unilever strategic management case study

Unilever Change Management Case Study

In today’s fast-paced business environment, change is inevitable.

Companies need to evolve and adapt to remain competitive, but managing change is not an easy task. Effective change management is crucial to the success of any organizational transformation, as it ensures that the changes are implemented smoothly and effectively.

In this blog post, we will examine a case study of change management at Unilever, one of the world’s largest consumer goods companies.

We will explore the challenges faced by Unilever, the change management approach it took, and the results of its initiatives.

Brief History and Growth of Unilever 

Unilever is a British-Dutch multinational consumer goods company that was founded in 1929 through a merger between Dutch margarine producer Margarine Unie and British soap maker Lever Brothers.

Unilever has a long history of growth through mergers and acquisitions, with notable acquisitions including Bestfoods, Ben & Jerry’s, and Dollar Shave Club.

The company operates in over 190 countries and has a diverse portfolio of products, including food and beverages, cleaning agents, beauty and personal care products.

Unilever has also been committed to sustainability and social responsibility, and in 2010, it launched the Unilever Sustainable Living Plan, which aims to reduce the company’s environmental impact and improve the health and well-being of its customers.

Today, Unilever is one of the world’s largest consumer goods companies, with a revenue of over €50 billion in 2020.

External factors that led to organizational changes at Unilever

Unilever is a multinational consumer goods company that has undergone several organizational changes over the years. Here are three external factors that led to organizational changes at Unilever:

• Changing Consumer Preferences: The changing preferences and behaviors of consumers can have a significant impact on a company’s strategy and operations. For example, as more consumers started to prioritize eco-friendliness and sustainability, Unilever had to shift its focus towards more sustainable products and packaging. This led to the introduction of products like the “Dove Refillable Deodorant” and “Omo EcoActive” laundry detergent, as well as a commitment to reduce its plastic packaging by half by 2025.
• Competitive Pressure: Competition is another external factor that can force companies to make organizational changes. For example, when Unilever faced increasing competition from other consumer goods companies in emerging markets like India and China, it had to restructure its operations to be more efficient and cost-effective. This led to the consolidation of its global supply chain, as well as a greater emphasis on localizing its products and marketing strategies to better appeal to these markets.
• Technological Advancements: Advances in technology can also lead to organizational changes, as companies need to adapt to new ways of doing business. For example, as more consumers started to shop online, Unilever had to develop a strong e-commerce presence and optimize its digital marketing efforts. This led to the creation of Unilever Digital, a team dedicated to digital marketing and e-commerce, as well as a partnership with Alibaba to expand its online distribution in China.

Internal factors that led to organizational changes at Unilever

In addition to external factors, internal factors can also lead to organizational changes at Unilever. Here are three examples of internal factors that have led to organizational changes at the company:

• Management Changes: Changes in top management can often lead to organizational changes. For example, when Paul Polman became CEO of Unilever in 2009, he initiated a major restructuring of the company that aimed to streamline operations and focus on sustainable growth. This led to the consolidation of Unilever’s foods and personal care divisions, as well as a greater focus on emerging markets and sustainability.
• Financial Performance: Poor financial performance can also prompt organizational changes. For example, in 2017, Unilever reported slower-than-expected sales growth, leading the company to undertake a strategic review of its operations. This resulted in a decision to sell or spin off Unilever’s spreads business and focus on higher-growth areas like beauty and personal care.
• Organizational Culture: Organizational culture can also drive organizational change. For example, when Unilever identified a need to become more agile and innovative, it undertook a major cultural transformation initiative called “Connected 4 Growth.” This involved restructuring the company into smaller, more autonomous business units and giving employees greater freedom to experiment and take risks. The initiative aimed to foster a more entrepreneurial culture within the company and enable faster decision-making and innovation.

05 biggest steps taken by Unilever to implement changes

Unilever is a multinational consumer goods company that has undergone several organizational changes over the years. Here are the five biggest steps taken by Unilever to implement changes:

1. Sustainable Living Plan

In 2010, Unilever launched its Sustainable Living Plan, a comprehensive sustainability strategy that aimed to reduce the company’s environmental footprint, improve social impact, and drive profitable growth. The plan set ambitious targets for Unilever to achieve by 2020, such as reducing greenhouse gas emissions by 50% and improving the livelihoods of millions of people in its supply chain. The Sustainable Living Plan has been a driving force behind many of Unilever’s organizational changes, such as the introduction of sustainable products and packaging and a greater emphasis on transparency and accountability.

2. Organizational Restructuring

Unilever has undertaken several major organizational restructuring initiatives over the years to streamline its operations and focus on high-growth areas. For example, in 2016, Unilever announced a plan to consolidate its foods and personal care businesses into a single division, with the goal of achieving greater efficiency and cost savings. Similarly, in 2017, Unilever announced a strategic review of its operations in response to slower-than-expected sales growth, resulting in a decision to sell or spin off its spreads business and focus on higher-growth areas like beauty and personal care.

3. Digital Transformation

As more consumers started to shop online, Unilever recognized the need to invest in its digital capabilities to stay competitive. In 2017, the company launched Unilever Digital, a team dedicated to digital marketing and e-commerce, and entered into a partnership with Alibaba to expand its online distribution in China. Unilever also invested in technology startups and acquired several digital companies to enhance its digital capabilities and drive innovation.

4. Cultural Transformation

Unilever recognized that its organizational culture needed to change to foster greater agility and innovation. In 2016, the company launched its “Connected 4 Growth” initiative, which involved restructuring the company into smaller, more autonomous business units and empowering employees to take more risks and experiment. The initiative aimed to create a more entrepreneurial culture within the company and enable faster decision-making and innovation.

5. Portfolio Transformation

Unilever has undergone several portfolio transformations over the years to focus on its core brands and divest non-core businesses. For example, in 2018, Unilever acquired the personal care and home care brands of Quala, a Latin American consumer goods company, to strengthen its presence in emerging markets. At the same time, the company divested its spreads business and announced plans to exit its tea business to focus on higher-growth areas. These portfolio transformations have helped Unilever to stay agile and adapt to changing market conditions.

05 Results of change management implemented at Unilever

The change management initiatives implemented at Unilever have had several positive outcomes and impacts. Here are some of the key examples:

• Increased Sustainability: The Sustainable Living Plan has been a key driver of Unilever’s sustainability efforts, and the company has made significant progress in reducing its environmental footprint and improving social impact. For example, by 2020, Unilever had achieved its target of sending zero non-hazardous waste to landfill from its factories, and had also reduced its greenhouse gas emissions by 46% per tonne of production.
• Improved Financial Performance: Unilever’s focus on portfolio transformation and strategic acquisitions has helped the company to improve its financial performance. For example, in 2020, the company reported a 1.9% increase in underlying sales growth and a 2.4% increase in operating profit margin.
• Enhanced Digital Capabilities: Unilever’s investments in digital transformation have enabled the company to stay competitive in a rapidly evolving digital landscape. For example, Unilever’s partnership with Alibaba has helped the company to expand its online distribution in China, while its investments in technology startups have helped to drive innovation and enhance its digital capabilities.
• Improved Organizational Agility: Unilever’s organizational restructuring and cultural transformation initiatives have helped to create a more agile and entrepreneurial company culture. This has enabled Unilever to make faster decisions and respond more quickly to changing market conditions.
• Increased Customer Satisfaction: Unilever’s focus on innovation and product development has resulted in the launch of several successful new products and brands, such as the plant-based meat alternative brand, The Vegetarian Butcher. These products have helped to increase customer satisfaction and drive growth for the company.

Final Words

Unilever’s successful implementation of change management is a testament to the company’s commitment to innovation, sustainability, and organizational excellence. By undertaking a variety of initiatives, such as the Sustainable Living Plan, organizational restructuring, digital transformation, cultural transformation, and portfolio transformation, Unilever has been able to adapt to changing market conditions and position itself for long-term success.

One key factor in Unilever’s success has been its ability to align its change management initiatives with its overall business strategy. By focusing on high-growth areas, investing in sustainability, and enhancing its digital capabilities, Unilever has been able to drive growth and improve profitability while also achieving its sustainability goals.

Another key factor has been Unilever’s emphasis on collaboration and stakeholder engagement. By working closely with suppliers, customers, and other stakeholders, Unilever has been able to create a shared sense of purpose and drive greater alignment around its sustainability and innovation goals.

About The Author

Tahir Abbas

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Unilever—A Case Study

This article considers key issues relating to the organization and performance of large multinational firms in the post-Second World War period. Although foreign direct investment is defined by ownership and control, in practice the nature of that "control" is far from straightforward. The issue of control is examined, as is the related question of the "stickiness" of knowledge within large international firms. The discussion draws on a case study of the Anglo-Dutch consumer goods manufacturer Unilever, which has been one of the largest direct investors in the United States in the twentieth century. After 1945 Unilever's once successful business in the United States began to decline, yet the parent company maintained an arms-length relationship with its U.S. affiliates, refusing to intervene in their management. Although Unilever "owned" large U.S. businesses, the question of whether it "controlled" them was more debatable.

Some of the central issues related to the organization and performance of multinationals after the Second World War can be illustrated by studying the case of Unilever in the United States. Since Unilever's creation in 1929 by a merger of British and Dutch soap and margarine companies, 1 it has ranked as one of Europe's, and the world's, largest consumer-goods companies. Its sales of $45,679 million in 2000 ranked it fifty-fourth by revenues in the Fortune 500 list of largest companies for that year.

A Complex Organization

Unilever was an organizational curiosity in that, since 1929, it has been headed by two separate British and Dutch companies—Unilever Ltd. (PLC after 1981), and Unilever N.V.—with different sets of shareholders but identical boards of directors. An "Equalization Agreement" provided that the two companies should at all times pay dividends of equivalent value in sterling and guilders. There were two head offices—in London and Rotterdam—and two chairmen. Until 1996 the "chief executive" role was performed by a three-person Special Committee consisting of the two chairmen and one other director.

Beneath the two parent companies a large number of operating companies were active in individual countries. They had many names, often reflecting predecessor firms or companies that had been acquired. Among them were Lever; Van den Bergh & Jurgens; Gibbs; Batchelors; Langnese; and Sunlicht. The name "Unilever" was not used in operating companies or in brand names. Lever Brothers and T. J. Lipton were the two postwar U.S. affiliates. These national operating companies were allocated to either Ltd./PLC or N.V. for historical or other reasons. Lever Brothers was transferred to N.V. in 1937, and until 1987 (when PLC was given a 25 percent shareholding) Unilever's business in the United States was wholly owned by N.V. Unilever's business, and, as a result, counted as part of Dutch foreign direct investment (FDI) in the country. Unilever and its Anglo-Dutch twin Royal Dutch Shell formed major elements in the historically large Dutch FDI in the United States. 2 However, the fact that all dividends were remitted to N.V. in the Netherlands did not mean that the head office in Rotterdam exclusively managed the U.S. affiliates. The Special Committee had both Dutch and British members, and directors and functional departments were based in both countries and had managerial responsibilities without regard for the formality of N.V. or Ltd./PLC ownership. Thus, while ownership lay in the Netherlands, managerial control was Anglo-Dutch.

The organizational complexity was compounded by Unilever's wide portfolio of products and by the changes in these products over time. Edible fats, such as margarine, and soap and detergents were the historical origins of Unilever's business, but decades of diversification resulted in other activities. By the 1950s, Unilever manufactured convenience foods, such as frozen foods and soup, ice cream, meat products, and tea and other drinks. It manufactured personal care products, including toothpaste, shampoo, hairsprays, and deodorants. The oils and fats business also led Unilever into specialty chemicals and animal feeds. In Europe, its food business spanned all stages of the industry, from fishing fleets to retail shops. Among its range of ancillary services were shipping, paper, packaging, plastics, and advertising and market research. Unilever also owned a trading company, called the United Africa Company, which began by importing and exporting into West Africa but, beginning in the 1950s, turned to investing heavily in local manufacturing, especially brewing and textiles. The United Africa Company employed around 70,000 people in the 1970s and was the largest modern business enterprise in West Africa. 3 Unilever's total employment was over 350,000 in the mid-1970s, or around seven times larger than that of Procter & Gamble (hereafter P&G), its main rival in the U.S. detergent and toothpaste markets.

