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Management
STRATEGIC ANALYSIS
OF
Page 1
Submitted by:
Nadia Shoukat (23)
MBA, 4th semester,
Section A, (M)
Submitted to:
Sir Shahid Yaqoob
MBA Marketing
Page 2
DEDICATION
WE DEDICATE THIS HUMBLE EFFORT TO
The Holy Prophet
HAZRAT MUHAMMAD
(P.B.U.H)
The greatest Social Worker,
Whose every tear was for
The Cause of humanity
And also dedicated to
THE UNFATHOMABLE LOVE, UNFLINCHING SUPPORT
UNTIRING MIDNIGHT PRAYERS AND STEADFASTNESS
OF
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Acknowledgements
God never spoils any effort; every piece of work is rewarded according
to the nature of devotion for it. We are extremely thankful to ALLAH
ALMIGHTY Who, in spite of numerous difficulties, vicissitudes and
acute frustrations enabled us to probe the present study and
dissertation. We bow our head to ALLAH ALMIGHTY for the buntings
and the blessings that He has bestowed upon us. Who has given us
the courage and stamina to come up to the expectations of our revered
teachers and ever loving parents and to sum up my maneuverings for
the completion of this manuscript.
All the respects are for the last Prophet of God, HOLY
PROPHET MUHAMMED (Peace Be Upon Him) Who is the greatest
scientist of all the ages, whose moral and spiritual teachings enlighten
our heart, mind and soul and flourished our thoughts towards
achieving higher ideas of life.
We deem it utmost pleasure to avail this opportunity to
express the heartiest gratitude and deep sense of obligation to our
revered Teacher Sir Shahid Yaqoob, Lecturer, Department of Business
Management Sciences, Islamia University, Rahim Yar Khan for his
skilled guidance, keen interest, constructive criticism, constant
encouragement, valuable suggestions and pains taking supervision
throughout the course of our study and research work. The work
presented in this manuscript is accomplished under his dynamic,
skillful, affectionate guidance and generous transfer of knowledge.
Whenever we sought help from him, he was the person who was
always there bearing a welcoming smile on his face and having the
Hailey College of Banking & Finance
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doors of his good offices always opened for us. We have learnt a great
deal from him.
We have the honor to express our deep sense of gratitude and
profound indebtedness to ever affectionate Sir Shahid Yaqoob for his
keen interest, encouragement, generous guidance and untiring help at
all times. In fact it was not possible to bring this work to fruitful
conclusions without his day and night persuasive and sincere efforts.
He has guided us at every step that we took throughout our career at
postgraduate level. He has always thought right for our betterment
and for our success in the professional field. We cannot thank him, as
we have no words that can have an idea of the respect we have in my
heart for him.
Table of Contents
1- Introduction of UNILEVAER.6
2- Company Summary.....8
2.1- Vision...8
2.2- Mission.....8
2.3- Objectives.9
Page 5
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latest state-of-the-art
products.
technology
for
producing
high
quality
Page 7
Page 8
Our Vision
Touching Hearts, Changing Lives.
Our Mission
Page 9
Page 10
Weaknesses:
The biggest challenge in safeguarding market position is to
become cost leader.
Opportunities:
Hailey College of Banking & Finance
Page 11
Threats:
FMCG market is highly responsive to economic conditions,
inflation and social disruptions resulting in variations in sales
revenues and demand for the company.
P & G is the major competitor and threat for UNILEVER. Other
organized players are Nestle and R & B.
UNILEVER is facing intense competition from unorganized
players i.e. cheaper smuggled products and Chinese products.
According to industry source, 40% of tea consumed locally
and a large portion of HPC products are smuggled into the
country.
Legal, political and regulatory factors of host country. For
example, supportive Government policies for attracting FDI,
1% tax rate on corporate profit and inability of Pakistan
Government to control smuggled products etc.
Although UNILEVER has a first mover advantage in ice cream
segment but Engro has announced to enter in ice cream
segment and is considering a big rival post CY2010.
Rapid increase in raw material cost and supply disruptions
from suppliers of raw material. The unprecedented surge in
palm oil, tallow prices and other materials has resulted in
declining margins. Going forward, high raw material costs are
a key risk to UNILEVERs profitability.
Page 12
EFE Matrix
1.
2.
3.
4.
5.
1.
2.
3.
4.
5.
OPPORTUNITIES
Market of developing countries due to
more tendency towards consumption
Rapid increase in worlds population.
Unrelated diversification.
Rural area.
Hygiene Consciousness
THREATS
Competition from organized players, P
&G
Inflation Rate
Smuggled products and local
competition.
Legal, political and regulatory factors
of host country.
Rapid increase in raw material cost.
