Strategic Management Assignment: Strategic Analysis Report For Unilever

Question

Task: Each student must choose one MNC and develop a max 3.000-word Strategic Report based on the requirements. You are required to develop a Professional Strategic Analysis Report addressing the four specific tasks set out in the strategic management assignment brief. Your report should be 3.000 words, excluding Title, Abstract, Table of contents, Bibliography and Appendices.
You are required to develop a comprehensive strategic management analysis of a multinational corporation of your choice. You need to conduct independent research focusing on the key developments inside and outside your case organization. The study should not go back in time beyond 5 years.

ADDRESS THE FOLLOWING TASKS:
Task 1: Strategic Issues
Critically discuss and evaluate the impact of strategic changes in the strategic position of the SBU of your choice by analyzing the external and internal environment (including changes in organizational resources, competences, capabilities, leadership, culture and other internal aspects) of the case study organization during the period identified for your research.

Task 2: Three Level of Strategy Analysis
Critically evaluate how well the organization responded to the external and internal challenges over the period concerned. Part of your critical reflection and evaluation could be a discussion of whether the strategy of your case organization is prescriptive and/or emergent.

This evaluation should include considerations pertaining to the strategy implementation of the organization and an evaluation of its successes and failures. Your considerations should be supported by analysis and evaluation of the key performance indicators for the period studied i.e., from the end of the case study to present.

Task 3: VRIO/VRIN and SAFe
Critically discuss and evaluate the basis and sustainability of the competitive advantage of your case organization. You are to use a range of theoretical frameworks to develop a critical discussion about the basis of the competitive advantage of the case organization and how it changed over the period studied. Students are also to conclude how sustainable the competitive advantage of the case organization going forward.

Task 4: Recommendations
You are required to thoroughly develop a range of strategic options for the organization to ensure its longterm success. This task needs to be specific and relevant to the organizational context studied. Predict the results and be convincing in developing a clear success path.

Answer

1. Introduction
Unilever Plc is a renowned UK-based multinational organisation that produces and sells consumer goods including condiments, food, wellbeing, beauty care, personal care, supplements, beverages and many others. At present, Unilever consists of nearly 2.5 billion active users that account for almost 34% of the global customers. In a nutshell, the business model of Unilever suggests that it is a D2C (Direct-to-Consumer) business, where the main purpose is at making a commonplace sustainable living (Cuofano, 2018). It helps the brand to deliver growth that is sustainable for the longer term. However, Unilever has been facing challenges in the new and advanced era of modernisation in technology and business models from 2017-2022 in order to develop new and more advanced omnichannel strategies in the B2B (Business-to-Business) marketplaces. The fundamental scope of the strategic report is to observe the approaches to be utilised by Unilever to enhance its strategic management in order to overcome the challenges in the B2B market and achieve its vision, mission and business goals (Muora, 2021). This requires proper investigation and the method used for investigation is via secondary resources obtained from articles, journals, books, company websites, renowned institutions and business magazines. The research objectives of this secondary research are:

• To identify and analyse external and internal strategic issues.
• To carry out strategic responses at the business, corporate and operational levels.
• To provide strategic recommendations to enhance Unilever’s stable and continuous revenue growth.

Following are the research questions based on the research objectives:
1. How strategic frameworks are used to analyse the external and internal environment
2. How strategic responses are made at corporate, operational and business levels?
3. How strategic recommendations help Unilever to grow its revenue in future?

2. Strategic Issues
This section of the strategic report will identify the strategic issues Unilever has been facing for the past five months with its SBU (sub-business unit) Lipton with the high competition with other brands producing weight loss drinks and teas. Changes made in the organisational structure and available resources of Unilever to ensure adequate support in reducing carbon emissions by 2039. Alteration in the executive corporate teams have proved to be significant for the company growth. Core competencies of Unilever including leadership and brand strategy has helped the brand to penetrate foreign B2B markets efficiently. Furthermore, consistency of Unilever’s corporate culture associated with its ever-changing portfolio has shown to have an impact on the brand strategy as well.

