Unilever’s Product Umbrella and Strategic Management Decisions
About Unilever:
Unilever is consumer goods manufacturing company which has its base in Rotterdam, Netherlands and London, the United Kingdom. The multinational company is listed primarily on the London Stock Exchange and Euronext Amsterdam. The company, founded in 1930 operates in more than a hundred countries under the leadership of Paul Coleman, its CEO and Margin Dekkers, its chairperson. The product umbrella of Unilever can be divided into four main divisions namely, food and drink, home care, personal care and water purifier. An analysis of the product umbrella of the Dutch multinational company would reveal reflection or outcomes of four strategic management decisions of the company to counteract the competitive threat it faces (unilever.com 2018). The first umbrella, consists of brands like Bru Coffee ranges, Cornetto, Magnum ice-cream and Brooke Bond. Unilever uses Bru that competes with Nescafe, owned by Nestle, one of the biggest competitors of the company in the food market. Cornetto and Magnum owned by the company competes with Movenpick, owned by Nestle and the ranges of ice creams by Baskin-Robbins. The next division consists of home care brands like OMO, Surf and Domestos. The major competitors of Unilever are P&G and Reckitt Benckiser (us.pg.com 2018). The third class of products Unilever offers consist of personal care, both for men and women. The brands like Lux, Axe, Brut, Lever and Lakme come under the product umbrella. Unilever encounters competition from multinational companies like P&G and L’Oreal. The company competes with electronic giants like LG and Samsung when it comes to Pureit, the water purifier brands it owns. The product line of Unilever consists of two strategies so that it can counteract the intense competition, niche marketing and acquisition and merger (Brown and Bessant 2013). The level of competitive threat under which Unilever operates can be gauged by the fact that Krafts Heinz wanted to acquire it and failed. Unilever, in order to sustain in this competition and operate globally as a leader in the consumer goods market adopts the strategy of acquiring companies all over the world. The deadly strategy which the company uses to support its acquisition, product strategy and niche marketing is supply chain management strategy, which again spreads all over the world (Kotler 2015).
Main analysis:
Acquisition and merger strategy of Unilever
According to Jay and Barry (2016), the acquisition and merger is a strategic tool which multinational companies use to strengthen their global competitive positions. The acquisitions and mergers serve several important roles for the multinational companies. The following are the strategic factors which multinational companies seek to achieve through acquisitions of firms:
Analysis of Unilever’s Acquisition and Merger Strategy
Increase in revenue generation:
The most important objectives that the companies try seek through the merger and acquisition strategy is increase in revenue. As far Unilever is concerned, the company’s product line is composed of food and drinks, personal care, home care and water purifier, all of which are extremely competitive markets. For example, in terms of food and drinks, Unilever brands like Cornetto, Magnum, Knorr and Lipton are present in the market. As far as Cornetto and Magnum are concerned, Unilever faces competition from Nestle, which is the world’s largest manufacturer of food products. Nestle is a multinational company listed on the Swiss Stock Exchange (bloomberg.com 2018). Nestle just like Unilever is present all over the globe and in fact, the two competitors share most of the markets. Nestle owns Movenpick which competes with the ice cream brands like Magnum that is owned by Unilever. Unilever is already facing stiff competition from its competitor based in the US, Baskin-Robbins. The latter is the world’s largest ice cream chain. The two companies give tough competition to Unilever in the ice cream market. The company in addition faces competition from low ice cream manufacturers in the world. This means that Unilever faces financial risk of losing revenue due to extreme competition in one of the market it operates (Zucchella et al. 2016). Acquisition of firms in different and diverse market allows Unilever to sell a large number of products globally and generate immense revenue. A classic example of one such acquisition was that of Lakme, the Indian beauty brand in 1996. The brand also offers salon services as well. Thus, acquisition and merger of Lakme allowed Unilever to enter the high-end beauty market. It is a high end beauty and fashion product and its consumers are mostly upper class consumers. Lakme Fashion Week is a high end fashion show attended by international designers. Thus, by acquiring Lakme, Unilever boosted its revenue generation power (Yamin and Mavondo 2015).
