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Introduction of Strategy Assignment
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With technological advancements, business organizations are rising and getting more popular than ever. Business organizations are thriving in this competitive business environment. There is a strong requirement of the policies and an effective strategy for the business organization to keep flourishing in the business environment (Magerakis and Habib, 2021). The goals, visions, procedures and strategic plan contribute massively in accomplishing the long-term as well as the short-term mission, goals or objectives of the business organization.
This analysis is concentrated on Unilever, a British multinational company with having 149,000 employees and the business operations take place on a global level. As of 2020, Unilever owns around 400 brands under its umbrella and it has a turnover of 51 billion euros (Unilever, 2021). The offerings of Unilever are being actively consumed by the customers belonging from different 190 nations globally. Unilever was established in the year 1929 with the mission to “add vitality to life through meeting different needs such as nutrition, hygiene and personal care”. Furthermore, the discussion on the micro and the macro aspects that can have a greater impact on the efficiency of Unilever is going to be discussed here.
2. Analysis of the impact and influence which the macro environment has on an organization and its business strategies
2.1 Application of appropriate frameworks and analysis of the impact and influence on the macro environment on a given organization and its strategies
PESTEL Analysis
Political Factor
In the industry of Consumer goods, there is a huge requirement for political stability for the success of the organization. Due to the political stable environment, the business operations of Unilever are going well (Kpoku, 2021).
Economic Factor
The economic situation of the country plays a huge role in the business sustainability of any business organization. In the United Kingdom, currently, Unilever is charging very high prices for its products and services due to higher inflation which is affecting consumer behaviour (Naidu, 2022).
Social Factor
Being a multinational company, Unilever has to evaluate and launch different products for the different nations on the basis of which commodities can appeal to the customers (Ullah, 2021). Unilever generates huge revenue by offering various beauty care products to the customers which aid the company in gaining more market share.
Technological Factor
With the ongoing pandemic, technological advancements also surge greatly and Unilever is getting huge benefits from the United Kingdom’s technological advancements that are enabling the manufacturing and other processes of the business operations to go smoothly (Anitah et al., 2019).
Environmental Factor
Unilever is actively contributing to accomplishing 100 per cent “plastic packaging” to become reusable and other environmentally sustainable activities due to the rise of problems such as global warming and the inconsistent change in climate which is becoming more evident than ever (Unilever, 2021a).
Legal Factor
The rules and legal policies of the United Kingdom are required by Unilever to follow and operate within the legal framework (Coline, 2021). Any business activities without following the legal policies can result in fines or penalties.
PESTEL Analysis
(Source: Ullah, 2021)
2.2 Critical analysis of the macro-environment to determine and inform strategic management decision
In the current scenario, the economic factors like rising inflation rate are already creating difficulties for Unilever to offer their commodities at a reasonable price and the marmite and Dove creator who are coming under the umbrella of Unilever which forecasted that the “Cost inflation of £3bn” is on the way this year (Sweney, 2022). Due to the pandemic, Unilever is seeing some of the worst impacts on the revenue and profits of the business altogether. Unilever is being affected by setting the standards or ideals for the customers around the world who are using it. In response, Unilever removed the normal and challenged these conventional standards and beauty ideals.
2.3 Critique and interpretation of the information and data applying environmental and competitive analysis to produce a set of valid strategic directions, objectives and tactical actions
From all the data analysis, it can be observed that the business operations of Unilever are being actively affected by environmental factors. One of the consistent problems with the company is that the company is yet to make a huge impact on environmental sustainability. Furthermore, the local companies in the United Kingdom can provide competition with Unilever (Tien, 2019).
Objectives
- To successfully achieve more 20 per cent share in the market till the end of this year. Currently, Unilever is having 26 per cent share in the market.
- By the end of 2025, a 50 per cent reduction in virgin plastic and ultimately contribute to environmental sustainability.
- Reskilling and upskilling of the existing workforce by 2025.
3. Assessment of the organization’s internal environment and capabilities
3.1 Analysis of the internal environment and capabilities of a given organization using appropriate frameworks
SWOT Analysis of Unilever
Strengths
Unilever has a very strong and stable financial flow as well as resources. The business organization has a great arsenal of “experienced leaders” (Tien, 2020). The company has diverse business offerings and a large commodity in the portfolio of Unilever.
Weaknesses
Unilever has a very limited business diversification outside of the fast-moving consumer good. Furthermore, the commodities are very easy to imitate and there are many similar products in the business offerings of Unilever (Kpoku, 2021).
