Question

Refer to the text to answer the following question(s).

Unilever, the world’s second largest consumer goods company, received a jolt in 2004 when its stock price fell sharply after management had warned investors that profits would be lower than anticipated. Even though the company had been the first consumer goods company to enter the world’s emerging economies in Africa, China, India, and Latin America with a formidable range of products and local knowledge, its sales faltered when rivals began to attack its entrenched position in these markets. Procter & Gamble’s (P&G) acquisition of Gillette had greatly bolstered P&G’s growing portfolio of global brands and allowed it to undermine Unilever’s global market share. For example, when P&G targeted India for a sales initiative in 2003–04, profit margins fell at Unilever’s Indian subsidiary from 20% to 13%.

An in-depth review of Unilever’s brands revealed that its brands were doing as well as were those of its rivals. Something else was wrong. According to Richard Rivers, Unilever’s head of corporate strategy, “We were just not executing as well as we should have.” Unilever’s management realized that it had no choice but to make-over the company from top to bottom. Over decades of operating in almost every country in the world, the company had become fat with unnecessary bureaucracy and complexity. Unilever’s traditional emphasis on the autonomy of its country managers had led to a lack of synergy and a duplication of corporate structures. Country managers had been making strategic decisions without regard for their effect on other regions or on the corporation as a whole. Starting at the top, two joint chairmen were replaced by one sole chief executive. In China, three companies with three chief executives were replaced by one company with one person in charge. Overall staff was cut from 223,000 in 2004 to 179,000 in 2008. By 2010, management planned close to 50 of its 300 factories and to eliminate 75 of 100 regional centers. Twenty thousand more jobs were selected to be eliminated over a four-year period. Ralph Kugler, manager of Unilever’s home and personal care division, exhibited confidence that after these changes, the company was better prepared to face competition. “We are much better organized now to defend ourselves,” he stated.

Questions:

1. What was the triggering event(s) in the case of Unilever? Elaborate.

2. Conduct the environmental scanning of Unilever through SWOT analysis,

emphasizing on the factors that were changed based on the management decisions.

3. Which Mintzberg’s mode of strategic decision making is adopted in the case of Unilever? Elaborate.

4. Discuss any 2 strategies used or might be used in the case. Elaborate.

Answer 1

Ans:-

(1):- Triggering event(s) in the case:

Sharp fall of stock costs in response of lower benefit expectation. The expectation was an aftereffect of following occasions:

The adversary began assaulting its beneficial situation in world's economies in Africa, China, India, and Latin AmericaThe rivals (like P&G) were in new business improvement/development mode (like obtaining of Gillette) and began to challenge Unilever's extensive solid nearby information.

Unilever couldn't handle the test successfully and its net revenue began to fall (like in India, the edge diminished from 20% to 13%

These afflictions were set up notwithstanding its brands were performing at per with its opponents.

(2):- Ecological examining of Unilever through SWOT examination:

Weakness:-

Association structure turned out to be unnecessarily enormous

2. Pointless administration and multifaceted nature

3. Duplication of corporate structures

4. Move of neighborhood the executives towards more restriction the globalization/centralization segment diminished

Quality:-

1. Worldwide nearness

2.Long lived solid brands

3.. Imposing scope of item blend

4.First mover's favorable position in rising economies

5. Solid nearby information

Threats:-

1. Adversaries in extension mode with solid securing and development hunger

2. High level of rivalry

3.Emerging markets are more value touchy, exceptionally for effectively substitutable items

Opportunities:-

1. Developing business sector extraordinarily in creating economies

2. Resuscitating net revenue

3.Increasing hierarchical effectiveness

(3):- Mintzberg's method of vital dynamic:

There are comprehensively three modes:-

• Entrepreneurial Mode: With advancement and hazard osmosis, center is around new opportunities.

• Adaptive Mode: Identifies receptive answers for existing issues instead of investigating for new opportunities

• Planning Mode: Uses efficient examination and system determination to address both existing issue and new opportunities

A fourth part was later on included:-

Consistent Incrementalism: Dynamic procedure of technique advancement for quickly changing condition

Here for this situation, the vital dynamic is clearly received from the Adaptive Mode, as it was taken in light of the current issue.

for example the administration were made a move to improve the Internal Environment to address the negative effect of the External Environment.

(4):- The methodologies pertinent here are on the whole corporate level as well as Business level procedures. These depend on:

• Concentrated on serious elements

• Contenders' capacities, expectations, activities, reactions

HUL received two significant systems:--

• Corporate rebuilding to make collaboration

• Business activity rebuilding t increment seriousness

Both the choices were critical to address the issue.