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UNILEVER GLOBAL STRATEGY CASE

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Nik Ricker

on 22 March 2017

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Transcript of UNILEVER GLOBAL STRATEGY CASE

UNILEVER'S NEW GLOBAL STRATEGY:
Competing Through Sustainability
By: Nik, Peter, Norman, Xiaolei
Background
Issue Statement
Environmental
Analysis
SWOT
Strengths
Rich history
Operates a wide selection of brands, a total of 400 brands. Ex: Dove, AXE, Hellmanns, Lipton,Mazola
Part of the UN Post-2015 development agenda
Taking leadership roles
Partnered with NGOs such as Oxfam, Unicef
Employee Engagement is at 75%. Higher than its competition
Brand workshops available for all brand leaders to help build “brand imprint” throughout company brands.
Unilever recorded its fifth consecutive year of top- and bottom-line growth
Cost savings programs had lifted core operating margins from 14.1% to 14.5%
Investors had been rewarded with an 18% rise in total shareholder return
Strong employee engagement scores very strong at 75%, well ahead of the 63% level of 2009.
Third-place position on LinkedIn’s list of “The World’s Most In- Demand Employers in 2014
Included in the Dow Jones Sustainability Index
Number one on the 2014 list of “Sustainability Leaders” in GlobeScan’s annual survey of worldwide sustainability experts.
Weaknesses
Opportunities
Continue to improve Unilever’s goal of reducing GHG and water usage
Continue improving sustainability goals
Have to leverage its scale, its influence, and its resources to bring about a market transformation and engage other companies to take broader responsibility.
How to source 100% of its palm oil from certified and traceable sources by 2020?
How to eliminate deforestation worldwide?
How to champion sustainable agriculture and the development of smallholder farmers?
How to improve health and hygiene, particularly for the 2.5 billion people without access to adequate sanitation or safe drinking water?
“Sustainable living brands” accounted for half the company’s growth and had grown at twice the rate of the rest of the business. -> need more in brand mix
Threats
PESTE
Political
Part of UN post-2015 development agenda
Foreign exchange risks
Employment laws in various countries

Economical
Developed markets are stalling
Emerging markets are slowing down
Poor economy
Not predicting significant improvement in market conditions in 2015
Increased affluence in developing countries

Socio-Cultural
Partnership with NGOs will help population in need
Consumer use accounted for 68% of Unilever’s GHG impact and 85% of its water footprint. the majority of both off-target metrics was due to consumers’ use of hot water for bathing, hair washing, and laundry.
Takes along time to break consumer habits
Technological
Growing customer technology usage in developing countries
Any bad publicity quickly heard through social media

Environmental
Sustainable program will reduce environmental impact
Increased concern over climate change and importance of CSR
Concern about the business environment, characterizing it as “volatile and complex . . . with more headwinds than tailwinds.”

Porter's 5 Forces
Competition from Rivals
- Low switching costs
- High aggressiveness of firms
- A lot of firms
- Lots of diversity in the market
- High exit barriers
Threat Of New Entrants
- Low switching costs
- High cost of brand development
- High economies of scale
- Large industry size
Bargaining Power Of Buyers
- Low switching costs
- High quality of information
- Small size of individual buyers
Threat of Substitutes
- Low switching costs
- Low substitute availability
- Low performance to price ratio of substitutes
- Moderate size of individual suppliers
- Moderate population of suppliers
- Moderate overall supply

Bargaining Power of Suppliers
BCG Matrix
Low
High
Low
High
Market Growth Rate
Relative Market Share
Poor economy
Shrinking demand in emerging markets
Developed market stalling
Competitors such as Procter & Gamble
Not predicting significant improvement in market conditions in 2015
Huge undertaking to halve the environmental footprint
Lots of skepticism from media and press such as Marketing Week and Financial Times with the USLP
Concern about the business environment, characterizing it as “volatile and complex . . . with more headwinds than tailwinds.”
Developed markets had stalled and emerging market growth slowed.
“How can Unilever increase a declining sales growth while diversifying the Unilever Sustainable Living Plan throughout the company and minimizing its environmental footprint in regards to internal greenhouse gases and water use?”
2014 Sales growth is at its lowest
2014 revenues were actually down 2.7% from 2013.
2014 stalled stock price
Some brands are harder to rebrand, ex: AXE
Doubt within the company that creating sustainable living brands do not support the large investments
Some within the company view the goals of reducing GHG and water usage as out of reach
USLP not been fully embraced by some parts of the organization.
Significant upfront investments to implement USLP
Unilever was far short of objectives that encompassed its whole value chain, from sourcing to consumer use and disposal
GHG impact per consumer had actually increased 4% since 2010, and water use per consumer had fallen by only 2%.
Polman does not provide earnings guidance or publish full quarterly reports
Within a year, Polman had changed a third of the top 100 executives.
Keith Weed given huge responsibility of the CMO and manager of USLP sustainability strategy
Many objectives and challenges on the agenda
Of Unilever’s top 30 brands, only 11 were classified as “sustainable living brands.”
COSTS
strong global brand
consumer goods company manufacturing and processing products such as beverages and food as well as personal care products and cleaning agents
having a focus on sustainability in line with its Unilever Sustainable Living Plan which seeks to ensure that Unilever business and products feature sustainability as a component

