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Company Profile

Overview
Unilever is a multinational corporation selling consumer goods including
foods, beverages, cleaning agents and personal care products. Unilever is a
dual-listed company consisting of Unilever NV in Rotterdam and Unilever PLC
in London.
Unilever owns more than 400 brands including 11 "billion-dollar brands",
which each achieve annual sales in excess of 1 billion.
Revenue (m and currency as quoted)
39,823 (2009)
Number of employees
163,000
Origin of ownership
UK/Netherlands
Geographical presence
Operates in 100 countries

Key contact
Santiago Gowland

Environmental Risks & Impact

Measured by voliume, around half of Unilever's raw materials are
agricultural or forestry products. As a result, the company's principle
environmental concerns are changing weather patterns, water-scarcity and
unsustainable farming practices.
Unilever measures its product categories against four green indicators
covering water, waste, sustainable sourcing and greenhouse gas emissions.
Most CO2 emissions associated with Unilever brands occur during
consumer use as products require energy to heat water for cooking and
washing.
Targets & Performance
Emissions & Energy
The company's aim is to reduce the carbon intensity of manufacturing
operations by 25% by 2012 (measured as tonnes CO2 per tonne of
production against a 2004 baseline).
In 2008, the company reduced CO2 emissions by 1.6% per tonne of
production compared to 2007.
Unilever has reduced the carbon intensity of its energy use by 39%
between 1995 and 2008. This represents a 43% reduction in absolute terms.
The company is investing in more efficient power and steam generation

technology and the development of less energy intensive manufacturing

processes. For example:
- In Europe, Unilever has at least three CHP plants which use waste steam
and hot water to generate electricity.
- The Cu Chi factory in Vietnam uses solar panels to preheat water for steam
generation.
- 2m point-of-sale ice cream freezer cabinets are being replaced with energyefficient HC alternatives.
The company plans to reduce indirect impacts by working with customers
and suppliers to address wider impacts. For example, Ben & Jerry's has a Lick
Global Warming campaign and an ice cream flavour called Fossil Fuel.
Around 4m tonnes of CO2 are produced each year because of Unilever's
transport and product distribution requirements.
Water
Unilever relies on water for:
- Sourcing: the cultivation of agricultural raw materials
- Manufacturing operations: cleaning, cooling, as an ingredient
- Consumers: use of home care and personal products
Unilever aims to:
- Reduce water in manufacturing
- Work with suppliers on issues such as crop irrigation
- Innovation on product design

 Since 1995, Unilever has reduced the amount of water used per tonne of
production by 63% by minimising water use and maximising water recycling.
During 2008, there was a 3% reduction in water intensity compared to
2007 from 3.05 m3 to 2.96 m3 per tonne of production.
The water intensity of food production has dropped from 5.27 m3 in 2003
to 4.23 m3 in 2007 per tonne of production.
Products aimed at reduced consumer water consumption include the One
Rinse Comfort fabric conditioner. In Vietnam, One Rinse Comfort reduces the
water needed by two-thirds and sales rose by nearly 30% in 2008.

Waste
Waste intensity has reduced by 68% per tonnes of production between
1995 and 2008, despite a 4.3% increase in the last year (7.56 kg/tonnes in
2007 to 7.89 kg/tonne).
The company says this increase was due to:
- Legislative changes
- Under-capacity in effluent treatment
- Planned disposal of accumulated and inherited hazardous waste
Changing packaging design is one of the ways in which the company wants
to use to reduce waste impacts.
The PVC policy commits to replacing PVC in all packaging by the end of
2010, where there are viable alternatives.

Resources
Agricultural and forestry crops make up around half by volume of raw
materials used by Unilever.
Unilever buys approximately 12% of the world's black tea, 6% of the
world's tomatoes and 3% of its palm oil.
Unilever established guidelines for good agricultural practice based on 11
indicators including water, energy, pesticide use and animal welfare.
Growers and third-party suppliers are encouraged to comply.
Most of the world's oil palm is grown in South-East Asia where the
clearance and burning of forests contributes to global warming.
Following a public challenge by Greenpeace, Unilever has agreed to draw
all their palm oil from certified sustainable sources by 2015.
Unilever have also agreed to support a moratorium on further deforestation
in South-East Asia.
At the end of 2009 around 80% of Lipton Yellow Label and PG tips tea sold
in Western Europe came from Rainforest Alliance Certified farms.
Unilever also uses paper and board, plastic, glass, aluminium, steel and
mixed material laminates (for sachets and pouches) in its manufacturing
processes.

