Pest Analysis On Unilever - December 2nd, 2010 Unilever is an Anglo-Dutch multinational corporation that owns many of the world's

consumer product brands in foods, beverages, cleaning agents and personal care products. Unilever is a dual-listed company consisting of Unilever N.V. in Rotterdam, The Netherlands and Unilever PLC in London, United Kingdom. This arrangement is similar to those of Reed Elsevier and Royal Dutch Shell prior to their unified structures. Both Unilever companies have the same directors and effectively operate as a single business. The current nonexecutive Chairman of Unilever N.V. and PLC is Michael Treschow while Paul Polman is Group Chief Executive. Unilever's main competitors include Danone, Henkel, Mars, Incorporated, Kraft Foods, Nestl, Pepsico, Procter & Gamble, Reckitt Benckiser, Sara Lee and S. C. Johnson & Son. PEST ANALYSIS A PEST analysis is used to identify the external forces affecting HUL .This is a analysis of HULs Political, Economical, Social and Technological environment. A PEST analysis incorporating legal and environmental factors is called a PESTLE analysis. POLITICAL The first element of a PEST analysis is a study of political factors. Political factors influence organisations in many ways. Political factors can create advantages and opportunities for organisations. Conversely they can place obligations and duties on organisations. Political factors include the following types of instrument: - Legislation such as the minimum wage or anti discrimination laws. - Voluntary codes and practices - Market regulations - Trade agreements, tariffs or restrictions - Tax levies and tax breaks - Type of government regime eg communist, democratic, dictatorship Non conformance with legislative obligations can lead to sanctions such as fines, adverse publicity and imprisonment. Ineffective voluntary codes and practices will often lead to governments introducing legislation to regulate the activities covered by the codes and practices. ECONOMICAL The second element of a PEST analysis involves a study of economic factors. All businesses are affected by national and global economic factors. National and global interest rate and fiscal policy will be set around economic conditions. The climate of the economy dictates how consumers, suppliers and other organizational stakeholders such as suppliers and creditors behave within society. An economy undergoing recession will have high unemployment, low spending power and

low stakeholder confidence. Conversely a booming or growing economy will have low unemployment, high spending power and high stakeholder confidence. A successful organization will respond to economic conditions and stakeholder behavior. Furthermore organisations will need to review the impact economic conditions are having on their competitors and respond accordingly. In this global business world organisations are affected by economies throughout the world and not just the countries in which they are based or operate from. For example: a global credit crunch originating in the USA contributed towards the credit crunch in the UK in 2007/08. Cheaper labour in developing countries affects the competitiveness of products from developed countries. An increase in interest rates in the USA will affect the share price of UK stocks or adverse weather conditions in India may affect the price of tea bought in an English caf. A truly global player has to be aware of economic conditions across all borders and needs to ensure that it employs strategies that protect and promote its business through economic conditions throughout the world.

SOCIAL The third aspect of PEST focuses its attention on forces within society such as family, friends, colleagues, neighbours and the media. Social forces affect our attitudes, interest s and opinions. These forces shape who we are as people, the way we behave and ultimately what we purchase. For example within the UK peoples attitudes are changing towards their diet and health. As a result the UK is seeing an increase in the number of people joining fitness clubs and a massive growth for the demand of organic food. Products such as Wii Fit attempt to deal with societys concern, about childrens lack of exercise. Population changes also have a direct impact on organisations. Changes in the structure of a population will affect the supply and demand of goods and services within an economy. Falling birth rates will result in decreased demand and greater competition as the number of consumers fall. Conversely an increase in the global population and world food shortage predictions are currently leading to calls for greater investment in food production. Due to food shortages African countries such as Uganda are now reconsidering their rejection of genetically modified foods. In summary organisations must be able to offer products and services that aim to complement and benefit peoples lifestyle and behavior. If organisations do not respond to changes in society they will lose market share and demand for their product or service. TECHNOLOGICAL Unsurprisingly the fourth element of PEST is technology, as you are probably aware technological advances have greatly changed the manner in which businesses operate.

Organisations use technology in many ways, they have 1. Technology infrastructure such as the internet and other information exchange systems including telephone 2. Technology systems incorporating a multitude of software which help them manage their business. 3. Technology hardware such as mobile phones, Blackberrys, laptops, desktops, Bluetooth devices, photocopiers and fax machines which transmit and record information. Technology has created a society which expects instant results. This technological revolution has increased the rate at which information is exchanged between stakeholders. A faster exchange of information can benefit businesses as they are able to react quickly to changes within their operating environment. However an ability to react quickly also creates extra pressure as businesses are expected to deliver on their promises within ever decreasing timescales. For example the Internet is having a profound impact on the marketing mix strategy of organisations. Consumers can now shop 24 hours a day from their homes, work, and Internet cafs and via 3G phones and 3G cards. Some employees have instant access to e-mails through Blackberrys but this can be a double edged sword, as studies have shown that this access can cause work to encroach on their personal time outside work.

