Unilever’s New Global Strategy Competing through

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Unilever’sNew Global Strategy: Competing through Sustainability

CentralIssues and Decisions Facing the Firm

CriticalIssues

First,the expected sales growths were among the lowest in the businesshistory and continue to slow. Moreover, there are no prospects in thecoming year. Secondly, the results come in the middle implementingUSLP a transformational strategy (Bartlett, 2016). Some parts of theorganization have not fully embraced the initiatives. The CEOdistress raises more questions to the concerned stakeholders.Furthermore, another central concern was the failure to meet some ofits key targets earlier set. Lastly, the dilemma whether to changeand initiate newer innovative ideas to sustain the positive returns.

Decision

Themajor decision facing in the next Five years is the company has tomake bold decisions whether to implement newer innovative changes inthe earlier set goals of USLP and replace. Also, re-organize theentire business operations and department to conform to the set goalsas some parts of the organizations have not embraced USLPinitiatives.

SituationAnalysis Depicted In the Case

Strategizingcorrectly for a company has proved critical for businesses that planto realize their business goals effectively, and Unilever case is noexception. Businesses, therefore, are compelled to review theirbusiness environment thoroughly. It enables it to make informeddecisions that provide the synergy enabling it to realize setbusiness goals and objectives on the stated time frame. Such businessenvironment analysis would also help businesses to monitor andevaluate themselves. It enables businesses to know whether they areon track to realize their set business goals and objectives or not.That in the event the business is going astray from the set goals,contingency business plans can be executed on time to help channelthe business back on track. Such acts avoid wastage of time andresources, thus, proves paramount for businesses to conduct athorough analysis of the business environment. Also, the presentglobalized business world has led to increased competition from localand international business firms. Hence, reviewing the businessenvironment help make informed strategies that benefit the concernedstakeholders. An analysis of Unilever case external environment woulduse Porter’s Five Forces Model. Value Chain Analysis, on the otherhand, would be used for the internal environment and finally, theStrategic Analysis would consider the organizational structure, goal,PM scope and competitive emphasis.

Externalanalysis

Porter’sFive Forces Model

NewEntrant Threat

Inthe contemporary times, globalization has led to the development ofglobal culture from businesses. It is whether involved in themanufacturing of goods or provision of services. The globalsustainable concerns such as issues of climate change, global warmingand women empowerment through affirmative action’s measures.Furthermore, global health care concerns among others dominate theglobal concern not only in the business world but also another sectorin the society. Consumers presently are equally informed regardingdecision-making. The fact has made companies including the Unileverto establish business strategies such as the USLP that address theconcerns. Many businesses have implemented such strategies throughthe Corporate Social Responsibility (CSR) departments. They engage indifferent actions that range from environmental conservation andprotection to education strategies among others that intend toportray the company in the positive limelight in the global contextand interests. However, it is imperative to note that Unilever is thefirst organization to use sustainability as a strategy to realize itsbusiness goals initiated by CEO Paul Polman. Unilever, however,created a new role led by Keith Weed that combined the role of ChiefMarketing Officer (CMO) with the responsibility for sustainabilityand communications found on the Unilever Leadership Executive (ULE).Unilever is a bigger and respected global company that sustains itsbusiness products through innovation. Also, research of customersneeds in formulation and branding of its products. It mentored manybusinesses that have used its strategies in the business world. Aftera year of implementing the USLP strategy, many people in the businessworld were aware of Unilever USLP strategy. It presents a possibilityof many businesses including Unilever competitors to replicate andcopy the strategies that increase the competition for the business(Bartlett &amp Ghoshal, 2014). The implementation of the USLPstrategy would require massive investments that would touch on allthe sectors in the organization. Comparing new entrants in use of thestrategy, Unilever would emerge the winner over the competitors. Itis because of its strong reputation and plan resulting in specifictailor-made goals and targets that exceed 50. The experience inimplementing the USLP strategy places it a head of new entrants inusing the sustainability strategy. It is due to its bold leadershipdecision and transformation actions. The entrance of new playersusing the strategy would give Unilever a threat over a short period,but it has the upper hand in overcoming the challenges.