Relationships

 Founding member of the Roundtable on Sustainable Palm Oil (RSPO), which

it continues to chair.
Worked with Greenpeace to build a global coalition of companies, banks
and NGOs to break the link between deforestation and the cultivation of oil
palm.
Unilever worked alongside Tesco to persuade the Consumer Goods Forum,
a global alliance of 300 leading manufacturers and retailers, to work together
to end deforestation.
Working with Greenpeace on climate-friendly refrigerants in an alliance
called Refrigerants Naturally!
Founding members of the Carbon Disclosure Project's Supply Chain
Leadership Collaboration.
CEO Paul Polman co-chairs a sustainability steering group of The Consumer
Goods Forum with Sir Terry Leahy. They have set out the vision for the
sustainability programme to drive and communicate sustainability
improvements throughout the value chain of the consumer goods industry.
Participated in a 2008 event hosted by Wal-Mart on water stewardship,
sharing expertise on reducing water use at all steps of a product lifecycle.
Participated in an initiative with Kenya Tea Development Agency (KTDA),
the UK Department for International Development and Wageningen
University to train smallholder farmers in sustainable tea cultivation.

Company Background
The company was formed by a merger of Dutch Margarine Union and British
soap-makers Lever Brothers in 1929.

Unilever was one of the worlds first genuine multinationals with operating
companies in more than 40 countries.

The company produces and distributes a vast number of well known brands
in the areas of nutrition, hygiene and personal care that are used by
consumers all over the world.

The history of Unilever dates back to 1885, William Lever established a soap
manufacturing company in the UK with his brothers and named the company
Lever Brothers in 1885.

William Hesketh Lever was born at Bolton, Lancashire in 1852 was the son of
grocer. Together with James Lever, William Lever opened soap factory at
Warrington, England, in 1885.

Their products, Sunlight, the worlds first packaged soap, was very
successful. The soup they made in ready moulded tablet.

Previously laundry soap was marketed in bars and grocers cut off pieces and
sold them by weight.

Until 1919 Lever was wholly own an controlled by the founder. By 1919, as a
result of ingle minded expansionist, commercial policies, his firm accounted
for 60 percent of soap production in Britain.

Two butter makers, Jurgen and Van den Berghs formed Margarine Union in
1927. The Dutch Margarine Union merged with Lever Brothers of United
Kingdom in 1929 to form Unilever.

During the 1930s, the structure and management do Unilever has been
describe as a professional largely non-family managed hierarchy.

For tax, purpose, two separate entities were established, one in London and
another in Rotterdam.

Historically, Unilever has grown to be a very multilocal company. However,

while the company used to work with regional supply chains on regional

brands,

Unilever started to globalize their brands in the early and mid 1990s.
Known until the early 1990s as Philippine Refining Company (PRC), Unilever
Philippines started as an oil milling business which at its peak produced
nearly 100,000 tons of coconut oil annually. Today, the company is a leading
manufacturer of home and personal care products, foods, and ice cream. Its
roster of brands include Axe, Best Foods, Block & White, Breeze, Clear,
CloseUp, Cream Silk, Domex, Dove, Eskinol, Master, Ponds, Knorr, Ladys
Choice, Lipton, Rexona, Selecta, Sunsilk, Surf, Tresemme and Vaseline.
Recognised annually amongst the Top 20 Tax Payers in the country, Unilever
Philippines employs over 1,000 people directly, as well as provides jobs for
10,000 indirectly (i.e. distributors and suppliers), as a result of its business
presence in the country. Employees and business partners recognise that
energy, creativity, the resilience to face changes and make things better are
all needed for business and people to grow together.
Unilever is known to be one of the few companies in the industry that has
succeeded in keeping majority of its manufacturing base in the Philippines.
Its Personal Care unit made news by securing the right to manufacture
deodorant mini-sticks for local and export markets. It has succeeded in
entering the US market and achieved the milestone on producing its 100
millionth stick in 2004.