Figure 1: Graph showing Unilever’s revenue growth
(Source: Smithson, 2017)

PESTEL Analysis
Factors Description Impact

Porter’s Five Forces Analysis
Factors Description Impact

SWOT Analysis

Industry Life Cycle

3. Strategic Analysis
Success Factors
The critical or key success factors of Unilever allows the brand to identify the customer needs by effectively understanding the factors or determinants that are responsible for succeeding in the B2B marketplaces. One of the most significant key factors to be overcome by Unilever is the highly competitive rivalry of the competitors with high differentiative products. As stated by Arora and Agarwal (2018), the organisational culture of Unilever makes the company's industrial environment change in a quick manner that makes the culture and organisational structure flexible while hanging from D2C to B2B business model. The partnership of Unilever Plc with Simens supply chain systems allowed the company to gain a global understanding of the specifications of raw materials. The brand name is another key point to its success factors. The quality crude materials from which Lipton products are made in the entire global industry allows the company to keep a reputed brand image amongst the stakeholders. As the company strives to work hard, its focus on sustainable living, improved health, enhanced livelihood and reduced environmental impact are some of the critical factors leading the brand to succeed in the long run. These success factors are also responsible for building customer trust, satisfaction, loyalty and product quality with Unilever's products. Some of the key performance indicators (KPIs) used by Unilever, i.e. employee engagement, quality products and technical ability helped in analysing the success factors. The strategies developed for Unilever’s Lipton SBU has been a prescriptive approach as it stitches the emerging opportunities and established strengths to mitigate the challenges.

Figure 2: Increased sales of Lipton due to its critical success factors
(Source: Arora and Agarwal, 2018)

Porter’s Value Chain Framework
Lipton is one of the global market leaders in the tea sector, which was interfered with in the market by Unilever in the year 2007. The company have taken many efforts in order to establish Lipton tea as the major 12 brand which is available in more than 110 nations. However, the strategic capabilities of the supply chain help a business form to gain better competitive advantages. The application of Porter’s value chain would help to assess the strategic capabilities of the company. As perBaldwin and Evenett(2015), the primary cavities of the Lipton are associated with the production and selling of tea products to their targeted customers residing in 110 nations. In the context of inbound logistics, the company value chain of the company is characterized by the vertical integration princess. However, the company distributes their raw materials only through selected and reliable suppliers. Unilever plc takes full control over the inbound logistics supply. Lipton operates in 110 markets. They sell their products through licensed stores, retail shops and several other selected distributors channels. The company holds a 15% market share across the world. Further., to ship the products to the customers all across the world. The company holds a strong partnership with the parent organization that takes full control over the packaging, distribution and delivery. Further, for marketing and sales, Lipton's foresees promotional activities in television, media channels, newspapers, magazines, social media platforms, and so on. Besides, the company collaborates with celebrities like Actor Shraddha Kapoor, Anushka Sharma, Hugh Jackman to globally promote their tea and unique products (Kirchoff, Tate and Mollenkopf, 2016). Both the presale and post-sale services offered by the organization holds an important role to build good customer relationships. The brand reputation of the parent organization Unilever helped to gain popularity for Lipton Tea within a very short span of time. The company directly does not provide any services to their customers. However, the company have introduced vending machines in order to maintain their value chain and provide a seamless product delivery to their targeted audiences.

Corporate Strategy
As opined by Chang et al. (2016), Lipton tea brand was established in the year 1893; however, it was acquired by Unilever in the year 1972. Within a very short span of time, the company established itself as the leading tea brand worldwide. The company has seen a sudden decline in sales volume over a few years. Thus, Unilever has committed to conducting a strategic review of this tea business. The entire tea business of the company held at $33 billion in the last year. The company is yet to decide about the separation of the Lipton tea business that will generate $2.3 billion in revenue in 2019 (Malviya, 2020).

Operational Strategy
In order to capture the market and maintain seamless business operations, Lipton has decided to incorporate sustainability in their product sourcing form 2020. They have decided to promote the sale of healthy tea products which are free from all pesticides. Besides, the company focuses on stringent quality control to provide its customers with the best quality of beverage or tea products. All the Lipton products will be Rainforest Alliance certified to maintain the Unilever Sustainable Agriculture Code (Lipton, 2022).

