The following report aims to describe the current market situation of the company Unilever, indicating its most potential markets in the global business domain. Following that, the sustainability challenges that the company faces and the feasible marketing opportunities will also be highlighted here. Lastly, a sustainability proposal have also been created for the company in order to direct the company for attaining a bottle line business strategy. The shift in business direction that is required for the attainment of the business development have also been highlighted.
The Unilever Company operates in the Consumer Goods industry. It is a public Company. The company manages the divergence of the product line through a vertical axis that represents the global combination level (Bansal & DesJardine, 2014). The organisation have a hybrid structure that is being manipulated with 3 ramification territories, 2 product divisions as well as 5 operative sections. Unilever, a global consumer goods company, operates with approximately 10000 employees. The most common job designations in the company are Brand Manager (5%), Finance Manager (2%) and so on. The vertical axis of product diversification represents how product dispersal is done globally and the horizontal axis represents the rationale of national difference that is responsible for the strategic and operational reconciliation.
The company is prompt about customers’ choices and works towards making the brand, the most accessible in the minds of the consumer. The company also inclines local in order to entice the customers of the local market to buy their products. The company ensures that the products they manufactures suffices the requirements of the National Food Safety agencies (Bhattacharya & Polman, 2017). The company, specifically excels in the FMCG products and it is the leading seller as well as distributor in 19 countries. Unilever always makes sure that the product ingredients are same in the different countries. However, based on the local preferences of the country where they are operating, Unilever manipulates their products. The company specialises in the product lines of food brand, personal care brands, health, hygiene and beauty, nutrition, home care, advertising as well as food solution. At present, the company caters to 2 billion consumers every day. The ultimate vision of the company is to create a better future for the people by fulfilling their daily needs. The company emphasises on the values like feeling good, looking good as well as achieving more out of their lives. Currently, they are also intensifying the business patterns in order to set an objective of doubling the organisation’s size and parallel bringing down the impact on the environment.
For the purpose of this research, the research data have been collected by means of secondary data collection method. For that, the online sources like journals, newspaper articles and government publications have been used. A thematic analysis of the research data have also been conducted here.
The largest customer’s base of the company lies in Asia and together with that maximum market suppliers of the company are also from Asian origin. Owing to strong competition in the market as well as global economic slowdown the net sales and net profit of the company have reduced (Goffin, 2017). Since it is a company of Australian origin, the company enjoys the benefits of understanding the cultural as well as the market differences in the countries of Asia (Beasley & D Scott Showalter, 2015).
Political
The company has to handle high level of political pressure since major part of their operation is conducted outside their home country. The political influence is experienced in the work domains of importing goods, employing expatriates as well as setting prices as well as others. These tasks involve local investors making FDI. Unilever is also member to a number of global organisations. The company have a alleviated corporate reputation in the countries where they operate and that is because the company engages in large number of CSR and ethical activities all over the country. Besides, since the company also generates lots of job opportunities in the marketplace, they enjoy ease of access in the market of many countries. The cost of market [operations of the company is also less because of the fact that they enjoy high level of tax rebate in many Asian countries where they have high market encompassment.
Economic and Social factors
The market environment of Unilever is most competitive in the market of Western Europe (Meulensteen, Vermeulen & Meerman, 2016). The free trade union policies as well as the Brexit rules of the continent cause’s lot of market entrants who keeps on segregating the business market of Unilever in the country (Bansal & DesJardine, 2014). Ample competition is faced from Procter and Gamble in Europe and this seriously impacts the profit potential of the company.
As a fast moving company of the FMCG industry, the company puts the other companies in a position where they are forced to reduce the prices of the products. As it seems, in the current position of economic tide, the customers are shifting away from brand loyalty and choosing cheaper products compared to branded products.
Again, in the EU arena, the competition is waged between French and Dutch companies which attempts to reduce prices in the international market. That is why the company is facing instability in the business in these selective countries.
There are technological aspects of the business ventures of Unilever. The company is distinctly aiming at enhancing the web existence of the company so that the brand communication of the company can be enhanced in turn, particularly in the nations like China, India, Bangladesh and other South Asian countries. Besides that the company also designed the Bitto Storage system Limited which acts as the main inventory supply agency that provides the company with pallet racking, plastic bins, wide span, heave load shedding as well as boltless shelving.
