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Unilever

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in this project i've done total analysis of unilever History to till today.how they get in problem, and how solve it.

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Unilever

  1. 1. UNILEVERA TROUBLED GIANT<br />
  2. 2. SOURCE : UNILEVER.COM, 2009<br />
  3. 3. MANAGEMENT<br />SOURCE : UNILEVER.COM, 2009<br />
  4. 4. SOURCE : UNILEVER.COM, 2009<br />
  5. 5. SOURCE : UNILEVER.COM<br />
  6. 6. SOURCE : UNILEVER.COM<br />
  7. 7. BACKGROUND NOTE<br />
  8. 8. UNIE<br /><ul><li> In 1872, two Dutchmen, Jurgens and Van Der Bergh </li></ul> had ventured into the margarine business<br /><ul><li> In 1927, they decided to merge to form two </li></ul> companies, Margarine Unie NV, based in the <br /> Netherlands and Margarine Union Ltd, based in the UK<br />STRATEGY : GROWTH<br />TOOL : MERGER<br />
  9. 9. LEVER<br /><ul><li> William Hesketh Lever founded ‘Lever Brothers’ in 1885
  10. 10. By 1887, introduced ‘SUNLIGHT’, the world’s 1st packaged laundry </li></ul> soap<br /><ul><li> Lever & Co. was making 450 tons of Sunlight soap a week
  11. 11. He expanded his business from UK to Australia, North America </li></ul> and other parts of Europe<br /><ul><li> In 1890, Lever & Co became a limited company –LEVER </li></ul> BROTHERS LTD, by 1894, they went PUBLIC<br /><ul><li> Diversified into other businesses, acquired Pears soap and Wall’s
  12. 12. Launched its innovative product , VIM</li></ul>STRATEGY : GROWTH<br />TOOL : ACQUISITION<br />
  13. 13. UNIE<br />LEVER<br />Unilever GROUP<br />
  14. 14.
  15. 15. UNILEVER PLC<br />UNILEVER N.V.<br />B.O.D.<br />B.O.D.<br />
  16. 16. PROBLEMS WITH THE STRUCTURE<br /><ul><li> Unable to sustain the great depression
  17. 17. Incapable of striking a balance between British and Dutch </li></ul> interests<br /><ul><li> Lack of co-ordination between the board of directors of the </li></ul> two holding companies<br /><ul><li> Two Masters - Confused Followers (Coalition Governance)</li></li></ul><li>1930 to 1979<br /><ul><li> In 1937 , acquired Thomas J. Lipton
  18. 18. In 1944, acquired Pepsodent
  19. 19. In 1957, acquired Bird’s Eye
  20. 20. In 1961, acquired Good Humor
  21. 21. In 1978, acquired National Starch and Chemical </li></ul> Corporation<br />STRATEGY : rigorous GROWTH<br />TOOLS : integration ( fwd & back)<br /> acquisition<br /> Diversification ( related & unrelated)<br />
  22. 22. ORGANIZATIONAL STRUCTURE<br />(1930 to 1979)<br /><ul><li> Concept of strategically independent units- local initiative and </li></ul> decentralized control<br /><ul><li> A special, 3-member committee was formed in September 1930, </li></ul> above the two boards of directors of the company<br /><ul><li> Matrix organizational structure was opted</li></li></ul><li>SPECIAL COMMITTEE (3)<br />UNILEVER PLC<br />UNILEVER N.V.<br />B.O.D.<br />B.O.D.<br />
  23. 23. PROBLEM WITH THE STRUCTURE<br />Concept of strategically independent units led to high cost structure from duplication of manufacturing facilities at various locations <br />
  24. 24. 1980 to 1995“the sleeping giant”<br /><ul><li> Rationalized manufacturing approach
  25. 25. Product divisions established to co-ordinate regional operations
  26. 26. Focus on the following four industries, as a part of core strategy </li></ul> – Foods, Personal Care, Home Care and Specialty Chemicals, <br /> divesting from all other businesses<br /><ul><li> Between 1992-1996 , Unilever made around 100 acquisitions, </li></ul> during 1995 alone the company acquired 38 companies<br /><ul><li> The company decided to target D&E markets</li></ul>STRATEGY : FOCUSED GROWTH<br />TOOLS : DIVESTMENT<br /> ACQUISITION<br />
  27. 27. List of acquisitions<br /><ul><li> 1984 - BROOKE BOND
