Unilever SWOT and PESTLE analysis

Unilever SWOT and po to a lower place analysisCompany ground and mission statement Unilever is a global society that flush toilet trace its origins to 1929, when a merger amongst a Dutch margarine manufacturer and a British soap maker was negotiated (Jones, 2002). Given the unambiguous sectors in which the two organisations were located, the merger was considered almostwhat of a curiosity (Jones, 2002, online), but it set the stage for a multinational corporation producing a wide portfolio of goods. Some of the worlds most recognised brands atomic number 18 drawd by the political party, including Surf, Lipton, Dove, Lynx, Magnum and Hellmanns. Today, Unilever is one of Europes largest companies, and in impairment of sales, it is the third-largest consumer goods unwavering in the world, riper near and Procter and Gamble (Thain and Bradley, 2014). The corporation has been floated twice, and is a constituent of the FTSE 100 Index and the AEX Index. The stated hold of t he gild is to domiciliate people the world over with fruits that be good for them and good for others (Unilever, 2014, online). Strategic Audit A strategic audit comprises a systematic and comprehensive evaluation of a companys business environs and internal assets. There be two come upon elements to the audit the outside(a) environment and the internal environment. The external environment identifies issues concerned with customers and competition, and examines the cordial, economic, technological, environmental policy-making and legal elements refering the business. A typical tool used at this stage is the PESTLE analysis. The internal analysis focuses on the resources the company possesses, such as the product distribution, product portfolio, sales and profit margins. A typical tool used at this stage is the SWOT analysis, in which the strengths and weaknesses, and the advantages and disadvantages of a company compared to its competitors are listed. Below, these tool s are in turn applied to Unilever. The External EnvironmentPESTLE analysis The PESTLE framework below analyses the political, economic, social, technological, legal and environmental dynamics of the environment in which Unilever operates. policy-making Unilever is co-headquartered in London and Amsterdam. Both the Dutch and the British political systems are in a duration of flux. The British government currently comprises the first coalition government in the post-war period, with another expected after the General Election in 2015 (Taylor-Gooby and Stoker, 2011), while in the Netherlands, coalitions are standard. Such governmental frameworks read all-important(prenominal) implications for the conduct of business, for thither tend to be policy ebbs and flows over short periods of time. For instance, in the Netherlands, the rate of harbor Added Tax ( value-added tax) for businesses has changed three times since 2010 (Wolf, 2014). Both the United Kingdom and the Netherlands are original members of the European center (EU) which facilitates trade among member states by the harmonisation of certain rules relating to business and the removal of trade barriers. There is roughly political impetus in both countries, however to leave the EU. For instance, in 2012, the prime minister of the Netherlands, lolly Rutte, curseened to pull the country out of the Eurozone as a means of easing the local Dutch economy (Dutch newlys, 2014), while in the UK there is a lobby for a referendum on EU membership. Exiting the EU would have massive implications for a co-headquartered business like Unilever. For this reason, Unilever has been vocal about its preference for both countries to catch ones breath in the fusion (The Guardian, 2014). There is growing political unrest in the Middle due east, and while Unilever does not currently operate there, 53 per cent of its business comes from developing markets (Unilever, 2014), and globalisation means that it may not be s hielded from the effects of conflict and instability overseas. For example, in 2012, oil prices reached unprecedented levels (Smith, 2014). This is a count of concern for the company because it straight off impacts on transportation costs. Economic Shoppers in Europe are settle down suffering from the effects of the longest and deepest recession in the post-war period. Data from Eurostat shows that category consumption fell drastically across Europe following the recession, and while there has been some recovery in recent years, household consumption is still not back to its pre-2008 level (Gerstberger and Yaneva, 2013). In addition, unemployment has risen and wages have stagnated in several of the economies in which Unilever supplies consumers. Low household consumption, mellowed unemployment and blow overing wages bring about drops in consumer demand which adversely affect manufacturers like Unilever. During recessions, households tend to