Introduction
The British corporation Lever Brother and the Dutch company Margarine Unie merged in 1930 to become the modern Unilever PLC and Unilever N.V, with headquarters in London and Rotterdam, respectively (Sivakumar, 2021). Before their merger in 1872, the Dutchmen Jurgens and Van den Bergh created a facility in the Netherlands to generate margarine from milk and fat. In 1927, they established Margarine Unie with the European enterprises of Schicht and Center. Lever & Co., on the other hand, was founded in 1884 by the British brothers William Hesketh Lever and James Lever to create soap (specifically, Sunlight soap) for the ladies of England. William Lever penned the company’s mission statement: “to normalize cleaning; to reduce women’s work; to promote health and enhance personal beauty (Austen-Smith et al., 2017).” Lever & Co. became Lever Brothers, a limited liability company, in 1890. In addition to Unilever PLC, the Unilever group includes Unilever and Unilever N.V.
The same board of directors administers both entities. The total revenue for 2021 was $62.047 billion, a 7.08 percent increase over the previous year. The number of employees at Unilever decreased by 0.61 percent from the previous year to 148,044. Food and drink, cleaning, and hygiene are the categories into which Unilever’s products may be categorized. There are just a few brands, including Knorr, Breyer’s & Magnum, Lipton, and Omo (detergent) (Bhagvandas, 2019). Although it is challenging to discover primary sources on Unilever’s management style and approach, most of the study’s data come from business websites and online-accessible encyclopedia articles. This research examines the external environment of Unilever and the firm’s responses to the various challenges.
External environmental analysis
Unilever’s capacity to adapt to changes in its immediate or macro-environment is crucial to its success in the global consumer products market. Performing a PESTEL/PESTLE analysis may reveal these external influences. Using the PESTEL/PESTLE Analysis paradigm, managers may understand how the external environment affects their enterprises (Kuznetsova, 2020). Due to its worldwide position, Unilever is susceptible to various external pressures. However, increasing productivity must be the organization’s top priority.
Political factors: Due to political reasons, Unilever must adhere to the criteria imposed by the European Commission and the Food and Drug Administration in the United States (Sivakumar, 2021). If the company did not comply, it would face legal and criminal litigation, imprisonment, and fines. If conditions become dire enough, the leaders may be imprisoned. In addition to European Union law, the firm must comply with all local regulations wherever its goods are distributed. This category comprises several countries, including South Africa, India, Russia, and China. Import/export restrictions and other trade law restrictions may threaten the future profitability of Unilever.
Economic factors: The current economic climate discourages consumers from purchasing luxury items. There is a significant demand for inexpensive, high-quality goods. Competitors of Unilever are expanding across the European Union, especially in France (Cheng, 2021). The customers have a direct impact on the products offered by Unilever. If its goods are not selling, Unilever will not generate enough revenue to pay its costs. Because Unilever operates in so many diverse markets, if one fails, another may succeed. This, unfortunately, renders them sensitive to changes in consumer preferences and pricing fluctuations.
Social factors: Unilever has prioritized establishing a solid reputation for each brand in the social sphere. The focus is on societally and environmentally significant concerns. Unilever has made it clear that its mission is to assist consumers in achieving a higher quality of life and a greater sense of well-being. A substantial portion of the company’s services is geared toward self-improvement. The primary objective of their marketing, especially for Dove, is to encourage women to feel physically and psychologically appealing.
Technological factors: To ensure Unilever’s continued success and competitiveness, keeping up with technological developments is essential (Tien, 2019). Continuous enhancement of the company’s operating processes is required to maximize production and decrease expenses. For the company to continue expanding its market share, Unilever’s research and development section must be adequately funded. By constructing an automated plant, Unilever will be able to save both time and money. Unilever frequently launches new products that may be purchased online under any of its brand names. The corporation prioritizes the development of its digital advertising and sales techniques. Compared to its rivals, Unilever’s level of automation is far greater, which expedites the delivery of items to retail locations.