A World-wide Investor

An early multinational investor, by the postwar decades Unilever possessed extensive manufacturing and trading businesses throughout Europe, North and South America, Africa, Asia, and Australia. Unilever was one of the oldest and largest foreign multinationals in the United States. William Lever, founder of the British predecessor of Unilever, first visited the United States in 1888 and by the turn of the century had three manufacturing plants in Cambridge, Massachusetts, Philadelphia, and Vicksburg, Mississippi. 4 The subsequent growth of the business, which was by no means linear, will be reviewed below, but it was always one of the largest foreign investors in the United States. In 1981, a ranking by sales revenues in Forbes put it in twelfth place. 5

Unilever's longevity as an inward investor provides an opportunity to explore in depth a puzzle about inward FDI in the United States. For a number of reasons, including its size, resources, free-market economy, and proclivity toward trade protectionism, the United States has always been a major host economy for foreign firms. It has certainly been the world's largest host since the 1970s, and probably was before 1914 also. 6 Given that most theories of the multinational enterprise suggest that foreign firms possess an "advantage" when they invest in a foreign market, it might be expected that they would earn higher returns than their domestic competitors. 7 This seems to be the general case, but perhaps not for the United States. Considerable anecdotal evidence exists that many foreign firms have experienced significant and sustained problems in the United States, though it is also possible to counter such reports with case studies of sustained success. 8

During the 1990s a series of aggregate studies using tax and other data pointed toward foreign firms earning lower financial returns than their domestic equivalents in the United States. 9 One explanation for this phenomenon might be transfer pricing, but this has proved hard to verify empirically. The industry mix is another possibility, but recent studies have suggested this is not a major factor. More significant influences appear to be market share position—in general, as a foreign owned firm's market share rose, the gap between its return on assets and those for United States—owned companies decreased—and age of the affiliate, with the return on assets of foreign firms rising with their degree of newness. 10 Related to the age effect, there is also the strong, but difficult to quantify, possibility that foreign firms experienced management problems because of idiosyncratic features of the U.S. economy, including not only its size but also the regulatory system and "business culture." The case of Unilever is instructive in investigating these matters, including the issue of whether managing in the United States was particularly hard, even for a company with experience in managing large-scale businesses in some of the world's more challenging political, economic, and financial locations, like Brazil, India, Nigeria, and Turkey.

The story of Unilever in the United States provides rich new empirical evidence on critical issues relating to the functioning of multinationals and their impact. — Geoffrey Jones

Finally, the story of Unilever in the United States provides rich new empirical evidence on critical issues relating to the functioning of multinationals and their impact. It raises the issue of what is meant by "control" within multinationals. Management and control are at the heart of definitions of multinationals and foreign direct investment (as opposed to portfolio investment), yet these are by no means straightforward concepts. A great deal of the theory of multinationals relates to the benefits—or otherwise—of controlling transactions within a firm rather than using market arrangements. In turn, transaction-cost theory postulates that intangibles like knowledge and information can often be transferred more efficiently and effectively within a firm than between independent firms. There are several reasons for this, including the fact that much knowledge is tacit. Indeed, it is well established that sharing technology and communicating knowledge within a firm are neither easy nor costless, though there have not been many empirical studies of such intrafirm transfers. 11 Orjan Sövell and Udo Zander have recently gone so far as to claim that multinationals are "not particularly well equipped to continuously transfer technological knowledge across national borders" and that their "contribution to the international diffusion of knowledge transfers has been overestimated. 12 This study of Unilever in the United States provides compelling new evidence on this issue.

Lever Brothers In The United States: Building And Losing Competitive Advantage

Lever Brothers, Unilever's first and major affiliate, was remarkably successful in interwar America. After a slow start, especially because of "the obstinate refusal of the American housewife to appreciate Sunlight Soap," Lever's main soap brand in the United Kingdom, the Lever Brothers business in the United States began to grow rapidly under a new president, Francis A. Countway, an American appointed in 1912. 13 Sales rose from $843,466 in 1913, to $12.5 million in 1920, to $18.9 million in 1925. Lever was the first to alert American consumers to the menace of "BO," "Undie Odor," and "Dishpan Hands," and to market the cures in the form of Lifebuoy and Lux Flakes. By the end of the 1930s sales exceeded $90 million, and in 1946 they reached $150 million.

By the interwar years soap had a firmly oligopolistic market structure in the United States. It formed part of the consumer chemicals industry, which sold branded and packaged goods supported by heavy advertising expenditure. In soap, there were also substantial throughput economies, which encouraged concentration. P&G was, to apply Alfred D. Chandler's terminology, "the first mover"; among the main followers were Colgate and Palmolive-Peet, which merged in 1928. Neither P&G nor Colgate Palmolive diversified greatly beyond soap, though P&G's research took it into cooking oils before 1914 and into shampoos in the 1930s. Lever made up the third member of the oligopoly. The three firms together controlled about 80 percent of the U.S. soap market in the 1930s. 14 By the interwar years, this oligopolistic rivalry was extended overseas. Colgate was an active foreign investor, while in 1930 P&G—previously confined to the United States and Canada—acquired a British soap business, which it proceeded to expand, seriously eroding Unilever's market share. 15

The soap and related markets in the United States had a number of characteristics. Although P&G had established a preponderant market share, shares were strongly contested. Entry, other than by acquisition, was already not really an option by the interwar years, so competition took the form of fierce rivalry between incumbent firms with a long experience of one another. During the 1920s and the first half of the 1930s, Lever made substantial progress against P&G. Lever's sales in the United States as a percentage of P&G's sales rose from 14.8 percent between 1924 and 1926 to reach almost 50 percent in 1933. In 1930 P&G suggested purchasing Lever in the United States as part of a world division of markets, but the offer was declined. 16 Lever's success peaked in the early 1930s. Using published figures, Lever estimated its profit as a percentage of capital employed at 26 percent between 1930 and 1932, compared with P&G's 12 percent.

Countway's greatest contribution was in marketing. During the war, Countway put Lever's resources behind Lux soapflakes, promoted as a fine soap that would not damage delicate fabrics just at a time when women's wear was shifting from cotton and lisle to silk and fine fabrics. The campaign featured a variety of tactics, including washing demonstrations at department stores. In 1919 Countway launched Rinso soap powder, coinciding with the advent of the washing machine. In the same year, Lever's agreement with a New York agent to sell its soap everywhere beyond New England was abandoned and a new sales organization was established. Finally, in the mid-1920s, Countway launched, against the advice of the British parent company, a white soap, called "Lux Toilet Soap." J. Walter Thompson was hired to develop a marketing and advertising campaign stressing the glamour of the new product, with very successful results. 17 Lever's share of the U.S. soap market rose from around 2 percent in the early 1920s to 8.5 percent in 1932. 18 Brands were built up by spending heavily on advertising. As a percentage of sales, advertising averaged 25 percent between 1921 and 1933, thereby funding a series of noteworthy campaigns conceived by J. Walter Thompson. This rate of spending was made possible by the low price of oils and fats in the decade and by plowing back profits rather than remitting great dividends. By 1929 Unilever had received $12.2 million from its U.S. business since the time of its start, but thereafter the company reaped benefits, for between 1930 and 1950 cumulative dividends were $50 million. 19

Many foreign firms have experienced significant and sustained problems in the United States. — Geoffrey Jones

After 1933 Lever encountered tougher competition in soap from P&G, though Lever's share of the total U.S. soap market grew to 11 percent in 1938. P&G launched a line of synthetic detergents, including Dreft, in 1933, and came out with Drene, a liquid shampoo, in 1934 both were more effective than solid soap in areas of hard water. However, such products had "teething problems," and their impact on the U.S. market was limited until the war. Countway challenged P&G in another area by entering branded shortening in 1936 with Spry. This also was launched with a massive marketing campaign to attack P&G's Crisco shortening, which had been on sale since 1912. 20 The attack began with a nationwide giveaway of one-pound cans, and the result was "impressive." 21 By 1939 Spry's sales had reached 75 percent of Crisco's, but the resulting price war meant that Lever made no profit on the product until 1941. Lever's sales in general reached as high as 43 percent of P&G's during the early 1940s, and the company further diversified with the purchase of the toothpaste company Pepsodent in 1944. Expansion into margarine followed with the purchase of a Chicago firm in 1948.

The postwar years proved very disappointing for Lever Brothers, for a number of partly related reasons. Countway, on his retirement in 1946, was replaced by the president of Pepsodent, the thirty-four-year-old Charles Luckman, who was credited with the "discovery" of Bob Hope in 1937 when the comedian was used for an advertisement. Countway was a classic "one man band," whose skills in marketing were not matched by much interest in organization building. He never gave much thought to succession, but he liked Luckman. 22 This proved a misjudgment. With his appointment by President Truman to head a food program in Europe at the same time, Luckman became preoccupied with matters outside Lever for a significant portion of his term, though perhaps not to a sufficient degree. Convinced that Lever's management was too old and inbred, he dismissed about 15 percent of the work force soon after taking office, and he completed the transformation by moving the head office from Boston to New York, taking only around one-tenth of the existing executives with him. 23 The head office, constructed in Cambridge by Lever in 1938, was subsequently acquired by MIT and became the Sloan Building.

Luckman's move, which was supported by a firm of management consultants, the Fry Organization of Business Management Experts, was justified on the grounds that the building in Cambridge was not large enough, that it would be easier to find the right personnel in New York, and that Lever would benefit by being closer to the large advertising agencies in the city. 24 There were also rumors that Luckman, who was Jewish, was uncomfortable with what he perceived as widespread anti-Semitism in Boston at that time. The cost of building the New York Park Avenue headquarters, which became established as a "classic" of the new postwar skyscraper, rose steadily from $3.5 million to $6 million. Luckman had trained as an architect at the University of Illinois, and he was very involved in the design of the pioneering New York office.

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Unilever: Strategic Planning, Budgeting and Forecasting

Business goals that will enhance long-term stakeholder value.

In 2012 we set our four strategic goals to be:

• Grow the Business: By 2020 our goal is to double sales by the business compared to 2010

• Improve Health and Wellbeing: By 2020 we will help more than a billion people take action to improve their health and wellbeing

• Reduce Environmental Impact: By 2030 our goal is to halve the environmental footprint from making and using of our products as we grow our business

• Enhance Livelihoods: By 2020 we will enhance the livelihoods of millions of people as we grow our business

Defining our purpose and our vision were key to setting our strategic goals. We believe profitable growth should also be responsible growth. That approach lies at the heart of the development of our strategic goals.

In developing our goals there were a number of priorities that were important to us:

• Customer and consumer trust

• A strong business for shareholders

• A better, healthier and more confident future for children

• A better future for the planet

• A better future for farming and farmers

We developed our goals as a path towards achieving our vision, incorporating these priorities through a process of actively engaging with governments, intergovernmental organizations, regulators, customers, suppliers, investors, civil society organizations, academics and our consumers. The detail on how we intend to deliver our goals is captured in the Unilever Sustainable Living Plan. It guides our approach to how we do business and how we meet the growing consumer demand for brands that act responsibly in a world of finite resources. Our Plan is distinctive in three ways:

1. It spans our entire portfolio of brands and all countries in which we sell our products.

2. It has a social and economic dimension: our products make a difference to health and wellbeing and our business supports the livelihoods of many people.

3. When it comes to the environment, we work across the whole value chain, from the sourcing of raw materials, to our factories and the way consumers use our products.

At Unilever, we have a simple but clear purpose – to make sustainable living commonplace. We believe this is the best long term way for our business to grow. Our purpose and operating expertise will help us to realize our vision of accelerating growth, reducing our environmental footprint and increasing our positive social impact. We recognize this is ambitious, but it is consistent with changing consumer attitudes and expectations. Our unswerving commitment to sustainable living is increasingly delivering:

• more trust from customers; and

• a strong business for shareholders, with lower risks and consistent, competitive and profitable long term growth.

