on it, their money will likely be from gold to dust.

Management- The management of any company are having a high level with

regards to the interest and the power within the company. They have the a high power

because they have the power to implement rules and orders in the company and

interest because the sake of the company is in their hands. In addition management are

the highly trusted people inside the company. They occupy the high standard positions

inside the company. It concentrates more on Performances, and Targets of the

company in terms of income, profit and strategies.

Government –Different sectors of the government and local government unit are

with low power because they do not have authority to run the company. In addition their

role is focused merely on the supervision of the company’s performance of its legal

obligations such as paying taxes, implementing sanitary procedures and promulgating

both ethical and civil law. On the other hand, they have a high interest since it is a big

source of taxes and revenues. According to Ms. Joan de Roxas, Corporate

Development Manager of Unilever Philippines, “Unilever is paying at least PhP 50 – 80

million per annum.”

Consumers- in a marketplace where businesses are competing for customers’

response are vital for the development, enrichment and progress of a competitive firm.

In the case of Unilever, their consumers have high interest and average power. High

interest since the company has already established its name in the mind of consumers.

The lattes are largely familiar with Unilever product. With this, consumers consider their
commodities as a first choice in most cases. On the other hand, they are not powerful

enough to influence corporate decisions. Yet, Unilever invests so much for their

promotional tools and advertisement to enhance consumers retention and consumption.

General Public – Since Unilever is also a producer of house cleaners and

products, their manufacturing process involves omission and dumping of toxic materials

and wastes, General public such as communities within the surroundings of their plant

plays a watchdog since the business can ruin and destroy nature by dumping their

waste at Pasig River. However, they have low power but aggregate interest in

influencing companies. In some cases, tough the general public will have considerable

interest when Unilever holds a fund raising activities, philanthropic deeds and promos.

ASAP (Advertising Suppliers Association of the Philippines – ASAP is one on the

interest groups of Unilever. Since the company us known for manufacturing

commodities in the market and use media and advertising as a means of reaching

consumers, advertisers will fight hand in hand in beating the opportunity to promote and

advertise the products of Unilever. According in a study of Unilever Corporate

Development team, their company invest so much for the launches, commercials and

endorsement of their products. They create at least 50 commercials for their 16 brands

per years. With this information, ASAP as a stakeholder, does have a high interest in

Unilever. As its vision concludes that ASAO uniting all sectors of advertising suppliers,

guided by the highest standards of ethical, professional and responsible trade practice

as partners in the advertising industry. Develop and sustain more effective working

relationships between the advertising service firms and the other sectors of the

advertising industry it serves; Uphold the tenets and ideals of the ADBOARD and the
principle of self-regulation within the advertising industry; and, Foster social

responsibility among advertising service suppliers, and help protect the interests of the

Trade, in general, its member-sectors and individuals, in particular, and the public at

large.

D. Corporate Responsibilities

“Our code of business principles describes the operational standards that

everyone at Unilever follows, wherever they are in the world. It also supports our

approach to governance and corporate responsibility.”

Their conduct on its operations is with honesty, integrity and openness, and with

respect for the human rights and interests of its employees. They shall similarly respect

the legitimate interests of those with whom they have relationships.

Responsibilities to Three Stakeholders

Responsibilities to its Consumers - “Our responsibility to our consumers is to add

Vitality to life. We meet everyday their need for nutrition, hygiene and personal care with

brands that help people look good, feel good and get more out of life.”

The extent that the corporation achieves the validity of their objective to its

consumer is very high and obvious. Unilever is an established name in to the market in

terms of Food, Personal care and Detergent products. Such as, company achieves its

responsibilities to its consumers by bringing out the best products available in the

market. It has a wide and diverse set of competitors in the consumer goods business.

Many of its competitors also operate on an international scale, but others have a
narrower regional or local focus. Competition is a normal part of business. It aims to

compete and give value to its consumers, customers and shareholders in three ways:

by continually developing new and improved products; by sharing new ideas and

concepts with their businesses all around the world; and by striving to lower the cost of

their sourcing, manufacturing and distribution processes while still maintaining, and

improving the quality of their products. Due to the strategies that Unilever employed,

there is no apparent conflict of expectations with its consumers since Unilever is

continuously bringing out the best and affordable product in the market.

Unilever is committed to provide branded products and services which

consistently offer value in terms of price and quality, and which are safe for their

intended use. Products and services will be accurately and properly labeled, advertised

and communicated.

Responsibilities to its Employees and Owners - “In many respects, we think of

Unilever as a community, rather than an organisation. This community is shaped and

led by its people, who operate creatively within a framework of shared values and

business goals.”

Unilever perceives these needs to include not only consumer needs, but also to

encompass all stakeholders, which might have direct, or even indirect relations to their

organisation. These would range from employees, shareholders, and business partners

to community at large or the environment. It seeks to be a responsible employer,

business partner and good corporate citizen, earning respect for their values wherever

they operate. Unilever has clear values and standards that govern the way they do
business around the world. They set out in their Corporate Purpose and Code of

Business Principles. It is by putting these shared values into everyday working practice

that they can operate successfully as a multinational company, and as a trusted

corporate citizen in diverse local societies.

Strategies employed to meet their responsibilities to their employees. Unilever is

committed to diversity in a working environment where there is mutual trust and respect

and where everyone feels responsible for the performance and reputation of their

company. They recruit, employ and promote employees on the sole basis of the

qualifications and abilities needed for the work to be performed. They are committed to

safe and healthy working conditions for all employees. In addition, they will not use any

form of forced, compulsory or child labor and in working with employees to develop and

enhance each individual's skills and capabilities. They respect the dignity of the

individual and the right of employees to freedom of association. And most importantly

they maintain good communications with employees through company based

information and consultation procedures. They compensate their employees, workers

and management through the response they implementing with the needs and

satisfaction of their people. In the table 1.1, it indicates there that Unilever gives its

employees the right amount of salary and other benefits. In addition, they help their

employees in applying for insurances and other loans. They are not only securing

employees’ needs for today hence extending it to the future. They offer their employees

seminars, conventions and other workshops for further enhancement of their skills.

They do this because they believe that learning should be experiential. Strategies

employed to meet their responsibilities to their shareholders. Unilever conducts its

operations in accordance with internationally accepted principles of good corporate

governance. They provide timely, regular and reliable information in meeting the

financial and corporate targets and objectives on their activities, structure, financial

situation and performance to all shareholders. Because of these things, the Unilever

have no apparent conflict in meeting the expectation of their employees and owners.

1. Ethical and Legal (Government) Responsibilities

Unilever companies and their employees are required to comply with the laws

and regulations of the countries in which they operate. One of the major responsibilities

of Unilever is to pay taxes and comply with the laws and regulations of its host country.

Unilever companies are encouraged to promote and defend their legitimate business

interests. Unilever co-operates with governments and other organizations, both directly

and through bodies such as trade associations, in the development of proposed

legislation and other regulations, which may affect legitimate business interests.

Unilever neither supports political parties nor contributes to the funds of groups whose

activities are calculated to promote party interests.

2. Social and Environmental Responsibilities

“We aim to reduce the impacts of our own operations and work with others to

understand better our wider environmental footprint. In 2007 we continued to make

good progress.”

Unilever commits itself in making continuous improvements in the management

of their environment and to the longer-term goal of developing a sustainable business.

Unilever will work in partnership with others to promote environmental care, increase

understanding of environmental issues and disseminate good practice.

“We seek to make a positive impact on the communities in which we operate.

Our people and our partners are key to the success of the many projects we engage in.”

Unilever company is involved in a huge range of community activities that

respond to local needs. In 2005 they contributed around Php79 million, equivalent to

1.7% of pre-tax profit. In 2005 we supported nearly 12,000 community organisations

around the world, both through cash donations and support in kind. They worked with a

range of partners, including national and local governments, non-profit organisations,

NGOs and international agencies. While the challenges they address are global, such

as health, education and the environment, the emphasis given to each of these themes

differs from country to country. Rather than a central policy for community contributions,

their approach is to encourage our local managers to decide what is right for their

business and communities, within the framework of their Code of Business Principles. ii

II. Economic Environment

Understanding the economic environments of foreign countries and

markets can help managers and economists predict how trends and events in the

environment might affect their companies' future performance. The purpose of

discussing the Economic Environment is to give an understanding of some of the ways

to understand changes in the environment and how these changes influence decisions.
A. Economic System

An economic system is a system that involves the production, distribution

and consumption of goods and services between the entities in a particular society. The

economic system is composed of people and institutions, including their relationships to

productive resources, such as through the convention of property. In a given economy,

it is the systemic means by which problems of economics are addressed, such as the

economic problem of scarcity through allocation of finite productive resources.

