PGBM156 Strategic Management in an International Context
1.Introduction
This report is going to provide a case study on the managing strategy in the Covid-19 environment of a chosen MNC, that is Unilever in this case, a British multinational manufacturing company. The marketing approach of Unilever on the complexity due to covid outbreak is going to be discussed through this report. The leadership perspective of Unilever is going to be addressed through this study which helps to understand management control over organizational chaos. The role of the CEO and senior manager of Unilever to achieve a sustainable structure within profits and CSR is going to be described through this study. An overall reflection on the learning outcome is also provided in this report.
2.Question 1: Managing Complexity in Covid-19 Environment
Distinguish Between simple business problem and complex business problem
According to Funke, Fischer and Holt (2017), a simple business problem can be mitigated through a single solution whereas a complex business problem is related to intangible elements which are problematic in case of removal. A simple business problem due to the covid outbreak is the lack of human resource as social distancing became a real issue at that time. This problem can be mentioned as simple because it has one solution and by applying this companies can easily get a sustainable solution to this problem which is work from home facilities. The global financial crisis is a complex problem carried by the coronavirus breakthrough as it lowers the structure of the world economy and it is hard to Achieve a sustainable economic structure, also it creates poverty, political issues.
Annual Report of Unilever and impact of Covid
| 2018 | 2019 | 2020 | |
| Turnover Growth | 5.1% | 2.0% | 2.4% |
| Underlying Sales Growth | 3.2% | 2.9% | 1.9% |
| Operating Margin | 24.8% | 16.8% | 16.4% |
| Free Cash Flow | 5.4 billion euros | 6.1 billion euros | 7.7 billion euros |
| Underlying Volume Growth | 1.9% | 1.2% | 1.6% |
Table 1: Annual Report of Unilever
Annual reports of Unilever 2018, 2019, 2020 have been provided through this chart and this chart it can be easily concluded that the Covid-19 breakthrough gave a huge impact on the business process of Unilever. The turnover growth has dropped consistently from 2018 to 2020. In just two years. The operating margin dropped from 24.8% to 16.4% meaning that they are spending more on sales and marketing but their net profit is going down. Underlying volume growth in these two years also has been in decline in 2019 due to the sudden outbreak of covid and then create a sustainable structure of 1.6% in 2020 (unilever.com, 2020). Free cash flow has increased because of investment pouring in more money in a pandemic situation that will help Unilever recover in future years. The coronavirus outbreak caused a decline in economic structure throughout the world and as a result, the sales of Unilever are restricted to the domestic region as the international flights are restricted. This gives a negative impact on the international marketing structure of Unilever. The sales growth in 2018 was 3.2% whereas after the Covid outbreak it declined to 2.9% in 2019 as covid arose serious social-distancing concern. Unilever produces retail manufacturing products like food, skincare, household and both food and household products sales at distinct volume but the sales of skincare products face huge economic trouble (Refer to appendix 1). Unilever spreads its stores all over the world and due to the covid crisis, the competitive market has increased which creates a complex situation for Unilever in every country. The annual report indicates that Unilever sustain a sustainable business structure before the covid breakthrough and due to the breakthrough, it faces some negative impacts on its economic structure. International market sales became drop in particular products like skincare as the international connection was restricted during the covid. The complexity management of MNC like Unilever has been associated with the masculinity v. femininity, individualism v. collectivism and long-term v. short-term.
Localization is related to the demand for any products for a particular region whereas globalization is related to the adaptation of the same products based on different areas and cultural backgrounds (Jovanova, 2017). Unilever, a popular retail manufacturing company produces household, skincare, food products and its business chain spreads all over the world. Unilever implements its retail chain structure in another country.
Figure 1: Hofstede Comparison between Countries
(Source: hofstede-insights.com, 2021)
It focuses on the new name for the company as customers easily relate to the company. Unilever always modifies its food products according to the taste of customer’s people and skincare products according to the skin type of the customers. Unilever focuses on the culture and demands of one particular regional people which helps to fulfil the demand for globalization as well. The countries where Unilever serve their products has different demand and for this for different country different strategies need to be adapt which is associated with cultural constrain. Here four countries have been chosen where Unilever has its stores and different in cultural background has been shown (hofstede-insights.com, 2021).
3.Question 2: Organizational Chaos Vs. Management Control
Organizational context helps to determine both the external and internal factors within any organization. Organizational context helps to determine the behavioral perspective of business as organizational context highlights the situational opportunities. According to Hobfoll et al. (2018), organizational context relates to factors present within any organization like government rules, leadership style and culture within the organization. Organizational context relates to the innovation or leadership factors within an organization through motivation and the creation of culture. Organizational context helps to understand and evaluates the variables factors within an organization through which development purpose can be performed. Organizational context deals with both internal and external factors and by discussing these two factors the organizational chaos of Unilever can be identified.
