Socio Cultural Environment Line With Its Sustainability Drive Marketing Essay

Socio Cultural Environment Line With Its Sustainability Drive Marketing Essay glomThis is a case study on Unilever vocation schema. It would seek to analyze the strategic position of the root word with the help of SWOT, PEST and BCG Matrix models. The paper would critically assess the competitive situation of the company in relation to other major product based companies in the market and companys financial slaying and name issues. In the end it would submit few recommendations.The case study is my first effort towards analyzing the rail line strategy of Unilever and its success in the market. Since Unilever is so famous and its products so widely used all oer the world, it is of spacious interest for me to carry out a case study on its business strategy. The paper would greatly help me and the readers to understand both(prenominal) key issues have-to doe withing Unilever in todays business world.Introduction2.1. About UnileverUnilever is a multi-national corporation, creat e of Anglo-Dutch p arntage that owns many of the worlds consumer product denounces in foods, beverages, cleaning agents and personal care products. Unilever employs nearly 180,000 people and had universal revenue of almost 40 billion in 2005.Unilever is a dual-listed company consisting of Unilever NV in Rotterdam, crystallizeherlands and Unilever PLC in London, England. This establishment is similar to that of Reed Elsevier and that of Royal Dutch Shell prior to their unified structure. Both Unilever companies have the comparable directors and effectively operate as a single business. The current non-executive Chairman of Unilever N.V. and PLC is Michael Treschow while P Mr capital of Minnesota Polman is the Group Chief Executive. The company is widely listed on the worlds stock exchanges (About Unilever 2008).2.2. HistoryUnilever was founded in 1930 through conjugation by the British, Lever Brother and the Dutch, Margarine Unie now Unilever PLC in London, U.K and Unilever N.V in Rotterdam, Netherlands respectively. In 1872 before the merger, Jurgens and avant-garde den Bergh, the Dutch, built factory in Netherlands for the production of Margarine made from milk and fact. In 1927, they organise Margarine Unie (margarine Union) together with two European handicraftes, Centre and Schicht. Lever Co on the other relegate was founded in 1884 by British William Hesketh Lever and his brother, James, and was producing soap Sunlight soap for people in England especially for women. William Lever wrote to make clean cable lengthss commonplace to lessen work for women to foster wellness and contribute to personal attractiveness, that keep may be more than enjoyable and rewarding for the people who use our products. In 1890, Lever Co become limited company known as Lever Brothers (Uhomhoabhi, Fredrick Albert 2008)Unilever, Unilever N.V and Unilever PLC comprise Unilever group. Both companies have the corresponding directors. Its annual turnover in 2005 was 3 9.672 billion and employs206, 000 employees around the world.1 Unilever brands consist of intellectual nourishment, Beverage, and Home and Personal Care. most of these products are Knorr, Breyers and Magnum, Lipton, Omo (detersive) etc. Knorr has the biggest sales of 2.3 billon in 2005.In May 2007 it became the first afternoon tea company to commit to sourcing all its tea in a sustainable manner, asking the Rainforest Alliance, an international environmental NGO, to start certifying its tea estates in East Africa. It declared its aim to have all Lipton Yellow Label and PG Tips tea bags sold in Western Europe certified by 2010, followed by all Lipton tea bags worldwidely by 2015. Covalence, an honest reputation ranking agency, placed Unilever at the top of its ranking based on positive versus prejudicial news coverage for 2007. In 2008 Unilever was honored at the 59th Annual Technology Engineering Emmy Awards for Outstanding feat in Advanced Media Technology for Creation and Distribution of Interactive Commercial Advertising Delivered through digital Set trespass Boxes for its program Axe.strategic position of the companyThe strategic position of the company shall be analyzed through following techniques3.1. S.W.O.T AnalysisThe overall evaluation of a companys strengths, weaknesses, opportunities, and threats is called SWOT analysis. In general, a business unit has to monitor key macro environment forces (demographic-economic, technological, political-legal, and social-cultural) and significant microenvironment actors (customers, competitors, distributors, suppliers) that affect its ability to throw kale. The business unit should set up a marketing intelligence system to track tends and primal developments. For each trend or development, management needs to identify the associated opportunities and threats.StrengthsRecognized as a global company.Strong brand portfolio.Strong relationship with retailersEconomies of scale.Corporate social behaviorVari ety of productsWeaknessesDual leadersLimited costumer connectionInefficient management of brandsInability to maximize acquisitionsLack of control in the marketReduced spending on RDOpportunitiesChanging consumer preferencesIncreasing need for healthy productsLow income consumers quick increase in populationThreatsDecrease in revenueStrong competition(PG)Tougher business climate put back ratesEconomic crisisIncrease in production and labor cost3.2. BCG MatrixStars(High market emergence component)LuxSunsilkWalls ice creamFair lovelyRafhanEnergileAXEVaslinePG tipsDogs(Low market growth share)Wheel detergentSupreme teaLifebuoy shampooCash cows(Low growth High share)Surf excelPondsLiptonClose upBlue bandDove soapRexonaKnorrQuestion