The document outlines the history and evolution of Unilever, detailing its strategic decisions, mergers, acquisitions, and restructuring efforts from its inception in 1872 to 2009. It highlights various problems faced by Unilever due to complex organizational structures and frequent restructuring, ultimately leading to significant layoffs and a renewed focus on core brands and markets. The company's shift towards a 'path to growth' strategy emphasizes consolidation and efficiency, aiming to strengthen its market position amid competitive dynamics.

1. UNILEVERA TROUBLED GIANT

2. SOURCE : UNILEVER.COM, 2009

3. MANAGEMENTSOURCE : UNILEVER.COM, 2009

4. SOURCE : UNILEVER.COM, 2009

5. SOURCE : UNILEVER.COM

6. SOURCE : UNILEVER.COM

7. BACKGROUND NOTE

8. UNIE In 1872, two Dutchmen, Jurgens and Van Der Bergh had ventured into the margarine business In 1927, they decided to merge to form two companies, Margarine Unie NV, based in the Netherlands and Margarine Union Ltd, based in the UKSTRATEGY : GROWTHTOOL : MERGER

9. LEVER William Hesketh Lever founded ‘Lever Brothers’ in 1885

10. By 1887, introduced ‘SUNLIGHT’, the world’s 1st packaged laundry soap Lever & Co. was making 450 tons of Sunlight soap a week

11. He expanded his business from UK to Australia, North America and other parts of Europe In 1890, Lever & Co became a limited company –LEVER BROTHERS LTD, by 1894, they went PUBLIC Diversified into other businesses, acquired Pears soap and Wall’s

12. Launched its innovative product , VIMSTRATEGY : GROWTHTOOL : ACQUISITION

13. UNIELEVERUnilever GROUP

15. UNILEVER PLCUNILEVER N.V.B.O.D.B.O.D.

16. PROBLEMS WITH THE STRUCTURE Unable to sustain the great depression

17. Incapable of striking a balance between British and Dutch interests Lack of co-ordination between the board of directors of the two holding companies Two Masters - Confused Followers (Coalition Governance)1930 to 1979 In 1937 , acquired Thomas J. Lipton

18. In 1944, acquired Pepsodent

19. In 1957, acquired Bird’s Eye

20. In 1961, acquired Good Humor

21. In 1978, acquired National Starch and Chemical CorporationSTRATEGY : rigorous GROWTHTOOLS : integration ( fwd & back) acquisition Diversification ( related & unrelated)

22. ORGANIZATIONAL STRUCTURE(1930 to 1979) Concept of strategically independent units- local initiative and decentralized control A special, 3-member committee was formed in September 1930, above the two boards of directors of the company Matrix organizational structure was optedSPECIAL COMMITTEE (3)UNILEVER PLCUNILEVER N.V.B.O.D.B.O.D.

23. PROBLEM WITH THE STRUCTUREConcept of strategically independent units led to high cost structure from duplication of manufacturing facilities at various locations

24. 1980 to 1995“the sleeping giant” Rationalized manufacturing approach

25. Product divisions established to co-ordinate regional operations

26. Focus on the following four industries, as a part of core strategy – Foods, Personal Care, Home Care and Specialty Chemicals, divesting from all other businesses Between 1992-1996 , Unilever made around 100 acquisitions, during 1995 alone the company acquired 38 companies The company decided to target D&E marketsSTRATEGY : FOCUSED GROWTHTOOLS : DIVESTMENT ACQUISITION

27. List of acquisitions 1984 - BROOKE BOND

28. 1986 - NAARDEN INTERNATIONAL 1987 - CHESEBROUGH- POND’S 1989 - FABERGE

29. 1989 - ELIZABETH ARDEN

30. 1989 - CALVIN KLEIN’S FRAGRANCE BUSINESS 1990 - NORDSEE FAST-FOOD

31. 1993 - EMPIRE OF CAROLINA INC. 1993 - PHILIP MORRIS KRAFT GENERAL FOODS UNITList of Divestments 1980 - SERVICE ( TRANSPORT) & ANCILLARY BUSINESS 1985 - PALM LINE, SHIPPING COMPANY 1990 - PLANT BREEDING & OTHER AGRICULTURAL PRODUCTS 1990 - PACKAGING & PROFESSIONAL CLEANING PRODUCTS

