Unilever

Presented to:
Mr.Shahid Mehmood
Lecturer Deptt. Of Commerce
The islamia university of
Bahawalpur
 Unilev
er
Presented By:

(M.Com-4th Morning)2008-10
Group-1
Topics Will Be Covered
 UNILEVER OVERVIEW
 SWOT ANALYSIS

 KEY COMPETITOR

 PRODUCTS AND SERVICES OF COMPETITORS

 COMPETITIVE ANALYSIS

 PRODUCTS AND SERVICES

 STRATEGIES

 CONCLUSION AND RECOMMENDATION

 Unilever
Overview
 Created in 1930 as result of a merger
 Key player in the food and household
products industry
 Maintains dual headquarter/dual chairperson
approach
 Launched Path to Growth strategy (2000) to
revive the company
 Historically grew through acquisitions Every
day around 160 million people in150
countries will buy a Unilever brand.
 Unilever
Overview
 13 of our brands achieve annual sales of E1 billion or
more. Our top 25 brands account for over 70%of sales.
 Dressings E14,232 7. growth 6%
 Turnover (millions) Underlying sales growth Ice cream
and beverages E7,694 5. growth 9%
 Operating profit (millions)E7,167
 Turnover (millions)E40,523
 We have operations in around 100 countries and our
products are on sale in about 50 more.
 Employees (year end) 174,000
 Purchase of goods and services (millions) E29,346
 Unilever
Overview
 All 22,000 products in our food and beverage
portfolio.
 Lifebuoy’s rural hand washing campaign in India
has reached 120 million people over 2002–2008
 Our Signal/Pepsodent/Close Up toothpaste
brands have reached more than 44 million
children with school-based oral hygiene
programmes over 1996–2008
 Achieved a 19%* reduction in our accident
frequency rate from 2007–2008
 Deliver 15 million school meals to 80,000
children in 2008 via our partnership with the
United Nations World Food Programme.
 Unilever
Overview
 160 million times a day someone buys a Unilever
brand
 13 brands with sales of E1 billion or more per year
 15 billion invested in advertising and promotion
 E927 million invested in R&D
 Hand washing Day on 15 October 2008. We worked
closely with NGOs, governments and other companies
to launch the day in 75 countries around the world.
 Unilever is one of the world’s largest buyers of palm
oil. We purchase 1.5 million tonnes a year for use in
products.
 We own over 2 million point-of sale ice cream freezer
cabinets worldwide.
 Unilever
Overview
 Delivered 16 million meals to 76 000
children in 2008.
 Lifebuoy aims to take its hand washing
message to 1 billion people by 2012.
 Unilever will purchase all palm oil from
certified sustainable sources by 2015.
 Over 1995–2008, achieved a
68%*reduction in total waste per tonne
of production.
 Ranked 9th out of 21 in 2008.
 Sales from developing markets reached
47% in 2008
 Unilever
Overview
 By end 2008, around 10 500 people involved and 40 000
tree seedlings raised.
 Unilever has contributed around Rs. 78 (Mn) to earthquake
relief including:
 Rs. 35.5(Mn) to president relief fund
 Rs.3.5(Mn) to TCF for long term reconstruction and Re-
buildings for the affected areas
 ·4(Mn) of employee contributions to president relief fund
 ·3(Mn) worth of contributions from our overseas Unilever
colleagues from Sri lanka, Turkey, Indonesia & etc
 In addition the company has donated 5(Mn) worth of
goods for immediate relief including tents, blankets, Tea &
Soap.
Mission
Mission Statement

Unilever's mission is to add Vitality

to life. We meet everyday needs
for nutrition, hygiene and personal
care with brands that help people
feel good, look good and get more
out of life.
Look good, feel good and get more out of life
Achievements
Achievements

ISO Certification KSE Top

Achievements

Health and
Asian CSR Award
Safety
Award
Achievements

TPM Award
BRANDS
 Brands

 22,000 products in our food and beverage portfolio

 13 brands with sales of E1 billion or more per year
 PERSONAL WASH
 TOILET SOAPS
 Lifebuoy (3 varieties)
 Lifebuoy Gold (2 varieties)
 Lux (8 varieties)
 Breeze
FABRIC AND HOME CARE
FABRIC WASH
 Surf Excel
 Power Surf

