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Company Profile
Overview
Unilever is a multinational corporation selling consumer goods including foods, beverages,
cleaning agents and personal care products. Unilever is a dual-listed company consisting of
Unilever NV in Rotterdam and Unilever PLC in London.
Unilever owns more than 400 brands including 11 "billion-dollar brands", which each achieve
annual sales in excess of €1 billion.
Revenue (£m and currency as quoted)
39,823 (2009)
Number of employees
163,000
Origin of ownership
UK/Netherlands
Geographical presence
Operates in 100 countries
Key contact
Santiago Gowland
Environmental Risks & Impact
• Measured by voliume, around half of Unilever's raw materials are agricultural or forestry
products. As a result, the company's principle environmental concerns are changing weather
patterns, water-scarcity and unsustainable farming practices.
• Unilever measures its product categories against four green indicators covering water, waste,
sustainable sourcing and greenhouse gas emissions.
• Most CO2 emissions associated with Unilever brands occur during consumer use as products
require energy to heat water for cooking and washing.
Targets & Performance
Emissions & Energy
• The company's aim is to reduce the carbon intensity of manufacturing operations by 25% by
2012 (measured as tonnes CO2 per tonne of production against a 2004 baseline).
• In 2008, the company reduced CO2 emissions by 1.6% per tonne of production compared to
2007.
• Unilever has reduced the carbon intensity of its energy use by 39% between 1995 and 2008.
This represents a 43% reduction in absolute terms.
• The company is investing in more efficient power and steam generation technology and the
development of less energy intensive manufacturing processes. For example:
- In Europe, Unilever has at least three CHP plants which use waste steam and hot water to
generate electricity.
- The Cu Chi factory in Vietnam uses solar panels to preheat water for steam generation.
- 2m point-of-sale ice cream freezer cabinets are being replaced with energy-efficient HC
alternatives.
• The company plans to reduce indirect impacts by working with customers and suppliers to
address wider impacts. For example, Ben & Jerry's has a Lick Global Warming campaign and an
ice cream flavour called Fossil Fuel.
• Around 4m tonnes of CO2 are produced each year because of Unilever's transport and
product distribution requirements.
Water
• Unilever relies on water for:
- Sourcing: the cultivation of agricultural raw materials
- Manufacturing operations: cleaning, cooling, as an ingredient
- Consumers: use of home care and personal products
• Unilever aims to:
- Reduce water in manufacturing
- Work with suppliers on issues such as crop irrigation
- Innovation on product design
• Since 1995, Unilever has reduced the amount of water used per tonne of production by 63%
by minimising water use and maximising water recycling.
• During 2008, there was a 3% reduction in water intensity compared to 2007 – from 3.05 m3
to 2.96 m3 per tonne of production.
• The water intensity of food production has dropped from 5.27 m3 in 2003 to 4.23 m3 in 2007
per tonne of production.
• Products aimed at reduced consumer water consumption include the One Rinse Comfort
fabric conditioner. In Vietnam, One Rinse Comfort reduces the water needed by two-thirds and
sales rose by nearly 30% in 2008.
Waste
• Waste intensity has reduced by 68% per tonnes of production between 1995 and 2008,
despite a 4.3% increase in the last year (7.56 kg/tonnes in 2007 to 7.89 kg/tonne).
• The company says this increase was due to:
- Legislative changes
- Under-capacity in effluent treatment
- Planned disposal of accumulated and inherited hazardous waste
• Changing packaging design is one of the ways in which the company wants to use to reduce
waste impacts.
• The PVC policy commits to replacing PVC in all packaging by the end of 2010, where there are
viable alternatives.
Resources
• Agricultural and forestry crops make up around half by volume of raw materials used by
Unilever.
• Unilever buys approximately 12% of the world's black tea, 6% of the world's tomatoes and 3%
of its palm oil.
• Unilever established guidelines for good agricultural practice based on 11 indicators including
water, energy, pesticide use and animal welfare. Growers and third-party suppliers are
encouraged to comply.
• Most of the world's oil palm is grown in South-East Asia where the clearance and burning of
forests contributes to global warming.
• Following a public challenge by Greenpeace, Unilever has agreed to draw all their palm oil
from certified sustainable sources by 2015.