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This Unilever case study has been taken from the A4S Essential Guide to Strategic Planning, Budgeting and Forecasting. 

Further case study

Yorkshire Water's case study on identifying long term risks and opportunities

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How Unilever Went From Soap Manufacturer To Multinational Giant

Table of contents, here’s what you’ll learn from unilever’s strategy study:.

• How to make the most out of the opportunities you meet.
• How to be proactive with market changes and thrive by adapting quickly.
• How product innovation becomes the source of competitive advantage.
• How strengths like in-depth knowledge of specific markets become powerful expanding factors.
• How to grow by taking advantage of unparalleled localization.
• How growth opportunities are revealed by empowering your management.
• How sustainability can be used as a brand lever.

With over 2.5 billion people consuming its products on any given day, it’s difficult to find any corner of the world where Unilever has not reached.

What started as one soap brand has now become one of the world’s largest consumer brand conglomerates, spreading into beauty and personal care, home care, and food and refreshments.

Unilever's market share and key statistics:

• Staggering turnover of €52.4 billion in 2021
• Portfolio of 400+ brands, 13 of which feature in Kantar Worldpanel Global Top 50
• 14 brands with a $1 billion turnover
• Over 53,000 supplier partners
• Number of employees worldwide: 148,000
• Owning  280 factories, 270 offices and 450 logistics warehouses globally
• A reach spanning over 190 countries

From innovative strategies and impeccable management to effective marketing and commitment to sustainability, there are several reasons behind the success of this multi-industry giant.

In this study, we analyze them closely to highlight how Unilever has been able to continuously expand its horizons over the years and across countries as well as continents, gaining a competitive edge while growing exponentially.

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Humble beginnings: How did Unilever start?

Although it wasn't until 1929 that the company we now instantly recognize as Unilever was formed, its story goes way back to the late 19th Century.

In fact, it is set in two different countries simultaneously, with two major companies operating in seemingly different industries coming together and setting the foundation of Unilever.

In many ways, it can be said that it set the tone for what sort of brand Unilever was going to be in the coming years.

More than just soap

William Hesketh Lever began his career in the 1880s as a salesman in his family's grocery business. At the time, The Long Depression was still affecting the global economy, and many companies were struggling to survive.

Amidst the chaos, Lever saw an opportunity to step into the manufacturing of soap, which he believed had great potential for growth.

Thus, in the 1890s, as the founder of Lever Brothers, William Lever penned his ideas for Sunlight Soap: "to make cleanliness commonplace; to lessen work for women; to foster health and contribute to personal attractiveness, that life may be more enjoyable and rewarding for the people who use our products."

Mission and vision statements were hardly a thing during the Victorian era. Yet, Lever was well ahead of his time. They envisioned changing attitudes towards hygiene and personal care in the UK and solve customers’ problems simultaneously.

Soon, the company was not only making waves in the British Isles, but also began expanding its reach in many parts of Europe, North America, Australia, and South Africa.

The first bar of Sunlight Soap was in 1884

Diversifying operations

In the early 1900s, much of Britain's consumption of butter and margarine was sourced from Dutch and Danish companies. However, with the threat of WWI and trade coming to a standstill, the British government asked Lever to produce margarine as well.

Recognizing that the required raw materials, including oils and fats, were quite similar for soaps and margarine, William Lever welcomed the opportunity with open hands.

From there on, Lever became more than a soap company as it took its first step towards forming a multi-brand legacy that would inspire and lead the world of consumer brands for the next century and probably, beyond.

A manufacturing company through and through

Not only did Lever plan to manufacture its products, but it also extended its operations to produce its raw materials itself.

From mills to crush seeds for vegetable oil to whole transportation and packaging operations, Lever became a well-established vertically integrated company, taking giant strides to redefine the consumer goods industry.

The Dutch side of things

Before Lever Brothers had set foot in the margarine industry, there was already intense competition in the Dutch market.

To see off new entrants exporting their products at lower prices and to make the most of the global economic situation, two Dutch giants Jurgens and Van den Bergh joined hands in 1908.

A few years later, in 1920, these two companies combined with Schitt and established their operations in the Netherlands as Margarine Unie NV and in England as Margarine Union Limited.

This put them in direct competition with the Lever Brothers and what ensued was a tussle of giants for most of the following decade. 

Putting Uni and Lever together

Both the Dutch and English companies knew they would benefit from synergies if they came together rather than going head-to-head in the soap and margarine industries.

Thus, after two years of discussions, they merged in 1929 to form Unilever, which was owned by two holding companies, Unilever Limited and Unilever NV, with setups in both countries.

The structures for the holding companies were identical, and the profit-sharing was on an equal basis.

This merger allowed the company to foray into multiple industries and establish dominance with its hold on manufacturing operations.

Key takeaway 1: cash In on opportunities

With the amalgamation of two companies – Lever Brothers and Margarine Unie – Unilever was formed.

From Lever entering an utterly new soap manufacturing business to competitors Jurgens and Van den Bergh combining, there are countless examples of the founders of Unilever realizing an opportunity and being quick to grab it. 

Navigating The Great Depression – Initial Challenges

Unilever was still in its early years when the Great Depression struck, and the company was riddled with challenges on all fronts.

Its products’ prices plummeted 30% to 40% within the first year while at the same time butter came forward as an even cheaper alternative, further lowering the demand for margarine. The company’s agricultural products, such as cattle cake, also took a major hit and its retail grocery and fish shops saw a major decline in revenues.

Things did not look too bright for the company that had already shown so much promise and growth. However, just as William Lever had come out of the Long Depression as a successful business, Unilever responded proactively to this crisis too.

Responding to the challenge

The 1930s saw fresh faces managing the operations at Unilever with Francis D'Arcy Cooper at the helm of affairs.

This new management’s initial response to the Great Depression was to form a special committee that would oversee the firm’s operations in both Netherlands and UK. It also supervised two further committees; one that would handle the company’s business in Europe and one for other regions.

These actions helped the company mitigate the immediate effects of the recession and lay the groundwork for further changes.

Restructuring & redistributing assets

Initially, the Dutch group contributed two-thirds of Unilever's total profits while the British side accounted for the remaining. However, owing to trade conflicts in Europe, similar to those preceding WW1, the equation was reversed, and the British group's contribution increased.

Therefore, in 1937, Cooper convinced the company’s boards that it was time for restructuring, and Unilever needed to align itself with its original goal of equal profit sharing. As part of this dynamic shift, one significant action was selling the Lever Brothers Company in the United States and other Lever Brothers' assets outside Britain to Unilever's Dutch group.

This allowed the two factions to operate with nearly equal profit volumes and assets and overcome the trade challenges.

Key takeaway 2: proactively adapt to the situation

Had Unilever not set up the special committee and undergone the changes it did in the 1930s, it is possible it would not have survived the Great Depression. But with pro-activeness and resilience, it was able to tackle the challenges successfully and come out on the other side stronger than before.

Growth Through Localization & Innovation

Following the years of the Great Depression and WWII, the world’s economic landscape completely transformed. At that point in time, Unilever was establishing itself in various countries and needed a strategy to localize its products, marketing efforts, and management.

It realized that growth in new markets now was not limited to or even dependent on increasing production capacities or lining up products. It needed to have a strong footing in research and development to keep up with changing consumer preferences and increasing competition.

This meant that the company had to make some much-needed changes in its approach and it did just that.

Heading into new markets

Unilever was growing and expanding its operations into many new countries and diverse communities. This meant more local challenges wherever it set up operations. However, much of the management was still under the control of Dutch and English representatives of the parent companies.

Undoubtedly, the people from the parent head offices were capable managers and had contributed to the company's growth, but the challenge here was different. Markets such as India, Brazil, or even the USA did not function in the same way as European Markets.

Customers had different preferences, supply chains were unique, and external influencing factors, such as laws and regulations, were also always specific to the respective regions. Therefore, Unilever's management needed local players who could understand what was required in their region and develop effective strategies to achieve it. 

Hence, in the 1940s, Unilever started a localization policy referred to as 'ization.’ The Dutch and English representatives were recalled, and local positions were handed over to local executives.

It began to be implemented as early on as 1942, with the company’s Indian subsidiary going through the process of Indianization. Australianization, Brazilianization, and more followed it. These centers had greater autonomy in decision-making and marketing, which enabled the company to penetrate further into these new markets and localize its products.

Unilever continued with this localized, decentralized management system throughout WWII and several years following. However, they did encourage Unileverization, sharing a common mission across their various subsidiaries during this time, and took it up more rigorously later on.

Embracing research & innovation

The embracing of research did not occur before facing a few setbacks. For instance, the market for soap, Unilever’s main product, revolved around color, scent, and application on fabrics. This changed when in the 1950s, their competitor in the US Market, Proctor & Gamble, introduced Tide. This nonsoap synthetic detergent powder was far superior and solved many plumbing problems caused by insoluble soaps.

For some years, Unilever remained behind its competitors until it found a way to solve the shortcomings of new detergent.

Tide was formed from petrochemicals, and its residues in sewerage systems and rivers were causing major problems. Now, Unilever had the chance to explore chemical technology and retain its position in the market. By 1965, they had launched their very own biodegradable version of the product.

It wasn’t just soap where Unilever invested in research. The company also established 11 research centers, including laboratories, all around the world to come up with innovative solutions for food preservation, health, and animal care. That was going to define the company as one that looked ahead into the future and relied on improving itself to remain at the top.

Another significant example of Unilever's constant innovation can be seen in its margarine. When butter was short in supply, margarine became a convenient alternative – one of the reasons why the Lever Brothers started manufacturing it in the first place. However, butter soon became available widely again, and that too at lower prices. Now, there was not much that made margarine an enticing option to customers.

Unilever's laboratory in Vlaardingen was tasked to find a way to improve the quality of margarine and make it stand out, whether through better nutrition, flavor, or convenience. The solution came in the form of enhanced refining of soybean oil, a key raw material in margarine production. 

Benefiting from tariff lift

A major boost to Unilever's operations was the formation of the European Economic Community and its efforts to make Europe a common market in the 1950s and 1960s.

Previously, Unilever has based its factories and production in various European countries to avoid tariff restrictions. It was, however, an inconvenient solution. Not only did they have to bear additional costs of production in expensive locations, but such a spread-out production system posed the challenges of supply, logistics, capacity, and more.

Through the common market, there was no need to restrict themselves anymore. Unilever now took its production to wherever costs could be minimized, and operations could be consolidated. Thus, they were able to produce in greater quantities and accelerate their processes.

Key takeaway 3: innovate & solve

Unilever's growth in 1940 to 1960s had a lot to do with improving their products and their management system to cater to modern problems. This helped them stay ahead of the competition and keep their production up-to-date and cost-effective all the while delighting customers.

Expansion & Acquisitions Till The 1990s

As a well-known multi-industry firm, Unilever was no stranger to acquisitions and takeovers. They expanded in the US Market in 1937 by adding the tea manufacturer Thomas J. Lipton Company to their portfolio. Later on, in 1944, they also entered the toothpaste industry by acquiring Pepsodent.

In the post-WWII era, they continued to take over larger firms like Birds Eye, a UK frozen foods company, in 1957. By 1961, they had also taken control of US ice cream producer, Good Humor. 

Unilever acquires Birds Eye parent company T. J. Lipton in 1943

However, these were only gradual acquisitions that allowed them to explore new product lines. From the 1980s, Unilever's approach took an aggressive turn, and they set their eyes on bringing many more brands under their banner.

The shopping spree of the 80s

Unilever’s targets changed in the 1980s. They wanted to expand but with a plan to strengthen their hold in industries in which they had resources and expertise and the market had a lucrative potential for growth. This meant they were sticking to foods, detergents, toiletries, etc. but were ready to eliminate the competition.

Thus, they began by selling off their ancillary business and services, such as transporting, packaging, and initiating their acquisitions. In 1984, Unilever oversaw a hostile takeover of the British tea company Brooke Bond for £376 million. The company complemented Unilever’s Lipton in the USA, and now, the road was clear for further growth.

