Introduction And Background Section
Strategic decision making is a process of charting goals based on the long-term vision through alignment with the short-term plans which have a deeper and broader mission. In this manner, the short-term goals ensure provision of a longer plans in order to initiate a wider mission to clarity as well as consistency. This study will address the business strategy of Unilever by the application of Porter’s Generic Strategies framework. The study will also critically evaluate the generic competitive framework by identifying the limitations and recommendations and how they can be overcome. Further, recommendations on the limitations of Porter’s Generic Framework and how these can be overcome are addressed in this study.
Unilever PLC is a British multinational consumer goods company based in London, England. In 2019, the group was listed as the fourth largest FMCG company in terms of sales and marketing. Some of the prominent brands include Knorr, Dove, Axe, and Lipton (Unilever 2022). On driving superior performance, the company aims at establishing a future fit business that is purpose-led and that can help in improving productivity and create an exuberant experience for the customers. The company also has a supportive and inclusive environment that helps employees to learn and develop for the best role that suits their needs.
The business strategy of Unilever is focused on acquiring a leadership position and adopting high growth in the business market. Unilever segmented its portfolio from distinctive groups such as Personal Care, Foods, Refreshment as well as Home Care. Upon selling its products into the market some of the supermarket groups such as Walmart and Carrefour are reliant on the company (Johnson et al., 2017). Unilever’s generic strategy can be utilized to address the market needs and establish a way through which a competitive advantage can be gained for the company in the global consumer goods industry.
In the case of Unilever, competitive advantage is identified through an approach of product development that integrates the research to prioritize the needs of the market. In addition to that, a company acquires progress to address the needs of the market. Unilever in this aspect makes a shift in prioritization of customer needs based on the consumer goods into the market (Yukl & Gardner III., 2020). In Porter’s model, the strategies are utilized to ensure competitiveness in the market and how it is necessary for maintaining business growth.
Unilever utilizes a broad level of differentiation in its generic strategy to gain a competitive advantage in the market. The foremost emphasis of this generic strategy is in its strategic focus that makes a business stand out from the rest of its competitors in the market. For instance, Unilever makes use of Dove Cream Bars to fulfils customers’ wants in the market as these products are not dry and punitive for the skin. Despite luxury in personal care products, it is witnessed that the company accounted for 1% of its total turnover. Goldman Tuchs also reduced its target from £38 to £37 in October 2015 (Unilever., 2022). On the other hand, Berenberg enhanced the target by performing on its margins and growing at a double in the market. Unilever’s products are competitive as they stand out from the rest in the market and tend to be more focused on the customer’s needs and orientation.
Unilever’s Business Strategy Using Porter’s Generic Competitive Strategies Framework
Unilever aims to be a market leader by attracting a large number of customers into the market. Therefore, this generic strategy is in close alignment with the vision as well as a mission declaration of Unilever that tends to support widespread sustainability and enhance importance in customers’ lives (Unilever., 2022). The strategic objective is founded on the variation of generic competitive strategy that makes Unilever produce items through concentrated energies in product expansion. In contrast to that, the financial objective is based on enhancing Unilever’s revenue to offer better growth opportunities in the market (Hitt, Ireland & Hoskisson., 2016). Mixtures of these objectives lead to a competitive advantage that is reflected from the products and undergo and strong financial position in the market.
Figure 1: Porters Generic Strategy
(Source: Created by author)
Unilever makes application for market penetration as its chief intensive strategy. In this approach, the company makes use of enhanced sales volume to expand its returns and business development. For instance, Unilever sells its products by making aggressive efforts to enhance its capability in order to capture customers from home care firms (Campbell &Yeung., 1991). Market penetration is utilized in employing an enhancement in market share for the product of Unilever.
Product development idealizes upon as a secondary approach that Unilever utilizes for better commercial development. The company utilises an intensive growth strategy to address customer’s needs (Porter., 2008). Unilever’s care products are released to enhance the share of the company in the market. This strategy leads to the enhancement of the market through the incessant novelty of the product. The changes in turnover composition are explained by an underlying growth of acquisitions and divestments.
Unilever makes use of diversification as a strategy for a wide range of investments within the portfolio by investing in the domestic and foreign markets. This strategy is aimed to mitigate the risks and maximize returns by assigning funds across different customers. To achieve diversification, Unilever acquires this business in a timely period and this acquisition is based on personal care of the business. The generic competitive strategy for differentiation is supported by offering unique features that attract the target customers (Denning., 2007). The strategic growth is therefore supported by a concentrated strategy to establish development through M&A. This trend aims to reach the worldwide consumer goods industry.
Market development is applied as a helpful progress strategy in the business of Unilever. Unilever can extend its market for current products as a new solution to address the customer needs and requirements (Zaccaro, Rittman & Marks., 2001). The strategy in differentiation provisions this intensive strategy by establishing an inexpensive advantage and establishing product individuality to arrive in the marketplace. Expanding onto the audience creates more potential leads that brings greater sales and higher revenue essential for bringing value to the target new customers (Mintzberg., 1994).