Opportunities
There is a huge surge in interest for health cautious products and people are demanding more healthy products which can be a huge opportunity for Unilever. The millennial generation is rising and becoming a big part of the market and Unilever can generate and capture more market share by concentrating on fulfilling the needs of the millennial generation (Lembke and Cartier, 2020).
Threats
The rising competitors such as Nestle, P&G creating a difficult situation in Unilever's business sustainability. Imitation is a weakness as well as a threat for Unilever since it requires huge financial resources to create new and distinct products (Kpoku, 2021).
SWOT Analysis
(Source: Tien, 2020)
VRIO Analysis
Value: The financial resources of Unilever is very valuable which is going to aid the company in combating problems, especially in this time of the pandemic (Galpin, 2019).
Rarity: Different patents for the different commodities of Unilever is very rare and these patents help the company in competing with the other business competitors (Zhang and Fan, 2020).
Imitability: The business offerings of Unilever are very easy to imitate by the different business competitors such as P&G, Nestle etc (Kostiuchenko and Zakorko, 2019).
Organization: Unilever is a very popular and big business organization and due to that Unilever knows how to make maximum utilization of the various resources of Unilever (Reza, 2020).
VRIO Analysis
(Source: Galpin, 2019)
3.2 Critical evaluation of the internal environment to assess the different strengths and weaknesses of an organization’s internal capabilities, structure and skillset
From the critical evaluation, it can be concluded that the reason why Unilever is so successful is that it has a wide range of product offerings at a reasonable price and it has a huge pool of talented and experienced leaders and managers that are hugely contributing to the success of the business organization. However, there is a rising surge in the competition from big companies such as Nestle, P&G etc are giving hard time to the company. Unilever even lost market share and as of 2020, the company has experienced a drop from 36% to 26% (Statista, 2019).
Furthermore, the product offerings outside of the FMCG products are not diversified and the products are very easy to imitate to counter these problems, the company is actively concentrating on this specific area for improving the “operational efficiency” in the market. It can be identified that Unilever has already invested about €800m into Research and Development and the company is having more than 15,000 patents to protect the ideas (Unilever, 2022). The prices are very inconsistent in the market and Unilever is not able to generate revenues and losing market share in the United Kingdom. The financial resources of Unilever are very valuable since they can be utilized in addressing and overcoming these difficult scenarios.
4. Evaluation and application of the outcomes of an analysis using Porter’s Five Forces model to a given market sector
4.1 Application of Porter's Five Forces model to evaluate the competitive forces of a given market sector for an organization
Bargaining Power of Buyers
It is a strong force for Unilever since the switching cost of the buyers are very low which make it very easier for the customers to switch to different commodities (As, 2020). In this today’s world, people are having more access to information which result in more knowledge about the different goods and services to select from.
Bargaining Power of Suppliers
This is the moderate force in which the company is having a huge pool of suppliers and the average suppliers are moderate in terms of size. Due to the moderate number of suppliers, they have a moderate impact on the business operation of Unilever (Murphy and Murphy, 2018). For instance; Any change in the production level due to the supplier can result in limited changes in the availability of the raw materials for the business operation of Unilever.
Threat of New Entrants
This is without a doubt is a very weak force for Unilever since it is an established business organization in the FMCG industry (As, 2020). The economies of scale are being actively enjoyed and utilized by Unilever which aids in competitive pricing and improved organizational efficiencies.
Threat of Substitutes
The force of substitutes is very low in the case of Unilever and even after having the availability of substitute commodities in the market, the impact can be significantly weakened due to the wider availability of substitutes (Shi, 2021). For instance; “Close-Up” toothpaste which is a product from Unilever is widely available in various grocery stores and people are more willing to buy closeup toothpaste than attaining from different grocery stores.
Rivalries
The rivalries are among the strong forces in porter's 5 forces for Unilever because there are many companies who are among the major competitors for Unilever such as Nestle, P&G, Johnson & Johnson etc (Cheng, 2021). Unilever is actively experiencing difficult competition from its competitors since the switching cost is very low and the people can easily switch to other business offerings.
Porter’s 5 Forces
(Source: As, 2020)
4.2 Devising appropriate strategies to improve competitive edge and market position based on the outcomes
Unilever can only compete with its other business competitors by constantly innovating in the department of commodities and services as well. This is very important to attain a competitive advantage in this competitive business environment. Furthermore, the rising competition from other competitors in the Fast-Moving Consumer Goods is creating difficult circumstances for Unilever (Banat, 2021). Unilever must put heavy emphasis as well as focus on the creation of new commodities and services to overcome these obstacles that can present even more challenges to the business.
