BSS058-6 Strategy and the Global Competitive Environment Assignment Sample 2023
1. Introduction
Strategy and global competitive environment directly depend on different external environmental factors that influence business practices and organisational development from different perspectives. For the identification and analysis of possible future scenarios of the Consumer Goods Industry and the organisation Unilever has been selected in the study. The major focus areas of the study are the background of the industry, strategic tools to identify external environments, development of four evidence-based future scenarios and identification and justification of most possible scenarios. The aim of the study is to understand the importance and significance of strategy and global competitive environment.
2. Background of industry
The FMCG or consumer goods industry is considered as one of the biggest manufacturing markets in the UK and it accounts for around 14% of entire manufacturing in the UK (Shevchenko, 2018). it has been reported that customers in the UK had spent approximately 4% on consumer goods in the year 2016 as compared to 2015 (thesterlingchoice.com, 2020). Huge growth opportunity is present in this industry and it is also predicted that in 2021, this consumer goods market in the UK can have the possibility of growth by 68% and one of the significant market competitors is Unilever. Moreover, current trends within this industry have been observed to be related to shifting towards online platforms, focusing on current requirements of consumers within the FMCG industry such as investing more on skin care products that are hygienic and organic as well and so on. In respect to this, the market is also looking forward to making effective future developments as well as achieving growth by competing with others.
3. Development of four evidences based future scenario
Future scenario for the consumer goods or FMCG industry is going to be developed based on four different paper articles in order to identify the future possibilities and impact of the external environment on business development from the perspective of real firms namely Unilever. The following are four evidences based future scenario:
Shifting to online platforms: The newspaper article that supports the increased rate of shifting towards online platforms in the future is “our pandemics shopping habits are here to stay. Brands are rising to adopt” by Hanna Ziady, CNN, May 27, 2020. One of the most potential future scenarios that have the possibilities to be adopted by Unilever in this competitive market is accelerating business on online platforms. According to the view of Dzwigol et al, (2020), the pandemic covid-19 has greatly influenced business practices and buying behaviour of organisation and customers to a great extent. The guidelines of social distancing and different restrictions in practicing business has greatly influenced customer preferences and buying behaviour. Due to occupational and health safety measures, most of the customers of the United Kingdom and other regions of the world prefer to buy online items related rather than visiting the store directly.
Shifting to the online platform of Marketing by adopting innovative approaches to digital marketing can help Unilever and other brands within the FMCG industry to extend their business in the international marketing areas in an effective way. According to the view of Uchihira et al, (2016), based on the current situation, other two plausible scenarios that can play a vital in achieving a strategic growth in this industry is figuring out the buying pattern of the consumers and reshaping the way customers used to spend their money on consumer goods. In addition to this, another potential scenario that can be feasible for the consumer goods industry of the UK is focussing on hygiene and wellbeing of customers in order to enjoy sustainable strength (Liu et al, 2018).
Dominating in the medical skin care product market: The article by Market Insight report on 29 May, 2020, “Medical Skincare Product Markets latest trend and demand 2020“, a potential trend within the consumer goods industry have been observed related to medical skin care products. According to the report, coping up with the current trend, Unilever has focused on developing the most innovative medical skin care product including hand sanitizer, cleansing items, room sanitizer and antiseptics due to the rise of customer demand. According to the view of Szymanski et al, (2019), along with Unilever, other top consumer product companies of the world have focused on implementing effective market segmentation by developing different medical skin care products because of the possibilities of increasing demand in the future perspective. The changing trends of cosmetic two skin care products due to the pandemic covid-19 have changed the buying behaviour of potential customers.
Development of oral hygiene products: the evidence that supports the future scenario of Unilever of development of oral hygiene products are the consumer demands and global existing competitions. From the article “Latest covid-19 research: oral care oral hygiene product market 2026 business strategy by leading industry” by Data Bridge Market Research on 28 May, 2020, plausible future/market trend of this FMCG industry that has been identified is focussing on oral hygiene products. According to the view of Savcı, (2018), the evidence from the article supported and suggested that Unilever is planning to focus more on oral care and oral hygiene products in order to dominate the product Market by 2026.
