Arab Academy for Science, Technology and Maritime Transport

Graduate School of Business

Final Exam
Course Title: International Business Mgmt
Exam Duration: 240 minutes Lecturer: Prof. Yasmine Ramzy
Total: 40 marks Exam Date: March 2024

Student's Name: __Riham Abd El-Salam______ Registration No: __22127240_______

Unilever - A Global FMCG Giant

Unilever story begins back in the late 19th century and tells of small family businesses who -
through partnerships, brand innovation and industry firsts - grow into the purpose-led
company that is Unilever today.

Dating back to the early 18th century, the Jurgens, a family of carpenters, begin selling on
butter that they have received as payment for work. As this proves to be a profitable
enterprise, in 1860 the family move to Oss, Brabant in the Netherlands, to focus on building
up a successful business in the butter trade.

Unilever is a British-Dutch company that operates in the market of consumer goods and sells its
products in around 190 countries. Unilever PLC is a British multinational fast-moving consumer
goods company founded on 2 September 1929 following the merger of British soap
maker Lever Brothers and Dutch margarine producer Margarine Unie. It is headquartered
in London.

The importance of this multinational is reflected too in the fact 2.5 billion people use
Unilever products every day, being part of their daily life. They also are responsible for the
employment of 161,000 people in the different countries they operate.
Another remarkable fact is that they own more than 400 brands, what means an important
diversification in both risk and the products they sell, among which there is food, personal care
products and cleaning agents. In fact, twelve of these brands have sales of more than a billion euros.
Unilever products include baby food, beauty products, bottled water, breakfast cereals,
cleaning agents, condiments, energy drinks, healthcare and hygiene products, ice
cream, instant coffee, pet food, pharmaceuticals, soft drinks, tea, and toothpaste. It is the
largest producer of soap in the world, and its products are available in over 190 countries. It
has research and development facilities in China, India, the Netherlands, the United
Kingdom, and the United States.
SWOT Analysis of the FMCG industry

Strengths

● Economies of scale: Every FMCG company can take profit of economies of scale.
● No Seasonality: The FMCG Industry has constant sales because they produce
products everyday products.
● Strong Brands: Presence of well-known brands in this sector.

Weaknesses

● Differentiation in the FMCG market is difficult because producers can only compete
in availability, range of products and prices. Their products can be easily substituted,
especially in emerging markets like Asia or Africa where they use traditional
alternatives.
● Dependance of retailers: FMCG companies don’t usually sell their own products, so
they depend on retailers.
● Counterfeit consumer goods: Goods of inferior quality sold without the brand’s
owner authorization under another’s name.
● High advertising costs: Increase in Advertising spending may affect margins.

Opportunities

● Improving economic conditions: getting out of the recession leads to higher

consumption.
● Digital strategy: Going digital will lead to more sales for FMCG companies because
people is increasingly buying online.
● Innovation: Products can be improved or invented in the healthcare market.
● International laws: The European Parliament and the European Commission are
trying to protect big food companies from some retail practices. The manager of
Unilever Germany has publicly supported it.
● Population Growth: Nowadays, population is constantly growing so the demand for
FMCG grows.

Threats

● Highly competitive: Unilever competes with other huge companies like P&G and
Nestlé and local companies that try to dominate every market.
● Retailer’s products: Increasing popularity in retailer’s own brands.
● Political situation: Nonstable political situation in some emerging countries.

Unilever has been impacted by the advance in information technology and market
expansion:

● Market Expansion: Globalization has facilitated Unilever's expansion into new

markets. By leveraging economies of scale and cross-border operations, Unilever
 has penetrated emerging markets such as India, China, and Brazil, tapping into the
growing middle-class consumer base.
● Supply Chain Optimization: Globalization has led Unilever to streamline its supply
chain, sourcing raw materials from diverse geographical locations and optimizing
manufacturing processes. This has enabled Unilever to reduce costs and enhance
efficiency in its global operations.
● Cultural Adaptation: Unilever's global presence necessitates cultural adaptation.
Through localization strategies, Unilever tailors its products and marketing
campaigns to resonate with diverse cultural preferences and consumer behaviors,
fostering brand loyalty across different regions.

In the 1930s, Unilever acquired the United Africa Company. During the second half of the
20th century, the company increasingly diversified from being a maker of products made of
oils and fats and expanded its operations worldwide. It has made numerous corporate
acquisitions, including Lipton (1971), Brooke Bond (1984), Pond's (1987), Hellmann's
(2000), Ben & Jerry's (2000), Slim Fast (2000), Knorr (2000), Alberto Culver (2010), Dollar
Shave Club (2016), and Pukka Herbs (2017). Unilever divested its specialty chemicals
businesses to Imperial Chemical Industries in 1997. In the 2010s, under the leadership
of Paul Polman, the company gradually shifted its focus towards health and beauty brands
and away from food brands that showed slow growth.