The company has been a leader in introducing new technologies into the
country since the early days of its existence - margarine production in the
1930s, non-soap detergents, shampoos and toothpaste in the 1960s and
1970s and state of the art sulphonation technology and cogeneration power
plant in the 1980s. The nineties has seen the company focusing on several
improvements in the Environment front one of which was the introduction of
the first 100% biodegradable detergent bar in the Philippines. Unilever works
closely with the community and other NGOs to protect and improve the
environment.
Unilever Philippines is also a leading company in the area of Human
Resources Management and Development. Unilever has for decades also
been known in the industry as a sound training ground for young Filipino
graduates. Some of its managers have progressed to senior levels in
government and public life. Unilever seeks to manage and grow its business
sustainably, focusing on three pillars as set out by the Unilever Sustainable
Living Plan Health & Well-Being, Environmental Impact and Enhancing
Livelihoods. We will develop new ways of doing business if we are to meet
the needs of the billions of people in the developing world who are yet to
become consumers and deserve a better quality of life.

Supply Chain Strategy

In 2010, Unilever launched an organizational transformation plan that
completely switched their gears.

They decided to utilize supply chain

sustainability to drive their growth. This was not an easy conversion and had
to start from the core. Not only processes and policies changed, but peoples
mindset changed, which is one of the most difficult challenges to accomplish
within an organization.

Their first key step was to incorporate sustainability as part of their long-term
strategy.

They were no longer being sustainable just because other

companies were doing so or external factors were forcing them to do so.

They created a vision for growth in sustainability, sales, positioning, and

consumption that would span for the next 10 years.

Today, they can

confidently say that sustainability is part of their backbone.

To reach where they are today, Unilever maximized their available resources
and went as far as creating a dedicated division that focuses on aligning
strategy to sustainability.

This division not only includes experts in

engineering and business, but also agronomists that can provide a different
perspective and add the necessary skillset variety to the team. In addition to
that, Unilever has also redesigned some of their transportation processes to
lower

shipping

and

handling

costs;

moreover,

they

also

modified

manufacturing by investing in eco-friendly equipment to incorporate in their

production line.

Last, but not least, they assigned a Chief Sustainability Officer and made
every effort to learn more about their suppliers business practices. The
latter helped them weed out those suppliers that were not aligned with
their vision of being sustainable and could hurt their reputation.

The

appointment of a CSO was crucial as this became a business unit that has
grown into the organizations core beliefs.

In sum, there were two main keys to success that Unilever adopted to
become a Sustainability-Driven grown company:
1
2

1. Identifying, accepting, and committing to the need for change.

2. Aligning every party involved in the chain to their strategy to make

sure they all moved towards the same goals. Those who were not on board
were left behind.

It sounds so simple, yet it completely changed their business, and they

continue to grow stronger today. How difficult might this approach be to
replicate?
Unilever's impressive supply chain
We are ranked in the Top 10 supply chains in world by Gartner (number one
in Europe)
We are one of the largest contract logistics companies in the world, second
only to DHL
We are on track to reduce our carbon footprint by 40% by 2020
We have 150,000 customers globally who we serve with a range of almost
60,000 products

We source more than 200,000 different materials from 160,000 suppliers

who work with up to a million smallholder farmers
We run more than 250 factories which produce 130,000 tea bags every
minute, 1 billion deodorants annually and 2 billion Magnums every year
We collaborate with the Lotus F1 grand prix team to build a performance
culture in our Supply Chain.

Operations Management Strategy

As one of the strong and healthy companies in the world with many
successful brands, Unilever has an opportunity to expand into foreign
markets that it is not yet operating in, in order to gain access to customers
around the world. Supported by strengths of its four key global brands

Dove, Sunsilk, Rexona and Lux, Unilever firstly entered in foreign market to
compete internationally by entering just one or select few foreign markets.
Once successfully introduced its product in several market, Unilever expands
its success brand to many other markets and starting to compete globally.

In entering and competing in foreign markets for its cosmetics and toiletries
product, Unilever follows a global strategy, also called by a think-global and
act-global strategy, The strategy using essentially the same competitive
strategy approach in all country markets where the company has a presence
(with only minimal responsive to local conditions), sells much the same
products everywhere (make minor adaption to local countries where needed
to accommodate local countries preferences), strives to build global brands,
and coordinates its actions worldwide (centralized).

