Unilever
Home and Personal Care Division
Market Overview
Market includes
Liquid & powder
detergents
Shampoos, body
washes, personal
care items
Perfumes
Cosmetics
Market Trends
During 1990’s – tight competition in
established markets
Economic slowdown in global market
Strong competition to develop new
products
Need to control costs and price
Market Trends
Acquisitions or joint ventures to solidify
global position
Strong need to be able to satisfy
changing consumer preferences
Laundry detergents form the largest
component – 50%
Products
Unilever manages over 400 leading brands and
just under 250 tail brands. These range from food
to home and personal care.
Food Products
Ben & Jerry’s
Breyers
Country Crock
Hellmann’s
Ragu
Slim Fast
Lipton
Others
Home and Personal Care
Dove
Caress
Pond’s
Snuggle
Wisk
All
Others
Technological Scope
Global integration of SAP software
Standardized corporate computer
services – includes intranet
Standardized corporate e-mail
Warehouse management systems using
bar code technology
Markets and Distribution
Unilever Divided into 2 Major Divisions
Foods
Home and Personal Care
Improved Focus Globally and Regionally
Faster Decision Making
Strengthened Innovation Capacity
Markets and Distribution
Home and Personal Care Divisions
North America
Europe
Asia
North Africa
Turkey
Middle East
Latin America
Manufacturing and/or
Processing
Operations has 2 divisions
Foods
Home & Personal Care
Employs 265,000 people
Has 2 parent companies
Unilever NV
Unilever PLC
Corporate Centers
London
Rotterdam
Manufacturing and/or
Processing (con’t)
One of largest users of packaging among
consumer goods companies
Works with others to ensure public concerns are
understood
Provides the best solutions possible
Trends in manufacturing
Fewer production centers
More efficient production centers
Manufacturing and/or
Processing (con’t)
Pilot project to improve logistics of incoming
raw materials to manufacturing locations
Carried out in Warrington, UK
Combine/optimize loads
Seek more direct deliveries
Some plants are making own bottles for liquid
detergent
Reduced number of deliveries
Saving around 1,000 trips a month
Manufacturing and/or
Processing (con’t)
Uses many forms of transport
Railroad
Ships
Trucking
Have minimized the environmental effects of
transport
Ensuring vehicles are used efficiently
Shifting goods from road, to rail and water
Industry Attractiveness &
Business Strengths
Nature of Competitive Rivalry
Unilever and P&G globally highly competitive
Sales driven by marketing
Bargaining Power of Suppliers/Customers
Carry clout with suppliers due to large
consumption of supplier goods
Customer – available shelf space
Threat of Substitute Products
Low consumer differentiation
New Entrants
Large capital barrier to new entrants
Industry Attractiveness &
Business Strengths
Economic Factors
Large Market
U.S. Market spends discretionary income on
personal care products
Financial Norms
Personal care products carry higher profit margin
Customers tend to pay late
Socio Political
Environmental concerns – recyclable packaging
Community programs such as Forest Park CleanUp
Industry Attractiveness &
Business Strengths
Cost Position
Economies of scale due to large consumption of raw
materials
Supply chain teams to control costs
Level of Differentiation
Recognition for key brands – Dove, Snuggle
Extremely effective in defending product patents
Response Time
In U.S. due to competition has had to improve flexibility
Continuing to combine business functions
Industry Attractiveness &
Business Strengths
Financial Strength
Strong cash reserves
Striving to improve growth of revenues
Human Assets
Promotes high level of training and empowerment
Manufacturing becoming more non-union
Public Approval
Low recognition in U.S.
Highly recognized oversees especially in third
world countries
Mission Statement
At Unilever we are dedicated to meeting
the everyday needs of people
everywhere. We provide washing
powder, shampoo and toothpaste, teas,
ice cream, oils and spreads for
consumers all over the world.
Corporate Philosophy
Unilever's Corporate Purpose states
that "to succeed requires the highest
standards of corporate behavior
towards our employees, consumers and
the societies and world in which we live.
This is our road to sustainable,
profitable growth for our business and
long-term value creation for our
shareholders and employees."