Unilever has adapted several market Entry Modes:

● Joint Ventures: Unilever often enters new markets through joint ventures with local
partners. This allows Unilever to leverage the partner's knowledge of the local market
and regulatory landscape while sharing risks and resources.
● Acquisitions: Unilever has pursued acquisitions to enter new markets or strengthen
its presence in existing ones. For instance, the acquisition of Ben & Jerry's and Dollar
Shave Club enabled Unilever to diversify its product portfolio and access new
consumer segments.
● Franchising: In some markets, Unilever utilizes franchising as a market entry mode,
allowing local entrepreneurs to operate Unilever-branded outlets while adhering to
standardized operating procedures and quality standards.

Unilever has become a transnational company in the most basic sense: we think globally as
well as act locally. The very nature of our products requires proximity to local markets;
economies of scale in certain functions justify several head-office departments; and the
need to benefit from everybody’s creativity and experience makes a sophisticated means of
transferring information across our organization highly desirable. All these factors led to our
present structure: a matrix of individual managers around the world who nonetheless share
a common vision and understanding of corporate strategy.

Unilever’s organizational structure has developed, at least to some extent, through trial and
error, it still have a consistent and long-standing policy when it comes to one thing: the
importance of managing people rather than simply analyzing problems.
 ● Decentralized Structure: Unilever operates with a decentralized organizational
structure, dividing its operations into multiple geographic regions or product
categories. This structure allows for localized decision-making and agility in
responding to market dynamics.
● Matrix Organization: Unilever employs a matrix organizational structure, combining
functional and divisional structures. This enables cross-functional collaboration and
resource sharing while maintaining focus on specific product categories or
geographical markets.
● Global Integration: Despite its decentralized structure, Unilever emphasizes global
integration through standardized processes, shared technologies, and global
branding strategies. This ensures consistency in product quality and brand identity
across diverse markets.

Questions:
1. How has globalization influenced Unilever's market expansion strategies and
product portfolio diversification? (5 marks)
2. What are the advantages and disadvantages of Unilever's chosen market entry
modes (joint ventures, acquisitions, franchising) in different geographical regions?
(10 marks)
3. How does Unilever's organizational architecture facilitate agility and innovation in
response to changing market dynamics? (10 marks)
4. What challenges does Unilever face in maintaining cultural adaptation and brand
consistency across its global operations? (10 marks)
5. Considering the evolving consumer preferences and sustainability concerns, how
should Unilever adapt its globalization strategies and organizational architecture in
the future? (5 marks)

Answers
1. How has globalization influenced Unilever's market expansion strategies and
product portfolio diversification? (5 marks)

Globalization has significantly impacted Unilever's market expansion strategies and product
portfolio diversification in several ways:

Market Expansion: Globalization has facilitated Unilever's expansion into new markets. By
leveraging economies of scale and cross-border operations, Unilever has penetrated emerging
markets such as India, China, and Brazil, tapping into the growing middle-class consumer base.

Supply Chain Optimization: Globalization has led Unilever to streamline its supply chain,
sourcing raw materials from diverse geographical locations and optimizing manufacturing
processes. This has enabled Unilever to reduce costs and enhance efficiency in its global
operations.
Diversification: Globalization has facilitated Unilever's diversification of its product
portfolio. Through acquisitions and strategic partnerships, Unilever has been able to expand
beyond its traditional product lines of oils, fats, and personal care products into new
categories such as food, beverages, and health products. For example, acquisitions like Ben
& Jerry's and Dollar Shave Club have enabled Unilever to access new consumer segments
and capitalize on emerging trends.
Access to Resources: Globalization has provided Unilever with access to diverse resources,
including raw materials, talent, and technology, from different parts of the world. This has
enabled Unilever to optimize its supply chain, reduce costs, and enhance efficiency in its
global operations.

The latest market trends are moving in three directions, and each will require a different
approach of some sort in the future.

● First, there is what one might call “global fast food”—the hamburger, fried chicken,
and certain soft drinks, for example. How far or how fast globalization of such popular
Western products will go is not yet clear. The much-publicized launch of the
hamburger in Moscow and the record-breaking popularity of fried chicken in Tokyo
may or may not be the beginning of a trend. In this particular instance, perhaps Andy
Warhol was right when he said that progress is not always good for food.
● Second, there is international food. Such food is common in one country but also
transferable to others. In the United Kingdom, Indian, Chinese, French, and Italian
foods are good current examples. In addition, the popularity of Lebanese, Mexican,
and other types of meals seems to be on the rise.
● Third, there is national food. Again, in the United Kingdom, steak and kidney pie,
Yorkshire pudding, and the banger for breakfast all represent typically British food.