Total Weighted Score
Ratings:
1 Poor
2 Below Average
Weigh
t
Rating
s
Weighte
d Score
0.15
0.60
0.15
0.10
0.05
0.10
3
1
4
2
0.45
0.10
0.20
0.20
0.15
0.60
0.08
0.16
0.07
0.14
0.05
0.10
0.10
1.0
0.40
2.95
3 Above Average
4 Superior
Justification of ratings:
On opportunity side:
1. It is a general observation that people of developing countries
like Pakistan are more inclined towards consumption rather
than saving and the major portion of spending is on FMCG.
2. World population is increasing at an alarming rate. World
population is set to grow by 800m in 2010 and almost all
increase will be in developing countries. And increase in
population leads to increase demand of FMCG sector.
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1990
1995
2005
2010
2015E
31.9
68.1
109.4
34.3
65.7
123.6
37.0
63.0
159.2
43.3
56.7
179.6
47
53
202.2
On threats side:
1. P & G with 50% market share is a big threat for UNILEVER.
Nestle with roundly 30% market share is also posing a threat
in near future. Engro is planning to enter in ice cream market
and a future rival in ice cream as well.
2. Rapid increase in inflation rate can increase the prices of
products and hence can reduce demand.
3. Smuggled products swallow a big part of profits of UNILEVER
every year. Almost 40% tea and 29% shampoo used in
Pakistan is smuggled from Afghanistan and China.
4. Economic system of host country and rapid increase in raw
material cost are last two major threats for UNILEVER.
Page 14
IFE Matrix
Key Internal Factors
1.
2.
3.
4.
5.
6.
STRENGTHS
Customers Loyalty.
Micro level retail outlets
Latest state of the art facilities and
technology.
International brand strength.
Market share of 41%
Committed to business ethics, safety,
health, environment and community.
Weigh
t
Rating
s
Weighte
d Score
0.15
0.10
4
4
0.60
0.40
0.10
0.40
0.08
0.24
0.12
0.36
0.10
0.30
0.15
0.15
0.05
1.0
1
2
1
0.15
0.30
0.05
2.80
WEAKNESSES
1.
2.
3.
Strategic Alliance
Costly Products.
Operational Complexity.
The score 2.80 shows that company has solid internal position, its
strengths are overcoming the weaknesses.
Ratings:
1 Major Weakness
2 Minor Weakness
3 Minor Strength
4 Major Strength
Justification of ratings:
On strength side:
1. Customers loyalty is not a hidden fact in UNILEVER case.
People have developed and adopted the taste of UNILEVERs
high quality products and there is no comprise on quality. 150
million times a day, in 150 countries, people use UNILEVERs
products at key moments of their day.
2. Micro marketing in developing countries. UNILEVER services
500,000 outlets with 50 % through direct distribution and
remaining via wholesalers.
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SWOT / TOWS
Matrix
WEAKNESSES
1. Strategic Alliance
2. Costly Products.
3. Operational
Complexity.
4. International brand
strength.
5. Market share of 41%
6. Committed to business
ethics, safety, health,
environment and
community.
OPPORTUNITIES
1. Developing countries.
2. Rapid increase in
worlds population.
3. Unrelated
diversification.
S-O Strategies
1. Discover new markets
(O1,O2,O4,S4,S3)
2. New quality products
(O3,O5,S3,S6)
3. Unrelated
diversification (O3, S1)
W-O Strategies
4. Market Expansion in
rural areas (O4, O1, W2)
4. Rural area.
5. Hygiene
Consciousness
THREATS
1. Competition from
organized players, P & G
2. Inflation Rate
S-T Strategies
5. Vertical Integration
(T1,T3,S2,S4)
3. Smuggled products
and local competition.
4. Legal, political and
regulatory factors of host
country.
W-T Strategies
6. Increase in
manufacturing capacity.
(W1, T1).
7. Cost
leadership(W2,T5)
Page 17
Proposed Strategies:
1. UNILEVER can capture untapped rural markets and markets of
Page 18
SPACE Matrix
Financial Strength (FS)
Ratings
+4
+3
+1
Total:
+11
+2
+1
+4
+2
+4
+1
+11
-1
-1
-2
-4
-1
Total
Environmental Stability (ES)
-9
-3
-5
-3
-4
-2
Total:
-17
Page 19
Average scores:
FS = 11/5 = 2.2
IS = 11/4 = 2.75
CA = -9/5 = -1.8
ES = -17/5 = -3.4
X-axis = IS+CA = 2.75-1.8 = 0.95
Y-axis = FS+ES = 2.2-3.4 = -1.2
FS
+6
CA
IS
-6
+ 0.95
+6
-1.2
Competitiv
e
Strategy
-6
ES
SPACE matrix indicates whether conservative, aggressive, defensive
and competitive strategies are more appropriate for given
organization. UNUILEVER should pursue Competitive Strategies that
are intensive and integration strategies.