SWOT Analysis
Strengths
Finance
1) Strong Cash Reserves
2) Global Purchasing
3) International Exchange Rate
SWOT Analysis
Strengths
Marketing
1) Extensive product lines make Unilever a
formidable competitor
2) Strong image for well-known brand products
3) Use of creative advertising and promotions on
website and commercials
SWOT Analysis
Strengths
Operations
1) Two Major Divisions – Foods and Home &
Personal Care
2) #1 in many consumer product categories
3) Well developed supply chain
SWOT Analysis
Strengths
Human Resources
1) High level of training in place for employees
2) Employ approximately 265,000 people
3) Enterprise culture – developing employee to
be more customer friendly
SWOT Analysis
Strengths
Information Systems
1. Corporate intranet and e-mail
2. All laptops and desktop machines organized
the same (Sunrise hardware program)
3. SAP software used globally
4. Total Business Productivity – each category
has website – example Accounting
SWOT Analysis
Weaknesses
Finance
1. Since it is an overseas stock – not included in
US market analysis
2. Business acquisitions affect overall profit
Marketing
1. Lack of innovation in several categories has
caused slippage in market share
2. Reduced marketing expenditures in television
commercials
SWOT Analysis
Weaknesses
Operations
1. Innovation time cycles continues to need
improvement
2. Consolidation of facilities is causing
production turmoil
SWOT Analysis
Weaknesses
Human Resources
1. Expensive labor due to high benefit package
2. Union contracts limit flexibility
Information System
1. Global help desk – India & Ireland
2. Deferred updating due to leased hardware
3. Insufficient software package training
SWOT Analysis
Opportunities
Demographics
1. Products appeal to wide range of population
2. Product loyalty through generations
Technology
1. Automated manufacturing facilities
2. Already using product innovation needed for
front loading washing machines
SWOT Analysis
Opportunities
Economy
1. Goods are durable in any economic
environment
2. Use of international exchange rate
Global
1. Largest consumer manufacturer
2. Integration of international employees bring
broad cultural and business experience in all
processes
SWOT Analysis
Opportunities
Environment
1. Maximize recycled packing materials
2. Processes environmentally friendly
3. Products are biodegradable
SWOT Analysis
Threats
Demographics
1. Low product differentiation tends to make
consumers reluctant to change products
2. Consumer purchasing base on cost
Technology
1. Competitors manufacturing technology
innovations
2. Reduction in innovations due to patent
constraints
SWOT Analysis
Threats
Economic
1. Internal turmoil in third world countries
2. Ventures in developing countries are jointly
owned
Global
1. Internal business in country may be given
preference
2. Knockoffs
SWOT Analysis
Threats
Environment
1. Increased regulations
2. Pressure to reduce utility consumption
Strategic Plan: Increase profitability from 6% to
12% in next 4 year
12%
6% growth
6%
Assumptions
Prime Rate is 4%
Available Market Growth is ongoing at
1 – 2% per year
Assume our vendors will accept late
payments
Assume our customers will pay net 30
Existing computer hardware will be able to
support new computer software
Outsourcing of production has acceptable
sources
Strategic Plan
Action Plan #1:
Reduce costs in production of laundry
detergents by 3 – 5% over next 4 years
Action Plan #2:
Strengthen market share in personal care
products by increasing market share by
10% points
Action Plan #1
Information Systems:
Upgrade information systems to achieve improve forecast of
sales
Improvement in forecasting should result in a change from 10
week product coverage to 9 week product coverage
Improve scheduling
Improvement in raw material inventory
Reduces storage time 10 – 15%
These improvements would reduce storage time 10 – 15%
Storage equates to $1 to $2/sq ft
Results in a 10% savings
Action Plan #1
Finance
Change payment on Accounts Payable
from normal 30 day cycle to 45 day cycle
This allows capital to remain invested for a
longer period
Example - $1M invested at prime (4%)
results in $1643 additional revenue in the
extra 15 days
Action Plan #1
Marketing
Reduce marketing on cash cow brands such as
Rinso, All, Final Touch and others
These brands can effectively be marketed in Club
Pack stores – examples Cosco, Dollar General,
Sam’s
Allows for reallocation of cash cow brand
marketing budget to key brands only should result
in an additional $8 M available
Action Plan #1
Marketing – Anticipated 2004 advertising cost
increases
16%
14%
12%
10%
P e rce n ta g e o f
In cre a se
8%
6%
4%
2%
0%
National TV
rates
Loc al TV rate
Radio
Ad ve rtisin g M e dia
News papers
Action Plan #1
Production
Initiate process changes to increase utilization of
assets and reduces fixed costs
Increase automation to reduce manual labor on
production lines – reduction in staffing from 5 per
line to 3 per line
Average hourly pay $15/hr plus benefits
Costs savings of $62,400/per worker
Outsourcing of production to reduce 2 production
lines per facility
Action Plan #1
Production
Increase quality control to reduce over
pack – example
On a 50 oz package reduce your over pack
from 2% to 1%
Assuming cost of $5/lb
Resulting savings of $3.4 Billion/year
Action Plan #1
Research & Development
Reduce cost by alternative formulation
Reduce builder in powder detergents by 2%
Cost savings – reduce raw material cost from 0.15/lb to
0.09/lb
Total cost savings - $29 M/year
Human Resources
Provide additional staff and line worker training
Training with help lines run more efficiently
Pros and Cons
Gives cost reduction desired
By increasing efficiency – makes
business more competitive
Focuses marketing on key brands
Sets corporate culture for future growth
in this area
Pros and Cons
Disruptive to business
Contracts for raw materials need to be
renegotiated
R&D diverted from innovation to cost
savings emphasis
Negative reaction from laid-off workers
Cost of Reversibility
Many of these changes would not have
a cost of reversibility associated with
them
If the outsourcing of production needed
to be reversed – loss of workers and the
need to divert capital back into
production facilities would be costly
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IS
Finance
Marketing
Production
R&D
HR
Summary
In order to meet the strategic goal both
action plans must be implemented
Personal care products have the higher
profit margin
Upcoming changes in laundry detergent
market necessitate reduction in
production costs to maintain current
profit margin