Unilever Case Analysis

Topics: Brand, Brand management, Strategic management Pages: 6 (2181 words) Published: April 11, 2005
External Assessment
Although Unilever's Path to Growth strategy involves all components of the general environment, two segments that are especially relevant are the global and sociocultural segments. A major strength of the company's global environment is its geographic diversification of its major product markets. In 2003, Unilever had sales and marketing efforts in 88 different countries. The key is that it gave decision-making power to its managers in different countries so that they could tailor their products to the market's specific preferences and consumers' local tastes. Thus, it was the cross-country preferences of consumers that determined what products Unilever would carry. The global segment provides an enormous opportunity for Unilever. The case states that emerging country markets show the greatest potential for sales growth. Major competitors such as Procter & Gamble and Kraft Foods had sales in roughly 140 to 150 different countries in 2003, and Nestle, Unilever's main rival, had market penetration in almost every country in the world. If Unilever is able to expand its operations into 50 or more new countries and concentrate its advertising campaign on consumer preferences, it could significantly increase its market share in the global economy.

Another important piece of Unilever's general environment is the sociocultural segment. One of the company's founding values is understanding and improving consumers' lives. A major strength of Unilever lies in its ability to anticipate consumer trends and demands and then cater to their needs. For example, market research indicated that nutrition was the number one concern in the United States, Germany, and the United Kingdom, and that weight was the number three concern. The focus of peoples' attitudes became living healthier lifestyles. To move with the trend Unilever acquired SlimFast. SlimFast was the U.S. market leader in the weight management and nutritional supplement industry, with a 45% market share. The acquisition seemed promising in the beginning. Approximately 94% of SlimFast's sales were in North America, which presented a huge opportunity to diversify into foreign markets such as Germany and the United Kingdom. Unfortunately the healthy lifestyle that people pursued became a threat to the future success of the company when Dr. Atkins came out with his low carbohydrate craze. The case presents no information about Unilever's response to this issue.

Unilever's industry performance is determined by all of Porter's Five Forces of competition, however it is especially sensitive to the rivalry among competing firms and the bargaining power of buyers. Unilever's main competitors are Nestle, Procter & Gamble, Kraft, Groupe Danone, Cambell Soup, and General Mills. As there are many more that could be added to this list it is obvious that there are numerous equally balanced firms in the consumer goods industry that are all fighting for market share. Another reason for cutthroat competition is the slow growth of the industry. The sales of food and household products in the United States are only growing at about 1-2 percent annually, a trend that is expected to continue. In the industrialized countries of Europe the growth rate is also in the 2 percent range. Developing countries are slightly more promising, but they only expect growth of 3-4 percent. Yet another reason for the serious competition is low switching costs. Consumers can just as easily pick up a bar of soap from Proctor & Gamble as they can from Unilever. The increased competition led all of these companies to pursue growth through acquisitions in an attempt to jockey for strategic market position. Three of Unilever's top acquisitions are SlimFast, Ben & Jerry's, and Bestfoods.

In 2000, there was a rapid consolidation among retail grocery stores. This increased the bargaining power of major supermarkets in terms of charging higher fees for shelf space. Since...
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