Global Strategic Management

Individual Report

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Table of Contents
Introduction.................................................................................................................................................3
Existing Strategy..........................................................................................................................................4
Pros and Cons of Current Strategy..............................................................................................................6
Improving their strategy..............................................................................................................................7
Contemporary Strategic Issues....................................................................................................................9
Conclusion.................................................................................................................................................13
References.................................................................................................................................................14

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Introduction
This report uses Unilever as an example to critically analyse several strategy related issues such
as various growth strategies, the role internal and external environments play in a business, the
pros and cons of an existing strategy, recommendations to improve strategy, and various
contemporary issues. Unilever has operated successfully and profitably since its foundation in
1929. This company has gone through many rough situations and dealt with them properly with
proper strategies to survive and make a profit in the market. Now it is a global company with
over 400 brands across more than 190 countries worldwide with a market cap of over €110
billion (Kathrin Jansen, 2016). This company uses many traditional and newfound strategies to
capture market share and make a profit over its competitors in local and international markets.
The different dimensions of their strategies are critically analysed in this report.

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Existing Strategy
Unilever’s mission statement 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” which is reflected in their strategies. Unilever abides by its mission statement by focusing
almost all of its 400 brands on three major industries which are Homecare, Food & Refreshment,
and Beauty and personal care. The company uses a few growth strategies in the market which
are:

Market Penetration
Unilever primarily applies market penetration as its growth strategy. The company aggressively
tries to sell its products in the markets. Whenever it finds an opening, it tries to get a higher
market share than its competitors. During the Covid-19 pandemic, there was a huge demand for
disinfection products which the company capitalized on. The company promoted their brand
Lifebuoy as an effective way to combat the new disease by promoting its success rate of 99.99%
against bacteria (Balakrishnan, 2013). The company increased the production of various
products of the Lifebuoy brand such as soap bars, hand wash, and hand sanitisers to take
advantage of the increasing demand for hygiene products.

The company has survived for a very long time which has resulted in having a better financial
status than most of its competitors which means it can invest more in products to capitalize on
new opportunities. But there are competitors like Procter & Gamble (Shankar and Carpenter,
2012) who are also ready to invest heavily in new products and opportunities. Unilever has to
compete fiercely with these major brands and local brands to gain more market share.

Product Development
Product development is the secondary growth strategy for Unilever. The company introduces
new products in the market when it observes an increase in demand for a new good or a new
feature in an already existing good. These new products or new versions of products are needed
to increase or maintain market share. The company uses a differentiation strategy to get more

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market share (Dirisu, Iyiola and Ibidunni, 2013). Unilever tries to make its products more
attractive to customers by designing the products to cater to the customers’ needs. Unilever’s
personal care product Dove is an excellent example of this. This soap was designed for people
who want soaps that do not harshen their skin. Even though there were a lot of personal care
products that catered to the demand for soap, this product differentiated itself with a feature that
people are interested in which increased the product’s value. Now people are willing to pay a
higher price to purchase this product.

Unilever is always ready to learn about new demands in products and then capitalize on them as
soon as possible. Unilever spent €800 million in R&D in 2020 (Burmester, Russell and
Cebula, 2012). This kind of expenditure in R&D helps the company take advantage of new
information before other companies can do it. However, the Covid-19 epidemic has resulted in a
sales decrease of 1.6% which may harm their ability to spend as much on R&D.

Diversification
Diversification is Unilever’s supporting strategy. Unilever doesn’t stop at improving the brands
it already has; it has diversified its product lines a fair amount. Now it has more than 400 brands
active in the market (Kathrin Jansen, 2016). Even in the dessert industry, it has over 15 brands
running in the market such as Ben & Jerry’s, Breyers, Fudgiscle, and Grom. The company is
always looking for unique brands it can acquire and profit on.

Unilever faces fierce competition from local companies when trying to enter a new market with a
new brand. The local companies are more familiar with the demand of the local people therefore
they have an advantage. To battle this problem, Unilever hires local talent in their offices to help
cope with unfamiliar territory.

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Pros and Cons of Current Strategy
Pros
Global Scale: Unilever has 400 brands active in over 190 countries which are used by about 2
billion consumers every day (Kathrin Jansen, 2016). This kind of scale surely helps the
company achieve high revenues.
Product Innovation: Unilever has spent a lot of money on R&D in recent years. In 2020, it spent
€800 million on R&D (Burmester, Russell and Cebula, 2012) . The innovations help reach
new markets and serve new and growing demands.
Great Management: Unilever’s management has proved its worth from time to time. In the
Covid-19 pandemic, the company suffered comparatively low damage thanks to the top
management’s swift and smart decision making.

