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Unilever SWOT and PESTLE analysis

Mission

Our mission is to add vitality to life. We meet everyday needs for nutrition, hygiene and personal care with brands that help people look good, feel good and get more out of life.

Introduction

Unilever is multinational corporation which formed by Dutch and British companies joint venture. Unilever owns 400 brands worldwide and runs operations in 100 countries. Unilever employed 174,000 worldwide and had revenue 40.5 billion Euros in 2008.

Unilever is dual listed company consisting of Unilever NV in Netherland, and Unilever PLC in UK. But both companies have same directors and effectively operate as a single business.

In the 1890 William Hesketh Lever, founder of Lever Brothers wrote down his idea for Sunlight Soap, his revolutionary new product that helped popularise cleanliness and hygiene in Victorian England.

  • In 1872 in Netherland, Jurgens and Van Den Bergh open their factories to produce margarine.
  • In 1884 Lever & Co. start producing Sunlight soap.
  • In 1886 Knorr - which will become part of Unilever , launch soap tablets with meat extracts to provide nutritious food for low income consumers.
  • In 1887 the buy a site, which was a large factory with purpose built village for its workers providing a high standard of living for its workers.
  • In 1890 Lever & Co. became a limited company, Lever Brothers Ltd.
  • In 1894 company creates affordable new product LifeBuoy soap for growing interests in personal hygiene. And becomes a public company.
  • In 1906 lever comes to an agreement with three other manufacturer to limit competition for raw material.
  • In 1911 Lever Brothers first purpose built research laboratory is constructed at Port Sunlight.
  • In 1917 Lever Brothers acquires Pears Soap, a company founded in 1789, and Jurgen forms an alliance with Kellogg's in preparation for expansion into North America.
  • In 1922 Lever Brothers buys Wall's a popular sausages company which is beginning to produce ice cream to sell in the summer when demand for sausage falls.
  • 1926 Lever Brothers launches its clean hands campaign. Part of its child health policy.
  • In 1927 Jurgens and Van Den Bergh, and some other companies create margarine Union. The union quickly gains new members.
  • On 2 September 1929 Lever Brothers and Margarine Union sign an agreement to create Unilever.
  • On 1st Jan. 1930 Unilever is officially established.
  • In 1941 during the Blitz WWII, Lifebuoy provides a free emergency washing service to Londoners.
  • In 1955 Unilever airs the very first advertisement on UK commercial TV, which was for Gibbs SR Toothpaste.
  • 1956 Unilever research establish its Biology department.
  • In 1968 attempts unsuccessfully to merge with Allied Breweries, one of the UK largest brewing company.
  • 1971 Lipton International is acquired and Unilever tea business becomes one of the largest in the world.
  • 1984 Unilever announce its core business strategy and large acquisitions and disposals follow over next decades. Brooke Bond is acquired in Unilever first hostile takeover.
  • In 1996 Hindustan Lever and Brooke Bond Lipton India merge to create India largest private sector company.
  • 2000 Bestfoods is acquired in the second largest cash acquisition in history.
  • By 2001 Unilever cut its brands from 1600 to 900. Unilever Bestfoods establish its Global nutritional and Health Network.
  • In 2004 the vitality mission is launched and the new Unilever and the Unilever brand rolled out, including the new logo which represents the diversity of Unilever, Our Products and Our People.

Company Logo

Company changed its logo in 2004. Which represent the diversity of Unilever, Which contains 25 signs and blue colour.

This shows company identity expresses the vitality at the heart of our brands, our people, and our values. Each icon within our logo represents an aspect of our business, showing that we add vitality in everything we do.

SWOT

A research method which includes to consider about Strength, Weakness, Opportunity and threats use for to know about company internal and external factors which could be have good or bad impacts on company planning and then organisation can plan its strategy how to tackle with those factors.

In which:

Strength and weakness are internal factors of the organisation.

And

Opportunities and threats are external factors of the organisation.

Strength

Internal attributes of the organisation that are helpful to achieve the objective.

  • Company operates around 100 countries
  • Unilever operates its operations nearly 100 countries in the world. And they also have 270 manufacturing sites worldwide.

  • Strong portfolio of brands
  • Company has 400 brands all around the world. Most of the brands known as multinational brands but some of them operate in some countries and company calls it local brands. 13 international brands have contribution in sales more than 1 billion Euros. And Unilever top 25 brands account for more than 70% of sales.

