Unilevers Path to Growth

Strategy:
Is It Working?
Presented By
Jalpa Sutariya[50]
Chaitali Parikh[32]
Aarti Limbachiya[23]
Rajesh Thanki[54]

Presentation Flow

Company Overview
Environmental Analysis
Financial Analysis
Recommendations
Implementation
Q&A

Company Overview

Created in 1930 as result of a merger

Key player in the food and
household products industry
Maintains dual headquarter/dual
chairperson approach
Launched Path to Growth strategy
(2000) to revive the company
Historically grew through acquisitions

Competitor Comparison

Top Segment

CG/Foods

Consumer care

Food

Food

Dove

Tide

Mac & Cheese

Kit Kat

A. Burgmans

A.G. Lafley

R. Deromedi

P. Letmathe

Stock per share

$66.03

$53.76

$30.70

66.90

Growth

15.58%

9.25%

8.2%

11.23%

Revenues

42,942M

28.2 BL

$31,010 M

$69 B

Revenue Growth

-11.93%

19%

4.3%%

-1.93%

100+

42

150+

86

234000

110000

10600

253000

Top Brand
CEO

International
Business Segments
Employees

S.W.O.T. Analysis
Strengths
Recognized as a global
company
Strong brand portfolio
Strong relationship with
retailers
Economies of scale

Weaknesses
Dual leadership
Not connecting with
customers
Inefficient management of
brands
Reduced spending for R & D
Inability to maximize
acquisitions
Decrease in revenues

Opportunities
Changing consumer
preferences
Increasing need for
healthy

Threats

Strong Competition
Increasing store brands
Tougher Business Climate
Exchange rates

ACQUISITIONS
In 2000 - BESTFOODS , U.S.A.
In 2000 - BEN & JERRYS HOMEMADE INC.,
ICE CREAM
In 2000 - SLIM FAST, SLIMMING PRODUCTS , U.S.A

Financial Analysis
Revenues

Net Income

Financial Analysis (cont.)

Net Profit Margin

Employees

Revenues: Product Segmentation

Why Path to Growth Strategy

Years of slow performance

Lack of sound corporate strategy
Numerous low-volume brands
Small global presence compared to
competition
Mediocre performance in
emerging markets

Elements of Path to Growth

5 year growth plan

Reduce portfolio to 400 core
brands
Focus R & D and advertising on
leading brands
Concentrate on product
innovation to fuel internal growth
Grow through acquisitions

Objectives of Path to Growth

Expectations

Achieve double-digit
EPS growth
Secure a better
competitive position
in global food and
household
Build brand value to
gain pricing power

Strategic Targets

Top-line sales
growth of 5-6%
annually
Increase operating
profit margins 11%
to over 16%
Plan to be
accomplished by
year end 2004

Is it working?
Yes

Successfully trimmed
unsuccessful brands
Leading brands
increased sales from
75% to 93%

Consistent growth in Home

& Personal Care
Improved overall quality and
growth profile of Food
portfolio

Global procurement
programs have delivered
2.4B, excess of 1.6B
target
Improved capital
efficiency
Successful integration of
Bestfoods acquisition

Is it working?
No. Unilever was getting there, but getting there too
late

Reported a net loss of

$318M
In 2004, underlying sales
grew by only .4%, leading
brands by .9%
Lagging behind
competitors in terms of
marketing and innovation

Failure to increase
advertising and
marketing efforts
Still lack focus and
effective strategy
execution
The company remained
too local and fragmented
Unilever plans to
discontinue the Path to
Growth Strategy

So whats next?

Recommendations
1. Reorganize and streamline
Unilevers organizational structure.
2. Implement Unilever Believer
product and brand extensions.

Recommendation 1

Recommendation 1

Strategy Justification

Unilever maintained two

business entities, dual
chairperson approach
Unilever Group owns
Unilever Plc and Unilever
NV
List stock separately and
share board of directors
Management typically wear
two/three hats
Board and business
responsibilities conflicted
Company remained two local
and fragmented
Recognize the need to
streamline
leadership and management
structure

Reduced effectiveness and

slowed the decision making
process.

Unilever Plc

Unilever NV

One Unilever

An initiative to create an
overall umbrella brand across
all Unilevers brands that will
eventually consolidate various
businesses under one name

One Unilever

One Unilever

Cross Functional Management Team

Global Business Units

Margarines, spreads, oils

Frozen Foods
Icecreams
Tea-based beverages
Culinary
Health and Wellness
Fragrances
Deodorants/toiletry
Oral Care
Soaps, lotions, skin care
Laundry
Househould care
Cleaning Products

Market
Development
Organization

Ireland
Korea
Neverlands
Italia
US

Global
Business Services

Global Enabling Team

Regional Leadership
Team
Global Process Owners

Corporate Functions

Customer Business
Development
Finance
Human Resources
IT
Market Research
Government Relations
Product Supply
Public Affairs

One Unilever

Cross Functional Management Team

Global Business Units

Margarines, spreads, oils

Frozen Foods
Icecreams
Tea-based beverages
Culinary
Health and Wellness
Fragrances
Deodorants/toiletry
Oral Care
Soaps, lotions, skin care
Laundry
Househould care
Cleaning Products

Market
Development
Organization

Ireland KEY
Korea
Neverlands
Italia
US

Global
Business Services

TO SUCCESS
Global Enabling Team
Regional Leadership
Team
Global Process Owners

Corporate Functions

Customer Business
Development
Finance
Human Resources
IT
Market Research
Government Relations
Product Supply
Public Affairs

A simpler management structure will increase accountability

and speed the decision making process.

Recommendation 1
Deliverables

Provides a greater clarity of leadership,

responsibility, and accountability

Allows Unilever to focus on the needs of their

customers and consumers thus growth and
increasing sales potential

Provides the ability to leverage scale of operations

Create a strategic platform for brand

management

Recommendation 2

Unilever Believer

Program that focuses on brand

initiatives to the consumer
Lets the consumer know more about
the product and its uses
Believe
intop
Unilever
Objective:
Bring
of the mind
awareness
Strategy: Use advertising that
connects with consumer needs

Recommendation 2

Strategy Justification

Consumers demand high quality

products that both are convenient
and delicious
Consumers look for new ways to
use products
More females are working full time
jobs
Large population of single-parent
households
Increase consumer focus on
health and nutrition

Products of Focus

Lipton Extension
Focus on Energy Drinks

Energy drinks jumped 56% in sales last year

Market has exceed $100 million
Main Competitor: Red Bull

Positioning Statement: A Healthier Alternativ

Energy Drinks

Lipton Extension
Product: Lipton Lift
Target Market: Young adults 18-32
Uses: stay up all night and/or start a night out
Main Ingredients: Caffeine, Vitamin B, Guarana

Advertisements: Highlight healthier ingredients o

product while showcasing its ability to give energ
revitalize body

How Do You RAGU?

Marketing & Advertising

Featured advertisements on how

consumers use Ragu
EXAMPLE of new product usage
A mom showing how she uses Ragu as a
base for her chili

Call to Action: How Do U Ragu contest &

website with new uses
The created new uses will get our consumer
involved in being a Unilever Believer

How Do You RAGU?

Product Line Extension

Focus on Consumers on the Go

Ragu Lunch Pack
-Ragu sauce
-Cooked spaghetti
-Garlic Bread
How do I Ragu On the Go

Recommendation 2
Deliverables

Delivers innovative products that

capitalizes on changing consumer
preferences

Allows Unilever to focus on the needs of their

customers and consumers thus reigniting
growth and increasing sales potential

Provides a strong competitive platform

against major competitors and private
label brands

Thank you