cut back on non-essentials, which fo rce impact some parts of the companys product portfolio. art object the West has suffered from the financial crisis, economies in other areas, such as Latin America and China, are booming, providing considerable opportunities for the company. For instance, in 2013, sales of the companys products to emerging markets grew by 8.7 per cent (The Guardian, 2014). kind Life expectancy has been increasing over time in wealthy nations. For instance, in the UK in 1980, flavor expectancy stood at 70.4 years for men and 79.8 for women. By 2010, it had increased to 79.3 years and 83.6 years, respectively for men and women (Blossfeld, Buchholz, and Kurz, 2011). At the same time, the fertility rate has been falling over time. The increase in life expectancy and a below replacement fertility rate coupled with the maturation of the questionable baby boom generation (those born between 1946 and 1965) are accelerating population ageing. The UK government has estimated that the proportion of the population aged 30 and under is set to fall, while the proportion aged 60 and above pull up stakes increase. By 2034, it is estimated that 23 per cent of the British population slump on be aged 65, while undecomposed 18 per cent will be aged 16 or below (Office for National Statistics, 2009). There are important ramifications of the ageing population for businesses like Unilever. Firstly, there are likely to be changes in the structure of demand in future. Older people have unique needs and desires that will need to be met by Unilever. For instance, there is a greater demand for frozen ready meals by older people (Ahlgren, Gustafsson and Hall, 2004) which will directly impact Unilevers Sara Lee brand. Secondly, there may be labour shortages in the future. Expanding businesses like Unilever will need to respond to this by encouraging workers to work longer or recruiting migrant workers (Maestas and Zissimopoulos, 2010) As a direct result of some high profile public campaigns, p eople are becoming to a greater extent health and ethically conscious. This has led to an increase in demand for ethically produced and healthy products and heightened concern regarding genetically modified goods. This trend has already had a direct impact on Unilevers product portfolio, with sales of two of its margarine brands (I Cant Believe its Not Butter and Flora) seemingly in free-fall (The Guardian, 2014) technological Increasingly, consumers, particularly younger individuals, utilise social media, retailing websites and mobile forms of communication to connect with retailers, to discuss with members of their social networks their purchasing decisions, and to review past obtains (Sashi, 2012). This means that consumables companies like Unilever need to harness the Internet and mobile technologies in accessing these customers. For instance, a growing number of companies now include social networking websites such as Facebook and micro-blogging sites like twitter in their p romotion mix as a means of engaging their current consumer base and recruiting current customers. At the same time, constant connectivity makes the exchange environment for consumer products increasingly competitive. The readiness of product price and promotional information, the ability of shoppers to access online stores quickly and the aggregation of online content and offline information all mean that, in the digital age, firms like Unilever moldiness carefully craft their marketing activity (Sashi, 2012). Legal Unilever has a presence in some xcl countries worldwide which means that it must abide by their national laws. The extent of the companys multinational activity means that it must devote considerable resources to scanning the legal eyeshot and ensuring that it responds to changes accordingly. There have been significant legislative changes in the area of people management. For instance, across Europe umpteen countries have enacted anti-discrimination laws which com panies like Unilever must adhere to. In the United Kingdom, under the provisions of the Equality trifle 2010, businesses are not allowed to discriminate against individuals on the basis of factors such as gender, age, disability, religion and ethnicity in their recruitment, selection, preparedness and promotional practices (Hyman, Klarsfeld, Ng, and Haq, 2012). Legal frameworks have also been put in place as a response to the ageing of the population (Maestas and Zissimopoulos, 2010). For instance, the mandatory age of retirement has been re preemptd in both the UK and the Netherlands, which means that Unilever can no longer compel employees to retire once they reach the age of 65. Large companies also must put adequate pension provisions for workers in place under a new British scheme, which has a direct impact on business costs Environmental There is increasing political impetus to respond to environmental