While we don’t know what the future holds, we are pretty much certain that Unilever is here
to stay and dominate, doing right by the people and planet. Once successfully introducing its
product in several markets, Unilever expands its success brand to many other markets and starts
to compete globally.

2. What are the advantages and disadvantages of Unilever's chosen market entry
modes (joint ventures, acquisitions, franchising) in different geographical
regions? (10 marks)

The company has improved its position because the new strategic groups are more in line with
identified consumer needs. In geographic terms, we continue to rely on the knowledge of our
operating companies to judge what product expertise to use in their local markets. In short, we
now have more unity and can also make better use of the many and various opportunities
offered by diversity.

the Board should be in keeping with the size of Unilever, its strategy, portfolio, consumer base,
culture, geographical spread and its status as a listed company and have sufficient
understanding of the markets and business where Unilever is active in order to understand the
key trends and developments relevant for Unilever.

Globalization has profoundly impacted Unilever's market expansion strategies and product
portfolio diversification.

Strategy Advantages Disadvantages

Joint ● Access to local partner's knowledge
Ventures: of the market and regulatory
landscape.
● Sharing risks and resources,
reducing financial burden.
● Ability to navigate complex local
regulations and cultural nuances.
Acquisitions ● Rapid market entry and expansion.
: ● Access to established distribution
networks, brands, and customer
base.
● Potential for synergies and
economies of scale.
Franchising: ● Low capital investment and
overhead costs.
● Rapid scalability and market
penetration.
● Local entrepreneurs' commitment
to operational excellence.
● Potential conflicts and
differences in strategic direction
with local partners.
● Limited control over decision-
making and operations.
● Difficulty in maintaining
consistent brand image and
quality standards.
● High acquisition costs and
integration challenges.
● Cultural differences and
resistance from employees.
● Risk of overpaying or acquiring
underperforming assets.
● Lack of direct control over
franchise operations.
● Dependency on franchisees'
performance and adherence to
brand standards.
● Risk of brand dilution or
inconsistency due to varying
quality standards.

3. How does Unilever's organizational architecture facilitate agility and innovation

in response to changing market dynamics? (10 marks)

Unilever's decentralized structure enables localized decision-making, fostering agility in

responding to market dynamics. By dividing operations into geographic regions or product
categories, Unilever can adapt strategies and tactics based on regional or product-specific
requirements.

Unilever’s organizational structure has developed, at least to some extent, through trial and
error, it still have a consistent and long-standing policy when it comes to one thing: the
importance of managing people rather than simply analyzing problems.

Unilever's organizational architecture fosters agility and innovation through several key
elements:
•Decentralized Structure: Unilever operates with a decentralized organizational structure,
dividing its operations into multiple geographic regions or product categories, Unilever
operates with a decentralized organizational structure, dividing its operations into multiple
geographic regions or product categories. This structure allows for localized decision-making
and agility in responding to market dynamics.

•Matrix Organization: Unilever employs a matrix organizational structure, combining

functional and divisional structures. This enables cross-functional collaboration and resource
sharing while maintaining focus on specific product categories or geographical markets.

•Global Integration: Despite its decentralized structure, Unilever emphasizes global

integration through standardized processes, shared technologies, and global branding
strategies. This ensures consistency in product quality and brand identity across diverse
markets.

•Agile Processes: Unilever embraces agile processes and methodologies, such as design
thinking and lean innovation, to foster a culture of experimentation, rapid prototyping, and
iterative product development. This approach enables Unilever to introduce new products and
innovations more quickly and efficiently.

•People-Centric Approach: Unilever places a strong emphasis on managing people rather

than solely analyzing problems. By empowering employees, fostering a culture of creativity
and collaboration, and investing in talent development, Unilever cultivates a workforce that is
agile, innovative, and responsive to changing market dynamics.

4. What challenges does Unilever face in maintaining cultural adaptation and brand
consistency across its global operations? (10 marks)

Maintaining cultural adaptation and brand consistency across global operations presents
several challenges for Unilever. Firstly, diverse cultural preferences and consumer behaviors
necessitate tailored products and marketing strategies, requiring significant investment in
market research and localization efforts. Secondly, ensuring consistent brand messaging and
identity across diverse regions while accommodating local nuances and preferences can be
challenging.