Examples of contemporary economic systems include capitalist systems, socialist

systems, and mixed economies. Below is a table comprising the elements, comparison

and contrast of different economic system.

Communism Socialism Capitalism

1. Business Most business are The government Individuals own

Ownership owned and operated owns and operates and operate all

by the government. major industries like businesses.

postal service,

telephone, utilities,

transportation, health
 care, banking and

some manufacturing;

individuals own small

business.

2. Competition None. The Restricted in major Encouraged by

government owns industries; market forces and

and operates encouraged in small government

everything. business. regulations.

3. Profits Excess income goes Profits earned by Individuals are free

to the government. small businesses to keep profits and

may be reinvested in use them as they

the business; profits wish.

from government-

owned industries

goes to the

government.

4. Products Consumers have a Consumers have Consumers have a

Availability and limited choice of some choice of wide choice of

Price goods and services; goods and services; goods and

 prices are usually prices are services; prices are

high. determined by supply determined by

and demand. supply and

demand.

5. Employment Little choice in Some choice of Unlimited choice of

Options choosing a career; careers; many careers.

most people work for people work in

government-owned government jobs.

industries or farms.

6. Examples China; North Korea; Sweden, India, Israel USA, Canada,

Cuba Japan and Austria

Russia Poland,

Hungary and other

Eastern European

nations.
Source: Ferrell, Hirt and Ferrel (2006). Business: A Changing World, USA

Table 1.2 – Economic Systems

Capitalism is the economic system in which the means of production are

distributed to openly competing profit-seeking private persons and where investments,

distribution, income, production and pricing of goods and services are predominantly
determined through the operation of a market economy in which anyone can participate

in supply and demand and form contracts with each other, rather than by central

economic planning. Capitalism is originally defined as a mode of production, where it is

characterized by the predominant private ownership of the means of production,

distribution and exchange in a mainly market economy. Moreover, Capitalism is usually

considered to involve the right of individuals and businesses to trade, incorporate, and

employ workers, in goods, services (including finance), labor and land. In modern

"capitalist states", legislative action is confined to defining and enforcing the basic rules

of the market though the state may provide a few basic public goods and infrastructure.

1. Type of Economic System

The Economic system in the Philippines is capitalism. Since most of the large

companies here in the country are privately owned, run and established by rich,

influential and famous people in the state. Although some of the institutions that are

privately owned, especially utility company have a joint-venture with the government.

Owners of the business can decide without the consultation from the government, they

can do what they think is good for their business. Hence, it should be covered and

guided by the rules and regulations of the land. In capitalist economic system,

consumers can choose from different variety of goods and services offered to them in

the market. In the case of Unilever, Capitalism gave way for the company to expand

their business through developing new brands and products from generation to

generation. It also increase the variety of products available in the market, which also

higher the level of competition.

 Nowadays, Philippines is experiencing surplus of human resource, such

that, the country have a big percentage of graduate students who has the capability to

work and be productive. This is the reason why Philippines is one of the top exporters of

human labour all over the globe. People may say that we have a shortage but this is not

true. We are now experiencing shortage because, productive people in the country does

not want to take the opportunities offered in the country, yet they would like to travel and

work abroad with higher pay. That is why, Unilever Philippines offers employment to

the Filipino people with right compensation to their workers and employees. “We treat

our employees especially the labourers as a family. Here in Unilever we are always a

big family” says Ms. Joan de Roxas, Corporate Development Manager of Unilever

Philippines.

2. Allocation of Resources

Under capitalism resources, the resources are allocated according to the level of

the demand and supply in the market. Every resource has to be well utilized and

properly allocated. Since Unilever is a manufacturer of commodities like shampoos,

detergent soaps, food and cream, they allocate there resources as efficient as they can.

They make sure, that their products is distributed all-over the archipelago. Products of

Unilever is available everywhere, in big supermarkets down to sari-sari store’s in a small

community. Business enterprises are responsible in to allocating these resources in the

right way. In the allocation of the resources there is the exchange in terms of the money

and also in terms of goods. “We at Unilever consider these factors as to achieve our
goals in reaching and touching each and every Filipinos through the products we are

offering. We are after in satisfying their needs and wants” says Ms. Joan de Roxas.

B. Macro-Economic Policy Measures

1. Development Goals of the Government

The Philippines’ Medium-Term Development Plan (2004-2010) under the

administration of President Gloria Macapagal Arroyo aims to fight poverty by building

prosperity for the greatest number of the Filipino people. It is possible if the government

will open up economic opportunities, maintain socio-political stability and promote good

stewardship. The implication of these plans of the government to Unilever is vital, since

it intends to create more business all over the country, to build new communities, to

increase employment rate and promote economic stability. If the government will be

successful in creating and developing new communities, it means business to Uniliver.

It may expand and increase the sales of the company through increased demand by a

growing population and emerging communities.

An example of emerging community that affects the possible distribution of

Unilever is development of an agricultural land to a industrial and commercial land.

Places like province Cavite in the Southern Tagalog region before are mostly like a

agricultural land. When the government established business parks in Dasmariñas and

General Trias, Cavite, it has opened new opportunity for the development of shopping

malls. These malls serve as a bridge for Unilever so that consumers will have the
access to their products. It also changes the lifestyle of the people in these places.

Before, they worked in farms. Being so, these people were not conscious about

personal hygiene like cleansing and beautification of their skin. Since the land has been

converted into commercial lots, their minds were opened in using skin products such as

Ponds whitening cream and Vaseline moisturizing lotion.

In addition, increase in employment also increases the sales of the company in

particularly for like shampoo, toothpaste, detergent soap and body soap. High

employment creates a high purchasing capability. Luxury products of Unilever such as

Ponds, Axe and Vaseline lotion may now become part of their daily routine since they

have a capability to purchase such products.

The Ten-Point Agenda of The Arroyo Administration. LIVELIHOOD : Ten million

jobs shall have been created. EDUCATION: Everyone of school age will be in school, in

an un-crowded classroom, in surroundings conducive to learning. FISCAL STRENGTH:

The budget shall have been balanced with the right revenues collected and spending on

the right things ensured. DECENTRALIZED DEVELOPMENT: The network of transport

and digital infrastructure on which the Arroyo government embarked in 2002 shall have

linked the entire country. Power and water shall have been regularly provided to the

entire country. Metro Manila will have been decongested with economic activity growing

and spreading to new centers of government, business and community in Luzon,

Visayas and Mindanao. The Subic-Clark corridor will have become the most competitive

international service and logistics center in the Southeast Asian region.

2. Fiscal and Monetary, Social Welfare and Industrial Policies

Fiscal Policy Measure in the Philippines includes Revenue Program, Debt

Management and Disciplined and Efficient Public Spending. Under Revenue Program

are Administrative Measures and Legislative Revenue Measures. On the other hand,

Disciplined and Efficient Public Spending includes Administrative Measures and

Legislative Measures.

Fiscal Policy aims to balance the national government budget in six years, to

reduce the ratio of CPSD-to-GDP from 6.7% in 2004 to 1.0% of GDP in 2010 and

reduce the ratio of public sector debt-to-GDP from 136 % in 2004 to 90% by 2010. If the

government will be successful in achieving these plans it helps increase the economic

stability in the country. Since it will make the economy stable, there is a big

opportunities for the investment of foreign investors. This would clearly mean that it will

create job opportunities in the country. It will mean business again to Unilever since a

high employment rate will increase the number of people who has a capability to

purchase. One example is that, today many American companies put up there call

center here in the Philippines. People who are working in these companies should

always on the go because their office hours is different from the usual. Because of this,

Unilever creates new packaging with their Knorr soups, they make it Knorr instant cup.

Social Policy includes Livelihood the expansion of micro-finance initiatives and

more livelihood and entrepreneurship opportunities for the poor. It also includes Asset

reform; Agrarian reform, Urban Land and Asset Reform and Ancestral Domain Reform.

These fiscal policies will help the citizens’ perse and also Unilever. If the government
will improve debt management in the country, many people will invest their money in a

business, most particularly in SME’s. this would mean profit to Unilever because, SME’s

businesses are usually convenient or sari-sari stores. These stores sells the products of

Unilever like Knorr, Sunsilk, Creamsilk, Surf, Lady’s choice and Domex because it is

one of the prime commodities needed at home.

