Unilever is a public company with headquarters in London in U.K and Rotterdam in the Netherlands. The company was established in 1930 to manufacture oil-related products such as soap and margarine, but later diversified into operations. Also, it made several acquisitions such as best foods and best-culver among others. Of recent, the company has experienced considerable growth, for instance, by the end of 2017, it had grown to $53.715 billion, and the number of employees is above 160,000.
Summary of Mission and vision statements
As discussed earlier, Unilever has experienced growth in the last few years, helping it to achieve its mission statement, which emphasizes vitality in all its brands; and its vision of making sustainable living a commonplace. Though there exist some negative responses, the company seems dedicated to achieving both of this vision and mission statements. Some of the signs indicating this development include the turnover increment to $53,715 in 2017 from 52,713 in 2016, (T1; F1), showing an ease of selling its products. The return on investment grew to 19.2-percent, representing an increased efficiency of the company’s investment. Moreover, Unilever’s inventory grew from forty-seven million in 2015 to 190 million in 2016 (T1; I1), and the operating margin increased to 16.5-percent in 2017. This information shows that Unilever has a powerful ability to flip its products into cash, and thus gain more profit. However, the market share kept reducing from 2012 to 2016 from 4.19-percent to 3.55, indicating poor performance (F1). Moreover, the share price decreased (F3), but have increased to $37.77 in the past few months (F8), meaning that most people want to buy its stock as compared to before. Some of the strategies employed here to bring this positive impact include the implementation of €5 BL share buyback program. Such positive responses show a revival of the company's lost competitiveness edge as discussed below.
Key performance indicators and comparison with competitors.
Though Unilever records a significant impact in meeting its mission and vision statement as discussed above, it faces some of its stiff competitors such as Nestle and P&G that help to read its performance. Unilever remains the overall leader, for instance, when ranked with Nestle in the brand sustainability measured as a total of the land, women, workers, farmers, climate, transparency and water, it led with fifty-two points against Nestle with forty-eight (T3). This data shows that Unilever has more social and environmental unique added values to increase customer benefit and thus improve competitive advantage than Nestle. When compared with P&G, Unilever leads on return on investment from 2012 to 2017 and the stock turnover (T 2), meaning that Unilever gets more income than P&G. However, in 2017, P&G doubled Unilever profit margin as the latter had little earning per share between 2012 and 2017 (T2).
The Unilever’s current ratio has recorded below one from 2012 to 2017, meaning that it could not pay its liabilities from the assets. On the contrary, P&G could pay its obligations in 2016 (current ratio of 1.1) but fell below one in 2017 indicating financial instability. Unilever’s gearing ratio record high, suggesting low financial stability than its competitor. Moreover, the quick ratio of both companies stands below one, meaning they could be relying on inventories to pay short-term liabilities. However, P&G is more financially stable than Unilever as it has performed better for those five years (T2). Nonetheless, P&G has a high-quality EPS than Unilever, meaning that it has a higher portrayal of what it earned as compared to its competitor. This Unilever’s performance indicators could emanate from the external factors discussed below.
Summary of the external factors
Some of the benefits and challenges facing Unilever as discussed above could be emanating from the external circumstances; the beneficial factors include the growing women empowerment, which increases consumption levels. Also, the development of automated operations, production, sales, and transportation to enhance efficiency and thus reduced production cost.
On the other hand, most of these external environments seem more against Unilever; for instance, the company faces product imitability (increased competition) as well as changing regulations across the world, which can alter business operations and also the employee-employer relationship (T6: T1 and 2). Again, the environmentalism concerns can make customers reject its products due to packaging material as many cares about the environmental conservation more than the offered product (T4: EN4). The Brexit vote also increases the cost of imported products, mainly raw materials and thus raising production cost, catered through pricing (T4: P6). However, though these challenges are many, Unilever still has more command of the market that its competitors.
How Unilever is placed on the market
Though Unilever faces harsh external factors, it is still a market leader, emanating from how it decides prices as customers do not influence (T5; B1, 5), and suppliers cannot work with competitors and thus, reduce rivalry (T5; S1, 2 and 3). Moreover, due to Unilever’s financial muscle and operation in a wide range of markets, it is difficult for new entrants, meaning that Unilever shall continue to command the industry for a long time as long as it keeps P&G and Nestle on the check. The company has to sustain this market leadership through the application of core-values, capabilities, and competencies.