Development of protein shampoo: In the article “protein shampoo market 2020, analyzing covid-19 impact, opportunities and project development“, as per market trend, more focus is given on development of organic or protein shampoo. According to the report the customer demand for protein shampoo has increased due to several health issues associated with hair falls and hair quality has been faced by the Global customers of consumer goods (Dodi, 2020).
4. Strategic tools to identify strategic environment
The selected strategic tool to identify the strategic environment of consumer goods or FMCG industry in the UK is the porter’s five forces framework and pestle analysis. According to the view of Lyapina et al, (2016), porter’s five forces framework can help to identify the impact of external and internal stakeholders in the business performances and practices of this industry through providing examples of Unilever. On the other hand, pestle analysis can help to understand external environmental factors including political, environmental, social and other environments to understand their impact on business practices.
Porter’s five forces framework
| Treat of new entrant | The threat of new entrants is high in Consumer goods industry due to the use of innovation in personal care products by different organisations of the United Kingdom and global marketing areas. Implementation of cost reduction strategy and new value proposition strategy of Unilever manage different challenges and ideas associated with competitive edge in order to develop business and marketing areas of the organisation (Eva and Perez-Esparrells, 2017). |
| Bargaining power of the supplier | Organisations under the consumer goods industry buy their raw materials from different suppliers based on regional situations and consequences. According to the view of Liu and Atuahene-Gima, (2018), the bargaining power of the supplier is high, most of the powerful suppliers in the consumer goods sector in the UK used their negotiating power to increase and extract higher prices for different personal product raw materials. |
| Bargaining power of the customer | The bargaining power of the potential customer consumer good organisation such as Unilever is low because it offers products and services at a reasonable price based on the low cost strategy of marketing (Alcaraz, 2020). |
| Threat of substitute product | The threat of substitute products is very hard for the Consumer Goods Industry because of the existence of different personal care and consumer goods organisations in the United Kingdom. According to the view of Kuznetsova et al, (2017), Unilever manages threats of substitute products by producing service-oriented and customer preferences products for completing in the Global competitive market. |
| Competitive Rivalry | Huge numbers of competitive players exist in the marketing area of the United Kingdom that creates several threats of rivalry and corporate availability of the consumer goods industry. The most powerful competitor of Unilever Pepsico, Nestle, Johnson & Johnson and others. |
Table 1: Porter’s five forces framework
PESTLE
| Political factor | The major political factor that influences the business practices of Consumer Good Industry is American and European laws. The subject of regulatory restrictions and guidelines issued by the European commission and Food and Drug Administration controls and reflects different business practices of Unilever. Unilever is also liable for different regional and local laws within the territory of the United Kingdom that influences business practices and corporate strategy from different perspectives. On the other hand, the Brexit referendum has also greatly influenced the business practices of the Consumer Goods Industry of the United Kingdom. |
| Economical factor | The existing competition in a competitive market and marketing structure are the most significant economic factors that influence business environment and practices of Consumer Good Industry. As per the view of Ensari, (2016), inflation rate, International exchange value, employment rate and customer demands also greatly impact business practices of Unilever as the major external environmental factor. |
| Social factor | The most significant social influences on the business practices of the Consumer goods industry are the household demands, desire for skin and hair care products. European culture and food habits of the global citizen are also the most significant social factors that influence the business performances and Practice of consumer good Industry. |
| Technological factor | The development of potential innovative technology for manufacturing, packaging and maintaining supply chains of the consumer goods industry greatly influences their business practices in the Global marketing areas. According to the view of Worlu et al, (2019), the development of automation Technology for manufacturing goods and services and the rise of digital platform health changes business practices and the history of different consumer goods organizations such as Unilever. |