I will suggest following two strategies:
1. Product development
2. Market Development
Page 20
Page 21
BCG Matrix
Market Share
High
1.0
Medium
0.50
High +20
Ice cream
Low
0.0
?
Knorr
INDUSTRY
SALES
GROETH
RATE (%)
Detergents
Dove
Medium 0
Beverages (Tea)
Soap
Low -20
Industry Classification:
Industry
Industry
Indicators
Page 22
Tea
Classification
Mature
Soap
Mature
Detergen
t
Shampoo
Growth
Growth
50%
population
Page 23
Therefore it can be noticed that not the whole divisions are under
performing, as a result UNILEVER needs to invest more in these
business units to keep up with the fast growing market because they
are already successful but need better performance. Brands such as
Knorr and Lipton in food and Dove in the household product sector
are among the core brands that raise concern for UNILEVER. As they
operate in a growing market more investment is needed to boost
sales and margin and as it is unlikely that these units achieve
sufficient cost reduction benefits, UNILEVER may turn to its cash
cow businesses to offset such investment.
As part of its path to growth strategy UNILEVER must build on these
businesses to improve performance as the market share must grow
if they are to become stars otherwise they may face alternative
solutions that could include the sale of the business, which should
be the last alternative because of the growing divisions inside the
business.
UNILEVER might be better off investing more cash in frozen foods
and household care; since the market is growing it may gain more
share and dominance
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Internal-External Matrix
Average
3.0
EFE
Weight
ed
Scores
High
4.0
2.0
Weak
1.0
ii
iii
iv
vi
vii
viii
ix
3.0
Medium
2.0
Low
1.0
The IFE matrix score for UNILEVER is 2.80 and for EFE matrix score
is 2.95 therefore our IE matrix falls more around v cell.
The company should adopt HOLD & MAINTAIN STRATEGIES and I
recommend Market Development and Product Development
for UNILEVER. UNILEVER can introduce existing products to new
geographical area that are rural markets and markets of developing
nations. On the other hand UNILEVER can also modifying its existing
products and introduce variants in order raise its market share.
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Rapid
Market
Rapid
market Growth
Growth
Q1
Q2
Weak
Competitiv
e Position
Strong
Competitiv
e Position
Q3
Q4
Page 26
QSPM Matrix
Market
Development
Product
Development
0.05
0.15
Attracti
ve
Score
4
3
0.15
Total
Internal Factors
1.0
Costly Products.
0.15
0.15
0.10
0.10
--3
4
3
---0.30
0.40
0.30
--4
1
3
--0.60
0.10
0.30
0.12
0.48
0.36
0.10
---
---
---
---
0.15
0.08
--4
--0.32
--3
--0.24
Operational Complexity.
0.05
---
---
---
---
Total
Grand Total
1.0
External Factors
Customers Loyalty.
Micro level retail outlets
Latest state of the art
facilities and technology.
Market share of 41%
Committed to business
ethics,
safety,
health,
environment
and
community.
Strategic Alliance
International
strength.
brand
0.20
0.15
Attracti
ve
Score
-----
0.60
0.15
0.10
0.10
0.05
----4
----0.20
2
--1
0.20
--0.05
0.08
0.15
0.10
2
4
3
0.16
0.60
0.30
3
4
0.24
0.45
0.40
0.07
0.21
0.28
Weig
ht
Total
2.42
1.8
4.22
Total
-----
1.77
1.6
3.37
Page 27
Strategic Recommendation
Appropriate strategy for UNILEVER is Market Development.
UNILEVER should remain in the present business and should
introduce present products in new geographical area.
Following are necessary factors that must be present while choosing
market development strategy:
UNILEVER has its own strong distribution channel.
UNILEVER is very successful at what it does.
Untapped rural market and market of developing countries
exist for UNILEVER to cover.
UNILEVER is a strong MNE in Pakistan. It has abundant
resources both financial and human, so it can easily expand
geographically. Here we are not concerned about expansion of
operating activities to new geographical area. We are
particularly concerned about capturing untapped market. It is
up to UNILEVER whether it is decided to start operating in new
areas too or just introduce products by using its strong
channel of distribution.
UNILEVER is operating globally. It means that FMCG is such an
industry which can be grown globally.
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References
www.pakistanunilever.com
www.igisecurities.com.pk
And various news paper articles, research findings and blogs, which
helped me indirectly to build up my mind about Pakistan UNILEVER
and figure out their External and Internal Factors which were
involved in the project.
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