Figure 2: Value chain analysis of Unilever
(Source: Vovk, 2017)
Complexity is more related with the two factors, probabilistic causality and deterministic causally. Where probabilistic causality refers to chaos situation within any management process along with external elements like PESTLE, value chain and five forces. PESTLE in context with Unilever has been discussed (Birahim, 2020).
Figure 3: PESTLE Analysis
(Source: Birahim, 2020)
Organizational leadership perspective is a management process through which leaders implement strategic aims and goals for the perspective of the organization (Ruben and Gigliotti, 2017). The organizational leadership perspective gives ideas for approaching the strategic management structure within any organization. Organizational dynamics is a process through which the strengthening of resources increases employee’s performance (Mokwa, 2017).
Figure 4: Organizational Dynamics
(Source: Mokwa, 2017)
Merits
There are different types of leadership styles that the organizational leadership perspective pursues a better management process. Ideas and perspectives are transformed to others easily that helps to think critically which creates effective productivity within the organization. Unilever is a big giant which is operated through strategic leaders with their leadership style as when the products of Unilever are going to launch every aspect of the products like government cooperation and new changes have been embraced by their leaders (Lammers and Gast, 2017). Practices of leadership perception styles create great evolution of effectivity as no communication gap is considered which helps to overcome the real crisis issues. Leaders through their leadership perspective encourage others to set aims and make their work more effective. Leadership persecution of an organization helps to evaluate the growth of the organization through the proper market segment. Both the organizational leadership perception and dynamics help to evaluate the better performance of the employees this the most valuable importance of these two. Unilever believes the fact that constructional dynamic factors help to create a sustainable source within the business structure and it applies all the certain usages of these two under the management process.
Demerits
Sometimes the coordination between the groups is difficult to maintain or sometimes it plays as inflexible reasons to work properly. The leadership style and dynamics of an organization have a demerit that is inflexible through which proper implementation of these two cannot be obtained (Tenzer and Pudelko, 2017). Unilever critically handles the chaos if managerial issues and inflexible issues cannot be obtained through their business structure much as it practices sustainable leadership and dynamic styles.
A low-cost leadership strategy can be useful for Unilever to maintain the organizational chaos along with increases in profitability. Low-cost leadership serves several possibilities to decrease the costs of an organization and increase the market value (Jermias, Gani and Juliana, 2018). A low-cost leadership strategy believes in saving capital for marketing and shares. It helps to create lower price meringues which squeeze the profits of competitors (refer to appendix 2). Unilever can easily increase its market share by applying this leadership strategy as it helps to create sustainability within the business structure. The low-cost leadership styles approach squeezing the competitors market share which can help Unilever to increase its competitiveness within the market which creates corporate profitability.
4.Question 3: Management of the Paradox Profits and Social Responsibility
The ability of the CEO and Senior manager of Unilever to evaluate corporate profitability and CSR
The paradox in profits and responsibility both refers to the long-term possibilities by creating values. According to Hoffmann (2018), an organization needs to create long-term values of profit and also long-term responsibilities to create a sustainable possibility of a future. There are some qualities or abilities that are needed within a CEO and senior managers to create maximum corporate profitability and CSR. The CEO and Senior Manager of Unilever have abilities like leading the strategy of profit structure, critical evaluation of annual profits of the company with managers, by reducing cost, and strategic tactics to improve production. All these abilities are important to be within a CEO and senior manager which helps to create a better profit margin in the long term.
Figure 5: Relationship between CSR and Corporate Profitability
(Source: Hoffmann, 2018)
A proper work ethics practice, the practice of work innovation culture, and understanding the needs of customers are some qualities that the CEO and Senior Manager of Unilever practices for better performance in long-term CSR. Corporate social responsibility is important for an organization as it brings long-term opportunities to evaluate the proper business structure (Van, Slawinski and Hahn, 2020). All these practices of the CEO and senior manager of Unilever help to create a long-term business process that emphasizes the business spread both domestically and internationally. Abilities like leadership, strategic opinion, situational overtaking abilities have within the CEO and senior manager of Unilever which helps to create survival and growth opportunities for Unilever in their business structure.
Implementation of CSR and corporate profits are important as the good structure of both of these values helps to create importance in the growth of the business. The balance between these factors is associated with the understanding of the goals, task force implementation and positive leadership approaches. This helps to create an evaluation of smooth sustainability within the business. The balancing between corporate profits and CSR creates some challenges that an organization may face (Doshmanli and Salamzadeh, 2018). Challenges like ethical issues, transparency issues may be faced by any organization during the reconciling of these two elements. CSR plays an important role to bind the responsibilities of an organization whereas profits create long-term growth value for an organization. To create reconciling between these two somehow ethical parameters may hamper to create a profit margin or sometimes profit values may decline to sustain the CSR values (Refer to appendix 3).