  • Products of the company
    • Personal wash: Lux, Rexona/Sure,
    • Laundry: Surf, OMO, Persil,
    • Skin care: Dove, Ponds,
    • Hair care: Sunsilk,
    • Oral care: CloseUp, Pepsodent,
    • Deodorants: AXE, Lynx,
    • Food and beverages: Lipton, PG Tips,
  • Research and development
  • Company spend huge amount on Research and development worldwide. In fiscal year of 2008 they spent 927 million Euros on R&D.

  • Price quality and variety
  • Unilever has 400 brands worldwide. But brands available in market are with different packaging with different quantities.

  • Competitive advantage
  • Huge product variety
  • Promotion and advertising
  • Effective and attractive packaging
  • Research and development
  • Economy of scale
  • Unilever operates 270 manufacturing sites around the globe. That is how they can achieve economy of scale easily. It gives competitive advantage to company.

Weakness

    Internal attributes of the organisation that are harmful to achieving the objective.

  • Strong competitors
  • Unilever has strong competition worldwide by multinational. E.g. P&G, Kraft, Nestle, etc

  • Substitute products
  • Unilever operates in 100 countries there are lots of substitute products available in the local market. And company charge higher prices for its products but the local products are much cheaper.

Opportunity

    External conditions those are helpful to achieving the objective.

    li>Health conscious products demand

    Now a day's people like to eat healthy food which contains fewer calories and use those products which will not harm their environment.

  • Changing life styles
  • Now people are more aware about innovations because of the media. Company can use changing life style and increase the demand of the products.

  • Emerging new markets
  • Now a day's new markets are emerging company can expand their business to cover these markets. Like Russia, Iran, Iraq and Afghanistan.

  • Increase production volumes
  • Unilever can concentrate to increase production volumes and they can try to increase their availability in the market. By increasing production volumes and availability it is possible to achieve high demands of products.

  • Move operations to undeveloped countries
  • Company needs to focus to move their production operations in undeveloped countries. Than they can find cheap labour and save money on operations and they can build a supply chain towards expensive markets. Then their profitability will be high.

Threat

    External conditions which could do damage to the business's performance.

  • Economic downturn
  • Biggest threat now days are recession. Most of the companies shut their operations or make redundancies people losing their purchasing power. It has affect all over the world in this situation coming times will be very crucial for company.

  • Environmental effects
  • Peoples are very conscious about the environment. They don't like to buy products which can be harmful for the environment. Company needs to focus on how to become environment friendly.

  • Global competition
  • The chances of Global competition are growing. New companies are coming with innovation. If Unilever wants to stay in market they need to focus on innovation to kill competition around the globe.

  • New local products
  • New local products are introducing in the market. As the sizes of local companies are small they have fewer expenses and when they provide cheap product they can grab the market share of Unilever easily.

  • legal effects
  • If the government introduces any sort of law for tax or it introduce new limits for production because the product is harmful for human use or natural environment. It will be very hard to sell out the product in the market.

PESTLE

PEST is macro environmental scanning tool which is very helpful to scan environment. But the model has been recently extended furthermore now it calls PESTLE analysis which provides more efficiency towards scan the environment for future strategic planning.

PESTLE stands for Political, Economical, Socioculturel, Technological, Legal, and Environmental, and it is very useful tool for develop new planning.

Political/Legal

Political and legal factors have huge impact on the business for develop new strategies. These factors can affect, how company operates, its costs, and the demand for its products. It includes:

  • Political stability
  • TAX Regulation
  • Trade Regulation
  • Employment Laws
  • Environment Laws
  • Health and safety laws
  • Employment laws
  • Consumer laws

The UK government support the fair trading commitment for both the local consumers and foreign producers. (News BBC, 2005)

During the 1960 the political risks of emerging countries began rising. A number of countries nationalised Unilever businesses. Governments restricted the payment of dividends and services fees. As a result of harmful effect of nationalisation policy, in the 1970's many US companies e.g. IBM and Coca Cola left India.

Unilever also disliked them, fearing knowledge leakage, loss of trademarks, and moral hazards issues. However Unilever became a master at delaying tactics, using its extensive contacts and goodwill in many countries to modify regulations, and generally bargain with governments.

During 2008 company had increased of 4.3 % in total waste compared to 2007. This increased from 7.56 kg/tonne to 7.89 kg/tonne has been driven by three factors:

Legislative changes which required different methods of disposal for non-hazardous waste, under capacity in effluent treatment and the planned disposal of accumulated and inherited hazardous waste.

