General Environment for Unilever

General Environment of Unilever

Political/Legal

Political and legal factors have huge impact on the business for develop new strategies. These factors can affect, how company operates, its costs, and the demand for its products. It includes:

• Political stability
• TAX Regulation
• Trade Regulation
• Employment Laws
• Environment Laws
• Health and safety laws
• Employment laws
• Consumer laws

Unilever Pakistan is facing worst economic conditions and tax regulations. It is facing energy crisis and import tariffs.

Economical

Economic factor that shape the general environment for unilever includes:

• Economic Downturn
• Interest rates
• Exchange rate
• Inflation rate
• Export subsidies
• Import tariffs
• Duty regulations
• Cheap labor

Unilever market is becoming highly competitive especially in Europe. P&G is major competitor in the Europe. And also there are so many discounters in the European market resulting from EU free trade policy. It has very bad impact on Unilever profitability.

Sociocultural

Social factors include the cultural aspects and its influences vary region to region. These factors for unilever include:

• Life style
• Age
• Religion
• Education
• Customer preferences
• Alternatives
• Substitutes
• Hygienic products  

As Unilever is one of the largest FMCG (Fast Moving Consumer Goods) Company in the world. Millions of people enjoy the products of the company every day around the globe. It means company has huge impact on the people life style. It is a responsibility that company considers very seriously.

• Company invested 91 Million Euros in community programme worldwide in 2008.
• 120 Million People reached by Lifebuoy brand's hand washing programme in India since 2002.
• Four million children are reached by Signal/ Pepsodent/ CloseUp/ tooth paste brands through school based oral health programme in 2008.
• Three quarters of the food products in our R&D pipeline bring specific nutritional or health benefits.

Technological

Technology is necessary for the success for competitive advantage and provide power to globalization. For Unilever these include:

• R&D Activity
• Informational Technology
• New machines
• Innovative products

Technology plays a vital role in company history. Right in the 1930's Unilever continues to diversify. Business continue to boom in 1950's with new technology being invented to boast production and improve quality.

Unilever is global leader in research and developments, believing that powerful vitality based innovations are crucial to delivering sustainable growth. In 2008 Unilever appointed first chief research and development officer. 6000 plus R&D professional came together in one unified organization. Company spent 927 million Euros on R&D worldwide. And company also has five laboratories around the world that explore new thinking and techniques to help develop our products. Its strong R&D give it a competitive advantage

Environmental

Growing awareness about climate change is affecting companies very hardly and it can create new markets or destroy existing markets. It focuses on corporate social responsibility and also takes into account environmental hazards that may be caused because of its production activity. It includes:

• Climate change
• Diseases
• Weather

Now a day's climate change is big issue for companies. People like to buy the products which will not be harmful for environment. And Unilever are working towards it.

Unilever depends on the natural environment for supplies of raw materials and water. Sustainability is a business issue. In 2008 we piloted a way to measure our product categories against four indicators covering water waste, sustainable sourcing and green house gas emission. This data will inform future development and innovation across our categories.

• 39% reduction in CO2 from energy 1995-2008.
• 63% reduction in water 1995-2008.
• 68 % reduction in total wastage 1995-2008.

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SWOT for Unilever

SWOT analysis for Unilever

Unilever is a company that serves in almost all the continents and over 190 countries of the world. It has a wide variety of products serving the people of all ages. Based on its core competencies and strategic outlook its strengths are;

Strengths

·        

           Company operating in nearly 190 countries

·         Company operates its operations nearly 190 countries in the world. And they also have 270 manufacturing sites worldwide

·         Strong portfolio of brands and diversified product range

·         Company has more than 400 brands all around the world. Most of the brands known as multinational brands but some of them operate in some countries and company calls it local brands.

·         More than 13 international brands have contribution in sales more than 1 billion Euros. And Unilever top 25 brands account for more than 70% of sales

Products of the company

·         Personal wash: soaps,

·         Laundry: Surf, detergants,

·         Skin care: Dove, Ponds,

·         Hair care: Sunsilk,

·         Oral care: CloseUp, Pepsodent,

·         Deodorants: AXE, Lynx,

·         Food and beverages: Lipton, PG Tips,

Research and development

·         Company spend huge amount on Research and development worldwide.

·         Price, quality and variety

·         Unilever has 400 brands worldwide. But brands available in market are with different packaging with different quantities.

·         Customer rely and believe in the quality of product because of their trust in unilever brands

Competitive advantage

·         Wide product variety

·         Promotion, marketing and advertising

·         Effective and attractive packaging

·         Research and development

·         Economy of scale

Unilever operates more than 270 manufacturing sites around the globe. That is how they can achieve economy of scale easily. It gives competitive advantage to company.

