This case study chronicles Unilever efforts at restructuring, divesting, acquisition, and general streamlining of its worldwide operations. These operations, in 2000, encompassed 1,600 brands in 88 countries. These products are mostly food, personal care, and household products. Around that same year, Co-chairmen Niall FitzGerald and Antony Burgmans decided that Unilever needed to make some rather drastic changes in order to remain competitive. More importantly that competitiveness was the importance that the company maintained ever increasing profitability. The co-chairs planned to bring about this much needed change via institution of an ambitious 5 year plan. This plan was dubbed the “path to growth” strategy.
This 5 year plan would have many focuses aimed at making Unilever more profitable. The key strategies to be implemented were: •
Reduce portfolio from 1600 to 400 core brands by 2004. This would allow the concentration of assets in marketing, production and distribution to be concentrated. This would also eliminate underperforming brands. •
Increase sales growth to around 5-6% on top performing brands, •
Increase overall margins to over 16%.
This initiative wasn’t expected to be cheap. It was projected to cost roughly 5 billion Euros and 25,000 employees. It was hoped that in the end it would more than pay for itself with better strategic stance, more efficient distribution, consolidated production, and generally increased overall efficiency.
Unilever began the first 12 months of its restructuring with new acquisitions. It acquired industry leaders in their market segments. These companies included: Slimfast diet foods, Ben & Jerry’s ice cream, and the conglomerate Bestfoods. Bestfoods alone had 1999 sales of over $8 billion. The Bestfoods acquisition was pivotal to the long term future success of Unilever. Successful integration of their operations was not an option, it was a necessity. Along with these new acquisitions, they chose to...
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