5.Question 4: Reflection on Learning
According to me, Unilever practices strategic management practice which helps it to secure a high position in the world retailing industry. Unilever practices a strategic management process to overcome the covid-19 impact. Through analyzing the annual report during the covid-19 I can easily state that Unilever faced some serious issues during that time but it can easily overcome that phase. A low-cost leadership strategy helps to create a greater market share value for Unilever and that is the difference between Unilever and its rivals.
Through this study, I can easily highlight the point that Unilever practices complexity management strategies like product modification to meet both the demand of localization and globalization. I agree with the strategies and approaches of the CEO and senior manager of Unilever to evaluate proper corporate profitability and CSR structure as it helps to create sustainable business policies for it. I believe that these practices and strategies of Unilever towards corporate chaos, complex management and corporate profits help it to evaluate its position in both domestic and global market.
6.Conclusion and Recommendation
This report offers the complexity management of Unilever during the outbreak of coronavirus which gives a negative impact on the economic structure of Unilever and through strategic management it can easily overcome that face. The localization and globalization demands are discussed in this study along with the organizational development and management control.
The strategies of Unilever have been discussed through this report along with proper modification or approaches of the CEO and Senior Manager of Unilever. The paradox of corporate responsibility and profitability is related to each other which is discussed through this report along with reflection on the learning outcomes. Through the overall report it can be concluded that Unilever plays an important role in the profit business and CSR as it practices sustainable business practice.
References
Birahim, S.A., 2020. Internal and external factors of Nestle and comparison with Unilever.
Doshmanli, M., Salamzadeh, Y. and Salamzadeh, A., 2018. Development of SMEs in an emerging economy: does corporate social responsibility matter?. International Journal of Management and Enterprise Development, 17(2), pp.168-191.
Funke, J., Fischer, A. and Holt, D.V., 2017. When less is less: solving multiple simple problems is not complex problem solving—A comment on Greiff et al. (2015). Journal of Intelligence, 5(1), p.5.
Hobfoll, S.E., Halbesleben, J., Neveu, J.P. and Westman, M., 2018. Conservation of resources in the organizational context: The reality of resources and their consequences. Annual Review of Organizational Psychology and Organizational Behavior, 5, pp.103-128.
Hoffmann, J., 2018. Talking into (non) existence: Denying or constituting paradoxes of corporate social responsibility. Human Relations, 71(5), pp.668-691.
hofstede-insights.com, (2021), Country comparison, Hofstede insights, Available at: https://www.hofstede-insights.com/country-comparison/australia,china,indonesia,the-uk/ [Accessed on: 2 May, 2021]
Jermias, J., Gani, L. and Juliana, C., 2018. Performance Implications of Misalignment Among Business Strategy, Leadership Style, Organizational Culture and Management Accounting Systems. Leadership Style, Organizational Culture and Management Accounting Systems (January 9, 2018).
Jovanova, K., 2017. Globalization versus localization–economic development perspectives. European Journal of Sustainable Development, 6(3), pp.181-181.
Lammers, J. and Gast, A., 2017. Stressing the advantages of female leadership can place women at a disadvantage. Social Psychology.
Mokwa, M.P., 2017. The policy characteristics and organizational dynamics of social marketing. In Marketing the Public Sector (pp. 43-55). Routledge.
Ruben, B.D. and Gigliotti, R.A., 2017. Communication: Sine qua non of organizational leadership theory and practice. International Journal of Business Communication, 54(1), pp.12-30.
Tenzer, H. and Pudelko, M., 2017. The influence of language differences on power dynamics in multinational teams. Journal of World Business, 52(1), pp.45-61.
unilever.com, (2020), Annual Report and Accounts 2020 Highlights, Unilever, Available at: https://www.unilever.com/investor-relations/annual-report-and-accounts/#performance [Accessed on: 1 June, 2021]
Van der Byl, C., Slawinski, N. and Hahn, T., 2020. Responsible management of sustainability tensions: A paradoxical approach to grand challenges. In Research Handbook of Responsible Management. Edward Elgar Publishing.
Vovk, N., 2017. Global Value Chain of Unilever with the focus on the Ice Cream category. Porter’s diamond and Silesian region (Bachelor’s thesis, Università Ca’Foscari Venezia).
Appendices
Appendix 1
Appendix 2
Appendix 3
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