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Swot and Pestle Analysis on Business Environment- Unilever PLC

University: University of East London

  • Unit No: 2
  • Level: Post Graduate/University
  • Pages: 13 / Words 3282
  • Paper Type: Assignment
  • Course Code: HI6006
  • Downloads: 563
Question :

This assessment will cover following questions:

  • Unilever Plc is a British multinational consume goods company in UK. Discussion understanding on the key elements of the internal environment of Unilever Plc and its interaction with the external environment.
  • Assess how a market economy functions and the role of government within it.
  • Examine why countries benefit from trade with each other.
Answer :
Organization Selected : Unilever Plc

INTRODUCTION

Business environment are all internal and external factors which have an influence on working of organization in market. Factors which affect company are customers needs, employees, innovation in technology, social trends, owners, suppliers, supply and demand, etc. These factors affect companies directly and indirectly so that organization can make themselves functions effectively and efficiently. Internal and external factors can also be distributed in macro and micro factors as stated in business environment. There are five factors which are included in business environment which are economic and legal, technological, competitive, competitive, social and global business environment. Business must analyse their external and internal factors before they make any decisions regarding company so that they can have a positive impact on company. Improvements have to be made in organizations so that they can function better but without understanding business environment decisions can not be taken for organization otherwise it is more likely to have negative impact on business. Economic environment of United Kingdom is capitalistic in nature which is making a lot of opportunities which is creating a lot of start-up's in country and a lot of job opportunities are coming up because of this factor.

Unilever is a multinational company which is spread across 190 countries and is also a public limited company. Headquarters are in London, England and number of employees working in this organization are 155,000 as of 2019. Products which are available in Unilever are beauty & personal care, cleaning products, refreshers and food products. Unilever is the oldest multinational company and they own more than 400 brands which has made Unilever get turnover of 53.7 billion euros as of 2017 (Unilever, 2020). Unilever is a dual listed organization which consists of Unilever N.V. And Unilever plc, both companies operate as one business with a common board directors.

Report discusses those internal and external factors effect organization. Factors like business culture, business natural and business environment has shaped organization in a particular manner which helps organization to make decisions and plan strategies and methods for themselves to function. The report will also discuss SWOT and PESTLE factors of Unilever to understand business environment of organization better.

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Impact of culture, environment and business environment on organizations

There are a lot of factors which are affecting companies functioning in organization which company has to consider and then make decisions for themselves. Culture, nature and business environment play most important role in shaping behaviour of organization (Loosemore, 2016).

Business Environment

Business environment are internal and external factors which have an influence on business. There are two types of business environment which are economic and non- economic.

  • Economic Environment

Economic environment are those factors like economic policies, economic system and economic conditions of country which will impact on businesses of country. Economy plays a major role on functioning and behaviour of organization, having a capitalistic economy in United Kingdom there are free and private organizations which are established in country. There are more businesses which are starting in country which will affect economy of country which will help country to develop. United Kingdom had recession in past because they did not have a too many job opportunities in country therefore government took a step to motivate the people to start their own businesses and loans will be provided to them so that there is a growth in country which motivated a lot of companies to start up in market. There was a downfall in income, employment and production in country but due to policies which changed in country there is an improvement which is visible in country. Employment rate has increased in country and now it is 76.1% which is the highest record in history of country (United Kingdom Employment Rate, 2020). The economic stability is coming in country therefore there are more businesses which are coming up in country and that is what is expected out of the country so that the unemployment rate can fall as well and the businesses have great opportunities in country. There is a lot of technological factors which can make the companies capture the market for the growth and productivity can increase by reducing labour cost. This can be beneficial because this is a strategy which the businesses have to make for the productivity level of businesses to increase and marketing surppose.

  • Non- Economic Environment

Non- economic environment are those factors like demographic factors, technological development, natural environment, legal framework, etc. which are having an impact on businesses of country. There is a stability in political power in country which is why policies remain same and due to Brexit there is a growth in country regarding that factor as well. United Kingdom has 5th largest economy in world and due to recession which took place in 2008 government has made adequate steps to come out of that trouble on economy of country. Current inflation rate of United Kingdom is 1.7% (David, 2020). Technology in country is high which is making companies in country have a stable growth for themselves in market. Technology is motivating establishments in country since it gets them unlimited opportunities to do business. The benefit of business in this aspect is that they will be able to get a competitive advantage when they have a good work force. Demands of the customers will be met and the business will be able to get a lot better in market. These factors are making business have loyal employees in organization which is making productivity of organizations increase, but they are not present in the full form. There still a lot of organizations where there is unfair and inequality which is present and appropriate treatment is not there.