BuyerPower

Theworld is presently described as a global village because of the easeto access information and transacts business with ease. It is due tothe technological enhancements and innovation that have shaped theglobal culture. Unilever buyers mostly come from developed world butalso the emerging markets termed as the engine of its growth. Globalconsumers are empowered regarding decision-making in purchasingproducts. Research indicates that products that take concern of theglobal issues have higher chances of being preferred when compared toproducts that do not. It indicates the reasons many business entitieshave incorporated CSR in the contemporary times. It creates apositive image among its markets and consumers. It is among thefactors that buyers consider before making a decision to buy aproduct or service. Sustainability as a strategy gives Unilever along-term option that would result in many benefits and save oncosts, For example, marketing because it focuses on building a futureand sustainable consumer base in the longer period. For Unilever, thestrategy provides good potential for mining long-term businessbenefits. The bargaining power of buyers, thus, is high because manybusinesses and in particular, those that offer similar products(competitors) have embraced the element of sustainability noted inCSR though not as a Global strategy as noted in the Unilever’scase.

SupplierPower

Itis determined by the relationship between the suppliers and thecompany. Unilever has put up measures that determine the supplier itengages in the business. For example, in its analysis of themanufacturing activities, it revealed that the suppliers constituted21% of the CHG. Unilever, hence, laid out strategies to half thefootprint through strategies. That touched not only on suppliers butalso consumers and its manufacturing activities. For example, throughits strategy of collaborating for change by establishing newerpartnerships, it led to establishing of “partner to win program.”It resulted in the signing of agreements with suppliers linked tosustainable sourcing. The introduction of such measures reduced thenumber of suppliers. Only the suppliers that engaged in sustainablepractices were sourced. The reduced number of suppliers through thenewer requirements of sustainable sourcing, thus, increased supplierpower making it high. However, due to the extensive nature ofUnilever business globally, many suppliers would be stimulated toconform to the newer requirements to stay in business. And, thus inthe longer period, the power of the suppliers would be reduced.However, presently suppliers have a higher power to drive up prices.

Threatof Substitution

Itis affected by the ability of the customers to find a different wayof doing what Unilever does or satisfy the same needs of itscustomers. Unilever main products are broadly categorized in threethat include the food products, personal care, and home products.There are many similar products in the market that compete with theproducts manufactured by Unilever. Moreover, the companies makingsuch products have recognized the need for sustainability in theiraction in particular related to environment, health and waterconcerns among others. They have, thus, initiated activities tocreate a good image. However, most have not approached it from thesame angle as Unilever who have opted it among their strategies tomeet their business goals. If consumer purchasing psychology is onlyto take a product from the company has show concern for globalchallenges in the sustainability issues, they would have a lot ofchoices. However, if their purchasing psychology is to relate to aproduct with long-term solution and strategy to global environmentconcerns among others, they would prefer Unilever. Currently,Unilever would find it hard to get an advantage over other businesscompanies that make similar products and concerned with the globalsustainability aspects. Also, Unilever primary market includesdeveloped and emerging markets that witnessed intense competition.Alternatively, pricing is another factor that determines consumerspurchasing psychology. Engaging, therefore, in sustainable conceptsthus does not guarantee assurance from the customers in purchasing ofa product. For example, most of the emerging markets that Unileverhas relied on for its business growth and expansion has weakereconomies when compared to developed countries. The purchasing power,thus, varies in the two market segment making pricing become a keyfactor in determining purchase. Therefore, the threat for substituteproduct is high for Unilever products despite its USLP initiative.

RivalryIntensity

Therival intensity is high due to the many business companies thatproduce products that Unilever does. Also, many of such companiesactively engage in sustainable action noted mostly through the CSRdepartments. Among its strong competitors include Procter &ampGamble, McDonald`s, Avon Products and Cadbury among others. Itresults in the high-intensity rivalry for Unilever Company in bothdeveloped and emerging markets.

Overall,it is a very competitive industry and Unilever strategy in the USLPmight give it a competitive advantage. They presently can maintainits culture of the USLP and products despite the higher bargainingpower of buyers and suppliers. Though, supplier’s power is expectedto reduce shortly as most try to adapt and conform to the newerrequirements as stated in the USLP agreements. Unilever, thus, canuse differentiation strategy to enhance competitiveness on productsand ensure they communicate that sustainability is among theiradopted strategy and not just a CSR PR event as most competitors do.Also, Unilever can use overall cost leadership strategy to enhancecompetitiveness on price.

Macroenvironment Trends (PESTEL Analysis)

PESTELAnalysis

PESTEL

Trend of the PEST

Opportunity or

Threat?

