CASE STUDY:

UNILEVER
COMPARATIVE
AND COMPETITIVE
ADVANTAGE
 INTRODUCTION
Unilever is a multinational enterprise in the fast-moving consumer Personal
goods (FMCG) industry with its headquarters in Rotterdam, care
Netherlands. In 1929,

Margarine Lever
Unie Brothers Unilever
(British) Cleaning
(Ducth) Products Food
agents

Beverages

Today, Unilever owns 400 brands which include Dove, Lipton,

Vaseline and many more. The firm have its research and production
operations in more than 100 countries and it also export their
products to almost 200 countries.
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Advantages that Unilever posses:

1)Comparative advantages
2)Competitive advantages
3) Location-specific
advantages
These advantages enables Unilever to
navigate threats and opportunities.
 5.4 Unilever has used FDI extensively to internationalize its activities
around the world. What advantages does FDI provide the firm? What
steps Unilever take to ensure its FDI ventures succeed?

Control international Reduce the risk of

operations dealing with outside
partner
Better Quality Control
Loss of autonomy and conflicts of
- Restructured the firm
interests
- Improve the value of expectedly
products
Control and manage
- Advanced technologies
- Increase the autonomy
Market Reach
.
- Allocate market size and target market
- Study and forecast the market
- Diversify the types of products in order
ADVANTAGES
to cater the different needs from consumer

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 Steps Unilever take to ensure its FDI ventures succeed
• Enters the market and expands its market reach
Gaining access • Market access is increasing, the business is growing, and it can help to
to the new expand its profit base.
market • The gain not just directly increase in a market share of specific industry,
but it also increases through access to distinct target consumers group.

• Conduct R&D
Obtaining the • Entered many collaborative ventures to strengthen their R&D
access to • New technologies, raw materials, resources, management skill and
resources cooperation opportunity
• Develop new product

• New resources such as raw materials, cost will be cheaper

• Able produce the products based on the available resources that they own
Reducing cost
of production
• Does not need to spend money to buy the resources from third party
• Low cost, high quality labor force can help to produce the high-quality
products effectively with the lower cost of production
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5.5 what are the roles of comparative and
competitive advantages in Unilever’s
success?

Provide specific examples of natural and

acquired advantages that Unilever uses to
succeed in the global FMCG industry.

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 COMPARATIVE ADVANTAGE
Natural advantages

STRATEGIC LOCATION 1

• Netherlands is well located to Netherlands and the UK are

serve the world and is a key
entry market for continental
Europe
• Expand their market to Europe
with their headquarters placed
in Netherlands
strong locations for R&D due to
the presence of highly
demanding consumers.
2 STRONG LOCATION

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 COMPARATIVE ADVANTAGE
Natural advantages (Part 2)
• UK is one of the world’s leading banking
centers, with an active stock market,
SKILLED LABOR 3 which provides a ready supply of
capital.
Produce more innovative • The ready supply of capital helped by
product than they can abundant food supplies, creating a
situation where natural resources were
produce with their previous plentiful, and increase the market of
labor’s skills and knowledge British manufacturers
in the company.
4 SUPPLY OF CAPITAL

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 COMPARATIVE ADVANTAGE
Natural advantages (Part 3)

STABLE ECONOMICS 5

Benefits in production level

and doesn’t have to worry
about excess production that
cause waste of factor of
production such as labor cost,
resources and etc.

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 COMPETITIVE ADVANTAGE
Acquired advantages

Superior R&D Superior production

Economies of Scale
capability factors
• Have a competitive edge • Lower-cost and superior • The productivity of
over its competitors labor. Unilever increases and
such as improve their • Save cost & producing unit cost fall which can
technology to be more high quality product at a achieve profitability.
innovative in technology same time.
• Provides a platform for • Can use the excess
creativity and capital to focus on R&D.
innovation to flourish in
Unilever

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 COMPETITIVE ADVANTAGE
Acquired advantages (Part 2)

Marketing Capabilities Well- known brand names

• Sense & respond to market • Build customer recognition.
changes such as competitors’ • Easier and less expensive to introduce
moves, technological evolution & new products or test them out before
revolution further invest in them.
• Develop both radical new products
or employ existing products with
new features & attributes to satisfy
both the needs of current
customers & new customers.

