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Important Factors Impacts the Operating Environment of Unilever

University: Brown University

  • Unit No: 2
  • Level: High school
  • Pages: 18 / Words 4605
  • Paper Type: Assignment
  • Course Code: DBM509
  • Downloads: 444
Question :

This assessment will cover following questions:

  • Unilever is the British multinational company offering consumer goods. What important factors impacts the operating environment of Unilever?
  • Analyse the strategic position of Unilever at present?
  • What is the role of development theories in success of Unilever?
Answer :
Organization Selected : Unilever

INTRODUCTION

Business environment is sum of the external and internal factors which would influence business. Unilever is Dutch company which is situated in the London. It was founded in 1929 and it was founded by the William lever and is providing the services relating to the food and services. Company is also providing the services like the beauty and personal care products and refreshment products and cleaning products as well. The company has spread business in India, china and many more countries. Company has divided products in the personal care and skin care products. Unilever has the largest media buyers and company has invested in market around 6 billion in advertising and promotion. Report is discussing the operating environment of organization and also use the strategic management theory. Current strategic position has been analysed and strategic management theory is also used by company. Report is discussing the strategic options and the principle of the change programs have implemented by company and organization development theory is also used by the company. The report is providing the knowledge about the business environment and company factors which would affect company performance (Abdolshah Moghimi and Khatibi 2018).

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Critically analyze operating environment

Business environment is affecting the company and sales as well. Company is dealing in variety of product and so it is affecting the company sales at the large cost. Customers are changing their preference and so company is affected by these. So company is using the new and innovative products which would attract customers towards the company and for that the internal and external factors would affect the products of company. So company is using the pestle analysis for working in effective manner and for analysing the external factors which would affect company.

Pestle analysis

Political factors

Political environment of UK is affecting the company sales and productivity. Due to election in UK companies are suffering and trade is also suffering. In UK the company is facing problems relating trade because of strict laws and regulations which are levied by government on the company and various other traders are protesting against the government for amending the laws (Adner Ruiz-Aliseda and Zemsky 2016). Trump government has recently withdrawn the trans pacific patent ship trade agreement and due to that the company and people which are trading are suffering. Administrative changes and trade deals are fluctuating the business and environment and these would affect company sales.

Economic factors

Conflict with distributor is rising because distributors are rising the price of products and these are affecting company. There is impact of the brexit on the UK government and company in facing problems for rising the price of distributor. Fluctuation in the economy and market is affecting the price of products and also the changes in market is affecting products price. So currency market is affecting the company and price of product. Product prices is affecting the customers and customers are switching towards other substitute products. So all these are affecting the company and product in market.

Social factors

Customers are nowadays interested in skin care products and demand for the skin products is increasing continuously. Customers want the new and innovated products which would attract them and be useful for them. Company has to understand the need of customers and improvise the products as per customers otherwise customers would switch towards the other companies. Premium products which would attract the customers and so it would affect the customer in effective way. In the case of skin care products, customers are also not looking after the price of products they are only looking after the quality of products.

Technological factors

Company is planning to implement the new technology in preparing the products and selling the products in market. Integrated supply chain is also affecting the company and performance of product in market. So company would use new and latest technology for attracting customers towards company. Company is taking the survey of customers and taking feedback form Customer which would help company to know abut their products and customers reviews regarding the products. Company would know about the Customer demand and need of them, so the company would prepare and improvise products as per customer demand.

Legal factors

Government of UK is amending the laws and these would affect sales of company. Regulatory approval would delay the decision and these would affect the business growth and business environment. So these would affect the company and products in market. Tax laws are changing frequently and these would have effect on the company performance in market and improve in rules and regulations would also have the impact which are sold in market. These would affect sales of company and productivity as well. Employees are affected and so the company would be affected as well.

Environmental factors

Climate of UK is changing frequently and so due to the change in climate the company is taking the effective measures for protecting the environment. Company is working on various strategies which would reduce the cost of the products and also the products would be environment friendly. Value chain is also affecting the company sales and so company is also using the value chain analysis in the for changing the climate in the effective way company is making sure that the environment would not be polluted.

Contingency theory of management

These theories are used by management to look after the internal affairs and try to overcome the issues which were affecting company. In these theories the employees need to be motivated so the employees would change performance. It is the responsibility of leader to look after the management ends and employees which must be fulfilled by company. Employee and employers relations are also affecting the company at the large scale and the employee performance would be affected as well. Theory is stating that how the employers must motivate employees and it is depends on the situations and problems which would be affecting relations.

