Unilever is a global company that sells its products in almost every country in the world and has dozens of brands. Despite some shortcomings, the new CEO Paul Polman has achieved significant results in the company, demonstrating his understanding of the company’s strengths and weaknesses in an international environment. This paper will analyze Polman’s decisions, in particular the Unilever Sustainable Living Plan (USLP), by using SWOT and PESTEL analysis to assess their suitability.
Polman’s achievements are controversial as despite meeting primary USLP targets, the company has also experienced partial declines in earnings. However, the SWOT analysis shows that Polman took into account the specifics of the company’s activities. Unilever’s strengths are the scale of its operations, a strong market presence, product diversity, and reliable brands, as well as a focus on innovation and strong supply chains. These features allow Unilever to withstand competition from other companies, as well as satisfy a variety of customer interests. The focus on innovation has also become the basis for USLP implementation, since the company has taken many successful steps in changing both the requirements for suppliers and retails. This trait has also strengthened its brands’ position because many of them have become “sustainable living brands” and made significant contributions to the company’s social responsibility (Bartlett, 2015, p. 10). Thus, Polman took into account the company’s strengths for creating strategy and only enchased them in its implementation.
The disadvantages of Unilever are dependence on retails and suppliers, a specificity of brands, and the availability of substitutes for their products. For example, Bartlett (2015) notes that the Axe, whose brand is based on masculinity, cannot change its strategy to a more socially responsible one, while some other brands can. This same feature also applies to suppliers who cannot significantly change their manufacturing strategy to reduce emission or water use. This fact partially contributed to the fact that Unilever’s environmental goals were not achieved. At the same time, many companies on the market manufacture the same products as Unilever; thus, customers could switch their preferences without difficulties.
Opportunities and threats for the company arise from the results of the strategy implementation. Opportunities are the further implementation of the USLP to transform the remaining Unilever brands into sustainable living brands, which will enhance the company’s image and customer love, and generate profit. Bartlett (2015) notes that brands already in this category “accounted for half of the company’s growth and had at twice the rate compared to other brands” (p.11). At the same time, such changes require significant investment and time, which threatens to lose profits, as happened in 2014 (Bartlett, 2015). Given the competition from other large companies, as well as the scale of Unilever’s work, such a decline could negatively affect the work of the entire company and cause concerns among stakeholders.
The PESTEL analysis also demonstrates that it has taken into account most of the features of the environment in which Unilever operates. The main difficulty in the political, economic, socio-cultural, technological, environmental, and legal environment is its diversity due to the global representation. However, most of the goals of the USLP are universal and can be implemented in different countries. For example, policies to reduce waste and water use and help sustainable social development are global goals, so both buyers and suppliers, as well as government, support them.
The legal environment regarding these issues is also relatively homogeneous, as Unilever does not address controversial matters that can be prohibited in the country. Example of changes in a legal environment is the working conditions of employees; however, in this case, Unilever also complies with the law and, in doing so, contributes to the workers around the world. For example, the minimum but above-average wage for workers in Vietnam demonstrates the participation of Unilever in this socially significant issue (Bartlett, 2015). A diverse socio-cultural environment is also a feature that Unilever takes into account in its strategy, and its multi-brand structure contributes to the realization of goals. Each brand can independently adapt its approach to the company’s tasks and the cultural environment of the countries, and Unilever only controls this process.
However, the barriers are the environmental conditions, economic, and technical environment, since countries are at different stages of development. For example, implementing new environmental-friendly manufacturing is difficult if the supplier does not have the technological resources. This feature also applies to transportation costs in countries with severe geographic conditions. Environment and economic diversity is an advantage and disadvantage for Unilever at the same time, since the company needs to adjust the prices of their products, but they can realize the goals of social development. For example, the supply of clean drinking water, hygiene products, and healthcare education in remote areas of Africa are the goals of the USLP, but it requires investments that are not profitable (Bartlett, 2015). However, since Unilever has a complex and broad structure, supply and transportation problems are solved at the local level, and the availability of investment opportunities develops the technical capabilities. Therefore, despite the difficulties associated with the diversity of characteristics of countries, Unilever can achieve its goals due to its financial capabilities and strong interaction structure.
In conclusion, the results of Unilever’s activities, SWOT and PESTEL analysis demonstrate that Polman’s solutions and strategies were appropriate, although the company did not manage to overcome all the shortcomings of the environment. However, Polman took into account the main nuances, making it possible to achieve some of the strategic objectives. At the same time, the ideas and goals of the USLP are challenging to reach, and they require significant time and investment. Hence, the decline in profits noted in the case study is not decisive for evaluating the company’s strategy in general.
Reference
Bartlett, C.A. (2015). Unilever’s new global strategy: Competing through sustainability. Harvard Business School.