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Unilever ltd.

SWOT Analysis Report

5/21/2011

Waqar-ul-Haq

R# 55-B

INDEX

Topics Page no.

1. Acknowledgment 032. Authorization 043. Transmittal 054. Body of report 06

a. Introduction 06b. Analysis 09c. Conclusion 14d. Recommendation 16

5. References 186. Appendix 19

Acknowledgment

God never spoils any effort; every piece of work is rewarded according to the nature of devotion for it. We are extremely thankful to ALLAH ALMIGHTY Who, in spite of numerous difficulties, vicissitudes and acute frustrations enabled us to probe the present study and dissertation. We bow our head to ALLAH ALMIGHTY for the buntings and the blessings that He has bestowed upon us. Who has given us the courage and stamina to come up to the expectations of our revered teachers and ever loving parents and to sum up my maneuverings for the completion of this manuscript.

All the respects are for the last Prophet of God ,HOLY

PROPHET MUHAMMED (Peace Be Upon Him) Who is the

greatestscientist of all the ages, whose moral and spiritual teachings enlighten our heart, mind and soul and flourished our thoughts towards achieving higher ideas of life.

I have the honor to express our deep sense of gratitude and profound indebtedness to ever affectionate ma’am Ghazala for her keen interest, encouragement, generous guidance and untiring help at all times. In fact it was not possible to bring this work to fruitful conclusions without her day and night persuasive and sincere efforts.

Authorization

Date : 21.05.11

Waqar-ul-HaqStudent of MBA-1Roll # 39-BBusiness Administration Department.Federal Urdu University of Art & Sciences.

Dear Waqar,

I hereby authorize you to write a SWAT Analysis report on Federal Urdu University of Art & Sciences. The date that I have given you is May 21st, 2011. I look forward to seeing your report then, and let me know if you have questions in the meantime regarding your report.

Sincerely,

Ghazala MusheerBusiness Administration Department.Federal Urdu University of Art & Sciences

Transmittal

Date : 21.05.11

Ghazala MusheerBusiness Administration Department.Federal Urdu University of Art & Sciences

Respected Ma’am,

This is to inform you that, I have completed my assigned task of SWOT analysis report writing on Federal Urdu University of Art & Sciences, dated 21.05.11.Kindly accept it.

Thanking you,

Faithfully,

Waqar-ul-HaqStudent of MBA-1Roll # 39-BBusiness Administration Department.Federal Urdu University of Art & Sciences.

Introduction:Unilever is one of the world's leading suppliers of fast moving consumer goods across Foods and Home and Personal Care categories. Unilever's portfolio includes some of the world's best known and most loved brands.

Unilever Pakistan Ltd :

Unilever Pakistan (70.4% Unilever equity) is the largest FMCG company in Pakistan, as well as one of the largest multinationals operating in the country. Unilever Pakistan Ltd., a subsidiary of the Unilever Group is operating in Pakistan since 1948. The Company’s main business lines are Soaps and Detergents, Personal Products, Cooking Oils and Fats, Packed Teas, and Ice Creams. Unilever has along list of brands such as Surf, Vim, Rin, Lifebuoy, Sunlight, Lux, Rexona, Sunsilk, Close-Up, Blue-Band, Dalda, Planta, Lipton’s Yellow Label, Taaza and Richbru, Brook Bond’s Supreme and Kenya Mixture etc. which are common household names in Pakistan.

The Company’s factory at Rahim Yar Khan was one of the first industrial units to be constructed after the creation of Pakistan. As the consumer base expanded over the years and the Company entered into new product lines like Personal Products and Margarine, it invested further in the installation of modern manufacturing facilities including a factory at Karachi.

Today, the Company is using latest state-of-the-art technology for producing high quality products.

In 1995, the Company established a new factory near Lahore to manufacture the Wall’s range of ice creams, which have

Become popular within a short time. In 1996, the present group – Unilever UK acquired the Polka Group that produced ice creams.

In 1999,Pakistan industrial promoters (Private) Limited, owners of ‘Polka’ brands of Ice Cream were merged with Lever.In order to leverage the synergies of Unilever’s international brand strength, market edge and corporate image, Lever Brothers Pakistan Ltd. changed its name to Unilever Pakistan Ltd., in August2002.

Strategic Management Of UNILEVER:

Overview of Unilever Pakistan Ltd.

The company had a turnover of Rs. 23.3 bn(Euro 309 mn) in 2007, and enjoys a leading position in most of its core Home and Personal Care and Foods categories, e.g. Personal Wash, Personal Care, Laundry, Beverages (Tea) and Ice Cream.

The company operates through 5 regional offices, 4 wholly ownedand 6 third party manufacturing sites across Pakistan.

Accountable to our stakeholders

Since the time Unilever Pakistan began its operations in 1948, theCompany has been closely connected to the Pakistani people and its brands have been an integral feature in their daily lives. In fact, the nature of our business enables our brands to be the pulse and heartbeat of the 164 million people in Pakistan.

