UnileverHome and Personal Care Division

Market OverviewMarket includes Liquid & powder detergentsShampoos, body washes, personal care itemsPerfumes Cosmetics

Market TrendsDuring 1990s tight competition in established marketsEconomic slowdown in global marketStrong competition to develop new productsNeed to control costs and price

Market TrendsAcquisitions or joint ventures to solidify global positionStrong need to be able to satisfy changing consumer preferencesLaundry detergents form the largest component 50%

Products

Unilever manages over 400 leading brands and just under 250 tail brands. These range from food to home and personal care.

Food ProductsBen & JerrysBreyersCountry CrockHellmannsRaguSlim FastLiptonOthers

Home and Personal CareDoveCaressPondsSnuggleWiskAllOthers

Technological ScopeGlobal integration of SAP softwareStandardized corporate computer services includes intranetStandardized corporate e-mailWarehouse management systems using bar code technology

Markets and DistributionUnilever Divided into 2 Major DivisionsFoodsHome and Personal CareImproved Focus Globally and RegionallyFaster Decision MakingStrengthened Innovation Capacity

Markets and DistributionHome and Personal Care DivisionsNorth AmericaEuropeAsiaNorth AfricaTurkeyMiddle EastLatin America

Manufacturing and/or ProcessingOperations has 2 divisionsFoodsHome & Personal CareEmploys 265,000 peopleHas 2 parent companiesUnilever NVUnilever PLCCorporate CentersLondonRotterdam

Manufacturing and/or Processing (cont)One of largest users of packaging among consumer goods companiesWorks with others to ensure public concerns are understoodProvides the best solutions possibleTrends in manufacturingFewer production centersMore efficient production centers

Manufacturing and/or Processing (cont)Pilot project to improve logistics of incoming raw materials to manufacturing locationsCarried out in Warrington, UKCombine/optimize loadsSeek more direct deliveriesSome plants are making own bottles for liquid detergentReduced number of deliveriesSaving around 1,000 trips a month

Manufacturing and/or Processing (cont)Uses many forms of transportRailroadShipsTrucking

Have minimized the environmental effects of transportEnsuring vehicles are used efficientlyShifting goods from road, to rail and water

Industry Attractiveness & Business StrengthsNature of Competitive RivalryUnilever and P&G globally highly competitiveSales driven by marketingBargaining Power of Suppliers/CustomersCarry clout with suppliers due to large consumption of supplier goodsCustomer available shelf spaceThreat of Substitute Products Low consumer differentiationNew EntrantsLarge capital barrier to new entrants

Industry Attractiveness & Business StrengthsEconomic FactorsLarge MarketU.S. Market spends discretionary income on personal care productsFinancial NormsPersonal care products carry higher profit marginCustomers tend to pay lateSocio PoliticalEnvironmental concerns recyclable packagingCommunity programs such as Forest Park Clean-Up

Industry Attractiveness & Business StrengthsCost PositionEconomies of scale due to large consumption of raw materialsSupply chain teams to control costsLevel of DifferentiationRecognition for key brands Dove, SnuggleExtremely effective in defending product patentsResponse TimeIn U.S. due to competition has had to improve flexibilityContinuing to combine business functions

Industry Attractiveness & Business StrengthsFinancial StrengthStrong cash reservesStriving to improve growth of revenuesHuman Assets Promotes high level of training and empowermentManufacturing becoming more non-unionPublic ApprovalLow recognition in U.S.Highly recognized oversees especially in third world countries

Mission StatementAt Unilever we are dedicated to meeting the everyday needs of people everywhere. We provide washing powder, shampoo and toothpaste, teas, ice cream, oils and spreads for consumers all over the world.

Corporate PhilosophyUnilever's Corporate Purpose states that "to succeed requires the highest standards of corporate behavior towards our employees, consumers and the societies and world in which we live. This is our road to sustainable, profitable growth for our business and long-term value creation for our shareholders and employees."

SWOT AnalysisStrengthsFinance1)Strong Cash Reserves2)Global Purchasing3)International Exchange Rate

SWOT AnalysisStrengthsMarketingExtensive product lines make Unilever a formidable competitorStrong image for well-known brand productsUse of creative advertising and promotions on website and commercials

SWOT AnalysisStrengthsOperationsTwo Major Divisions Foods and Home & Personal Care#1 in many consumer product categoriesWell developed supply chain

SWOT AnalysisStrengthsHuman ResourcesHigh level of training in place for employeesEmploy approximately 265,000 peopleEnterprise culture developing employee to be more customer friendly

SWOT AnalysisStrengthsInformation SystemsCorporate intranet and e-mailAll laptops and desktop machines organized the same (Sunrise hardware program)SAP software used globallyTotal Business Productivity each category has website example Accounting

SWOT AnalysisWeaknessesFinanceSince it is an overseas stock not included in US market analysisBusiness acquisitions affect overall profitMarketingLack of innovation in several categories has caused slippage in market shareReduced marketing expenditures in television commercials

