51 unilever’s path to growth strategy

22,861 views

Published on

Amit kumar sharma

Published in: Business
1 Comment
5 Likes
Statistics
Notes
No Downloads
Views
Total views
22,861
On SlideShare
0
From Embeds
0
Number of Embeds
13
Actions
Shares
0
Downloads
743
Comments
1
Likes
5
Embeds 0
No embeds

No notes for slide
  • threat of P&G merger as a threat..tougher business climate
  • Snapshot of acquisitions Each had strong brand portfolios (visible) Helped fuel growth
  • Deleted 2001 chart; just speak to sales increase in beauty category (18% to 33%)
  • which falls short of target ( 5-6%)
  • Recently lost CEO No longer doing Path to Growth strategy Dual leadership; focus on “One Unilever” Not bringing value to the customers; not connecting Lowering price on brands; not positioning themselves well
  • Reorganize management structure Benchmark P & G’s strategy (market development organization); Unilever’s management is spread thin – no focus Slow to react to changing customer needs and trends; have spent less on R & D since 2000 (Unilever Believer)
  • Operates under a complex
  • Recently lost CEO No longer doing Path to Growth strategy Dual leadership; focus on “One Unilever” Not bringing value to the customers; not connecting Lowering price on brands; not positioning themselves well
  • Recently lost CEO No longer doing Path to Growth strategy Dual leadership; focus on “One Unilever” Not bringing value to the customers; not connecting Lowering price on brands; not positioning themselves well
  • 51 unilever’s path to growth strategy