Strategy and long-term financial target:

At the heart of Unilever's strategy is a concentration of resources on areas where we have leading category and brand positions and which offer excellent opportunities for profitable growth, especially in personal care, developing and emerging markets and Vitality. The focus is primarily on developing the business organically, but acquisitions and disposals can also play a role in accelerating the portfolio development.

To execute this strategy we have re organised the business to simplify the organization and management structure and to improve capabilities in marketing, customer management, and research and development. The result is better allocation of resources, faster decision-making and a lower cost level. This transformation, known as the One Unilever programme, allows us to leverage our scale both globally and locally.

Unilever's long-term ambition is to be in the top third of our peer group in terms of total shareholder return. We expect underlying sales growth of 3-5% per annum and an operating margin in excess of 15% by 2010 after a normal level of restructuring charges of 0.5to 1 percent of turnover. Return on invested capital is targeted to increase over the 2004 base of 11%. Over the period 2005 – 2010,we aim to deliver un geared free cash flow of €25-30 billion. It should be noted that previous and planned disposals and the additional restructuring plans will have reduced un geared free cash flow by about €2.5 billion over this period, while enhancing the ongoing cash generating capacity of the business.

ANALYSIS:

Strenght:

Customer’s Loyalty.

Latest state of the art facilities and technology for producing

high quality products.

International brand strength.

Committed to business ethics, safety, health, environment

and community.

UNILEVER’s key competitive advantage over other marketparticipants is the retail reach of the company. UNILEVER services 500,000 outlets with 50 % through direct distribution and remaining via wholesalers.

UNILEVER is enjoying market edge of 41% in FMCG industry.

UNILEVER is at number one in ice cream segment and having

14% market share all over the globe.

Weaknesses:

The biggest challenge in safeguarding market position is to

become cost leader.

Operational complexity due to a large number of products in

portfolio and due to diverse work force.

Strategic alliance with other small mills for manufacturingpurpose is the weakness as well as a threat for UNILEVER.Although UNILEVER claims that it is a part of its cost reduction strategy but it can not hide the reality that it shows weakness of UNILEVER.

Opportunities:

Markets of developing countries can be proved a profitable

segment because people are consumption oriented rather

than saving or investment oriented.

UNILEVER can gear up its market share in the untapped rural

market.

Diversification in unrelated business.

Rapid increase in world population.

World population is set to grow by 800m in 2010 and almost all

increase will be in developing countries.

Threats:

FMCG market is highly responsive to economic conditions,

inflation and social disruptions resulting in variations in sales

revenues and demand for the company.

P & G is the major competitor and threat for UNILEVER. Other

organized players are Nestle and R & B.

UNILEVER is facing intense competition from unorganizedplayers i.e. cheaper smuggled products and Chinese products. According to industry source, 40% of tea consumed locally and a large portion of HPC products are smuggled into the country.

Legal, political and regulatory factors of host country. Forexample, supportive Government policies for attracting FDI,1% tax rate on corporate profit and inability of Pakistan Government to control smuggled products etc.

Although UNILEVER has a first mover advantage in ice cream

segment but Engro has announced to enter in ice cream

segment and is considering a big rival post CY2010.

Rapid increase in raw material cost and supply disruptions

from suppliers of raw material. The unprecedented surge in palm oil, tallow prices and other materials has resulted in declining margins. Going forward, high raw material costs area key risk to UNILEVER’s profitability.

Ratings:

1 – Poor

3 – Above Average

2 – Below Average

4 – Superior

Total weighted score of EFE matrix of UNILEVER (2.95) shows

strong response of company towards external factors.

Justification of ratings:

On opportunity side:

1.It is a general observation that people of developing countries like Pakistan are more inclined towards consumption rather than saving and the major portion of spending is on FMCG.

2.World population is increasing at an alarming rate. World population is set to grow by 800m in 2010 and almost all increase will be in developing countries. And increase in population leads to increase demand of FMCG sector.

3.Like Engro, UNILEVER can enter in unrelated areas of

production.

4.The under penetrated rural market offers tremendous growth potential as rural population constitutes around 60% of the total population. In the past few years, favorable structural changes, such as double digit growth in agricultural credit, increased penetration of television cable media have boosted demand for FMCG products. Following table shows that rural population will be almost 50% of total population in near future.

Ratings:

1 – Major Weakness

3 – Minor Strength

2 – Minor Weakness

4 – Major Strength

Justification of ratings:

On strength side:

1. Customer’s loyalty is not a hidden fact in UNILEVER case.People have developed and adopted the taste of UNILEVER’shigh quality products and there is no comprise on quality. 150million times a day, in 150 countries, people use UNILEVER’sproducts at key moments of their day.

2.Micro marketing in developing countries. UNILEVER services500,000 outlets with 50 % through direct distribution and remaining via wholesalers.

3. UNILEVER’s continuous expansion and its large market share indicate their strength in latest facilities and quality management. UNILEVER has ISO certification.

