OVERVIEW OF UNILEVER
Unilever is among the leading brands in the FMCG industry, headquartered in London. The organization deals in over 400 brands and around 190 countries worldwide. Established in 1929, the organization deals in the product segment such as skin and personal care, food products, daily need essentials, as well as other FMCG products. The mission and the vision of the organization are to ensure that the value creation can be ensured for the customers or the stakeholders in the industry and to contribute toward the improvement of the lifestyle and to meet everyday nutrition, hygiene and personal care. As a result of being industry-focused, the organization has been able to achieve effective growth in the competitive environment and is working towards ensuring further growth and development within the industry
ANALYSING THE INTERNATIONAL BUSINESS ENVIRONMENT
The management operating within the industry is required to focus towards analyzing and understanding the needs and requirements of the customers, as well as the other stakeholders and accordingly the strategic decisions, are required to be made so that the set goals, as well as long-term retention, can be ensured. Therefore, in order to understand such needs and interests, it is required that the analysis in terms of the environmental analysis is being conducted which can either be internal i.e., analyzing the internal skills and capabilities or understanding the external business environment. Therefore, in order to ensure the business success and effectiveness in the international market, it is required that such analysis is being conducted so that the key threats or opportunities can be identified and accordingly the strategies can be developed. Such international business environmental analysis can be conducted while focusing on two major elements including the microenvironment as well as the macro environment.
MICRO ENVIRONMENTAL ANALYSIS OF UNILEVER
Focusing towards analyzing the microenvironment analysis of Unilever, it can be identified that it includes the focus towards the employees, competitors, media, shareholders, suppliers as well as customers. Therefore, in simpler terms, it can be defined that the microenvironmental analysis is focused on stakeholder’s analysis within the industry. Focusing towards the employee base at Unilever, it can be analyzed that the company employs around 149000 peoples across the international market. In order to ensure the retention of their interest and needs Unilever, has adopted effective strategies in respect to the improvement of employee health and well being by providing them with a safe and comfortable work environment that helps them in contributing towards the organizational goals innovatively and creatively. The management considers the workforce to be a key resource for the organization to ensure the achievement of the strategic goals therefore, accordingly they work in order to transform the lives of employees by providing them with the development and growth opportunities while working within the organization.
To ensure business effectiveness in the international market, Unilever has adopted an approach of Partner with purpose, it has been developed in order to develop effective relations with the suppliers within the industry and contribute towards innovative ways of product development and distribution within the economy. As it can be analyzed that Unilever operates in a highly competitive business environment, as a result, it is required that the management has an effective focus towards the competitive analysis so that the key challenges and threats can be analyzed. Porter’s five forces model is an effective tool that helps in analyzing such business competitiveness and further scope of development within the industry.
As in the international market, the FMCG industry does nor have great or heavy barriers to entry, as a result of which any new player can easily approach within the industry, giving rise to the existing competition. However, the industry is already competitive, as the key competitors for Unilever are P&G and Nestle. In such an industry, suppliers have limited bargaining power, also Unilever has focused towards establishing effective relations with the suppliers. The industry competition results in an increased threat of substitutes as with the availability of product choices a customer can easily shift to the substitute available within the industry.
Therefore, it can be analyzed that while operating in an international business environment, the micro factors possess a great risk in terms of the business competition for the organization such as Unilever. As there are a number of players from different regions competing at the international level, therefore the strategies in respect to customer attraction and retention are to be developed and be ensured so that the competitiveness can be retained and further be improved.
MACRO ENVIRONMENTAL ANALYSIS OF UNILEVER
The macro-environmental factors are being classified as the external factors that are beyond the control of the management and are required to be analyzed from the industry viewpoint. Therefore, key tools that can be utilized in order to analyze an organization’s external business environment includes the focus towards the SWOT Analysis which helps in analyzing the key opportunities and threats within the industry, as well as PESTLE analysis through which the impact of key factors over the business success and development can be understood.
- The effective and strong brand portfolio.
- Global Market Presence.
- Focus toward R&D practices and innovative approaches.
- An established leading and competitive position within the industry.
- The threat of product substitution.
- Industry Competition.
- Highly dependence on the supply chain.
- Adopting changing product policies.
- Analyzing the customer trends and accordingly introducing innovative products and services.
- Expansion in the untapped international markets or developing and underdeveloped economies.
- Increasing industry competition.
- Changing international policies with respect to human rights and customer welfare.
- Increasing threats from domestic brands due to their easy and timely reach to customers.
- Limited scope for product innovation.
PESTLE ANALYSIS FOR UNILEVER IN THE INTERNATIONAL MARKET
The PESTLE analysis focuses towards the key factors including the political, economic, social, technological, legal and environmental factors and analyzing their impact on the organizational success in the international market.
Political Factors: Unilever operates in an international business environment; therefore, it is required that the management analyses the key political interests and acts accordingly. As in the international environment, the governments are more focused towards promoting their domestic brands as a result of which Unilever may face certain challenges in the industry.
Economic Factors: The change in the interest rates, as well as the economic instability in the international environment, may have a direct impact on the operations of Unilever. In the present scenario, as a result of COVID, individuals have limited disposable income due to which they are spending only on the necessities and the key required items, which has resulted in declining sales and revenue for Unilever in the international market.
Social Factors: The society in the present scenario is much more aware of the product quality as well as their needs and requirements, as a result, they require that the organization focuses towards fulfilling their needs and develops products and services that suit their needs and interest in the international market. The key strategy to deal with such a challenge has been identified as the sustainable and localized approach so that within the industry the organization can ensure societal satisfaction and need fulfilment.
Technological Factors: In the international environment, technological factors play an important role, as such ensures cost efficiency and product innovativeness within the industry. Unilever has invested in such technological improvements, but to retain the organization’s image within the industry it is required that further advancements are being introduced and implemented.
Legal Factors: The international laws in respect to human rights, business execution as well as tax laws are required to be followed so that the business effectiveness can be ensured. As discussed, the governments are preferring more towards domestic brands, as a result, such interest may have an impact on the legal rules with respect to the operations of the MNCs.
Environmental Factors: The key concern in the present business environment and society is the changing climate and the industries are the key contributors in order to create pollution and carbon emission, therefore, it is required that such aspects are being focused upon so that the business effectiveness can be ensured and focus towards further development can be ensured.