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Unilever Company has been the one of the largest multinational companies that manufactures and supplies consumer goods for the long time. This company has been successful in its operations in both domestic and international markets with annual sales of approximately $48bn. Unilever Company produces a variety of products that satisfy the needs and desires of many their consumers across the world. This company concentrates on the production of personal-care and home products and a variety of foods. Some of the company’s products include Blue band, Omo, Lipton, Flora, Vaseline, Lifebuoy, Rexona, Dove, among others.
Unilever Company focuses on two vital segments in the general environment; these include global segment and socio-cultural segments (O. C. Ferrell, 2010). The geographic diversification of Unilever’s main products markets has been the greatest strength of the company in the global environment. By the year 2003, this company had sales and marketing capability in 88 countries across the world.
The main reason that has enabled Unilever Company to be successful in the global environment is the ability of the company to give the powers of making critical decisions to its managers in different countries. This helps managers to manufacture various products according to various preferences in the market, and the taste of local consumers. The global segment grants Unilever Company with a huge opportunity to prosper.
Unilever Company endeavors to attract and retain highly qualified labor force in all its outlets across the world. The company has employed approximately 250,000 employees in 100 countries. Although, the company does not have outlets in all countries across the world, it supplies its sales to various countries through E-business. Through this technology, consumers from can order various products online and the company makes arrangements for the delivery of those products (Ashok Ranchhod, 2004). In order to achieve this milestone, Unilever invests more on information technology (IT) to enhance its business transactions through E-business.
Reasons why the business is successful in the highly competitive market
Despite the fact that Unilever Company faces stiff competition from other multinational companies in this industry, it has established effective mechanisms to deal with competition from those competitors. The company`s main competitors include Nestle and Procter and Gamble. In order to deal with competition from these companies, Unilever concentrates a lot on research and product innovation. This company allocates adequate funds to conduct market research on various opportunities that may be available in the environment locally and internationally. The company invests approximately 2.5% of its annual turnover on research and product innovation. This has granted the company a competitive advantage over its competitors in the international market.
The main purpose of research in this company is to identify new opportunities in the international market and to identify and anticipate the needs of consumers across the globe. The company meets the needs of these consumers with a variety of branded products and services. Therefore, the main aim of investing on product innovation is to apply creativity in producing a variety of products that serve consumers with different tastes and preferences. Through research, the company has been able to identify the weaknesses of its competitors in the international market (Paley, 2006), and use it as an advantage to increase its marketing strength and to obtain a large market share.
Through research and product innovation, the company has been able to meet the needs of its consumers in the globe by providing products and services of high quality. The funds allocated in research and product innovation get used in conducting market research. The company employs qualified researchers capable of conducting research on consumer needs, economic and marketing trends in the international market.
On the other hand, Unilever Company has invested in the information technology (IT) for a long time. Unilever Company believes that application of information technology has been the key tool that has made it prosper in the international market. Application of information technology has also enabled the company to experience a commendable growth in many parts of the world, as well as making it more profitable than its competitors, in both the domestic and the international markets. As a result of the benefits that accrue from the application of information technologies in their operations, the company allocates adequate funds from its budgetary allocation in identifying new technologies that can enhance the operations of the company in both marketing, management of its labor force and corporate social responsibilities.
Through the application of new information technologies, Unilever Company has been able to market their products across the entire world, even in the countries that the company does not have any outlet. This has been achieved through E-business, where consumers across the world can order various products electronically (online), and the company organizes the delivery of those products.
The labor force of Unilever Company has helped the company to become successful in the market. This is because the company employs individuals who are posses’ vital skills and highly experienced in different fields. In order to make the labor force more competitive, the Company conducts continuous training and development of its labor force. This ensures that the employees of the company acquire vital skills on the application of new technology, to enhance the operations of the company as well as understanding various marketing techniques that can be applied to enable the company to increase its market share. As a result of training and development, the company has gained a competitive advantage over its competitors. Additionally, application of new information technology has eased the execution of tasks by the employees of the company. This has led to job satisfaction among its employees that has enabled Unilever Company to attract highly qualified employees, and retaining them in the company.
On the other hand, the corporate social responsibility (CSR) in this company enhances the relationship between the company and the society (Kaynak, 1993). Unilever has managed to enhance the relationship of the company and its employees, local communities, suppliers, consumers, government and shareholders. This initiative has enabled the company to portray a decent picture in the mind of many individuals in the society. Through CSR, the company is under obligation to provide high quality products to its customers, this has led to consumers’ confidence in the company’s products and services. As a result, the company gains a larger customer base in the market than its competitors.