A global strategy used by the Unilever is preferable to localized strategies

because Unilever can more unify its operations and focus on establishing a
brand image and reputation that is uniform from country to country. It
strategy implies to the Unilever success in building strong character brand
such as Dove, Sunsilk, Rexona and Lux. Moreover, with a global strategy
Unilever should coordinated its marketing, operational and distribution
worldwide.

Unilever is increasing its efforts to build on its long-established local roots in

developing regions. Through its well-established distribution network in both
the traditional and modern retail outlets and with a good ability to adapt
successful global brand concepts to suit local markets, Unilever is in a good
position to be able to capitalize on the growth forecast in these regions.

Once Unilever became one of the most successful global companies in the
world, it has many profit sanctuaries. By having multiple profit sanctuaries,
Unilever has strong competitive advantage over its competitor with a single
or few sanctuaries.

In the cosmetics and toiletries globally competitive industry, there are no

doubt that Unilevers major rivals over the next few years will be Procter &
Gamble and LOral, both of which give significant resources to new product
development activity, and respond to changes in the market faster than
Unilever. LOral also has the benefit of being exclusively involved in
cosmetics and toiletries, unlike both Unilever and Procter & Gamble which
both have cross-industry involvement, such as in packaged food. Much the
same group of rival companies competes in many different countries.
Therefore, the competition pursues the company to be more innovative in

developing its products and maintaining its brands. The following diagram
shows the market performance of Unilevers skin care and hair care market
share:

To win customers and sales away from select rivals in country markets,
Unilever employ cross-market subsidization. This offensive strategy is
appropriate for Unilever which is compete in multiple county markets with
multiple brands and wide variety of products. Finally in entering the
emerging-country market Unilever prepare to compete on the basis of low
prices. Unilever pursued this strategy because consumers in emerging
markets are often highly focused on price, which can give low-cost local

competitors the edge unless a company can find ways to attract buyers with
bargain prices as well as better products.

All strategies executed by Unilever for competing in foreign market resulting

in moderate 5% sales growth in 2006 just above market performance
ensured that Unilever kept its position as third largest player in cosmetics
and toiletries with a 7% market share. Second-placed LOral fared a lot
better, increasing the gap between the two companies in part thanks to its
acquisition of The Body Shop. Market leader Procter & Gamble remained over
five percentage points ahead of Unilevers share. In 2006, Unilever remained
comfortably ahead of Colgate-Palmolive in fourth place. Unilever decision to
introduce its product on emerging market such as Asia-Pacific, Latin America
and North America implies to the high contribution of Unilever total revenue
by 26%, 21% and 16% respectively.

On January 1st, 2013 Unilever released its results for the fourth quarter and
full year 2012 which show good quality, profitable growth ahead of our
markets. This underscores the good progress we are making in transforming
Unilever into to a sustainable growth company. The past year performance of
the company was as follows:

Turnover increased by 10.5% to 51.3 billion with a positive impact

from foreign exchange of 2.2% and acquisitions net of disposals of

1.1%
Underlying sales growth 6.9% comprising volume growth of 3.4% and

price growth of 3.3%

Emerging markets underlying sales growth 11.4% now representing

55% of turnover
Core operating margin up 30bps to 13.8%; gross margin up 10bps,

advertising and promotions up 470 million at constant exchange rates

Core earnings per share increased by 11% to 1.57; free cash flow of
4.3 billion

ANALYSIS
Before analyzing the Unilever strategies for competing in foreign market, its
important to identify companys resource strengths and weaknesses and its
external opportunities and threats, commonly known as SWOT analysis. This
analysis provides a good overview of whether the companys overall
situation

is

fundamentally

healthy

or

unhealthy.