Weakness

  Internal attributes of the organization that are harmful to achieving the objective. Unilever has the following weaknesses out of which the strong competitors like P&G, Nestle and

• Strong competitors

Unilever has strong competition worldwide by multinational. E.g. P&G, Rackitt Benckiser, Nestle, etc these are also the companies that operate worldwide, have big market shares, huge product line and millions of customers.

• Substitute products

As Unilever operates in more than 100 countries and there are lots of substitute products available in the local market. Because of product quality and extensive R&D company charge higher prices for its products but the local products are much cheaper.

Opportunity

External conditions those are helpful to achieving the objective.

·         Health conscious products demand

Now a day's people like to eat healthy food which contains fewer calories and use those products which will not harm their environment. This gives a good opportunity to Unilever to add more and more products in its product line.

·         Changing life styles

Now people are more aware about innovations because of the media. Company can use changing life style and increase the demand of the products.

·         Emerging new markets

Now a day's new markets are emerging company can expand their business to cover these markets. Like Russia, Iran, Iraq and Afghanistan.

·         Increase production volumes

Unilever can concentrate to increase production volumes and they can try to increase their availability in the market. By increasing production volumes and availability it is possible to achieve high demands of products.

• Move operations to undeveloped countries

Company needs to focus to move their production operations in undeveloped countries. Than they can find cheap labor and save money on operations and they can build a supply chain towards expensive markets. Then their profitability will be high.

Threat

External conditions which could do damage to the business's performance.

• Economic downturn

Biggest threat now days are recession. Most of the companies shut their operations or make redundancies people losing their purchasing power. It has affect all over the world in this situation coming times will be very crucial for company.

• Environmental effects

Peoples are very conscious about the environment. They don't like to buy products which can be harmful for the environment. Company needs to focus on how to become environment friendly. It needs to focus on its environmental friendly products.

• Global competition

The chances of Global competition are growing. New companies are coming with innovation. If Unilever wants to stay in market they need to focus on innovation to kill competition around the globe.

• New local products

New local products are introducing in the market. As the sizes of local companies are small they have fewer expenses and when they provide cheap product they can grab the market share of Unilever easily.

• legal effects

If the government introduces any sort of law for tax or it introduce new limits for production because the product is harmful for human use or natural environment. It will be very hard to sell out the product in the market.

UNILEVER.....

External Environment Of UNILEVER

Analyzing the external environment for Unilever

Environmental scanning

Unilever focus on the external environment and take into account the changes undertaking in the environment outside the organization. Its environmental scanning includes the following things:

·         Emerging competitors

·         Competitors strategies

·         Competing products

·         Changing market trends

·         Policies of the competitors

·         Substitutes availability in the market

·         Needs of the customers

·         views of the customers

Environmental monitoring

It takes into account the emerging market trends and changes in the market conditions very seriously. It tackles this phase in the following way;

·         Market share

·         Inflation

·         Product pricing

·         Low price and better quality substitutes availability for customers

·         Potential customers

·         Emerging needs of customers

·         Lifestyle of the targeted audience

·         Customer’s response to new products

·         Interest rate and availability of cheap inputs

·         Market timing and availability of demanded products at time in market

·         Daily sales of a product and its comparison to the competitor’s sales

·         Net disposable income and yearly earnings

·         Interest rates, taxes, profit maximization, cheap labor, low cost inputs and incentives from the government

·         Capturing more and more customers and increase in daily sales of the product

Competitive Intelligence

The biggest competitors of Unilever Pakistan Ltd are P&G, Rackitt Benckiser and Nestle. Unilever carefully analyze the strengths and weaknesses of its rivals and understand the industry. It gathers the intelligence of its competitors and gathers data on competitors. Such as;

·         It identify trends

·         Conduct competitive analysis

·         Analyze carefully the employees, sales, products, market share, product prices etc of competitors

·         Better provision of services and up to date customer dealing

·         Competitor’s potential

·         Government regulations

·         Keep track of new competitors

Environmental forecasting

By all the above activities it predicts change. Environmental forecasting asks about;

·         How much time a new technology or competitor will take to reach the market?

·         For how long the government policies will not change?

·          Is the current trend likely to continue?

·         For how long current prices of the products remain same?

·         Is new product needed?

·         For how long customers remain satisfy with the existing products?

·         For how long competitor’s products will perform in the same way?

·         What are the potential strengths and weaknesses of the competitors?