degradation, and the onus is on large manufacturers like Unilever to us e fewer resources and produce less waste. In Europe, a major development affecting the company is the establishment of the European Union Emissions Trading System (EU ETS), which was set up in 2005 as part of a concerted and collaborative attempt to reduce coke emissions under the requirements of the Kyoto Protocol. The EU ETS is a system under which polluters emissions are lie in order to pollute more, manufacturers must purchase credits from other polluters. Participation in the EU ETS is mandatory for all large factories and thinkts that produce more than 25 thousand metric tons of carbon dioxide and that use ammonia or petrochemicals (Ellerman, Converey and Perthuis, 2010). The Internal EnvironmentSWOT analysis The second element of a strategic audit is an analysis of the internal mechanisms of the business. This part of the paper uses a SWOT analysis to discern and critically examine the strengths, weaknesses, opportunities and threats facing Unilever Strengths The size of the company is its major strength. Unilever manufactures more than 400 brands which it sells to some 190 countries (Unilever, 2014, the Guardian, 2014). In addition, it employs over 167,000 people and expends 928 million euros on investigate and development annually (Unilever, 2013). In terms of performance, the company has bucked recent economic trends. In 2013, the company reported profit growth of 9 per cent over the previous year, reporting a net profit of 4.4 billion. In addition, global sales grew by over 4 per cent that year, with sales to emerging economies growing by 8.7 per cent (the Guardian, 2014). As strong as its sheer size, a major source of strength for Unilever is its longevity and brand recognition. The company has been in existence since 1929 and is the worlds oldest multinational enterprise (Thain and Bradley, 2014) Another strength of the company is its geographical spread. impertinent some consumable manufacturers, which are headquartered in just one count ry and found on just one public index, Unilever has headquarters in two countries, is floated on two indexes and is secondarily floated on the New York Stock Exchange. Another of the companys strength is its human capital. Human capital is the volume of skills, knowledge, let and competencies embodied in individuals that staff and run the business. This is important for there is a good deal of experiential research that links high levels of human capital with firm performance (Huselid, Jackson and Schuler, 1997). The companys chief executive officer, Paul Polman, who held senior positions at both of the companys major competitors, Nestle and Procter and Gamble, has been termed a rainmaker that has interpreted the company from strength to strength (The wire, 2014). On taking the reins in 2009, Polman set out a plan to double the size of the business, to double sales to 80 billion and to boost efforts at environmentalism and sustainability. Weaknesses Some analysts have argued tha t the companys broad product portfolio is a source of weakness (the Guardian, 2014). The firm produces goods in four broad product categories cleaning agents, food, personal care products and beverages. It is argued that such a broad portfolio can proceed the business from focalisation its marketing efforts appropriately (Putsis and Bayus, 2001). Thus, in order to consolidate its activities, the company may need to divest some brands or product ranges in the future. Indeed, the company already seems to be taking steps in this regard, selling popular brands Peparami, Slim-Fast, Ragu and Bertolli in 2014 (The Telegraph, 2014). In addition, most of brands produced by the company are multinational brands which may prevent them from being tailored to the needs of local markets. A further weakness of the product line concerns the prices offered to consumers. The prices of Unilever brands are generally higher than those of its competitors (Thain and Bradley, 2014). The company has apo logizeed that prices are high to represent the quality of the goods, while analysts have attributed the high prices to the enormous amount the company spends on research and development and its massive marketing budget (Thain and Bradley, 2014). In 2010 alone, Unilever spent 6 billion euros on advertising, and today, the company is one of the worlds largest purchasers of advertising media (The Telegraph, 2011). Threats The company is facing a number of threats, particularly from competitors, the market and consumers. Firstly, while Unilevers broad product portfolio might be conceived as unusual, it is not unique in this respect. Procter and Gamble and Nestle have very confusable business models and product lines (Thain and Bradley, 2014). Indeed, in terms of sales, Unilever is outperformed by both of these competitors. A large proportion of Unilevers products are premium brands stationed