One of Unilever’s biggest acquisitions was of Chesebrough-Pond in 1986. The company owned some very high-potential and popular products in the USA like Vaseline Intensive Care and Pond's Cold Cream. Moreover, with over $3 billion in annual sales, it was the perfect chance to cement itself in the personal product business internationally.

Another major market that the company dominated with its acquisitions in the late 1980s was the perfume and cosmetic industry. It simultaneously became the owner of Shering-Plough's perfume business in Europe, Calvin Klein in the US, and Fabergé Inc. The latter was bought for $1.55 billion and handed Chloe, Lagerfeld, and Fendi perfumes to Unilever.

Now, the company was a force to reckon with, if not the leader in its primary industries and in the markets it predicted would generate the most gains.

The global giant

Unilever clearly showed its aggressive intent in the 1980s, and they were not going to stop in the 1990s.

By 1992, the conglomerate consisted of over 500 businesses in 75 countries. In the mid-1990s, they went on to acquire over 100 more companies. From buying personal care giant Helene Curtis for $770 million to sweeping the US ice cream market by buying Philip Morris's Kraft General Foods’ division for $215 million, there was no shortage of the treasure chest Unilever had.

By 1999, they had grown from 500 businesses to 1600 brands. But this brought them back to where they started the extensive series of acquisitions, with many companies that didn't have the potential to grow or simply didn't fall in with Unilever's strengths.

It was time for a major strategy shift and to go back to the basics. Out of 1600 brands, 400 were generating 90% of the revenue. Unilever decided to let go of the remaining 1200 and put all its efforts into strengthening its already powerful brands.

This has been their path ever since and one that has enabled them to maintain their position as one of the top consumer products companies in the world.

Toppling competitors

Along with buying their competitors, Unilever did not stop introducing new products into the market. In 1984, their product Whisk overtook P & G’s Cheer in the US laundry detergent market.

Two years later, Whisk was introduced in Britain, along with Breeze, a soap powder the company had only seen of in Surf. Unsurprisingly, Unilever recorded a 50% growth in operating profits for detergent products while it also experienced increasing returns in the food industry.

This multi-pronged strategy of introducing new products and acquiring ones with potential did not allow Unilever to capitalize fully on the market's potential for growth and left little room for competitors to adjust.

Standing out from the competition

From Lever Brothers and Margarine Unie taking on their rivals head-on to Unilever PLC establishing its unique identity despite battling against giants P&G and Nestle, the company has always embraced healthy competition.

One of the main reasons Unilever has been so successful in standing out is its expansion in over 190 countries through products they specialize in and dominate in. Moreover, it hands significant decision-making power to local managers to strengthen their position in diverse markets. Both P&G and Nestle have not been able to grow as much in terms of reach.

Another, key aspect that differentiates Unilever is its emphasis on and funding towards Research & Development. They continue to improve their products and adapt to changing consumer needs by providing enhanced solutions.

Last but not least, Unilever’s sustainable plans set them apart from major competitors, whereby they show their commitment to the collective betterment of people and societies.

Key takeaway 4: stick to your strengths

Unilever’s origins lay in soap and margarine – industries they knew very well and had the potential to grow in. They expanded their portfolio but stuck to their strengths and, as a result, grew exponentially.

Changing Product Groups With Evolving Markets

Throughout the nearly 100 years of Unilever, they have acquired and sold brands and expanded their reach into many territories. Naturally, they experiment with product groups and divisions to decide which suits their goals best and when.

At times, their product groups have had a significant influence on their strategies, whereas at other times, they were merely playing advisory roles. But whatever the situation, Unilever has kept an eye on how operations and revenues were affected and carefully reorganized their groups accordingly.

Understanding complex markets

There is no one fixed way to distribute product groups. Sometimes, they require to focus on research and distribution while emphasizing localization from time to time. For instance, the food industry, from which many of Unilever's top brands belong, undergoes changes every few years. It can be categorized into three regional groups.

Firstly, the global fast-food category. Fried chicken, burgers, soft drinks, etc., are famous worldwide, from Asia to Europe and beyond. The core products remain the same, and the tastes do not differ greatly.

The next category is international foods. These are products that belong to one country but are also popular in other countries as well—for example, Chinese, Indian, and Italian foods.

Hence, the third category leads to national foods – those that represent and are popular in their country of origin. For Unilever's base region, the UK, pies, puddings, steaks, etc., are considered national foods.

Now, that is only one way to look at food markets. Another method or problem, as you may call it, is that a product may not even be defined or preferred the same way in different regions.

For example, take something as simple as tea - a globally consumed product. The British like their tea hot and with milk; Americans prefer it iced; Middle Easterners drop the milk and add sugar.

Therefore, Unilever cannot keep its product groups fixed or stringent and must recognize where it can churn out the most profits.

Giving more autonomy to product groups

Until the 1960s, Unilever's localization policy played a major role in its decisions and actions. Product groups served advisory or assisting roles with little power. That was how to company was progressing, and there was no need for change.

Carrying on the example of food products, during and post-WWII, raw material sourcing was a crucial factor in the production of Unilever foods. But then, when the 60s came, and firms, along with Unilever, started to invest in research, the dynamic shifted towards preservation technology and logistics.

Gradually, the power of determining revenues was handed to product groups, and local managers took a backseat. A pivotal change made in the new structure was introducing three separate food units: edible fats, frozen foods and ice cream, and a general food and drinks group.

These groups proved fruitful and helped the company expand in the European and North American markets. 

Rising consumer awareness

The 1970s was the time the marketing arena transformed. With every brand wanting to stand out, they popularized concepts, such as healthy eating and natural ingredients.

The surge in demand for low-calorie foods was also a result of effective marketing. The challenge for Unilever was that all three of its food groups contained low-calorie products. It came in the way of their progress and dented their profits.

But how could they form a system that resolved this problem and kept local managers and product groups intact?

Unilever formed a committee called “Food Executive” consisting of three directors. Its role was to control all food products instead of leaving it to specific groups or managers.

Now, there are 5 product groups:  edible fats, meals and meal components, beverages, ice cream, and professional markets. They play an essential role as advisors (more valued than in the 1960s) but are not responsible for profits.

Simultaneously, local managers are allowed to oversee the regional needs and preferences of consumers.

Key takeaway 5: balancing decentralization and product groups

Managers and product groups are both vital components of a multinational firm. To ensure their products satisfy consumers’ wants, Unilever continues to come up with ways to combine the two productively.

Unilever Strategy - Management Dynamics Over The Years

One of the key factors that have fueled Unilever's growth ever since 1929 is its evolving management dynamics that have allowed the company to stay true to its roots while adapting to the local areas it operates in. 

Think globally. Act locally!

Think globally and act locally has been at the heart of Unilever's operations and enabled it to make a mark in even the most far-flung areas successfully. As a result of trial and error, Unilever's management dynamics over the years showcase the company's drive to excel, innovate, learn, and get the job done. 

Let's delve deep into the management dynamics to better understand the growth of the company. 

Given that both the parent companies of Unilever had a tradition of scaling their business through export as well as local production that British and Dutch expatriates mostly ran, it comes as no surprise that Unilever, too, had the same management style initially. British and Dutch executives ran the show, at least for the first decade. However, in the early 1940s, Unilever began changing things by hiring local managers to lead the operations in respective parts of the world, as already highlighted in Chapter 3.

The localization and decentralization began with the subsidiary in India in 1942. Key roles were given to Indian managers, who were also provided with the freedom and flexibility to run operations on their own with little involvement from the head office on a day-to-day basis. 

This process of localization of management, in addition to the growing competition as well as the alienation of the subsidiaries during World War 2, led to decentralization, with each subsidiary becoming a self-reliant and self-sufficient unit. 

This is where the senior management decided that while decentralization has indeed paid off, it would be in the company's best interest to guard against too much of it. Hence, to ensure that the Unilever culture, vision, and mission were shared among all subsidiaries, Unileverization was promoted. 

It has now become a long-standing practice at Unilever to regularly train managers from around the world, be it at a Unilever Four Acres facility or hired facilities in local areas, to ensure that Unilever's values are ingrained and followed everywhere.

The Unilever management matrix, which mainly consists of local talent and initiative with centralized control, is empowered to think transnationally. From nurturing local talent to cross-posting managers worldwide so that they can gain diverse experiences, better understand the Unilever culture, and establish unity, an array of practices are followed. 

Break communication barriers

Given the sheer size and scale of Unilever around the globe, effective communication across borders is an essential need for it. It doesn’t come as a surprise that the most relevant and used language for all forms of communication is English.

Hence, Unilever actively looks for employees with fluency in the English language when hiring and regularly invests to develop the English language as well as communication skills in general for its employees through various training programs. 

Pick the cream of the crop

Alone you can only go so far; together the sky is the limit with what you can achieve. Unilever takes it a step further by hiring the best as well as the brightest and then unifying them to achieve remarkable results. 

While it comes as no surprise that Unilever pays huge emphasis on onboarding the right people, the way how it goes about the process of recruitment offers a lesson to other businesses. Right from the mid-twentieth century, Unilever has continued to pioneer employee section systems.

From getting involved in universities to spot talent early on to sponsoring an extensive range of business courses, Unilever has done it all. Plus, trainees – as part of a group – are offered on-job experiences and courses at training facilities, allowing Unilever to create a holistic network of individuals whose informal experiences act as a glue that drives the company.

In addition to this, the vast system of attachments that allow employees to work on temporary assignments and projects in different parts of the world further grooms them offers them exposure and provides the 'know-how' of how Unilever functions. This empowers them and helps them further the unique Unilever way of working wherever they go next. 

The company's formal structure, together with the informal exchanges leads to the transfer of ideas, enhances communication, and fosters collaboration, which in turn, boosts innovation and helps solve problems, allowing Unilever to continue to grow. 

Modern workforce and workplace

Being resourceful is the new corporate approach of Unilever, which accounts for a number of organizational changes to prepare for the future, including:

• Tapping the open talent economy to boost the workforce whenever needed
• Harnessing the power of digital to drive business growth
• Being more creative and thinking out of the box to achieve goals
• Creating a better work-life balance and work environment

One example of Unilever’s unique approach to setting itself up for success in the future and unlocking its capacity to grow is its “YourFreelo” program in which internal resources of the company are offered holistic support through freelancers with different perspectives and handy skills.

Iterative improvements thanks to trial & error

From the outside, it may appear that it is Unilever's transnational strategy that has helped pave its way to success. While that wouldn’t be wrong to conclude but if we delve deep, we can find that it’s the messier revolution brought to the fore by continuous trial and error that has driven the company.

Hiring and training managers and leaders carefully, as well as linking decentralized units with a common culture, are the primary reasons behind the company's growth. That being said, the company has cautiously treated the path of an informal transnational network, realizing that it can elevate risks and lead to complacency.

To guard against it, the company continues to shake up the system every now and then, shifts roles, and responsibilities and evolves in the dynamic business world where change is the only certainty. By rethinking, reviewing, and reforming the strategies, the company manages to tackle the tricky waters and win.

Key takeaway 6: Develop bold middle-management

One of the major reasons behind the success and growth of Unilever has been its management, which doesn’t shy away from taking bold steps when needed. In addition to this, Unilever continues to invest in human capital and experiment as well as explore to stay a step ahead in the ever-evolving dynamic age.

Sustainable Living Plan – The Game-Changer For Business Growth

Seldom do businesses as large as Unilever get a chance to re-invent themselves and throw caution to the winds by taking the difficult long-term approach that can even negatively impact their bottom line.

In 2010, Unilever did just that by launching the Unilever Sustainable Living Plan (USLP), pioneering a new business model. 

Playing their part in the environment

At the core of the plan lies Unilever's commitment to doing right by people and the planet with its purpose-driven ambition of halving its environmental footprint while doubling its size and making the world a better place for 8 billion people.

Fighting climate change by ending deforestation, ensuring food security by championing sustainable agriculture, and investing in water, safety, and hygiene to uplift people's lives, Unilever set the bar higher than ever before.

Has Unilever been successful in achieving its targets? You bet it has.

