SWOT Analysis of Unilever. PAPER: 1/2/9/11

SWOT Analysis of Unilever

Introduction

Unilever operates in nearly 190 countries around the world and has been a traditional paragon of excellence and quality in the Fast Moving Consumer Goods sector. The company derives its competitive advantage from its global footprint and its track record of enhancing value for the consumers around the world. Even in the current recessionary environment, it has managed to grow at a respectable pace though as we shall discuss latter, Unilever cannot afford to ignore the emerging threats from a wide range of global, regional, and local players. Apart from this, as the succeeding SWOT Analysis makes it clear, the battle for the emerging markets is likely to escalate into a no holds barred competition with a race to the bottom ensuing between the global giants like Unilever and Proctor and Gamble and a array of local players.

Strengths

• Unilever operates in nearly 190 countries around the world and hence, has a global footprint combined with top of the mind brand recall among consumers worldwide.
• It has a deep and broad portfolio of brands and a diversified product range, which makes it uniquely, positioned to tap into the changing consumer preferences across the world.
• Its Research and Development initiatives are heavily funded and manage to bring to the market innovative and cutting edge products in tune and in line with consumer preferences.
• Unilever has a distinct competitive advantage over its nearest competitor, Proctor and Gamble because of its flexible pricing and expertise in distribution channels that manage to reach the nook and the corner of the globe.
• The company finds its strengths in leveraging the economies of scale arising from its breadth of operations as well as synergies between its many manufacturing facilities, which totaled 270 locations around the world at last count.
• Unilever combines global thinking with local execution, which means that it pursues Glocal strategies that let it win the hearts and minds of consumers who would like to use its products that are globally famous yet retain a distinct local flavor.

Weaknesses

• The biggest weakness that Unilever faces is that it operates in an uber competitive market where the other global giants like P&G and Nestle in addition to a host of local players challenge its dominance at every turn and raise the stakes in the Trillion Dollar FMCG (Fast Moving Consumer Goods) space.
• The other weakness is that its products can easily be replaced with substitutes especially in the emerging markets in Africa and Asia where the rural consumers in the hinterland often use traditional and natural alternatives to the products that Unilever markets.

Opportunities

• With the advent of globalization and the proliferation of global media, consumers in the emerging markets are aspiring to western lifestyles and this means that Unilever has a tremendous opportunity waiting for it as it taps into this large and diversified consumer base that wants to join the league of westerners in taste and preferences for consumer goods.
• Apart from that, capturing the “Newly Affluent Trillion Dollar Consumers” in China and India means that it has a golden opportunity to leverage this huge and growing consumer base, which often tries to imitate and mimic the consumerist preferences of the material west.
• The emergence of the health conscious consumer in the developed world means that Unilever can seize the opportunity to market to this segment with its existing and yet to be launched product range that is specially geared for the health conscious consumer.
• Unilever has a good track record of social and environment responsibility and with the emergence of the ethical chic consumer who like to buy and consume products and brands that are responsibly made and sustainably complete.

Threats

• The ongoing global economic crisis has severely dented the profitability of many FMCG companies and Unilever is no exception. With the shrinking of the disposable incomes of the global consumer, they are buying less and insisting on more value for their money or “more bang for the buck”. This means that Unilever faces the threat of diminished revenues and increasing costs, which is like a “Double Whammy” to its top-line, and bottom-line.
• Though we had mentioned that Unilever succeeds and scores over P&G in the CSR or the Corporate Social Responsibility aspect, the increased awareness among the global consumers has turned the harsh glare into each and every strategic move that the company makes. Some practices of the company have been criticized which means that Unilever has to ensure that it sustains and maintains its focus especially when the spotlight is on it.
• As mentioned earlier, Unilever operates in a market segment where local products and alternatives to its brands proliferate especially in the emerging markets and hence, it faces a threat from smaller and more nimble local upstarts who can provide more value for lesser money without the associated costs that global giants like Unilever incur.
• The entry of Asian multinationals into the global arena has upped the ante for Unilever and raised the stakes in the global game for dominance in the FMCG market segment. This means that Unilever faces the prospect of having to battle not only the recessionary blues but also emerging threats from this new age and new breed of competition from Asian conglomerates that are beginning to spread their wings internationally.

Conclusion

Unilever has been in the business of consumer fulfillment for many decades and hence, we are confident that it can tide over the present gloomy conditions in the FMCG segment. Having said that, we conclude the article with a cautionary note of not taking the threat from the Asian FMCG majors lightly as they understand the continent better and at the same time are mastering the intricacies of the global marketplace