Pestel Analysis

Topics: Unilever, Lever Brothers, Port Sunlight Pages: 19 (5353 words) Published: November 20, 2010
PESTEL ANALYSIS: A REPORT ON UNILEVER INTRODUCTION TO THE COMPANY The Fast Moving Consumer Goods (FMCG) environment is rapidly changing. Especially, the increasing popularity of line extensions seems to depend on advantages inherent in brand leveraging. FMCG manufacturers go into R&D in order to come up with the product that best satisfy consumers because customers become more critical about attaching themselves to a particular brand. They will also like to buy less expensive product due to current economic tide. Unilever is one of the biggest Fast Moving Consumer Good (FMCG) companies in the world. I have always been inquisitive about Unilever’s operations because I use some of its products, even right from childhood. This together with the current environmental challenges being faced by FMCG manufacturers motivated me to find out about Unilever’s operations and the current challenges it faces in the volatile business environment.

Unilever was founded in 1930 through merger by the British, Lever Brother; and the Dutch, Margarine Unie; now Unilever PLC in London, U.K and Unilever N.V in Rotterdam, Netherlands respectively. In 1872 before the merger, Jurgens and Van den Bergh, the Dutch, built factory in Netherlands for the production of Margarine made from milk and fact. In 1927, they formed Margarine Unie (margarine Union) together with two European Businesses, Centre and Schicht. Lever & Co on the other hand was founded in 1884 by British William Hesketh Lever and his brother James, and was producing soap – Sunlight soap for people in England especially for women. William Lever wrote: “to make cleanliness commonplace; to lessen work for women; to foster health and contribute to personal attractiveness, that life may be more enjoyable and -1© 2008 All rights reserved.

rewarding for the people who use our products”. In 1890, Lever & Co become a limited company known as Lever Brothers. Unilever, Unilever N.V and Unilever PLC comprise Unilever group . Both companies have the same directors. Its annual turnover in 2005 was €39.672 billion and employs 206,000 employees around the world.1 Unilever brands consist of Food and Beverage, and Home and Personal Care. Some of these products are Knorr, Breyer’s and Magnum, Lipton, Omo (detergent) etc. Knorr has the biggest sales of €2.3 billon in 2005. Though it is very difficult to get vital information as to Unilever’s managerial tactics and strategy, most of the information was gathered from the internet through companies’ websites and encyclopedia. This report takes a look at the company’s business environments, internationalization strategy, the role of the company’s subsidiaries, and its future challenges.

IMPACT OF INTERNATIONAL BUSINESS ENVIRONMENT ON UNILEVER Every MNC is measured by the standard it set in the environment in which it operates. Unilever is not an exception. Unilever has a mission to add value to life of both its present and potential customers. Accomplishing this mission will not take place in a vacuum, but in an environment which is very turbulence.


-2© 2008 All rights reserved.

POLITICAL/LEGAL ENVIRONMENT Unilever, as a matter of policy, set a standard as to the way of tackling political issues. Unilever has its tactical way of handling political issues. First, in the 1960s, many countries began to nationalize foreign firms which also affected Unilever. This was a call for local equity participation in foreign firms. Thus, so many companies were subject to local control on prices, imports, employment of expatriates and so on. As a result of the adverse effect of nationalization policy, in the 1970, many US companies e.g. IBM and coca cola left India. There was fear by foreign companies on certain issues such as knowledge leakage, loss of trademark etc.2 this was also hazardous for Unilever as its control over operation in the...
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