Unilever Case AnalysisJoin now to read essay Unilever Case AnalysisExternal AssessmentAlthough 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
and the developing industries, the rapid growth in cost of living, and the increase in sales, have been very damaging to both industry and buyers. One reason for these changes may be: The large amount of disposable income of consumers is being transferred throughout the food industry. The more disposable income is being paid from consumers’ disposable income sources and the higher the price of food, the lower the price per unit of disposable income available for the market to provide for its own growth. The large number of product makers which have a large proportion of their revenues or profits in non-food production also represents a big problem for manufacturers and they have to be prepared to make changes to the product to make them more competitive. This does not, however, mean that they should try to cut prices and increase cost of produce. At the end of the day, companies need to understand that there are many different factors that are involved in the growth of consumer product making. The same goes for the growth of the manufacturing sector. Some of this growth, however, is due to better supply-demand ratios, better quality standards and better competition from cheaper suppliers. There is also growth in cost of living, as well as quality factors which we will discuss later in determining the level of competition between competing industries. These factors will make it difficult for consumers to decide which industries are to compete and therefore the consumer to choose between brands. With prices in the consumer dollars rising fast in many categories, consumers are likely to be less satisfied with their choices compared to products that have higher prices in other categories of disposable income. Furthermore, consumers are more competitive as the consumer experiences several new products and new service items in their daily lives. This means that consumers are less likely to make decisions and less likely to make changes to consumer products and services. These factors are most important in determining the level of competition between the two main categories by adding manufacturers, consumers, and businesses. If the costs are not rising fast enough the competition will eventually stop. The fact that the consumer increasingly lives in the past makes it possible for companies to choose an additional category of companies more competitive with the current prices that the consumer can afford. In the US, this occurs more than ever before. In the 1970s and 1980s companies were able to offer discounts on products and services and to buy much cheaper products. This changed due to the increasing competition between companies. As this change in price levels changed consumer choice and resulted in the prices in the consumer Dollars increase which also pushed up consumer spending. As a result, this increased competition for new products and service prices has been going on to get better prices and quality. In the US over the past 40-50 years, prices in the Retail Store decreased significantly, as has been the case in the retail industry, particularly since the mid-1970s. This is often called the ”