4.Its brands are enjoying international recognition. UNILEVER is

serving almost 150 countries.

5.UNILVER is concerned about its customers as well as employee. There are strict safety standards for employees and visitors of plants too.

Conclusion:

Appropriate strategy for UNILEVER is Market Development. UNILEVER should remain in the present business and should introduce present products in new geographical area.

Following are necessary factors that must be present while

choosing market development strategy:

UNILEVER has its own strong distribution channel.

UNILEVER is very successful at what it does.

Untapped rural market and market of developing countries

exist for UNILEVER to cover.

UNILEVER is a strong MNE in Pakistan. It has abundantresources both financial and human, so it can easily expand geographically. Here we are not concerned about expansion of operating activities to new geographical area. We are particularly concerned about capturing untapped market.

It is up to UNILEVER whether it is decided to start operating in new areas too or just introduce products by using its strong channel of distribution.

UNILEVER is operating globally. It means that FMCG is such an

industry which can be grown globally.

Recommendations:

Proposed Strategies:

1.UNILEVER can capture untapped rural markets and markets ofdeveloping nations by using its state of the art facilities &technology. International brand strength is plus point whichwill be proved helpful while positioning.

2. UNILEVER’s Commitment to business ethics, safety, health,environment and community can be proved helpful in order tosatisfy hygiene conscious customers. UNILEVER should focus moreon quality of goods.

3.Unrelated diversification is a risky decision to be taken. Loyalcustomer is the major power to cope up with after effects ofthis decision.

4. Customers in rural areas and in developing countries usuallyhave low income level. UNILEVER should reduce its costs inorder to capture that uncovered markets effectively.

5. UNILEVER can use its international brand strength and widenetwork of retail outlets in order to compete with organizedand unorganized players of market.

Strategic alliance is showing the weakness of UNILEVER inparticularly manufacturing area which the competitors do nothold. UNILEVER should its production capacity in order tocompete in market and to reduce competitor’s threat.

7. If UNILEVER can obtain cheaper raw material, it can reducecost of goods manufactured.

Although UNILEVER claims that strategic alliance with smallfirms for manufacturing purpose is the part of its reducingcost objective but if we look at the other side of the picture,strategic alliance is a weakness as well as threat forUNILEVER. For example, Asad Soap

Factory is manufacturingsoap for UNILEVER Rahim Yar Khan, and now Asad soapfactory is searching for buyers of soap plant.

UNILEVER’s products are costly as compare to local producers.Although costly goods are not posing any big threat toUNILEVER but in long run it can be proved harmful forcompany. So company is responding greatly towards coveringits weakness. For this purpose, company has adopted policy ofcontractual hiring, strategic alliance etc.

UNILEVER has a large number of products in its portfolio. Itmeans that UNILEVER has a large number of SBU’s to control.It adds operational complexity to UNILEVER’s operations.

References:

1. ^ Amanullah Bashar (2002-10-06). "Urdu University: A Gift Of The Present Government". Pakistan Economist. Retrieved 2006-12-08.

2. en.wikipedia.org/wiki/Federal_Urdu_University.

3. www.ehow.com/how_5083209_write-transmittal-letter.html4. www.4icu.org/reviews/7541.htm5. Departments". Federal Urdu University. Retrieved 2010-09-03\6. www.google.com7. www.investopedia.com/terms/s/swot.asp8. J. Scott Armstrong (1982). "The Value of Formal Planning for

Strategic Decisions". Strategic Management Journal 3 (3): 197–211.doi:10.1002/smj.4250030303

9. www.merapakistan.com/directory/swot_analysis_of_university.html

10. books.google.com.pk/books?id=SNpQgAACAAJ&dq=swot+analysis&hl=en&ei=xgzMTcKE4ndiAL65NSJBQ&sa=X&oi=book_result&ct=result&resnum=2&ved=0CC4Q6AEwAQ

11. books.google.com.pk/books?id=Tub1VFyFVesC&printsec=frontcover&dq=swot+analysis#v=onepage&q&f=false

12. books.google.com.pk/books?id=1cGnPy9H7XUC&dq=swot+analysis&source=gbs_similarbooks_s&cad=1

Appendix

The SWOT-landscape systematically deploys the relationships between overall objective and underlying SWOT-factors and provides an interactive,

query-able 3D landscape.

PEST analysis :

which measures a business according to external factors; Political, Economic, Social and Technological. It is often helpful to complete a PEST analysis prior to competing a SWOT analysis.

Difference between PEST and SWOT :

PEST tends to assess a market, including competitors, from the standpoint of a particular proposition or a business.

SWOT in business and marketing tends to be an assessment of a business or a proposition, whether it is your own business or (less commonly) a competitor's business or proposition.

SWOT analysis history:

The origins of SWOT analysis was provided byAlbert S Humphrey, one of the founding fathers of what we know today as SWOT analysis.

4Ps:

Product, price, place, promotion.

USP:

Unique Selling Position