• Unilever have also agreed to support a moratorium on further deforestation in South-East
Asia.
• At the end of 2009 around 80% of Lipton Yellow Label and PG tips tea sold in Western Europe
came from Rainforest Alliance Certified farms.
• Unilever also uses paper and board, plastic, glass, aluminium, steel and mixed material
laminates (for sachets and pouches) in its manufacturing processes.
Relationships
• Founding member of the Roundtable on Sustainable Palm Oil (RSPO), which it continues to
chair.
• Worked with Greenpeace to build a global coalition of companies, banks and NGOs to break
the link between deforestation and the cultivation of oil palm.
• Unilever worked alongside Tesco to persuade the Consumer Goods Forum, a global alliance of
300 leading manufacturers and retailers, to work together to end deforestation.
• Working with Greenpeace on climate-friendly refrigerants in an alliance called Refrigerants
Naturally!
• Founding members of the Carbon Disclosure Project's Supply Chain Leadership Collaboration.
• CEO Paul Polman co-chairs a sustainability steering group of The Consumer Goods Forum with
Sir Terry Leahy. They have set out the vision for the sustainability programme to drive and
communicate sustainability improvements throughout the value chain of the consumer goods
industry.
• Participated in a 2008 event hosted by Wal-Mart on water stewardship, sharing expertise on
reducing water use at all steps of a product lifecycle.
• Participated in an initiative with Kenya Tea Development Agency (KTDA), the UK Department
for International Development and Wageningen University to train smallholder farmers in
sustainable tea cultivation.
Company Background
The company was formed by a merger of Dutch Margarine Union and British soap-makers Lever
Brothers in 1929.
Unilever was one of the world’s first genuine multinationals with operating companies in more
than 40 countries.
The company produces and distributes a vast number of well known brands in the areas of
nutrition, hygiene and personal care that are used by consumers all over the world.
The history of Unilever dates back to 1885, William Lever established a soap manufacturing
company in the UK with his brothers and named the company Lever Brothers in 1885.
William Hesketh Lever was born at Bolton, Lancashire in 1852 was the son of grocer. Together
with James Lever, William Lever opened soap factory at Warrington, England, in 1885.
Their products, Sunlight, the world’s first packaged soap, was very successful. The soup they
made in ready moulded tablet.
Previously laundry soap was marketed in bars and grocers cut off pieces and sold them by
weight.
Until 1919 Lever was wholly own an controlled by the founder. By 1919, as a result of ingle
minded expansionist, commercial policies, his firm accounted for 60 percent of soap production
in Britain.
Two butter makers, Jurgen and Van den Berghs formed Margarine Union in 1927. The Dutch
Margarine Union merged with Lever Brothers of United Kingdom in 1929 to form Unilever.
During the 1930s, the structure and management do Unilever has been describe as a
professional largely non-family managed hierarchy.
For tax, purpose, two separate entities were established, one in London and another in
Rotterdam.
Historically, Unilever has grown to be a very multilocal company. However, while the company
used to work with regional supply chains on regional brands,
Unilever started to globalize their brands in the early and mid 1990s.
Known until the early 1990s as Philippine Refining Company (PRC), Unilever Philippines started
as an oil milling business which at its peak produced nearly 100,000 tons of coconut oil
annually. Today, the company is a leading manufacturer of home and personal care products,
foods, and ice cream. Its roster of brands include Axe, Best Foods, Block & White, Breeze, Clear,
CloseUp, Cream Silk, Domex, Dove, Eskinol, Master, Pond’s, Knorr, Lady’s Choice, Lipton,
Rexona, Selecta, Sunsilk, Surf, Tresemme and Vaseline.
Recognised annually amongst the Top 20 Tax Payers in the country, Unilever Philippines
employs over 1,000 people directly, as well as provides jobs for 10,000 indirectly (i.e.
distributors and suppliers), as a result of its business presence in the country. Employees and
business partners recognise that energy, creativity, the resilience to face changes and make
things better are all needed for business and people to grow together.
Unilever is known to be one of the few companies in the industry that has succeeded in keeping
majority of its manufacturing base in the Philippines. Its Personal Care unit made news by
securing the right to manufacture deodorant mini-sticks for local and export markets. It has
succeeded in entering the US market and achieved the milestone on producing its 100 millionth
stick in 2004.
