ASB 4904/5 Strategy in Action Coursework
Introduction
Strategic management is the procedure of goal setting in organizations followed by establishing procedures and objectives for increasing competitive advantage (Ambrosini, et al., 2015). Strategic management within organisations intends to develop the resources and staff to achieve the organisational goals (Analoui & Karami, 2003). The topic of the study is based on the analysis and evaluation of the strategies of Unilever in the UK. Unilever is a consumer goods company based in London that manufactures food, cleaning agents, condiments, beauty products and personal care items (Unilever, 2022).
Strategy
Every valid choice within an enterprise is built on a specific strategy. The efficacy of employees in an organisation is impacted significantly by top management’s poor choices and business plan formulation. The business-level strategy of Unilever in the UK aims for formulating a competitive advantage while providing an ethical value to customers and to emerge as a challenging and distinctive competitor in the UK-based consumer market (Unilever, 2022). The conditions to support the organisational strategy inside functional departments which are HR, Marketing, Research and Development (R&D), and Production are considered to be the centre of the organisational strategy of Unilever, UK. These operational tactics are frequently tried to enhance the efficiency rate of the inter-departmental operations of an organisation.
Employees working in these departments frequently discuss marketing strategy, Human Resource Management (HRM) strategy, as well as R&D strategy. Such plans are required to be aligned with the organisation’s corporate strategies. while trying to formulate a corporate strategy, the managers of Unilever consider the operations in which the company should be involved at the foundations and the process of obtaining a competitive edge in comparison to the rivals. This process involves selecting the group of subsidiary companies and figuring out processes to incorporate those withinside a larger organisational structure.
Performance
Firstly, the organisation is highly efficient in managing its business operations referring to its production and supply chain management. This is evident as the company is operational in 190 nations of the world (Unilever, 2022). Second, the company has a good brand portfolio involving a diversified product range that makes it the default choice of the customers. Third, the firm can execute its corporate strategies of increasing revenues and sales by operating across 270 manufacturing locations globally offering the products to the customers regularly. Fourth, the company faces very highly competitive rivalry from other market operators like P&G along with other substitutes. Fifth, consumers have become more health conscious in the contemporary time as they do not prefer consumable products with sugar and unnecessary chemicals (Unilever, 2020).
Reasons for success
The company has gradually increased its sales revenue over the past ten years. However, due to fierce competition and a change in consumer taste and preferences, the large retail industry has recently been experiencing a poor growth rate. Unilever has a substantial market share in the UK’s and global consumer goods industry (Unilever, 2020). This makes it possible for the business to increase income, providing a solid financial foundation for the business. Thus, the business can finance its awareness-raising marketing initiatives. The company’s inability to educate both present and potential customers about the ingredients and potential chemicals used in the products has an impact on the number of sales. The current market trend of investing in online sales through websites and apps has not been possible for Unilever as it sells through distributors and retailers.
Unilever keeps on innovating its products and processes by not holding onto past profits and by expanding its product line to gain more customers (Lamptey, 2009). The business can profit from promoting its items via social media platforms to draw customers given the rising popularity of the internet. Few customers will choose to purchase at their stores due to the existing low variety. With the lowered marketing efforts and raised consumer awareness of workplace conditions, there is also a risk of diminished and damaged brand awareness.
Company Ownership
Unilever is a public limited company without any individual ownership. The company operates as a joint venture under the holding company Unilever PLC in the UK and N.V. that is the Netherlands (Jones, 2005). The corporate objectives of the organisation and its ownership include helping more than a billion individuals to enhance their overall health as well as mental well-being. Apart from that, enhancing the living conditions of thousands of individuals across its supply chain. finally, deducting the environmental food print and emissions of the products of the entire group by half (Unilever, 2021).
