Inside Unilever: The Evolving Transnational Connpany
by Floris A. Maljers
The story behind one worldwide company's flexible organization-and the managers who make it so successful.
These days, Unilever is often described as one of the foremost transnational companies. Yet our organization of diverse operations around the world is not the outcome of a conscious effort to become what is now known among academics as a transnational. When Unilever was founded in 1930 as a Dutch-British company, it produced soap, processed foods, and a wide array of other consumer goods in many countries. Ever since then, the company has evolved mainly through a Darwinian system of retaining what was useful and rejecting what no longer worked-in other words, through actual practice as a business responding to be marketplace. But regardless of the process, Unilever has become a transnational company in tbe most basic sense: we think globally as well as act locally. The very nature of our products requires proximity to local markets; economies of scale in certain functions justify a number of head-office departments; and the need to benefit from everybody's creativity and experience makes a sophisticated means of transferring information across our organization highly desirable. All of these factors led to our present structure: a matrix of individual managers around the world who nonetheless share a common vision and understanding of corporate strategy. At Unilever, major product groups are responsible for profits in Europe and North America, and regional groups arc responsible elsewhere. Some of our brands, like Lipton Tea and LUX Soap, are known even in Albania and Cambodia - that is, even in countries where Unilever does not have its own industrial operations. In each of some 75 countries, we do business through one or more operating companies, with a total of about 500 companies in the Unilever group. In our case, "thinking transnationally" means an informal type of worldwide cooperation among self-sufficient units. Of course, there bas to be a formal structure of some sort that encourages managers to think and act in the way corporate policy dictates. But everyone must also share the values that lead to flexibility on every level. In a worldwide company incorporating both unity and diversity, business strategy and structure are inextricably linked-and always evolving. While Unilever's organizational structure bas developed, at least to some extent, through trial and error, we still have a consistent and longstanding policy when it comes to one thing: the importance of managing people rather than simply analyzing problems. The two companies that formed Unilever, Margarine Unie of the Netherlands and Lever Brothers of the United Kingdom, had a long tradition of expanding their businesses through both export and local production. Initially, local operations were almost exclusively managed hy Dutch and British expatriates; however, even in the early days of Unilever, the new company started developing local managers and decentralizing the organization. Yet the head office also recognized the need for a common culture among its many scattered units and set up formal training programs aimed at the "Unileverization" of all its managers. In essence, Unilever's story, idiosyncratic though it may be, is one example of how a single company has come to manage far-flung units that share a common culture. Over the course of its particular lifetime, the company has successfully weathered numerous changes. Within just the last 30 years, for example, Unilever's most important product group, the foods business, has gone through two major reorganizations. The details of how the foods business has reshaped itself in response to new market trends illustrate Unilever's overall combination of structural formality and managerial flexibility. From Margarine to Global Fast Food
Until the mid-1960s, the national management in...
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