Company Appraisal

UNILEVER

Module Code
BUS4010

Module Name
Contemporary Business Environment

Tutor’s name
MICHAEL GABRIEL

Student ID: STU142405

Date: 14-11-2022
 Table of Contents
1 Introduction ............................................................................................................................. 3

1.1 Organization’s purpose .................................................................................................... 3

1.2 Objectives, mission and vision ......................................................................................... 3
1.3 Key environmental pressure ............................................................................................. 4
1.4 Industry and market analysis ............................................................................................ 4
1.5 Post Covid-19 challenges ................................................................................................. 5
1.6 Key Stakeholders.............................................................................................................. 6
1.7 Impact of digitalisation on the business structure ............................................................ 7
2 Task 1 ...................................................................................................................................... 8

2.1 Business environment analysis......................................................................................... 8

2.2 PESTLE............................................................................................................................ 8
2.2.1 Political ..................................................................................................................... 8
2.2.2 Economic................................................................................................................... 9
2.2.3 Social....................................................................................................................... 10
2.2.4 Technological .......................................................................................................... 10
2.2.5 Legal ....................................................................................................................... 10
2.2.6 Environmental ......................................................................................................... 10
2.3 SWOT............................................................................................................................. 10
2.3.1 Strengths ................................................................................................................. 10
2.3.2 Weakness ................................................................................................................. 11
2.3.3 Opportunity ............................................................................................................. 11
2.3.4 Threat ...................................................................................................................... 11
3 Task 2 .................................................................................................................................... 11

3.1 Leadership challenges posed by contemporary global business .................................... 11

4 Conclusion ............................................................................................................................ 13

5 References ............................................................................................................................. 15
1 Introduction

Unilever is a consumer goods company with headquarters in London and is marked as the most
famous British multinational firm. The company comprises a broad portfolio of products,
including cleaning agents, personal care, ice cream, food and other beauty products. It is also the
largest soap producer globally, and the company's products are available in 190 or more countries.
In terms of the legal structure, the company comprises a private legal structure. In 2020, the
company unified its legal structure and made it a single-parent company called Unilever Plc. This
helped the company create a simpler firm that provides greater strategic flexibility to be positioned
successfully in the future. In the private sector, Unilever operates in the corporation type of
business structure. According to Soderstrom and Weber (2020), a corporate structure is described
as an organisational structure that comprises different units of departments within a company.
Thus, by adhering to the corporate structure, Unilever benefits from optimising work performance
and dividing the complex and crucial tasks amongst different business units.

1.1 Organisation's purpose

The organisation works with the purpose of making sustainable living commonplace. The
company is driven by this purpose, and inspiring and exceptional performance can be visualised
back in 1883. The purpose of Sunlight Soap, developed in 1883, working with a purpose to foster
cleanliness and innovation, motivating a sustainable living back then (Unilever 2022).

1.2 Objectives, mission and vision

The objectives of Unilever are presented below:

 To transform the business system by advocating new laws, policies and social norm that
works to promote well-being, health and inclusion,
 To drive a positive change and promote inclusion and diversity

The company works with the mission to do good for society and the planet by acting on the
environmental and social issues faced globally and enhancing the lives of people with sustainable,
innovative and high-quality products. The vision statement of the company emphasises putting
sustainability at its core and establishing a long-term way for business growth (Unilever 2022).
1.3 Key environmental pressure
Environmental factors comprise key indicators that may cause a change in the environment and
affects the use of its resources. Vanham et al. (2019) provided insights into the key environmental
pressures; these include greenhouse gas emissions, air pollution, acidifying emissions and raw
material usage. The key environmental pressure faced by Unilever is in terms of the fossil fuels
used in the cleaning products, which contributes to carbon emissions. In addition, the
petrochemicals used in the products also create a burden on the environment and therefore, this
area needs to be focused on by the brand by replacing it with sustainable ingredients. The
chemicals used in the laundry and cleaning products of Unilever make up approximately 46%
proportion to the carbon footprint across the lifecycle (BBC 2020).

1.4 Industry and market analysis

The market in which Unilever operates is becoming increasingly competitive. However, despite
the external environment, Unilever has maintained a significant market position with
approximately 3.4 billion people using the company products on a daily basis, along with a
turnover of £52 billion in 2021, with approximately 58% in revenue in the emerging markets.