One of the keys for Unilever to attain a competitive advantage over the other competitors in this business environment, there is a huge requirement for Unilever to engage in implementing a new strategy for making new, unique and distinct commodities and services. Furthermore, the reskilling and upskilling of the current or existing employees are also required to keep up with the changing business environment, especially in this time of the pandemic (Zhongming et al., 2021). Cost leadership can be utilized by Unilever to attain competitive advantages in this competitive business environment.
5. Application of the model, theories, and concepts to assist with the understanding and interpretation of strategic directions available to an organization
5.1 Application of A Range of Theories, Concepts and Models, Interpret and Devise Strategic Planning for A Given Organization
Some of the primary strategies that can be utilized by Unilever to overcome various difficulties and to attain a competitive advantage in the business environment are as follows:
Porter’s Generic Strategy
Cost Leadership
By utilizing this “cost leadership strategy”, Unilever can effectively attain a competitive advantage over its competitors such as Nestle, P&G etc by reducing the prices that will be charged to the customers (Ze et al., 2018). Furthermore, offering lower prices than the competitor’s commodities can result in capturing the market share.
Differentiation
By utilizing this strategy, Unilever can put heavy importance on creating new and distinct commodities that are very different from the product offerings from the competitors’ side (Cheng, 2021).
Cost Focus
The cost focus can aid Unilever to focus on differentiating its various different commodities in a targeted market by actively engaging and participating in the creation of distinct as well as very different from the other business competitors’ offerings.
Differentiation Focus
This differentiation focus can be recognised that the company is already utilizing it effectively but still there is a lot of room to grow and learn. Unilever must focus on launching new commodities and services which can improve and enhance the quality of the commodities. The targeted market will play a key role in this strategy to gain more market share and offer distinct and different commodities at reasonable prices (Jain and Sharma, 2018).
Porter’s Generic Strategies
(Source: Cheng, 2021)
Bowman’s Strategy Clock
Low price and Low Value Added
The offerings of Unilever are required to be offered to the customer or consumer at very reasonable prices or at a cheap rate as per this tactic (D?n?lache, 2018).
Low Price
Unilever has to produce its products and services by spending less in financial resources on the production and manufacturing activities to offer products at a reasonable cost (Desai, 2019).
Hybrid
The characteristics involving the differentiation aspect and the low-price commodities are required to be taken care of under this tactic (Echchakoui, 2018).
Differentiation
The emphasis on creating new, distinct and innovative commodities must be the most important priority of the business which can aid in capturing more market share (Desai, 2019).
Focused Differentiation
For the purpose of attracting more and more customers, there is a huge need of charging the right price on the basis of commodities (Echchakoui, 2018).
Risky high Margins
In this tactic, the consumers expect to pay more for the commodities and services even after getting the value for money from Unilever (Desai, 2019).
Monopoly Pricing
This tactic involves the monopoly aspect of the pricing in which there are no other competitors in the industry. Customers are also ready to spend x amount of money for the commodities and services of Unilever (Echchakoui, 2018).
Loss of market share
This tactic involves Unilever offering products that are distinct, valuable and different from the other business competitors’ offerings (Desai, 2019).
Bowman Strategy Clock
(Source: D?n?lache, 2018)
5.2 Production of a Strategic Management Plan That Has Tangible and Tactical Strategic Priorities and Objectives
This strategic management plan is going to concentrate on improving as well as enhancing the competitive position in the business environment. Increasing competition is very critical for the growth and expansion of the business organization (Elbanna, Al Katheeri and Colak, 2020). Unilever can attain a competitive advantage by offering different, distinct and unique products to the customer base which are competitively priced and unique from the other business competitors.
Analysis of Market
The Ansoff matrix model of Unilever shows the organization put heavy emphasis and utilized the market penetration effectively and majorly. It is evident that Unilever has been actively using the market penetration intensively and due to that, it has managed to gain so many customers or consumers (Dawes, 2018). Today, around 2.5 billion customers or consumers visit the different stores of Unilever on a daily basis (Unilever, 2021c). However, Unilever must focus on creating new, unique and distinct products for the customers that can be different and unique from the other business competitors’ offerings to capture more market share.
Resources Implications
Unilever must make sure that the company is having enough resources. The reskilling and upskilling of the employees and recruiting new and skilled employees are essential for capturing more market share and active investment in the Research & Development department is required for creating new, unique and distinct commodities for the customers (Reza, 2020).
6. Conclusion
It can be concluded that ultimately, Unilever needs a strong and effective strategic management plan to succeed in this competitive business environment, especially when looking from the long-term perspective. The threats like rising competition from the other business competitors can affect the company in generating more revenue and capturing the market share. Furthermore, it is advised that the business organization must engage and participate in identifying the business environment precisely and analytical to succeed in the strategic management plan.
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