ORGANIZATIONAL CHANGE AT UNILEVER

and by the company's inability to enjoy the same

Unilever is a very old multinational with kind of scale economies as P&G. Unilever's high
worldwide operations in the detergent and food costs ruled out its use of competitive pricing.
industries. For decades, Unilever managed its
worldwide detergents activities in an arm's- To change this situation, Unilever
length manner. A subsidiary was set up in each established product divisions to coordinate
major national market and allowed to operate regional operations. The 17 European
largely autonomously, with each subsidiary companies now report directly to Lever
carrying out the full range of value creation Europe. Implicit in this new approach is a
activities, including manufacturing, marketing, bargain: The 17 companies are relinquishing
and R&D. The company had 17 autonomous autonomy in their traditional markets in exchange
national operations in Europe alone by the mid- for opportunities to help develop and execute a
1980s. unified pan-European strategy. As a consequence
of these changes, manufacturing is now being
In the 1990s, Unilever began to trans- rationalized, with detergent production for the
form its worldwide detergents activities from a European market concentrated in a few key loca-
loose confederation into a tightly managed tions. The number of European plants
business with a global strategy. The shift was manufacturing soap has been cut from 10 to 2,
prompted by Unilever's realization that its and some new products will be manufactured at
traditional way of doing business was no longer only one site. Product sizing and packaging are
effective in an arena where it had become being harmonized to cut purchasing costs and to
essential to realize substantial cost economies, pave the way for unified pan-European"advertising.
to innovate, and to respond quickly to changing By taking these steps, Unilever estimates it may
market trends. save as much as $400 million a year in its
European operations.
The point was driven home in the
1980s when the company's archrival, Procter & Lever Europe is attempting to speed its
Gamble, repeatedly stole the lead in bringing development of new products and to synchronize
new products to market. Within Unilever, the launch of new products throughout Europe. Its
"persuading" the 17 European operations to efforts seem to be paying off: A dishwasher
adopt new products could take four to five years. detergent introduced in Germany in the early 1990s
In addition, Unilever was handicapped by a high- was available across Europe a year latera distinct
cost structure from the duplication of improvement.
manufacturing facilities from country to country
 But history still imposes constraints.
Procter & Gamble's leading laundry detergent
carries the same brand name across Europe,
but Unilever sells its product under a variety of
names. The company has no plans to change
this. Having spent 100 years building these
brand names, it believes it would be foolish to
scrap them in the interest of pan-European
standardization. http://www.unilever.com

Sources: Guy de Jonguiercs, "Unilever Adopts a

Clean Sheet Approach," Financial Times,
October 21,1991, p. 13; and C. A. Bartlett and
S. Ghoshal,
Managing across Borders (Boston: Harvard
Business School Press, 1989).