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 5.6 Discuss Unilever and its position in the
FMCG industry in terms of the determinants of
national competitiveness.

What are the roles of demand conditions; firm

strategy, structure, and rivalry; factor
conditions; and related and supporting
industries in Unilever’s international success?

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• Unilever has unique position as it is National Competitiveness
located in a prime location for new
technology development, innovation,
supply, labor and financial resources. • R&D in UK and Netherlands, US, China
• Unilever is able to survive is due to and India
internationalization and foreign direct • Major factories in Brazil, China, Indonesia,
investment (FDI) which branches off Mexico, Canada, Ireland and Turkey (low
into competitive advantage and cost, high quality labor, property-related
comparative advantage- able to cost low)
compete internationally and globally.
• Personal care product such as Pond’s, Dove
• Unilever acquire assets beyond its
borders and truly branch out and and Vaseline manufacturing in China
focus on deep distribution channels,
innovative technologies, customer
loyalty and excellent market
capabilities.

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 ROLES OF DETERMINANTS OF NATIONAL COMPETITIVENESS
DEMAND CONDITION
• refers to the nature of home-market
demand for specific products and services
• South Korea-4th largest skincare market-
source of global beauty trends- ‘K-Beauty’
becoming a globally.
• Unilever spent $ 2.7 billion to acquire skin-
care brand Carver Korea in South Korea to
extend its presence in Asia -China and
Japan.
• creates more competition and raises the bar
higher and higher benefiting the market
• Europe-suppliers of food, personal care, and
beauty products-intense rivalry pressures
Unilever to launch new product and improve
existing ones.
• New product Hijab Fresh, a hand and body
lotion specifically developed for Muslim
consumers in Indonesia to evolve into huge
Muslim market.
FIRM STRATEGY,
STRUCTURE AND RIVALRY
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 ROLES OF DETERMINANTS OF NATIONAL COMPETITIVENESS
(PART 2)
FACTOR CONDITIONS
• describe the nation’s resources,
Unilever’s factories that spread
worldwide benefit by different
countries resources
• Unilever’s plant in South Africa benefits
from top advantages in natural
resources, physical infrastructure and
low-cost, high quality labor.
• which refers to presence of clusters of
suppliers, competitors, and a skilled
workforce
• Unilever set its R&D centers in India,
United States, Netherlands, UK and China
which advanced in technology and
knowledge and skills individuals that
require in doing research.
RELATED AND SUPPORTING
INDUSTRIES
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 5.7 In terms of Dunning's eclectic paradigm,
describe the ownership-specific advantages,
location-specific advantages, and
internalization advantages that Unilever holds.

Which of these advantages do you believe has

been most instrumental to the firm's success?
Justify your answer.

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ownership-specific
advantages
- Include proprietary information and
various ownership rights of a company.
(branding, copyright, trademark or
patent rights)
- Thousands of patents, superior R&D
capability, well-known brand names,
customer loyalty, and access to lower-
cost and superior labor through
factories worldwide.
- UK market is highly developed to
ensure demand for Unilever’s products.
location-specific
advantages
- Include natural resources, skilled labor,
low-cost labor, or inexpensive capital.
- Malaysia, Unilever’s palm oil
plantations (margarine and soap’s
production)
- China was the main manufacturing of
Dove, Vaseline
- Lower production cost to strengthen
on their research and development
activities.
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internalization advantages

- The gains from the firm by internalizing foreign-

based manufacturing, distribution to foreign entities.

- Unilever utilizes full range of foreign market entry

strategies, including exporting and foreign direct
investment (FDI).

- Spent $2.7 billion to acquire South Korean skin-care

brand Carver Korea to extend its presence in Asia and
Quala to better target personal and home care
products to Latin America in Colombia.

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THANK YOU!