at consumers with relatively high levels of disposable income. This might be considered a th reat in the context of the current economic downturn. Increased financial uncertainty might lead households to move away from these brands to own-brand and lower value products, negatively affecting both net sales and sales margins. nutrition prices have risen substantially worldwide (Headey and Fan, 2008). This represents a significant threat to the company because it must pass the cost of food inflation to customers in order to maintain current profit margins. This might explain why the firms CEO is starting to consider refocusing the company strategy on alternative product lines, such as sundries or hard lines (The Guardian, 2014) Although the company has a stated aim to double its sales levels, analysts have noted that the company is still far short of accomplishing that aim. As the Telegraph (2014, online) notes, the acquisitions of TRESemm shampoo maker Alberto Culver and Radox bath foam have added almost 3bn in turnoverHowever, these deals have scarcely moved the needle a nd Unilever is still sitting on a big pile of cash. With growth backwardness in emerging markets where 60pc of the groups sales are generated, investors may start pushing for Unilevers leader to be a bit bolder if he is to reach his ambitious 80bn sales goal. In the context of the recent economic downturn, there have been some demergers and sell-offs in some of the sectors in which Unilever operates. While in some cases this has proven to be an opportunity for the company (for instance, the firm has recently been able to purchase top hair care brand TRESemm), it also poses a threat should any of these product lines fall into the hands of its competitors. For instance, the 2008 purchase of shaving brand Gillette by Procter and Gamble immediately made it the biggest company in mens personal care (The Telegraph, 2014) An increased social ethic and concern for the environment among consumers should also be considered a threat to the company. In Japan, Thailand and particularly in Ind ia, Unilever has attracted heavy criticism for the manufacture of so-called fairness products. These are products that are typically aimed at women and used for lightening the skin. While such brands are a major source of income for the company allegedly, one skin lightening agent produced by the company, honorable and Lovely, is used by 80 per cent of the population of Bangladesh (Unilever Bangladesh, 2014) the company has also come under blow for promoting Westernised standards of beauty. In Thailand, an advert for one of the companys fairness creams was withdrawn from media outlets after widespread trounce because it correlated white skin and high levels of intelligence (The Guardian, 2014). Opportunities Social media offers considerable opportunities to Unilever, particularly given its aim to reduce its advertising expenditure (The Telegraph, 2014). Social media sites are increasingly used by companies to update consumers on new products, to offer discounts and special prom otions, and to invite consumers to special events that are either held online or physically (Sashi, 2012). Unilever may be able to capitalise on this trend either by means of corporate accounts or through brand accounts. There are considerable opportunities to the company through its extensive research and development efforts. Unilever has research facilities in England, Shanghai, Bangalore, New Jersey and Connecticut, which are working continually to develop new product lines and enlarge existing ones. Through this investment the company is able to regularly introducing new brands or reintroduce redesigned brands to the market. consequence Unilever is a unique company. The firm is dual listed, co-headquartered in two of Europes wealthiest cities and it offers the market a vast and very broad range of products. This strategic audit has shown that while the company is operating in a turbulent business environment, it is managing to perform well, both in terms of sales and growth. Despite the companys strengths, there are some external threats posed by market developments, customer attitudes and the actions of its key competitors. The company leadership will need to monitor these aspects if Unilever is to meet its objective to become the largest consumables multinational company in the world. References Ahlgren, M., Gustafsson, I. B., Hall, G. (2004). Attitudes and beliefs directed towards ready-meal consumption. Food Service Technology, 4(4), 159-169. Blossfeld, H. P., Buchholz, S., Kurz, K. (Eds.). (2011). Aging populations, globalization and the labor market Comparing late working life and retirement in modern societies. Cheltenham, UK/Northampton, MA Edward Elgar. Dutch News (2014). Opposition mononuclear phagocyte system call on premier to explain quit the euro claims. 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