Political

-Government policies and regulations on the manufacturing Industry and sustainability

– Local tax laws incentives on sustainability

-Opportunity

-Opportunity

Economic

-Depressed global economy growth in developed and emerging markets

-Emerging markets

-Threat

-Opportunity

Sociocultural

-People embracing sustainability actions

-Informed consumers about benefits of sustainability

-Opportunity

-Opportunity

Technological

-Technological innovation ( repackaging of products production chain)

-Opportunity

Internalanalysis

ValueChain Analysis

InboundLogistic and Outbound Logistic

Itis made up of primary and support activities creating customer value.It allows identification of strengths and weakness of the business.Inbound logistics, marketing, and sales, customer service, outboundlogistic as well as operations constitute the primary activities.Inbound activities involve the movement of raw materials into thecompany. Unilever has initiated changes in its USLP that haveimpacted suppliers providing it with raw materials. In the short-term, they might have challenges with inbound logistic but they arein a position to sustain their operations. They have actively engagedin strategies that enhance the suppliers of raw materials byestablishing corporations that enhance the goals set out in the USLPprograms. The vast experience places it well prepared for logisticalmanagement reducing challenges related to inbound logistics. Thesuppliers of raw materials to the business also are aware of globalsustainable concerns. The Inbound logistic, thus, would have minimumchallenges. On the other hand, the outbound logistic would also bewell handled because Unilever has enormous experience. Sustainabilityissue determines the global consumption culture. And, thus, Unileveris well placed as a pioneer in USLP programs. It is because of thesustainability concerns and the numerous activities it involvesitself. The two factors, thus, would not give much pressure onUnilever USLP strategy.

Operations

Theactual transformation of raw materials into different product entailsthe operations processes. The process is designed according to theUSLP. It led to the formation of the Unilever Leadership Executive(ULE) mandated to execute USLP strategy. However, from the analysisof the impact and targeted goals, USLP was off-target on the two keyissues. Unilever, thus, can maintain its operation processes becauseof the positive indications. However, it also needs to adjust andreview the few operations that were off-target. Initiate operationsmeasures that ensure that departments that were yet to implement theUSLP strategies do so to create uniformity. For Example, through theinitiatives such as “USLP Refresh” and “Crafting Brands forLife” enhance operation processes.

Marketingand sales

Marketingis among the key reasons that Unilever is a global business leader.Business built on USLP impacted the marketing and sales part of thebusiness greatly. The marketing was linked with the sustainabilityprograms noted in the combined role of Chief Marketing Officer (CMO).The CMO also would coordinate and implement strategies that enhancethe USLP. The department initiated internal and external programs toenhance marketing and link it with the USLP concept. For example,CraftingBrands for Lifeprogram initiated by senior Vice president for marketing MarcMathieu. The department also designed workshops that tried to empowerover 6000 marketers and how brands were linked to USLP. However, themarketing team also recognized challenges in linking all the brandsto the USLP. For example, Axe. In conclusion, the company should keepits philosophy of CB4L.

CustomerService

Thecustomer service of Unilever has changed to finding the truth andsharing it with customers as opposed to the creation of a myth andtelling it. It led to changes geared towards developing brand lovefrom the customers, enhance the quality of the products andcommunication with the customers. The strategies, hence, were linkedto the USLP. It has led to the development of diverse customerservice needs in the globe to cater for the different niche ofcustomers linking the actions to the USLP.

Supportactivitiesinclude mostly the Human resource department, procurement, firminfrastructure and technological development. Unilever recognizesand treats all the employees with respect whether involved in theprimary or support activities departments. The USLP strategy isimplemented across the entire business. Each employee has a role toplay to realize the desired business goals that conform to the USLPprograms.

BuildingBlock Analysis

Productinnovation-The innovation on Unilever products is evident. For example, theyhave ventured on research to empower suppliers and otherstakeholder’s son sustainable methods of production. They havetaken risks including establishing sustainable funds to encourageinnovation.

Responsivenessto Customer-They focus on the quality of their service, so their commitment is toprovide a comfortable products in home, personal and nutrition thatare sustainably produced to protect their customer’s interest inthe long-term.

Quality–Thequality of Unilever products is uncompromised. They use high qualityingredients sustainably produced across their entire productionprocesses.

Efficiency-Unilever has a high efficiency sustainable operation method.

Overall,Unilever has a competitive advantage due to its marketing strategythat has adapted the USLP concepts in the branding and strategiesemployed. It shows higher chances of success in the globalizedbusiness environment where it operates. Consumers in many parts arealso empowered with sustainability concepts and, hence, reward suchcompanies. Those that actively try to resolve global concerns amongtheir strategies and not merely PR action as noted in some businessesthrough the CSR activities. However, they have to design severalmarketing strategies that reciprocate to the diverse markets in theUSLP strategy. They should develop global standards but alsoencourage local custom made initiatives that conform to the USLPstrategy.