By pushing the company in a unique way, further than ever before, in its quest to build a sustainable and equitable future, Unilever has delighted all stakeholders, appealed to the masses, and showed how companies can lead from the front by taking a stand at issues that matter.

Following are some of the highlights of the USLP more than ten years after its launch depicting how Unilever has made an explicit positive contribution to address the key challenges:

• Reached over 1.2 billion worldwide with health and hygiene programs
• Lowered the environmental footprint per customer by one-thirds
• Reduced greenhouse gas emissions by two-thirds
• Achieved 100% renewable grid electricity across all plants
• Achieved zero landfills across all factories
• Cut down on over €1 billion on costs by reducing waste and enhancing energy as well as water efficiency

"Brands with purpose grow; companies with purpose last; and people with purpose thrive."

Embedding sustainability into the business has yielded remarkable results for Unilever.

Unilever's purpose-led brands have contributed immensely to Unilever's growth in a day and age where sustainability has become mainstream as around two-thirds of consumers opt for a particular brand because of its stand on social issues, and more than 90% of millennials prefer brands that strive to elevate humanity. 

According to Unilever , its purpose-driven brands contribute to almost 75% of the company's growth and are growing 69% faster than the rest of the business, depicting that the huge bet has indeed paid off. 

While Unilever could have easily waited for consumers and governments worldwide to push it to embrace sustainability rather than do it all by itself – that too ahead of the time – it portrayed itself as the leader with the focus on the bigger picture which stands by its values and is not afraid to do the right thing even when the odds are stacked against it.

Key takeaway 7: Make sustainability part of your business strategy

Pioneering sustainability businesses, Unilever started a movement for social change in 2010 that helped it re-invent itself for good. It has paid off for the company, making customers fall head over heels for their brands.

Why is Unilever so successful?

Unilever is always in transition, equipping itself to continue making a difference well into the future. It isn’t perfect given its fair share of products that don’t seem sustainable or advertising campaigns that don’t go hand in hand with its values. However, it is a company on a big mission to transform the world, setting an example for the rest to follow.

Performance beyond expectations In challenging & uncertain circumstances

The year 2020 was volatile and unpredictable in ways more than one for all businesses operating around the globe. From supply chain bottlenecks to change in the way consumers shop and employees work, there were an array of disruptions, leading to an uncertain business environment.

Yet, in the face of such adversity, Unilever has stayed true to the values that have always made it a force to be reckoned with – resilience and agility – and hence, not only survived but also thrived. 

While underlying operating profit fell by 5.8% in 2020, the company experienced a boost in underlying sales growth of 1.9%. This can be mainly attributed to the company’s long-term planning, flexibility, and sustainable objectives.

Hence, where other companies focused on driving growth temporarily, Unilever developed their current and future strategies on sustainability and inclusiveness for growth. An example is their stronghold in emerging economies of China, India, and the USA, where they have always looked to include locals and contribute to society’s uplift.

Moreover, Unilever went ahead with a major shift in its legal structure in 2020 to stabilize and unify its operations worldwide. Formerly run by cross-border companies, Unilever NV and Unilever PLC, Unilever has consolidated itself into the single umbrella of Unilever PLC, becoming stronger than ever.

Below is a graph of Unilever's annual revenue in Euro Millions

Growth by the numbers

List of key strategic takeaways.

• Impact-driven Businesses Succeed

Now more than ever, it has become difficult for companies to achieve a competitive advantage. So, what can a business do? Be relevant to society and offer a multi-stakeholder return, benefiting all and crafting real change. It definitely pays off.

• Always Be Proactive and Flexible

Change is the only certainty, so you need to embrace it. Your best bet is to be on the lookout for potential opportunities that present themselves from time to time and grab them with both hands. You can do that if you remain agile and act quickly.

• Prioritize Investing In Human Capital

Your single most important asset is your people. Empower them so that they can help you elevate your brand. Right from hiring the ‘right’ people to nurturing them, you need to continuously invest in human capital in order to achieve lasting success.

• Take Risks To Grow

You can only reach the top with iterative improvements made possible by continuous innovation and risk-taking. Keep experimenting, testing, and exploring: if you achieve the desired result, you win, if you don’t, you learn.

• Encourage Sustainable Living And Make It Effortless

Weave sustainability into your processes and value chains. From the raw material used to the packaging, make sure you use eco-friendly practices to add value to the lives of people. This way you can win consumer goodwill and trust.

• Stay Intune With The DNA Of Your Brand

In the quest to do more and become more, you can easily forget to stay true to your ultimate purpose. Go back to the drawing board whenever needed, regularly communicate your purpose to your target audience, and stand up for what you stand for to separate yourself from the rest.

Unilever’s journey from one soap brand with a handful of sales and customers to the leading multinational consumer goods company with billions of consumers worldwide has been incredible and offers a number of lessons, including:

While we don’t know what the future holds, we are pretty much certain that Unilever is here to stay and dominate, doing right by the people and planet.

Unilever PESTEL Analysis

Before we dive deep into the PESTEL analysis, let’s get the business overview of Unilever. Unilever is one of the world’s leading suppliers of fast-moving consumer goods in food, home care, and personal care. 

Founded in 1929 due to a merger between the British soapmaker Lever Brothers and the Dutch margarine producer Margarine Unie, Unilever has become a global powerhouse in the FMCG (Fast Moving Consumer Goods) sector.

Here is an overview of Unilever’s business:

• Products and Brands : Unilever’s portfolio includes a wide range of products across diverse categories. Some of its most recognizable brands include Dove, Axe/Lynx, Ben & Jerry’s, Lipton, Magnum, Hellmann’s, Knorr, Sunsilk, and Surf, among others.
• Global Presence : Unilever operates in over 190 countries, and its products are used by billions of consumers daily. The company’s operations are often divided into regions: Europe, the Americas, Asia, Africa, and the Middle East.
• Beauty & Personal Care : This is the largest segment and includes skincare, haircare, deodorants, and oral care products.
• Home Care : This includes laundry detergents, household cleaning products, and related offerings.
• Foods & Refreshment : This segment comprises a diverse range of food products, including soups, bouillons, sauces, snacks, mayonnaise, salad dressings, spreads, and ice cream.

Financial Performance of Unilever

Turnover increased 14.5% to €60.1 billion, and the underlying operating profit was €9.7 billion, up 0.5% versus the prior year.

Business Strategies that set FMCG giant “Unilever” a class apart

Here is the PESTEL analysis of Unilever

A PESTEL analysis is a strategic management framework used to examine the external macro-environmental factors that can impact an organization or industry. The acronym PESTEL stands for:

• Political factors: Relate to government policies, regulations, political stability, and other political forces that may impact the business environment. 
• Economic factors: Deal with economic conditions and trends affecting an organization’s operations, profitability, and growth. 
• Sociocultural factors: Relate to social and cultural aspects that may influence consumer preferences, lifestyles, demographics, and market trends.
• Technological factors: Deal with developing and applying new technologies, innovations, and trends that can impact an industry or organization. 
• Environmental factors: Relate to ecological and environmental concerns that may affect an organization’s operations and decision-making.
• Legal factors: Refer to the laws and regulations that govern businesses and industries. 

In this article, we will do a PESTEL Analysis of Unilever.

PESTEL Analysis Framework: Explained with Examples

Political 

• Trade Regulations and Tariffs : Unilever operates in over 190 countries, so changes in trade policies, such as the imposition of tariffs or trade barriers, can have significant implications on its supply chain and distribution strategies.
• Political Stability : Countries with political unrest or instability can affect Unilever’s operations. For instance, civil strife, sudden regime changes, or political violence can disrupt the company’s manufacturing, distribution, or sales processes in those regions.
• Government Policies : Governmental policies related to health, safety, and quality standards can impact Unilever’s product formulations. For instance, certain countries may restrict specific ingredients in personal care or food products.
• Taxation Policies : Changes in tax regulations or corporate tax rates in countries where Unilever has significant operations can influence its financial performance.
• Regulation on Advertising and Promotion : Governments may impose regulations on how certain products (like foods with high sugar content or skincare products) are advertised or promoted. This can affect Unilever’s marketing strategies.
• Environmental Regulations : Political decisions related to environmental conservation can affect Unilever, especially given the company’s sustainability objectives. For example, regulations related to plastic packaging or waste management can impact Unilever’s operations.
• Foreign Relations and Geopolitical Issues : Political relationships between countries can affect Unilever’s operations, especially in regions with geopolitical tensions. For instance, strained relations between countries could affect trade and business operations.
• Regulations on International Investment : Some countries may have restrictions or policies encouraging or discouraging foreign investments. This could influence Unilever’s decisions to set up factories and distribution networks or even to enter or exit specific markets.
• Labor Laws : Political decisions related to labor, such as minimum wage regulations, worker rights, and union-related policies, can impact how Unilever manages its workforce in different countries.

• Global Economic Conditions : Economic downturns, recessions, or global economic crises can affect consumer spending habits. During economic downturns, consumers might switch to cheaper alternatives, which could affect sales of some of Unilever’s premium products.
• Currency Exchange Rates : Given its global operations, fluctuations in exchange rates can significantly impact Unilever’s earnings. A stronger or weaker currency can influence the cost of importing raw materials and sales profitability in foreign markets.
• Interest Rates : Changes in interest rates in different countries can impact Unilever’s financing decisions and costs. Higher interest rates can increase borrowing costs, whereas lower rates might present expansion opportunities.
• Inflation Rates : High inflation in a country can increase raw materials, production, and labor costs. It also affects consumer purchasing power, which might impact sales.
• Consumer Purchasing Power : A rising middle class and increasing disposable income in emerging economies can lead to greater demand for Unilever’s products. Conversely, economic challenges can decrease this power, leading to reduced sales.
• Employment Rates : High employment rates often correlate with higher consumer confidence and spending, benefiting companies like Unilever. Conversely, high unemployment can lead to decreased consumer spending.
• Raw Material Prices : The costs of raw materials, such as agricultural commodities for food products or chemicals for cleaning products, can fluctuate based on global economic conditions. Such fluctuations can impact Unilever’s cost structure and profitability.
• Competitive Landscape : Economic conditions can influence the competitive environment. During challenging times, there might be price wars, new entrants looking for market share, or even consolidation in the industry.
• Economic Policies : The economic policies of countries, such as fiscal policies, monetary policies, or trade policies, can impact how Unilever operates in specific regions.
• Emerging Markets Dynamics : The growth rates and economic conditions in emerging markets, like India, China, or Brazil, can provide opportunities for expansion and growth for Unilever. However, they also come with unique economic challenges and volatilities.

Unilever SWOT Analysis

Sociocultural

• Changing Consumer Preferences : As societal values change, so do consumer preferences. For instance, there’s a growing trend towards natural, organic, and environmentally friendly products. If Unilever doesn’t adapt to these changes, it might lose market share to niche brands that cater to these preferences.
• Health and Wellness Trends : Increased awareness about health and well-being can influence purchasing decisions. There’s a rising demand for healthier food options, skincare products without harmful chemicals, and sustainable products.
• Cultural Nuances : Unilever operates in over 190 countries, each with its own cultural norms and traditions. What’s acceptable or popular in one culture might not be in another. For instance, beauty standards, dietary habits, and cleanliness norms can vary widely.
• Demographic Changes : Factors like aging populations in certain countries or young populations in others can influence product demand. For example, an aging population might increase the demand for certain healthcare or wellness products.
• Gender Norms and Roles : Changing perceptions about gender roles, especially in traditionally conservative societies, can impact the demand for specific products. For example, increasing acceptance of men’s grooming and skincare products in certain cultures can open up new markets for Unilever.
• Lifestyle Changes : As lifestyles change, so do consumption habits. For instance, the rise of urban living might increase the demand for convenience products. Similarly, increasing travel might boost the demand for travel-sized personal care items.
• Ethical and Social Responsibility Concerns : Modern consumers, especially younger generations, often prefer brands that uphold ethical values, support social causes, or have sustainability initiatives. Unilever’s commitment to sustainability, therefore, not only aligns with its corporate responsibilities but also caters to this consumer preference.
• Influence of Social Media : The power of social media influencers and online communities in shaping consumer perceptions and trends cannot be understated. A positive or negative review by a key influencer can significantly impact product sales.
• Family Dynamics : Changes in family structures and dynamics, such as increasing numbers of single-person households or dual-income families, can influence product preferences and consumption habits.
• Education and Awareness : Higher levels of education and awareness in societies can lead to increased demand for quality products and products that align with modern values (e.g., cruelty-free products).

