Afternoon, 4 December 2012
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As in real life, anomalies may be found in this Case Study. Please simply state your assumptions where necessary when answering questions. ABE is not in a position to answer queries on Case data. Candidates are tested on their overall understanding of the Case and its key issues, not on minor details. There are no catch questions or hidden agendas. After the publication of the Case Study, subsequent developments may occur. The examination is based on the published Case Study, and students who do not mention such developments will not be penalised. However, students may consider such developments in their answers if they wish.
Unilever Case Study Introduction Unilever is a British-Dutch multinational fast-moving consumer goods (FMCG) company. Its products include foods, beverages, household cleaning agents and personal care products. It is the world’s third-largest FMCG company measured by revenues (after Procter & Gamble and Nestlé) and the world’s largest maker of ice cream. Unilever is a dual-listed company consisting of Unilever N.V. in Rotterdam, Netherlands and Unilever PLC in London, United Kingdom. Both Unilever companies have the same directors and they operate as a single business. As of December 2011, it was the 18th largest company on the London Stock Exchange, and the combined market capitalisation was £51 billion. Unilever is organised into four strategic business units (SBUs), as follows: l
Savoury, Dressings and Spreads - including soups, bouillons (stock cubes), sauces, snacks, mayonnaise, salad dressings, margarines and spreads. Ice Cream and Beverages - ice cream, tea, weight management (slimming) products and nutritionally enhanced staple foods. Personal Care - skin and hair care, toiletries, deodorants and antiperspirants, and oral care products (toothpastes). Home Care - laundry washing powders and detergents, soaps and other household cleaning products. Unilever Sales by Market Sector
Billions of Euros (€) Savoury, Dressing and Spreads Ice Cream and Beverages Personal Care Home Care Total (Source: Unilever Annual Reports)
2008 14.2 7.7 11.4 7.2 40.5
2009 13.3 7.8 11.8 6.9 39.8
2010 14.2 8.6 13.8 7.7 44.3
2011 14.0 8.8 15.5 8.2 46.5
Unilever Sales by Region Billions of Euros (€) Netherlands/ United Kingdom Rest of Western Europe Total Western Europe USA Brazil Rest of Americas Total Americas Asia, Africa, Central & Eastern Europe Total (Source: Unilever Annual Reports) Of particular note is the company’s interest in India, which is a 52% controlling stake in Hindustan Unilever Ltd (HUL) (See Appendix 1). Like Nestlé India, Hindustan Unilever understands the need to get close to the customer. Its ‘Project Shakti’ recruited 45,000 poor rural women as sales agents, turning them into micro entrepreneurs. These women perform a useful public service by teaching their neighbours about basic nutrition and hygiene. By a happy coincidence, lessons about the importance of hand washing stimulate demand for Unilever’s soap. Unilever has the advantage that people’s preference for soap and shampoo varies much less from place to place than their taste in food. The firm thus spends less time than Nestlé studying local culinary habits, and more time trying to work out the right package sizes and prices - Indian consumers are highly price-sensitive. Paul Polman, Unilever’s chief executive, recently decided to put the bulk of the company’s resources behind growth in its more commoditised product lines. Company History Unilever was...