 Sunlight Washing Powder

 Wheel

HOME CARE
 Vim Dish Washer/Scourers
 Vim Bar
 Vim Powder
 PERSONAL Care
HAIR CARE
 Sunsilk Shampoo (4 varieties)

 Lifebuoy Shampoo

 Harmony Soap

SKIN CARE
 Fair & Lovely skin cream and lotion

 Ponds skin cream

 Ponds talc
 DENTAL CARE
 Close-up Tooth paste
 Pepsodent Tooth Paste
 TEA
 Yellow Label
 Yellow label Danedar
 Richbru
 Top Star
 Taaza Leaf
 Supreme
ICE CREAM
Cornetto(3varieties), Feast(2 varieties)
Feast Stickless, Top Ten,Star Cup(4
varieties),Callipo Split Fruiti, Peddle Pop (3
varieties),3-D, Solo(3 varieties),Polka Cup
Panda, amily Packs
Magnum
Foods

Our foods brands include:

 Knorr
 Bertolli
 PG Tips
 Magnum
 Lipton’s
 Hellman’s
 Coleman’s
Home and Personal Care
Our home and personal care brands include:
 Dove

 Cif

 Persil

 Domestos

 Sunsilk

 Comfort

 Lux
Home and Personal Care
Our home and personal care brands
include:
 Signal
 Vaseline
 Comfort
 Radiant
Competitor Comparison
 Competitor Comparison

Top Segment CG/Foods Consumer care Food Food

Top Brand Dove Tide Mac & Cheese Kit Kat
CEO A. Burgmans A.G. Lafley R. Deromedi Ian J. Donald
--------- -------------- ------------ ----------- ------------
Growth 15.58% 9.25% 8.2% 11.23%
Revenues 42,942M 28.2 BL $31,010 M $69 B
Revenue Growth -11.93% 19% 4.3%% -1.93%
International 100+ 42 150+ 86
Business Segments 3 5 5 6
Employees 234000 110000 10600 253000
PRODUCTS OF NESTLE
Top Competitors Key Measures:
UL

UL KFT PG

Valuation
Price/Earnings 12.86 22.01 — 16.75
 Per Share Data

UL KFT PG
Last Dividend 68.98 91.80 — 43.36
Book Value 5.03 15.02 — 20.84
Revenue 40.52 B 42.2 B — 83.5 B
 Profitability
UL KFT ------ PG
EBIDTA 8.46 B 4.83 B — 20.71 B

Operating Margin 14.55% 11.94% — 22.13%

Profit Margin 12.42% 6.87% — 14.46%

Gross Profit Margin 49.06% 33.25% — 51.27%

 Revenues: Product
Segmentation
43%

57%

Foods Division
Home and Personal Care
 Financial Strength
UL KFT --------- PG

Quick Ratio 12.42 6.87 — 14.46

Current Ratio 0.83 1.03 — 0.69
LT Debt to Equity Ratio 62.72 83.73 — 32.45
ROE 31.67 7.93 — 17.34
ROA 10.49 5.69 — 10.61
ROIC (Return on Invested Capital) 17.20 8.22 — 12.51
Muhammad Faisal Rashid
M.COM 4th (Finance) M
Roll # 12
Competitive Profile
Matrix (CPM)
Competitive Profile Matrix (CPM)

The competitive profile matrix identifies a firms

major competitors and its particular strength
and weaknesses.
Steps in CPM;
Success Factors
Weight (0.00 to 1.00)
Steps in CPM

 Rates (1 to 4);

4= Major strength
3= Minor strength
2= Minor weakness
1= Major weakness
 Competitive Profile Matrix
(unilever)
Unilever P&G Kraft
Success Factors Weight Rating Score Rating Score Rating Score

Quality 0.13 4 0.52 3 0.39 3 0.39

Financial Position 0.15 4 0.60 3 0.45 4 0.60

Market Share 0.16 3 0.48 3 0.48 3 0.48

Technology/innov 0.12 3 0.36 4 0.48 3 0.36

ation
Global Market 0.10 3 0.30 4 0.40 3 0.30

Price 0.10 2 0.20 3 0.30 4 0.40

Competitiveness
R&D 0.14 4 0.56 3 0.42 3 0.42

Customer Loyalty 0.10 3 0.30 3 0.30 2 0.20

Total 1.00 3.32 3.22 3.15

Strengths

 Largest organizations
 Advanced technology
 well skilled professionals
 Good distribution network all over world
 Unilever provided creative strategies
 Strong marketing and good image creation
 Wide distribution channels in both national and internal
markets
 Decentralized decision-making
Strengths