Technological

• E-Commerce and Online Retail : The rise of e-commerce platforms offers a new avenue for sales. Unilever must ensure its products are readily available online and manage logistics efficiently in this digital sales environment.
• Data Analytics and Consumer Insights : Advanced data analytics tools allow companies to understand consumer preferences, habits, and buying patterns in more detail. This data can be leveraged for product development, targeted marketing campaigns, and inventory management.
• Digital Marketing : With consumers spending more time online, digital advertising and marketing techniques (like social media marketing, influencer collaborations, and content marketing) become essential tools to reach potential customers effectively.
• Supply Chain Management Systems : Technological advancements in supply chain management can lead to more efficient and cost-effective processes, reducing waste and ensuring timely delivery of products.
• Product Innovation : Technologies related to product formulation, research, and development can lead to innovative products that cater to evolving consumer needs. For instance, advancements in biotechnology might lead to new skincare formulations.
• Sustainable Technologies : Given Unilever’s commitment to sustainability, investing in technologies that reduce environmental impact (like eco-friendly packaging solutions) is crucial.
• Smart Manufacturing and Automation : Using automation, AI, and Industry 4.0 principles in manufacturing can improve efficiency, reduce costs, and increase production capacities.
• Digital Communication Tools : Technologies like chatbots for customer service, augmented reality for virtual product trials (e.g., virtual makeup testers), or mobile apps for loyalty programs can enhance the customer experience.
• Blockchain : Blockchain technology can be used in the supply chain to ensure transparency and traceability of products, especially for claims like “organic” or “ethically sourced.”
• Internet of Things (IoT) : In the context of consumer goods, IoT can lead to smart appliances that influence product formats. For example, smart fridges might suggest recipes based on their contents, indirectly influencing food product preferences.

Environmental

• Sustainability Initiatives : Unilever has made several commitments towards sustainability. Consumer preferences are also shifting towards products and brands that prioritize sustainability. Addressing this through sustainable sourcing, reducing waste, and other eco-friendly practices can impact Unilever’s brand image and operations.
• Climate Change : Changes in global climate patterns can affect the supply of raw materials, especially agricultural commodities. This might result in price fluctuations or the availability of essential ingredients for Unilever’s products.
• Water Usage : Many of Unilever’s products, especially in the personal care and home care segments, require significant water usage. Given the global concern over water scarcity, there’s a push for products that need less water or companies that adopt water conservation techniques in their manufacturing processes.
• Packaging Concerns : The environmental impact of packaging materials, especially plastics, is significant. To minimize its environmental footprint, Unilever needs to consider alternative packaging solutions that are biodegradable or recyclable.
• Regulations and Compliance : Many countries enact stricter environmental regulations concerning emissions, waste management, and sustainability. To avoid legal issues and potential backlash, Unilever must ensure compliance with these regulations across its global operations.
• Biodiversity : Sourcing certain natural ingredients can impact biodiversity, especially if not done sustainably. Ethical and sustainable sourcing is crucial to ensure that ecosystems are not harmed.
• Carbon Footprint : There’s a growing emphasis on reducing carbon emissions. Unilever’s manufacturing and transportation operations need to consider strategies to reduce their carbon footprint.
• Energy Consumption : Adopting renewable energy sources and optimizing energy use in manufacturing units can lead to operational cost savings and align with global sustainability goals.
• Consumer Awareness : Modern consumers are more informed about environmental issues. This awareness can influence their purchasing decisions, pushing them towards eco-friendly products and brands.
• Waste Management : Efficient waste management, especially in manufacturing units, is essential to reduce environmental impact and ensure compliance with local regulations.

• Regulatory Compliance : Different countries have varying regulations related to product standards, health and safety, labeling, advertising, and quality. Ensuring compliance with these standards across different markets is critical for Unilever.
• Intellectual Property (IP) Rights : Protecting patents, trademarks, and copyrights is vital for a company with numerous proprietary products and brand names. Additionally, Unilever needs to ensure it does not infringe on the IPs of others.
• Labor and Employment Laws : Different countries have diverse labor laws regarding working hours, wages, benefits, and workers’ rights. Adhering to these laws is crucial for Unilever’s operations in various regions.
• Trade and Tariff Regulations : As a global entity, Unilever must navigate international trade laws, customs duties, and tariff regulations that could impact its supply chain and distribution.
• Antitrust and Competition Laws : Given its significant market presence, Unilever needs to be cautious about potential anti-competitive behavior, monopolistic practices, or actions that could be perceived as limiting competition.
• Environmental Laws : Many countries have strict environmental regulations concerning emissions, waste disposal, water usage, and sustainability. Unilever must ensure its operations align with these environmental laws.
• Data Protection and Privacy : With the increasing importance of data in marketing and operations, adhering to data protection regulations like the GDPR in Europe is crucial for Unilever.
• Advertising and Promotion Laws : Countries may have specific rules about how products can be advertised, especially if they pertain to health claims, children’s advertising, or potentially misleading information.
• Taxation Laws : Given its operations across numerous countries, Unilever must navigate the complex web of international taxation laws, ensuring it pays the correct taxes in each jurisdiction and adheres to regulations related to profit repatriation, transfer pricing, and more.
• Contract and Commercial Laws : Engaging with suppliers, distributors, and other stakeholders requires contracts. Adherence to contract laws and international commercial laws is vital for smooth business relationships.

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BUS608: Ethical and Strategic Management

Case study: unilever.

As you read this case study, consider how international considerations are important for ethics and social responsibility. Review the critical thinking questions at the end and consider other companies that may have similar social responsibility strategies internationally.

Unilever "Enhancing Livelihoods" through Project Shakti

According to management guru Peter Drucker, whose ideas significantly contributed to the foundations of thought about the workings of the modern business corporation, workers "need to know the organization's mission and to believe in it". How do organizations ensure this commitment? By satisfying workers' values. A program undertaken by Unilever, the Dutch-British multinational company co-headquartered in Rotterdam and London, illustrates the kind of values-oriented corporate endeavor Drucker describes. Project Shakti is a Unilever CSR initiative in India that links corporate social responsibility and financial opportunities for local women. It is considered a leading example of micro-entrepreneurship, and it expands the concept of sustainability to include not only environmental issues but also economic opportunity and financial networking in underdeveloped areas.

The goal, according to Unilever, is to give rural Shakti women the ability to earn money for themselves and their families as micro-entrepreneurs. Unilever's subsidiary in India, Hindustan Lever, has started training programs for thousands of women in small towns and villages across India to help them understand how to run their own small sole proprietorships as distributors of the company's products. With support from a team of rural sales managers, women who had been unable to support themselves are now becoming empowered by learning how a supply chain works, what products Hindustan Lever produces, and how to distribute them. The sales managers also act in a consulting capacity to help with business basics, money management, negotiations, and related skills that help the women run their businesses effectively.

The program was so successful that Unilever expanded it to include Shakti men, typically the sons, brothers, or husbands of the women already running businesses. The men, who are essentially like delivery drivers, sell Unilever products using bicycles for transportation, enabling them to cover a larger area than women cover on foot. The women spend most of their time running the business.

Project Shakti has enlisted more than 100,000 rural participants, which includes about 75,000 women. The project has changed their lives in ways that are profound, and not only because of the income earned. The women now have increased self-esteem based on a sense of empowerment, and they finally feel they have a place in Indian society. According to the Unilever Sustainable Living Plan, Project Shakti is one of the best and most sustainable ways the company can address women's social concerns. It allows Unilever to conduct business in a socially responsible manner, helping women to help themselves while extending the reach of its products.

Critical Thinking

• Do you believe Unilever sponsors the Shakti program to help women, to boost its own profits, or both? Explain your answer.
• If Unilever has mixed motives, does this discredit the company in your eyes? Should it?
• How is this program an example of both corporate and personal sustainability?
• Could this model program be duplicated elsewhere, in another area and with different products? Why or why not?

Unilever Strategic Management Implementation Analytical Essay

Introduction, strategy implementation.

This paper is about strategy implementation, which is the most difficult aspect of strategic management of the Unilever Company and provides justification on how this might be the case. Unilever is one of the world’s top manufacturers of consumer products, which include food and personal healthcare products.

According to DeLong and Srivastava (2010), Unilever operates in a highly competitive environment with Nestle and Kraft being the main competitors. In 1999, Unilever started to implement a strategy known as the ‘Path to Growth’ based on capital efficiency, global buying, operating costs, and brand focus.

However, the main problem was to implement the strategy to achieve the goals and objectives according to the mission and vision statements of the company (Iguchi & Hayashi, 2009; Stevenson & Hojati, 2007). Typically, strategy implementation is the most difficult part of the strategic management process because it involves making changes to allow for and to accommodate the new changes (Aaltonen & Ikävalko, 2002).

Change is the core element of strategy implementation and making the change requires a significant deal of sacrifice, commitment to hard work from employees, and discipline to change and align the company to its strategic mission and vision statements (Hubbard & Beamish, 2010).

Description of Unilever’s strategy implementation

Unilever’s strategy implementation is based on five steps, which include strategic analysis, external and internal environmental analysis, formulation of the business strategy, and overall implementation of the strategy (Aladwani, 2001).

According to Hubbard and Beamish (2010), once the core elements of the specific strategy and the mission and vision statements have been written, implementing the strategy begins (Atkinson, 2006; Hill & Jones, 2007).

The core business strategy must be aligned to the corporate mission statements and objectives based on the company’s existing business model. Here, Unilever’s mission statement consists of the values, major goals, and objectives (Bartlett & Ghoshal, 2002).

The mission statement elements provide guidelines to the management and the workforce to work towards implementing the strategy and to keep the strategy in control to ensure workers do not deviate from the strategic path (Cravens & Piercy, 2008).

The mission provides an explanation of the existence of the company, and Unilever’s business strategy to ‘think-global and act-global’, using the cross-market subsidisation strategies (Clark, 2000; Cleland & Ireland, 1999). To effectively address the situation, the company has formulated finance, acquisition and merger, human resource, product development, and corporate strategies into the ‘Path to Growth’ strategy.

Hubbard and Beamish (2010) argue that the process of implementation is the most difficult part because it involves taking actions on different levels of the organisation, which include the provision of leadership, changing the organisational culture, organisational structure, and organisational controls to support and accommodate the new changes (Clark, 2000).

The company’s implementation of the ‘Path to Growth’ strategy was formulated and started in 2000 with the aim of sustaining the firm to achieve growth, reduce the cost of doing business, reduce the dependence on less qualified human resources, and to align the company to the goals and objectives defined in the strategy (Hubbard & Beamish, 2010; Fleisher, & Bensoussan, 2003).

The elements defined in the growth strategy include concentrating on product innovation, marketing better performing brands in the global market, concentrating on investment, reducing the brands to concentrate on profitable brands, and strongly focusing on brand development to achieve the projected annual growth of 6% and the profit margin of 16% (Hubbard & Beamish, 2010).

According to Hubbard and Beamish (2010), leadership is one of the key elements of Unilever’s approach to strategy implementation because leadership provides strategic direction, effective management of the company’s resource portfolio, sustaining an effective organisational culture, putting measures in place to ensure ethical practices within the company affairs, and establishing balanced organisational control for brand building, innovation, market leadership, and brand awareness (Yusof & Aspinwall, 2000).

Here, Unilever’s leadership is about providing direction on what to be done and how it should be done in multicultural, local and foreign environments. In addition, the leadership provides direction on how to expand globally in the company’s activities (Hubbard & Beamish, 2010).

Unilever sometimes outsources the leadership services to companies which have specialised personnel, who interact with the senior leadership of the company to create the mission and vision statements of the company, which reflect the desired changes to implement in the organisation (Pearce & Robinson, 2000).