Therefore,

for

companys strategy to be well-conceived, it must be:

- Matched to its resource strengths and weaknesses
- Aimed at capturing its best market opportunities and erecting defenses
against external threats to its well-being

SWOT Analysis of Unilever Cosmetics and Toiletries

Based on the SWOT analysis we can infer that the company has very
healthy and strong condition in overall. Therefore, this condition provides
high capabilities to the company and offers wide opportunities for the
company to compete in foreign market. Based on this analysis, Unilever
firstly entered foreign market in the year of 1950 by offering its product to
European community.
From the Unilever mission statement, we can conclude that the company
expands into foreign markets in order to gain access to customers around
the world. Unilever recognized that its product is commonly used for all
people worldwide. The companys objective to bring their wealth of
knowledge and international expertise to the service of local consumer
pursues the company to produce many nutrition, hygiene and personal care

product with successful brands. Therefore, Unilever are moving rapidly and
aggressively to extend their market reach into all corners of the world.
For its cosmetics and toiletries product, Unilever start to compete
internationally by entering just one or select few foreign markets. Unilever
launched Axe/Lynx/Ego deodorant body spray in the US and Canada in
autumn 2002 and introduced Dove initially in Italy, France and Belgium in
2002. Once successfully introduced its product in several market, Unilever
expands its successful brand to many other markets and starting to compete
globally.
Through its successful growth strategy, Unilever has continued to build on
the strengths of its four key global brandsDove, Sunsilk, Rexona and Lux
and by doing so, created strong platforms for further growth in a number of
cosmetics and toiletries sectors. This has been particularly evident in
deodorants, mens grooming products and bath and shower products, with
strong growth for the Axe, Dove and Rexona brands. However, competition in
the cosmetics and toiletries industry remains tough, and while the current
strategy is providing results, greater product innovation and marketing
support, as well as further development of functionality in products will be
needed to keep up with the market. There are no doubt that Unilevers major
rivals over the next few years will be Procter & Gamble and LOral, both of
which give significant resources to new product development activity, and
respond to changes in the market faster than Unilever. LOral also has the

benefit of being exclusively involved in cosmetics and toiletries, unlike both

Unilever and Procter & Gamble which both have cross-industry involvement,
such as in packaged food.
In a globally competitive industry faced by Unilever, much the same group of
rival companies such as Procter & Gamble and LOral competes in many
different countries, but especially so in countries where sales volumes are
large and where having a competitive presence is strategically important to
building a strong global position in the industry. Therefore, a companys
competitive position in one country both affects and is affected by its
position in other countries. In this case innovation plays an important role.
Thus, in a market where innovation is often the key to growth, Unilever has
invested in improving its research and developing procedure further
including speeding up the process of getting new products to market.
Through a mass-market positioning, much of the companys organic growth
strategy is to leverage the value of key brands by cross-sectoral brand
extensions, thus taking advantage of customer brand recognition and
loyalty, and creating marketing efficiencies. The Dove brand is one of the
examples of a recognized soap brand being successfully extended into skin
and hair care, deodorants, baby care and mens grooming products.
Unilevers marketing strategy for competing in foreign market
For its marketing strategy Unilever combines its strategy with social project
in many countries. Educational campaigns have been important tools for

raising awareness for Unilever brands such as Close-Up and Dove. The
companys partnership with the World Dental Federation has seen it become
involved in oral healthcare projects in both developed and emerging nations,
including Austria and Brazil. In 2006, Unilever developed a low-cost
toothbrush, the Pepsodent Fighter, which retails at a price equivalent to just
EUR0.20 and is distributed in India and Indonesia.

The company also has more directly brand-related programs, including

Close-Ups Project Smile in Nigeria, which used small kiosk outlets to
showcase both its products and oral hygiene information, and the Dove SelfEsteem Fund, which has joined with organizations such as the Girl Scouts of
the USA and the UKs Eating Disorder Association to fund educational Body
Talk programs in schools to improve body-related self-esteem.
Less directly, a Brazilian recycling partnership with Pao de Acucar, a major
Brazilian retailer, not only helped employ more than 300 people in a local
recycling co-operative, but also gave Unilevers products greater in-store
prominence as well as raising the profile of brands including Rexona by
having their logos on point-of-sale information and educational materials.
The companys successful brand innovation program is supported with a high
level of marketing and advertising activities including most media. As there
are many opportunities in the foreign markets but the tendency of threats is

also same as opportunities. The powerful R&D, diversified and differentiated

product line and market analysis are all important factors that make a
company enjoy its potential and good market share in foreign market.