The company has been a leader in introducing new technologies into the country since the
early days of its existence - margarine production in the 1930s, non-soap detergents, shampoos
and toothpaste in the 1960s and 1970s and state of the art sulphonation technology and
cogeneration power plant in the 1980s. The nineties has seen the company focusing on several
improvements in the Environment front one of which was the introduction of the first 100%
biodegradable detergent bar in the Philippines. Unilever works closely with the community and
other NGOs to protect and improve the environment.
Unilever Philippines is also a leading company in the area of Human Resources Management
and Development. Unilever has for decades also been known in the industry as a sound training
ground for young Filipino graduates. Some of its managers have progressed to senior levels in
government and public life. Unilever seeks to manage and grow its business sustainably,
focusing on three pillars as set out by the Unilever Sustainable Living Plan – Health & Well-
Being, Environmental Impact and Enhancing Livelihoods. We will develop new ways of doing
business if we are to meet the needs of the billions of people in the developing world who are
yet to become consumers and deserve a better quality of life.
Supply Chain Strategy
In 2010, Unilever launched an organizational transformation plan that completely switched
their gears. They decided to utilize supply chain sustainability to drive their growth. This was
not an easy conversion and had to start from the core. Not only processes and policies
changed, but people’s mindset changed, which is one of the most difficult challenges to
accomplish within an organization.
Their first key step was to incorporate sustainability as part of their long-term strategy. They
were no longer being sustainable just because other companies were doing so or external
factors were forcing them to do so. They created a vision for growth in sustainability, sales,
positioning, and consumption that would span for the next 10 years. Today, they can
confidently say that sustainability is part of their backbone.
To reach where they are today, Unilever maximized their available resources and went as far as
creating a dedicated division that focuses on aligning strategy to sustainability. This division not
only includes experts in engineering and business, but also agronomists that can provide a
different perspective and add the necessary skillset variety to the team. In addition to that,
Unilever has also redesigned some of their transportation processes to lower shipping and
handling costs; moreover, they also modified manufacturing by investing in eco-friendly
equipment to incorporate in their production line.
Last, but not least, they assigned a Chief Sustainability Officer and made every effort to learn
more about their suppliers’ business practices. The latter helped them “weed out” those
suppliers that were not aligned with their vision of being sustainable and could hurt their
reputation. The appointment of a CSO was crucial as this became a business unit that has
grown into the organization’s core beliefs.
In sum, there were two main “keys to success” that Unilever adopted to become a
Sustainability-Driven grown company:
1 1. Identifying, accepting, and committing to the need for change.
2 2. Aligning every party involved in the chain to their strategy to make sure they all moved
towards the same goals. Those who were not on board were left behind.
It sounds so simple, yet it completely changed their business, and they continue to grow
stronger today. How difficult might this approach be to replicate?
Unilever's impressive supply chain
We are ranked in the Top 10 supply chains in world by Gartner (number one in Europe)
We are one of the largest contract logistics companies in the world, second only to DHL
We are on track to reduce our carbon footprint by 40% by 2020
We have 150,000 customers globally who we serve with a range of almost 60,000 products
We source more than 200,000 different materials from 160,000 suppliers who work with up to
a million smallholder farmers
We run more than 250 factories which produce 130,000 tea bags every minute, 1 billion
deodorants annually and 2 billion Magnums every year
We collaborate with the Lotus F1 grand prix team to build a performance culture in our Supply
Chain.
Operations Management Strategy
As one of the strong and healthy companies in the world with many successful brands, Unilever
has an opportunity to expand into foreign markets that it is not yet operating in, in order to
gain access to customers around the world. Supported by strengths of its four key global brands
– Dove, Sunsilk, Rexona and Lux, Unilever firstly entered in foreign market to compete
internationally by entering just one or select few foreign markets. Once successfully introduced
its product in several market, Unilever expands its success brand to many other markets and
starting to compete globally.
In entering and competing in foreign markets for its cosmetics and toiletries product, Unilever
follows a global strategy, also called by a think-global and act-global strategy, The strategy using
essentially the same competitive strategy approach in all country markets where the company
has a presence (with only minimal responsive to local conditions), sells much the same products
everywhere (make minor adaption to local countries where needed to accommodate local
countries preferences), strives to build global brands, and coordinates its actions worldwide
(centralized).