Capital generation:
Figure 1: 5 years stock comparison between Unilever, Nestle, P&G and Samsung
(Source: bloomberg.com 2018)
Increase in Revenue Generation
Acquisitions and mergers are formidable tools that multinational companies use to expand their capital base in which in turn renders them their competitiveness. The figure above shows comparison between Unilever and its three competitors Procter & Gamble, Nestle and Samsung (us.pg.com 2018). The graph shows that the performance of Unilever has been better than Procter & Gamble and Nestle but not as good as Samsung. One must note that all of these companies are public limited companies listed on various stock exchange around the world. Unilever, like its consumer base shares its investors’ base with them. Acquiring companies from diverse markets not only allows Unilever to serve a diverse consumer base, but get access to to the capital of these companies. The operations managers of Unilever can use the assets of these companies as well to manufacture and operate in the international market more efficiently (unilever.com 2018)
The two tables shown above compare between the assets held by Unilever and one of its largest competitors, Nestle. The table shows that compared to approximately 109060 million Euros asset value of Nestle, the asset value of Unilever is mere 60285 million Euros according to the financial figures of 2017. One can also point that as far as food market is concerned, Nestle occupies the top position. This means that acquisition of assets in form of companies contribute directly towards the operational efficiency of multinational companies (Sheen 2014). This factor has made Unilever acquire companies from diverse industries to boost its asset value. Unilever acquired Lipton in 1971 and Brooke Bond for GBP 390 million in 1984.
These two acquisitions strengthened the position of Unilever in the tea market in England. Unilever acquired Chesebrough-Ponds in 1987 which earned the company a great share in the beauty market in Europe. Thus, it is evident that acquisition and merger plays an important role in evaluating the competitive strength and asset value of the company. Since, Unilever is a public limited company, it is dependent on the trust of the investors so that capital can be generated for international operations. The decisions regarding acquisitions and merger have deep impact on the decisions of the investors to invest in the funds of the company. This was further evident when Unilever rejected the offer of Kraft Heinz to acquire it. This decision of Unilever actually advertised and reinstated its prowess to sustain its global operations and give its investors positive returns on their investments. The investors support increased for the company and its share price soared to £ 39.78 (ft.com2018). The apex management of Unilever further pledged to give short term return through its growth-driven operation model. Apparently the growth driven model
Capital Generation
The figure above shows that operating profits of Unilever personal care increased from 2010 to 2016 compared to other products. This can be aligned to the fact that Unilever has acquired more personal care product companies compared to the other segments.
One can point out that acquisition and merger plays an important role in capital generation and competitive strength of Unilever. The figure above shows the stock price of Lakme Limited, which is one of the biggest acquisitions of Unilever. The graph shows that the stock prices of Lakme is increasing which means that the company can generate more capital by floating shares in the stock market. Since, Lakme is owned by Unilever, the latter can use the capital of the former to enhance the efficiency of its international operations (ft.com2018). Thus, this analysis shows that as far as Unilever is concerned, its acquisitions consist of public limited companies which are capable of generating capital themselves. This adds to the capital base of Unilever which ultimately adds to its financial power. This financial power acts a security to the investors from around the globe in invest in the shares of Unilever which generates immense capital for the company.