The rate of quarterly sales of the company have been poor in the last 4 years. Product manufacturers starting from brands like Dove Soap to Ben and Jerry’s ice cream have issued sales warning regarding repetitive fall in emerging markets (Grayson, 2017). The currency weaknesses in the countries like India, Indonesia and other surrounding countries as well as Latin American countries like Brazil is the reason why the quarterly sales rate of the company have depreciated by 6.5% in the third quarter since 2016 (Bocken, 2017).
Unilever also sells their products to the toughest of the markets which sells premium products like Tesco, Morrison’s and so on. These supermarkets are not only tough competitors. They are also capable of delisting specific brands as well as shrinking the floor spaces for them. However, in spite of the supermarkets sales being affected heavily by the depreciating third quarter sales, the sale in the emerging retail markets have helped the company to remain the top sales grossing company in the Asian market. The company also encompasses risk in growing a sustainable business. The company has set clear and specified goals for minimising the environmental impact. However, in order to pursue this goal, they have to meet many environmental laws and barriers. Water availability and usage, green emission rating as well as positive social benefitting is to be implemented for the reduction of the environmental impact.
According to Alabau et al. (2015), the materiality assessment of Unilever identifies priority sustainability issue across the whole value chain of the company. Macro forces are affecting the businesses of Unilever. The company monitors these trends for mapping the strategy that has impact on the materialistic issues of the company (Matlock, 2015). Water scarcity and climatic change are directly affecting the business of the companies like Unilever. High data based technologies such as artificial intelligence, robotics, virtual reality and voice technology opens up new avenues for connection, value creation and also poses around new risks regarding security as well as privacy (Apte & Sheth, 2017).
In the annual reports as well as accounts, the principal risks as well as the concerned material issues are presented in a synopsis here.
According to Matlock (2015), the first risk in this context is sustainability. The material waste regarding this are packaging wastes, water, hygiene sanitation, nutrition and diets, deforestation, communicable diseases as well as animal welfare. The sustainability issues are as follows:
These issues call for Materiality assessment and the steps associated with that are as follows:
The proposed change will comprise of the ethical values and a new design based on diversity will be developed. There is such diversity in the workforce of the company, that members can be classified on the basis of gender, religion, age group as well as others in context of the workplace morale (Rochlin et al. 2015).
Recession is gradually gaining ground in many of the countries. However, the European market is creating a single based market and this market is gradually growing mainly for the products of Unilever (Grayson, 2017). In most of the markets, inflation rates as well as exchange rates have ben immutable. Hence, this does not even contrives the price of any product or any subsequent investment.
Unilever should take initiative to state the facts clearly about the global pollution output of the company. Goffin (2017) has mentioned that firms like the Unilever management should try and understand that over two third of the greenhouse emission as well as half of the wastage of water owing to consumption of cosmetic products in caused by Unilever products, directly or indirectly. However, the product usage and manufacturing is the main cause of the spread of pollution in the country.
Again, in order to develop the nutritive quality of their products, certain important steps like cutting in the salt limit, level of saturated fats, sugar as well as calories is very important. Again, for a farm of such a big domain, Salvioni, Astori and Cassano (2015) suggest that the need to conduct CSR activities on a large scale is also necessary. In this context, the company should have contract with about 30000 to 40000 small holding farmers. Having small scale farmers in the supply chain of the company, the bargaining power of the suppliers would also decrease.
According to the views of Melton, Damron and Vernon (2017), it is required that the companies take responsibility of the damage that their activities are doing towards the planet. As concerned customers, people nowadays are preferring to purchase products that are manufactured ethically and provides some viable economic benefits (Melton, Damron & Vernon, 2017). The governments are working actively to address the problems linked to food shortages, malnutrition as well as climatic changes. That is why the responsibility rest up on the corporate world. The company can get an added competitive edge by addressing these problems.
Purohit (2017), has mentioned that under the proposed sustainability plan, the organisations should plan for the primary changes related to the following:
The above proposed changes are general deliverables that can help the company to attain a competitive profit edge as well as create market sustainable products that would be beneficial for the future productivity of the company. However, the issue is that the company still do no have any discreet blue print regarding how to achieve the same. As the company puts it: “We do not yet know how we will do this”.