SWOT of HUL - September 9th, 2010 SWOT ANALYSIS OF HINDUSTAN LEVER LIMITED

STRENGTHS 1] DEEP ROOTS IN LOCAL CULTURE & MARKETS & GREAT UNDERSTANDING OF CONSUMER NEEDS. 2] WEALTH OF LOCAL KNOWLEDGE & INTERNATIONAL EXPERTISE HELPS IT TO BE GLOBALLY COMPETITIVE. 3] EXCEPTIONAL HIGH QUALITY STANDARD PRODUCTS. 4] NEW INNOVATIVE IDEAS & PRODUCTS. 5] HIGHILY PROFESSIONAL MANAGEMENT. 6] EXCELLENT DISTRIBUTION NETWORK & GOOD RELATIONSHIP WITH THE WHOLESALERS & RETAILERS. 7]CONTINOUS EFFORTS TO REDUCE COST & PASS ON BENEFIT TO CONSUMERS.

8] GOOD REPUTATION & GOODWILL IN THE MARKET FOR ITS PRODUCTS. 9] GOOD ADVERTISEMENTS SO AS TO MAKE THE CONSUMERS AWARE OF ITS PRODUCTS,USES & PRICE & ALSO HAVE A LASTING IMPRESSION BY CATCHY ADS. 10] EXCELLENT BRAND MAKING CAPABILITY. IT HAS 110 BRANDS OUT OF WHICH 30 ARE POWER BRANDS (IE, LEADER IN MARKET SHARE WITH HIGH GROWTH POTENTIAL) 11] ABILITY TO PROVIDE GOOD QUALITY GOODS TO MIDDLE CLASS AT REASONABLE RATES & ALSO CATER TO THE PREMUIM SEGMENT FOR THE UPPER CLASS. 12] VERY HIGH MARKET PRICE PER SHARE COMPARED TO THE FACE VALUE. 13]GOOD RETURNS BY WAY OF DIVIDEND PER SHARE EVERY YEAR.LAST YEAR 5/- RS DIVIDEND PER SHARE. 14]STEADY INCREASE IN THE RETURN ON CAPITAL EMPLOYED. 15] CONTINOUS INCREASE IN EARNING PER SHARE (EPS) 16]GOOD CASH RESERVES. 17]EXCELLENT PAST PERFORMANCES FOR A NUMBER OF YEARS. 18]ABILITY TO MANAGE DIVERSE BUSINESS 19]HAVING UNILEVER AS PARENT COMPANY GIVES IT A GLOBAL PRESENCE. 20]EXCELLENT RESEARCH & DEVELOPMENT. 21]USE OF RS-NET A WEB ENABLED CUSTOMER MANAGEMENT SYSTEM TO ESTABLISH TWO WAY CONNECTIVITY WITH STOCKIST. 22] USING INFORMATION TECHNOLOGY TO CONNECT SUPPLY CHAIN 23] EXCELLENT FINACIAL SUPPORT FROM BANKS & FINANCIAL INSTITITUIONS. 24]GOOD FINACIAL LIQUIDITY & ALSO ABILITY TO COMPLETE PROJECTS ON TIME. 25] GOOD EXPORT EARNINGS

WEAKNESS

1]DIVERSIFICATION INTO VARIOUS LINES IN WHICH IT DOES NOT HAVE MUCH KNOWLEDGE WOULD BE VERY RISKY PROPOSITION. 2] HIGH COMPETITION FROM ESTABLISHED BRANDS WHICH HAS RESULTED IN REDUCTION IN PROFIT MARGINS. 3] NON FMCG PRODUCTS ARE LOSING GROUND & THEIR MARKET SHARE & SALES HAVE BEEN DECLINING. 4]WORKING CAPITAL TURNOVER IS NEGATIVE. 5]UNALE TO MAKE A BIG IMPACT IN RURAL AREAS. 6] COMPETITION FROM ITS OWN BRANDS ( LUX, LIRIL, LIFEBUOY )

OPPORTUNITIES

1]BIG UNTAPPED MARKET AVAILABLE., ESPECIALLY THE RURAL AREAS. 2]GROWTH POTENTIAL IS HIGH FOR THE POWER BRANDS. 3]GOOD SOURCE OF REVENUE & FOREIGN EXCHANGE AVAILABLE BY WAY OF EXPORTS OF ITS PRODUCTS. 4]ITS COMPETITORS DONT HAVE THE FIANACIAL BANKING LIKE IT SO IT CAN TAKE ADVANTAGE OF THIS. 5]DUE TO GOOD REPUTATION IT MAY EXPERIMENT & INTRODUCE NEW INNOVATIVE PRODUCTS IN THE MARKET. 6] THE FOOD,CULINARY & ICECREAM CATEGORY HAVE A LOT OF GROWTH POTENTIAL AVAILABLE

THREATS

1] HIGH COMPETITION FROM ESTABLISHED BRANDS.(NIRMA,COLGATE, P&G) 2] COMPETITION FROM UNBRANDED PRODUCTS. 3] COMPETITION FROM ITS OWN BRANDS.( LUX,BREEZE,LIRIL) (PEPSODENT & CLOSE UP) 4]POOR MONSOON LEADS TO POOR GROWTH DUE TO LACK OF PURCHASING POWER BY THE RURAL AREAS. 5] NEGATIVE WORKING CAPITAL TURNOVER MAY LEAD TO SHORT TERM INSTABILITY. 6] ITS FOOD,CULINARY, ICECREAM SEGMENT & BEVERAGE SEGMENT ARE FACING REDUCTION IN SALES & HENCE INNOVATION REQUIRED TO MEET THREATS OF COMPETITIORS.