GROUP 8 : UNILEVER

ABOUT UNILEVER
Unilever is a British-Dutch multinational corporation Founded on 1 January 1930 by Antonius Johannes Jurgens, Samuel van den Bergh and William Hulme Lever, 2nd Viscount Leverhulme Product Offerings: Personal Care, detergent, food etc Annual Revenue: In excess of $ 50 billion Sells more than 1000 products in virtually every country Detergents account for 25% of the revenue Omo is one such detergent which is sold in over 50 countries Personal Care Products account for 15% sales It includes Calvin Klein Cosmetics, Pepsodent Toothpastes, Vaseline skin care lotion Food products account for 60% sales It includes tea, ice cream, frozen foods & bakery products. In this Unilevers market share in most of the countries exceeds 70% WHAT IS GIVEN IN THE CASE STUDY Organization structure mid 80s Its features, advantages & disadvantages Transformation in mid 90s Its features, advantages & disadvantages

What was the old decentralized structure of Unilever before 1990s

Unilever was organized on a decentralized basis. In Europe the company had 17 subsidiaries in the early 1990s,each focused on a different national market. Subsidiary companies in each major national market were responsible for the production, marketing, sales, and distribution of products in that market. Each was a profit center and each was held accountable for its own performance. The structure allowed local managers to match product offerings

marketing strategy to local tastes and preferences

to alter sales and distribution strategies to fit the prevailing retail systems. To drive the localization, Unilever recruited local managers to run local organizations To build a common organizational culture among its managers.

WHY THERE WAS A NEED FOR A NEW ORGANIZATIONAL STRUCTURE ?

Early 1990s the competitive environment was changing

Trade barriers between countries were falling

Creation of a single market in 1992 in European Union This made it possible to manufacture certain items such as detergents and margarine at favorable central Locations in order to realize the benefits associated with location and experience curve economies Unilever introduced a new organizational architecture based on regional business groups, each of which contained product divisions Also, new products in areas such as frozen foods and margarine were gaining regional or even global acceptance Unfortunately for Unilever, some of its global competitors moved more rapidly to exploit this change in the competitive environment To reestablish a fit between strategy, architecture, and environment, Unilever had to embrace the difficult process of strategic and organizational change

What are the features & advantages of Centralization

Centralization can facilitate coordination

It can help ensure that decisions are consistent with organizational objectives
Concentration of power and authority bring major organizational changes

It can avoid the duplication of activities by various subunits

The number of European plants manufacturing soap has been cut from 10 to 2 Some new products will be manufactured at only one site Product sizing and packaging are being harmonized to cut purchasing costs and to pave the way for unified pan-European advertising. By taking these steps, Unilever estimated it may save as much as $400 million a year in its European operations

What was the reason for, the need of frequent restructuring at unilever ??
STRATEGY Strategically independent units at various locations PERIOD 1930 to 1979 FEATURES Matrix Organizational structure ADVANTAGES Localization DISADVANTAGES High cost structure, duplication of manufacturing facilities at various locations

Focused Growth

1980 to 1995

Concentration on 4 industries, 100 acquisitions, 38 companies acquired in 1995

Concentration on both Developed & Emerging markets

Too many acquisitions, Accountability & Responsibility, Difficulty in decision making, Complexity
No fit between structure & strategies, Dip in market share prices, Too many brands resulted in Lost Focus , Big dip in market share,

Breakthrough Restructuring strategy

1996 to 1999

Variable Pay, 3 member committee was dissolved, 7 member committee was appointed, 1st Non Dutch & British Chairman appointed

Focus on core competencies, Operations were grouped by product, Combination of Global Push & Local Pull

STRATEGY
Path to Grow Strategy Consolidation

PERIOD
1999 to 2004

FEATURES
Brand portfolio of 1600 became 400 for better focus. 150 units closed down for cost control, 55000 employees laying off

ADVANTAGES
Focus on core competencies. 400 brands contributed 93%. Sales increased by 30%,, Focus on brands & decision making, Profit increased by 4-5%

DISADVANTAGES
LOSS Sales dropped by 15%, Profits fell by 13%, Top Line Growth reduced to 3%, Share prices fell by 7%, Earnings per share affected, Due to loss liquidity affected, High cost & advertising budget for maintaining non performing 1200 brands.