32. BEFOREafterBUSINESSESBUSINESSESFOODHCPCSC

33. PROBLEMS WITH THE STRUCTURE The unending acquisitions made the operations cumbersome and the company became inflexible to adapt to the market dynamism Performance drift

34. Organizational fatigue

35. Excess of bureaucracy

36. Confusion – of accountability and responsibility

37. Conflicting priorities in the special committee

38. Decision making became constipated

39. Structural detritus , accumulated over decades

40. Absolute chaotic condition

41. Extra levels of complexity were imposed on an already convoluted structure

42. 1996 TO 1999breakthrough restructuring 3- Member special committee which existed since the birth of Unilever got dissolved , to give way to a 7- Member Executive committee The company appointed its 1st Chairman (Niall FitzGerald, an Irishman) not carrying a British or a Dutch passport Two layers of the organizational structure consisting of the world- wide business coordinators and the network of Regional Directors were swept away to form a single team of 14 business Presidents Company’s operations were grouped by product , instead of geographical regions From Centrally – Driven expansion to branched expansion…Unilever wanted to grow as much by local pull as by global push Focus on Company’s Core Competences

43. Introduction to the new management incentive system (Variable Pay)STRATEGY : SUSTAINABILITYTOOL : restructuring

44. ACQUISITIONS1996- HELENE CURTIS INDUSTRIES, INC., PERSONAL CARE PRODUCTS 1996- NORTHBRROOK DIVERSEY CORP., CHEMICAL CLEANSER & SANITIZER 1999- KIBON S.A. INDUSTRIES ALIMENTICA, ICE-CREAM COMPANYDIVESTMENTS1996- CATERPILLAR INC., HEAVY EQUIPMNET, U.K. FRANCHISEE 1997- NATIONAL STARCH & CHEMICAL CORPORATION

45. 1998- PLANT BREEDING INTERNATIONAL CAMBRIDGE LTD.EXECUTIVE COMMITTEE (7)UNILEVER PLCUNILEVER N.V.BP’sBP’s

46. PROBLEMS WITH THE STRUCTUREUnilever’s Market Capitalization of about £ 51 Billion (~ $ 82 Billion) in June 1999 shrank to £ 20 Billion by January 2000 (Stock prices Plunged) Company’s Existing brand structure had lost its Focus (Too many Brands) Unilever was criticized for spending large amounts of funds due to frequent restructuring over the years Unilever’s market share was taking a big time hit (Dip)

47. There was no Fit between the company’s organizational structure and its strategies (Persil Power shook the giant to its foundations)It was believed that, every big organization that is running into trouble needs a crisis to convince it of the necessity for fundamental change, and that for Unilever this situation had already arrived long ago

48. 2000 TO 2004PATH TO GROWTH STRATEGY In February 2000, the company announced a € 5 Billion Five – Year Growth Strategy Unilever was “Shrinking to Grow”

49. Laying off over 25, 000 employees ( ~ 10% of the employee base) Unilever was split into two, separate global units : Foods and Home & Personal Care (HPC), headed by two executive Directors separately Unilever reorganized its 300 operating companies into 10 Regional Groups Unilever Further Decentralized its Control over its subsidiaries

50. Unilever Shut down more than 100 manufacturing units for cost reduction

51. … More than half of its Top Executives were replaced with young blood Brand Portfolio of 1, 600 was pruned to 400 (For better focus on leading brands) Company came up with a Brand Focus Strategy “Nourishing the Core” Unilever started to exploit brands within the existing product categories but outside their scopeSTRATEGY : CONSOLIDATIONTOOL : restructuring

52. UNILEVER- REGIONAL GROUPSSOURCE: WWW.UNILEVER.COM, 2009

53. ACQUISITIONS In 2000 - BESTFOODS , U.S.A.