Acquisitions and financial sustainability:
The acquisition and merger strategy enables Unilever to establish itself in the host countries which already have competitive resident companies, thus making it operations financially more sustainable. As pointed above the Unilever faces stiff completion from Nestle and Baskin-Robbins in terms of desserts. Nestle is listed on the Swiss Stock Exchange as already pointed out and shares both revenue and stock market with Unilever. However, it must also be pointed out that Baskin-Robbins, the next big competitor of Unilever in terms of frozen dessert is owned by Dunkin’ Brands though it is not a listed company. Dunkin’ Brands is listed on NASDAQ and thus contributes to the capital of Baskin-Robbins which attributes for the latter’s competitive strength (nasdaq.com 2018). Thus, to counteract the competition of Baskin-Robbins and Nestle, Unilever acquires several ice cream brands all over the world. The company acquires Breyers which is also based in the US like Baskin-Robbins in 1993. This acquisition enabled Unilever to establish itself as the largest manufacturer and seller of ice cream in the United States which is one of its important markets (unilever.com 2018). One can also say these acquisitions has enable the company to gain more competitive strength in the market and gain higher degree of financial stability. The same can be pointed out in case of the acquisition of Dollar Shave Club in 2016, a mens’ grooming company based in California which makes razors and grooming products for men. One can also point out that though Unilever already owned Axe as its mens’ grooming brand, Axe does not make razors. Gilette, the men’s grooming brand owned by P&G makes both shaving creams, gels and other accessories including razors (us.pg.com 2018). Thus, by acquiring Dollar Shave Club, Unilever strengthened its position in mens’ grooming market (fortune.com 2018). Again, one can point out that the traditional rivals of Unilever like Nestle and P&G have stronger position that the former which challenge its revenue generation. The company already has established its presence in the electronic water purifier market in form of Pureit where its strong competitors are absent. The company has acquired a majority stake of Qinyuan Group which is a leading Chinese water purifier company which already generates sales over €100 million (chinadaily.com.cn 2018). Thus, acquisition and merger allows Unilever to enter various markets which allows it to diversify the competition in receives from its powerful contenders. One can point out that moving into the electronic water purifier market brings Unilever into competition from Samsung and LG, which have stronger presence in the electronic market (lg.com 2018). However, Unilever can give both Nestle and P&G more competition in revenue generation by its presence in electronics market. Again, it can diversify the loss of revenue which it suffers owing to presence of stronger presence of competitors like Samsung and LG in water purifier market. Moreover, acquisitions enable Unilever to establish itself strongly in its main host markets and dominate them. Breyers and Dollar Shave Club earn the company high positions in the US while Qinyuan Group help it to strengthen its position in Asia (in.reuters.com 2018).
Acquisitions and Financial Sustainability
This analysis shows that acquisitions and mergers enables Unilever to gain financial sustainability in various markets product wise and region, thus making its operations more sustainable. Unilever though has weaker positions compared to P&G, Nestle or Samsung, is able to give all of them tough competition through its acquisitions and merger strategy (Stiglitz and Rosengard 2015).
Niche marketing strategy of Unilever:
The term Niche marketing is referred to as the marketing tactic that is employed to target a particular market segment which is unique in nature. Niche marketing is often created as a result of satisfying some very precise and specific needs of the customers. The management has the sole responsibility to identify the needs of the customers and create specific products according to such demands. The target market of the niche products have to be selected in advance to gain the maximum possible profit from sales. Unilever has been one of the most successful companies of the globe with a variety of products in offering (Choudhary 2014). There has been a recent trend in the growth of the niche marketing arena of Unilever. The company has been long serving specific areas of interests for its consumers. This includes a variety of food products, beauty products and many more as such. However the growth of the niche market has also provided enough scope to the other enterprises to venture into this particular category (Schaefers 2014). The following trend has increased the competitiveness within the industry and customers have a lot options available in front of them to satisfy their specific needs. The implementation of the niche strategy has helped the companies to avoid the intense competition that is present in the normal markets. The sales growth of the high end niche products has been another main reason behind the implementation of the niche strategies by the variety of companies (Ponnam and Balaji 2015).
Unilever has around 7000 marketing channels and brand partners all across the world. These partners and channels collaborate together and undertake a strategy development program to develop the main aims of the business. The marketing strategy of the company is very much unique in nature (Chae 2015). The management of Unilever believes in a connected world and thus the motto of the business organization is “Crafting the brand for life”. The following motto is a combination of three pillars namely;
- People first- The aim of the organization is to put the people first in the category of the needs. Putting the people at the core of the business operations is essential to the growth of the business in the long run. The management of the business has aimed to make the business run according to the demands of the people and has pledged to fulfill all the different specific needs of the people (Choudhary 2014).
- Indispensible Brands-The fact that people cannot live without the use of brands is a proven truth. The presence of a large number of different brands of Unilever provides immense value to the customers and value to the specific range of products for the consumers (Schaefers 2014).
- Magical Experiences- The providence of immense value to both the products as well as the consumers is of immense help to the customers as they enjoy a magical experience from the use of the specific range of products.