Team leader must look that the employees are encouraged, and they are working in the effective way. These cooperative relations would not any affect employees, and so they would also not affect the team leader. Team leaders would work in the effective manner and the management would be affected and improved. Manger must look that the team members are not punished, and they are given rewards for working in the effective way. Employees must not be terminated and these would not affect employees of company. Rewards are given to team members in the form of the bonus and promotions.

These would improve the management and it would result in effective working which would improve the business environment of company. Company would achieve the long term goals and improve the productivity as well. Targets which are set by company and employees are achieved and company would work in the effective manner. Employee motivation would result the company in the achieving the huge growth in market. Employees need are fulfilled, and they are working in effective way. Leader of team members and employees would be efficient and look that the team members would work in the effective way for motivating the employees and improving the performance of employees at the large scale (Omsa Abdullah and Jamali 2017). Task are given the importance and structure of the task must be followed and standard procedures must be followed by employees which are working in team. It is the responsibility of leaders which are working in team projects.

Critically analyse the current strategic position of company

Company is analysing the current position in the market by the way of the marketing mix strategy. In the report the two companies are compared on the basis of 4 ps of marketing.

Basis

Unilever

Proctor and gamble

Price

Price of product of Unilever is low but the other competitor in market is providing the products at low prices and so the customers are using the other products. So company must not compromise the quality of products and look that the price of products is improved and decreased.

Proctors and gamble is giving the strong competition to the Unilever by the way providing the products at the low prices and these are affecting Unilever. Customers are attracted towards the company and looking for good quality products.

Product

Products are improvised and introduced in market but the competitors are also using the latest technology and introducing product in market and these are affecting then price of products (Perera 2017).

Company is making effective measures for working on products. So customers would be attracted towards other company.

Promotion

Promotion of the products is done at the large scale and the company is investing huge amount in marketing of the products and in the advertising as well. These promotions are leading the company to achieve the long term goals.

Company is not investing in the promotion of then products and these are affecting the company and company knows abut the position of company in market (Racz, and et.al., 2018).

Place

Company is achieving the targets and providing then products to each and every place and also the product area available in the remote areas as well. So the company is looking after the effective measures which would help them to achieve the success.

The products are not provided by the every place and these are affecting the company sales and long term goals of company.

These would state that the company is facing high competition in market but then company would be able to survive in market. The position of the company is identified and these have resulted in improve in the performance of the company at the weaker sections which need to be improved. The company must try to overcome the issues and solve the problems which are affecting the company sales at the large scale (Rastogi and Trivedi 2016).

Porters generic competitive strategies

In the porters generic strategies competition is identified and it is analysed as well. Company position is identified by the way of the analysing the competition in market. Company profitability ratios are identified and company would also again the knowledge regarding the competitive market.

Cost leadership

In the cost leadership cost of products has to set low and company and cost of product is also depending on the structure of the company and the advantage of company as well. It would include the raw material and other factors which are having the impact on the cost of the products. Prices of products meet the industry average and the prices must not be so low that the company would have to bear the losses ( Fozer, and et.al., 2017).

Differentiation

In the differentiation strategy it would be identified that the same dimensions are identified and the buyers would have uniqueness in product. The products need to be identified and products would need the unique features which would attract the customers towards the company. Employees and company have to come up with the new features for attracting the customers and these would also improve the productivity as well.

Focus

The focus is concentrating on the factors which have to be focused like the cost and differentiation focus. Company must have focus on the cost of the product and look that the products would have the features which would be needed by customers. In the differentiation focus it would be stated that the company need to have the focus on the unique features of the products and also consider the cost of the product as well. These all must be made as per the cost of the products and it would also work according to the customers (Anoke 2018).

By using this strategy company would analyse the position of company in the effective way and company would gain the knowledge regarding the position and the competition in the market.

Appropriate model of strategic options and justification of final option choice

In the context of strategic models, it can be said that there are several options available by which company can take several advantages. For performing something there is a requirement to analyze each factor of business environment in which the company operates and make an effective planning. By using an effective strategic planning and management model Unilever can take competitive advantages. 2 Options and strategic models are being discussed as below:

Porter's five forces: It is an older but an effective strategy by which company can analyse each force and see its own position in the market and intensity of competition in the industry in which it operates. 5 forces are described below:

Threat of new entry: In the context of Unilever it is stated that this retailer is in diverse geographical markets, so this intensity differs in different markets. Unilever has strong financial stability and trademark representation, so it makes difficult for new entrants to enter and compete with big brands (Mathooko and Ogutu, 2015). On the other hand, as per the law perceptions and rule and regulations, it is easy for companies to enter this industry. So, there is a moderate intensity.