VRIOquestion framework:

RegardingValue, Unilever can exploit the opportunity as the pioneer inimplementing the USLP. It is using it as a strategy, unlike mostcompetitors that use it as CSR to enhance PR. Rarity– Thecontrol of the resources is not in the hand of a few. The new CEOshifted the position and shareholders also have a say in the company.The control of the USLP, however, is in the hand of the ChiefSustainability Officer (CSO) but they have put up measures that touchon every department of the business and contributions from members.Imitability– of the USLP strategy is difficult but possible.However, it entails serious changes and reforms that might affect thefinancial and operational activities of any firm trying to imitateUnilever’s USLP strategy. Organization– Unilever isorganized and has already implemented and initiated the USLP strategyto enhance its business objectives.

Organization

Value

Rarity

Imitability

Exploited by Organization

Implication for Competitiveness

Solid financial ground

Yes

No

No

Yes

Competitive uniformity

Highly performance in the world

Yes

No

Yes

Yes

Competitive advantage

Customer focus

Yes

No

No

Yes

Sustainable competitive advantage

Effective managerial ability

Yes

Yes

Yes

Yes

Stronger competitive advantage

High quality product that is affordable

Yes

No

No

Yes

Competitive advantage

StrategicAnalysis

Value-Provide a high quality product in nutrition, home and personal careusing sustainable strategies that satisfy customers.

Mission-Have positive effect in society by addressing sustainable humanityconcerns as a business strategy.

Vision-Provide quality products using sustainability strategy

Goal’sanalysis

Thegoal is clear, that is, competing through Sustainability. It hasdeveloped specific goals in the USLP that touch on health,environment, and livelihoods to be realized before 2020.

Size-relatedgoal-Implement sustainable strategies across all its operationsinternationally

Competition-relatedgoal-Become a leader in companies that use sustainability as key strategyto realize business goals

CompetitiveEmphasis: Each action has emphasized on the competitive nature of theUSLP that maintains high standards in the products.

OrganizationStructures

TheUnilever corporate organization chart depicts the functionalorganizational structure. It has numerous advantages such asefficient decision-making process effective use of managerial andtechnical talents good at control within each of the functionalareas and to enhance its coordination and career paths andprofessional development in specialized areas are facilitated (Desset al., 2014).It requires effective communication strategiesbetween and among different levels. Failure results in uncoordinatedactivities creating challenges. Unilever has created and incorporatedthe strategy in its organization structure through the CSO mandatedwith coordination of the USLP strategies. The creation of a specificadministrative center in the structure has made it easy for thebusiness to implement strategies based on the USLP model. Unileverhas used the structure for many years that it has been in operation.The introduction of USLP concept only resulted in re-designing thestructure to include the CSO. The clear and distinguished rolesshould eliminate possible communication challenges related to theUSLP strategy.

TheProject Management Scope: The USLP has designed specific, measurableattributes that exceed fifty to be established over a given timeframe (before 2020). There are measures laid to monitor and evaluateif the set goals are on track. It has set tasks as noted in the CSOresponsibilities for leaders, deadlines to be implemented and thecosts to be incurred. It allows the marketing departments to gobeyond their set budget targets and goals in implementing the newermeasures.

AnalysisReport

Inconclusion, USLP would help Unilever meet its business goals in theshort and long-term. It would reduce the supplier power in thelong-term and increase the efficiency of the logistic. The businessis also a pioneer in implementing USLP as a strategy. It has welllaid out competitive advantage enabling it likely overcome possiblerisks and challenges in the implementation of the strategy.

TheImpact analysis of the USLP strategy has also indicated signs of apositive outcome. It has only realized minimal challenges indicatingthat the benefits might be experienced faster than anticipated. Theprimary and support activities are also lined with the goals andobjectives of USLP. The changes introduced by the CEO, hence, wouldbe fruitful for Unilever and might take a little more time before itis fully implemented. Changing behaviors has proved to be challengingas noted in the past successful activities (Qin, 2012). They,however, are optimistic that they shall overcome the challengespresently experienced in the implementation of the USLP strategy.

Firm’sMain Decision Alternatives with Their Pros and Cons

OptionA

Tocompel all the organization division that had not fully embraced theidea of USLP strategy to do so with immediate effect.