Fitness of objectives with strategy
Unilever has integrated sustainability into its manufacturing DNA by sourcing energy from renewable sources like solar and wind along with utilising waste materials for recycling and repurposing (Kruger, et al., 2017). The company has also used rainwater harvesting techniques in its manufacturing location across India for securing the water supply. This is a valuable sustainability tool used by the company for accomplishing its objectives of reducing emissions and enhancing the livelihoods of people (Unilever, 2021).
Main Body
Porter’s five forces
Bargaining power of buyers
To entice a greater number of consumers, the consumer goods industry has to innovate continuously in terms of the goods and packaging to stay relevant in the marketplace. In this concern sector, the bargaining power of the consumers is very high. Switching to other products is simple for the customer because there is almost no expense involved (Barney & Hesterly, 2010). The customers of Unilever hence have high bargaining power.
Bargaining power of suppliers
In the consumer goods industry, the company’s sales are greatly influenced by the distribution system. All of the raw ingredients and technology needed to manufacture and package the items are provided by the vendors. A very low switching cost is also present. Therefore, there is very little possibility that they will have an impact on prices. The suppliers of Unilever hence have moderate bargaining power.
The threat of new entrants
About 400 brands, including those for toothpaste, cleaning supplies, ice cream, food, water and air purifiers, pet food as well as condiments are owned by Unilever (Statista, 2022). Hence, for Unilever, the risk of new competitors is low to manage than maintaining a big legacy of numerous brands.
Threats of Substitutes
Because of moving between distinct FMCG is quite inexpensive and high market competition, the threat of substitutes becomes more prominent. The concept for differential can be the desired item, cost factor, quality, or packaging standards. despite being a consumer goods organisation, most of their businesses are well-settled, as well as customer-focused (unilever.co.uk, 2022). Unilever can have multiple products within a specific, which is considered another crucial problem. Thus, the company receives moderate to high threats of substitution.
Competitive rivalry
Unilever is a large enterprise in the UK and worldwide that sells numerous goods under different brands worldwide. A significant number of businesses are avoiding the origin of a heavy monopolistic situation as well as promoting healthy competition withinside the UK consumer goods market. The concerned enterprise introduces new items according to the requirements of the customer to stay stable in this market. However, the company faces stiff competition from P&G as its closest rival the overall competitive threat is moderate for Unilever.
PEST Analysis Sandipan
Political
Unilever being a consumer goods company needs to follow the guidelines set by the European Commission as well as by the Royal Society for the Prevention of Accidents (RoSPA) for maintaining product safety. Unilever also needs to consider the guidelines by Food Standard Agency and Medicines and Healthcare products Regulatory Agency (MHRA) for consumer goods, as the company also deals with packaged and processed foods. Thus, sudden changes in these regulatory acts may affect the operational processes of Unilever. In 2019, the UK faced a deficit of 27.6 billion GBP and still recovering from the loss. It also left an impact on the international trade operations of the company (Ditta et al., 2021).
Economical
Customers can buy the products they want rather than just what they need with a stronger economy. Customers have less incentive to buy expensive goods given the UK’s economic downturn caused by the COVID-19 pandemic with Brexit. There is a need for more relatively affordable, superior goods. (Kapetanios and Papailias, 2021). Products supplied by Unilever are directly influenced by consumers. Unilever’s cash flow and profits will suffer if the products aren’t in demand. Fortunately, Unilever operates in several markets, so if one struggles, another might do well. Sadly, the above-mentioned factors leave the company vulnerable to consumer whims and inflation.
Social
Unilever has determined to recognise developing sturdy popularity to manipulate its several brands. They emphasise social in addition to environmental issues. Given that a lot of its merchandise is geared towards private care and well-being, Unilever indicates a top-notch dedication to supporting human beings to stay the lives they deserve at the same time as additionally feeling and searching for attractive. The intention in their complete advertising plan, in particular with Dove, is to assist ladies to experience their fine from the internal out.
Technological
Every day, Unilever introduces new merchandise and sells them online beneath every one of its trademarks. The corporation makes a speciality of improving its virtual advertising and promoting strategies. Furthermore, Unilever has greater automation than its competitors, permitting it to fast repurchase intentions to keep locations (Panmore, 2022). If not, the danger of dropping their reputation, earnings, or cash is that they have got so tough and spent a lot of cash to establish.