Figure 1: Unilever’s worldwide revenue

 (Source: Statista 2022a)

In terms of the analysis of Unilever’s position in the consumer goods industry, the company stands
in the fourth position with net sales f 61.63 billion US dollars (Statista 2022b).

Figure 2: Unilever ranking amongst FMCG companies

(Source: Statista 2022b)

1.5 Post Covid-19 challenges

Just like other businesses, Unilever also suffered from a significant impact on the business, people
and international communities. The company suffered from a drop-down in sales by 0.1%, with
volume declining by 0.3% (Bhakat et al., 2021). The overall turnover also decreases by 1.6%. In
terms of the post-COVID-19 challenges, a change in the operating environment was observed by
Unilever in the markets in which it operates. Moreover, consumer demand patterns also changed,
and the food service also declined by 40% and eCommerce growth increased by 49%. The brand
value of Unilever also dropped in 2021, reaching 3.97 billion US dollars (Statista 2022c)
 Figure 3: Unilever Brand Value worldwide

(Source: Statista 2022c)

1.6 Key Stakeholders

Unilever comprises 148,000 people who work with their skills in factories, offices, R&D
laboratories and other estates. As a global company, the firm works to interact with a range of
stakeholders to ensure that they foster their responsibilities adequately. The below stakeholder
mapping represents the key stakeholders of the company.

Low High
Low NGOs Shareholders
Peer companies Trade associations
High Consumer Employees
Government Scientists
Communities Suppliers
 Key stakeholders Needs and influence
Employees Critical for organisational success and are
therefore engaged and informed
Consumers For business growth, consumers are important
Shareholders Shareholders have control over business
decisions and are therefore valued
Government To ensure laws and regulations are met by the
business
Suppliers Unilever work with 53,000 suppliers for
material sourcing
Scientists Commits to investing in the scientific approach

1.7 Impact of digitalisation on the business structure

The notion of digitalisation refers to an approach in which the functioning of the conventional
units is standardised on the patterns of the digital notions. Digitalisation plays a vital role in
improving the functioning of an organisation in order to meet successive objectives (Vasilev et al.,
2020). The impact of digitalisation on the functioning of the business would help an organisation
to obtain a larger market from both digital and conventional practices, improve the performance
and productivity of an organisation in the matter of growth, enhance agility in the matter of
development (Kohtamaki et al., 2020). This approach of agility of a business from the impact of
digitalisation can be witnessed through the employment of agile project management, which has
proven to be one of the most advanced and user-friendly tools that have helped the functioning
sector in obtaining its outcomes (Raharjo, 2020). A number of examinations have reported that
digitalisation within the structure of business management has been effective and efficient in the
approach of the business because of the involvement of business tools in the notions of successive
outcomes. The notion of motivation is an aspect that is reported to be analysed from the approach
of digitalisation into a business structure. According to Madsen (2020), motivation is improved
among the employees because the workload is shifted on the motivations and the ideology of
effective decision-making tactics needed to be employed by employees in order to meet the
objectives of a company.
Moreover, the notion of strategies from the aspect of digitalisation into business is reported to be
improved in multiple ways. The approach of digitalisation from the aspect of business strategies
allows a company to improve its functioning performance and in attracting customers towards the
products. In this regard of improvement, social media marketing is one of the most employed
approaches utilised by every functioning sector to launch digital campaigns to appeal to customers.
Unilever being a worldwide recognised brand, has improved its performance and has employed an
approach of in the making collaborating with iconic music brands by sponsoring them would allow
Unilever to set its potential commercial market by promoting its personal care. This approach
employed by Unilever allowed it to accelerate its market. From the aspect of the operation in a
digitalised business, most possibility, new products are born. In the approach to operations,
Unilever has been implementing high-tech practices in engaging with partners and consumers
(Martin, 2018). The employment of digital practices in a business allows a business to ensure the
stability and validity of its products and the performance of the business. When a business follows
the practices of digital operations, the burden of the tasks is reported to be reduced by the
management team. It has been examined that due to the approach of digital practices in the
company, sustainability is majorly practised in order to reduce environmental challenges produced
by the company (Gomez et al., 2021). The polished approach of eCommerce has been playing a
vital role in improving business and improving its productivity from a larger perspective.