Capabilities, competencies and Core values
Capabilities core-values and competencies that make Unilever to command the market lies with its diverse employee regarding skills and talents; they can innovate and develop new strategies to boost the company. Again, the company’s value is its strategy of employing from broad cultural backgrounds (T7: P7), and also operates with integrity, honesty, and respects to the human rights, particularly employees (T7: P8).
Conclusion
Unilever is currently stable and a leader in the market although more needs to be done to halt its rising competitors such as P&G, and also to ensure that the external factors do not force it to closure even though the company cannot control them. Unilever’s current plan of hiring employees should remain to continue providing competitiveness.
TASK 2
Environmental/sustainability
Due to the increased adverse effect and rivalry discussed in the previous task, only businesses that help people and the planet to thrive shall succeed. One of the primary challenge facing Unilever is sustainability, as many customers want to buy from brands they believe are environmentally and socially friendly (T1; C13). The advantage of this challenge is that it can help the company to test new investment models such as supporting the low-income consumers with products that improve their health and environment, to boost its overall acceptance.
If the company fails to consider these sustainability goals, more customers are likely to shift to competitors who entice them with a desire to conserve the environment and promote social life apart from selling their products.
Digitalization
Unilever deals with its customers through physical shops, but today, businesses are being digitized, and people can access shops online (T6: T8). Digitization can be a challenge to Unilever as it has to install the costly digitization processes such as training new staff.
Considering that businesses are now focusing on digitization, this challenge can be beneficial to Unilever as it shall force it to digitize processes and allow customers acquire services online. However, failure to check on this protocol would make Unilever lose some customers to competitors who understand its viability.
Economic and political instability
Political environments determine the success of a business, and some of the issues that arise in the European regions can cause a considerable challenge to this company. An example of a difficulty in this section includes the economic crises in Brazil and slow growth in the middle east, which provide uncertainty of Unilever’s growth or stability as well as changes in business policies.
This challenge if vital to Unilever as it shall help the management to conduct thorough research and gain an understanding of unstable markets to avoid them in future. However, if the company does nothing about this issue, it can eventually enter an unpredictable market and suffer significant losses.
Tough business rivalry
Though Unilever still experiences good times in business, if it fails to take better measures, those moments can be seasonal as the market have a fierce rivalry and stiff competition from other multinational companies, which can cause substitution (T6; T4, 5 and 6). The advantage of this challenge is that it forces the company to improve the quality of its product, and this can happen until others cannot imitate it. However, the company may risk losing part of the market if it does not take relevant measures, such as reducing imitability.
Dependence on retailers
Unilever depends much on retailers, and this can be a challenge as their brand becomes more popular and reduce the market share for Unilever's brand (T6: T1 and 15). The importance of this challenge is that it helps the company to reach more customers at a lower price as compared to when operating alone.
However, if Unilever does not take precaution and use better tactics such as opening its brand houses, it may end up losing some of its clients to retailer house brands who may provide better prices and promotions.
TASK 3
Option1
Investing in Urban farming in London, Paris and other big cities with large population.
This plan to farm in the urban centers is to help grow natural foods that can cater to the underserved areas and also for such individuals to access fresh foods while providing information on how to grow and eat healthily. In retaining sustainability, this method can be beneficial to provide raw materials besides green foods. However, the plan is not suitable for it shall be done in an overcrowded area with high pollution, and thus, few people shall have confidence in what comes from the farm. Moreover, it would be challenging to find people who would agree to do farming in the city, meaning that the plan is less accepted. Using these farm produce to make some products would also cause some customers who are more conscious about their health to shift from Unilever to its competitors. Meaning that, though the plan is suitable for the entire company, its acceptability to the client is lower and would pose a threat to the company’s operation (T10). The feasibility of this plan is also minimal as such areas have a high number of supermarkets, hypermarkets and local shops that are easily accessible. Meaning that the project can start but fail to consolidate a market and thus cause a significant loss, which makes the project unfeasible. This plan has a suitability of nine, acceptability of seven and feasibility of eight out of ten and the total equals twenty-four.
Option 2
Buying land in the developing countries to make sustainable agriculture,
as part of “Sustainable Sourcing” in order to reduce “Environmental Impact”(USLP).
As a plan of increasing food supply, Unilever can decide not to farm in the cities but the developing nations. Such a program is suitable for most of those areas have conductive farming environments which can create a constant food supply. In simpler terms, the agriculture in such regions is sustainable and thus would cause reliable sourcing for food. Moreover, lands in such nations are cheaper as compared to the first world countries and therefore, practicing agriculture in such areas would be suitable. However, the suitability is not one-hundred-percent as regulations in the developing nations may hinder the company from buying lands as a foreigner. Moreover, political and economic instability can bring failures to the project, and that is one of the reasons as to why the suitability is 9 (T10).
