Case study: Unilever
- 1980's: beginning of an era of changes
- Structuring and managing the businesses
- Future Challenges
The merger of Lever Brothers and Margarine Unie, two European companies, created the company Unilever which has become one of the major players in food, personal and home care market. Unilever competes with Procter & Gamble, owing to its 400 brands, in over 100 countries all around the world. In this document we will analyze how Unilever adapted itself and changed, over the last 25 years. Then we will try to understand how such a big firm, with a complex structure (a group separated into two entities, with PLC and NV), manages multiple brands in various countries.
[...] This is divided into three divisions, function of different areas: Europe; Asia/Africa and Americas Finally, the ?functions? pillar regroups the human resource function and the financial function, two critical divisions in the Unilever organization. In practice, this organization leads to the nomination of seven executives, corresponding to the seven strategic divisions of Unilever, all under the responsibility of a ?Group chief executive?: - Two executives in charge of the ?Category? pillar (Food and Home/personal Care) - Three executives for the ?Regions? pillar (Americas; Europe and Asia/Africa) - Two executives responsible for the ?Functions? (Human resources and finance) They are all responsible for managing profit and loss and for delivering growth across the different divisions We can first note that the ?pillars? of the structure are complementary and have to work together. [...]
[...] Originally, this separation was done to separate the two firms, which originated from a merger to create Unilever (Margarine Unie & Lever brothers). To work efficiently, a unified board operates to manage Unilever, with common directors, at the board of Unilever PLC and NV. Thus, the ?unity of management, unity of operation and unity of shareholders right? are important features of the corporate governance With same people on the board of the two companies, the ?unity of management? is reached, permitting to the overall group to have common goals, analysis of the situation and commitment to act. [...]
[...] Unilever diversification was seen to be excessive, leading the firm to high cost structure and inefficiency. The belief was that managers should focus on what they were good at, rather than trying to manage everything Thus, Unilever passed from a strategy of diversification to a more focused approach. To refocus on core product areas, Unilever had to rationalize, to take advantages of its strongest markets and growth opportunity. This Rationalization passed by large divestment to abandon none strategic business, and large acquisitions to strengthen the core activities: 2 Billion of divestment and 4 billion of acquisition, occurred between 1984 and 1988 The first wave of large divestment occurred in 1984, with the transport, the fish farming and the animal's food activities. [...]