SWOT AnalysisWeaknessesOperationsInnovation time cycles continues to need improvementConsolidation of facilities is causing production turmoil

SWOT AnalysisWeaknessesHuman ResourcesExpensive labor due to high benefit packageUnion contracts limit flexibilityInformation SystemGlobal help desk India & IrelandDeferred updating due to leased hardwareInsufficient software package training

SWOT AnalysisOpportunitiesDemographicsProducts appeal to wide range of populationProduct loyalty through generationsTechnologyAutomated manufacturing facilitiesAlready using product innovation needed for front loading washing machines

SWOT AnalysisOpportunitiesEconomyGoods are durable in any economic environmentUse of international exchange rateGlobalLargest consumer manufacturerIntegration of international employees bring broad cultural and business experience in all processes

SWOT AnalysisOpportunitiesEnvironmentMaximize recycled packing materialsProcesses environmentally friendlyProducts are biodegradable

SWOT AnalysisThreatsDemographicsLow product differentiation tends to make consumers reluctant to change productsConsumer purchasing base on costTechnologyCompetitors manufacturing technology innovationsReduction in innovations due to patent constraints

SWOT AnalysisThreatsEconomicInternal turmoil in third world countriesVentures in developing countries are jointly ownedGlobalInternal business in country may be given preferenceKnockoffs

SWOT AnalysisThreatsEnvironmentIncreased regulationsPressure to reduce utility consumption

Strategic Plan: Increase profitability from 6% to 12% in next 4 year

AssumptionsPrime Rate is 4%Available Market Growth is ongoing at 1 2% per yearAssume our vendors will accept late paymentsAssume our customers will pay net 30 Existing computer hardware will be able to support new computer softwareOutsourcing of production has acceptable sources

Strategic PlanAction Plan #1:Reduce costs in production of laundry detergents by 3 5% over next 4 yearsAction Plan #2:Strengthen market share in personal care products by increasing market share by 10% points

Action Plan #1Information Systems:Upgrade information systems to achieve improve forecast of sales Improvement in forecasting should result in a change from 10 week product coverage to 9 week product coverageImprove schedulingImprovement in raw material inventoryReduces storage time 10 15%These improvements would reduce storage time 10 15%Storage equates to $1 to $2/sq ftResults in a 10% savings

Action Plan #1FinanceChange payment on Accounts Payable from normal 30 day cycle to 45 day cycleThis allows capital to remain invested for a longer periodExample - $1M invested at prime (4%) results in $1643 additional revenue in the extra 15 days

Action Plan #1MarketingReduce marketing on cash cow brands such as Rinso, All, Final Touch and othersThese brands can effectively be marketed in Club Pack stores examples Cosco, Dollar General, SamsAllows for reallocation of cash cow brand marketing budget to key brands only should result in an additional $8 M available

Action Plan #1Marketing Anticipated 2004 advertising cost increases

Action Plan #1ProductionInitiate process changes to increase utilization of assets and reduces fixed costsIncrease automation to reduce manual labor on production lines reduction in staffing from 5 per line to 3 per lineAverage hourly pay $15/hr plus benefitsCosts savings of $62,400/per workerOutsourcing of production to reduce 2 production lines per facility

Action Plan #1ProductionIncrease quality control to reduce over pack exampleOn a 50 oz package reduce your over pack from 2% to 1% Assuming cost of $5/lbResulting savings of $3.4 Billion/year

Action Plan #1Research & DevelopmentReduce cost by alternative formulation Reduce builder in powder detergents by 2%Cost savings reduce raw material cost from 0.15/lb to 0.09/lbTotal cost savings - $29 M/yearHuman ResourcesProvide additional staff and line worker training Training with help lines run more efficiently

Pros and ConsGives cost reduction desiredBy increasing efficiency makes business more competitiveFocuses marketing on key brandsSets corporate culture for future growth in this area

Pros and ConsDisruptive to businessContracts for raw materials need to be renegotiatedR&D diverted from innovation to cost savings emphasisNegative reaction from laid-off workers

Cost of ReversibilityMany of these changes would not have a cost of reversibility associated with themIf the outsourcing of production needed to be reversed loss of workers and the need to divert capital back into production facilities would be costly

SummaryIn order to meet the strategic goal both action plans must be implemented Personal care products have the higher profit margin Upcoming changes in laundry detergent market necessitate reduction in production costs to maintain current profit margin

Since Unilevers Plan to Growth Strategy was launched in 2000, they have reduced the number of brands they manage from 1600 to some 400 leading brands.This enables them to concentrate resources on a portfolio of leading brands with strong growth potential that best meet the needs and aspirations of consumers around the world.

Unilevers biggest brands have international appeal because they meet a need or fulfil a desire that people share, no matter where they live.Two of Unilevers biggest brands are Dove and Knorr.In the next few slides we will focus on the key brands within the United States.