Monetary Policy of our country aims Ensure stable macroeconomic

environment to reduce long-term risk by managing inflation, promote a stronger, stable

and deeper financial system, rationalize government pension and retirement scheme

and increase SME access to financing.

Social Policy Measures is focused in Essential Services such as clean water for

the entire country, more power supply and Education. Health Care is also part of this. It

aims to have more affordable medicines, to expand health insurance for indigenous

through premium subsidy and health Sector Reform Agenda. Unilever will be much

affected with this social policy measure. It is for the reason that manufacturing

company, like Unilever, will be able to have good quality basic essentials like water and

power. With this, the business will be more efficient with regards to their production, if

the company is efficient, it means more profit and gain to Unilever. They are able to

meet their production without sacrificing the quality of their products. Education plays a

significant role in the community. With this Social policy, education a thing to consider

because it helps the country to create a labor power in the future. Since, they will teach

and train people to have good education, Unilever will be able to acquire and use soon

their learning in school. Applying it to their business. It is like expandind the resources of

the Filipino for human capital and human resources.

 Industrial Policies of the Government includes Energy and Infrastructure

development. Investments should be more focused incentives package and simplify

investment registration procedures. These things will help in the development of Unilver

Philippines. Good and well developed infrastructure will make the transportation of

goods much easier, faster and more efficient. It creates easy access within the

archipelago islands of our country. One example of this is the creation of the new

Cavite-Manila express way. With this new road, industrial parks in Cavite can transport

their products to Manila and other place. The regime of President Arroyo in known in

giving tax incentives and concessions to an investor and manufacturer, with this

Unilever is experiencing it benefits which they embrace to their products. Also, the

expressways in southern Manila results Unilever in expanding their factories in Laguna.

They have put their Selecta Ice Cream plantation in Laguna.

C. Economic Situationer

The current economic condition of the Philippines has a mixed economic system,

and is one of the newly industrialized emerging market economies of the world. In 2007,

it was ranked as the 37th largest economy by the International Monetary Fund

according to purchasing power parity. It is the fastest-growing economy in Southeast

Asia, posting a real GDP growth rate of 7.3% in the year 2007, its fastest pace in three

decades, and has a comparable economic growth to that seen in India. As a response

to the economy of the country Unilever consider the indicators of economy with their

pricing and strategies.

1. Economic Indicator

Understanding the economy's ebb and flow can get complicated. Investors use

piles of economic data out there and plucking out a selection of key economic

indicators. The gross domestic product, the key measure of the economy's overall

output from quarter to quarter, is a good indicator of where the economy's been. To

gauge where it is headed, click on some of the other indicators, which show consumer

purchasing trends, buyers' moods, export orders and job growth.

Gross Domestic Product is the barometer of the nation's total output of goods

and services, GDP is the broadest of the nation's economic measures. Despite a raft of

problems in US this year, Philippines economy managed to post strong growth. This

year may not be as kind. Consensus estimates are for growth of 7.3%. With the gross

domestic product, one can measure the economy of the country, if this is performing

well, this can be use as the indicator of the economy of one country. Job Growth is a

key to understanding consumer sentiment is job growth. Consumers feel more at ease

when the job market is expanding. If the country has a large GDP and high GDP growth

rate this means that the economy is good and stable. If there are a lot of job

opportunities in the country the number of unemployed people become decrease, and

employment will increase. When people are productive and efficient, the economy

continues to grow and market economy will be in good and stable condition. The

benefits if an economic growth goes back to the people in terms of better cost of living.
And a better quality of life will mean business and gold to everybody. As I mentioned,

higher purchasing capability the higher business and profit for Unilever.

2. Challenges/ opportunities facing the economy

Indicators of the economy such as GDP growth rate, employment and

unemployment rate and inflation rate are the data that describes, illustrates and

forecasts the economic status of a country. Others can see opportunities and business

with the information but some can seek problems and challenges that may affect their

business. Knowing the result of the indicators can help a lot in business. They say,

business is like a gamble, you play, you holds the card of your destiny, you decide the

bet, you throw your bad aces but then you should be responsible for your actions. This

is true, in every gamble it is matter of winning or losing. But the result will always be in

your hand, economic indicators helps you to decide, either to pursue it or not. In every

country, economy will always be not stable, no one can say what will happen in the

future. No one can say but economist and executives can predict. This why challenges

and opportunities may arise in every business. It is up to the management how will they

conquer and face these trials. Some will take it as strength to hold and to develop but

other may take it as a weakness.

There are a lot of challenges which are arising in our country now a days, these

are the following; the growing population, increase of people below poverty line, lack of

education, increase of unemployment rate, malnutrition, corruption, political issues,

inflation rate and so many more. If the government and the company will only focus on

its dark side, there is a little change to resolve it. The best way that the company should

do is to find solution with its problems. As the old cliché goes, prevention is better than

cure. “In respond to this, we at Unilever Philippines, creates an organization which grant

educational scholarships for poor Filipino children. We also have livelihood programs in

the depressed area in Metro Manila once a month. In addition, we participate in job fair

in Visayas and Mindanao since we believe that we should give opportunities for our

fellow Filipinos in rural region.” says Ms. Joan de Roxas.

D. Global Economy

Characteristics of the Global Economy

Rising technology has allowed our environment to be characterized as a

global one. “The global economy" gives business the ability to market products and

services all over the globe. It has also allowed them to develop partnerships and

alliances throughout the world, which has become essential for success in today’s

business.” Prior to Globalization, the United States dominated the global economy. In

past decades, however, the U.S. share of the global economy has shrunk to

approximately 20%. This trend is expected to continue as the economies of many newly

industrialized countries continue to grow at a faster rate, this is called the balancing of

the equilibrium.iii

While these business practices allow companies to save money, leading to larger

returns for investors and more affordable products for their clients, at the same time
balancing the world economy, some believe they also serve as a motivation for

governments in developing nations to keep their legislation lax when it comes to labor

and environmental laws. These transnational corporations often lobby governments in

order to gain access into these developing countries. Still, many developed countries

have protectionist policies that do not enable developing countries to export their goods

into developed markets. While some believe these activities should be curtailed with

increased government legislation, proponents of economic liberty argue that the

governments themselves are the reason for most of the economic problems attributed

to globalization. Characteristics of Global economy is influencial and powerful. It is the

mover and shaker in the economy especially in an unstable economy like Phillipines.

Today, world is experiencing a crisis in the global economy, largely as a result of

the financial turmoil in the United States of America, the US financial crisis is affecting

most of the countries all over the world. There are various consequences; stock market

become unstable all around the world, many stocks fall or the value of these following

stocks depreciate. Many investors lose confidence, many companies shut down

operations like for example Lehman Brother and most recently Sony-Ericsson USA

temporarily closed because of the crisis.

2. Influence of globalization on the business of an organization and its stakeholders

The influence of globalization on the business of an organization and its

stakeholder’s is that creates ad increase the level of competition. Local competitors

strive their best level with a international brand. In addition it also creates a wide variety
of choice because it helps in developing new flavour and scent. Competition may be

healthy as driven by market forces and modified by competitive strategies, companies

are using valid ideas so that they can stay longer in the market and in the industry.

3. Prognosis of Globalization

The question is, what are the opportunities in the economy of the Philippines?

Growth trend, Migration trend, Global trend and Educational trends are the strengths

Unilever consider in expanding their business and seek more opportunities. GROWTH

TREND; it means building and emerging of new communities. If there is a new

community, it will create a high power of purchase most particularly for manufacturing

companies like Unilever. MIGRATION TREND; it creates opportunity to expand the

business. Although Unilever is a multinational company, migration can changes

Filipinos lifestyle and taste. It will give way in developing new products, like for example

the Sunsilk mousse and wax for curly and straight hair. Before, Filipinos are most likely

have straight hair, because of the influence of other culture, permming is now a trend.

Since a permed hair needs to be maintain, Sunslik innovates their mousse.

4. Roles of Global Institutions

The World Trade Organization (WTO) is the only global international organization

dealing with the rules of trade between nations. At its heart are the WTO agreements,

negotiated and signed by the bulk of the world’s trading nations and ratified in their

parliaments. The goal is to help producers of goods and services, exporters, and

importers conduct their business. Over the years, the WTO has become one of the most

important platforms for business dialogue amongst the stakeholders of the multilateral
trading system. Their concerns are growing over the impact of globalization on the

environment - all this as the multilateral trading system.