  28. 28. 1986 - NAARDEN </li></ul> INTERNATIONAL<br /><ul><li> 1987 - CHESEBROUGH-</li></ul> POND’S<br /><ul><li> 1989 - FABERGE
  29. 29. 1989 - ELIZABETH ARDEN
  30. 30. 1989 - CALVIN KLEIN’S </li></ul> FRAGRANCE BUSINESS<br /><ul><li> 1990 - NORDSEE FAST-FOOD
  31. 31. 1993 - EMPIRE OF </li></ul> CAROLINA INC.<br /><ul><li> 1993 - PHILIP MORRIS </li></ul> KRAFT GENERAL <br /> FOODS UNIT<br />List of Divestments<br /><ul><li> 1980 - SERVICE ( TRANSPORT) </li></ul> & ANCILLARY BUSINESS <br /><ul><li> 1985 - PALM LINE, SHIPPING </li></ul> COMPANY<br /><ul><li> 1990 - PLANT BREEDING & </li></ul> OTHER AGRICULTURAL <br /> PRODUCTS<br /><ul><li> 1990 - PACKAGING & </li></ul> PROFESSIONAL <br /> CLEANING PRODUCTS<br />
  32. 32. BEFORE<br />after<br />BUSINESSES<br />BUSINESSES<br />FOOD<br />HC<br />PC<br />SC<br />
  33. 33. PROBLEMS WITH THE STRUCTURE<br /><ul><li> The unending acquisitions made the operations cumbersome and </li></ul> the company became inflexible to adapt to the market dynamism<br /><ul><li> Performance drift
  34. 34. Organizational fatigue
  35. 35. Excess of bureaucracy
  36. 36. Confusion – of accountability and responsibility
  37. 37. Conflicting priorities in the special committee
  38. 38. Decision making became constipated
  39. 39. Structural detritus , accumulated over decades
  40. 40. Absolute chaotic condition
  41. 41. Extra levels of complexity were imposed on an already convoluted </li></ul> structure<br />
  42. 42. 1996 TO 1999breakthrough restructuring<br /><ul><li> 3- Member special committee which existed since the birth of </li></ul> Unilever got dissolved , to give way to a 7- Member Executive <br /> committee<br /><ul><li> The company appointed its 1st Chairman (Niall FitzGerald, an </li></ul> Irishman) not carrying a British or a Dutch passport<br /><ul><li> Two layers of the organizational structure consisting of the world-</li></ul> wide business coordinators and the network of Regional <br /> Directors were swept away to form a single team of 14 business <br /> Presidents<br /><ul><li> Company’s operations were grouped by product , instead of </li></ul> geographical regions<br /><ul><li> From Centrally – Driven expansion to branched expansion</li></li></ul><li>…<br /><ul><li>Unilever wanted to grow as much by local </li></ul> pull as by global push<br /><ul><li> Focus on Company’s Core Competences
  43. 43. Introduction to the new management </li></ul> incentive system (Variable Pay)<br />STRATEGY : SUSTAINABILITY<br />TOOL : restructuring<br />
  44. 44. ACQUISITIONS<br /><ul><li>1996- HELENE CURTIS INDUSTRIES, INC., PERSONAL CARE </li></ul> PRODUCTS<br /><ul><li> 1996- NORTHBRROOK DIVERSEY CORP., CHEMICAL CLEANSER & </li></ul> SANITIZER<br /><ul><li> 1999- KIBON S.A. INDUSTRIES ALIMENTICA, ICE-CREAM </li></ul> COMPANY<br />DIVESTMENTS<br /><ul><li>1996- CATERPILLAR INC., HEAVY EQUIPMNET, U.K. </li></ul> FRANCHISEE<br /><ul><li> 1997- NATIONAL STARCH & CHEMICAL CORPORATION
  45. 45. 1998- PLANT BREEDING INTERNATIONAL CAMBRIDGE LTD.</li></li></ul><li>EXECUTIVE COMMITTEE (7)<br />UNILEVER PLC<br />UNILEVER N.V.<br />BP’s<br />BP’s<br />
  46. 46. PROBLEMS WITH THE STRUCTURE<br /><ul><li>Unilever’s Market Capitalization of about £ 51 Billion (~ $ 82 Billion) in </li></ul> June 1999 shrank to £ 20 Billion by January 2000 (Stock prices <br /> Plunged)<br /><ul><li> Company’s Existing brand structure had lost its Focus (Too many </li></ul> Brands)<br /><ul><li> Unilever was criticized for spending large amounts of funds due to </li></ul> frequent restructuring over the years<br /><ul><li> Unilever’s market share was taking a big time hit (Dip)
  47. 47. There was no Fit between the company’s organizational structure and </li></ul> its strategies (Persil Power shook the giant to its foundations)<br /><ul><li>It was believed that, every big organization that is running into trouble </li></ul> needs a crisis to convince it of the necessity for fundamental change, <br /> and that for Unilever this situation had already arrived long ago<br />