Bargaining power of suppliers: It is stated that Unilever has a rule of home business and local developed it makes it able to break authority and make suppliers bargaining ability weaker. Its effective policy also helps it out to prevent suppliers from switching to other competitors at high rates. It has string relationship with its suppliers but still suppliers have bargaining power to some extent which can affect competitive situations of buyers.

Bargaining power of customers: Customers in this industry do not have much power to bring prices down. But on the other hand, in additional offers, it is easier for its customers to switch and change companies. Well-built and potential customers have power to force sellers to change their prices by providing better quality products. SO, it can be said that intensity of this power is high in this industry (O’Hare Stewart and McColl 2018).

Threat of substitute products: Customers demands and needs in this industry keep changing as customers prefer to try something new and unique. This changes in needs and demands impacts on the company as it can directly impacts on the sales and revenue of the company. This power and higher intensity is a threat for Unilever which put pressure on this company to invest more in research and development and advanced technology.

Rivalry among existing players: Unilever has strong huge numbers of opponents which have strong stability in all terms. Some big brands and competitors of Unilever are: Nestle, p&G etc. All these brands use effective strategies and have more power to attract wider range of customers and this rivalry is more intense which is the biggest threat for Unilever.

VRIO Analysis model: This strategic planning model is mainly related to the vision of the company. The main aim of company to implement this model is to analyse position and get competitive advantages.:

Value: Value means having resources that can give value to customers and employees. There re several resources like effective technical and human resources which have value.

Rare: Rarity means lack of availability of resources which are being used by the company, There are several resources of Unilever that are rare and some products which are not rare. Unilever has skilled workforce and this human resource are rare (Hernández and Garcia, 2018).

Imitability: imitability means ability of other companies to produce and copy the same features of products. It is the main weakness of Unilever that its products are imitable.

Organization: Unilever is organized enough to be more able to exploit its products as it has a strong position in the market.

From the above discussed strategies for market analysis and competitive advantages it can be said that porter's 5 forces model is more beneficial for Unilever as compare to VRIO model. The main reason of recommending this model is it analyse each factor in detail which can help to Unilever in analysing its actual position and market condition. There are several advantages of using Porter's 5 forces model by this company such as:

  • It provides a comprehensive framework that help companies about competitive forces.
  • Company can make changes in its strategies as per the intensity of all forces and analysing them (Safa and et.al., 2015).

Analysis of the principles of successful change programmes for effective strategic implementation for strategic management

After making plan it is important for the company to implement them successfully. Implementation of planned strategies is not an easy task as company's have to face several problems while implementing strategies of change management such as: resistance of employees, impacts of external forces etc. For an effective strategic management and successfully implementation of change programmes there are several principles and models which need to be considered by Unilever (Bradley, 2016). Some principles of successful change programmes are:

Making the changes familiar: It is important for the manager to make changes familiar. As there are several changes occur in an organization. So, By talking continuously about changes, focusing on key aspects can help the company to make them aware and become familiar with people.

Let people create change: No one likes changes and changes their strategies as per the changes because it takes time and make frustrated individuals sometimes. People think that by adapting continuous changes they cannot take growth but it is important for manager to make them aware that changes are good and accepting changes can be beneficial for both employees and employers. So, making them able is important which is the most important principle of successfully change management (Baggio and et.al., 2016).

Using effective communication: It is stated that communication is the key of the success of the company. Way of talking can sometimes influence employees and make them able to help the company voluntarily. So, using appropriate and effective communication mode and also behave ethically while communicating is important principle.

Guiding employees: For successfully implementing change in an organization it is important for manager and leader of the company to not only make employees able but also support them in their activities. When employees adapt changes then they have to make changes in their activities and way of performing in which they find difficulties initially. So, by supporting employees, company can make them feel valued, respected and increase honesty.

So, from the above discussed effective principles, it can be said that Unilever can make changes in its business effectively. Rather than, principles, there are some models which are being developed for successfully implementation of change management in an organization (Basile and Faraci, 2015). An effective change management model and strategy is described as below:

Organizational development theory: Organization development is a wide area as it is a combination of research, theory and practices that are dedicated to expanding and sharing knowledge and effectiveness of people with the main aim of successfully organizational change and improve ability to solve relevant problems. There are several theories of organizational development that are mainly considered with organizational change.