Culture Environment

Culture of a country can affect businesses to function in market which has to be considered when it is required to make decisions and changes in organization. It is very important to have motivated employees or work force in organization therefore businesses in United Kingdom have come out with a policy of rewarding, giving incentives or extra privileges so that businesses can have loyal employees and a stronger work force. Attitude of people on businesses in country are very positive now after changes have been made by government of country. Employees must know their rights and have to be treated in right manner so that they feel motivated enough to continue working in business. Having loyal employees will make employees have a skill which will be missing in new employees. Loyal employees know the work and the right skill for the work to be completed therefore they will be able to do the work better and the organization will be able to meet the demands of the company in market. There are a lot of start-up's which has come up in United Kingdom which is making a lot of people of the country have employment therefore there is a growth in GDP and the inflation rates have grown as well.

Including all employees in decision-making will lead to more unique ideas and innovations which organizations in country can come up with so that they can have a control on market. Unique ideas and innovation will lead to having loyal customers which is going to make a lot of difference to businesses in United kingdom since they will not be able to shift from one company to another. Flexibility from organization side is also present so that the working environment is healthy and there is smooth functioning of organization in country. Attitude of employees and businesses is welcoming the changes which are coming in market so that they can grow as much as possible and that will be very helpful for the functioning of businesses. Changes are required so that competitive advantage can be got by companies in market. Employees are given short term visions so that they can achieve those and make a profit of organizations. There are a lot of entrepreneurs which are coming up in country because there is right inflation which is taking place in country and the technological changes are very good in the country which make the productivity of organization stable.

Businesses in United Kingdom are growing because there is a stability in market since decisions are taken in organization after considering the point of view of employees. Businesses have made this culture such so that the employees feel that they are the major part of organization and they feel comfortable working in businesses. Language has to be maintained and if not maintained then there will be a communication gap and if there are employees who do not speak the language then there are translators in organization so that they can communicate better. Clarity in organizations is a very important factor for it to work and get a competitive advantage. Working hours for the employees is being paid for per hour so that there is no unfair treatment in businesses so that they can have a stable income and there is a fairness in environment of organization (Poorrezaei, Pich and Resnick, 2019). Technological changes which are taking place in market are being accepted by businesses because the culture of country is very modern to accept them and understand importance of new methods which are supposed to be used. Using old methods will increase the work load of employees and therefore culture makes technological changes in country come in very easily.

Nature Environment

According to researches the operations and financial performance of businesses are affect 70% by weather of countries (Bertrand and Parnaudeau, 2017). There are a lot of organizations which are taking measures so that they can reduce impact on the environment so that they can do business successfully. There is a use of renewable resource which is making the environment for the employees, customers and the business all together. Resources are very limited therefore utilizing those are very important factor for organizations in United kingdom and minimizing negative impacts. The government is also changing policies so tat the companies in country reduce their carbon footprint for the betterment for themselves and long run in market. Clear weather and supporting climate helps the delivery of suppliers and demands of customers be met easily. United kingdom is well-connected with other countries and that will give business another positive aspect to do business in other countries which is going to make economic condition of country improve.

There has to be a clear strategy for making the company have a profit in market by planning there strategies according to nature environment kept in mind so that there is a difference in organization (Katmon and Al Farooque, 2017). Climate is a factor which is not under control therefore it is very important factor in which the businesses are running in. Demands of the customers is increasing because there is a growth in customers therefore it is very important for businesses to be set in locations where are not in extremes which will affect the company not be able to reach out to customers.

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Pestle Analysis

It analysis and evaluates various external factors of environment that impact on the functioning of business and helps it in achieving competitive advantages in the market. Unilever is a leading company in UK that deals in consumer good and operates its business worldwide. Pestle analysis of Unilever helps in identifying all such external factor that impact on smooth functioning of company and helps in gaining competitive position in the market.

Political Factor: It refers to government rules and regulations that impact on smooth functioning of organization. Due to Brexit, UK is facing political stability that adversely impact on company by decreasing its sales and profit margin (Mingran and Alexander, 2017). But it is able to grow and survive in the market because of its global presence. Thus, political factor affect functioning of business adversely as it restrict import and export of company and impact on its sales.

Economical Factor: It includes interest rate, employment rate and disposable income of customers in the country (Liu, and Alexander, 2017). Due to Brexit UK economic is facing recession and customers are less willing to spend or make purchase due to decreases in employment and disposable income of customers. But company functioning has not been affected as Unilever operate its business across various nation. Thus, this factor has impact positively on the functioning of business and helps in achievement of organizational goals.

Social Factor: Company in order to differentiate itself from other competitors in the market has satisfied the needs of customers in effective manner. It impacts on company function as it had to markets and develop product as per the demographic structure of the society (Islam, 2017). It has to consider social factor in order to satisfy needs of customers. Thus, Unilever achieve its objectives by considering social factor such as advertisement its product in different language to attract wide varieties of customers.

