Strategic management Essay
This paper will discuss the practices of strategic management in Unilever UK. Strategic management is a form of management in which strategies and plans are devised for the company to move it forward. The strategies are designed in order to deal with the challenges of the new environment. Plans are usually made to counter any unavoidable circumstances that may occur due to many reasons. Unilever is one of the largest commodity producing firms. They have spread their business globally; one can find Unilever products almost all around the world.
The size of the company is very large. It is involved in large scale production. Marketing and advertising are the backbone of such companies. This is primarily because commodity or consumer products produced by every company has the same characteristics but it is the marketing and advertising that differentiates it from the other. a) An analysis of the industry’s current and future macro environment, clearly identifying the major factors for change The macro environment is the environment that encompasses the whole industry and the environment not just one or few companies.
The word macro means on the whole taking viewpoint on large scale considering every aspect not just concentrating or focusing on any
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But as years passed it succeeded in its operations. The company became technologically sound and has improved the standard and quality of its products tremendously. The technological dimension of the macro environment basically concerns the technological achievements in the industry and the society at large. The second dimension of the macro environment is the international dimension. It basically focuses on the representation and opportunities for the company in the world. Unilever is a company that has a widespread network of operations all around the world.
They have expanded in almost every region setting up as multi-nationals and giving them a tough competition to the local competitors of the market. It has come this far because like every company it had thought on the grounds of expanding internationally. This expansion has given the company a chance to cut its cost and obtain raw material at the best and most competitive prices. Another dimension of the macro environment is the socio-cultural situation. It is the dimension representing the norms, customs and values of the population.
This is one of the most important aspects that the company has to keep into its strategy because an organization is made of people. In order to set up a company and to take it forward it is essential that the organization has the support of the people. But every culture has certain demographics, characteristics, norms, values and customs of the population within which the organizations have to operate. Therefore it is essential that all these aspects are kept in mind. As all these factors can have a great impact on the employees of any company.
Unilever has greatly concentrated on this factor and has been very successful in establishing companies in all the regions that are very culture specific. They have valued the norms and customs that were pertinent in every society. Therefore we can see a vast difference in the Unilever that is present in UK to that which is present in China or maybe India. Another factor of macro environment is concerning the legal and political framework. This dimension includes the government regulations and the political activities designed to control the company behavior. This is also a very important factor.
Countries in which the political conditions are not very stable it is difficult to operate in them. This is primarily because in such countries the availability if raw materials and others labor force can be disrupted any day if riots break into the country or ant strike is called. On the other hand countries in which he political conditions are stable and the legal framework is strong the operations become much easier. In such regions it is also very difficult to violate laws and so the rights of the employees and the company are both protected by the law in an efficient manner.
Unilever is a company that has always been very conscious when it comes to ethical and lawful behavior. The company has maintained a very good image in the industry with its ethical acts. From its very beginning it has never compromised on ethics and laws and this behavior it has maintained in every region wherever it has operated. The company has always made an extra effort when it comes to dealing with the employees. Along with this the suppliers and customers have always remained satisfied with its performance.
These core values of the company had made it one of the largest operational multi-nationals in the world that has the capacity to deliver to the customers. It has always maintained quality standards and have attracted the best talent of all the countries to join its workforce. The final factor of the macro environment is the economic dimension. This dimension represents the overall economic health of the country or region in which the company operates. Consumer purchasing power, interest rates and unemployment rate are part of the company’s economic environment.
The economic environment has significant impact on the working of the company. If any economy is affected either by a boom or a recession the company has to bare its effects. But every company has to adapt to these economic changes. In this time where the world is under a global economic crisis, Unilever is also not safe from the adversities of this crisis. Like all other companies Unilever is trying its best to cut its cost and expenditures in order to cope with the ongoing situation. One advantage that this company has that it is spread all over the world in so many regions.
Also that it is aware of the local markets therefore it can arrange for the cheapest raw material, labor and packaging material all around the world. In this case it as a competitive edge over its competitors. One of the most significant trends emerging in the world is that of acquisitions and mergers. This reduces the cost to a large extent. Unilever’s has until now not done any large mergers but it has carried small scale mergers in the local markets. These mergers are limited to a single product or brand within the local markets.