Even in small little things, Unilever participates and joins hand with the

government and the business community in achieving the vision of WTO. Since

Unilever is a multi-national company, and they are both importing and exporting goods

in and outside the country, they make sure that they follow all the rules and procedures

with regard to paying tariffs and other taxes. Other than WTO, Unilever is also

supporting the projects of United Nations, most especially the UN-Food for Hunger

Programme. With this, they share and donate their commodities to the unfortunate

people especially here in the country. For the company, it is like paying back to the

people all the blessings that have been bestowed upon them through over the years.

In the business world, there are a lot of opportunities and bridges that can help

Unilever or a firm in general, to become known and grow. Other than using promotional

tools, supporting civic organization is one of the best ways to promote the objective of a

business enterprise. With regard to Unilever, since its objective is t add vitality of life

and fair business, WTO can help them to uphold their vision and principles.

An example is that with WTO’s free trade, cost goods as a result of reduced or

no tariffs may be pushed downwards, resulting in more affordable goods for the

consumers. Furthermore, WTO promotes healthy competition among global players in

the business industry. It makes competition more interesting and exciting, with benefits

to the consumers. Profitability way also rise for highly efficient funds like Unilever.
 Association of Southeast Asian Nations, this is an economic organization which

involves around 15 countries. This is a summit that is attended by the presidents of the

countries who are members of the ASEAN. They talk about the economies of their

countries or anything concerning in the economies. The members of this organization

help each other to overcome economic obstacles in one country. The role of ASEAN to

UIGPI’s business can be described as follows: the ASEAN will be the meeting ground of

different Asian countries, if the country has a good relationship with the other country,

the run of the business between the two countries will be good because there will be a

free trading which will happen between the two companies from different countries. If

the economic status of the country is good many investors will be investing in that

country. With regards with Unilever, it creates free tariff in importing Ponds from

Thailand and Malaysia since Unilever Philippines is only outsourcing Ponds from those

countries.

III. Market Environment

A. Market Structure

1. Types of market structure, difference, particularly with perfect competition

Perfect Monopolistic Oligopoly Monopoly

Competition Competition
Number of the -numerous -fewer than the -very few -there is a

players/ perfect single player.

suppliers competition
Significance of -too small to -have power -have control -have control

players affect the price over price. over price. over price but

subject to

government

regulations.
Product -one -difference -difference -single product.

differentiation standardized among goods among goods

product may be small. may be small.

Cost of entry -very low -high -very high -extremely high

and exit -firms can freely

enter or exit the

market.

Demand curve -horizontal line -sloping -sloping -sloping

of a firm downwards. downwards. downwards.

Price -no -yes -yes -yes

discrimination

possible
examples -wheat -drugs -airline -power

-corn -softdrinks -automobiles generation

-cotton -vacuum -telecoms -power

-cleaners -appliances distribution

 -soaps -banking -water

-fuel
Sources: Ferrell, Hirt and Ferrel.(2006) Business: A Changing World, USA, Mankiw,

Gregory N.(2004). Principles of Economics, 3rd ed., USA.

Table 1.3 – Market Structure

Unilever is basically in monopolistic competitive market structure. The

characteristics of a monopolistically competitive market are almost the same as in

perfect competition, with the exception of heterogeneous products, and that

monopolistic competition involves a great deal of non-price competition (based on

subtle product differentiation). A firm making profits in the short run will break even in

the long run because demand will decrease and average total cost will increase. This

means in the long run, a monopolistically competitive firm will make zero economic

profit. This gives the company a certain amount of influence over the market; because

of brand loyalty, it can raise its prices without losing all of its customers. This means that

an individual firm's demand curve is downward sloping, in contrast to perfect

competition, which has a perfectly elastic demand schedule. A monopolistically

competitive firm acts like a monopolist in that the firm is able to influence the market

price of its product by altering the rate of production of the product. Unlike in perfect

competition, monopolistically competitive firms produce products that are not perfect

substitutes. As such, brand X's product, which is different (or at least perceived to be

different) from all other brands' products, is available from only a single producer. In the

short-run, the monopolistically competitive firm can exploit the heterogeneity of the

market to reap positive economic profit (i.e. the rate of return is greater than the rate
required to compensate debt and equity holders for the risk of investing in the firm). One

possible effect of advertising on a firm's long run average cost curve when earning an

economic profit in the short run is to raise the curve.

Unilever is classified as a monopolist competitive type of business

referring on the information’s given in Table 1.3 – Market Structures. Unilever is

monopolist competitive because there are many players in Food, Personal care and

nutrition industry. In addition, entering this filed is costly, for the fact that Unilever

comprise 16 brands and many products. The difference of this to perfect competition is

that, entering this kind of business is not that easy and at the same time it is not easy to

leave this industry. Moreover, Price discrimination is possible here especially with the

competing products because there are a lot of variety and substitute products.

B. Market Forces

Supply and demand is perhaps one of the most fundamental concepts of

economics and it is the backbone of a market economy. Demand refers to how much

(quantity) of a product or service is desired by buyers. The quantity demanded is the

amount of a product people are willing to buy at a certain price; the relationship between

price and quantity demanded is known as the demand relationship. Supply represents

how much the market can offer. The quantity supplied refers to the amount of a certain

good producers are willing to supply when receiving a certain price. The correlation

between price and how much of a good or service is supplied to the market is known as
the supply relationship. Price, therefore, is a reflection of supply and demand. The

relationship between demand and supply underlie the forces behind the allocation of

resources. In market economy theories, demand and supply theory will allocate

resources in the most efficient way possible.

1. Demand

Demand is an economic principle that describes a consumer’s desire and

willingness to pay a price for a specific good or service. Holding all other factors

constant, the price of a good or service increases as its demand increases and vice

versa. Think of demand as your willingness to go out and buy a certain product. For

example, market demand is the total of what everybody in the market wants.

Businesses often spend a considerable amount of money in order to determine the

amount of demand that the public has for its products and services. Incorrect

estimations will either result in money left on the table if it’s underestimated or losses if

it’s overestimated. Below are the factors that affect the demand curve of Unilever and

also in other general firms. These factors may be a strength or weakness of the

company. Below are the factors that affect the demand curve of Unilever and also in

other general firms. These factors may be a strength or weakness of the company.

Factors Affecting the Demand

1. Changes in Price and Consumers Income spent

2. Changes in Taste and Preferences of the Costumers

3. Changes in Price of Related Goods, Substitutes and Complements

4. Changes in Fiscal and Monetary Policies

5. Natural Disasters

6. Scientific Discoveries

7. Advertising and Commercial Adds

9. Changes in Growth rate of the Population

10. Number of Consumers in the Market

11. Seasonality

12. Sociological Factors

Table 1.4 – Factors Affecting Demand

In the case of Unilever, demand curve serves as their basis in pricing and

targeting their consumers. Like for example, today, because of the inflation that takes

place in the market, Unilever creates and makes their shampoos in value and budget
pack. For Sunsilk, Creamsilk, Vaseline and Clear, instead of selling one sachet, they

produced it in 2 – 3 packs per sachet. This would enable consumers to save their

money while achieving their satisfaction. Other example is, because of the growing

demand for aniti- dandruff shampoo, Unilever repack and re-launches Clear anti-

dandruff shampoo in the market to respond with the demand. Other example is, during

summer season, tropical fruits and scent is what consumers want. Because of this,

Sunsilk launches their limited edition Sunsilk Watermelon shampoo during this season.

They produce it since they knew that there is a demand on it.

2. Supply

Supply is a fundamental economic concept that describes the total amount of a

specific good or service that is available to consumers. Supply can relate to the amount

available at a specific price or the amount available across a range of prices if displayed

on a graph. This relates closely to the demand for a good or service at a specific price;

all else being equal, the supply provided by producers will rise if the price rises because

all firms look to maximize profits.

Supply and demand trends form the basis of the modern economy. Each specific

good or service will have its own supply and demand patterns based on price, utility and

personal preference. If people demand a good and are willing to pay more for it,

producers will add to the supply. As the supply increases, the price will fall given the

same level of demand. Ideally, markets will reach a point of equilibrium where the

supply equals the demand for a given price point; at this point,consumer utility and
producer profits are maximized.  Below is a table of the factors affecting the supply of the

companies in the market especially in the eyes of Unilever.