 High market share

 Strong management teams
 Efficient HRM department
 Strong reputation
 Global innovation centers
 Understanding local culture
Weaknesses

 Competitors offered better alternative product

 Dual co-chair approach and dual company structure
create problems
 Lack of high volume brands
 Slow sales growth compared with the competitors.
 Low cash flow
Weaknesses

 Focus on short term strategy

 High cost of restructuring

 Hard to manage and control company

structure
 High cost limit promotions in company
Opportunities

 Rural areas are a large prospective market

 Employing external job applicants
 Gain high market share
 Introducing new distribution channel
 Advertising through e-commerce
 Promote its products in new geographic areas
 Customer base is increasing with effective marketing
Opportunities
 Take advantage of the changes of technology
 Increase cash flow
 Gain scale of economies
 Decrease its labor cost
 Maintaining good relationship
 Population expanding at a rapid rate
 Current capacity utilization is 80%
THREATS
Threats

 Product innovation is ineffective

 The high competition for market share
increases rapidly
 Changes of people’s lifestyle

 Political and Economic factors

Threats
Threats

 Increasing social awareness in society

 Unfavorable conditions

 Company’s image destroyed

 Acquisition decision
Threats
Strategies & Recommendations
 Is it
working?
No…. “Unilever was getting there, but getting there too
late”
 Failure to increase advertising
 Reported a net loss of $318M and marketing efforts
 In 2004, underlying sales grew by  Still lack focus and effective
only .4%, leading brands by .9% strategy execution
 Issued 1st ever profit warning  The company remained too
ahead 3% decline local
 Lagging behind competitors in  Unilever plans to discontinue
terms of marketing and the “Path to Growth” Strategy
innovation

So what’s next?
 Is it
Yes… working?
 Successfully modify  Global procurement
unsuccessful brands programs have delivered
2.4B, excess of 1.6B target
 Leading brands increased  Improved capital efficiency
sales from 75% to 93%
 Successful integration of
 12 brands with sales of Best foods acquisition
1B+  Operating assets have
 Consistent growth in improved by 9%, exceeding
Home & Personal Care 6% target
 Improved overall quality
and growth profile of
Food portfolio
Competing with the Giants

Giants dominate all

categories
Giants are growing
Giants operate globally
Marketing is a luxury
Misbelief that Marketing
needs big budgets
Strategies for competitors to the employee

It is going to get tough, so we will need to be

equally tough in response

Path to Growth Strategies
2001
 Why Path to Growth
Strategy
 Years of slow performance
 Lack of sound corporate strategy

 Low-volume brands

 Small global presence compared to competition

 Mediocre performance in emerging markets

 Objectives of Path to
Growth
Expectations Strategic Targets

 Achieve double-digit EPS  Top-line sales growth of

growth 5-6% annually
 Secure a better competitive  Increase operating profit
position in global food and
household margins 11% to over
 Build brand value to gain 16%
pricing power
 Strategic
Issue
What adjustments, both internally and
externally, should Unilever make to rebuild a
strong and focused competitive strategy?
 Recommendation
1

1. Reorganize and Unilever’s organizational

structure.

2. Implement “Unilever Believer” product and

brand extensions.
 Recommendation 1
Strategy Justification

 Unilever maintained two Reduced

business entities, dual effectiveness and
chairperson approach slowed the decision
making process.

Board and business

responsibilities conflicted
 One Unilever

An initiative to create an overall umbrella brand

across all Unilever’s brands that will eventually
consolidate various businesses under one name
 Recommendation 2
Strategy
Justification
 Consumers demand high quality products that both are
convenient and delicious
 Consumers look for new ways to use products
 More females are working full time jobs
 Large population of single-parent households
 Increase consumer focus on health and nutrition
Recommendation 3

 Environmental issues are becoming increasingly

important
 Failure to address these issues can damage brand
reputation
 LCA is a useful tool to measure, understand and
communicate environmental performance innovation
process, product design
 communication with external stakeholders