Economical

Economic factor has major impact on how business operate and make decisions in the future. This includes:

  • Economic Downturn
  • Interest rates
  • Exchange rate
  • Inflation rate

UK is seventh largest economy in the world and third largest economy in Europe. During the recession time UK is in its worse time. Companies are not doing new investments but doing redundancies that is why consumer markets are shrinking and peoples are losing their purchasing power.

Unilever market is becoming highly competitive especially in Europe. P&G is major competitor in the Europe. And also there are so many discounters in the European market resulting from EU free trade policy. It has very bad impact on Unilever profitability.

Socioculturel

Social factors include the cultural aspects and its influences vary region to region. This includes:

  • Life style
  • Age
  • Religion
  • Education

As Unilever is one of the largest FMCG Company in the world. Millions of people enjoy the products of the company every day around the globe. It means company have huge impact on the people life style. It is a responsibility that company consider very seriously.

  • Company invested 91 Million Euros in community programme worldwide in 2008.
  • 120 Million People reached by Lifebuoy brand's hand washing programme in India since 2002.
  • Four million children are reached by Signal/ Pepsodent/ CloseUp/ tooth paste brands through school based oral health programme in 2008.
  • Three quarters of the food products in our R&D pipeline bring specific nutritional or health benefits.

Technological

Technology is necessary for the success for competitive advantage and is provide power to globalisation. This includes:

  • R&D Activity
  • Informational Technology
  • New machines

Technology plays a vital role in company history. Right in the 1930's Unilever continue to diversify. Business continue to boom in 1950's with new technology being invented to boast production and improve quality.

Unilever is global leader in research and development, believing that powerful vitality based innovations are crucial to delivering sustainable growth. In 2008 Unilever appointed first chief research and development officer. 6000 plus R&D professional came together in one unified organisation. Company spent 927 million Euros on R&D worldwide. And company also have five laboratories around the world that explore new thinking and techniques to help develop our products.

Environmental

Growing awareness about climate change is affecting companies very hardly and it can be create new markets or destroy existing markets. It includes:

  • Climate change
  • Diseases
  • Weather

Now a day's climate change is big issue for companies. People like to buy the products which will not be harmful for environment. And Unilever are working towards it.

Unilever depends on the natural environment for supplies of raw materials and water. Sustainability is a business issue. In 2008 we piloted a way to measure our product categories against four indicators covering water waste, sustainable sourcing and green house gas emission. This data will inform future development and innovation across our categories.

  • 39% reduction in CO2 from energy 1995-2008.
  • 63% reduction in water 1995-2008.
  • 68 % reduction in total wastage 1995-2008.

Facts and figures 2008

In 2008 we made further solid progress. We achieved underlying sales growth ahead of our target range and faced with unprecedented input cost pressure, protected profit by early pricing action and saving programmes.

Conclusion

Unilever is multinational and one of the largest FMCG providers to the world. Company runs its operations in 100 countries with 400 brands. Company operates 270 manufacturing sites with 174000 employees and generate 40.5 Billion Euros of revenue during the 2008.

13 international brands have contribution in sales more than 1 Billion Euros. And 25 top brands contribute for more than 70% of sales.

In 2008 Unilever appointed first chief research and development officer. 6000 plus R&D professional came together in one unified organisation. Company spent 927 million Euros on R&D worldwide in 2008.

Unilever has strong competition from local and multinational manufacturers.

Company has huge impact of political and legal system. And Unilever became a master at delaying tactics using its extensive contacts and good will in many countries to modify regulations and generally bargain with Governments.

Millions of people enjoy the products of the company every day and it is responsibility that company consider very seriously.

Technology plays a vital role in company history. In 1930 when company became Unilever, company continue to diversify. Company depends on natural environment for suppliers of raw material and water. Sustainability is a business issue company is taking steps very seriously towards friendly environment.

References

  • http://www.codewit.com/Pestel_Analysis.pdf
  • http://www.hbs.edu/research/pdf/06061.pdf#search=%22uaal%20meetingof%20osc%20unilevr%22
  • http://ivythesis.typepad.com/term_paper_topics/pest_analysis_in_the_uk_tea_market/
  • http://www.marketingteacher.com/Lessons/lesson_PEST.htm
  • http://tutor2u.net/business/strategy/PEST_analysis.htm
  • http://www.unilever.com/
  • http://www.unilever.co.uk/
  • http://en.wikipedia.org/wiki/PEST_analysis

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