Unilever SWOT and Five Forces Analysis

Introduction

Unilever was the first multinational company that used to start work in more than forty countries after the merger. It was created in 1930 by the merger of two producers who produced margarine and soap in England, which was Margarine Unie and Lever Brothers, respectively. This multinational firm makes different products such as nutritional, personal care, and hygienical, which are used by the consumer of all classes worldwide in an affordable price range. Now, this firm works over 190 countries with 2.5 billion consumers globally and has a revenue of €52.0 billion in 2019.

Description of Good Consumer Industry

2.5 billion consumers used Unilever’s products to “Feel good, look good, and get more out of life”. This firm gives almost 400 brands of all types of products in all ranges, i.e., skincare, health care, household items, nutritional items, beverages, shampoos, soaps, ice-creams, noodles, pasta, etc. This firm claims that every seven items out of ten items used Unilever’s household items. This multinational firm was always tried to meet such challenges, which occasionally occurs at a global level or at the region level. That’s why they are providing best work environment to their 150 thousand employers with number 1 FMCG graduate employer’s choice in 52 markets.

Main Competitors of Unilever

As we live in global village no company can sustain its monopoly and able to work in isolation. Nestlé, Procter & Gamble and Colgate-Palmolive Company are three largest competitors of Unilever. These are companies which produces same use of products with different brand names and labels running firms in monopolistic competition.  

Why Unilever Chooses

Unilever is global brand in all over the world in more than 190 countries. Most of the products consumer uses on daily basis such as shampoos, kitchen items, bath items, ice-creams etc. every product comes in range of Unilever brand. It is well-known world’s largest multinational firms, so it is better to choose it then any other brand. It has a wide variety and range of products.

Unilever Five Forces Analysis

Michael Porter Model of Five Forces is used to Determine Industry Attractiveness

Michael porter model of five forces is used to determine industry attractiveness. This model is used to understand that how external factors affect the performance of industry. Unilever is affecting by these five forces

1. Rivalry with competitors Strong Forces
2. Customers bargaining power strong forces
3. Suppliers bargaining Power adequate forces
4. Substitution threats low forces
5. New entry threats low forces

The rivalry force and customers bargaining forces are very important and have strong intensity for company and the suppliers bargaining powers is a moderate force for Unilever while substitution effect and new entry forces with low intensity. To meet these forces and industry development Unilever have a keen focusing. They are continuously working on product development and innovation, for more emphases, a big investment is made on research and development department of new features and enhancement of product quality.  The details of the five forces is explained in following.

1. Rivalry with Competitors

Competition is a main for faced by Unilever, there are many firms working in consumer industry. They have aggregation to compete and want to take market share, for this purpose they are lowering the prices. Unilever has vast experience of competition through the world and most of the customers change their products due to low prices. So it is very important for Unilever to make a deep focus to meet the rivalry and always focus on future.

2. Customers Bargaining Power Strong Forces

Unilever environment is focused on the bargaining power of its customers. The buyer has an influence on the company, they can go for low prices or extremely high informed goods. Company is continually working on lower cost products and always try to provide maximum information to customer about their products.

3. Suppliers Bargaining Power

Suppliers have significant importance during manufacturing process, the availability of raw material. They are external factors have moderate effect on the environment of firm. Unilever has a large size of supplier from all over the world that can deliver the adequate for raw material at time of demand and also they have long term contracts.

4. Substitution Threats Low Forces

Substitution can reduce revenue and effect the strength of firm environment. Competitors may lower price but Unilever has a keen eye of the conditions and always ready to solve the problem them.

5. New Entry Threats Low Forces

Unlevered always compete the firms and also new firm in consumer industry. Low switching cost can able the firm to become threat for it. But it is very difficult to establish a new product as a brand to compete the brands like Unilever.

Unilever strategy make always give strong consideration to Michael porter five forces model to meet the new forces and work for long run in the market.

Unilever SWOT Analysis

SWOT analysis is a structured planning which is used by Unilever managers to ensure the long term success. It’s very important model that figure out the companies Strength(S), Weakness (W), Threat (T) and Opportunities (O) facing by the Unilever currently. SWOT analysis is based upon two factors:

Internal factors: it includes Strength and weakness

External factors: it includes threats and opportunities

By identifying the internal and external factors the organization know their current position in the market to cope the threat facing by the Unilever. Due to this company easily attain further international growth and expansions. All the factors in SWOT analysis should be considered by the Unilever because it guide the formulation for global operations. This Analysis requires high cooperation as well coordination among many departments in the organization such as Finance, Marketing, AIS and MIS etc.

Unilever’s Strengths

• If we talk about the most important strength of Unilever it is economic of large scale. Economic of large scale assist in production efficiency which helps to set competitive price
• Unilever is working from years and has done many merger and acquisitions with others business due to which the company has wide variety of products which helps organization growth and increasing revenues.
• In consumer goods industry, Unilever has strongest brand image due to this it’s easy for the organization to penetrate in the market and compete the competitors it become Unilever strength.
• On the other hand Unilever has strong global market presence because it’s working in international market and people are familiar with their products.
• Unilever can use their strengths to sustain in the global market and compete their competitors.

Unilever Weaknesses

Unilever also has weakness Inspite of strong market position which is:

• Diversification of Unilever business is limited as compared to other consumer goods industry in spite of its broad product mix.
• Unilever doesn’t has direct contact with its customers because they sell their products by using channels of distribution like wholesaler, retailers etc. it directly effects the buyer.
• One of the major weakness of Unilever the product is imitable in nature like even Unilever invest a lot in product development other firm can imitate Rexona and Dove products.
• To cope with the weakness Unilever should focus on innovation, increase its diversification and expend their effects to penetrate in the market.

Unilever Threats

• If company not focus on weakness it become company threat due to this performance of Unilever may reduce.
• The major threat Unilever face is product imitation its mean that the other local firms easily copy the product of Unilever and the retailer carry out a threat by selling their own brand.
• The strength of other firm become the weakness of organization. Unilever face lot of competition from P&G that is financial performance and market share.
• In this era retailers are biggest threat because they sell their own products which is similar to Unilever product E.g. P&G has its own house brand that directly compete products of Unilever.
• To dealing with the threats Unilever must focus on competitive advantage.

Unilever Opportunities

• External factors involves the opportunities which involves growth in consumer goods market in all over the world.
• By selling the revenues from the sale of its product in the new market segments Unilever easily attain market development.
• To retain its consumer Unilever should make organization environment friendly to grab and retain their potential and current consumers.
• Product innovation is very necessary to increase the attractiveness of product which should fulfill the needs of consumer.
• Unilever should avail there opportunities to remove their weakness.

Future Recommendations

In context with household products. Company will be effect by different factors indirectly and indirectly in future. these factors are several and its very necessary to have a deep eye and important in consideration while making any decision for future.

Development in Nanotech and material science have great impact in the advancement of material and it is strong, light weight, heat proof, impact resistance, shapeshifting and many other improvements.

Artificial intelligence is a big development its working better than human’s beings, can be applied manufacturing process. Reboots helps in shirking costs and high productivity.

Nations in Asia and Africa showing boom in population and wealth needs more intentions and providing opportunities of company. Dependence on 3d printing is more beneficial in future, could help manufacturing and production more efficiently. Use of automated technology process will change the household products entirely in future. Outsourcing is no more effective and manufacturing process will be done domestically which decrease the shipping cost, labor cost and products are available in market on time.