Our final question was: How to increase ethnic diversity within Unilever the Netherlands? Therefore we came up with a Five-step plan:
I. Define a clear value proposition: create a clear value proposition and set a few clear targets (preferable not quotas).
II. Establish a fact base: Understand the current situation in terms of statistics and mindsets.
III. Create targeted initiatives: differentiate initiatives by a diversity group and lead it from the top.
IV. Define the governance model: define the rollout strategy for all initiatives. Monitor rigorously.
V. Build inclusion: address potential mindset barriers through systematic change management.
And finally, Unilever wants to install a “Winning Balance”, as well as regarding to the gender balance as for the different ethnical backgrounds. Consistent with the five steps of a winning balance for the company, there are identical calls for action for each employee. Those five steps are; own the business case, by making diversity (gender, culture etc) a business issue and not only a women's or a diversity issue, set targets in order to be able to deliver the goals, strengthen the supply, lead inclusively by encouraging and value diversity and finally track and measure.
In annexe 3 you can read the business case for diversity , a case regarding the role of diversity and gender equality in a company.
a. Possible suggestions for future improvement (based on MIB-curriculum)
As I have already explained before, Unilever is a worldwide company present in over more than 150 countries. Which means that Unilever is dealing with people from all over the world, with different cultures and different ways of working. During my internship I could definitely feel the respect of the company as well as the employees regarding all the different cultures and values of each person. The goal for Unilever is to be able to work with everyone, not only all over the world but as well at our own (home country) office, which for me was the office in Brussels.
However, when talking about culture, it's important to not stick only to the organizational culture ; which is “the group of beliefs and ideas that multiple members of an organization share, assumptions that everyone takes for granted unconsciously and that lead to a taken-for-granted view of an organization and its environment.” As an individual we are part of more than one culture and we get in contact with different cultures, for example: our national or regional culture or think about our functional or divisional culture. The most important is that we, as individuals, get our own, personal balance between the different cultures, beliefs and related ways of working in a company. Because all those differences can affect the management of a firm and can affect what a firm can or cannot do.
Regarding to my personal experiences at Unilever, this company does not allow culture to affect it in a “negative” way, it is more the opposite; they are using all those differences to build a even stronger strategy and to make sure to be able to satisfy the consumers in their needs, regardless of where they are located in the world.
Regarding the management at the Brussels office, I had to adapt myself. Why? Because I have always been to a Catholic school (which implies strong, explicit rules for everybody), I did multiple summer internships each time in companies with a structure, clear rules regarding the work hours and breaks and especially a clear hierarchy. However, at Unilever the way of working and its rules were quite different, specific to the company, which brought some hesitating to me:
I. When signing my contract I was informed about my working hours; which were 9am-5pm from Monday to Thursday and 9am-4pm on Friday. But at the office itself, everybody had his own hours, made his own schedule and you were allowed to arrive later/earlier and leave later/earlier. This caused some questions to me, because as an intern I was considered as “part of the team” and as a real colleague. So I asked myself am I also allowed to arrive earlier/later? I talked about it to my manager who told me that as an intern I had my fixed working hours but as an adult I could make my own choices and if I assumed that my work was done, and that I fulfilled my deadlines/daily responsibilities, I could leave earlier. Which was different in the case of another intern, who was allowed to leave earlier for an appointment but had to catch up her “time” the following day, even when her deadlines and work were done. Same for the traffic, as it is known in Belgium, traffic in Brussels; especially in/on the “ring” is horrible. You can leave one hour earlier in the morning and still arrive one hour later than normally. Which causes some issues as well.
This flexibility of the work hours and being considered as “totally part of the team”, was confusing for us, interns. Because it was not clear where the limits of this flexibility were for us. Some interns were allowed to do “home office” as much of the employees did, especially on Friday, while some of us weren't even allowed to work once at home during the whole four-to-six months internship.
For the interns, I would definitely suggest to create a sort of file/roadbook that we get in the beginning of our internship, in which it is clarified where the limits are FOR US regarding the flexibility of the working hours. It would be good as well to make sure the Line Managers are in line with those clarifications, which would create also more clearness and solidarity between the interns.
II. During my internship, I never had a real one-to-one with my Line Manager. We agreed that if something was not done, not done in the right way or if there were any problems she would come directly to me and say it. So we agreed to have a real, confident relationship based on trust. Regarding the one-to-one, for example my manager had each week one with the OOH manager (our “big” boss), which allowed her as well to progress. Regarding the team meetings, there was one each month with the whole team (customer service, the accounts, key accounts and field managers for Brussels, the south and north of Brussels).