| Legal factor | The major legal factors that influence business practices of the consumer goods industry are the product safety regulations, copyright policy, health and occupational safety of the employees, International and regional taxes and copyright claims. According to the view of de Castro Placido and Hwang, (2019), the consideration of different legal components including regulations and Consumer Rights Act 2015 is very important for the consumer goods industry to maintain standard and quality of the product and services. |
| Environmental factor | The most significant environmental factors associated with business practices and performances of the consumer goods industry focus on CSR, use of Eco friendly materials and reusable packaging. As for example the organization Unilever promotes the utilisation of Sustainable and renewable resources by the customer and other manufacturing companies for contributing in the sustainable development for resource conservation along with reducing carbon footprint (Rezaee et al, 2017). |
Table 2: PESTLE
5. Identification and justification of most possible scenario
The most possible scenario that has the potentiality to influence the competitive market of the consumer goods industry is the shifting to the online market. The changes of customer buying behaviour due to the pandemic covid-19 have been shifted from offline mode to online mode of buying items (Edition.cnn.com, 2020). However, due to the changing perspective of customers buying behaviour business to business and business to customer online marketing model is going to be dominated in the future. Shifting of the marketing practices to digital platforms developing proper application and customer service policy can help customer good industry to sell their products directly to the customer in a safe and convenient manner. According to the view of Gutsalenko et al, (2019), the most important components associated with practicing business on digital platforms are the implementation of strong cyber security, potential payment gateway, proper product representation, easy and convenient delivery and easy return or exchange policy.
On the other hand, the most significant advantage of shifting from offline mode to online mode of business practices by major consumer goods industries are the maintenance of proper safety guidelines, respect to international business rules and regulations, maintenance of restriction policies, safety and convenient services to the customers and an increase of annual sales (Edition.cnn.com, 2020). Online marketing can have different consumer goods industry services Unilever to expand their business areas without entering in a physical territory market segmentation and competitive process (Avram et al, 2016).
Evidence based argument: The major evidence that supports the future scenario of shifting to online platforms by the organisation Unilever are the government restrictions due to covid-19, customer preferences to buy online goods and maximum opportunity to increase business areas. According to the view of Avram et al, (2016), government restriction on maintaining social distancing in different marketplace and retailing stores is one of the most significant evidences that support the safety of Unilever to online marketing in the future. On the other hand, the customer preferences for shopping online applications on doorstep delivery options has been increasing and it can be one of the most significant reasons for promoting online shopping by Unilever. However, the practices of online marketing can help the organisation to reach out to remote customer technological advancement and opportunities.
Strength of shifting to online scenario: The most significant strength of shifting to online scenario is the increasing annual sale, offering safe and insecure products to the customers, innovative shopping experiences and extension of marketing areas. Development of different online applications and websites for selling Healthcare and consumer products by Unilever can help to increase annual sales significantly. On the other hand, it can greatly contribute in the process of increasing profit margin returning high from different investments. Introduction of innovative shopping experience is one of the major strengths that can be avail through the process of shifting to online scenarios (Avram et al, 2016).
6. Conclusion
From the above discussion, it can be concluded that Global competitive environment greatly influences business performances and business approaches used by Unilever to a great extent. The analysis and discussions of different possible future scenarios focus on possible changes and future development of Unilever from different perspectives. The major highlighted areas of the study are the background of the company, strategic tools to identify external environments, development of four evidence-based future scenarios and identification and justification of most possible scenarios. The selected strategic tool to identify external environments is the porter’s five forces and pestle analysis of Unilever marketing areas. Development of four evidence-based future scenarios has been developed based on the newspaper articles that it is possible it is to be achieved by Unilever. Identification and justification of the most possible scenario has focused on the most potential development scope for Unilever that can help the organisation to improve the business packages and corporate strategy to a great extent.
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