2 Task 1

2.1 Business environment analysis

The chosen organisation works in a competitive business environment, and therefore, analysing
the micro, and macroeconomic factors and their impact on the organisational behaviour is
important. For this purpose, the use of PESTLE analysis seems appropriate as it helps analyse
microforces that impact a business. In addition, to analyse the internal environment, a SWOT
analysis is used.

2.2 PESTLE
2.2.1 Political
The political factor impacts the growth of industry and UK holds a stable political environment,
but the impact of Brexit and the lockdown cannot be underestimated. The UK government also
provides domestic and foreign policies, licensing needs and export for consumer goods. Since
Unilever is headquartered in London, therefore, the company needs to follow the codes and
conducts set by Food and Drug Administration and should abide by the laws. The company
operates in 190 countries. Therefore compliance with the laws and trade regulations is important
for the business.

2.2.2 Economic
The inflation rate in the UK as a result of the pandemic has largely influenced the sales of the
consumer goods industry. High inflation means that purchasing power of consumers decreases
which ultimately affects business sales. Inflation in the UK increased to 10.1% in 2022 (Trading
Economics 2022). However, procurement for a business becomes crucial during the inflationary
period. An increase in cost decreases the demand, and therefore the producers are required to focus
on fewer products and services.

Figure 4: UK Inflation Rate

(Source: Trading Economics 2022)

In addition to this, the circular flow of income in the UK has also been influenced due to
uncertainty, lockdowns, and income declines. However, at Unilever, the circular economy is
regenerative and restorative by design and makes use of renewable resources (Unilever 2018).
2.2.3 Social
Consumer spending has increased in the UK, specifically on consumer goods. About 12 billion
US dollars has been spent by consumers in terms of consumer products. However, the consumer
prefers good and services of high quality and are ready to pay a premium price for the product.
Unilever focuses on providing the consumer with high-quality products. Moreover, the market
structure adopted by the company further aids in forcing the customer to pay a premium price for
the product. Unilever adheres to an oligopoly market structure as the brand dominates the global
market. Georke (2022) provided that by adhering to an oligopoly structure, an organisation is able
to increase prices, block new entrants and slow innovation.

2.2.4 Technological
A change in the consumer goods industry has been incurred by innovative technology. The
implementation of new technology allows us to sustain products and services and move to
technological advancements. Unilever makes use of AI and satellite imaging technology along
with building automated technology in the innovation centres (Stanley et al. 2022).

2.2.5 Legal
In the UK, to protect consumer right Consumer Rights Act need to be followed by the firm. The
European Union has also imposed several laws. Besides this, the Employment Rights Act also
ensures that employees are respected and valued and provides better customer service.

2.2.6 Environmental
In the UK, the induction of technology imposes that the organisation comply effectively with
environment-friendly procedures, and therefore sustainability needs to be emphasised. The
consumer goods industry has rested a major focus on reducing the environmental burden. Unilever
has also been marked as a trusted company based on its environmental sustainability practices.

2.3 SWOT
2.3.1 Strengths
 Unilever’s global footprint and widespread operation in 190 countries serve as its biggest
strength.
 Diversified range of products
 High investment in research and development.
  Cutting-edge innovation.
 Combines global thinking with a touch of local execution

2.3.2 Weakness
 The products of Unilever can be imitated by competitors.
 The cash flow of the company is also influenced due to high operational functions.
 The product prices are high, and consumers can switch to alternatives.
 The company depends on retailers.

2.3.3 Opportunity
 The opportunity to penetrate a healthy and innovative consumer market.
 The focus on sustainability helps create a positive image which can aid in adapting to
changing customer lifestyles.
 Can expand in developing countries.

2.3.4 Threat
 Increasing consumer goods competitors in the market, including Nestle, Johnson &
Johnson, Proctor & Gamble etc.
 The company also face extended macroeconomic risk in unstable economies, namely
emerging markets.