However, there were no consistent team meetings each week for for example the progress of the preparations of the kick-off events etc… Which can be tricky, because in order to guarantee the best results, a good team and a good team communication is definitely important.
For this issue I would definitely propose to have each week, on Monday morning a one-hour meeting in which the progress of important issues/projects is discussed and shared with everyone. Where people can share their problems or share propositions of ways-of-working with the whole team, instead of sending mails with propositions of it.
III. At least, something that was for me a pity was the fact that, except for the Christmas lunch, we never had a real incentive with the team. The OOH team made during the year of 2016 some great realizations and had a very good outcome regarding the financials. However, compared with other teams (marketing team or the finance department), we never took the time or we never jumped on an occasion to celebrate this together. So I would definitely suggest, in order to guarantee a great teamwork and team cohesion, to have now and then a small incentive. To remember them that they are a team and if Ice Cream and LIT made such good results during summer 2016, it is because they worked as a team: the marketing strategy was great, the field managers did a great work to lead their field representatives, the representatives at their turn did some great turn regarding the selling and assuring great quality to their clients.
6. TRIPOD ANALYSIS
a. External analysis – Porter's 5 forces
For this analysis, I will investigate the performance of Unilever in the industry; so the degree of competitiveness in the industry but also the attractiveness. Unilever is a company that competes in the FMCG industry, more specific the consumer goods market.
Concentration: there are a lot of companies operating in the consumer goods industry, which makes the competition intense.
⇒ High concentration leads to a high competition.
Diversity of competitors: there is a lot of similarity among the competitors and there is not a dominant player. There is definitely an intense competition. ⇒ Low diversity between the competitors leads to an intense competition.
Product differentiation: the different competitors are all selling products that have similarities between each other (ex OLA and Ijsboerke), which makes the competition in this industry harder.
⇒ Product differentiation is low so a harder competition.
Exit barriers: a company as Unilever has to invest in tangible, specialized equipment to produce their products/brands. So it makes this industry not easy to exit. And the cost of entry is high as well.
⇒ High exit barriers, which makes the competition harder.
Unilever uses high economies of scale, which makes the competition harder.
⇒ High competition.
Regarding the first force, we can speak about a high competition.
ii. Threat of substitutes
The substitutes are the products coming from different companies/industries that satisfy similar customer needs.
As said before, the switching costs are low which makes the buyer's propensity to substitute high. But there is a low availability of substitutes and when it comes to the price-performance characteristics of the substitutes most of them have low performance regarding to a small or even insignificant cost difference. Above that, Unilever also has a leading position in the consumer goods industry, which also makes it less likeable that consumers will switch to substitutes.
So we can conclude that the threat of substitutes is low.
iii. Threat of new entrants
Capital requirements: as said before we are speaking about low switching costs, which allows consumers to switch easily from one product to another. Therefore, new entrants will have to have a big capital in order to invest a lot to build strong brands before competing with Unilever. ⇒ High
Access to channels of distribution: there is not an easy access to the different channels because in order to be able to use those, the different channels need be willing to accept new suppliers. Contracts need to be made based on trust, the organization, etc… and money. And as said in the previous point, new entrants will need a big capital. ⇒ Difficult/low
Legal and regulatory barriers: For the FMCG industry there are a few political influences, examples of them are: health and safety laws, but also consumer protection laws and employment laws.
Above this, there are also a few restrictive government policies regarding entering the FMCG industry. ⇒ High
Product proliferation: Unilever fill its product space in order to make sure the unmet demand is low, ex Ice cream (Refreshment) → OLA, B&J, Magnum, … ⇒ High
Product differentiation: there is definitely a brand differentiation for Unilever, let's think about AXE; at some moment we had a demand for the female version of it. Regarding the brand identification, more and more people are loyal to Unilever's brands. Unilever is already one of the leading companies in this industry and is also competing with other giants like Nestlé or Kraft (think about the offer Kraft recently made to take over Unilever), so it would definitely be difficult for other companies to enter this market. ⇒ High
Economies of scale: Unilever uses high economies of scale, which has as result competitive pricing and well-organized efficiencies. Small companies that just enter the industry have difficulties to do this as well as they are new they already have a lot to think about. ⇒ High
Regarding the threat of new entrants we can conclude that this one is low.
iv. Bargaining power of suppliers
This power is the ability to raise prices or to reduce the quality of certain goods.
Unilever has a moderate number of important suppliers and the availability of a substitute for the supplier's product is high; Unilever has a lot of suppliers of raw materials to choose from. In order to ensure itself and limit this power of suppliers, it has a policy of buying and manufacturing locally . This way, Unilever ensures that suppliers cannot go to other companies and ask higher prices.