Analysis of three key areas displaying Unilever’s capacity to create capabilities to gain a competitive advantage
Production efficiency using technology
To allow trying out operational modifications and track bodily conditions, Unilever PLC is developing virtual replicas of its vegetation making use of information streaming from gadget-ready with sensors. The “virtual twin” technique, which objectives to growth production’s flexibility as well as efficiency, analyses large quantities of information from related gadgets the usage of gadget studying and synthetic intelligence. Dave Penrith, the chief engineer at Unilever, stated, “We have it in (plants that create) mayonnaise, shampoos soap, conditioners, and laundry detergents” (Partners, 2022). The technique is part of the increasing utilization of the large records streams coming from the Internet of Things (IoT), which makes use of embedded gadgets in such things as production systems to transmit records approximately how the system is performing. In the approaching 12 months or so, Unilever will cooperate with Microsoft Corp. to broaden digital representations of dozens of its more or less three hundred international plants (Unilever, 2022). The era allows the Anglo-Dutch employer to make modifications in real-time to optimise productivity, greater as it should be rent materials, and reduce waste from merchandise that does not fulfil great standards. The gadgets add to the cloud real-time facts on temperature, motor speed, and different manufacturing variables. The facts are ingested via way of means of algorithms, which then map out the perfect operational occasions for the usage of superior analytics. On-web page personnel use hand-held gadgets to display product quality, version capacity issues and proportion statistics with co-people in different locations. Last year, a tribulation software among Unilever and Microsoft turned into mounted at a UK manufacturing plant that produces ice cream and Dove cleaning soap (Unilever, 2022). Along with this, the organization hired an entire virtual twin, which turned into created in 3 to 4 weeks, to outline specs for requirements just like the temperature in which the cleaning soap is poured out earlier than being reduced into bars.
The solution reduced the usage of energy settling within the range of 1% to 3%. Apart from that, enhancements in production, saved Unilever around $2.8 million at that location, according to the business (Partners, 2022). Eight of these digital incorporations of Unilever’s factories are located in various regions of Northern America, South America, Europe, and Asia. Along the way, there have been some difficulties, such as figuring out how to stream data from older, less technologically advanced machines. In addition to that, for goods like shampoo and conditioner, the method has increased production yields. The factory operators observe if the procedure is reaching the quality parameters as delivered out by the system and check the acquired quality in exchange for pausing the production to check the quality, intervening only when the production is veering.
“Although we don’t get rid of the quality check, it does give us considerably more confidence to move on to the next stage of the product, according to Mr Penrith” (Panmore, 2022). Without the need to add new machinery, that increased manufacturing capacity. With ambitions to integrate 70 sites by the close of the year and an additional 100 or so by the end of 2022, the enterprise is now streaming data from 15 plants (Partners, 2022). According to Noha Tohamy, vice president and analyst at Gartner Inc., Unilever wants “to have a very clear digital picture of their supply chain” by bringing in as much information as possible and utilising advanced process analytics to guide management choices.
Strategic Advertising & Marketing
Most contemporary brands offer false claims regarding the sustainability involved in the development and distribution of the products for gaining consumer trust and admiration through greenwashing. Unilever under the direction of its CEO Alan Jope had introduced creativity and positive change as the ideals behind marketing and product advertising (Unilever, 2019). Unilever lives by the strategy of promoting sustainable living and intends to make it a common practice among global consumers. Hence the company heavily markets its sustainable products and innovations for reducing carbon emissions and releasing and recycling resources including water. Unilever has aligned its business operations with the sustainable development strategy and goals of the UN as it represents the concept of corporate citizenship. The company through its creative marketing campaigns provide the facts to the customers while not engaging in wrongly influencing the customers. The company integrates purpose to its brands and shapes the same while creating marketing campaigns for establishing a positive change in the future. 28 brands of Unilever presently using purposeful marketing campaigns by representing what the brand does have registered 69% faster growth than the rest of the brands while accumulating 75% of the overall annual turnover.
