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Transcript of Unilever
What factors have made it easier for modern companies to operate with a centralized organizational structure?
Under what conditions would you still choose to run a company using a decentralized organizational strategy?
What are the implications of attempting to change a company's corporate structure? What risks are posed by this?
Telecommunications development (global phone calls, the Internet, etc.) allow for easier centralized operation of global companies.
Container transport makes it easy to produce large quantities of a good in one place and ship to other locations.
Air travel allows for executives and managers to move and interact with regional groups more easily
Unilever had "last-mover disadvantage"
Competing companies moved to take advantage of centralized organization and lower production costs before Unilever did.
Unilever's decentralized organizational strategy put them behind the curve relative to competitors
Regionally specialized brands each induced their own overhead costs
Region-based groups, rather than full subsidiaries, are a happy medium
Can adapt products to local markets, while still taking advantage of lower costs resulting from centralized organization
Decentralized structure was unable to keep up with the changing international business environment
“Out of step with a rapidly changing competitive environment.”
Company is geographically dispersed
Environment is unstable
building global brands faster
reducing cost structure
executing product launches at the same time in several national markets
launching more products
Unilever was formed in 1930 as a merger between British soap company Lever Brothers and Dutch margarine producer Margarine Unie
One of the first multinational corporations
Produces a wide range of branded products, especially food, personal care products, and detergents
Brands include Ben & Jerry's, Dove, AXE, Ragu, and Lipton
Operates in 190 countries with 400 brands
Generates over $50 billion in sales each year ($51 billion in 2012)
Managers need to periodically assess their organizational structure
Examine for inefficiencies
"How could we perform/communicate better?"
Be conscious of the power of a global brand
Worldwide recognition for travelers means a worldwide customer base
Hill, Charles W. L. "The Ecuadorean Rose Industry." International Business. New York: McGraw-Hill Professional, 2012. N. pag. Print.
Unilever Structure & Design. Rep. N.p., n.d. Web. 28 Oct. 2013. <http://www.authorstream.com/Presentation/aSGuest134942-1418403-unilever-structure-design/>.
Unilever USA. Unilever USA, n.d. Web. 28 Oct. 2013. <http://www.unileverusa.com>.
"Unilever." Wikipedia. Wikimedia Foundation, 25 Oct. 2013. <http://en.wikipedia.org/wiki/Unilever>.
Solutions by Unilever
Developed region-based groups
Decreased the time it took to develop and introduce new products and operating costs
Centralization helped improve coordination between divisions and eliminate unprofitable activities
Cut down the number of brands
From 1,600 to just 400
Focus on the branding of brands better, be able develop and market the products on a global scale.
Simplified the categorization of their products into two global product divisions
Jordan Maddox, Lisa Ito, Alex Kordas, Sohee Kim, Emma Woods
Focus more on researching changes in the world, and how other companies are adapting with their organizational structure
Allow Unilever to quickly adapt its own structure and avoid falling behind
Increase communication between individual divisions