Unilever slide

1. AA
Case AnalysisCase Analysis
OnOn
Unilever Path to Growth Strategy: Is It Working?Unilever Path to Growth Strategy: Is It Working?
Presented by:Presented by:
Patel Ankit ( 64 )Patel Ankit ( 64 )
Patel Ankur ( 65 )Patel Ankur ( 65 )
Patel Indra ( 71 )Patel Indra ( 71 )
Patel Nilesh ( 77 )Patel Nilesh ( 77 )

2. Introduction to UnileverIntroduction to Unilever
Unilever was established in 1930 through the merger ofUnilever was established in 1930 through the merger of
margarine unie and british based lever brothers it ismargarine unie and british based lever brothers it is
soap and detergent company. Lever brother wassoap and detergent company. Lever brother was
established in 1885. in 1917 lever brother beganestablished in 1885. in 1917 lever brother began
diversified into food, acquiring fish and canned fooddiversified into food, acquiring fish and canned food
business. At the time of their merger two companiesbusiness. At the time of their merger two companies
are purchase raw material from many of the sameare purchase raw material from many of the same
suppliers and both are involved in large scalesuppliers and both are involved in large scale
marketing of household products and both are usedmarketing of household products and both are used
similar distribution channel.similar distribution channel.

3. Cont…Cont…
Unilever broad based product and geographicUnilever broad based product and geographic
diversification in food, personal care and householddiversification in food, personal care and household
products. In 2000 when the path to growth strategyproducts. In 2000 when the path to growth strategy
introduce the company has 1600 brand of food,introduce the company has 1600 brand of food,
personal care and household products, sales of 41.2personal care and household products, sales of 41.2
billion and having operation in more than 88 countries.billion and having operation in more than 88 countries.
In 2003 unilever’s brand portfolio increasing from 500In 2003 unilever’s brand portfolio increasing from 500
to 600 brand sales of 48.8 billion.to 600 brand sales of 48.8 billion.

4. Elements of Unilever strategy:Elements of Unilever strategy:
► Reducing the size of portfolio from 1600 brand to 400Reducing the size of portfolio from 1600 brand to 400
core brand.core brand.
► Focus on R&D and advertising on leading brand.Focus on R&D and advertising on leading brand.
► Divesting underperforming brand and business.Divesting underperforming brand and business.
► Concentrating on product innovation to boost internalConcentrating on product innovation to boost internal
growth of business.growth of business.
► Making new acquisition.Making new acquisition.

5. Acquisition done by unileverAcquisition done by unilever
► The Slimfast acquisitionThe Slimfast acquisition
► The Ben & Jerry’s acquisitionThe Ben & Jerry’s acquisition
► The Best food acquisition.The Best food acquisition.

6. The slimfast acquisitionThe slimfast acquisition
Unilever acquired slimfast diet food for $2.3 billionUnilever acquired slimfast diet food for $2.3 billion
cash in 2000. it was privately held company and U.Scash in 2000. it was privately held company and U.S
market leader in the $1.3 billion and nutritionalmarket leader in the $1.3 billion and nutritional
supplement industry having 45% of market share butsupplement industry having 45% of market share but
the rival had a market share of about 25% andthe rival had a market share of about 25% and
company’s total net assets was $160 million at the timecompany’s total net assets was $160 million at the time
of acquisition. About 94% sales of slimfast product wasof acquisition. About 94% sales of slimfast product was
in north america.in north america.

7. Why unilever acquired slimfast diet food…Why unilever acquired slimfast diet food…
Unilever ready to acquired slimfast because companyUnilever ready to acquired slimfast because company
was growing by 20% annually so, unilever hadwas growing by 20% annually so, unilever had
opportunity to used the company’s global distributionopportunity to used the company’s global distribution
capabilities to introduce slimfast in Europe, Australiacapabilities to introduce slimfast in Europe, Australia
and other cities in developing countries. At the time ofand other cities in developing countries. At the time of
acquisition slimfast begin to contribute positively to theacquisition slimfast begin to contribute positively to the
unilever’s cahsflows in 2002 and slimfast had strongunilever’s cahsflows in 2002 and slimfast had strong
management team.management team.

