Trends In Packaging Of Food Beverages And Other Fast-Moving

Strategic direction and strategic thinking of Unilever

Any organisation operates upon the strategic decisions that are taken by the management of the company. These decisions are based on the internal and external business environmental factors. These decisions are also aligned with the principles and core values of the company. According to Hill et al. (2014), the internal factors are under the control of the management and hence these are used to determine the strengths and weakness of the company. On the other hand, Vogel and Güttel (2013), the external factors are not under the control of the company and the analysis of these factors lead to the opportunities as well as the threats in the industry. The company that will be explored in this assignment is Unilever with the help of five tasks the strategic management of the company will be analyzed.

Strategic direction is the approach that is taken by the company in order to achieve the objectives aligned with the principles of the company. Unilever is a multinational organisation that operates in the FMCG industry and thus the company has ample opportunity to expand in terms of market expansion. There is a plethora of brands that operate under the company and the strategic direction that the company had undertaken in the past is differentiation strategy. The company focused on the features and the products that the competitors were serving and presenting the own brand in a different manner (Davcik and Sharma 2015). Here, marketing and sales strategies played an important role. According Zehir et al. (2015), one of the major advantages of the strategy is that the company is already providing the consumers with something that has a new feature than what is being offered by the competitors. This strategy enabled Unilever to build the brand name with goodwill not only among the customers but also other stakeholders. It has been stated in the official website of the company that the foundation of the organisation is based on the purpose of providing the people with better opportunities and options, thus following this strategy the company has been focusing on the differentiation strategy (Hartsfield et al. 2017).

In the due course of the company Unilever has ensured to maintain the principles with which the organisation was established. In order to be in sync with the process the strategy was changed from differentiation to innovation. Today, innovation research and development play an important role in the business model of Unilever (Daneshkhu 2015). The company has established itself a brand that offers high quality product at the best price and in order to maintain the quality with price innovation play an important part (Pisano 2015).  The vision of the company is to achieve the objective of the business by making sustainable living commonplace (Unilever.com 2018). The strategic objective of the company has been divided in four divisions:

• Growth in terms of sales as well as capital efficiency
• Development of the health and wellbeing by focusing on the nutrition and hygiene
• Improving the livelihood of the people associated with the business by ensuring there is a healthy work environment which is devoured of discrimination of any kind.
• Positive impact on the environment by reducing waste, sustainable usage of water, reduction of greenhouse gases and also ensuring sustainable sourcing (Unilever.com 2018).

Industry Analysis

These are the aspects that have been the basis of strategic thinking for Unilever in order to achieve these objectives the company has focused upon innovation not only in the products and services but also in the process of doing business. Some of the strategies that is undertaken by the company in order to ensure a focused approach to innovation: Active portfolio management, e-commerce, Zero-based budgeting etc.

As discussed in the introduction it is important for the company to analyze the industry in order to understand the position of the company. PESTEL analysis will be used o determine the dynamics of the industry however, the porters generic strategy model will be used to understand the competitive advantage decisions that is taken.

Political: The stability of the government in the process of achieving the objectives of the business. As Unilever operates in the FMCG industry it has to abide by a number of regulations that are set by international authorities Like FDA, ISO, etc depending on the country or region of operation. The liberalization of the regulations of a country also impacts the decision making of the company, for example: if company is operating in the UAE region, the company will enjoy the liberal trade policies in the region. On the other hand, the company also have to abide by the

Economy: The economy of the country of operation or distribution is an important criterion to consider while taking strategic decision. The position of the country in the development list showcase the opportunity the company has towards development and growth (Dsouza 2017). The company offers the people with the best quality product in the most reasonable price that is possible. As the labour costs of the developed countries are high, the company can choose to operate in the developing countries where the cost of labour is relatively low in order to ensure investment savings. However, the sustainable sourcing policy of the company highlights the importance of ethical sourcing.

Societal:  Depending on the economy the standard of living among the people of the country varies, Unilever ensures that they provide all the customers irrespective of their geographical boundaries. As the company has basic FMCG products the quality of the products are the prime concern of the company and not the price. The focus of the company is to develop a sustainable future and in order to achieve the vision the company introduces strategies in to improve the society in which the organisation is operating. Apart from this there are a number of CSR activities that is undertaken by the company to improve the societal condition in the countries of operation (Unilever.com 2018).

