Unilever simplifies organisation

British multinational consumer goods conglomerate Unilever PLC (UL)

announced a major restructuring of its business from three units to five. The
reorganization will eliminate some 1,500 roles globally and see high-level
executives leaving or taking on new positions.
On Jan. 25, Unilever announced that it would shift to an organizational model
with a category focus and centered around five business groups: Beauty &
Wellbeing, Personal Care, Home Care, Nutrition, and Ice Cream. In the
announcement, Unilever CEO Alan Jope said that the reorganization aims at
a structure that is "more responsive to consumer and channel trends,"
adding that growth remains a "top priority" for the company. Some analysts
expect that additional changes—including divestitures—may still be to come.

External Pressures May Motivate Restructuring 

Analysts have speculated that Unilever's announcement may have been
motivated in part by mounting pressures to speed up growth and innovation.
These pressures have increased in recent days as the conglomerate has
become a target of activist investor Nelson Peltz's Trian Fund Management.
Peltz consolidated a stake in the company in mid-January after Unilever
made a failed $68 billion bid to buy healthcare giant GlaxoSmithKline PLC's
(GSK) consumer health business. Unilever stock surged following the

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announcement of the hedge fund's purchase of its shares, a potential
indication of broader investor interest in major changes at Unilever.

The pressure from investors on Unilever to boost performance relative to

rivals was in place before news broke about Peltz's purchase, however.
Analysts suggest that the company has underperformed competitors in
areas including packaged food and hygiene throughout the COVID-19
pandemic. Investors also broadly opposed its GlaxoSmithKline bid, which
Unilever framed as a way of further moving into the health, beauty, and
hygiene products space.

Signals of Divestitures to Come? 

Analysts see investor calls for Unilever to bolster its sales growth and focus
on innovation as an indication that the company may divest slower-growing
operations. The restructuring plan seems to position the company well for
this strategy in the future. Particularly, isolating ice cream as its own division
separate from nutrition—which will include ingredients lines, healthy
snacking brands, and functional-nutrition products—suggests that Unilever
may offload ice cream in the future. The company's food brands have
tended to grow more slowly than its beauty and well-being and personal
care lines.

Investor response to Unilever's reorganization announcement was tepid,

judging by a modest decline in share price following the announcement.
Despite restructuring its business and shuffling several top executives, the
new divisions will all be lead by Unilever veterans. Without fresh faces
spurring new strategies for growth and innovation, investors may be
skeptical of the broader impact of the restructuring plan

QUESTION:
1. Why did Unilever decide to restructure its organization in 25 Jan 2022?
2. How did the act of restructuring affect its organization and
performance?