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V3 analysis tea & sustainability at unilever 3 21.04.2015

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Unilever, one of the world’s largest and leading companies, acquired Lipton International in 1971 and
became a global leader in tea industry. Tea market is consistently growing and is dominated by Lipton
tea, Twinings Tea, in addition to Tetley Tea. Unilever's global brand development director of Lipton Tea
Michiel Leijnse faces a very important meeting with Unilever CEO in a few short hours. He has to make a
decision concerning sourcing Lipton Tea 100% sustainably, recommend strategies on how Lipton can
become credible with consumers, obtain sustainable certification, integrate sustainable practices into
Lepton's entire supply chain, and tell customers about it. The decision has to take into consideration the
financial implications in addition to indicating a reasonable return on investment. There are so many
issues relevant to resourcing Tea sustainably so we confined the problem statement to the three most
troublesome issues, namely: to become credible with consumers, obtaining sustainable certificate from a
credible partner and implementing farming sustainable practices. To fully understand Unilever's
situation, we ran a thorough analysis to assess Unilever situation in term of Industry Dominant Economic
Characteristic, the five competitive forces, the major Driving force of change, VRIN test for Resources
and Capabilities, SWOT analysis and Key Success factors for tea industry. Despite the many challenges
facing this initiative that would affect the outcome of the sustainable tea resourcing, all mentioned
analysis showed that this initiative is beneficial for Unilever. We highly recommend Unilever to adopt
and lead the transformation of the new Lipton brand, and to execute this option employing the highest
standards and best practices. Suggestion were made regarding choosing a certification partner who
possesses a significant overlap with Unilever’s strategic approaches, the usage of on- field training
programs to empower farmers with the required skills and the use of innovative marketing to
communicate credibility and the advantages of sustainable tea resourcing to consumers.

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V3 analysis tea & sustainability at unilever 3 21.04.2015

  1. 1. Tea Production by Sustainable Practice at Unilever APRIL 11TH , 2015Amani Siam, Hazem Tirhi, Mahmoud Abu Farha, Mohammad Abu Libdeh
  2. 2. Sustainable agricultural practice • Planting cover crops • Soil enrichment (using Plant & Animal residuals) • Utilizing natural pests’ predators • Bio-intensive best management
  3. 3. Established 1929 1971 1980s 1990 Since 2000s Acquired Lipton Int’l World’s 26th largest company Restructered into 4 core Businesses (home care, personal care, foods, & specialty chemicals) Adopted the strategy of expansion through acquisitions leader in sustainability, integrated into its business strategy and culture 2003 2004 Established Unilever Health Institute, founded Nutrition and Health Academy Analysis: Unilever history
  4. 4. Analysis: Unilever Mission & Logo represents its diversity Mission: “to meet every day needs for nutrition, hygiene and personal care with brands that help people look good, feel good and get more out of life.”
  5. 5. Analysis: Tea Industry, Three Major Players
  6. 6. Why Sustainability in Tea Industry? Social Life of workers (poorly managed plants, dangerous conditions, etc) Environmental impact of tea production (Habitat biodiversity destruction, huge release of Carbon, etc)
  7. 7. Problem Statement Unilever mission statement Unilev er's cultur e producing 100% of its tea through sustainable resources Drive Unilever Brands to take a stronger stance on social and environmental issues Many problems face this Unilever's initiative
  8. 8. Problem Statement: Traditionally produced Tea Sustainably produced Tea Strategic Decision Scale of changes future of the brand financial implications direction of Unilever’s multinational business strategy Competitive Forces Michiel Leijnse (Unilever's global brand development director of Lipton Tea) faces a very important meeting with Unilever CEO. He has to recommend strategies on how Lipton can become: •Credibility with consumers. • Integrating sustainable practices into Lipton's entire supply chain •Obtain sustainability certification •Communications with Customers
  9. 9. 1 Options for Solving Problems Drive Unilever Brands to take a stronger stance on social and environmental issues Obtaining sustainable certification for Lipton Tea Integrating and crafting sustainable practices into the entire supply chain Telling customers about it 4 To become credible with consumers Marketing experienc eheritage Message of healthy Product/ benefit to farmers or Both Rainforest Alliance FLO UTZ Certification On-land Training HQ training (dramatic / incremental) Resolution Options
  10. 10. Situation Analysis:5 Competitive Forces Industry Five Competitive forces Bargaining power of buyer (High) Competitive force of substitute (depends) Supplier bargain power (Low) Competitive force of new entrant (Low) Competitive Force of rivalry among sellers (High)
  11. 11. Major Driving force of change Changing societal concerns, attitude and lifestyles that demand a more transparently sourced and credible product. Bargaining power of buyer (High) Competitiv e force of substitute (N/A) Competitiv e Force of rivalry among sellers (High) Competitiv e force of new entrant (Low) Supplier bargain power (Low) Industry Five Competitive forces The five competitive forces, Major Driving forces Attractive opportunity to increase their market share
  12. 12. Situation Analysis: VRIN •The expected high quality input through successful innovation of sustainable resources farming techniquesValuable •knowledge based core competence residing in brand management capabilities, vertical integration and a powerful certification agency executing the strategy Rare •combination as a whole cannot be easily copied, beaten, matched or imitated because of the superiority of the know-how Inimitable •Unilever sustainable culture and not easily substituted Non- substitutable
  13. 13. Strength - Long term history of success - Intellectual capital - Strong brand name & Co. reputation. - Vertical integration. Weakness: - Insufficient information about Customers & Rivals responses - High cost & huge financial implications. Threats - Growing bargaining power of suppliers. - Weak or no respond to new product. - Higher prices are a barrier to sustainable consumption - Weak or no response of tea farm owners Opportunities - Expanding to meet a broader range of customer needs - Already existence of a substantial market for Unilever - Market size is big with only three major players. Situation Analysis: SWOT
  14. 14. Key Success factors for tea industry KSF Access to skilled labor Expertise in tea industry Scale of economy known, respected brand Quality control, know how Experienc e curve effect Overall low costs Vertically integrated National, global distribution capabilities 3 5
  15. 15. Recommendations: •To adopt and lead the transformation of the Lipton brand •To execute this initiative strategy at the highest standards and best practices •To take full advantage of learning curve method to be as cost- efficient as possible •To try to reach economy of scale by work at full capacity to achieve the cost- efficiency
  16. 16. Implementation & Control •Announcing the existence of sustainable tea long before it is in the market. •Story telling of the idea behind sustainably resourcing tea •Choosing the right medium to disseminate the story •Choosing a celebrity as brand ambassador •Holding brand name awareness campaigns •Special promotions & allowances for retailers To become credible with consumers:
  17. 17. Implementation & Control •Choosing a certification agency that complies to the newest standards of sustainable farming •Choosing certification agency that is respected & accredited by consumers •The chosen agency should have the resources to handle certifying a brand as large as Lipton in a timely manner •Its seal of certification brand should not overshadow or overpower Lipton’s brand Obtaining sustainable certification for Lipton:
  18. 18. Implementation & Control •Start implementation and certifying farms estates in Kenya •Design a program for on-land farmer field training process •Empower and build labor skills by utilizing learning and experience •Empower some locally-elected farmers who succeed in the individual training sessions to lead smallholder training through actionable activities Integrating sustainable practices into the supply chain:
  19. 19. Sustainability in the Tea Industry

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