The company during its marketing campaigns focuses on the greater environment and issues and outcomes for taking long-term action with measurable results. Advertising in Unilever helps the organisation to convey the benefits of the products and innovations to the customers. This also provides an opportunity for customer engagement and brand interactions. The company encourages responsible marketing and advertising as the campaigns of its brands like Dove challenges the present stereotypes about beauty. The company focuses on building trust with consumers by undertaking responsible practices and encouraging transparent communication (Unilever, 2022). The company has a comparative advantage in this regard due to its originality promoted through its advertisement and marketing campaigns as they also promote environmental responsibility and citizenship. The company also follows the approach of integrating healthy components and fewer additives and its food and beverage products for ensuring greater quality nutrition for the customers. The advertising and marketing of the company incorporate the principles for marketing foods and beverages for highlighting concerns about childhood obesity and other important topics.
R&D for products and business processes
The innovation strategy of Unilever is one of its strengths as it thrives to enhance the functionality and usefulness of its products along with quality. The products of Unilever are used by more than 2.5 billion people regularly and the company ensures the use of world-class science and technology for developing these products (Unilever, 2022). The company had invested Euro 800 million for its research and development in 2020 and the company presently has 20,000 patterns for protecting its ideas and intellectual property. The company has appointed more than 5000 experts across 60 countries for continuing to research and develop its product line. Unilever has been innovating its products for more than 100 years as a dream invented the soap in the late 19th century while presently pioneering in the field of sustainable living as it intends to benefit the society and planet along with its stakeholders and consumers in alignment with the corporate strategy (D’Aveni, et al., 2010). Including production, the processes and practices of the company are also researched and innovated for maximizing sustainability and improving the CSR records of the company. With its innovative technology, Unilever is capable of tracking more than a billion digital connections involving consumers for gathering insights along with learning about new trends and opportunities. The company uses automated technology for enhancing product quality and differentiation for gaining a strategic advantage in the market (David, 2011).
The research and development activities of Unilever are capable of providing the highest quality of consumables and products at competitive prices to the customers enabling them to continue using the products even during recessions (Chen & Miller, 2015). R&D contributes to the development of capabilities for the organisation that helps it to increase its VRIO attributes by increasing the value offerings of the product and insurance so that they are rare to gain a competitive advantage (Laursen & Andersen, 2016). The company has come up with its sustainable laundry capsules for helping customers to use them in cold temperatures below 20 degrees Celsius while saving 60% energy per use. Such products are also not imitable due to their being patented (Unilever, 2022). As discussed earlier the research and development department of the company is highly organised and hence provides a long-term competitive advantage to the company.
Conclusion
From the report, it is concluded that Unilever faces challenges due to its external environmental factors and high market competition. The company faces pressure due to the legislation of the UK and the countries in which it operates as it requires to comply with its products accordingly. Unilever has a corporate strategy that specially focuses on sustainability and the promotion of sustainable living while enhancing the quality and effectiveness of the production and operations to minimise the carbon footprint of the company. The functional strategy of the company includes the selection of the best materials and suppliers for manufacturing products while the business and corporate level strategies are based on the adoption of sustainable policies and practices along with innovation and creativity. It is also concluded that Unilever has been able to successfully develop its products across numerous brands resulting in being used by more than 2.5 billion customers worldwide regularly. The company uses destructive technology for producing the goods across its 300 global plants for improving productivity and reducing defects. The organisation has more than 20000 patterns indicating its heavy focus and allocation of financial resources towards innovating products and processes. The organisation has a long-term and sustainable competitive advantage as it offers valuable and rare products to its customers having unique features that encourage less resource usage while offering maximum utility. The responsible marketing and advertising campaigns of the company also established its image as a market leader in the consumer goods industry of the UK.
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