51_unilever’s path to growth strategy

8/8/2019 51_unilevers path to growth strategy

1/18

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

Company Overview


2/18

S.W.O.T. Analysis

Strengths Weaknesses

Recognized as a global company

Strong brand portfolio

Strong relationship with retailers Economies of scale

Dual leadership

Not connecting with customers

Inefficient management of brands Reduced spending for R & D

Inability to maximize acquisitions

Decrease in revenues

Opportunities Threats Changing consumer

preferences

Increasing need for healthy

products

Strong Competition

Increasing store brands

Tougher Business Climate

Exchange rates


3/18

Rationale

Attractive Drivers

Unilever contributions

Build strong portfolioStrategically attractivecategory

Strong customer reach20% annual growth rateStrong sales anddistribution networkOpportunity for product

Would make Unilever worldslargest ice cream productsmakerPremium pricesStrong brand equity

10th largest U.S. basedfood products companiesHistory of growth inrevenues and earningsStrong global position

SlimFast BestfoodsBen & Jerrys

$2.3 billion cashInternational presence

$326 millionCompetencies in the industry

$20.3 billion euro cash;assumption of net debtOperating efficiencySimilar portfolios andgeographic coverage


4/18

Why Path to Growth Strategy

Years of slow performance

Lack of sound corporate strategy Numerous low-volume brands

Small global presence compared to

competition Mediocre performance in emerging

markets


5/18

5 year growth plan

Reduce portfolio to 400 corebrands

Focus R & D and advertising onleading brands

Concentrate on product innovationto fuel internal growth

Grow through acquisitions

Elements of Path to Growth

Source: Crafting and Executing Strategy


6/18

Objectives of Path to Growth

Expectations

Achieve double-digit EPSgrowth

Secure a bettercompetitive position in

global food andhousehold

Build brand value to gainpricing power

Top-line salesgrowth of 5-6%annually

Increase operating

profit margins 11% toover 16%

Plan to beaccomplished byyear end 2004

Strategic Targets


7/18

Successfully trimmedunsuccessful brands

Leading brands increased

sales from 75% to 93% 12 brands with sales of 1B+

Consistent growth in Home &Personal Care

Improved overall quality and

growth profile of Food portfolio

Yes Global procurement

programs have delivered2.4B, excess of 1.6B target

Improved capital efficiency Successful integration of

Bestfoods acquisition

Operating assets haveimproved by 9%,exceeding 6% target

Is it working?


8/18

Reported a net loss of$318M

In 2004, underlying salesgrew by only .4%, leading

brands by .9%

Issued 1st ever profitwarning ahead of third

quarter results, 3%decline

Lagging behind competitorsin terms of marketing andinnovation

No. Unilever was getting there, but getting there too late

Is it working?

Failure to increaseadvertising and

marketing efforts Still lack focus and

effective strategyexecution

The company remained

too local and fragmented Unilever plans to

discontinue the Path toGrowth Strategy

So whats next?


9/18

What adjustments, both internally andexternally, should Unilever make to rebuild

a strong and focused competitivestrategy?

1.Reorganize and streamline Unileversorganizational structure.

2. Implement Unilever Believer product

and brand extensions.

Strategic Issue &Recommendations


10/18

Recommendation 1

S

trategy Justification Unilever maintained two

business entities, dualchairperson approach

Unilever Group owns

UnileverPlc and Unilever NV

List stock separately and shareboard of directors

Management typically weartwo/three hats

Board and business

responsibilities conflicted Company remained two local and

fragmented Recognize the need to streamline

leadership and managementstructure

Reduced effectiveness and

slowed the decision making

process.


11/18

Unilever Plc Unilever NV

One Unilever


12/18

Margarines, spreads, oilsFrozen FoodsIcecreamsTea-based beveragesCulinaryHealth and Wellness

FragrancesDeodorants/toiletryOral CareSoaps, lotions, skin careLaundryHousehould careCleaning Products

IrelandKorea

NeverlandsItaliaUS

Global Enabling TeamRegional Leadership

TeamGlobal Process Owners

Customer BusinessDevelopment

FinanceHuman Resources

ITMarket ResearchGovernment RelationsProduct SupplyPublic Affairs

Cross Functional Management Team

Global Business UnitsGlobal

Business ServicesCorporate Functions

Market

Development

Organization

One Unilever


13/18

Margarines, spreads, oilsFrozen FoodsIcecreamsTea-based beveragesCulinaryHealth and Wellness

FragrancesDeodorants/toiletryOral CareSoaps, lotions, skin careLaundryHousehould careCleaning Products

IrelandKorea

NeverlandsItaliaUS

Global Enabling TeamRegional Leadership

TeamGlobal Process Owners

Customer BusinessDevelopment

FinanceHuman Resources

ITMarket ResearchGovernment RelationsProduct SupplyPublic Affairs

Cross Functional Management Team

Global Business UnitsGlobal

Business ServicesCorporate Functions

Market

Development

Organization

One Unilever

KEY TO SUCCESS

A simpler management structure will increase accountabilityand speed the decision making process.


14/18

Provides a greater clarity of leadership,responsibility, and accountability

Allows Unilever to focus on the needs of theircustomers and consumers thus reigniting growth andincreasing sales potential

Provides the ability to leverage scale of operations

Create a strategic platform for brand management

Recommendation 1

Deliverables


15/18

Unilever Believer Program that focuses on brand initiatives

to the consumer

Lets the consumer know more about theproduct and its uses

Objective: Bring top of the mind

awareness Strategy: Use advertising that connects

with consumer needs

Believe in Unilever


16/18

Recommendation 2

Strategy Justification

Consumers demand high qualityproducts that both are convenient anddelicious

Consumers look for new ways to useproducts

More females are working full time jobs

Large population of single-parenthouseholds

Increase consumer focus on healthand nutrition


17/18

Lipton Extension

Product: Lipton LiftTarget Market: Young adults 18-32

Uses: stay up all night and/or start a night outMain Ingredients: Caffeine, Vitamin B, Guarana

Advertisements: Highlight healthier ingredients of the

product while showcasing its ability to give energy andrevitalize body


18/18

Delivers innovative products that capitalizeson changing consumer preferences

Allows Unilever to focus on the needs of theircustomers and consumers thus reigniting growthand increasing sales potential

Provides a strong competitive platformagainst major competitors and private labelbrands

Recommendation 2

Deliverables

51_unilever’s path to growth strategy

Documents