    1. 1. Unilever’s Path to Growth Strategy: Is It Working? Bianca Cole ~ Reginald Green ~ Kameela McClinton ~ Stephanie Richardson ~ Derek Webster
    2. 2. <ul><li>Company Overview </li></ul><ul><li>Environmental Analysis </li></ul><ul><li>Financial Analysis </li></ul><ul><li>Strategic Issue </li></ul><ul><li>Recommendations </li></ul><ul><li>Implementation </li></ul><ul><li>Q & A </li></ul>Agenda
    3. 3. <ul><li>Created in 1930 as result of a merger </li></ul><ul><li>Key player in the food and household products industry </li></ul><ul><li>Maintains dual headquarter/dual chairperson approach </li></ul><ul><li>Launched Path to Growth strategy (2000) to revive the company </li></ul><ul><li>Historically grew through acquisitions </li></ul>Company Overview
    4. 4. Competitor Comparison Top Segment Top Brand CEO Stock per share Growth Revenues Revenue Growth International Business Segments Employees CG/Foods Consumer care Food Food Dove Tide Mac & Cheese Kit Kat A. Burgmans $66.03 15.58% 42,942M -11.93% 100+ A.G. Lafley 234000 $53.76 9.25% 28.2 BL 19% 42 5 110000 R. Deromedi $30.70 P. Letmathe 8.2% 66.90 11.23% $69 B $31,010 M 4.3%% -1.93% 150+ 86 5 10600 6 253000 3
    5. 5. S.W.O.T. Analysis S trengths W eaknesses <ul><li>Recognized as a global company </li></ul><ul><li>Strong brand portfolio </li></ul><ul><li>Strong relationship with retailers </li></ul><ul><li>Economies of scale </li></ul><ul><li>Dual leadership </li></ul><ul><li>Not connecting with customers </li></ul><ul><li>Inefficient management of brands </li></ul><ul><li>Reduced spending for R & D </li></ul><ul><li>Inability to maximize acquisitions </li></ul><ul><li>Decrease in revenues </li></ul>O pportunities T hreats <ul><li>Changing consumer </li></ul><ul><li>preferences </li></ul><ul><li>Increasing need for healthy </li></ul><ul><li>products </li></ul><ul><li>Strong Competition </li></ul><ul><li>Increasing store brands </li></ul><ul><li>Tougher Business Climate </li></ul><ul><li>Exchange rates </li></ul>
    6. 6. Rationale Attractive Drivers Unilever contributions <ul><li>Build strong portfolio </li></ul><ul><li>Strategically attractive </li></ul><ul><li>category </li></ul><ul><li>Strong customer reach </li></ul><ul><li>20% annual growth rate </li></ul><ul><li>Strong sales and distribution network </li></ul><ul><li>Opportunity for product </li></ul><ul><li>Would make Unilever world’s largest ice cream products maker </li></ul><ul><li>Premium prices </li></ul><ul><li>Strong brand equity </li></ul><ul><li>10 th largest U.S. based food products companies </li></ul><ul><li>History of growth in revenues and earnings </li></ul><ul><li>Strong global position </li></ul>SlimFast Bestfoods Ben & Jerry’s <ul><li>$2.3 billion cash </li></ul><ul><li>International presence </li></ul><ul><li>$326 million </li></ul><ul><li>Competencies in the industry </li></ul><ul><li>$20.3 billion euro cash; assumption of net debt </li></ul><ul><li>Operating efficiency </li></ul><ul><li>Similar portfolios and geographic coverage </li></ul>
    7. 7. Revenues Net Income Financial Analysis
    8. 8. Net Profit Margin Employees Financial Analysis (cont.)
    9. 9. Revenues: Product Segmentation
    10. 10. <ul><li>Years of slow performance </li></ul><ul><li>Lack of sound corporate strategy </li></ul><ul><li>Numerous low-volume brands </li></ul><ul><li>Small global presence compared to competition </li></ul><ul><li>Mediocre performance in emerging markets </li></ul>Why Path to Growth Strategy
    11. 11. <ul><li>5 year growth plan </li></ul><ul><li>Reduce portfolio to 400 “core” brands </li></ul><ul><li>Focus R & D and advertising on leading brands </li></ul><ul><li>Concentrate on product innovation to fuel internal growth </li></ul><ul><li>Grow through acquisitions </li></ul>Elements of Path to Growth Source: Crafting and Executing Strategy
    12. 12. <ul><li>Achieve double-digit EPS growth </li></ul><ul><li>Secure a better competitive position in global food and household </li></ul><ul><li>Build brand value to gain pricing power </li></ul><ul><li>Top-line sales growth of 5-6% annually </li></ul><ul><li>Increase operating profit margins 11% to over 16% </li></ul><ul><li>Plan to be accomplished by year end 2004 </li></ul>Objectives of Path to Growth Expectations Strategic Targets
    13. 13. <ul><li>Successfully trimmed unsuccessful brands </li></ul><ul><li>Leading brands increased sales from 75% to 93% </li></ul><ul><li>12 brands with sales of 1B+ </li></ul><ul><li>Consistent growth in Home & Personal Care </li></ul><ul><li>Improved overall quality and growth profile of Food portfolio </li></ul><ul><li>Global procurement programs have delivered 2.4B, excess of 1.6B target </li></ul><ul><li>Improved capital efficiency </li></ul><ul><li>Successful integration of Bestfoods acquisition </li></ul><ul><li>Operating assets have improved by 9%, exceeding 6% target </li></ul>Yes… Is it working?
    14. 14. <ul><li>Reported a net loss of $318M </li></ul><ul><li>In 2004, underlying sales grew by only .4%, leading brands by .9% </li></ul><ul><li>Issued 1 st ever profit warning ahead of third quarter results, 3% decline </li></ul><ul><li>Lagging behind competitors in terms of marketing and innovation </li></ul><ul><li>Failure to increase advertising and marketing efforts </li></ul><ul><li>Still lack focus and effective strategy execution </li></ul><ul><li>The company remained too local and fragmented </li></ul><ul><li>Unilever plans to discontinue the “Path to Growth” Strategy </li></ul>No …. “Unilever was getting there, but getting there too late” Is it working? So what’s next?
    15. 15. What adjustments, both internally and externally, should Unilever make to rebuild a strong and focused competitive strategy? Strategic Issue
    16. 16. <ul><li>1. Reorganize and streamline Unilever’s organizational structure. </li></ul><ul><li>2. Implement “Unilever Believer” product and brand extensions. </li></ul>Recommendations
    17. 17. Recommendation 1