3 Task 2

3.1 Leadership challenges posed by contemporary global business

Leaders play a central role in an organisation, and in terms of the global business environment,
strategic positioning is established (Maranga et al., 2017). The leaders work to create a business
model to survive in the global competition by creating value for the customer and generating profit
sustainably and distinctively in the global marketplace. The leaders face several challenges in the
contemporary global business model, and a reorientation to maintain a balance between the
difference in cultural system is crucial. Besides this, other challenges faced by leaders in the
contemporary global environment include teamwork management, challenges of remote working,
talent retention, and recruiting new talent. In such a complex and crucial situation, leaders need to
maintain a strategic approach to effectively have control over the situation.
Gonas et al. (2016) provided that controlling ensures that efficient and effective utilisation of
resources occurs to achieve planned goals and targets. Through the effectiveness of control, the
deviation that occurs from actual performance to standard performance can be measured
effectively. In addition, Birasnav (2014) provided that organisational control by the leader helps
identify errors and plans according to the situation. Strategic management is essential when
dealing with a contemporary global business environment. Ansoff et al. (2018) described strategic
management as ongoing planning that helps monitor, analyse and assess the necessities of an
organisation. A change in business working or environment also requires that an organisation
constantly revolutionise their strategies.

Currently, Unilever is searching for a new CEO, as Alan Jope, the leader of Unilever, is stepping
down from the business by 2023. Jope’s leadership employed at Unilever has been marked by a
journey of pandemic along with a wider impact of inflation. The leader ensured to make
appropriate business change and set it up for better growth in future. The strategic management
changes as a result of increasing challenges from the global environment include restructuring of
the business, focusing on areas of international expansion, eCommerce and purpose-driven brands
(Colley and Spyridonidis 2022). Though Jope’s strategy was subjected to severe criticism by the
shareholder, and a dipping share price in his tenure was observed, the financial results are still
positive; this implies that the effective leadership and management of Jope stormed the weather of
inflation. According to the Hersey-Blanchard leadership model, there is no single style of
leadership that is appropriate to be applied in the workplace rather than workplace factors, and the
internal and external environment must be analysed to lead the abilities (Uslu 2019).

Based on these facts, the new leader at Unilever will incur five major challenges; firstly, the long-
term impact posed by inflation. This is because the leadership will begin in uncertain and choppy
economic waters. The economic impacts have largely triggered the global supply chain, and the
ongoing war in Ukraine has further affected the situation. The Bank of England has also predicted
that the country will enter a recession period as an intensification of inflation is evident. This is
likely in the US as well, where higher prices will continue for the next year as well. However,
Unilever has taken strategic control measures to withstand these challenges. The current business
approach can be summarised as starting by adopting precision pricing single-mindedly and quickly
and retaining the ability to invest effectively behind the brands. The business has also been closely
monitoring the actions of competitors and consumer behaviour (Egel and Fry 2019). This was done
to ensure that the price increase of Unilever does not reach far, leading to decreasing volume of
sold products. However, if this strategy is continued, then the new leader needs to oversee that the
brand constantly proves to its customer that each product is worth money.

The second challenge is the point of purpose. Jope focuses on brand purpose from Dove to
Hellmann’s and Ben & jerry, the purpose of growth is driven by its brands. Unilever marked
focusing on purpose as ludicrous and also blamed the firm’s lacklustre performance. Besides this,
under the recent debates, the purpose strategy of Unilever has also pulled the business and has
entered it into an uncomfortable and uncertain political territory. Moreover, the leader also took
the decision to stop selling the product to Israeli territories as it is considered inconsistent with the
brand's value. This caused a legal battle, and therefore, to work in the contemporary global
environment, the new leader needs to work on tangible results generation.

Another challenge is in terms of furthering the digital agenda. Unilever has a clear line to action,
and eCommerce will serve as a key channel in the post-pandemic times. For the next leader, the
challenge will be in terms of maximising growth in this regard and delivering a strong digital
business. Furthermore, the fourth challenge is to manage a new structure, making it simple and
category-focused. The restricting needs to be maintained globally with a crystal-clear
accountability action. Lastly, the focus on sustainability is a high-up agenda for business leaders,
and commitment in this regard serves as a magnet to business growth and profitability (Marketing
Week 2022). However, by tackling the five key challenges faced by leaders in a challenging
business environment, the business will be able to maintain a positive and strong interrelationship
between the organisation, management and the business environment. It is important that an insight
into the outer environment is maintained through effective research, which will help in tackling
internal functions. The business needs to operate by managing interlinks and interconnections,
which help attain long-term sustainable business growth.

4 Conclusion

From the above discussion, it can be summarised that the business has been successfully
articulating around its vision and mission and is working to mitigate the ongoing environmental
and economic challenges. The challenges faced by COVID-19, inflation and other economic
uncertainty are part of the external environment and therefore, generating corporate development
and enhancing employee performance is fundamental to incur growth and attain competitive
behaviour.
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