Cons
Competition: Unilever faces fierce competition both locally and internationally. Internationally
the company has to face companies like Procter & Gamble, Johnson & Johnson, Nestle, and
L’Oreal (Shankar and Carpenter, 2012). All these companies have a good financial status that
can compete with Unilever. Locally, there are small companies everywhere that specialize in
serving local demands and can provide a lower cost.
Commodities Cost: Unilever has traditionally dealt with price hikes by increasing product costs.
Since the company has premium brands and a loyal customer base, it has not been a major
problem so far but it is unclear how long it will remain the same.
Political Factors: Unilever operates in over 190 countries. Every country has its law about
international companies which the company has to be very careful about. Moreover, factors like
Brexit and Free Trade Agreements can and will affect how the company operates outside the
UK.

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Improving their strategy
Unilever’s business strategies have proved profitable so far. They have engaged in several
industries with success but there are some opportunities they can take advantage of to be more
successful. Unilever still depends on old school ideas to improve its performance. The
company’s main plans are aggressively selling products to gain market share or bringing in a
new feature in its products to make them more appealing to consumers. These ideas have worked
so far in the market but the company needs to embrace the new times and new ideas that come
with it to profitably operate in the current environment. Some of the opportunities that Unilever
can take advantage of are:

Peaceful international environment: A peaceful international environment is a prerequisite for an

international business portfolio. Unilever often has to deal with a complex international political
situation when trying to diversify its portfolio and increase its market share. Right now, there are
no major issues that will affect the international market and negatively impact Unilever’s
operations which is a major opportunity for the company to take advantage of. In addition to this,
there are growing opportunities in several countries that Unilever can use. For example, in
China, the market for fast-moving consumer goods is growing at a fast pace and the country is
decreasing taxes (Tang, 2020). There are many countries which present opportunities like this
that Unilever can profit from.

Shortage of local businesses: In the past, Unilever has faced fierce competition with local
businesses in serving various localities. The local businesses are more familiar with the local
demands and can usually undercut big companies like Unilever. But in the recent Covid-19
pandemic, many local businesses went bankrupt due to remaining closed for a long time (Bartik
et al., 2020). Unilever can take advantage of this situation. Since the local businesses are gone,
there is going to be less competition in the local markets and Unilever can gain more of the
market share before the new competition comes in. Although Unilever itself suffered some

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damage in the pandemic, it was not as bad as expected and they still have a solid financial
position and strength (Dewi Cahyani Pangestuti, Heni Nastiti and Renny Husniaty, 2021).

Increased environmental awareness: With time, people are starting to be more aware of the risks
environmental change brings. This leads to a shift in consumer demands toward companies that
are environmentally sustainable. Seventy-two per cent of Gen Z consumers are willing to pay
more for a sustainably produced service; and 59 per cent of consumers of all ages believe it is
vital that the meals they purchase are consumed sustainably, up from 50 per cent in 2017 (Zhou,
Hu and Huang, 2016). Not only does sustainability improve brand reputation, but it can also
help companies improve efficiency in operations and lower the total costs. Unilever can donate
to charities, take up initiatives like green buildings and promote these to make the public aware
of their stand with the environment and attract buyers that are interested in buying from
environmentally sustainable organizations.

Technological development: A lot has changed in the last couple of years in terms of technology.
Now people are used to buying products on their phones, giving feedback online, taking reviews
from people online etc. Unilever does not have a big presence online. The company can try to
create an e-business platform and promote its online services to get more customers to buy its
products.
Technology has also enabled people to do their work from home. Most of the workers got used
to working from home during the pandemic. Unilever can allow their managers to work from
home to increase efficiency and achieve their tasks faster (Khan, Raza and Siddiqui, 2020).
Going online with routine work will also make information sharing smoother and faster which
will help make fast decisions.
AI has made a big impact on production-based companies. Companies are less reliant on human
labour and are relying more and more on machines to do the work. Machines can do more work
more efficiently in a smaller amount of time. Unilever can use more machines in their production
work to produce more in a smaller amount of time.

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Contemporary Strategic Issues
Porter’s Five Forces

Bargaining power of suppliers- Low

Unilever operates across the whole world with many different suppliers available. If the
company finds a different low-cost supplier then it can easily switch to the new supplier without
much problem. Unilever deals with a lot of farm products and chemicals that are widely
available which makes it easy to find new suppliers (Laursen and Andersen, 2016).

Bargaining power of buyers- High

There are a lot of international and local companies in the market that serve similar products.
Buyers can easily switch to a different product if they are attracted by a lower price or a new
feature provided by a different company. Unilever has to work hard to maintain customer loyalty
and market share. For example, Ben & Jerry’s is one of Unilever’s premium ice cream brands
which has to compete with Haagen Dazs for market share (Mishler, 2017). Buyers can easily
switch to the competitor’s products if they want to.