Factors Affecting Supply

1. Changes in the Price of a good or service

2. Changes in Technology (or the State of the Art) of business firms

3. Changes in the Tastes/Preferences of consumers for goods/services

4. Changes in consumers’ Income spent on goods and services

5. The Costs of factor inputs of firms (labor, capital etc)

6. The number of business firms in an industry

7. Changes in the Prices of related goods and services

Table 1.6 – Factors Affecting Supply

The compnay Unilevr has an organization called Unilever Supply Chain

Company AG (USCC). Thiss one of the world's largest consumer goods companies
they could not survive withough Supply Chain Management. Unilever Supply Chain

Company - a stand-alone entity located in Schaffhausen- is responsible for the entire

sourcing, production and logistics process in Europe and Asian Region, i.e. from finding

the raw materials to delivering our end product.   In supply management, they optimise

the cost and quality of the product they buy. Intelligent sourcing of raw materials,

packaging, and non-production items can reduce costs and make their business more

effective.  They are responsible for liaising with its suppliers and finding new ways to

work with them, through e-business, for example. They also develop thorough

understanding of global supply markets and play a lead role in the innovation of new

technologies.

Unilevers’ manufacturing record is one of the most envied in the world, with many

of their factories considered the best in their country. Its role, and challenge, is to

continue to deliver the efficiency for which they are renowned, whilst helping their

factories adapt to the changing needs of customers and consumers. Every day,

Unilever uses thousands of materials to create hundreds of products. In logistics, they

are tasked with the planning that gets them all together in the right place – to deliver at

the right time. Logistics takes a wider look at the supply chain process. They use the

most advanced technology to ensure that our factories run smoothly, and that their

customers get the outstanding service they expect. They should be central to the

process of bringing new products to market, liaising with teams in buying,

manufacturing, development, and marketing / customer management. Involvement in

distribution also has a major impact on delivering sales and promotions activities. As

relationships with retailers and customers change.

3. Economy of Scale

Economy of Scale is the increase in efficiency of production as the number of

goods being produced increases. Typically, a company that achieves economies of

scale lowers the average cost per unit through increased production since fixed costs

are shared over an increased number of goods. Economy of scale gives big

companies access to a larger market by allowing them to operate with greater

geographical reach. For the more traditional companies, however, size does have its

limits. After a point, an increase in size actually causes an increase in production costs.

This is called "diseconomies of scale". Unilever in the other hand have a good and great

level of economic scale because it maximizes its resources and at the same time they

increase their profit. They have a low and decreasing fixed and variable cost at to which

extent they increase their sales. This is the reason why products of Unilever is offers in

a low and affordable price.

4. Pricing Mechanism

A price mechanism or market-based mechanism is any of a wide variety of ways

to match up buyers and sellers. The main advantage of such methods is that conditions

are laid out in advance and transactions can proceed with no further permission or

authorization from any participant. When any bid and ask pair are compatible, a

transaction occurs, in most cases automatically. Unilever’s pricing mechanism depends

on the variable and fixed cost of the product. But primarily, they always create a budget

and affordable packaging for their products such that they want their consumers to
afford and purchase their goods. Unilever creates sachets, value packs and Tipid-packs

for their products like Rexona, Close-Up, Clear, Vaseline, Lady’s Choice and many

more. The pricing mechanism of Unilever is primarily a demand driven one.

5. Direct Competitors

Figure 2.3 – Direct Competitors of Unilever

Since Unilever is a manufacturing Firm, it has many competitors in the market. For food,

Unilever brands like Lipton, Lady’s choice, Best Foods and Selecta the competitors of

this in the market is Nestle products like Nestea, Nestle ice cream. For personal care

and hygiene goods like Clear, Sunsilk, Dove, Cream Silk, Surf, Ponds, Rexona, Axe

and Vaseline, their complement products are the one produced by P&G like Safeguard,

Pantene, Head and Shoulders, Tide and Ariel. In the toothpaste industry Unilever is

competing with Colgate-Palmolive. And lastly, for products like Ponds they are

competing with Splash Corporation here in the country. (See appendix for the

comparison of the revenues with its competitors.)

6. Indirect Competitors

Unilever’s indirect competitors are local manufacturing firm who produces and

manufactures the same products. Like for example, Perla is a Philippine detergent soap

brand, consumers like it because of its floral scent. To compete with this products,

Unilever creates new scents and fragrance for their Surf brand. Other competitors are

the producers of coconut skin and hair products available in the Philippine market. In

addition, Philippines’ native shampoo, “gugo” is a an indirect competitors since it has

been part of Filipina tradition.

7. Elasticity

Price elasticity of demand is defined as the measure of responsiveness’s in the

quantity demanded for a commodity as a result of change in price of the same commodity.In

other words, it is percentage change in quantity demanded as per the percentage change in

price of the same commodity. In economics and business studies, the price elasticity of demand

(PED) is a measure of the sensitivity of quantity demanded to changes in price. It is measured

as elasticity, is it measures the relationship as the ratio of percentage changes between quantity

demanded of a good and changes in its price. Drinking water is a good example of a good that

has inelastic characteristics in that people will pay anything for it (high or low prices with

relatively equivalent quantity demanded), so it is not elastic. On the other hand, demand for

sugar is very elastic because as the price of sugar increases, there are many substitutions

which consumers may switch to. Unilever products are elastic but not perfectly elastic. Since

they manufacture prime commodities for personal hygiene product they become a first choice

for the consumers.

The calculation of elasticity of supply is comparable to the calculation of

elasticity of demand, except that the quantities used refer to quantities supplied instead

of quantities demanded. Factors that influence the elasticity of supply include the ability

to switch to production of other goods, the ability to go out of business, the ability to use

other resource inputs and the amount of time available to respond to a price change.

Over a short time period, firms may be able to increase output only slightly in response

to an increase in prices. Over a longer period of time, the level of production can be

adjusted greatly as production processes can be altered, additional workers can be

hired, more plants can be built, etc.  Therefore, elasticity of supply is expected to be
greater with longer periods of time. Supply for Unilever is also elastic because the

company does have to acquire their supply in other to maintain customer satisfaction

and retention. They are willing to embrace the cost in other to acquire theirs supplies,

and lower the cost of production.

8. Market Trends

Market trends are one of the vital information the Unilever considers in

developing and creating new products. These market trends includes increased

concern for health and nutrition among all age categories, increasing consumer price-

sensitivity and exotic flavours and variety of choice that reflects boredom and a great

exposure to foreign culture. First is the increasing health consciousness among people,

this is the reason why Unilever innovate their Lipton teas. Before it is only for old people

who like to have a cup of tea but now a days they have different flavours, packaging

and cold products for their Lipton teas. Price- sensitivity makes Unilever offers low and

affordable packs of their products. Variety of flavours and exposure to foreign culture

give the idea for Unilever to create Chocolate and Orange taste with their Close-Up

tooth paste. In addition, anti-aging cream makes a growing demand in skin products.

This is why; Ponds develop their all new anti-aging cream, serum, lotion and toner in the

market. Other market trend is the Advertising trend. Today, Unilever incorporates and

use top endorsers and influential celebrities and personalities to promote their products.

Proctol and Gamble and Unilever uses the field of multi-media to compete with each

other.
Financing:

Unilever loan or borrows in a financing firm when they need it for further

expansion of their business. They use their excess money in giving employees benefits

and incentives. “Here at Unilever, were rick and kind in giving rewards to our

employees” says Ms. Joan de Roxas. Furthermore, one of the most costly expenditures

of the company in invested in their promotional tools like commercials and launches.

Outsourcing:

Unilever outsources their products from other Unilever branches across the

region. One example of this is their Ponds brand. This product is not manufactured in

the country hence it is from Unilever Malaysia. Since, it would be more costly for

Unilever to established and manufacture Ponds here in the country. Outsourcing from

other countries would help the firm reduce cost and increase profit.

Innovation:

Innovation is one of the company’s values the Unilever promulgated. This is

supported through their institutes around the globe. Innovating new products is one of

their main goal. Like for example, they created an anti- dandruff and beauty shampoo all

in one in the entity Clear Shampoo. Their innovations are tested and modified at their
Ponds institution and laboratories located in New York, USA, Paris France and Tokyo,

Japan.

9. Examples illustrating relationship between market forces and organizational

responses

Each and every business enterprise in entitled to respond to the need of their

consumers in order to satisfy their needs and retention. Moreover, Unilever have a

various examples illustrating their reply to the driven market forces in the business

world. Fist example is, Knorr having and creating a instant cup soup. Since now a days,

people in the Philippines are always on the go especially the working people, Knorr

soups innovate their packaging and product from a 10 minute cooking soups at home to

an instant up soup. This products are Cream of Mushroom, Crab and Corn, Sopas and

Nido soup, it instantly available to the consumers like making a cup of coffee. Second

example is the re-launching of Clear anti- dandruff shampoo. Before its entity is Gard,

since the brand is not marketable in the market, Unilever re-pack and re-launch it. It is

for the reason that they respond to the increasing sophistication of young-adults now a

days.