MORAIS and Silvestre (2017) mentioned that the company can source 100% of their agricultural raw materials sustainably, within 2025. This can include 100% sustainable products like palm oil and that that is because Unilever is that company that sources 3% of the Palm Oil in the world. Through its products, Unilever can change the hygiene habits of 1 billion customers in Asia, Africa as well as Latin America that can help in reducing diarrhoea (Grayson, 2017). The Unilever needs to push up the sales of the Lifebuoy soap and though their television commercials they can teach the people when to wash their hands and that too in a hygienic way.
They can enhance the availability of safe drinking water in all the households. This can be achieved by fostering the sales of the Pureit home water purifier of the company (Salvioni, Astori & Cassano, 2015). The company can also generate value for the society by doing the following:
Do (2016), states that the boosting the sales of the ecologically sustainable products can also create economic value towards the customers. Bansal and DesJardine (2014) state that there are billions of customers in the world who are deprived of better quality products like soap, clean drinking water and shampoo. However, the company should be mindful of the fact that the growth of the company should not come at the cost of diminishing the resources of the organisation. They can enhance the availability of safe drinking water in all the households. This can be achieved by fostering the sales of the Pureit home water purifier of the company (Salvioni, Astori & Cassano, 2015)
The company can also generate value for the society by doing the following:
Improve the living standards of people by working in unison with Oxfam and Rainforest Alliance
Do (2016), states that the boosting the sales of the ecologically sustainable products can also create economic value towards the customers. Beasley and Scott (2015) have mentioned that here are billions of customers in the world who are deprived of better quality products like soap, clean drinking water and shampoo. However, the company should be mindful of the fact that the growth of the company should not come at the cost of diminishing the resources of the organisation.
(Source: Bansal and DesJardine, 2014)
The Unilever is the 2nd largest personal care and foods company that has maximum sales parity in the domain where they operate. It is also the biggest ice cream manufacturer through sale of Wall’s and Ben and Berry’s. The company also operates two of the biggest green tea brands like Lipton. Apte and Sheth (2017), as an outcome, the company can generate value by either diminishing the price of these products or by using generic or organically extracted raw materials for these products. Beasley and Scott (2015) has argued that the sustainability pledges that have been aroused by rival company Procter and Gamble thrusts Unilever to generate more eco-sustainable products that can validate that Unilever is also working towards the betterment of the society. This has forced the company to take up environmentally sustainable targets (MORAIS & Silvestre, 2017). Working with Pampers, Gillette and Ariel, the company the company has launched an environment based campaign that aims at:
“to improve more consumers’ lives in more parts of the world more completely”
The competitive advantage which will be achieved by Unilever in order to engage in the same:
Conclusion
Therefore, from the given analysis it can be stated that Sustainability can be considered to be an effective part of the organization and in order to ensure long term success, all the firms would be essentially required to undertake an analysis on the sustainability strategy so that they will be able to maintain its positioning in the market. The given report chose the company named Unilever and research has been done in order to analyse its sustainable strategy and review the different market and regulatory analysis in order to analyse whether the sustainable strategy of the company is working or not and also to present a sustainable proposal. The report reviewed the background of the company which was followed by the PEST analysis. This was followed by the analysis of stakeholders and other parties and along with it a proper proposal has been presented.
Reference List
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Beasley, M. S., & D Scott Showalter CPA, C. G. M. A. (2015). ERMAND SUSTAINABILITY: TOGETHER ON THE ROAD AHEAD. Strategic Finance, 96(9), 32.
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Bocken, N. (2017). Business-led sustainable consumption initiatives: impacts and lessons learned. Journal of Management Development, 36(1), 81-96.
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Goffin, K. (2017). Sustainability and new product development. In Cranfield on Corporate Sustainability (pp. 105-118). Routledge.
Grayson, D. (2017). Overview of embedding corporate sustainability……………….. David Grayson, Director of the Doughty Centre for Corporate Responsibility and Professor of Corporate Responsibility. In Cranfield on Corporate Sustainability (pp. 23-42). Routledge.
Grayson, D. (2017). Overview of embedding corporate sustainability. In Cranfield on Corporate Sustainability (pp. 7-26). Routledge.
Grayson, D. (2017). Sustainability and new product development……………….. Dr Keith Gof?n, Professor of Innovation and New Product Development. In Cranfield on Corporate Sustainability (pp. 121-134). Routledge.
Matlock, M. (2015). Agricultural Sustainability: A Grower, Processor, and Retailer Initiative. Resource Magazine, 22(3), 6-9.
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