Legal factors: Due to its more than 400 unique brands, Unilever is subject to many regulatory restrictions. However, Unilever must safeguard its patents. Typically, fraudulent businesses use the patents of law organizations as a selling point and to deceive customers. A company’s legal department must be competent and vigilant to avert such a tragedy. Additionally, clients must be aware of the appropriate laws and standards. This instills confidence in the minds of customers, resulting in consumer loyalty.
Environmental factors: Unilever has successfully promoted its image as an ecologically conscious firm and implemented its green plans. Unilever supports the United Nations’ Sustainable Development Goals to enhance its brand and financial performance (Nisa et al., 2021). The company is committed to replacing all plastic packaging with alternatives that can be recycled. In addition, Unilever must develop technologies and strategies to lessen its reliance on plastic packaging. This may drastically lower the company’s and its consumers’ carbon footprints.
How Unilever Has Adapted To The Challenges
Using the results of the PESTEL/PESTLE study, Unilever may develop strategies to address the most significant obstacles and capture the most advantageous possibilities. Unilever’s PESTEL and PESTLE study reveals potential global consumer goods business prospects. Despite the challenges posed by the company’s more extensive or more distant surroundings, growth is still possible by using strategies such as product innovation.
By increasing its environmental efforts in response to the growing interest in corporate environmentalism, Unilever may capitalize on the expanding market for eco-conscious consumers. As a result, the firm may outperform competitors in the consumer goods market by boosting its competitiveness with enhanced sustainability initiatives. A significant component of Unilever’s CSR strategy is ensuring that these initiatives are executed throughout the organization. In order to reduce a company’s adverse environmental effects, the relevant strategy must consider aspects such as new product development and internal business processes. These approaches should also assist Unilever in adhering to ever-stricter environmental requirements. As a consequence of this external pressure, the company has an opportunity to enhance its competitive advantage via improved corporate responsibility. Given the current state of the remote or macro-environment, Unilever’s PESTEL/PESTLE study offers opportunities to increase company performance while being more environmentally conscious (Kuznetsova, 2020).
Unilever created a management system to conform to regional legislation and fulfill its business duties. Unilever values safe and healthy products. Under this approach, all Unilever companies must adopt a formal environmental management system (Venkatesh et al., 2020). Various regions/business groups are establishing training programs to guarantee that the organization’s Standard for Occupational Health and Safety Environmental Care is followed (SHE). The ISO 14001 management standard serves as the basis for this framework.
Unilever has also collaborated with the governments in the countries where it has conducted business to decrease waste. By providing over 21 tons of rubbish to small and medium-sized recycling businesses in Accra, Ghana, Unilever has helped reduce the amount of plastic waste thrown in landfills.
Considering its sustainability goal, Unilever has maintained a firm position in the business’s social and cultural elements. The company strives to improve sanitation and nutrition so that disadvantaged and obese individuals in Asia, Africa, and Latin America may live healthier lives. At least 30% of the people in Africa have a daily income of $1 or less. However, the low levels of literacy among consumers hinder the efficiency of marketing tactics such as print media advertising. Therefore, it is necessary to use additional resources, such as those geared to improve interpersonal connections.
Additionally, Unilever employs individuals from almost a hundred additional countries (Kerr et al., 2020). It guarantees that both customers and employees benefit from variety. Unilever implemented the diversity toolkit strategy to manage and profit from the organization’s diversity. Due to Unilever’s emphasis on building an exclusive culture and accepting diversity, its goods are in great demand in growth and new locations.
Conclusion
The outcomes of the PESTEL/PESTLE analysis reveal that Unilever must examine both opportunities and threats when formulating its growth and worldwide development strategy for the consumer goods industry. Plans for the firm should theoretically account for the rising consumer interest in health and wellness. With this, Unilever can enhance its food range. However, if the firm provides its sustainability efforts with the utmost importance and resources, it will be able to capitalize on its sustainable potential. By automating their production processes, local businesses might potentially surpass their competition. The PESTEL/PESTLE analysis conducted by Unilever reveals several threats to the company’s capacity for growth, innovation, and global competitiveness.
References
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