Technological : It refers to level of technology and innovation in technology that helps company in gaining competitive advantages in the market. Unilever by using higher level of automation that helps in quickly supply of products in store able to expands its business and build strong brand image in the market. Thus, technological factor had lead to growth and success of business in the global and local market.

Legal Factor: It refers to laws and regulation of the country that the company has to abided in order to perform its activities effectively. Unilever is consumer good company that has wide product portfolio's and approx 400 brands in food, personal and health care. Thus, Legal factor has restriction functioning of company by abiding it with employment laws and health and patent and copyright to various technology (Mukherjee, 2017). Thus, company in order to perform its function effectively has followed laws, ensure safety of its customers and employees that helps in building successful brand image of company.

Environmental Factor: It has impact on company functioning as it has to produce and promote eco-friendly to ensures health and safety of customer and protection of environment. It had lead to increases sales and build brand image as company take steps to protect environment. Thus, environmental factor has adversely impact on the functioning of Unilever.

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Swot Analysis

Swot Analysis is done to identify strength and weaknesses of company in order to gain competitive advantages by using available opportunities.

Strength: Company strength lies in its wide product portfolio, presence in global market and strong brand image of the company (Weng and Liu, 2018). Strong brand image in consumer good industry helps company to penetrate market and to effectively competitive with other competitors in global market.

Weaknesses: Despite strong market position company has limited potential growth as it has limited business diversification as it has investment more in consumer good than other goods. So, it needs to diversify its business in order to gain competitive advantages in the market.

Opportunities: Company has opportunities to expand and diversify its business due to well-established brand image of the company (Frolova, 2019). It can also expand its businesses by entering into new market or by developing innovative product that satisfy needs of health conscious customers.

Threats: Unilever is facing threat of increasing competition in consumer good industry and product imitation by local firms as they can develop same product as Unilever to increase their sales.

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CONCLUSION

From the above report it can be concluded that cultural and natural environment impact and shape the behaviour of Unilever. There are various internal and external factors that impact on the functioning of business in the market in which it operates. Business has to consider such factor in order to succeed and grow in the industry. Business environment are further divided into two economic and non-economic environment. Both these factors impact on the smooth functioning of businesses in the industry. It can also be concluded that economic environment such as interest rate, disposable income should be considered for effectively achievement of organizational goals. UK economic is suffering from situation of recession but the company was able to grow and survive in the market by expanding its business across the globe. Non– economy environment such as demographic, technological has to be considered for achievement of company goals. Company by considering non economical factor such as demographic, technological factor of various countries is able to build strong brand image and promote its business across the globe. It also analyses and concluded from above report that culture environment also needs to be considered by company to satisfy needs of customers beyond their expectancy. It also crucial for company in order to recruit right person for right job or to motivate employees to work effectively for organization. Helps in identifying employment rate, their belief and value thus helps Unilever in satisfying needs of customers and employees. Thus, culture environment helps in maintaining and building customers loyalty and satisfaction in the society and promote repeated sales. It can also be explained that natural environment such as weather and climate also impact on functioning of business. As the resource are limited so company has to make effective utilization of available resource to achieve its objectives. It also has to take steps to reduce carbon footprint to ensure health and safety of people living in the society. Company by taking incentives regarding protection of environment helps in building strong brand image and increases sales of the product. From the above analysis it can also be concluded that various internal and external factor can be evaluated by company by conducting Pestle and swot analysis. SWOT Analysis helps Sainsbury in gaining competitive advantage and various opportunities available in the industry. It also protects company from various threats by identifying increasing competition in the market. Pestle Analysis helps in identifying external factors that impact Unilever such as policies of government, economic condition of the country and social belief and value of people living in the society. It also identifies technological advancement and laws of government that impact on the functioning of Unilever. Thus, it can be concluded that environmental factors impact adversely in functioning of company.

REFERENCES

  • Frolova, N. A., 2019, January. Using PEST-and SWOT Analysis for the Strategic Development of an Enterprise for the Production of Confectionery Products. In International Scientific Conference" Far East Con"(ISCFEC 2018). Atlantis Press.
  • Islam, M. A., 2017. SWOT Mix and PESTEL Analysis: Effective Tools of Risk Management of Leasing Companies. The Millennium University Journal. 2(1). pp.1-18.
  • Katmon, N. and Al Farooque, O., 2017. Exploring the impact of internal corporate governance on the relation between disclosure quality and earnings management in the UK listed companies. Journal of Business Ethics. 142(2). pp.345-367.
  • Liu, H. and Alexander, P., 2017. Analysis of the impact of advertising and the use of social media regarding product sales.
  • Loosemore, M., 2016. Social procurement in UK construction projects. International journal of project management. 34(2). pp.133-144.
  • Mingran, B. and Alexander, P., 2017. Analysis of Customer Satisfaction in a Motel.
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