In addition to that, the leadership relies on total quality management techniques in some subsidiary plants, and not on the entire organisation. In the context of Hubbard and Beamish’s (2010) and Barney and Hesterly’s (2009) arguments, the company’s leadership focuses on the enhanced work organisation, team building techniques, which were very successful in certain centers including the personal products division.

Cooperate structure

Unilever’s cooperate structure consists of executive directors and non-executive directors. In addition, the company has senor leadership executives responsible for managing profit and loss to ensure the cooperate strategy of reducing losses and increasing profits are achieved and sustained (Maon, Lindgreen & Swaen, 2009).

The senior cooperate officers are interested in providing the required information on the success and other trends in strategy implementation to the executives for decision making (Morgan & Rego, 2009; Swayne, Duncan and Ginter, 2012).

Based on the company’s pursuit to achieve the growth strategy, Unilever streamlined the management and carried out some cooperate restructuring, which led to greater clarification on the roles and responsibilities of the management, the removal of bureaucracies and other unnecessary complexities, and the simplification of operations within the company’s different branches (Hubbard & Beamish, 2010).

The results were a reduction in operational costs and better performance in the global market.

Under the human resource strategy, the company’s human resource management undertakes to recruit competent staff that is responsible for the successful implementation of the growth strategy (Eisenstat, 2000).

Under the strategy, the management is responsible for the employee recruitment and placement to ensure the right people with the right skills are assigned to the jobs. In addition, the right human resource strategy is responsible for the replacement planning, employee compensation, employee training and development, and rotation in the departments (Eisenstat, 2000).

Strategy control

Control is one of the strategic approaches the company uses to ensure strategy is aligned to the goals and objectives of the growth strategy during the strategy implementation process (Graetz, 2000). Typically, the organisation uses strategy control mechanisms to provide incentives for the employees and the management to pursue the right activities to achieve the growth strategy.

In addition, the company has control systems in place to facilitate the performance and ensure effective monitoring and progress of the performance objectives (Von Krogh, Nonaka & Aben, 2001).

Here, the control systems provide the management with the ability and tools to take action to ensure correct decisions are made provide the management with the ability to respond to unexpected events in appropriate ways, and reward mechanisms, which are used to determine the approaches used to reward employees in executing their activities (Graetz, 2000).

To ensure strategic controls, the company struggles to accomplish strategic control through the behavioral, output, and personal controls. The company sets targets for the employees to achieve to ensure that the company gains for the synergy of group dynamics (Hubbard & Beamish, 2010).

Organisational culture

Organisational culture is one of the tools the company uses to implement its growth strategy. Typically, organisational culture is “the specific collection of values, norms, beliefs and attitudes that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organisation” (Von Krogh, Nonaka & Aben, 2001).

Unilever uses culture as one of the strongest tools to achieve coordination and integration of different strategies, which include financial strategies, human resource strategies, acquisition and mergers when they happen and when they are necessary, product development and innovation strategies, and the cooperate strategies in the pursuit of the growth strategy.

According to Hulland (1999), financial strategies enable the company to operate within the available resources, keep the debtors; stock as little as possible while ensuring that the working capital is appropriately maintained at the desired levels, adhere to the authorised accounting laws and practices, ensure that the sales revenue are consistently maintained and within the target, and ensuing that the purchasing function is kept at appropriate levels (Hulland, 1999).

Other the supporting strategies such as the corporate strategy is achieved and maintained by managing good relationship with governments where the company has its assets and operations, and becoming a leader in the consumer goods market (Hubbard & Beamish, 2010).

Towards the pursuit and fulfillment of the growth strategy, the company provides the management and the workers with the ability to effectively communicate decisions, guide the daily business relationships, and to develop a collective identity.

The core values of the organisation are controlled by a belief system, which controls the core values of the Unilever Company, which are linked to its growth strategy in a multicultural environment (Hubbard & Beamish, 2010).

Analysis and critique of the benefits and limitations of strategy implementation in the organisation

An analysis of the benefits accruing from the implementation of the strategy will follow after the company’s strengths, weakness, opportunities, and threats are analysed.

A critical analysis of the company shows that when Unilever successfully implemented the new strategy, the company achieved a strong global brand strategy and became effective in brand marketing because it enjoys geographic and sectorial diversity with the ability to develop brands quickly using efficient control structures (Von Krogh, Nonaka & Aben, 2001).

The analysis shows that the company is weak in industry focus, non-core brands, risk neglect, lacks major patents, and has a pronounced absence from premium markets ((Von Krogh, Nonaka & Aben, 2001).

Studies show that the company is experiencing intense competition from other companies, is becoming stagnant in markets such as the North American market, and niche brands are gaining favor (Hubbard & Beamish, 2010). However, the opportunities include building on brand equity, widening consumer base, products for ageing population, and potential of developing markets.

In this analysis, it is clear that the motivation of the company was to gain access to a wide customer base in the world by taking the services and products closer to the consumer by the company’s rapid expansion into different markets in the world.

In addition to that, the company has continued to invest in innovation to make better and higher quality products through research and development programs. Here, the company has made significant investments in brand recognition, showing that its strategy implementation has been successful.

Another area of success was the restructuring that was carried out to ensure that direct responsibility was assigned the regional marketers could communicate directly with the top management to resolve problems and any other issues that could arise as a result of operations in overseas markets in the company’ growth strategy.

In addition, the restructuring has enable people working in different areas such as in Asia to move to Singapore to work as a team in product innovation and development (Hubbard & Beamish, 2010). In addition, the restricting enabled regional managers to be directly responsible for their own countries to reduce the time required to resolve issues of urgency (Hubbard & Beamish, 2010).

Several benefits were realised when the company implemented path to growth strategy implementation. The benefits include better strategy formulation and implementation, which led to the reduction of core product categories to focus on (Hubbard & Beamish, 2010).

The reduction in the number of core products has enabled the company to concentrate in the provision of better quality services and products at lower costs, and has a achieved a reduction in the cost of production, leading to the elimination of unnecessary investments and costs in activities, which do not add value to the organisation.

In addition, the company has steadily gained competitive advantage over rival companies with the same product offerings (Von Krogh, Nonaka & Aben, 2001).

On the other hand, it has been demonstrated that the company has become the market leader in the core products the company decided to focus on. However, it is not the case for all countries the company has its operations in, but the trend is clearly demonstrated in the acquisition of national companies and in its investment in core activities (Ramos‐Rodríguez & Ruíz‐Navarro, 2004).

Prior to strategy implementation, the company was operating with 2000 brands, which were reduced to 1600 brands. In addition, the company has managed to stretch well-known and famous brands and categories such as Lipton into different beverages and brands.

In addition to the success in strategy implementation, it is clear that the company has successfully increased revenue and profits generated from its core brands, turnover of over 90% of its products have been experienced, new mergers have occurred, higher levels of brand awareness have been achieved, and higher profits continue to be registered in the company’s financial books (London & Hart, 2004).

For instance, by 2013, the company registered impressive financial growth compared with the previous year, by recoding a 10.5% products turnover, a 2.2 acquisition rate, and a 1.1% net of disposals because of the growth strategy. In addition to that, core earnings increased by 11% in the same period, showing that the global growth strategy was a success.

Unilever’s implementation of the path to growth strategy was successful in driving the organisation to achieve its growth strategy in the global market. However, several issues have emerged in the process of strategy implementation. For instance, the company identified the core strategy was to reduce the number of brands and concentrate on certain core brands (Hubbard & Beamish, 2010).

Typically, the company’s decision to concentrate on the core brands and leave other brands was a means to jeopardize its growth strategy because no research was done to determine the underlying reasons, which led the brands to underperform.

In addition to that, neglecting other brands could give rivals the opportunity to use the neglected brands to penetrate the market and provide the platform the competitors to enter the highly competitive market (Hubbard & Beamish, 2010).

In addition to that, the strategy for growth does not clarify the points where culture, which is an important asset of strategy implementation, is given the required emphasis. The company operates in a multicultural environment and seems not to be sensitive to the values, beliefs, and norms of different cultures in product innovation and development.

A study by DeLong and Srivastava (2010) shows that there is no effective strategic leadership and planning for strategy growth and development defined by the company.

Here, strategic leadership is one of the core principles of strategy implementation and if not properly factored, leads to the failure to achieve the goals and objectives if strategy implementation (Hubbard & Beamish, 2010). Here, the leadership style is critical in providing the strategic direction for strategy implementation and when not well articulated might not lead to the desired results.

Analysis of why implementation might be the most difficult part of the strategic management process in the organisation

Implementation is the most difficult part of the growth strategy because the company has not clearly demonstrated the point at which the different strategies get combined to provide the pillars for the overall growth strategy (Hubbard & Beamish, 2010). It implies that the management and the workers at different levels have to develop their own objectives to support the overall implementation of the overall growth strategy.

Such an approach could be very difficult to achieve the solid implementation of the overall strategy because each department has their own ways of approaching the implementation process.

In addition to that, providing leadership is very difficult because the company operates in an international environment with many countries, which have their own laws and regulations concerning labor rights, employment laws, and taxation and other laws, which are difficult to synchronize into a single package when implementing the strategies.

It is also important to consider the problem of diversity of beliefs, norms, and the values of different customers in a global environment.

The above scenario creates a situation where it becomes difficult for the company to distinguish the strategy to be implemented when different strategies need to be implemented and the scope of implementing the support strategies (Hubbard & Beamish, 2010). The reason is that each strategy requires different approaches to be implemented.

For instance, implementing the financial strategy means that different laws and regulations governing taxation and salaries among other laws have to be evaluated for each country the company has its operations. The dilemma is to determine the strategy to implement at a specific location not to contradict the final strategy (DeLong & Srivastava, 2010).

Another problem is that when managers and workers misinterpret the strategy, it becomes a problem for the managers to implement the strategy. For example, the workers might concentrate on old products or regions, and the managers want the workers to concentrate on specific products and regions, which they figure could lead to the success of the growth strategy.

Such misunderstanding could lead the team to leave the brand and product portfolio and concentrate in activities, which do not broaden the scope of the strategy. In addition to that, the process should start with preparation of complete details of the changes that are necessary to implement the strategy.

The “problem is because the management and the workers do not know what they don’t know” (Hubbard & Beamish, 2010). The solution in most instances is to look for an outside team to help in the provision of advice on what is not known.

If the company resources are inadequately aligned with the new strategy, the results make the strategy implementation process difficult to achieve. The problems related to resources include employing personnel with the wrong skills and lack of time to implement the strategy.

Other issues include unanticipated major problems such as wars and changes to laws and regulations, environmental factors, inadequate leadership, loss of focus, poor coordination, lack of information systems to monitor the implementation progress, and poorly done tasks.

Recommendations on how strategy implementation could be enhanced

The results from the study show that the company has to start the overall implementation strategy by communicating the case for change and ensure that all stakeholders understand the details and reasons for new change. In addition, the company needs to build consensus on how to start the implementation process.

The consensus should cover all employees including the top management. Once a common consensus has been reached, it is important to position key allies and people with skills in key positions and empowering them to move the implementation process. Rewards are necessary for achievers and resources should be reallocated to the key areas, which drive success.

The need for an implementation plan is critical because it clearly defies the scope, main activities and their implementation strategies, timeline for change, risk identification, contingency plans, communication efforts, and reporting and monitoring framework.

In conclusion, it has been established that strategy implementation is the most difficult part of strategic management because organisations, which operate in multicultural environments with different values, and beliefs find it difficult to provide leadership for strategy implementation. In addition, strategy controls to realign the company to its mission and mission statements are additional sources of difficulties.

Companies find it difficult to determine the strategy to implement among different strategies, employees do not understand the big picture of strategy to implement, lack of details on the approach to implement the strategies, leaving the product portfolio untouched, and failure to communicate and prepare people to get involved in strategy implementation.

Results from the study show that the organisational culture should be factored into the decision making process when starting the strategy implementation process to accommodate the organisational culture when new changes are introduced into the company.

In addition, the study shows that for Unilever to be successful in strategy implementation, the company should adopt and integrate the concept of total quality management into the strategy implementation process. It is important for organisations to communicate strategy change and the need for change, organisations can better prepare employees to be proactively involved in strategy change.