Business Strategy
Based on the analysis of porter's generic strategy, it can be identified that Lipton maintains a healthy balance between the cost leadership and differentiation target. As suggested by Yoo and Seo(2017), by considering the losing market share of Lipton, the company can curtail their prices in future. This will help the company to gain better competitive dates core its competitors like Tetley, Society, Brooke Bond tec. Besides this, the company needs to think about differentiation tactics in order to maintain healthy KPIs. Based on the market demand, the company can come up with new beverage products to hold a good market share.

4. Result Analysis
VRIO Analysis

The VRIO analysis provides a holistic review of the company management guidelines. This helps to truly assess the valuable resources of the company by determining its competitive advantages. The valuable core resource of Lipton is the brand image. In terms of social responsibility, the company sells and distributes healthy tea products (Talaja, 2012). Besides, the constant efforts to maintain the quality of organic tea products help the economy to establish a transparent and sustainable business for the future. Further, the engagement in the CSR responsibility natural publication of reports aids to ether sustainable business goals and development. The company is seen as the leading tea brand in the world. Due to their unique supply chain, maintained by Unilever, the brand name can be the true source of competition for the company. Another important thing is customer loyalty and experience. This helps to position the company for long term investments; the higher brand recognition thus provides a sustainable competitive advantage to the brands.

However, in terms of official resources, Unilever has the capability to generate equity through internal resources. As per Hernándezand Garcia (2018), by considering the sudden market decline, the company needs to think about product expansion and diversification to see better business engagement. Thus, this segment provides a temporary competitive advantage to the organization. While considering the rare competencies for the brand, international presence comes in the first position. The company distributes their products in more than 110 nations. Thus, global heritage large cultural presence can be noted as a rare competency. The strong R&D unit maintained by the company to procure such unique taste products holds the rare position of the company. The inimitable product of the competencies is associated with the location of the stores. The products offered by these brands are highly acceptable to their consumers as it maintains a strong distribution channel. Apart from that, the marketing communication of the company has enabled the brand to hold a strong relationship with its consumers. This provides a sustained competitive advantage to the brand. Financial strength and the technological; integration of the R&D units revitalized the organized nature of the company. <

SAF Analysis
In order to check the success factors of the business strategy, the SAF model has been applied. Suitability: the business strategy of Lipton tea is highly sustainable for the future. The company has to think about product innovation, cost curtailment and expanding business to gain competitive advantages over its competitors (Chang et al., 2016). The business strategy is highly suitable for the future. Acceptability: Yes, the levels of strategy aligning of product differentiation and cost leadership will benefit Lipton in future; however, the parent company needs to focus more on strategic advantages to increase profitability. Feasibility: As opined by Kirchoff, Tate and Mollenkopf(2016), Lipton company has all parts of financial resources and capabilities. Besides, the brand image of Unilever will help to align the business strategy for steady future growth.

Figure 3: Lipton’s tea sales in UK market
(Source: Statista, 2022)

5. Recommendations
Lipton has established itself as the leading tea brand across the world. However, at the competitive edge of the coffee industry, the company is facing challenges to maintain healthy business growth. The company has seen a declining market which accounts for 0.5% in the developing nations. The above graphs illustrate the variable nature of sales of Lipton’s tea products in the UK market. As per Dummett and Chuadhuri (2021), Unilever even decided to sell some assets to European company, CVC Capital partners at the business transaction cost nearly $4.5 billion euros. This partnership will help the brand to control its tea business in Europe. However, the company will maintain the joint venture with PepsiCo Inc. in Nepal, India and Indonesian region. In this context, the very first recommendation for the brand will be to introduce new tea products to fortify its previous position. Such strategies will help the company to increase its business profitability. This will help to gain better comparative advantages over its competitors. Besides, the company can think about some supporting policies like launching Lipton mixed brands, lowering the prices to the level of strong competitors, increasing distribution through direct sales, training the farmers for organic tea plantation etc. Even for a constant supply of organic tea products, the company can even provide financial support to tiger registered farmers. This will help the company to portray itself as a responsible and ethical tea brand. Using strategy will also assist their business expansions more strategically.

6. Conclusion
The report has briefly presented the strategic analysis for the Strategic Business Unit of the leading FMCG brand Unilever. Lipton holds the position of top 12 brands of this company. However, the changing consumer experiences inverse market share of coffee industry led to declining sales value for Lipton Tea predicts. However, the spring brand image quality product development helped the company to fortify its position over the years. It can be stated that product differentiation and cost leadership hold promising business enhancement in the future. Thus, Unilever needs to lay the foundation of strategic business advantages to gain better competitive advantages in the future.