Analysis of Strategic Options
1
1
1
Increase the number of “sustainable living brands” in the portfolio.
PROS
Sustainable brands proven to lead to an increased company growth
Greater overall link between brands portfolio and Unilever goals
Lead to a competitive advantage in the marketplace
Customer’s will have a greater appreciation for Unilever and added brands
Increased attraction and retention of employees
CONS
Significant upfront investment
Hard to configure around certain brands
2
2
2
Build external partnerships that support the USLP
PROS
Shared costs
Shared responsibilities
Greater impact on society
Goals accomplished more quickly
Partner will have specialized resources
CONS
Partner has to have shared views that align with the USLP
Potential disputes
Joint liability
3
3
3
Scale back financial investment
in the USLP

PROS
Decrease overall costs
Able to focus on core product and service of brands
Focus on profit making objectives
CONS
Will not reduce GHG or water usage
Lose touch with the objectives set by Polman
“Green” brands or not so “green” brands will struggle in Unilever’s portfolio
Reduced customer relations
Reduced publicity and company image
4
4
4
Getting the remaining two pillars on track with performance

PROS
Will fully be meeting the USLP
Will reduce the impact of GHG and water usage from consumers
Overall improved efficiencies
CONS
Hard to fix consumer habits
Might take a considerable amount of time
Will not lead to immediate profits
R e c o m m e n d a t i o n s
1.
Increase the number of “sustainable living brands” in the portfolio.

2.
Build external partnerships that support the USLP

3.
Getting the remaining two pillars on track with performance
Next Steps
Evaluation Criteria
Revenue increase
Profit increase
Increased new customers
More sustainable brands in the portfolio
New partnerships that are a benefit
Accomplishing goals by 2020
All pillars on track with performance
Increase the number of “sustainable living brands” in the portfolio
1. Evaluate current brands and their management
2. Eliminate or re-adjust any brands that do not fit the brand portfolio
3. Implement sustainable goals for these brands
4. All managers now held accountable for these goals as well as financial performance
5. Reward managers based on results in achieving these goals
6. Repeat process yearly

Build external partnerships that support the USLP
1. Continue to find partners that have "sustainable reputations"
2. Align businesses with a common goal or objective
3. Create a plan in completing this objective
4. Select certain brands that resonate with plan
5. Market this partnership and the plan
6. Train employee's the same as other party
7. Execute
8. Compensate management based on success
9. Review

Getting the remaining two pillars on track with performance
1. Continue to implement plans to lower GHG such as:
Adding new renewable energy and new factories.
Improving concentration, reformulation, and consumer behaviour.
Reducing GHG from transport, refrigeration, offices, and reduce employee travel
2. Continue to implement plans to lower water usage such as:
New factories in manufacturing process
Easy rinse products, products that use less water
Use less water in agriculture
3. Evaluate any other ways to internally reduce GHG and water usage
4. Evaluate best ways to reduce GHG and water usage during consumer skin cleansing and hair washing
5. Implement these strategies

Summary
Questions
Financial Analysis
Agenda
Video
Background
Issue Statement
Environmental Analysis
SWOT
PESTE
5 Forces
BCG Matrix
Financial Analysis
Strategic Options
Recommendations
Next Steps
Evaluation Criteria
Summary
Questions
Should a company prioritize profits first or the environment first?

“There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
Environmental Analysis
Our Options
Our Decision
Next Steps
Evaluation Criteria
What are your options?
What are Unilever's SWOT's?
Full transcript