    18. 18. Recommendation 1 Strategy Justification <ul><li>Unilever maintained two business entities, dual chairperson approach </li></ul><ul><li>Unilever Group owns Unilever Plc and Unilever NV </li></ul><ul><li>List stock separately and share board of directors </li></ul><ul><li>Management typically wear two/three hats </li></ul><ul><li>Board and business responsibilities conflicted </li></ul><ul><li>Company remained two local and fragmented </li></ul><ul><li>Recognize the need to streamline </li></ul><ul><li>leadership and management structure </li></ul>Reduced effectiveness and slowed the decision making process.
    19. 19. Unilever Plc Unilever NV One Unilever
    20. 20. One Unilever An initiative to create an overall umbrella brand across all Unilever’s brands that will eventually consolidate various businesses under one name
    21. 21. <ul><li>Margarines, spreads, oils </li></ul><ul><li>Frozen Foods </li></ul><ul><li>Icecreams </li></ul><ul><li>Tea-based beverages </li></ul><ul><li>Culinary </li></ul><ul><li>Health and Wellness </li></ul><ul><li>Fragrances </li></ul><ul><li>Deodorants/toiletry </li></ul><ul><li>Oral Care </li></ul><ul><li>Soaps, lotions, skin care </li></ul><ul><li>Laundry </li></ul><ul><li>Househould care </li></ul><ul><li>Cleaning Products </li></ul><ul><li>Ireland </li></ul><ul><li>Korea </li></ul><ul><li>Neverlands </li></ul><ul><li>Italia </li></ul><ul><li>US </li></ul><ul><li>Global Enabling Team </li></ul><ul><li>Regional Leadership </li></ul><ul><li>Team </li></ul><ul><li>Global Process Owners </li></ul><ul><li>Customer Business </li></ul><ul><li>Development </li></ul><ul><li>Finance </li></ul><ul><li>Human Resources </li></ul><ul><li>IT </li></ul><ul><li>Market Research </li></ul><ul><li>Government Relations </li></ul><ul><li>Product Supply </li></ul><ul><li>Public Affairs </li></ul>One Unilever Cross Functional Management Team Global Business Units Global Business Services Corporate Functions Market Development Organization
    22. 22. <ul><li>Margarines, spreads, oils </li></ul><ul><li>Frozen Foods </li></ul><ul><li>Icecreams </li></ul><ul><li>Tea-based beverages </li></ul><ul><li>Culinary </li></ul><ul><li>Health and Wellness </li></ul><ul><li>Fragrances </li></ul><ul><li>Deodorants/toiletry </li></ul><ul><li>Oral Care </li></ul><ul><li>Soaps, lotions, skin care </li></ul><ul><li>Laundry </li></ul><ul><li>Househould care </li></ul><ul><li>Cleaning Products </li></ul><ul><li>Ireland </li></ul><ul><li>Korea </li></ul><ul><li>Neverlands </li></ul><ul><li>Italia </li></ul><ul><li>US </li></ul><ul><li>Global Enabling Team </li></ul><ul><li>Regional Leadership </li></ul><ul><li>Team </li></ul><ul><li>Global Process Owners </li></ul><ul><li>Customer Business </li></ul><ul><li>Development </li></ul><ul><li>Finance </li></ul><ul><li>Human Resources </li></ul><ul><li>IT </li></ul><ul><li>Market Research </li></ul><ul><li>Government Relations </li></ul><ul><li>Product Supply </li></ul><ul><li>Public Affairs </li></ul>One Unilever KEY TO SUCCESS A simpler management structure will increase accountability and speed the decision making process. Cross Functional Management Team Global Business Units Global Business Services Corporate Functions Market Development Organization
    23. 23. <ul><li>Provides a greater clarity of leadership, responsibility, and accountability </li></ul><ul><li>Allows Unilever to focus on the needs of their customers and consumers thus reigniting growth and increasing sales potential </li></ul><ul><li>Provides the ability to leverage scale of operations </li></ul><ul><li>Create a strategic platform for brand management </li></ul>Recommendation 1 Deliverables
    24. 24. Recommendation 2
    25. 25. Unilever Believer <ul><li>Program that focuses on brand initiatives to the consumer </li></ul><ul><li>Lets the consumer know more about the product and its uses </li></ul><ul><li>Objective : Bring top of the mind awareness </li></ul><ul><li>Strategy : Use advertising that connects with consumer needs </li></ul>Believe in Unilever
    26. 26. Recommendation 2 Strategy Justification <ul><li>Consumers demand high quality products that both are convenient and delicious </li></ul><ul><li>Consumers look for new ways to use products </li></ul><ul><li>More females are working full time jobs </li></ul><ul><li>Large population of single-parent households </li></ul><ul><li>Increase consumer focus on health and nutrition </li></ul>
    27. 27. Products of Focus
    28. 28. Lipton Extension <ul><li>Energy drinks jumped 56% in sales last year </li></ul><ul><li>Market has exceed $100 million </li></ul><ul><li>Main Competitor: Red Bull </li></ul><ul><li>Positioning Statement: A Healthier Alternative to </li></ul><ul><li>Energy Drinks </li></ul>Focus on Energy Drinks
    29. 29. Lipton Extension <ul><li>Product: Lipton Lift </li></ul><ul><li>Target Market: Young adults 18-32 </li></ul><ul><li>Uses: stay up all night and/or start a night out </li></ul><ul><li>Main Ingredients: Caffeine, Vitamin B, Guarana </li></ul><ul><li>Advertisements: Highlight healthier ingredients of the </li></ul><ul><li>product while showcasing its ability to give energy and </li></ul><ul><li>revitalize body </li></ul>
    30. 30. <ul><li>Featured advertisements on how consumers use Ragu </li></ul><ul><li>EXAMPLE of new product usage </li></ul><ul><li>A mom showing how she uses Ragu as a base for her chili </li></ul><ul><ul><li>Call to Action: How Do U Ragu contest & website with new uses </li></ul></ul><ul><ul><li>The created new uses will get our consumer involved in being a Unilever Believer </li></ul></ul>How Do You RAGU? Marketing & Advertising
    31. 31. <ul><li>Focus on Consumers on the Go </li></ul><ul><li>Ragu Lunch Pack </li></ul><ul><li>-Ragu sauce </li></ul><ul><li>-Cooked spaghetti </li></ul><ul><li>-Garlic Bread </li></ul>How Do You RAGU? Product Line Extension How do I Ragu… On the Go
    32. 32. <ul><li>Delivers innovative products that capitalizes on changing consumer preferences </li></ul><ul><li>Allows Unilever to focus on the needs of their customers and consumers thus reigniting growth and increasing sales potential </li></ul><ul><li>Provides a strong competitive platform against major competitors and private label brands </li></ul>Recommendation 2 Deliverables
    33. 33. Q & A

    ×