  48. 48. 2000 TO 2004PATH TO GROWTH STRATEGY<br /><ul><li> In February 2000, the company announced a € 5 Billion Five – </li></ul> Year Growth Strategy<br /><ul><li> Unilever was “Shrinking to Grow”
  49. 49. Laying off over 25, 000 employees ( ~ 10% of the employee </li></ul> base)<br /><ul><li> Unilever was split into two, separate global units : Foods and </li></ul> Home & Personal Care (HPC), headed by two executive <br /> Directors separately<br /><ul><li> Unilever reorganized its 300 operating companies into 10 </li></ul> Regional Groups<br /><ul><li> Unilever Further Decentralized its Control over its subsidiaries
  50. 50. Unilever Shut down more than 100 manufacturing units for </li></ul> cost reduction<br />
  51. 51. …<br /><ul><li> More than half of its Top Executives were replaced with young </li></ul> blood<br /><ul><li> Brand Portfolio of 1, 600 was pruned to 400 (For better focus </li></ul> on leading brands)<br /><ul><li> Company came up with a Brand Focus Strategy “Nourishing the </li></ul> Core”<br /><ul><li> Unilever started to exploit brands within the existing product </li></ul> categories but outside their scope<br />STRATEGY : CONSOLIDATION<br />TOOL : restructuring<br />
  52. 52. UNILEVER- REGIONAL GROUPS<br />SOURCE: WWW.UNILEVER.COM, 2009<br />
  53. 53. ACQUISITIONS<br /><ul><li> In 2000 - BESTFOODS , U.S.A.
  54. 54. In 2000 - GROUPO CRESSIDA CENTRAL AMERICA FOODS </li></ul> CORPORATION, CENTRAL AMERICA<br /><ul><li> In 2000 - AMORA MAILLE, CULINARY PRODUCTS, FRANCE
  55. 55. In 2000 - JABONERIA NA, FOODS & HPC
  56. 56. In 2000 - BEN & JERRY’S HOMEMADE INC., ICE CREAM
  57. 57. In 2000 - CRESSIDA, FOODS, SOAPS & DETERGENTS
  58. 58. In 2000 - CODEPAR/SPCD , HPC
  59. 59. In 2000 - SLIM FAST, SLIMMING PRODUCTS , U.S.A
  60. 60. In 2000 - ENGLEWOOD CLIFFS, FOODS, NEW JERSEY</li></li></ul><li>BEFORE<br />after<br />BUSINESSES<br />(FOOD & HPC)<br />BUSINESSES<br />FOOD<br />HPC<br />ED<br />ED<br />
  61. 61. BENEFITS OF THIS STRATEGY<br /><ul><li>Focused and Effective streamline decision making
  62. 62. Sales shot up by 16 %
  63. 63. Unilever’s Share price had recovered by 30 %
  64. 64. Company’s Turnover rose from € 40, 977 Million in </li></ul> 1999 to € 47, 582 Million in 2000<br /><ul><li> Supply Chain Restructuring saved € 1.75 Billion
  65. 65. Annual Top line Growth of about 4 % to 5 % was </li></ul> achieved<br /><ul><li> Average Earnings Per Share increased by 9 %</li></li></ul><li>UNILEVER FINANCIALS (IN € MILLION)<br /> BY GROUP<br />Source :Unilever Annual reports 1998 - 2002<br />
  66. 66. BY GEOGRAPHIC REGIONS<br />Source :Unilever Annual reports 1998 - 2002<br />
  67. 67. BY OPERATIONS <br />Source :Unilever Annual reports 1998 - 2002<br />
  68. 68. 2003UNWELCOME LOSS OF WEIGHT FOR UNILEVER<br /><ul><li> Sales dropped by 15 %
  69. 69. Profits fell by 13 %
  70. 70. Annual Top line Growth of about 4 % to 5 % came </li></ul> down to 3 %<br /><ul><li> Share Price fell by 7 %
  71. 71. Company was unable to cope up with the </li></ul> Competitive Market Dynamics<br />
  72. 72. 2004 to 2010growth to vitality strategy<br /><ul><li> Brand Portfolio of 400 Brands would be reduced to 40 Mega </li></ul> World Brands, the retained ones would have sales in excess of a <br /> Billion Dollar<br /><ul><li> High Concentration on Developing and Emerging markets (D & E)
  73. 73. 3 to 5 % of Organic Growth was targeted
  74. 74. Margin Enhancement through portfolio mix
  75. 75. Business on strict Value creation criteria
  76. 76. First Non – Executive Chairman was appointed
  77. 77. Concept of “ONE UNILEVER”
  78. 78. Unilever started soft selling under this ‘VITALITY’ strategy</li></ul>STRATEGY : FOCUSED GROWTH<br />TOOLS : DIVESTMENT<br /> ACQUISITION<br />
  79. 79.