In spite of the efficiently organized marketing system of Unilever the company faces a number of operational issues in niche marketing, which makes it tough for them to address. This are;
- Imitable products-All the different types of products in the market manufactured and sold by Unilever are easily imitable. The products are imitated mainly by the local companies who try to gain the popularity of the already successful products by launching the products with the same range of uses (Hasan 2015).
- Availability of cheap substitutes-As mentioned earlier the customers nowadays have lots of different options in their hand to choice from a wide range of products. The availability of a number of different cheap products has made it one of the largest weaknesses of Unilever.
- High Dependence on the Retailers-The management of Unilever has a high rate of dependency on the retailers as their products are displayed in the different retail stores (Hasan 2015). The buyer’s behavior is thus dependent on the behavior of the retailers in promoting the niche products to the customers visiting the stores.
- Limited diversification of the business-The absence of a widespread diversification of the niche products is one of the main threats of the business. The absence of a proper marketing strategy to deliver the niche products to the end users has been the gaining grounds for the competitors. The competitors have utilized the following opportunity and have come up with a variety of measures to gain a significant foothold in the niche market arena of the business (Weinstein and Winston 2016).
The entry into a Niche market though seemed much too safe for the mentioned private organization, the problems it faces from a large number of competitive threats. The niche market entry requires a basic number of main requirements which were initially avoided by the company. This includes;
- Entering a Niche requires adaptability of the plan- The entry into the niche segment requires a compact and effective plan so that any threats that may arise from competition can be dealt with strongly. There is a misperception that niche market is one of the most safest places in the market and has the least amount of threat. This is never true in all the cases as because other companies will also offer similar kind of specific products that will no doubt limit the scope of the profitability for the organization.
- Duration of the Niche market- The duration of the niche market is not stable as because the availability of a large number of similar products from time to time will limit the duration of the niche tag and will make the particular product fall into the normal category of the market (Chae 2015).
- Growth of the Niche Market- Unilever entered the niche market with a specific range of beauty and home products (Weinstein and Winston 2016). The brand Avon which is a range of beauty products has been manufactured by the business organization was unique in nature as it catered to the specific beauty demands of a large scale of women. However the availability of other similar quality products has made the brand fall under the normal category of the product lines (Zucchella et al. 2016).
Supply chain strategy of Unilever:
Unilever is considered to be one of the leading suppliers of fast-moving consumer goods in the world. It has three major global divisions, one is the food, the other is the home care products and the last is the personal care products. It has huge chain of supply as the organization intends to satisfy all their customers with their brands and products. In the last five years the company has have concentrated on the supply of their products. It is concerned about the needs and the demands of their consumers. In order to improve their supply strategy the company intends to focus on the core strategy of supply. The organization intends to introduce the specialty industry in order to increase their supply chain. The organization intends to restructure the supply chain. There are few reasons for the same (Chae 2015).
The first and foremost strategy is the announcement of the special interim dividend. The other strategy is the growing popularity of the internet and the telecom stocks which were moving from the consumers to the old stock. The company has adopted a “Path to Growth Strategy”. The company spent a huge amount on the raw materials and packaging from over ten thousand suppliers in the year 2009. In order to have a complete focus, the company cut down the vast brand portfolio from 1600 to 400. The supply chain strategy was focused on restructuring of the plan that was developed around five areas of focus. This include the supply chain organization, global procurement, involvement of the supplier, and the development of the information technology systems. The methodology that has been applied in this case include the agree targets, the identify projects, the provide resources, the measure and track and the ensure enablers respectively (Coyle et al. 2016).