TheAdvantages of Option A

First,it would make and bring uniformity in the organization. It enablesthe easier realization of improved business outcomes as all memberswould know the actions to take and at the appropriate time. It wouldeliminate the gaps that exist presently. Secondly, it would enhancecommunication and corporation between the different departments andsections making the realization of stated programs in USLP easier.

TheDisadvantages of Option A

First,it might create tension and possible conflict when employees arecompelled to do something or implement a strategy that they have notfully understood. Secondly, it would portray the leadership andsenior officials responsible for implementing the project negativelyas authoritative that is not part and culture of the Unilever.

OptionB

Establisha team to review and analyze the reason the two key metrics were theoff-target and possible solution to the challenge.

TheAdvantages of Option B

First,it would bring in-depth analysis and revelations that would clearlyexplain why only the two metrics were off-target. It might presentpossibilities that relevant concepts and ideologies were ignored insetting the targets and metrics. Secondly, it would allow theconcerned stakeholders and in particular, employees to contributetheir ideas and views about the entire USLP strategy and thechallenge. It would increase diverse and strong options to choose themost viable solutions.

TheDisadvantages of Option B

First,it would increase the time in which decisions are reached and madewhen all parties are involved in finding a solution. Secondly, itwould halt other productive activities when a team is established andalso when employees participate in the discussion processes.

OptionC

Takeno action to alter the USLP program as initiated because it is gearedtowards long-term success and has already shown indicators ofpositive results through the impact analysis.

TheAdvantages of Option C

First,it would sustain the positive momentum already realized in the impactanalysis that shows the strategy is already picking up enhancingbusiness goals and objectives. Secondly, it would enable analysiswhether the problem results from the globally depressed growthexperienced in both the developed and emerging markets. Moreover, itis important to note that it out performed its competitors.

TheDisadvantages of Option C

First,it might prevent the faster establishment of a problem in the eventthere exists one and when not addressed might result in furtherchallenges for the business. Secondly, it would contravene thephilosophy and ideology of the CEO about problems that believesproblems are opportunities for changes and reforms hence “never towaste a crisis.”

Recommendations

Thereasons why I choose option C rather than B or A is the positivemomentum that the strategy has already shown and the globaldepression noted in all the sectors.

Therecommendations are based on option C a situation that encouragesmaintains the status quo as noted presently:

1. The impact analysis of the USLP strategy to the Unilever businessindicates positive signs that have started to increase positiveresults gradually. It is important to consider that it is still underthe transition process where some members are still grasping theconcepts and ideas of the strategy and, hence, when fully understoodwould further impact positive results and outcomes.

2. The USLP strategy is a long-term sustainable business project,and such projects hardly show and indicate results in the short-term.It, thus, requires patience as an in-depth analysis had already beenestablished by competent professions even before it was implemented. The status quo has to be maintained to give room for initially statedoutcomes to be realized.

3. There is a high possibility that the halted and depressed globalmarket contributed to the limited results and outcomes unlikeanticipated. Both developed and emerging markets performed poorly anindicator that the world economy was experiencing difficulties atlarge and the Unilever case was no exemption.

4. The Unilever cooperate business outperformed its competitorsindicating that it is still on top in the business. The resultsindicate that its competitors equally posted poor results despiteposting the lowest sales growth. Hence, there is no cause for panicand worry.

ImplementationPlan

Basedon the above-given recommendations, the implementations should followsteps by:

Short-termplan: Encourage the CSO to speed up implementation of the strategies inthe USLP across the entire sector in the business and closely monitorthe developments of the strategies by analyzing the metrics and keytargets

Mid-termPlan:Continuous training employees and concerned parties on thesustainable projects and actions that would ensure the transitionprocess are successful and fully understood.

Long-termplan:The CEO to communicate with stakeholders and assure them by givingthem facts about the possible reasons for slow growth. It wouldeliminate possible panic and also help them understand the USLPprograms better.

References

Bartlett,C. A. (2016). “Sustainability.” Boston: Harvard Business School Publishing.

Bartlett,C. A., and Ghoshal, S. (2014). TransnationalManagement: Text, Cases, and Readings in Cross-Border Management (7thed.). Boston, MA: Irwin McGrawHill.

China.Course Syllabus: 2012: 05 (summer).

Dess,G. G., McNamara, G., Lumpkin, G.T., Peridis, T., Weitzner, D., &ampEisner, A. B. (2015). StrategicManagement: Creating Competitive Advantages.McGraw-Hill Education.

Qin,R. (2012). GEB4935: Rightness and correct form: the yiand liof organization in