Unilever’s Generic Strategy
Critical evaluation of Porter’s Generic Competitive Strategies framework by identifying the limitations and advantages and recommendation on how these limitations are to be overcome.
Competition is one of the most powerful forces that can be better than most of the fields in human endeavor. As competition is pervasive in the market, there are likely chances that marketplaces have to restore to coping with globalization in making a response to societal needs (Bolman & Deal., 2017). Competition has intensified in the last decades and businesses need to strive in this cut-throat environment in order to maintain prosperity and enhance business growth. By constantly trying to evolve into the market they have widened to encompass newer dimensions into the business.
For instance, the five forces became a shorthand idea for the industry structures through which competition unfolds in the market. Strategic positioning vs. operational effectiveness becomes distinctive in understanding the strategic nature of how it sets competition in the market. Thinking about competition and strategy in the market, there are chances for influencing diversification based on industry-level competition (Katzenbach & Smith., 2008). As competition is evolving, it is an unsettling source as they convey messages for a staggering power to make things better in the market.
One of the constraints of Porter’s generic strategy is its criticism for suppleness and specificity. Porter made recognition for reducing the generic strategies and focus on the three dimensions of the model which includes access-based, need-based, and variety-based strategies. The model is disparaged for being a “stuck in the middle” premise. Despite the limitations, there are chances that these firms make use of models to take strategic management decisions.
Unilever makes use of a broad differentiation strategy to gain a competitive advantage. The chief emphasis of this generic strategy is that it features the products that brand on how it stands out from the competitors in the market. Examining the business strategy lies in applying and following on a particular generic strategy in sharing certain features for the company (Cohen & Bailey., 1997). In the case of Unilever, the application of this strategy can be utilized to ascertain that the company is able to make an effective positioning in the market by segmenting the market into different groups. The firm in this aspect needs to take into context the details in generic strategy for depending on the firm’s strategy.
Unilever’s success is shown in how effectively it utilizes and supports business through growth. The purpose is in building an essential element that is effective for brand building. One of the significant reasons for Unilever’s growth is in how these products specialize and dominate in around 190 countries. Therefore, a significant level of decision-making is indispensable for strengthening its position in diverse markets. Unilever achieves onto product market share for enhanced profits into the market (De Wit & Meyer., 1994). Upon achieving double-digit growth, it creates awareness that links human health and cleanliness for the company.
Unilever’s Intensive Strategies
The decisions are made for the long-term growth of the company and how they can collect bonuses to be in a good shape. The launch of a sustainable development plan ensures that the company increases social impact through a novel, sustainable as well as equitable approach. In the book, “Competitive Advantage: Creating and Sustaining Superior Performance”, Porter initiated “Generic Strategies” to be subdivided into the market (Ahlstrand, Lampel & Mintzberg., 2008). Therefore, the applicability of this strategy ensures that this approach is utilized to maintain its stand in the market. On determining the usefulness of this tool, competitive strategies bring to assist in the growth, profitability, and management of the business to generate a sustainable competitive gain for the business.
Unilever needs to make use of a wider differentiation strategy for ensuring a competitive advantage so that the company is able to stand out against its competitors. One of the biggest weaknesses of Unilever’s strategy is that it operates in a competitive market where opposite players challenge their dominance at each stage. It is recommended to assess and manage risks that are crucial in determining the climate-related risks as well as opportunities. Mitigating risks paves way for the financial stability of the business. These recommendations will ensure markets remain active to exposure and opportunities for the purpose-built by the customers.
Upon being compared to generic strategies, Porter’s model can make an explanation for how they would compete and what they would compete in the market. In this way, Unilever will be able to make effective criteria on what could be done to better explain the ideas through the utilization of distinguishable strategies (Patrick., 2018). Therefore, upon being employed by the firm utilization of this aspect is based on what strategy the firm can adopt to remain active in the real world (Crawford & Salaman., 2012). Porter’s generic strategies need to make application of this approach for understanding the growth and profitability to create sustainable competitive advantage. Porter acquired this strategy to remain competitive in the market and achieve sales in producing high volume at low cost. By focusing on this strategy, businesses will be able to determine their own position in the market and obtain strategic options to remain competitive in the market.
Conclusion
Strategic decisions are intended to initiate competitive advantage by means of bringing a change in the scope as well as direction to the company. They are important for the health and survival of the business and promote business growth and extension. Considering the prevalent environment in which the firm is operant in, and how it needs to reduce its weaknesses and improve strengths these decisions are taken. Unilever is mainly concerned with meeting everyday needs with hygiene and personal care that helps people to look good and feel full of life. They make and sell products with sun protection products and so on.
Unilever meets the daily needs by fitting into the business that has a purpose beyond profit and its growth is powered by ideas and values. Believing in caring for stakeholders is a way through which business can be done. Its history lies in a story of growth and meeting the everyday needs of the company. The products of Unilever include wellbeing vitamins, minerals and supplements, ice cream, and food. On initiating the everyday needs, the company has aimed to create a better life for the individuals. Being a part of the brands enhances the lives of the customers through integrity, respect, responsibility, and pioneering.
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