On the other hand, Most of the Unilever customers are likely to accept the products if they come from a well-maintained farm in developing country, but they are also likely to prefer products from their local areas to promote their nation and thus, acceptability is at a lower level than suitability.
However, if Unilever takes this project, it shall have chosen a better agricultural plan with higher feasibility. For instance, it is easy to acquire cheap labor throughout the year in the developing nations, which would help secure the supply chain. However, the investment falls below the perfect level of feasibility as it would require vast amounts of capital that can deprive the company of cash in the short run and hence create management difficulties. As compared to the first option, this is a better plan but seeking for another alternative to solve some of the problems related to Unilever's sustainability would be beneficial. This plan has a total score of twenty-six as suitability records ten, acceptability seven and feasibility nine out of ten.
Option3:
Applying the existing ways and technologies in order to use less plastic, to design reusable and recyclable plastic packages while developing fully decomposable packaging (Reduce Reuse Recycle Reload).
Plastics have been one of the significant environmental challenges globally, and many people are now becoming health conscious, and thus consider buying products from companies that have plans of conserving the environment. For that reason, Unilever should be on the forefront to implement strategies for reducing plastics as they do not decompose. If Unilever takes any of the four available technologies of dealing with plastics, that is, reducing, reusing, recycling or reloading; any of them would be entirely suitable as it aims to eliminate or minimize the amount to the environment.
Considering how people are becoming conscious of the environment and the marine life that has been exposed to a challenging situation by these plastics, most individuals would accept these technologies. However, a challenge arises as the project is costly, and the company is forced to transfer the cost to the product consumers. Eventually, the increased price of Unilever items would reduce the acceptability level from ten to nine (T10).
This plan of considering the four technologies is feasible as reducing plastics would minimize the cost of treating diseases that emanate from pollution issues, and also protect the precious marine life. Moreover, these plastics can act as raw materials for other works such as road construction, and thus, its feasibility continues to increase. However, recollection process is costly, and that is why the feasibility score does not read ten but nine (T10). This plan recorded a total of twenty-eight points, where suitability reads ten and both acceptability and feasibility record nine each. Considering that the third option has a higher score than the first two, this paper shall provide more discussion concerning the implementation of the third option in the next answer.
TASK 4
One of the primary challenges facing Unilever is environmental sustainability, as many clients are more concerned with the environment rather than the product itself. Some methods of reducing the problem of these materials include using fewer plastics and designing reusable and recyclable packages which must be compostable.
However, the company has to handle the issue of brand imitability which can favor competitors to increase rivalry. In this plan, Unilever should come up with a patented unique packaging element. Also, acquiring materials is an issue, and the company has to define the source of raw material before implementing this plan.
Unilever can apply reducing technology by replacing plastics with other environmentally friendly materials such as MuCell Packaging technologies (T4; T12). The bottles produced by this method are fabricated to create cells in the polymer matrix, and the end product has a minimal amount of plastics; fifteen-percent less than the original plastic bottles.The second technology is reuse; for instance, bottles used for shampoos, detergents and body wash can be sent back to the company for repackaging. However, the method can apply best to the hard-to-recycle plastics.
Another method is recycling which means changing the form of waste plastic into another different design beneficial in the reduction of plastic menace. For instance, waste plastics can be made into pellets to replace bitumen used in the road construction. According to an engineer, roads made from plastics are cheaper and lasts ten times longer. The last technology is reloading, which uses material developed with silicate coating, usable for different packaging and protects food from premature degradation, while these elements are entirely compostable.
Considering that Unilever has experienced good times in the last few years, then it can finance the change from its annual revenue by cutting the profit margin in the short run, but it can also seek other means such as borrowing from banks or partnering with the competitor to share the financing cost.
Unilever employees have outstanding capabilities and commitments to come up with new strategies, and they have the right skills and talents (T7; P9 and 10). But due to the introduction of new technologies, the company can train more employees as long as they have diverse cultural and geographical backgrounds. Climate change is also another practical issue as it causes water scarcity (T6; O12), and Unilever can reduce this menace by using plastics in the engineering practices such as road construction to replace bitumen which releases greenhouse gases when extracted from petroleum.