The organization has grown with the passing years. It has undergone certain major thrusts. There are certain recognized threats that has been adopted by the organization. The organization has implemented the executive purchasing. It has attracted and developed the retaining of the world class supply management executives. This further includes the professionalizing the purchase of the non-production items. The organization has focused on the technological advancements, as the system of e-sourcing taken up within the organization has helped in managing the supplies in an effective manned. This further includes the accelerating and leveraging of the simplification within the supply chain. The organization drives the information and the management which is an essential part of the supply chain strategy. In order to make the supply chain strong and successful, the organization intends to increase the partnerships (Wisner, Tan and Leong 2014). This is possible through the process of redistribution and retailing. The product are sold in many retail stores and over 10 million small stores. The majority of the sales are from the developing and the emerging markets. The organization has been able to increase its partnership through Tesco, Walmart, Metro, Casino, Auchan and others. The division of supply chain has installed two electronic communication system. These systems are accessed for the use of internet only. It helped in saving up of time and provided ready access to information on all the activities of supply chain. The size of the supply chain, the risk related to it and the resources can be analyzed through this system. The organization aims at creating a healthy relation with the suppliers. It was reported that the organization would form a collaborative rather than a traditional combative relationship with the suppliers (Gualandris et al. 2015).
There were many companies under Unilever that managed the activities of procurement. The companies were not dependent on the systems and the staffs. The company went in to partnership through the business platforms so that the products and services can be provided in an effective manner. This strategy helps the organization to consolidate the purchase, enhance scale for the company and the supplier, guarantee quality merchandise and it enabled the process of creating automatic information that acts as a base to manage the above mentioned materials. The launch of the systematic IT department was one of the most remarkable supply strategy. The company made remarkable change in the IT environment. It used many systems of legacy so that proper established internet service can help in linking with more than 80000 desktops in the entire world that will help the company executives across the world to access and share the knowledge (Lee and Vachon 2016).
The most important part of the supply strategy is the distribution. It developed warehouses in each region so that the operation can take place by handing over the system to the third party. The organization introduced the process of combined shipping in order to reduce the cost in a positive manner. It prepared the transportation software tool so that the supply chain of the organization can be improved with respect to the products preferred by the consumers. It arranges a process of change that can bring better and brighter future in the company and within the work environment. The organization hires representative who provide the list of potential suppliers in order to bring innovation in the team of supply chain. In the regional level, the company recruits the innovation manager in order to receive help to identify the potential suppliers (MacCarthy et al. 2016).
Threats:
The global economic crisis and the competitive mindset has emerged as the largest threat for the FMCG companies. This is same in the case of Unilever. There is a huge competition between the companies under the FMCG groups. There has been a shrinkage in the disposable incomes of the global customers that are buying less and are insisting more on the monetary value. This has led to constant thereat of low revenue within the organization (Ng et al. 2015).
The practices that are present within the company are not liked by the customers and this motivates them to switch over to new companies. The rise in the competitors for the company has caused a shift of the consumers as well. The company should therefore concentrate on the sustainability factor and it should maintain the focus especially when it is famous in the world (Roh, Krause and Swink 2016).
The company operates in the local market sector where the local products and the local brands proliferate in the emerging market. This is the reason it faces the threat from the smaller and local upstarts those are capable of providing more value for lesser amount of money without the associated costs that global giants. The entry of the Asian multinationals into the global arena has added a strong competitive threat for the company. The organization intends to face a huge competition from the Asian conglomerates that has started to spread the wings in the international level (Ross 2015).
The organization has set up the branches and factories in many countries. They have numerous competitors across the globe, which are inclusive of Nestle and P&G, as they are global enterprises with strong brands and huge experience in the management. On the other hand the local companies understands the demand and the needs of the customer, as they receive support from the local government that turns out to be huge threat for the company (Wilhelm et al. 2016). The company faced a loss due to decreasing sales that rose in the recent years. This was because of the growing threats from the local competitor. It was reported that the company faced competition from the US ice cream where Unilever lost the market share to Halo Top which is a new low-calorie brand that capitalizes on the growing demands for healthier products (Wilhelm et al. 2016). The change in the taste of the consumer, along with the acceptance and demand of the online shopping and other systems like the home-delivery plans is changing the traditional scenario and the multinational companies like Unilever, Nestle and others. The business models of the same needs to be changed. In order to overcome the threat of competitive defeat the organization must increase the cost of advertising and marketing. Moreover the upcoming brands lay their focus on building a strong relationship with their customers. This can be a strong threat for the organization, as Unilever has no direct communication with the customers (Wang et al. 2016).
