Unilever Lipton plant in Dubai
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Unilever Lipton plant in Dubai

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An initial survey of the Lipton plant in Dubai

An initial survey of the Lipton plant in Dubai

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  • 1. Making of Strategy INSEAD, April 2009 “Painting Dubai yellow” The Unilever Lipton plant in Dubai Kyoko OGURA Julian PETRESCU Zhanfu YU Alan ZELLER
  • 2. Agenda • Unilever and Lipton introduction • 1998: The Decision of the Dubai Plant (Our guess) • 2004: The Dubai plant expansion (Our guess) • Factory level product innovation (From interview) • New Decision making process (From interview) • Interesting findings
  • 3. Unilever & Lipton •Lipton and Unilever Unilever: global giant established in 1930 400+ brands! F&B, Home & Personal care 13 billion $ brands Lipton: 1890’s in Glasgow Together since 1929, complete acquisition in 1972 •Tea producers worldwide •Unilever (Lipton) •Tata Tea (Tetley) •Twining •Dilmah
  • 4. Unilever & Lipton… in Dubai Until 1998 production for Arabia sourced from the UK  New location in Jebel Ali between tea growing areas and large  tea markets Site originally envisaged to supply to local markets only  1998-2004: Steady growth, focus on systems, quality, high  efficiencies Global footprint
  • 5. 1998:The Decision of Dubai plant (Guess) •Low share of revenue/profit contribution from AMET due to Trigger consistently low investment • “Oil wealth” posed as an attractive development tide to ride •Executive Committee of the Board raised the initiative to emphasis more on AMET market Framing •Business Group Presidents were called up. Jeff Fraser (head of Central Asia & Middle East) took lead • Jeff led internal team to investigate alternatives; actively talk Alternatives with other Business Group Presidents •Jeff led the internal communication with Director of food Selection category, Financial Director and Strategy Director •Final approval by the Executive Committee To be confirmed during the new round of interview
  • 6. 2004: Plant Expansion Decision – Our Guess •Deteriorating Performance Trigger •One Unilever •Innovation, Rationalization and Concentration •UEx (Executive Team) meeting •Short listing target brand & market Framing •Lipton Alternatives •Omo •Do Nothing •Competitive Landscape Selection •Emotional Attachment According to the plan manager, the extension was pre-planned. To be confirmed during the new round of interview
  • 7. Product Innovation Trigger •Competitor introduces foil tea bag •Altug: “Our (better) product is not as well Framing packaged, so…” •Do nothing Alternatives •Ask for permission •Invent •Respond to defend Lipton’s true quality in the Selection marketplace: create a similar product in 8 weeks!
  • 8. Decision Making •New CEO Trigger •Low competitiveness •Slow decision => no innovation, late adaptation •1600 brands: Most decisions traditionally made by Framing the Marketing Department at local level •Too many brains •Continue customized and local brands Alternatives •Focus on innovation •Decision making at head office level •Create powerful regional clusters Selection •Focus on USD 1bn global brands
  • 9. Interesting findings Based on our online research and interview with the factory Manager. Marketing Strategy Central, reg Vs Vs ional, or Production Production local authority • Traditionally, Marketing is the key decision- maker in FMCG companies •Plant management •Surprised to notice •In this case, the is not involved at all that most decisions in the strategy are made at an factory has significant process and has a intermediary level autonomy to adapt production focus (Singapore) higher decisions to local conditions