UNILEVER COMPANY ANALYSIS
Unilever is one of the most prominent global companies dealing with the manufacturing and supply of fast-moving goods. The company enjoys a considerably large share in the worldwide market, with around 2 billion users. Diversification of products and services is associated with the continued dominance that the company enjoys within the global market. Unilever deals with dressings and spreads, beverages and ice cream, savoury, and garments meant for home care. Since its creation during the year 1930 due to the merger Lever Brothers and Margarine Unie, the company has tapped on strategic approaches to continued benefitting from competitive advantages. Profits, financial ratios, stock market share price, and sales revenue are vital considerations when reflecting on Unilever’s financial strength. Financially, the company has attained commendable performance since its formulation. According to the financial details for the year 2019, the company’s revenue was 51.98 billion EUR. This paper reflects on this British-Dutch Multinational Firm considering the corporation’s position, the external environment influencing its day-to-day operations, and the main issues that ought to be resolved.
Internal and External Environments
The continued success enjoyed by Unilever Company is associated with the ability of the management team to formulate strategic approaches to leverage competitive advantage. Various factors are considered by the company’s managerial team when coming up with operational decisions and policy frameworks. Such considerations offer the management team with both environmental and social contexts hence leading to the adoption of faultless operational decisions. The internal and external environments form some of the critical considerations by the managers when deciding on the best strategic approaches to enable an organization to continue improving its financial performance (Wheelen et al., 2017). Some of the internal and external factors influencing the operations within the company include;
- Internal Analysis
The internal environment of Unilever Company is an essential consideration when reflecting on its performance. This explains the reasons why some of the distinct internal factors exemplified below are key in dictating the levels of performance.
- The Value Chain
The CSR policy formulated by the company is critical in dictating Unilever’s value essence of the value chain. CSR is one of the essential considerations which influence the ability of any organization to leverage on competitive advantage and outshine other firms with similar services/commodities in the market (Nyuur et al., 2019). Unilever considers CSR as a vital aspect whose perfection is associated with the growing revenue enjoyed by the company. Loyalty towards the firm’s clients, honor, and integrity are fundamental values that the company’s management team considers when formulating operational decisions.
- Strengths and Weaknesses
Unilever’s management team does not only consider the significant strengths when formulation operational decisions but also reflect on the significant weaknesses to facilitate the adoption of response measures. One of the major strengths that the company enjoys is a strong market brand. Since its formation, the company has always prioritized the creation of a strong market brand. Persistence in formulating a strong market brand has enabled the company to attract clients from around 190 nations globally. Innovativeness and diversification of commodities form the other strengths allowing the company to continue enjoying a significant market share. Furthermore, the company utilizes unrelenting strictness in controlling the quality of its products as a critical strength associated with the growing sales volume.
On the other hand, there exist specific weaknesses that curtail better performance within the market. The management team should formulate strategic measures to respond to the weaknesses and attain the desired operational objectives. High pricing is one of the significant flaws (Ma, 2017). Unilever offers quality commodities when compared to close competitors. The company’s competitors provide products of close resemblance, but low quality at a reduced price risk the corporation to an unpredictable future. This may influence most of the company’s customers to opt, shifting to the rival producers. The diversification of commodities and brands is another major weakness that the company ought to address. Even though the approach enables the company to continue making sales at different seasons, such diversifications curtail Unilever’s management team from having a focused analysis of the transformations characterizing the contemporary world of commerce. Rival producers can maximize on such weakness to come up with changes that may lead to the collapse of the company.
- External Environment/Analysis
PESTEL Analysis
The company utilizes this analytical approach as an essential tool for determining the political, economic, social, and technological factors influencing its day-to-day operations. Besides, Unilever considers the legal and environmental factors which are vital in shaping performance. Sustainability is an essential consideration by Unilever Company’s managers as they try to remain dominant in the market (Lawrence et al., 2019). The framework below reflects some of the significant aspects of the external environment influencing Unilever’s day-to-day operations.
Main Issues Facing the Company
There are distinct issues that the company should consider to ease the realization of the set operational goals. Some of the major issuers are evident when reflecting on the internal and external environment of the Unilever Company. Perfected consideration of these factors is critical towards enabling the company to continue leveraging on competitive advantage. One of the significant issues associated with the external environment is the increasing wages with the developing nations. Even though this may act as an opportunity for the company, it may also pose specific threats that the management team cannot overlook. Unilever has many outlets in different nations hence increase in wages may lead to a hike in operational costs. As briefed earlier, the company has higher prices than other firms dealing with correlating products and services. The fact that an increase in operational costs may force the company to raise their rates even higher explains why such an issue is a significant concern. Further increase in the prices of its commodities may force consumers to opt for other rival producers.
Commodity and brand diversification is another issue that the company’s management team ought to consider. The decision by the management team to diversify its commodities and brand was meant to enable it to leverage on the competitive advantage. This is because the company can attain sales and profits from other commodities or services when significant products are in low market demand. On the contrary, the move has led to the issue of difficulties in reflecting on the changes characteristic of the modern world. Having diversified products hinders the managers from concentrating on a particular line of commodities (Lee et al., 2012). It is challenging for Unilever to consider the changes associated with a specific brand of product. Rival firms can use this weakness to come up with operational decisions that may reduce the loyalty of Unilever’s clients. Another primary concern associated with Unilever’s day-to-day operations relates to the intensification in business automation. Even though such automation is critical in enabling Unilever to enhance operational efficiency, it may also strengthen rival firms hence allowing them to pose a threat to the corporation. Technological advances are both advantageous and catastrophic to the company. Unilever’s management team ought to reflect on the probable adverse implications of such rising technological advances. This transformation may help other firms to strengthen their operations hence the ability to compete with Unilever effectively.
Conclusion
The paper looks into the operations within Unilever Company considering the external and internal environment, its position in the market, and principal issues facing its day-to-day operations. Unilever is one of the most prominent global businesses dealing with various brands of products and services. The continued success of the company is dictated by the perfection by the management team to adopt excellent strategic decisions and operational policies. Policy formulation is crucial in influencing the levels of success faced by the company. There are diverse political, economic, social, technological, and legal factors affecting the company. Such factors are associated with the adoption of various decisions considered by the company. One of the issues faced by the company relates to technological advances. Even though the advances lead to efficiency, the managers appreciate that other rival firms can tap on such factors to intensify their competition. The company evidence commendable efforts in responding to this issue. This is achieved by adopting sophisticated technology not to improve functional efficiency but also to reach customers scattered in various parts of the globe. The company is leveraging competitive advantage to enable it to lower prices and curtail the chances of rival firms tapping on such weakness. So far, Unilever has commendable measures to respond to the main issues facing its operations.
References
Lawrence, J., Rasche, A., & Kenny, K. (2019). Sustainability as Opportunity: Unilever’s sustainable living plan. In Managing Sustainable Business (pp. 435-455). Springer, Dordrecht.
Lee, J., Gereffi, G., & Beauvais, J. (2012). Global value chains and agrifood standards: Challenges and possibilities for smallholders in developing countries. Proceedings of the National Academy of Sciences, 109(31), 12326-12331.
Ma, L. (2017). Financial Analysis of Unilever Company.
Nyuur, R. B., Ofori, D. F., & Amponsah, M. M. (2019). Corporate social responsibility and competitive advantage: A developing country perspective. Thunderbird International Business Review, 61(4), 551-564.
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management and business policy (p. 55). Boston, MA: Pearson.