marks(High growth low share)Clear shampooRin nurtureBen JerrysPersil3.3. PESTEL Analysis3.3.1. Political/Legal environmentUnilever, as a matter of policy, set a amount as to the way of tackling political issues. Unilever has its tactical way of handli ng political issues. First, in the 1960s, many countries began to change alien firms which also affected Unilever. This was a call for local equity participation in foreign firms. Thus, so many companies were subject to local control on prices, imports, employment of expatriates and so on. As a result of the adverse effect of nationalization policy, in the 1970, many US companies e.g. IBM and coca cola left wing India. There was fear by foreign companies uncertain issues such as knowledge leakage, loss of stigmatize etc. this was also hazardous for Unilever as its control over operation in the market was reduced. For typeface UAC, a subsidiary of Unilever, whose operation was in many African countries (Cameroon, Ghana, Ivory Coast, Nigeria, etc.), was focused on as its profit margin and rate of easy remittance of profit to its Anglo-Dutch boot was enormous. Nationalizing UA Chambered Unilevers control over the market where UAC operates. However, Unilever uses its experience an d goodwill to make contacts in many countries to bargain with governing so as to modify their regulations. In central and south America, Unilever only engaged in lobbying rather than active politicking. In other words, Unilever never get involved in sponsoring political parties. Today, Unilever has gained political ground employ its tactical strategy and experience. Unilever is a member of many organizations all over the world. The aim is to create favorable business environment, and also facilitate corporate reputation management.3.3.2. Economic environmentUnilever market environment is becoming super competitive especially in the Western Europe. Procter Gamble (PG) is one of the major competitors in the European market. much so, in that location are so many discounters in the European market resulting from EU free mete out policy. This has had adverse effect on Unilevers profit potentials. Retailers are pressurizing FMCG producers to reduce prices of their products.Consumer s on the other hand would not want to buy expensive product or brands due to current economic tide. Competition in EU has grown so strong that Unilever is facing difficulties in places like France, Netherlands. In the developing countries and the uphill economies (Asia and Africa), where there are political instability, Unilever has adopted its company strategy to get wind that its profitability drive is sustained. Some Products are packaged in small surface for low or regular income earner, for affordability. In some developing countries, Nigeria to be precise, there was uncertainty about duties to be paid by companies due to inflation and fluctuation of currency. The effect on Unilever was a decrease in profit in 2005 compared to 2004, though there was increase in turnover.3.3.3. Socio-cultural environmentUnilever has continued to maintain momentum in its socio-cultural environment in line with its sustainability drive. The company is working relentlessly to bring improve hygie ne and better nutrition to people in Asia, Africa and Latin America, especially the poor and obesity. Over 30% of Africa population lives on less than $1 per day. By this, Unilever strengthens it goodwill. However, the low literacy of consumers affects marketing vehicles such as advertisement in print media. This therefore requires employment of more resources, for instance to enhance face-to-face communication. Besides, Unilever employs about 100 nationalities. It ensures that diversity works for everybody both employees and consumer alike. In frame to achieve and ensure that diversity works amongst employees, Unilever employed the strategy of so as to manage and leverage diversity. Unilever is focused on building an exclusive culture and embracing difference, which resulted in high demand of its products in the developing and emerging markets.3.3.4. Technological environmentRight in the 1930s, Unilever continue to diversify. Business continue to thunder in the1950s with new techn ology being invented to boast production and enhance quality products for consumer, competitors improving their products using new inventions. Unilever did not give up its effort in RD. Since 2000, Unilever has been spending on ITto improve its business especially in the area of e-business so as to improve brands communication and market through inter benefit, making transaction simple along chain.Today, Unilever is trying to minimize cost through IT efficiencies at global level. In addition, Unilever Technology Venture works in collaboration with Unilever RD group to help Unilever meet consumers needs. Area of concern is genomics, advanced bioscience, advanced materials science and nanotechnology. In 2003, Unilever installed and commissioned pallet live memory board system from Bitto reposition System Ltd. This was meant to store its frozen products. The facilities include pallet live storage systems, carton live storage systems, pallet racking, boltless shelving, plastic bins an d containers, wide span and heavy load shelving, cantilever racking, and multi-tier shelving systems.3.3.5. EnvironmentIn realisation of local legislation and to keep its corporate responsibilities, Unilever designed management system. Unilever has respect for consumer health and safety. This policy is to ensure all Unilever operators establish a formal environmental management system. Training programs are being pose in various regions/business groups to ensure compliance with the company Standard for Occupational Health and