Equilibrium theory: This theory is mainly created by Kurt Lewin which states that company needs to make an effective balance between desirable and non-desirable behaviours of organizational development practitioners by using equilibrium point. It was its first idea and as per its second idea, it said that there is a requirement to mirror the first idea that the behaviour can be moved by three steps such as unfreezing, moving and freezing. According to its unfreezing step, company has a desire to change and innovate its strategies by which it can make all people aware and influence to make changes, In its next change step, company needs to work outside in and inside out and have to change mindset of employees and all involved people in the change process (Cummings, S., Bridgman, T. and Brown, K.G., 2016). In the last stage and refreeze stage, it states that company needs to make new rules and standards on which basis, employees are allowed to work and which can meet the criteria of quality in the market. All stage of Lewin 3 stage change management model are described in detail:

Unfreezing: According to this stage, it is stated that before implementing change, it must go through unfreezing step because different types of people resist changes. So, in this stage, manager of Unilever needs to make aware to employees and people that why in change process are being put into a force and the importance of making changes. For making this stage successful, they need to use an effective communication mode in order to make able and increase willingness among employees to accept changes. It can be suggested to company that they should involve all employees by taking a constructive approach.

Changing: After making people unfrozen and making them able to adapt changes, Lewin stated that change is a procedure in which company and all participants need to move into new state of being in a efficient manner. It is the stage in which changes become real and all employees voluntarily accept changes. They also learn new behaviours and ways of performing activities. For making this stage successful and teaching employees about new behaviours and practices, manager is required to provide them education, communication and support to them. It is also important to plan and execute the process efficiently. Throughout this stage, employees ate being reminded the reason and importance of making changes for keeping them motivated.

Refreezing: This stage is called the final stage in which, employees move from the change stage to a much more stable state. It is called the ultimate stage because employees learn and implement new ways of working and accept it in positive manner as a part of their life. But for motivating employees and for making this behaviour for the long run, it is important for employer and manager of Unilever to rewards and appraise their performance by which they feel respected and valued. Supporting them in performing their activities and solving their problems they also need to give proper guidance (Cook, 2015).

Rather than this, there is other theory which can also help Unilever in effective change management such as:

System theory: It is a multidisciplinary approach to study of an abstract organization. In this model and theory a system is being created where all types of employees can work productively and collaboratively, When employees work in a team then they are more likely to perform productively and with concentration. They also resist less to adapt changes. There are 4 steps such as input, process, output and feedback. For getting an effective results and making employees analyse and aware about their actual position in the company, employers give them feedbacks (Hayes, 2018).

So, from the above discussed theory it can be suggested that Lewis's change management model will be beneficial and suitable for Unilever. By implementing this, it can make changes successful as it gives proper details in all three stages.

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CONCLUSION

From the above study it has been summarized that business environment analysis played an important role. It consisted of several internal and external factors that have significant and critical impacts on the company's performance and strategies. By analysing each factors with the help of appropriate model, company has analysed its actual position in the market and analyze impacts of each factor. It has shown that for analysing external factors, PESTLE analysis model and contingency strategic management theory played an important role as it suited with it. It has also shown some other strategic models and tools by which company has analysed competitive market and internal factors like its own strengths, weaknesses, opportunities and threats. For analysing positive and negative impacts of internal factors SWOT strategic model has been used and implemented appropriately. Further, for taking competitive advantages and knowing market trends and current position of the company, Porter's five forces analysis model has been used and chosen as it suited with this strategy appropriately. Lastly, this study has shown several strategic management theories and successful change programs that helped company in successfully implementation of strategies and organizational development.

REFERENCES

Books and journals

Abdolshah, M., Moghimi, M. and Khatibi, S.A., 2018. Investigating Competitive Advantage in Banking Industry Based on Porter's Generic Strategies: IRANs Newly-Established Private Banks. International Journal of Applied Management Sciences and Engineering (IJAMSE). 5(1). pp.52-62.

Adner, R., Ruiz-Aliseda, F. and Zemsky, P., 2016. Breaking Trade-Offs: When is Dominating from the Middle a Winning Generic Strategy?. In Academy of Management Proceedings(Vol. 2016, No. 1, p. 16580). Briarcliff Manor, NY 10510: Academy of Management.

Anoke, C., 2018. The Impact of Porter’s Generic Model on Organizational Performance: A Case Study Of Westcon Group(Doctoral dissertation, United States International University-Africa).

Baggio, J.A. and et.al., 2016. Explaining success and failure in the commons: the configural nature of Ostrom’s institutional design principles. International Journal of the Commons. 10(2). pp.417-439.

Basile, A. and Faraci, R., 2015. Aligning management model and business model in the management innovation perspective: The role of managerial dynamic capabilities in the organizational change. Journal of Organizational Change Management. 28(1). pp.43-58.

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