Reference List
Arora, M. and Agarwal, A., (2018). Strategic Green Marketing and its Implication By Hindustan Unilever Limited. International Journal of Management and International Business Studies, 8(1), pp.23-38.https://www.ripublication.com/ijmibs18/ijmibsv8n1_03.pdf Baldwin, R.E. and Evenett, S.J., (2015). Value creation and trade in 21st century manufacturing. Journal of Regional Science, 55(1), pp.31-50.https://onlinelibrary.wiley.com/doi/abs/10.1111/jors.12175

Cascade Team, (2021). How Unilever Went From Soap Manufacturer To Multinational Giant. Cascade. https://www.cascade.app/strategy-factory/studies/unilever-from-soap-manufacturer-to-multinational-giant Chang, W., Ellinger, A.E., Kim, K.K. and Franke, G.R., (2016). Supply chain integration and firm financial performance: A meta-analysis of positional advantage mediation and moderating factors. European Management Journal, 34(3), pp.282-295. https://www.sciencedirect.com/science/article/pii/S0263237315001231
Cheng, Y., (2021, February). Analysis of the Opportunities and Challenges of Unilever's Differentiated Competition by Using SWOT and PEST. In 6th International Conference on Economics, Management, Law and Education (EMLE 2020) (pp. 280-284). Atlantis Press.https://www.atlantis-press.com/article/125952947.pdf
Cuofano, V., (2018). Unilever Direct-To-Consumers Business Model. FourWeekMBA. https://fourweekmba.com/unilever-business-model/ Gander, J., (2017). Strategic analysis: a creative and cultural industries perspective. Routledge. https://www.taylorfrancis.com/books/mono/10.4324/9781315644592/strategic-analysis-jonathan-gander
Hernández, J.G.V. and Garcia, F.C., (2018). The link between a firm s internal characteristics and performance: GPTW & VRIO dimension analysis. Revista de Administração IMED, 8(2), pp.222-235. https://dialnet.unirioja.es/servlet/articulocodigo=6784268 Kirchoff, J.F., Tate, W.L. and Mollenkopf, D.A., (2016). The impact of strategic organizational orientations on green supply chain management and firm performance. International Journal of Physical Distribution & Logistics Management. https://www.emerald.com/insight/content/doi/10.1108/IJPDLM-03-2015-0055/full/html

Kissinger, D., (2017, February). Unilever’s Five Forces Analysis (Porter’s Model) & Recommendations. Panmure. http://panmore.com/unilever-five-forces-analysis-porters-model-recommendations Lipton, (2022). Our Approach To Growing Tea | Sustainability | Lipton (2022). Available at: https://www.lipton.com/us/en/our-purpose/our-approach-to-growing-tea.html
Malviya, S., (2020). Unilever to create separate entity for global tea business, but will retain India and Indonesia. Strategic management assignmentThe Economic Times. https://economictimes.indiatimes.com/industry/cons-products/food/unilever-to-create-separate-entity-for-global-tea-business-but-will-retain-india-and-indonesia/articleshow/77123331.cmsfrom=mdr
Muora, E., (2021, October). How Unilever is facing the challenges of the B2B market. Vortex. https://vtex.com/en/blog/customer-stories/how-unilever-is-facing-the-challenges-of-the-b2b-market/
PhD Essay, (2022). Unilever Product Life Cycle. PhD Essay. https://phdessay.com/unilever-product-life-cycle/ Smithson, N., (2017, February). Unilever’s PESTEL/PESTLE Analysis & Recommendations. Panmure. http://panmore.com/unilever-pestel-pestle-analysis-recommendations Talaja, A., (2012). Testing VRIN framework: Resource value and rareness as sources of competitive advantage and above average performance. Management-Journal of Contemporary Management Issues, 17(2), pp.51-64. https://www.ceeol.com/search/article-detail id=86182

Yoo, S.H. and Seo, Y.W., (2017). Effect of supply chain structure and power dynamics on R&D and market performances. Journal of Business Economics and Management, 18(3), pp.487-504. https://www.tandfonline.com/doi/abs/10.3846/16111699.2017.1326979