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Artificial intelligence in strategy

Can machines automate strategy development? The short answer is no. However, there are numerous aspects of strategists’ work where AI and advanced analytics tools can already bring enormous value. Yuval Atsmon is a senior partner who leads the new McKinsey Center for Strategy Innovation, which studies ways new technologies can augment the timeless principles of strategy. In this episode of the Inside the Strategy Room podcast, he explains how artificial intelligence is already transforming strategy and what’s on the horizon. This is an edited transcript of the discussion. For more conversations on the strategy issues that matter, follow the series on your preferred podcast platform .

Joanna Pachner: What does artificial intelligence mean in the context of strategy?

Yuval Atsmon: When people talk about artificial intelligence, they include everything to do with analytics, automation, and data analysis. Marvin Minsky, the pioneer of artificial intelligence research in the 1960s, talked about AI as a “suitcase word”—a term into which you can stuff whatever you want—and that still seems to be the case. We are comfortable with that because we think companies should use all the capabilities of more traditional analysis while increasing automation in strategy that can free up management or analyst time and, gradually, introducing tools that can augment human thinking.

Joanna Pachner: AI has been embraced by many business functions, but strategy seems to be largely immune to its charms. Why do you think that is?

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Yuval Atsmon: You’re right about the limited adoption. Only 7 percent of respondents to our survey about the use of AI say they use it in strategy or even financial planning, whereas in areas like marketing, supply chain, and service operations, it’s 25 or 30 percent. One reason adoption is lagging is that strategy is one of the most integrative conceptual practices. When executives think about strategy automation, many are looking too far ahead—at AI capabilities that would decide, in place of the business leader, what the right strategy is. They are missing opportunities to use AI in the building blocks of strategy that could significantly improve outcomes.

I like to use the analogy to virtual assistants. Many of us use Alexa or Siri but very few people use these tools to do more than dictate a text message or shut off the lights. We don’t feel comfortable with the technology’s ability to understand the context in more sophisticated applications. AI in strategy is similar: it’s hard for AI to know everything an executive knows, but it can help executives with certain tasks.

When executives think about strategy automation, many are looking too far ahead—at AI deciding the right strategy. They are missing opportunities to use AI in the building blocks of strategy.

Joanna Pachner: What kind of tasks can AI help strategists execute today?

Yuval Atsmon: We talk about six stages of AI development. The earliest is simple analytics, which we refer to as descriptive intelligence. Companies use dashboards for competitive analysis or to study performance in different parts of the business that are automatically updated. Some have interactive capabilities for refinement and testing.

The second level is diagnostic intelligence, which is the ability to look backward at the business and understand root causes and drivers of performance. The level after that is predictive intelligence: being able to anticipate certain scenarios or options and the value of things in the future based on momentum from the past as well as signals picked in the market. Both diagnostics and prediction are areas that AI can greatly improve today. The tools can augment executives’ analysis and become areas where you develop capabilities. For example, on diagnostic intelligence, you can organize your portfolio into segments to understand granularly where performance is coming from and do it in a much more continuous way than analysts could. You can try 20 different ways in an hour versus deploying one hundred analysts to tackle the problem.

Predictive AI is both more difficult and more risky. Executives shouldn’t fully rely on predictive AI, but it provides another systematic viewpoint in the room. Because strategic decisions have significant consequences, a key consideration is to use AI transparently in the sense of understanding why it is making a certain prediction and what extrapolations it is making from which information. You can then assess if you trust the prediction or not. You can even use AI to track the evolution of the assumptions for that prediction.

Those are the levels available today. The next three levels will take time to develop. There are some early examples of AI advising actions for executives’ consideration that would be value-creating based on the analysis. From there, you go to delegating certain decision authority to AI, with constraints and supervision. Eventually, there is the point where fully autonomous AI analyzes and decides with no human interaction.

Because strategic decisions have significant consequences, you need to understand why AI is making a certain prediction and what extrapolations it’s making from which information.

Joanna Pachner: What kind of businesses or industries could gain the greatest benefits from embracing AI at its current level of sophistication?

Yuval Atsmon: Every business probably has some opportunity to use AI more than it does today. The first thing to look at is the availability of data. Do you have performance data that can be organized in a systematic way? Companies that have deep data on their portfolios down to business line, SKU, inventory, and raw ingredients have the biggest opportunities to use machines to gain granular insights that humans could not.

Companies whose strategies rely on a few big decisions with limited data would get less from AI. Likewise, those facing a lot of volatility and vulnerability to external events would benefit less than companies with controlled and systematic portfolios, although they could deploy AI to better predict those external events and identify what they can and cannot control.

Third, the velocity of decisions matters. Most companies develop strategies every three to five years, which then become annual budgets. If you think about strategy in that way, the role of AI is relatively limited other than potentially accelerating analyses that are inputs into the strategy. However, some companies regularly revisit big decisions they made based on assumptions about the world that may have since changed, affecting the projected ROI of initiatives. Such shifts would affect how you deploy talent and executive time, how you spend money and focus sales efforts, and AI can be valuable in guiding that. The value of AI is even bigger when you can make decisions close to the time of deploying resources, because AI can signal that your previous assumptions have changed from when you made your plan.

Joanna Pachner: Can you provide any examples of companies employing AI to address specific strategic challenges?

Yuval Atsmon: Some of the most innovative users of AI, not coincidentally, are AI- and digital-native companies. Some of these companies have seen massive benefits from AI and have increased its usage in other areas of the business. One mobility player adjusts its financial planning based on pricing patterns it observes in the market. Its business has relatively high flexibility to demand but less so to supply, so the company uses AI to continuously signal back when pricing dynamics are trending in a way that would affect profitability or where demand is rising. This allows the company to quickly react to create more capacity because its profitability is highly sensitive to keeping demand and supply in equilibrium.

Joanna Pachner: Given how quickly things change today, doesn’t AI seem to be more a tactical than a strategic tool, providing time-sensitive input on isolated elements of strategy?

Yuval Atsmon: It’s interesting that you make the distinction between strategic and tactical. Of course, every decision can be broken down into smaller ones, and where AI can be affordably used in strategy today is for building blocks of the strategy. It might feel tactical, but it can make a massive difference. One of the world’s leading investment firms, for example, has started to use AI to scan for certain patterns rather than scanning individual companies directly. AI looks for consumer mobile usage that suggests a company’s technology is catching on quickly, giving the firm an opportunity to invest in that company before others do. That created a significant strategic edge for them, even though the tool itself may be relatively tactical.

Joanna Pachner: McKinsey has written a lot about cognitive biases  and social dynamics that can skew decision making. Can AI help with these challenges?

Yuval Atsmon: When we talk to executives about using AI in strategy development, the first reaction we get is, “Those are really big decisions; what if AI gets them wrong?” The first answer is that humans also get them wrong—a lot. [Amos] Tversky, [Daniel] Kahneman, and others have proven that some of those errors are systemic, observable, and predictable. The first thing AI can do is spot situations likely to give rise to biases. For example, imagine that AI is listening in on a strategy session where the CEO proposes something and everyone says “Aye” without debate and discussion. AI could inform the room, “We might have a sunflower bias here,” which could trigger more conversation and remind the CEO that it’s in their own interest to encourage some devil’s advocacy.

We also often see confirmation bias, where people focus their analysis on proving the wisdom of what they already want to do, as opposed to looking for a fact-based reality. Just having AI perform a default analysis that doesn’t aim to satisfy the boss is useful, and the team can then try to understand why that is different than the management hypothesis, triggering a much richer debate.

In terms of social dynamics, agency problems can create conflicts of interest. Every business unit [BU] leader thinks that their BU should get the most resources and will deliver the most value, or at least they feel they should advocate for their business. AI provides a neutral way based on systematic data to manage those debates. It’s also useful for executives with decision authority, since we all know that short-term pressures and the need to make the quarterly and annual numbers lead people to make different decisions on the 31st of December than they do on January 1st or October 1st. Like the story of Ulysses and the sirens, you can use AI to remind you that you wanted something different three months earlier. The CEO still decides; AI can just provide that extra nudge.

Joanna Pachner: It’s like you have Spock next to you, who is dispassionate and purely analytical.

Yuval Atsmon: That is not a bad analogy—for Star Trek fans anyway.

Joanna Pachner: Do you have a favorite application of AI in strategy?

Yuval Atsmon: I have worked a lot on resource allocation, and one of the challenges, which we call the hockey stick phenomenon, is that executives are always overly optimistic about what will happen. They know that resource allocation will inevitably be defined by what you believe about the future, not necessarily by past performance. AI can provide an objective prediction of performance starting from a default momentum case: based on everything that happened in the past and some indicators about the future, what is the forecast of performance if we do nothing? This is before we say, “But I will hire these people and develop this new product and improve my marketing”— things that every executive thinks will help them overdeliver relative to the past. The neutral momentum case, which AI can calculate in a cold, Spock-like manner, can change the dynamics of the resource allocation discussion. It’s a form of predictive intelligence accessible today and while it’s not meant to be definitive, it provides a basis for better decisions.

Joanna Pachner: Do you see access to technology talent as one of the obstacles to the adoption of AI in strategy, especially at large companies?

Yuval Atsmon: I would make a distinction. If you mean machine-learning and data science talent or software engineers who build the digital tools, they are definitely not easy to get. However, companies can increasingly use platforms that provide access to AI tools and require less from individual companies. Also, this domain of strategy is exciting—it’s cutting-edge, so it’s probably easier to get technology talent for that than it might be for manufacturing work.

The bigger challenge, ironically, is finding strategists or people with business expertise to contribute to the effort. You will not solve strategy problems with AI without the involvement of people who understand the customer experience and what you are trying to achieve. Those who know best, like senior executives, don’t have time to be product managers for the AI team. An even bigger constraint is that, in some cases, you are asking people to get involved in an initiative that may make their jobs less important. There could be plenty of opportunities for incorpo­rating AI into existing jobs, but it’s something companies need to reflect on. The best approach may be to create a digital factory where a different team tests and builds AI applications, with oversight from senior stakeholders.

The big challenge is finding strategists to contribute to the AI effort. You are asking people to get involved in an initiative that may make their jobs less important.

Joanna Pachner: Do you think this worry about job security and the potential that AI will automate strategy is realistic?

Yuval Atsmon: The question of whether AI will replace human judgment and put humanity out of its job is a big one that I would leave for other experts.

The pertinent question is shorter-term automation. Because of its complexity, strategy would be one of the later domains to be affected by automation, but we are seeing it in many other domains. However, the trend for more than two hundred years has been that automation creates new jobs, although ones requiring different skills. That doesn’t take away the fear some people have of a machine exposing their mistakes or doing their job better than they do it.

Joanna Pachner: We recently published an article about strategic courage in an age of volatility  that talked about three types of edge business leaders need to develop. One of them is an edge in insights. Do you think AI has a role to play in furnishing a proprietary insight edge?

Yuval Atsmon: One of the challenges most strategists face is the overwhelming complexity of the world we operate in—the number of unknowns, the information overload. At one level, it may seem that AI will provide another layer of complexity. In reality, it can be a sharp knife that cuts through some of the clutter. The question to ask is, Can AI simplify my life by giving me sharper, more timely insights more easily?

Joanna Pachner: You have been working in strategy for a long time. What sparked your interest in exploring this intersection of strategy and new technology?

Yuval Atsmon: I have always been intrigued by things at the boundaries of what seems possible. Science fiction writer Arthur C. Clarke’s second law is that to discover the limits of the possible, you have to venture a little past them into the impossible, and I find that particularly alluring in this arena.

AI in strategy is in very nascent stages but could be very consequential for companies and for the profession. For a top executive, strategic decisions are the biggest way to influence the business, other than maybe building the top team, and it is amazing how little technology is leveraged in that process today. It’s conceivable that competitive advantage will increasingly rest in having executives who know how to apply AI well. In some domains, like investment, that is already happening, and the difference in returns can be staggering. I find helping companies be part of that evolution very exciting.

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