8. The Ben & Jerry’s acquisitionThe Ben & Jerry’s acquisition
At the time it was acquired by unilever, ben & jerryAt the time it was acquired by unilever, ben & jerry
produced and sells 50 superpremium icecream in aproduced and sells 50 superpremium icecream in a
different flavor. About 35 of the flavors are packed indifferent flavor. About 35 of the flavors are packed in
pint cartons for sales in super market, grocery storespint cartons for sales in super market, grocery stores
and convenience stores and remaining flavors areand convenience stores and remaining flavors are
packed in bulk tubs for sales in about 200 franchise andpacked in bulk tubs for sales in about 200 franchise and
company owned shops, restaurants and food servicecompany owned shops, restaurants and food service
account.account.

9. Cont…Cont…
► At the end of 1999 ben & jerry had 164 franchisedAt the end of 1999 ben & jerry had 164 franchised
shop, 8 partnershop franchised, 12 scoopshop, 8 partnershop franchised, 12 scoop
stationfranchise.stationfranchise.
► 9 company owned shops, internationally there are 99 company owned shops, internationally there are 9
franchised.franchised.
► It established its owned subsidiary in japan for theIt established its owned subsidiary in japan for the
purpose of importing, marketing and distributing itspurpose of importing, marketing and distributing its
product through japanese retail grocery stores.product through japanese retail grocery stores.

10. Why unilever acquired Ben & jerry’sWhy unilever acquired Ben & jerry’s
► Top executive of unilever icecream business believeTop executive of unilever icecream business believe
that achieving 5 to 6% annual revenue growth and sawthat achieving 5 to 6% annual revenue growth and saw
icecream as on the path to growth strategy.icecream as on the path to growth strategy.
► Good financial highlights in earlier period and sales wasGood financial highlights in earlier period and sales was
increase year by year so, unilever believe that the ben &increase year by year so, unilever believe that the ben &
jerry acquisition put in superpremium segment of thejerry acquisition put in superpremium segment of the
icecream market for the first time and made unilever theicecream market for the first time and made unilever the
world largest marketer of icecream products.world largest marketer of icecream products.

11. The Bestfood acquisition…The Bestfood acquisition…
The Bestfood was a global company which engage inThe Bestfood was a global company which engage in
producing and marketing consumer foods. Theproducing and marketing consumer foods. The
company had sales offices and manufacturing operationcompany had sales offices and manufacturing operation
in 60 countries and marketed its product in more thanin 60 countries and marketed its product in more than
110 countries. About 60% sales of bestfood outside110 countries. About 60% sales of bestfood outside
united state. Bestfood employed more than 44000united state. Bestfood employed more than 44000
employees. It was one of the 10employees. It was one of the 10thth
largest U.S baesd foodlargest U.S baesd food
product company. In 1990 bestfood had annual revenueproduct company. In 1990 bestfood had annual revenue
growth rate was 7.8% and EPS was 12.1% annualgrowth rate was 7.8% and EPS was 12.1% annual
growth rate.growth rate.

12. Cont…Cont…
► The company had increased its dividend for 14The company had increased its dividend for 14
consecutive years.consecutive years.
► In 1998 bestfood sales was 2.7% and operating incomeIn 1998 bestfood sales was 2.7% and operating income
was 9%was 9%

13. Core element of Bestfood strategy…Core element of Bestfood strategy…
► Globalisation of the company’s core consumer businessGlobalisation of the company’s core consumer business
► Constant improvement in cost effectiveness.Constant improvement in cost effectiveness.
► Seeking out and exploiting new market opportunitiesSeeking out and exploiting new market opportunities
► Using free cash flow to make strategic acquisition.Using free cash flow to make strategic acquisition.

14. Why unilever acquired Bestfood…Why unilever acquired Bestfood…
► Unilever believe that combining and integratingUnilever believe that combining and integrating
operation of bestfood would result in cost savingoperation of bestfood would result in cost saving
through combined purchasing, greater efficiency inthrough combined purchasing, greater efficiency in
business operation and process, improvement inbusiness operation and process, improvement in
marketing and distribution and increase economy ofmarketing and distribution and increase economy of
scale.scale.
► Bestfood product had good geographical marketBestfood product had good geographical market
coverage so that it would result in better position incoverage so that it would result in better position in
food market.food market.
► Opportunity to introduce in Europe and latin america.Opportunity to introduce in Europe and latin america.

15. Conclusion…Conclusion…
► In 2003 growht in sales of its leading brand will beIn 2003 growht in sales of its leading brand will be
declining.declining.