Threat of new entrants- High

Unilever mainly operates in the Homecare, Food & Refreshment, and Beauty and personal care
industries (Jones, 2005). The products it distributes in these industries are easy to produce and
therefore new competitors can easily enter the market and try to capture market share. The new
companies may provide a lower product cost and that can hurt Unilever’s performance
massively.

Threat of substitute products or services- Low

There are not many substitutes for the products Unilever produces. Most of the brands this
company owns provide items that are basic needs for people’s everyday lives. These items are
not easily substituted. The demand for these products will continue to grow as the population
increases which is beneficial to Unilever.

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Rivalry among existing competitors- High
Unilever faces fierce competition from both local and international companies. Internationally,
companies like Procter & Gamble, Johnson & Johnson, GSK, and Nestle are competitors of
Unilever (Shankar and Carpenter, 2012). These companies are financially strong and compete
for market share in various industries with Unilever. Also in the different localities that Unilever
operates in, numerous small local brands provide similar products and have better knowledge
about the demands of the local people. These companies can often undercut Unilever in product
prices.

Blue Ocean
Unilever actively pursues both the Blue Ocean Strategy and Red Ocean strategy at the same
time. The methods are:

Blue Ocean Strategy in Unilever:

With the differentiation strategy, Unilever brings new products and new features to existing
products to render the competition irrelevant (Dirisu, Iyiola and Ibidunni, 2013). An example
of this is Dove. Unilever developed this product to capture the market that wants soap but not the
harshening that comes with it. Dove serves this purpose perfectly. Since there is little
competition for this product, Unilever can charge a higher price for it which the consumers are
likely to pay. Unilever continues to find low-cost methods and other various advantages to
provide the customers with products and features that were not available in the market in an
attempt to make the competition irrelevant.

Red Ocean Strategy in Unilever:

Unilever’s main growth strategy is market penetration. The company aggressively tries to sell its
products in the market and tries to take market share away from competitors. Most of the
products Unilever sells are sold using this strategy and this brings in most of the revenue. In the
industries Unilever operates, the company faces competitors like Procter & Gamble (Shankar
and Carpenter, 2012) in cleaning supply products, Johnson & Johnson in health care products
and Blue Bell Creameries in food and refreshment products. Unilever tries to provide consumers

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with a better product experience and lower cost than its competitors to gain higher market share
to increase revenues.

SWOT Analysis
Strengths:
Stable financial position: Unilever has been operating for a very long time and has grown into a
huge company which has a market cap of over €110 billion (Miryala and Aluvala, 2015). This
has made the company financially very strong and stable.
Experienced management: Unilever management is an experienced team of leaders who have
proved their worth. The company suffered significantly lower losses during Covid-19 thanks to
the management (Pandey et al., 2021).
Economies of sale: Unilever has a huge product line and one of the best supply chains and
therefore can divide the cost among a lot of products which means it can provide a lower cost
than most of the companies.
Diverse portfolio: Unilever has over 400 brands operating over three main industries (Kathrin
Jansen, 2016). These brands lower the risk for the company and help go through tough times.

Weaknesses:
Fierce competition: Unilever faces fierce competition both internationally and locally. Example:
P&G.
Failed brands: Unilever has launched and failed with several brands such as Persil Power.
Liquidity: Unilever’s current ratio is 0.70 which is a red flag for the shareholders. The low
liquidity ratio makes the company unattractive to potential shareholders.

Opportunities:
Peaceful international environment: There is no major issue in international politics which allows
Unilever to operate properly in different regions.
Local business bankruptcy: A lot of local businesses went bankrupt due to Covid-19 which
Unilever can capitalize on.

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Increasing demand: The demand for fast moving consumer goods is increasing day by day which
is beneficial for Unilever.
Technology development: New machinery has made it easier for manufacturing companies to
produce goods easier and faster which Unilever can take advantage of (Wilson and Daugherty,
2018).

Threats:
Local companies: Local companies know the local demands better and can often undercut big
companies like Unilever.
Economic downturn: Everyone is suffering from the economic downturn resulted by Covid-19
and Unilever is no different.
Exchange rate fluctuation: Unilever operates in the UK but most of its business is outside the
UK. Therefore the company suffers when the exchange rate takes a turn for the worse.
Political factors: Various political factors such as the free trade agreement and Brexit can affect
how the multinational company runs its business.

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Conclusion
Unilever has successfully operated its business for a long time with traditional strategies. It has
survived through many rough patches and made a profit. But as times change, the company must
change its strategies to cope with the new changes that come its way in order to be profitable.
The recent pandemic has resulted in an economic blowback which the company must recover
from. Although there are many challenges the company has to face to recover from the damages
suffered, the company has a strong brand image and loyal customer base that will help it go
through it all. In uncertain situations, its strategies like diversification and a huge portfolio will
help mitigate the risks. These strategies inspire confidence that this company can go through
these situations successfully. Proper strategies like Unilever’s can help any company deal with
uncertain situations and be successful in the long run.

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