Unilever, headquartered in London, United Kingdom, and Rotterdam, Netherlands is a Dutch-British transnational consumer products business organization. Unilever is currently the third biggest consumer products company around the world, behind the leaders Procter and Gamble at position one and Nestle at position two. It is the global producer of food spreads like margarine. The company’s products include cleaning agents, food products, beverages, and personal care products.
Unilever Business Portfolio Strategic Analysis
BCG Matrix Analysis
Unilever, headquartered in London, United Kingdom, and Rotterdam, Netherlands is a Dutch-British transnational consumer products business organization. Unilever is currently the third biggest consumer products company around the world, behind the leaders Procter and Gamble at position one and Nestle at position two (Brand Finance, 2017). It is the global producer of food spreads like margarine. The company’s products include cleaning agents, food products, beverages, and personal care products (Oakley , 2014).
Unilever is a dual listed company that include Unilever plc located in London, as well as Unilever N.V that is based in Rotterdam. The different companies are ran as single businesses, with one board of directors (Oakley , 2014). It is structured into four major segments Refreshments (34%), Foods (27), Home care (22%), and Personal care (17%). The company’s research and Development facilities are located in the Netherlands, the United Kingdom, the United States, China and in India (Brand Finance, 2017).
The company’s global revenues totals to 50 billion euros as at the 2016 financial year across its incredible more than 400 brands. These include the highest performing brands around the world. Its products are available in about 190 countries across the world (Oakley , 2014). However the company’s main focus has been on its 14 key brands only. They include Dove, Axe/Lynx, Omo, Heartbrand ice creams, Lux, Magnum, Sunlink, Rexona, Degree Hellmann’s, Flora/Becel, Knorr, and Lipton (Oakley , 2014).
These brands are believed to generate more than € 1billion euros. There has been the question of why the company retains such a huge business portfolio of its brands and the reasons behind its selective acquisition (Oakley , 2014). To find the answer to this question, the Boston Consulting Group (BCG) Matric also referred to as ‘Boston Matrix’ can happen to be a helpful tool in comprehending Unilever’s business portfolio management (Oakley , 2014).
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Fig 1. The Unilever’s business portfolio management in a BCG Matrix (Oakley , 2014).
Star
This include the high market share brands with high market growth. They include brands which are quite much at their market peak. Such products hold a huge market share in quite significant share in a quite growing market (Oakley , 2014). They therefore, need a continued investment in order to enhance their market position and competitive edge. More competitors are entering the market with continuous innovation and new competitive strategies (Oakley , 2014).
Unilever’s prime products include Lipton, which also happens to be the global bestselling tea brand. Continued investment in TESS, a patented innovation that employed natural essence from freshly collected leaves has facilitated the universal re-launch of Lipton Yellow Label fueling a 5.6% growth (Brand Finance, 2017).
Cash Cows
These include products that have high market share but low growth in the market. They need little investment in order to generate more revenues. These are the most significant brands of Unilever. They allow for the profits to be ventured into the raising stars. Unilever’s cash cow include Marmite. Its investment has been greatly restricted to advertising (Oakley , 2014).
Problem Child (or Question Marks)
There include products with low market shares but increased market growth. They are relatively young brands which will be tomorrows raising star. These include brands like T2, a fast advancing Unilever brand in Australia. Others are Mighty liquid detergent, which operates under the Omo Brand, and Persil (Oakley , 2014).
Sleeping Dog
These are brands with low market growth and share. They are dead-end products and offer no significant future profits to the company. They waste resources by being in the market. Unilever’s Slim-Fast brand was a sleeping dog that was sold in 2014 (Brand Finance, 2017).
Macro Environment
PEST Analysis
Political
Unilever has been subject to global, and regional regulations. Such cover wide areas including safety of products, copyrights, patents product claims, workers health and safety, the environment, and corporate governance (Brand Finance, 2017). Unilever experiences significant revenues from D&E regions such as Brazil, Turkey, South Africa, Mexico, China and Russia. These markets have been more volatile than those in developed economies. Government reactions affect financial stimulus of the company (Kissinger, 2017).
Economical
The market environment of Unilever is becoming increasingly competitive more so in the Western European markets. Its macro has been uncertainly influenced. Consumers do not like to purchase costly products with the economic tide. Due to increased competition, the company is going through stiff competition in such countries as Netherlands, and France (Kissinger, 2017). Economic meltdown in the past has led to supplier and customer default, adversely affecting its cash flows, profits, profit margins, and turnover. The adverse economic have negatively affected the company regionally and globally. In most D&E environments market volume had resulted to increased growth of 7% in 2016 (Kissinger, 2017).
Social and Ecological
Unilever has established a strong corporate image over the many years of operations. It has strong focus on societal as well as environmental issues. Its vision has been to assist people feel good, something it has strived to meet societal needs.
Technological
Unilever has been a key beneficiary of advancing technologies and innovations. Technology happens to be an opportunity to the company, which it can tap for competitive edge (Brand Finance, 2017).
Micro Environment
Unilever’s micro environment factors include employees, consumers, the media, shareholders, suppliers and competitors. The micro environment can be analyzed with the use of Porter’s model analysis. Unilever’s analysis includes competition and consumers as the major forces in the company’s industry (Brand Finance, 2017).
These forces result in differences in the intensities of the identified forces affecting the industry (Kissinger, 2017). The other forces include its suppliers’ bargaining power, which in this case is moderate, the average bargaining consumer power, the weak threat of substitutes and the threat new entrants which can be termed as weak force (Kissinger, 2017).
- Quote paper
- Bachelor of Science Harry Mwololo (Author), 2018, Strategic Analysis Of Unilever, Munich, GRIN Verlag, https://www.grin.com/document/429846