PESTEL Analysis

Technological: The company has undertaken innovation as an important aspect of the business model. Advancement of technology has been accepted by the company for innovation research and development. The company has used technology as a method of market development by introducing e-commerce to the business model. Apart from this the company has also used digitalization of data so that the process of gathering information is easy and smooth and also decreases the cost to some extent. The manufacturing plants of Unilever are based on high technology and engineering, these ensure that the resource and capabilities of the company are utilized to optimum level. Technology also guides the people to achieve their best performance in the company.

Environmental: Unilever complies with environmental rules and regulations in the process of manufacturing as well as distribution of the products. The company has CSR activities which are based on reduction of environmental impact, and strategies such as reduction of carbon emission and greenhouses gases along with reduction of waste, sustainable usage of water etc.

Legal: tax laws, labour laws, patent laws, trade barriers etc impact the operations of the business of Unilever. The company abides by the legal jurisdiction of the countries of operation in order to enjoy the freedom of operation and support from the local government.

Some of the direct competitors of Unilever are Nestle and Procter & Gamble. In order to meet the competition the company has to ensure the capabilities. The VRIO analysis will help in understanding the competitive position of the company.

From the above table it can be concluded that the company has the resource and capability to combat the intense competition in the market as most of the resources adds up to being sustainably competitive in nature which means that they have a long-term impact. As the strategy of the company revolves with the innovation capability it can be said that the company has achieved competitive advantage over the other players in the market. Therefore it can be concluded that the company has gained sustainable competitive advantage with the help of the resource and capabilities.

Established in 1929, the company has come a long way in the industry, at this stage it can be said that the company is in the maturity stage and there is a steady growth in the revenue of the company (Unilever.com 2018). However, the rate of profit has decreased over the years, the company has seen drastic decrease in the profit in the past and has recovered form that. Turnover growth averaged 1.0% over five years the company is in the maturity phase and with the help of innovation and research can achieve growth (Unilever.com 2018). Refer to the appendix 1 for a comparative study of the past three years

Competitive advantage among its direct competitors

The vision of Unilever is to make sustainable living commonplace (Unilever.com 2018)

 The management explains that they believe that this is the most effective and long-term way for the business to develop in the future. Sustainability is a factor that is aligned with the current requirement of the industry. Business organisation all over the world has acknowledged the responsibility and obligation they have towards the society and the environment (Carroll 2015). Owing to the fact that the society and the environment provide the resources the help run the operations of the business. The company employs market research in order to determine the needs and requirements of the customers which are important as the mission is to provide the people with better opportunities in life so that they can lead a higher standard of life (Malhotra and Peterson 2014). The objective of priority of the company is as follows:

• Build a better future for the children
• Ensure a healthy lifestyle
• Reduced impact on the environment
• Proving the farmers with a better future (Unilever.com 2018)

The company has been focusing upon innovation as a major part of the business model to ensure that the strategic decisions that are taken are aligned with the vision of the organisation. Innovation is not only required in the products or services that the company offers but also in the process of business operation. Over the years the company has not changed its focus in attaining sustainability and hence there is no change in changing the vision or mission. All the objectives that are established by the management are all based on the above stated vision of the company.

The company operates in the consumer goods industry and some of the trends of the marketplace that are aligned with the vision and mission of Unilever are:

Firstly people do not want to spent a lot of money on consumer goods; rather they would save that money on spending on something they aspire for. As the nature of consumer goods are such that it does not satisfy the aspiration of a person the price point has to be nominal. Unilever believes in providing the people with the best quality product at the minimum price possible, though the company understands the importance of health and hygiene and also involves in spreading the awareness of the same (Mckinsey.com 2018).  

Another trend is to ensure there is e-commerce provision; people are now inclined to not waste time on buying groceries rather spending that time with family or friends. Most of the places where the company has its distribution have the facility and the infrastructure to facilitate e-commerce in the grocery sector. Unilever has also expanded the market in such a way that it can facilitate e-commerce itself and also by partnering with a number of third parties (Mckinsey.com 2018).

Probable market changes and challenges faced by Unilever

Innovative products, in order to capture the attention of the customers and maintain a competitive advantage the strategy that the company has undertaken is initiation of innovation. This is aligned with the trends in the market (Mckinsey.com 2018). Innovation in terms of healthy alternatives is a growing demand (Mckinsey.com 2018).

Therefore, it can be said that he vision and the mission of the company is aligned with the market place trends.