Other examples include the variety of Surf detergent soap scent and fragrance.

Before, women are often you sunlight to dry their clothes. This is because they believe

that it will make the clothes fresher in smell. Since today, many of these woman are

using driers to dry their clothes, Surf creates detergent soap with the scent of Sunlight

to maintain the tradition and belief of their consumers. They comply with the needs and

demands in the market. Another example is the Lady’s Choice product of Unilever,

before it is only for salad dressing and mayonnaise. But today, they put variety to it, they
create Lady’s Choice sandwich spread since people now a days are always on the go.

Mothers today do not have enough time to prepare foods for their children, yet they are

using sandwich spread to be instant. It is in the flavour of tuna, chicken, ham and

bacon.

C. Competition

Competition in economics is a term that encompasses the notion of individuals

and firms striving for a greater share of a market to sell or buy goods and services.

Merriam-Webster defines competition in business as "the effort of two or more parties

acting independently to secure the business of a third party by offering the most

favorable terms." Seen as the pillar of capitalism in that it may stimulate innovation,

encourage efficiency, or drive down prices, competition is touted as the foundation upon

which capitalism is justified. According to microeconomic theory, no system of resource

allocation is more efficient than pure competition. Competition, according to the theory,

causes commercial firms to develop new products, services, and technologies.

1. Competitive Environment (Five Porter’s)

Porter's 5 forces analysis is a framework for the industry analysis and

business strategy development developed by Michael E. Porter of Harvard Business

School in 1979 . It uses concepts developed in Industrial Organization (IO) economics

to derive 5 forces that determine the competitive intensity and therefore attractiveness
of a market. Attractiveness in this context refers to the overall industry profitability. An

"unattractive" industry is one where the combination of forces acts to drive down overall

profitability. A very unattractive industry would be one approaching "pure competition".

Porter referred to these forces as the micro environment, to contrast it with the more

general term macro environment. They consist of those forces close to a company that

affect its ability to serve its customers and make a profit. A change in any of the forces

normally requires a company to re-assess the marketplace. The overall industry

attractiveness does not imply that every firm in the industry will return the same

profitability. Firms are able to apply their core competences, business model or network

to achieve a profit above the industry average. A clear example of this is the airline

industry. As an industry, profitability is low and yet individual companies, by applying

unique business models have been able to make a return in excess of the industry

average. Below is an illustration of the 5 Porter’s forces.

Figure 1. 5 - 5 Porter’s Analysis

 Bargaining power of the suppliers, is conquered by few companies and is

more concentrated than the industry it sells to. It is not obliged to contend with other

substitute products which are available in the market. The industry is not an important

customer of the supplier’s group. A concrete example of bargaining powers of suppliers

is the case of Colgate- Palmolive and Laimoyan Corporation. Before Laimoyan supplies

the aluminium tubes for Colgate, since Colgate switch in using plastic tubes Laimoyan

lose their business and client. Just not to waste their machineries, they develop their

own product. Today, Laimoyan is entitled producers of leading toothpaste in the

Philippines, Happy toothpaste. In Unilever, their suppliers play a vital role. They create

and set up a fair atmosphere in their suppliers.

Threat of the entry of new competitors, in a particular industry there are a

lot of companies there will be a decrease in the profitability. There is the existence of

the barriers to entry like patents, right and more, the brand equity, the switching cost,

the capital requirements, access to distribution, and the government policies. The threat

of new competitors in Unilever will be the Whitecat detergent soap. Since Whitecat is

endorse by Ms. Kris Aquino, the top endorser in the Philippines, Surf soap in at stake.

But to defeat the new competitors, they come up with promos to promote Surf detergent

soaps.

Bargaining power of the buyers, buyers have a high bargaining power

because they are the source of the company’s profit, they hold the sales of the

businesses, the buyer will always be sensitive in price of products most especially when
there are a lot of substitute products available in the market. This is why, firms are

implementing their price with due analysis and study. Since Unilever is a demand driven

company, they are always after in lowering the price their products not decreasing the

quality of it. They think that this strategies is their edge with their competitors.

Threat of substitute products, the existence of close substitute products

means that there will be a switching to alternatives as a result of increase in the price. In

this threat there is the perceived level of product differentiation. The treat of substitutes

products for Unilever’s Sunsilk hair products are the waxes and serum that are now

available in the market. To overcome and compete with this new complement they also

release and manufacture hair serum, mousse and waxes.

Competitive rivalry, for the most industries, this is the major determinant of

the competitiveness in the industry. These include the number of the competitors, rate

of the industry growth, exit barriers, diversity of competitors, and the level of advertising

expenses. Competitive rivalry make Unilever thinks well and better. It makes the

company’s sprit to grow and strengthen. This is the reason why, they are competing in

every aspect of their competitors.

Porter’s Generic Strategies

After analyzing the source of environmental opportunities and threats and company

strengths and weaknesses in the business environment, we are now in a position to

examine the issue of how a company can compete effectively in an industry. This will

focus on various strategies of a company can adopt at the business level to maximize

its competitive advantage and profitability.

 If the primary determinant of a firm's profitability is the attractiveness of the

industry in which it operates, an important secondary determinant is its position within

that industry. Even though an industry may have below average profitability, a firm that

is optimally positioned can generate superior returns. A firm positions itself by

leveraging its strengths. Michael Porter has argued that a firm's strengths ultimately fall

into one of two headings: cost advantage and differentiation. By applying these

strengths in either a broad or narrow scope, three generic strategies result: cost

leadership, differentiation, and focus. These strategies are applied at the business unit

level. They are called generic strategies because they are not firm or industry

dependent. The following table illustrates Porter's generic strategies:

Over-all Cost leadership Strategy: This generic strategy calls for being the low

cost producer in an industry for a given level of quality. The firm sells its products either

at average industry prices to earn a profit higher than that of rivals, or below the

average industry prices to gain market share. In the event of a price war, the firm can

maintain some profitability while the competition suffers losses. Even without a price
war, as the industry matures and prices decline, the firms that can produce more

cheaply will remain profitable for a longer period of time. The cost leadership strategy

usually targets a broad market. Some of the ways that firms acquire cost advantages

are by improving process efficiencies, gaining unique access to a large source of lower

cost materials, making optimal outsourcing and vertical integration decisions, or

avoiding some costs altogether. If competing firms are unable to lower their costs by a

similar amount, the firm may be able to sustain a competitive advantage based on cost

leadership.

In Unilever, they are applying the cost leadership strategy that is why they are

able to low and decrease their products in the market. Unilever is employing work

streaming within their company to be able to reduce their cost. “Here at our company,

managers like me do not have secretaries. If we can do the job we are doing multi-

tasking. In addition, our maintenance people in the office is only few, we help them if we

have time in cleaning our own dirt” says Ms. Joan de Roxas, Corporate development

Manager. This example is only one way of employing over-all leadership cost.

Moreover, their company is very lenient in giving and distributing office supplies.

Differentiation Strategy: A differentiation strategy calls for the development of a

product or service that offers unique attributes that are valued by customers and that

customers perceive to be better than or different from the products of the competition.

The value added by the uniqueness of the product may allow the firm to charge a

premium price for it. The firm hopes that the higher price will more than cover the extra

costs incurred in offering the unique product. Because of the product's unique attributes,
if suppliers increase their prices the firm may be able to pass along the costs to its

customers who cannot find substitute products easily.

Manufacturing companies like Unilever should and must employ this strategy to

be able to catch up attention and make a difference. In the case of Unilever, they are

using this strategy by having different variation within their products. This is the reason

why Lipton teas evolve with different flavours. Selecta ice cream but now they are

selling cookies-ice-cream. Clear anti-dandruff shampoo combining it with beauty

shampoo to attract sophisticated young adults. And lastly, Axe perfume before and

know they come up with deo-spray cologne for men who has a sporty and cool lifestyle.

These products are the result for the product that differs from the other.

Focus Strategy: The focus strategy concentrates on a narrow segment and within

that segment attempts to achieve either a cost advantage or differentiation. The premise

is that the needs of the group can be better serviced by focusing entirely on it. A firm

using a focus strategy often enjoys a high degree of customer loyalty, and this

entrenched loyalty discourages other firms from competing directly. Because of their

narrow market focus, firms pursuing a focus strategy have lower volumes and therefore

less bargaining power with their suppliers. However, firms pursuing a differentiation-

focused strategy may be able to pass higher costs on to customers since close

substitute products do not exist. Firms that succeed in a focus strategy are able to tailor

a broad range of product development strengths to a relatively narrow market segment

that they know very well. Some risks of focus strategies include imitation and changes

in the target segments. Furthermore, it may be fairly easy for a broad-market cost
leader to adapt its product in order to compete directly. Finally, other focusers may be

able to carve out sub-segments that they can serve even better.