In Unilever Company, the commitment to maintain high standards of corporate behavior has been a vital part of the company’s operating tradition. All employees of the company are guided by the company’s code of Business Principles in ensuring that their products are safe for human consumption or use, and they are of high quality.
On the other hand, through corporate social responsibility Unilever company provides better working environment for its labor force, this enables the company to attract and retain qualified employees. In the long run, this reduces the rate of employees turn over, and gives the company a competitive advantage over competitors since its employees are highly skilled.
Through CRS, Unilever Company ensures that the working environment is safe for all employees’ in all branches. The company achieves this by establishing effective health and safety programs in order to take care of employees’ welfare. This has enabled the company to create job satisfaction among its employees, and this reduces the rate of employees turn over in all Unilever branches across the world. Creation of job satisfaction has enabled the company to retain its employees with adequate skills as well as attracting new employees with adequate knowledge and skills.
Additionally, Unilever Company ensures that mutual relationship exists between the company and the surrounding communities. The company achieves establishing effective mechanisms to avoid pollution of the surrounding environment. On the other hand, the company participates in various development projects in the society. This has enhanced the relationship between the company and the surrounding communities, and in the long run, the company wins a large customer base, because it portrays a positive picture in the mind of many people in the society. Problems the company may face in the current economic situations
In recent years, many multinational companies across the globe have been affected by economic recession in some countries (Bradley, 2005). Being one of the multinational companies, Unilever experiences the problem of economic recession present in some countries, where the company has outlets. As a result, of economic recession, the company may lower its production, and this may affect the targets of the company in terms of its profit margin.
Additionally, the fluctuating prices of fuel in the world may affect the operations of the company. The prices of fuel in the world market have increased drastically; this may affect the operations of this company adversely, especially in the countries that import petroleum. The increase in fuel prices will obviously increase the costs of operations in the Unilever Company. As a result of this increase in the operational costs, this company may be forced to increase their prices in order to deal with this problem, and avoid deficits. Increment in the prices of the company’s products may lower the demand of them, leading to fall in the profits of the company.
Another challenge that this company may experience at the current economic situation may be the government regulations in various countries. In some countries, the government may enact rules that will require the company to pay higher tax to the government due to the economic crises that may be present in various countries. On the other hand, if the company opens a branch in a new country, the government of that country may put pressure on the company to employ a certain percentage of the local people, rather than importing labor force. This may affect the company, because it will incur additional costs in training the new employees, since they may lack sufficient knowledge on the operations of the company.
Lessons to be learnt from a similar business environment
In the year 2003, Unilever’s competitors, Kraft Foods and Procter & Gamble were able to sell their products in approximately 140 to 150 countries across the globe. On the other hand, Nestle Company, which happens to be the main business rival of Unilever, had market penetration in almost all countries in the globe. This shows how other multinational companies in this industry focus in expanding their operations in many parts of the world. The main reason for expansion is to increase their profit margins, as well as gaining competitive advantage over other companies in the industry.
Therefore, if this company can manage to do expansion of its business operations into about 50 or more countries and focus its advertisements campaigns on the needs and preferences of different consumers, it can increase its market share in the global market. Through expansion, Unilever can manage to compete with companies, such as Nestle, Procter & Gamble and Kraft Foods, the main competitors of the Unilever in both domestic and international market. In order to deal with the stiff competition from other companies, Unilever should come up with new and unique ideas of producing high quality products, and new marketing techniques that may enable the company to win a large customer base in various market segments.
The success of any business depends on its ability to conduct research in the market environment. The company should focus its R&D (research and development) and marketing department in identifying various products that can satisfy the needs and desires of consumers in different market segments (David W. Cravens, 2005).
Therefore, the company should increase the funds allocated in conducting research and product innovation. This will enable the company to conduct market analysis to identify more opportunities in the local and international markets. The company may apply SWOT analysis to identify the strength and weaknesses, as well as the opportunities and threats present in the marketing environment (Doyle, 2008). This is imperative because, the company can take an advantage of the competitor’s weakness and use it as an ample opportunity to enhance its operations in the market.
On the other hand, the company must incorporate new information technologies in their operations in order to gain a competitive advantage over the competitors in the market. This new technology may include the application of social network site, such as Facebook and Twitter. These social networks may play an enormous role in promoting various brands of products. Through this social network sites, both new and existing customers may post their opinions regarding various products. This may help the management of the company to identify the performance of various brands of products in different market segments. On the other hand, through the views from different consumers, the management of the company can identify various products that may need to be rebranded. Social networks have been very effective especially on the market segment that comprise of young people. This is because many youth use these networks in searching vital information and having more fun than old people.