A global strategy used by the Unilever is preferable to localized strategies because Unilever can
more unify its operations and focus on establishing a brand image and reputation that is
uniform from country to country. It strategy implies to the Unilever success in building strong
character brand such as Dove, Sunsilk, Rexona and Lux. Moreover, with a global strategy
Unilever should coordinated its marketing, operational and distribution worldwide.
Unilever is increasing its efforts to build on its long-established local roots in developing
regions. Through its well-established distribution network in both the traditional and modern
retail outlets and with a good ability to adapt successful global brand concepts to suit local
markets, Unilever is in a good position to be able to capitalize on the growth forecast in these
regions.
Once Unilever became one of the most successful global companies in the world, it has many
profit sanctuaries. By having multiple profit sanctuaries, Unilever has strong competitive
advantage over its competitor with a single or few sanctuaries.
In the cosmetics and toiletries globally competitive industry, there are no doubt that Unilever’s
major rivals over the next few years will be Procter & Gamble and L’Oréal, both of which give
significant resources to new product development activity, and respond to changes in the
market faster than Unilever. L’Oréal also has the benefit of being exclusively involved in
cosmetics and toiletries, unlike both Unilever and Procter & Gamble which both have cross-
industry involvement, such as in packaged food. Much the same group of rival companies
competes in many different countries. Therefore, the competition pursues the company to be
more innovative in developing its products and maintaining its brands. The following diagram
shows the market performance of Unilever’s skin care and hair care market share:
To win customers and sales away from select rivals in country markets, Unilever employ cross-
market subsidization. This offensive strategy is appropriate for Unilever which is compete in
multiple county markets with multiple brands and wide variety of products. Finally in entering
the emerging-country market Unilever prepare to compete on the basis of low prices. Unilever
pursued this strategy because consumers in emerging markets are often highly focused on
price, which can give low-cost local competitors the edge unless a company can find ways to
attract buyers with bargain prices as well as better products.
All strategies executed by Unilever for competing in foreign market resulting in moderate 5%
sales growth in 2006 – just above market performance – ensured that Unilever kept its position
as third largest player in cosmetics and toiletries with a 7% market share. Second-placed L’Oréal
fared a lot better, increasing the gap between the two companies in part thanks to its
acquisition of The Body Shop. Market leader Procter & Gamble remained over five percentage
points ahead of Unilever’s share. In 2006, Unilever remained comfortably ahead of Colgate-
Palmolive in fourth place. Unilever decision to introduce its product on emerging market such
as Asia-Pacific, Latin America and North America implies to the high contribution of Unilever
total revenue by 26%, 21% and 16% respectively.
On January 1st, 2013 Unilever released its results for the fourth quarter and full year 2012
which show good quality, profitable growth ahead of our markets. This underscores the good
progress we are making in transforming Unilever into to a sustainable growth company. The
past year performance of the company was as follows:
Turnover increased by 10.5% to €51.3 billion with a positive impact from foreign
exchange of 2.2% and acquisitions net of disposals of 1.1%
Underlying sales growth 6.9% comprising volume growth of 3.4% and price growth of
3.3%
Emerging markets underlying sales growth 11.4% now representing 55% of turnover
Core operating margin up 30bps to 13.8%; gross margin up 10bps, advertising and
promotions up €470 million at constant exchange rates
Core earnings per share increased by 11% to €1.57; free cash flow of €4.3 billion
ANALYSIS
Before analyzing the Unilever strategies for competing in foreign market, it’s important to
identify company’s resource strengths and weaknesses and its external opportunities and
threats, commonly known as SWOT analysis. This analysis provides a good overview of whether
the company’s overall situation is fundamentally healthy or unhealthy. Therefore, for a
company’s strategy to be well-conceived, it must be:
- Matched to its resource strengths and weaknesses
- Aimed at capturing its best market opportunities and erecting defenses against external
threats to its well-being
SWOT Analysis of Unilever Cosmetics and Toiletries
Based on the SWOT analysis we can infer that the company has very healthy and strong
condition in overall. Therefore, this condition provides high capabilities to the company and
offers wide opportunities for the company to compete in foreign market. Based on this analysis,
Unilever firstly entered foreign market in the year of 1950 by offering its product to European
community.