Growth to vitality strategy

2005 to 2010

High concentration on Emerging markets. Company simplified its management structure, 20000 job cuts in Europe. Target 3to 5% organic growth

41% revenues were generated in developing countries. Focus on advertising and promotion

HOW CONSTANT ACQUISITIONS MERGERS HELPED UNILEVER ? OR TOO MANYACQUISITIONS ???

Filling the product gap in business

Increased distribution network

Brand Extension & diverse product range Brings increase in sales & profits No interdependence on any product or entity
BIG ACQUISITIONS OF UNILEVER: Best foods, Chesebrough-Pond's (Vaseline), Naarden International, Brooke Bond, Calvin Klein, Empire of Carolina Inc., Chicago-based Helene Curtis Industries,

WHAT IS HUL Current Structure ?

The day to day operations are supervised by the National Management comprising the Vice Chairman, Managing Director (HPC), Managing Director (Foods) and the Finance Director.
LATIN AMERICA UNITED STATES

MULTINATIONAL HEADQUARTERS

Each division is self-sufficient with dedicated resources and assets in sales, marketing, commercial, and manufacturing. For managing sales operations, HUL has divided the country into four regions, Delhi, Kolkata, Chennai and Mumbai. Headed by a Regional Manager. In Marketing, each category has a Marketing Manager who heads a team of Brand Managers dedicated to each or a group of brands.

AUSTRALIA

EUROPE

AFRICA

 Each Division has a nationwide manufacturing base, with each factory peopled by teams of Production, Engineering, Quality Assurance, Commercial and Personnel Managers. HUL's Central Functions are Finance, Human Resources, Technology and Research Unilever grouped its worldwide operations into 2 global divisionsFoods and Home and Personal Care. It uses the worldwide geographic area structure. For the foods division regional presidents are responsible for operations in the region i.e. Asia, Europe, Turkey, North America, Africa , Middle east and Latin America. Unilever strengths lies in Best foods because of which they are able to tailor the products according to different markets as well as to anticipate consumer demands and trends.

HOW HUL OPERATES IN INDIA?

75 year history in India

Sunlight soap first imported in 1888 Lever Brothers incorporated in 1933 Hindustan Lever Ltd formed through merger in 1956 Unilever equity diluted in 1977 and 1980 to 51% 1993 : TOMCO merged with HLL 1996 : Brooke Bond Lipton & HLL merge 1998 : Ponds merges with HLL 1999 : Modern Foods acquired 2006 : Move to one Unilever structure 2007 : Name change to Hindustan Unilever Ltd

 HUL's BRANDS- like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna, Kwality Wall's are household names across the country .They are manufactured over 40 factories across India. The operations involve over 2,000 suppliers and associates. HUL's distribution network, comprising about 4,000 redistribution stockists, covering 6.3 million retail outlets reaching the entire urban population, and about 250 million rural consumers

Shakti Programme.
In 2001, the company embarked on an ambitious programme, Shakti. Through Shakti, HUL is creating micro-enterprise opportunities for rural women. Improving their livelihood and the standard of living in rural communities.

Shakti also includes health and hygiene education through the Shakti Vani Programme Shakti has 100,000 Shakti entrepreneurs covering 500,000 villages, touching the lives of over 600 million people.

CHALLENGES OF UNILEVER & OUR LEARNING

INITIATIVES & CHALLENGES IN 21 CENTURY

OUR KEY LEARNINGS

IMPORTANCE OF ORGANISATION STRUCTURE IN GLOBAL COMPETITIVE MARKET IMPORTANCE ON ACQUISITION AS STRATEGY ADAPTABILITY OF UNILEVER IN GLOBAL MARKET DYNAMICS OF CHANGING INTERNATIONAL MARKET IMPORTANCE OF EMPLOYEE TRAINING `

DIVESTMENT/REDUCE NUMBER OF TARGETS

COST CUTTING & IMPROVING MARGINS

STREAMLINE THE MANAGEMENT & LEADERSHIP TO FIGHT RISK & COMPETITION

CONCENTRATION OF 400 BRANDS

ACQUISITIONS
CONCENTRATION ON ASIAN GIANTS

Thank You