Product line strategy of Unilever:
The term Product line is referred to as a group of related products under a same single brand sold by the same company. The companies have the tendency to expand their offerings by expanding the existing range of product lines (Bocken et al. 2016). This is done mainly because consumers always prefer to use the brands which they are more familiar with. Unilever has a variety of products that competes in the market with similar brand of products offering the same benefits. Some of them are as follows;
- Sun silk vs. Pantene-Unilever developed Sun silk and Pantene developed by Unilever are quite similar in their uses. They are the direct competitors of each other and try to outclass each other in the market. However, the diverse range of product line of Sun silk is a huge advantage to Unilever. Sun silk offers a wide number of different products like Sun silk peach dark, Sun silk dandruff remover, Sun silk long and silky and many other such products which are hard to compete for Pantene. Pantene generally does not have the huge range of variations in its product line which limits its scope in the market (Yamin and Mavondo 2015).
- Ponds Age Miracle vs. Olay- Ponds Age Miracle is a product of Ponds which is Unilever Company’s skincare brand line. The product was launched in the vox pop format which saw people from different fields of life providing valuable reviews about the product. The company launched a TV commercial before the launch and finally launched the product after a continuous campaigning for 6 months. This helped to build the market and extend the value of the product to the users (Hammervoll and Toften 2014). On the other hand Olay a product of P&G was launched to tap the anti-ageing market did a market research and launched the product. These two products offer similar kind of services and compete against each other. However Unilever uses a variety of innovative strategies to stay sustainable in the market (Banerjee 2017).
- Magnum Vs Buskin Robbins- Magnum is one of the most premium ranges of Ice Creams that is produced by Unilever. It directly competes with a varied range of premium ice creams of other brands like Buskin Robbins. The ice cream is priced at a much higher amount than the other range of ice creams produced by the organization. Buskin Robbins can be cited as the best competitor of the brand in this group. Both of the brands have a similar range of products and both of them are priced much higher which promotes their individual values. Thus Unilever has to innovate a wide range of similar products to compete in this particular segment (Zucchella et al. 2016).
- Axe vs. Gillette- Axe is owned by Unilever and has entered the market much after P&G owned Gillette. Though the products offer similar range of uses but Axe has to struggle much more to gain competitive ground in the market.
The acquisition and merger strategy of Unilever contribute to another deadly operation strategy, the product line strategy. The company as pointed above faces competition from MNCs like Nestle and P&G. The unique product line of the company allows it to give competition to all these powerful rivals and sustain in the market. The company enters diverse market which is evident by its product line which makes it impossible for any single competitor to compete with it (Zucchella et al. 2016). For example, Lakme allows Unilever to enter the highly competitive market of high-end beauty and fashion where P&G cannot compete with it. Lakme has established itself a top international beauty brand which enables Unilever to collaborate with multinational designers and fashion houses. This in fact enables the company to expand its business in areas where its traditional competitors cannot compete with it. This, however, brings the company into competition with the leading brands like L’Oreal and Avon (loreal.com 2018). However, it must be pointed that Nestle is one of L’oreal’s biggest shareholders and thus it again collides with Unilever here (nestle.com 2018). Again, entering the water purifier market, Unilever competes with Samsung and LG where Nestle and P&G cannot compete (lg.com 2018). Thus, the product line of Unilever enables it to compete with a large number of competitors and diversify the loss of revenue it suffers to this competition.
Conclusion:
Therefore from the above analysis this can be concluded that the competitive threat is the major threat faced by the organization. It has been researched that the multinational companies in the contemporary faces the threat from the potential competitors. Unilever is one of them. The report include the strategies that have adopted by the company to overcome their threads. One of those is the acquisition and the merger strategy. It has been treated as a strategic tool to strengthen the global competitive positions. This include the increase in the revenue generation. The consumers look forward to different types of products under one single brand. It can be any product. It can be of any category. For example, different flavors of ice-cream under one single brand. This can be huge challenge for the company. The acquisitions and mergers further are considered to be an effective tool that are used to expand the capital that is a necessary part of business. The report portrays certain research that shows that acquisition and merger plays an important role in improving the competitive strength and as it is the asset value of the company. In order to make this successful the company needs to choose the investors tactfully. The investors has a huge role to play in the factor of acquisition and merger. The other point that can be considered under this include the Niche marketing strategy of Unilever. This has been taken into account in the report. The management performs the sole responsibility of identifying the needs of the customers. The organization has a good reputation in such segment. In order to avoid the unhealthy competition the company has adopted the niche strategy. The organization has around 7000 marketing channels and brand partners all over the world. This is the reason the company considers people as their priority.