Basically, Unilever has the segment for average people. Their products are

offered for people who are living an average, basic and simple life. Their strategies and

pricing consider these factors. But, there are some products the Unilever is

manufacturing for affluent sectors of the community. These products are offered for

people who has a high quality of lifestyle. Example of their products is Pond’s whitening

cream for average consumers and Pond’s Flawless white cream. These two products

are of the same use, but because of focus, their promotion is different. Flawless white

creams being more expensive than Pond’s cream is introduce in a luxury magazines

and market.

2. Competitive Strategies

"Business strategy is less a function of grandiose predictions than it is a result of being

able to respond rapidly to real changes as they occur. That's why strategy has to be
dynamic and anticipatory."

- Jack Welch

Unilever as a multi-national company uses same competitive and business

strategies across the globe and region. This strategies are being suggest and govern by

their mother company locally based in Europe. Their first strategy is, Unilever identifies

PERSONAL CARE FOR FUTURE SALES GROWTH AND PROFITABILITY. Unilever,

the Anglo-Dutch company recently has identified its personal care segment as its

fastest-growing business and a key to achieving sustainable profitable growth. Unilever

is one of the world’s leading suppliers of fast moving consumer goods across Foods

and Home & Personal Care categories. However, for many years, rivals like Procter &

Gamble Co. (P&G), which have been more creative in introducing new products, have

outperformed Unilever. The personal care segment will be a priority area in 2008 to

Unilever for creation of future sales growth and sustaining profits from increasing raw

material costs.

Their second plan is, EXTERNAL PRESSURES AND ORGANIZATIONAL

RESTRUCTURING. Key concern areas like high material costs, adverse exchange

rates and macroeconomic worries could hamper the company’s performance. Unilever

has already announced steps to improve its performance in 2008. These include

reducing 20,000 jobs across its divisions and combining its Home & Personal Care and

Foods into a single category structure. In February 2000, Unilever had announced a

five-year growth strategy called ‘Path to Growth’, directed towards bringing a significant

improvement in its performance. In 2001, the Path to Growth Strategy had led to

organizational restructuring in the form of two global divisions being formed – one for

Foods and one for Home and Personal Care.

 RESTRUCTURING AT UNILEVER. In February 2008, Unilever's CEO Patrick

Cescau had announced that it was streamlining its management structure in keeping

with its strategy of focusing on developing markets and promoting executives with

experience in those territories. It’s Central and Eastern Europe division would be

included in an enlarged Asia, Africa and Central and Eastern Europe unit, thus

centralizing management of emerging economies that shared similar consumer traits

and potential for growth. Unilever also combined its home and personal-care and foods

units into a single division as a part of the company's continuing effort to raise its

profitability by becoming leaner and more agile.

In addition, Unilever are using more advertising and promotional tools and

communication to be able to compete with their competitors. The company’s plan

includes the yearly repackaging of their products especially Sunsilk and a roaming salon

and caravan to test and try their product for free. Moreover, Unilever is using and

choosing the top endorser to promote and advertise their products. Example is Ms. Kris

Aquino for Domex, Marian Rivera for Sunsilk, Toni Gonzaga for Creamsilk and most

likely, Ms. Lumen for the Surf commercial. .

3. Role of Regulatory Bodies in the organization:

Bangko Sentral ng Pilipinas

The BSP provides policy directions in the areas of money, banking and credit. It

supervises operations of banks and exercises regulatory powers over non-bank

financial institutions with quasi-banking functions. Under the New Central Bank Act, the
BSP performs the following functions, all of which relate to its status as the Republic’s

central monetary authority.

 Liquidity Management. The BSP formulates and implements monetary policy

aimed at influencing money supply consistent with its primary objective to

maintain price stability.

 Currency issue. The BSP has the exclusive power to issue the national currency.

All notes and coins issued by the BSP are fully guaranteed by the Government

and are considered legal tender for all private and public debts.

 Lender of last resort. The BSP extends discounts, loans and advances to

banking institutions for liquidity purposes.

 Financial Supervision. The BSP supervises banks and exercises regulatory

powers over non-bank institutions performing quasi-banking functions.

 Management of foreign currency reserves. The BSP seeks to maintain sufficient

international reserves to meet any foreseeable net demands for foreign

currencies in order to preserve the international stability and convertibility of the

Philippine peso.

 Determination of exchange rate policy. The BSP determines the exchange rate

policy of the Philippines. Currently, the BSP adheres to a market-oriented foreign

exchange rate policy such that the role of Bangko Sentral is principally to ensure

orderly conditions in the market.

  Other activities. The BSP functions as the banker, financial advisor and official

depository of the Government, its political subdivisions and instrumentalities and

government-owned and -controlled corporations.

Relation to Unilever

Central Bank of the Philippines relationship to Unilever is that they are the one

who distributes and allocate money to the different banks all over country where these

banks are entitled to offer different loaning term to the company for any financial help.

With this, people may loan in a bank to established their business like groceries

restaurants. These establishments would mean business to Unilever because it will

increase the consumption level of people and these enterprise may serve as a link for

products of Unilever.

Securities and Exchange Commission

  The Commission shall have the powers and functions provided by the

Securities Regulation Code, Presidential Decree No. 902-A, as amended, the

Corporation Code, the Investment Houses Law, the Financing Company Act, and other

existing laws.Under Section 5 of the Securities Regulation Code, Rep. Act. 8799, the

Commission shall have, among others, the following powers and functions: 

(a)  Have jurisdiction and supervision over all corporations, partnerships or

associations who are the grantees of primary franchises and/or a license

or permit issued by the Government;

 (b)  Formulate policies and recommendations on issues concerning the

securities market, advise Congress and other government agencies on all

aspects of the securities market and propose legislation and amendments

thereto;

(c)  Approve, reject, suspend, revoke or require amendments to registration

statements, and registration and licensing applications;

(d)  Regulate, investigate or supervise the activities of persons to ensure

compliance;

(e)  Supervise, monitor, suspend or take over the activities of exchanges,

clearing agencies and other SROs;

(f)   Impose sanctions for the violation of laws and the rules, regulations and

orders issued pursuant thereto;

(g)  Prepare, approve, amend or repeal rules, regulations and orders, and

issue opinions and provide guidance on and supervise compliance with

such rules, regulations and orders;

Relation to Unilever:

Securities and Exchange Commission provides security and precaution in

Unilever. It protects all the of its investors against manipulation. It helps exercise such

other powers as may be provided by law as well as those which may be implied from, or

which are necessary or incidental to the carrying out of, the express powers granted the
Commission to achieve the objectives and purposes of these laws. They are the one

who ensure that investment in Unilever will not make their money disappear and

useless hence it will gives profit and wealth to them.

Department of Trade and Industry

Department of Trade and Industry regulations includes; It a sure that consumer

products are safe and have the quality. Watch over the unfair and unconscionable sales

act and practices. They watch over the weighing of the products. Watch over the

warranties of the consumer products. Watch over the right labelling and packaging. And

also watch over the advertising and sales promotion.

Relation to Unilever:

The relationship of DTI to Unilever is that helps create and establish good

credibility and standards for products released in the market. It also make the business

completion fair and with due integrity. Unilever’s advertisement, promotional tools,

services and products are all DTI approved and permitted. If the so, it only proves that

the quality of Unilever’s product is good and safe.

Department of Environment and Natural Resources

The DENR's mission is to be the dynamic force behind people's initiatives in the

protection, conservation, development and management of the environment through

strategic alliances and partnerships, participate processes, relevant policies and

programs and appropriate information technology towards sustainable development. To

accomplish the department's mandate, the following objectives serve as basis for policy

formulation:

 Assure the availability and sustainability of the country's natural resources

through their judicious use and systematic restoration or replacement, whenever

possible;

 Increase the productivity of natural resources in order to meet the demands for

forest, mineral and land resources of a growing population in a manner

consistent with environmental protection and enhancement;

 Enhance the contribution of natural resources for achieving national economic,

political, social development and ecological integrity;

 Promote equitable access to natural resources by the different sectors of the

populations;

 Maintain a desirable level of environmental quality;

 Conserve specific terrestrial and marine areas representative of the Philippine

natural and cultural heritage for present and future generations.