From the Unilever mission statement, we can conclude that the company expands into foreign
markets in order to gain access to customers around the world. Unilever recognized that its
product is commonly used for all people worldwide. The company’s objective to bring their
wealth of knowledge and international expertise to the service of local consumer pursues the
company to produce many nutrition, hygiene and personal care product with successful brands.
Therefore, Unilever are moving rapidly and aggressively to extend their market reach into all
corners of the world.
For its cosmetics and toiletries product, Unilever start to compete internationally by entering
just one or select few foreign markets. Unilever launched Axe/Lynx/Ego deodorant body spray
in the US and Canada in autumn 2002 and introduced Dove initially in Italy, France and Belgium
in 2002. Once successfully introduced its product in several market, Unilever expands its
successful brand to many other markets and starting to compete globally.
Through its successful growth strategy, Unilever has continued to build on the strengths of its
four key global brands–Dove, Sunsilk, Rexona and Lux–and by doing so, created strong
platforms for further growth in a number of cosmetics and toiletries sectors. This has been
particularly evident in deodorants, men’s grooming products and bath and shower products,
with strong growth for the Axe, Dove and Rexona brands. However, competition in the
cosmetics and toiletries industry remains tough, and while the current strategy is providing
results, greater product innovation and marketing support, as well as further development of
functionality in products will be needed to keep up with the market. There are no doubt that
Unilever’s major rivals over the next few years will be Procter & Gamble and L’Oréal, both of
which give significant resources to new product development activity, and respond to changes
in the market faster than Unilever. L’Oréal also has the benefit of being exclusively involved in
cosmetics and toiletries, unlike both Unilever and Procter & Gamble which both have cross-
industry involvement, such as in packaged food.
In a globally competitive industry faced by Unilever, much the same group of rival companies
such as Procter & Gamble and L’Oréal competes in many different countries, but especially so in
countries where sales volumes are large and where having a competitive presence is
strategically important to building a strong global position in the industry. Therefore, a
company’s competitive position in one country both affects and is affected by its position in
other countries. In this case innovation plays an important role. Thus, in a market where
innovation is often the key to growth, Unilever has invested in improving its research and
developing procedure further including speeding up the process of getting new products to
market. Through a mass-market positioning, much of the company’s organic growth strategy is
to leverage the value of key brands by cross-sectoral brand extensions, thus taking advantage
of customer brand recognition and loyalty, and creating marketing efficiencies. The Dove brand
is one of the examples of a recognized soap brand being successfully extended into skin and
hair care, deodorants, baby care and men’s grooming products.
Unilever’s marketing strategy for competing in foreign market
For its marketing strategy Unilever combines its strategy with social project in many countries.
Educational campaigns have been important tools for raising awareness for Unilever brands
such as Close-Up and Dove. The company’s partnership with the World Dental Federation has
seen it become involved in oral healthcare projects in both developed and emerging nations,
including Austria and Brazil. In 2006, Unilever developed a low-cost toothbrush, the Pepsodent
Fighter, which retails at a price equivalent to just EUR0.20 and is distributed in India and
Indonesia.
The company also has more directly brand-related programs, including Close-Up’s Project Smile
in Nigeria, which used small kiosk outlets to showcase both its products and oral hygiene
information, and the Dove Self-Esteem Fund, which has joined with organizations such as the
Girl Scouts of the USA and the UK’s Eating Disorder Association to fund educational Body Talk
programs in schools to improve body-related self-esteem.
Less directly, a Brazilian recycling partnership with Pao de Acucar, a major Brazilian retailer, not
only helped employ more than 300 people in a local recycling co-operative, but also gave
Unilever’s products greater in-store prominence as well as raising the profile of brands
including Rexona by having their logos on point-of-sale information and educational materials.
The company’s successful brand innovation program is supported with a high level of marketing
and advertising activities including most media. As there are many opportunities in the foreign
markets but the tendency of threats is also same as opportunities. The powerful R&D,
diversified and differentiated product line and market analysis are all important factors that
make a company enjoy its potential and good market share in foreign market.