They consider the indispensable brands to be the other factor that the company considers to be important. The organization focuses on the availability of the cheap products. It considers the high dependence on the retailers. This further includes the limited diversification of the business. The report provides a brief description of the growth of the niche market and the duration of the niche market. Apart from this the report considers the product line strategy. It includes the competitive ways between the brands. In this report a brief comparison has been done between Sunsilk and Pantene. A comparison has been done between ponds age miracle and Olay, magnum verses Baskins and Robins, axe verses Gillette, Lakme verses L’Oreal and finally pure-it and other water purifiers like Samsung and LG. The report further takes into account the supply chain strategies and the threats that are associated with it. The major reason of smooth functioning of the organization is highly dependent on the supply strategies. The report analyses many such strategies and at the same time it analyzes the risks that are related to it. The report offers a recommendation that might turn out to be an effective one for the company. The recommendations are related to the flaws and the pitfalls that have been discussed in the report.
The analysis of the following essay will lead to the formation of a number of different recommendations that will seek to address the different issues related to the use of the completive threats in the management of operations by the Company. They are as follows;
- Utilize the Social Network- The main aims of the business will be to make its operations much smoother by reaching out to a large base of customers as well as retailers. The modern trend of utilizing the social network strategy will be of immense use to the company as social network provides the perfect base for the management to spread the operations of the company to distant places and also target a wide range of customers. The traditional techniques of marketing by booking TV slots and promoting the brands through different channels does not attract customers anymore. The use of graphics and innovative advertisements in the internet and the different WebPages or the social media applications will reduce the competition in the market and create a specific demand for all the different kinds of products.
- Focusing on the Uniqueness of the Niche Product- The management of the company must focus on the uniqueness of a particular product. This helps the customers of the company to identify the product in a much better way. The company has to convince them that their product is unique and exclusive in nature. They should also explain the consumers about why they should buy the particular product and what special benefits do the particular product promotes than the other product in the market. The successful understanding from the part of the organization can help in the creation of a unique competitive advantage for the company in the niche market segment.
- Targeting the Networking opportunities within the market-Effective networking is critical to the success of the business organizations within the market. The presence of a narrowed and targeted niche market of the business organization makes it necessary for the management to utilize the networking in the most prominent way. The marketing department of the company has to be aware all the time and search for adequate networking opportunities from any form of legitimate sources.
- Being an Expert to the target audience of the company- The selling of a premium product to the customer need some specific details. The management needs to provide a detailed and a sincere attention to the specific niche category of market and also act as an expert to the particular customer for convincing him to buy the product. It is utmost important for the management to act as an expert for the customer as he may get confused over the actual use of the product.
- Electronic segment expansion-Unilever must enter the electronic segment more strongly to operate more competitively in the global market. The company has presence in the electronic water purifier market which means that has scope to expand its product line in the direction where its traditional competitors cannot compete. This would allow the company to earn more revenue and cement its global position as a consumer product and electronic product manufacturing giant.
According to Slack (2015), operations management refers to management and control the of entire business operations including production in business organizations. The operations manager in the recent times needs to control diverse areas of operations right from customers, finance, marketing to human resources so that operations can be done in an efficient manner. According to Jacobs, Chase and Lummus (2014), in the recent scenario it can be seen that the operations managers are responsible for efficient operations of the business organizations. These facts apply more to the multinational companies where the operations manager undoubtedly account for their high market performances. The aim of the paper is to discuss a contemporary issue of operations management which operational managers face. The issue which would form the crux of the study are the competitive threats from the market which MNC companies face in the competitive market. The paper would delve into four strategic management tool namely, acquisition and merger, niche marketing, supply chain strategy and product line strategy which multinational companies take to counteract this issue. The multinational company on which the entire study would stand on is Unilever.
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