Relation to Unilever:
 DENR’s role and purpose id significant to manufacturing companies like

Unilever. It is for the reason that it help protects the natural and environmental

resources of the country. Unilever’s relation to this is to respond and comply with the

regulations it promulgated. For example, Unilever consider dumping of their waste

materials in their expenses, because they pay for scrapers and trucking to dump their

products in the respective place. With this the cost of it is embrace by the company. In

addition, protecting natural resources if one of the civic activities of Unilever, because

they believe that they have to take care of the nature because it is one of their

resources.

Bureau of Food and Drugs:

The purpose of BFAD are to : Enforce laws and regulations relating to food,

Handles consumer complaints and Responsible on how food is advertised and labelled.

Relation to Unilever:

All skin products of Unilever is approved and recommend by BFAD. It is tried and

tested, for over the years, Unilever holds a laboratory examination for all their products.

The significance of this the company is that, it builds the credibility of Unilever’s product.

With this, people will not have the second thought in using and trying skin products of

Unilever. Most especially it will help in increasing the sales and profits of the business.
Local Government Unit

(a) Any provision on a power of a local government unit shall be liberally interpreted in its

favor, and in case of doubt, any question thereon shall be resolved in favor of devolution

of powers and of the lower local government unit. Any fair and reasonable doubt as to

the existence of the power shall be interpreted in favor of the local government unit

concerned;

(b) In case of doubt, any tax ordinance or revenue measure shall be construed strictly

against the local government unit enacting it, and liberally in favor of the taxpayer. Any

tax exemption, incentive or relief granted by any local government unit pursuant to the

provisions of this Code shall be construed strictly against the person claiming it.

(c) The general welfare provisions in this Code shall be liberally interpreted to give more

powers to local government units in accelerating economic development and upgrading

the quality of life for the people in the community;

(d) Rights and obligations existing on the date of effectivity of this Code and arising out of

contracts or any other source of presentation involving a local government unit shall be

governed by the original terms and conditions of said contracts or the law in force at the

time such rights were vested; and

(e) In the resolution of controversies arising under this Code where no legal provision or

jurisprudence applies, resort may be had to the customs and traditions in the place

where the controversies take place.

Relation to Unilever:
 Since LGU is the nearest government sector surrounding the business, it serves

as a bridge and messenger for a higher unit of the government. Unilever responds with

the regulations of LGU trough paying permits and registering in the municipality it is

related. If plays a vital role because in case of accidents like fire, LGU will be the first

one to help and to kill off the fire. In addition, it also maintain the roads and

infrastructure surrounding the company’s office.

IV. Conclusions and Recommendations

Through analysing and inferring the data and information I gathered, I conclude

that there are many factors and actors around business environment that may, can and

might affect and defect company’s performance and decisions in general. Knowing the

significance of these changes is crucial to company to which extend they will have to

know their company’s strength, weaknesses and economic opportunities. In Unilever, I

personally wrap up my ideas and analysis so that I may be able to apply all the theories
and concept of Economics to the real market place. Unilever being one of the big player

in the manufacturing industry, also faces trails and challenges which soon they knew

will be the source of their triumphs and success. With this paper, I am able to get the

answers to the questions not by merely answering it hence finding each piece to solve

and complete the puzzle and the logic. Moreover, this rationale exemplifies the roles,

duties and significance of each and every stakeholder of a company, most especially in

the eyes of the consumers and owners.

Continuous innovation, learning and development should always be the onset

of accompany. One will always need to develop and to enhance for its own good.

Unilever itself is a multi-national company hence it still find ways to innovate their

products and service. Survival of the featest is the game in the business world,

hardwork, dedication, dignity and integrity are the value that will help business to

survive. In addition, I will recommend Unilever to provide a greater clarity of leadership,

responsibility and accountability and create a strategic platform for brand mangement. It

will result to allow Unilever to focus on the needs of their customers and consumers

thus reigniting growth.

Most especially, business firms should also be an instrument of kindness and

generosity for the community since they have to pay back all the blessing they receive.

In the bible in says that, if you give ten folds will return to you.
 Table of Contents

I. The Company 1

A. Company Background...............................................................................................1

1. Industry Affiliation and Start of Operation...............................................................1

2. Products Offered.....................................................................................................5

3. Type of Organization and Top Management..........................................................6

4. Personnel Complement..........................................................................................7

B. Corporate Vision........................................................................................................8
 1. Vision and Mission Statement.................................................................................8

2. Corporate Values.......................................................................................................9

3. Corporate culture..................................................................................................11

C. Stakeholders............................................................................................................12

1. Identification of Stakeholder..................................................................................12

2. Stakeholders’ Objectives......................................................................................13

3. Stakeholder’s Map................................................................................................18

D. Corporate Responsibilities.......................................................................................21

Responsibilities to Three Stakeholders....................................................................22

1. Ethical and Legal (Government) Responsibilities.................................................24

2. Social and Environmental Responsibilities...........................................................25

II. Economic Environment 26

A. Economic System....................................................................................................26

1. Type of Economic System....................................................................................30

2. Allocation of Resources........................................................................................31

B. Macro-Economic Policy Measures..........................................................................31

1. Development Goals of the Government...............................................................31

2. Fiscal and Monetary, Social Welfare and Industrial Policies................................33

C. Economic Situationer...............................................................................................36

1. Economic Indicator...............................................................................................36
 2. Challenges/ opportunities facing the economy.....................................................37

D. Global Economy......................................................................................................39

Characteristics of the Global Economy.....................................................................39

2. Influence of globalization on the business of an organization and its stakeholders

..................................................................................................................................40

3. Prognosis of Globalization....................................................................................40

4. Roles of Global Institutions...................................................................................41

III. Market Environment 43

A. Market Structure......................................................................................................43

1. Types of market structure, difference, particularly with perfect competition........43

B. Market Forces..........................................................................................................46

1. Demand.................................................................................................................47

2. Supply...................................................................................................................49

3. Economy of Scale.................................................................................................51

4. Pricing Mechanism................................................................................................52

5. Direct Competitors................................................................................................53

6. Indirect Competitors..............................................................................................54

7. Elasticity................................................................................................................55

8. Market Trends.......................................................................................................56

Financing:..................................................................................................................57
 Outsourcing:..............................................................................................................57

Innovation:.................................................................................................................57

9. Examples illustrating relationship between market forces and organizational

responses..................................................................................................................58

C. Competition..............................................................................................................59

1. Competitive Environment (Five Porter’s)..............................................................59

Porter’s Generic Strategies.......................................................................................62

2. Competitive Strategies..........................................................................................66

ing leaner and more agile.........................................................................................67

3. Role of Regulatory Bodies in the organization:....................................................68

IV. Conclusions and Recommendations 76

V.Bibliography.................................................................................................................78

Bibliography
i
http://www.unilever.com.ph/ourcompany/aboutunilever/history/default.asp

ii
http://www.ethicalcorp.com/content.asp?ContentID=5110

iii
Haag, Stephen (2000). Management Information Systems. ISBN 0-7600-1091-9.

Books:

Moyer, Charles. Mcguigan, James and Rao, Ramesh (2006). Contemporary Financial

Management Fundamentals. Singapore: Thomson South-Western Publishers.

Gordon, Robert J. (1987). Macroeconomics Fourth Edition. Canda: Little, Brown &

Company Limited.

Case, Karl E. & Fair, Ray C. (2005). Principles of Economics. United States of America:

Prentice Hall, Inc.

Dornbusch, Rudiger & Fischer, Stanley (1978). Macroeconomics Sixth Edition. United

States of America: McGraw-Hill, Inc.

Blanchard, Olivier (2005). Macroeconomics Third Edition. Philippine: Pearson Education

Pte Ltd.

Internet:

Unilever.com.ph, 2007, about Unilever, 26 October 2008

< http://www.unilever.com.ph/ourcompany/aboutunilever/unilevervitality.asp>

Unilever.com.ph, 2007, about Unilever, 26 October 2008

< http://www.unilever.com.ph/ourcompany/aboutunilever/default.asp>
Unilever.com.ph, 2007, about Unilever, 26 October 2008

< http://www.unilever.com.ph/ourvalues/purposeandprinciples/default.asp>

Unilever.com.ph, 2007, about Unilever, 30 October 2008

< http://www.unilever.com.ph/ourcompany/aboutunilever/companystructure/default.asp>

Unilever.com.ph, 2007, about Unilever, 5 November 2008

< http://www.unilever.com.ph/ourvalues/nutritionhygienepersonalcare/default.asp>

Interviewee:

Ms. Joan de Roxas, Manager, Corporate Development Department, 24 October 2008