refuge Environmental Care (SHE). This framework is based on the ISO 14001 management standard. Unilever had also worked in conjunction with government of countries of its operation as regards waste management. For instance in Ghana, 2004, over 21 tones of wastes were supplied to small and medium size recycling businesses in Accra, Ghana, by Unilever to reduce the amount of plastic waste sent to landfill.Financial performanceUnderlying sales growth of 7.4% wa s partly offset by movements in exchange rates (4.8%) and the sugar impact of disposals and acquisitions (1.4%). Including these effects, turnover was 40,523 one million million for the full year, change magnitude by 0.8%. Operating profit increased by 1,922 million to 7,167 million, including a higher level of profits on business disposals. These generated a pre-tax profit of 2,190 million in 2008, comparedwith 297 million in 2007. Net profit was 28% higher than last year, boosted by the profits on disposals. Earnings per share were 1.79, including a net gain of 0.36 fromRDIs. This compared with 1.35 last year, which included a net loss of 0.07 from RDIs.Net capital flow from operations at 3.9 billion was in line with last year. come in cash returns to shareholders in the year were3.6 billion, made up of 2.1 billion of dividends and 1.5 billion of share buy-backs.4.1. Consolidated income account(Highlights for the year ended 31 December) Million 2008 2007Turnover 40 523 40 18 7Operating profit 7 167 5 245Profit before taxation 7 129 5 184Taxation (1 844) (1 128)Net profit from proceed operations 5 285 4 056Net profit 5 285 4 136Combined earnings per share from total operations 1.79 1.354.2. Consolidated balance sheet(As at 31 December) Million 2008 2007Non-current assets 24 967 27 374Current assets 11 175 9 928Current liabilities (13 800) (13 559)Total assets less current liabilities 22 342 23 743Non-current liabilities 11 970 10 924 shareowners equity 9 948 12 387Minority interests 424 432Total capital employed 22 342 23 7434.3. Consolidated cash flow statement(For the year ended 31 December) Million 2008 2007Net cash flow from operating activities 3 871 3 876Net cash flow from/ (used in) investing activities 1 415 (623)Net cash flow from/ (used in) financing activities (3 130) (3 009)Net increase/ (decrease) in cash and cash equivalents 2 156 244Cash and cash equivalents at 1 January 901 710Effect of foreign exchange rate changes (697) (53)Cash and ca sh equivalents at 31 December 2 360 9014.4. Financial ObjectivesUnilevers ambition is to top Third Total Shareholder Return, over a 3 year rolling period out of peer group of 20 other companies. Its outlook for year 2010 is Un-geared free cash flow in the period 2005-2010 to be 25-30bn. advantage in Return on Invested Capital. Underlying sales growth of 3-5% p.a. Operating margin of over 15% by 2010 after normal restructuring. Improved capital and tax efficiency.Market share and competition5.1. Top Unilever CompetitorsCompanyLocationProctor GambleCincinnati,OHKraft FoodsNorthfield, ILNestleVevey, Switzerland5.2. Competitor ComparisonUnileverP GKraftNestleTop SegmentC/G FoodsConsumer CareFoodFoodTop BrandDoveTideMac CheeseKitKatCEOA.BurgmansA.G.LefleyR.DeromediP.LetmatheStock per share$66.03$53.76$30.70$66.90development15.55%9.25%8.2%11.23%Revenues$42.942m$28.2BL$31,010m$69.BLRevenue Growth-11.93%19%4.3%-1.93%International100+42150+86Business Segments3556Employees2340001100001060 0253000(Source Hoovers business Intelligence guide)5.3. Category position in the marketStrategic IssuesFollowing are some of the key strategic issues which Unilever faces today6.1. LeadershipUnilever maintains two business entities i.e. Unilever PLC and Unilever N.V. callable to dual chairperson approach it faces following problems in their business strategyList stock severallyShared board of directorsTypical management wear two, three hatsConflict in Board and Business responsibilitiesCompany remains fragmentedReduced effectivenessSlow decision making process( Bureaucracy)Unilever believer (believe in Unilever)Unilever should create a sense of belief amongst its consumers. It should try and focus on program that focuses on brand initiative to the consumers. Use advertising that connects with consumer needsConsumers demand high quality products that are both cheery and deliciousConsumers look for new ways to use the productLarge population of single parent house holdMore females are working full-time jobsIncrease consumer focus on health and nutritionStrategy Justification7.1. Recommendation 1Make an initiative to create an overall umbrella brand across all Unilevers brands that will eventually consolidate various businesses under one name.Unilever PlcUnilever NV nonpareil UnileverProvides a greater clarity of leadership, responsibility, and accountabilityAllows Unilever to focus on the needs of their customers and consumers thus reigniting growth and increasing sales potentialProvides the ability to leverage scale of operationsCreate a strategic programme for brand managementRecommendation 2It should implement Unilever Believer product and brand extensions. The related drill in this case is of Lipton tea. It should try and create an extension to this famous brand by focusing on energy drinks. Justifications areEnergy drinks jumped 56% in sales last yearMarket has eliminate $100 million in the recent yearsMain Competitor Red Bull attitude Statement A Hea lthier Alternative to Energy DrinksUnilever should cash in this opportunity by locate Market Young adults 18-32Uses stay up all iniquity and/or start a night outMain Ingredients Caffeine, Vitamin B, GuaranaAdvertisements Highlight healthier ingredients of the product while showcasing its ability to give energy and revitalize body