Despite Unilever's efforts to adapt to diverse cultural contexts, maintaining cultural adaptation
and brand consistency across its global operations presents several challenges:

● Cultural Diversity: Unilever operates in diverse cultural contexts, each with its own
language, customs, and consumer preferences. Adapting products, marketing
strategies, and messaging to resonate with local cultures while maintaining a
consistent brand identity can be challenging.
● Communication and Coordination: Ensuring effective communication and
coordination across geographically dispersed teams is essential for aligning global
objectives with local execution. Language barriers, time zone differences, and
cultural misunderstandings can hinder collaboration and consistency.
 ● Brand Dilution: The proliferation of sub-brands, line extensions, and localized
variants can dilute the core brand identity and erode brand equity over time.
Balancing the need for innovation and customization with the imperative of brand
consistency requires careful management.
● Regulatory Compliance: Navigating complex regulatory environments and cultural
sensitivities in different markets requires a nuanced understanding of local laws,
norms, and ethical standards. Failure to comply with regulatory requirements or
address cultural sensitivities can damage brand reputation and undermine consumer
trust.
● Competitive Pressures: Intense competition from global rivals and local challengers
compels Unilever to continuously innovate and differentiate its offerings while
staying true to its brand values. Maintaining brand relevance and consumer loyalty
amidst competitive pressures is a perpetual challenge.
Navigating the transition to remote work presents a myriad of challenges, requiring strategic
and innovative solutions to ensure productivity and collaboration within the organization.
Challenges:
● Maintaining team cohesion and morale
● Overcoming communication barriers
● Balancing work and personal life
● Ensuring data security
● Managing performance and accountability

Additionally, providing resources for mental health support and fostering a culture of trust and
autonomy can help employees navigate the blurred boundaries between work and personal life.
Finally, Unilever must address the challenges of managing a diverse workforce, effective
leadership, technological advancements in HR functions, and legal and political aspects in the
globalized environment.

5. Considering the evolving consumer preferences and sustainability concerns, how

should Unilever adapt its globalization strategies and organizational architecture
in the future? (5 marks)

Unilever faces several challenges as a result of globalization. Unilever's success in navigating

the complexities of globalization lies in its ability to adapt market entry modes, organizational
architecture, and strategies to diverse geographical and cultural contexts. By fostering global
integration while embracing local relevance, Unilever continues to thrive in the competitive
consumer goods industry.

Considering the sustainability strategy and vision of unilever, unilever adapts the following :
that they have a long tradition of being a responsible and pioneering business. It goes back to
the days of our founders, including William Lever, who launched one of the world’s first
purposeful brands, Sunlight Soap, more than 100 years ago. And it is at the heart of how we
run our company today. They also strive to do more good for our planet and our society – not
just less harm. We want to act on the social and environmental issues facing the world and we
want to enhance people’s lives with our innovative, sustainable and high-quality products.

Unilever must strategically refine its globalization strategies and organizational architecture.
Central to this adaptation is the imperative to prioritize sustainable practices throughout its
value chain. Unilever should rigorously source raw materials responsibly, emphasizing ethical
practices and environmental stewardship. This entails close collaboration with suppliers to
ensure adherence to sustainability standards and the promotion of sustainable agricultural
practices. Additionally, Unilever should invest in product innovation, focusing on developing
and reformulating offerings to align with consumer demand for healthier and more
environmentally friendly options. Leveraging digital technologies and data-driven insights will
be crucial in understanding consumer preferences and behavior, facilitating personalized
marketing strategies and enhancing online engagement. Moreover, Unilever should foster a
culture of sustainability and innovation across its organization, empowering employees with
the necessary skills and knowledge to drive sustainability initiatives effectively. By embracing
these strategies, Unilever can navigate the complexities of evolving consumer preferences and
sustainability concerns, driving long-term growth and value creation while contributing to a
more sustainable future.

To address evolving consumer preferences and sustainability concerns, Unilever should

consider the following strategies:
● Further emphasize innovation in sustainable product development and eco-friendly
packaging to align with consumer demand for environmentally responsible products.
● Enhance supply chain transparency and ethical sourcing practices to meet increasing
consumer expectations regarding corporate social responsibility.
● Invest in digitalization and e-commerce capabilities to capitalize on the growing trend
of online shopping and reach consumers directly.
● Continuously refine organizational architecture to foster agility and responsiveness to
dynamic market conditions while maintaining global integration and brand
consistency.
● Strengthen partnerships with local communities and NGOs to address social and
environmental issues, demonstrating a commitment to sustainable business practices
and enhancing brand reputation.