But on an international level in the recent 5 years no large merger or acquisition has taken place. Unilever itself is a very large company with a lot of products under its head. Mergers may increase their span of products that can be difficult to handle in this time of crisis. b) The company’s current position within the competitive marketplace both in the UK and abroad including the strategy currently adopted. The company’s current position in the competitive market especially concerning UK is very strong. It is giving tough competition to all the local commodity producers.
It has a well established name in the UK. The sales are increasing tremendously. The company does mass marketing and its product availability is vast. The consumers are please with the quality that it serves. Unilever also does big marketing campaigns for all its products. Some of its very famous products have become household names. For example washing powder is very commonly known as surf. This is because of the good branding and loyalty that customers feel with all the products of this company. In UK every day new companies are made and new products are launched.
But no company has been able to snatch the customers of Unilever’s from it. It has always been flexible to the changes occurring in the consumer minds. The company’s position in the international market is also very strong. Research suggests that the company has been able to attract sufficient amount of customer base in all the regions that it has expanded in. the reputation of Unilever is the same across all borders. It is a well recognized brand name all over the world. All the users of Unilever product are one family now. The company has built strong customer base in all the regions.
The popularity of Unilever products is increasing day by day and new people are entering the pool of the company every year. It has expanded into so many products with so many varieties. The current strategy that Unilever is using is the differentiation strategy. It is a type of strategy in which the organization seeks to distinguish its products and services from its competitors. Since the major pool of products that is produced all every day usage consumer products like tae and soaps etc. therefore it is extremely important to use the differentiation strategy.
This is the only way the company can attract customers to buy their product only. Differentiation strategy makes it easier for the company to sell the product because in this way they highlight the specific features of their product to gain a competitive edge over the others. c) A critical evaluation of the strategic options available to your chosen organisation. The strategic options available for the company that we have chosen are many. One of the strategic options includes the other competitive strategies to be also implied during strategic planning. One of the other strategies is the cost leadership strategy.
It is one in which the organization effectively seeks efficient facilities, cost is cut down and there is tight cost control so that the efficiency is increase and it eventually becomes much more than the competitors. Although Unilever is making use of strategy but not to a large extent. Cost effective strategies make the company very efficient and gives it an edge over competitors. During the global economic crisis it is essential for companies to make use of this strategy otherwise the funds would eventually evaporate. This is primarily because the products that Unilever is selling are purely consumer based.
And any effect on the economy can greatly affect the buying power or capacity of the consumers. Another strategy that the company can make use of is the focus strategy. It mainly emphasizes on the concentration on a specific regional market or buyer group. We know for a fact that all the cultures are variably different from each other. If the company comes up with certain products that will cater to a regionally different audience, this can provide the company with a competitive edge. For example there are certain herbs that are available in China and India only.
These herbs are used extensively by the people of this region. If Unilever comes up with a soap which has the smell of one of these herbs and also ha qualities of improving the skin, then in that case the people of this region will be attracted towards buying this product. On the contrary if the same product is introduced in the western countries the consumers will not be attracted that much because they will not have any association with the product. d) Make detailed recommendations as to the option(s) the organisation should pursue with clear and unambiguous justification of your choice.
in order to formulate a competitive strategy I recommend that the company should adopt the BCG matrix. It is a concept developed by the Boston Consulting Group. It evaluates the companies with respect to the dimensions of business growth rate and market share. This model helps improve the old products and provides guidelines to develop new products. All the products that are under the umbrella of Unilever either fit into one of the categories that are the stars, question marks, cash cows and dogs. By applying this concept the company can develop its individual brands.
The best option of the BCG matrix lies in the question mark. It comprises of new ventures. By applying this concept the company can convert all its brands into the stars category. These are the products that have rapid growth as well as expansion. Butteriss,M. , 1998, Re-inventing HR- Changing Roles to Create the High Performance Organization, Wiley.. Clawson, J. G. & Conner, M. L. , 2004, Creating a Learning Culture: Strategy, Technology, and Practice, Cambridge University Press. Evans,C. , 2003, Managing for Knowledge – HR’s Strategic Role Butterworth-Heinemann, 1st edn.
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