  80. 80. Turnover & Profit Last 12 years<br />SOURCE : UNILEVER ANNUAL REPORTS 1996 - 2008<br />
  81. 81. 2008restructuring again<br /><ul><li> Announced 20, 000 Job Cuts
  82. 82. Combined its two Global units Food & HPC into a </li></ul> single one<br /><ul><li> Focus on personal care Products Division</li></li></ul><li>UNILEVER & FEW CLOSE COMPETITORS <br />A COMPARATIVE STUDY<br />
  83. 83.
  84. 84. SHARE LISTINGS, EPS & DIVIDENTS<br />SOURCE : UNILEVER.COM, 2008<br />
  85. 85. WHATS IN THE NEWSACQUISITIONS IN 2009<br /><ul><li> UNILEVER ACQUIRED SARA LEE’S PERSONAL CARE & </li></ul> EUROPEAN DETERGENT UNIT FOR $ 1.9 BILLION, <br /> GAINING SANEX SHOWER GEL<br /><ul><li> IN ADDITION , UNILEVER IS BUYING SEVERAL OTHER </li></ul> STRONG REGIONAL BRANDS LIKE RADOX BUBBLE BATH ; <br /> DUSCHDAS, GERMAN SHOWER GEL & SWITZAL, <br /> BABY SHAMPOO <br />
  86. 86. REFERENCES<br /><ul><li> Renewing Unilever – Transformation and Tradition, Geoffrey Jones
  87. 87. Munching on Change, Economist, January 06, 1996
  88. 88. Unilever to create “Power Brands”, http://news.bbc.co.uk, September </li></ul> 21, 1999<br /><ul><li> Rohan Mike, Refocused Unilever on Global Acquisition Spree, www. </li></ul> Itsfood.com, January 04, 2000<br /><ul><li> Unilever Changes Track, http://news.bbc.co.uk, February 22, 2000
  89. 89. Unilever to Axe 25,000 Jobs in Cost Overhaul, </li></ul> www.industrysearch.com.ai , February 23, 2000<br /><ul><li> Shrinking To Grow, Economist, February 26, 2000
  90. 90. Harvilicz Helen, Unilever Undertakes Massive Restructuring, Chemical </li></ul> Market Reporter, February 28, 2000<br /><ul><li> Stevens Robert, Unilever to Shed 10 Percent of Workforce in Global </li></ul> Restructuring, www.wsws.org, March 01, 2000<br /><ul><li> Fat & Thin, Economist, April 15, 2000</li></li></ul><li>?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />?<br />
  91. 91. 1. What was the need for unilever to have separate legal identity but operate as a single entity ??Can unilever plc and unilever nv fuse, in future ???<br />
  92. 92. 2. What was the reason for, the need of frequent restructuring at unilever ?? <br />
  93. 93. 3. Have unilever’s top brands paid the debt for the Structural detritusof unilever ???<br />
  94. 94. 4. Did unilever’s investment of £ 5 billion on “pgs” payoff ???<br />
  95. 95. 5. Had unilever grown more than its cradle ??<br />
  96. 96. 6. Should unilever opt for umbrella branding ever in future ? If yes, why?? If no, why???<br />
  97. 97. THANKS…<br />

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