From the above analysis of the strategic capabilities of Unilever it can be said that the company has the ability to improve in the factory and the HR department. As mentioned above innovation is the strategy of focus the management should focus on developing the manufacturing units in a more advanced way in order to improve the production of the company. Another resource of the company that can be changed with strategic management decisions is the human resource. The focus should be on the career development and in order to do so the people should get regular training and skill development (Hamel and Prahalad 2013). This will ensure that the performance of the people is developing and their interest is aligned with the objective of the company. Encouraging change and innovation among the people working for the company is important in order to change the competitive equity to sustainable competitive aspect. The management of Unilever understands that the people are the backbone of the company and thus providing them with opportunity to grow would mean better efficiency for the company (Vogel and Güttel 2013).

Strategies to defend the core business

Implementation of Big data services, the company is spread all across the globe with 2.5 million people using Unilever products every day. It is important to understand the nature of buying process among these people and in order to do this the company has to undertake big data services (Fan and Bifet 2013). The company requires focusing on the high velocity data in order to be more effective. According to Wang et al. (2016), the company will also benefit from the analysis in supply chain as well as maintaining the logistics of the brand.

Regional products:  in order to fit the requirements those are based on the cultural and geographical need of the customers (Srivastava 2013). Market research is also important in this case as the requirement of the customers have to be recognized the demand. For example, the specification for the people from India will be different from that of America. As the principle of the company accepts and enjoys the advantages of diversification the company has to indulge in market research (Davis et al. 2014).

Conclusion

Healthy and hygienic options in innovation, there are a number of snacks and fast food options in the company which should be developed in a healthier version. More and more people are becoming health conscious thus proving packaged health food will be an opportunity for the company. On the other hand; innovative healthy options for the products that are already include in the product portfolio, will help the company to broaden the target market further. Here, another aspect that has been associated with the current trend in the market is the reduced consumption of sugar content (Farmer 2013). According to Spaargaren et al. (2014), people are concerned with their health and the daily routine does not permit most people to work out properly, people are trying to deal with the food items which when consumed in large amount is harmful to health (Farmer 2013).

Increased use of locally manufactured raw materials is one of the current trends in the market; this not only will help the company to reduce the cost of product but will also ensure ethical and sustainable sourcing which is one of the major objectives of the management (Poulis et al. 2013). This strategy will help in the process of research and development of product and services to fit the local demand of the country.

 Following the above strategy the company can also develop products which are organic in nature; this can be created with a separate line of products or can also be developed which will have exclusive organic items. The existing line can also come up with organic options but this is a good opportunity for the company to develop a brand which caters to people who like using organic products and are also vegan in nature. Along with organic product to use, vegan and organic snacks and packaged food items can be introduced in order to cater a target market which is looking for premium quality reasonable organic options.

Unilever has six research and development locations all over the world; however, given the opportunities and the area of expertise that the company covers, there is scope and time to establish another R&D department. As the focus of the company is on the innovation strategy this idea would be a fruitful addition to the asset. The study uses the VRIO model to describe the various strategies discussed in this section (discussed in Task 2) and the Product Life Cycle Model to explain the use of the product in the hypothesized future market scenario.

References

For the recommendation that has been stated above has been the following resources implications are necessary:

In order to manage big data the resource that the company should initially have is third party assistance, most of the big data services are provided by third party organisation and hence finance is another resource which is required in order to use initiate this recommendation. Furthermore, with big data comes market research to develop products and services which fit the trends of the market as well as cater to the needs and requirement of the customers (Alfes et al. 2013).

To develop regional product to cater to specific requirement the company will need research resource, human resource and financial resource to ensure that the process of initiation and distribution is smooth. To initiate innovation the company requires financial investment along with trained human resource; this will help in developing products that are healthy, organic or vegan. On the other hand, in order to develop a new organic product line the resource that is required apart from the above stated ones are technology, physical resources like office and stationery etc (Alfes et al. 2013).

Conclusion 

It can be concluded form the above discussion that Unilever is an organization that has been following the path of sustainable growth form the time of establishment. The company values the principles that have been responsible for the growth of the venture and hence it is still practiced. All the decisions and policies are formulated based on these principles.  The vision and mission of the company follows the path of sustainability and providing the customers with high quality output in reasonable price point. E-commerce, organic and healthy options, collection and analysis of big data etc are some of the recommendation for the development of the company.

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