This way, I would say that the bargaining power of suppliers is moderate.
v. Bargaining power of buyers
As discussed in previous points, the low switching costs make it easy for consumers to switch from Unilever products to other similar products from other companies. Above that, the buyer's information is high because they have easy access to this information. The buyer's price sensitivity is high as well because the consumer often has the choice between two products, at similar prices and same quality but from different companies, so this leads the consumer to choose the cheaper product.
Therefore the power of buyers is high.
By this analysis, I can conclude that Unilever is a 3* company: its average performance in the FMCG industry, more particularly in the consumer goods market, is moderate. This analysis showed us that the competitive rivalry and the bargaining power of buyers are two external powers that Unilever will need to take more in consideration to ensure its long-term success.
This analysis also allows me to specify the threats and opportunities to ensure Unilever's long-term success:
I. Threats: substitute products, tough competition/rivalry
II. Opportunities: product innovation regarding health and well being (Unilever has already started doing so by introducing Pure Leaf), continue to keep in mind the environment by enhancing sustainability in everything they do.
b. Internal analysis – Barney's VRIO Model
This analysis is about the firm-specific differences/resources and capabilities to procure an advantage. The aim is to know why some companies have better results than others in the same industry.
The VRIO model analyzes Unilever's resources following 4 characteristics: Value, rarity, imitability and organizational embeddedness.
Value Rarity Imitability (costly to imitate) Organizational embeddedness
Human Resource development/
Management YES NO NO YES Competitive parity
Brand & Innovation YES YES YES YES Sustained competitive advantage
Customer service program YES YES YES YES Sustained competitive advantage
Distribution YES NO _ YES Competitive parity
Marketing & Sales YES NO _ YES Competitive parity
Sustainable sourcing YES YES NO YES Temporary competitive advantage
Human resource development/ management
Value: Unilever had in the past several programs in order to assess their candidates and finally recruit and train people with the necessary skills. Another program is the Unilever Leadership Development Program (ULDP) to give the opportunity to people to develop their personal development plans and align these with their professional development plans of becoming senior managers of even leaders within the company. Therefore, this is definitely a good, valuable resource.
Rarity: a lot of companies are aware that its something important to start develop in their organization, especially in order to allow you to have the best people with the best experiences, skill etc in the company. However, it is not a rarity anymore because a lot of companies have a human resource development plan or program within their organization.
Organizational embeddedness: the company controls their own program called ULDP, it is very well enrolled in the company and follows the organization Unilever made for it.
Brand & innovation
Value: in order to help increase the perceived customer value and to hold its superior position among certain products, Unilever keeps innovating. Unilever especially increases the differentiation of it brands and products.
Rarity: Unilever has multiple innovations that cannot be acquired by other companies. Regarding certain product/services and what they give to consumers, Unilever is the only capable to offer certain of them.
Imitability: Some innovations of Unilever are impossible to imitate, or even very hard to find substitutes for. Think about the certain types of Ice Creams of Unilever.
Organizational embeddedness: this resource is very well organized among the company, this in order to fully use and realize the potential of it.
Therefore, I can say that the resource brand & innovation gives a competitive sustained advantage to Unilever.
Customer service program
Value: This resource definitely adds value to the company in that way that Unilever keeps a good contact and works very closely with its customers.
Rarity: We can surely talk about a rare resource because not a lot of companies have such a developed and positive program to ensure a good service and therefore a good relation with their customers. It is not only based on just collecting complaints of customers, it goes way further than only this.
Imitability: As said before, each company has it own way of working to ensure a good relationship and a good contact with its clients, but a detailed program as Unilever has is difficult to imitate. Because it is based on years and years of specific research, of specific (internal) matrix and the level of expertise is very high.
Organizational embeddness: of course again, this program is very well organized in the company. The company pays a lot of importance as well to the social complexity that has positive outcomes in the organization.
We can obviously conclude that Unilevers customer service program adds a competitive sustainable advantage to Unilever.
Value: Unilever has an impressive international distribution network, which of course adds a lot of value to the company but also to it's external network.
Rarity: This can be seen as rare in that sense that not a lot of international/worldwide companies have such a miniculeus, detailed, worldwide distribution network. But when talking about the distribution network/distribution channels of a company, we can say that this is not rare. Therefore, competitors are able to expand their network and to invest to let it grow.
Organizational embeddedness: of course this whole network of distribution and its channels is and must be very well organized among the company. If not this could certainly not add a competitive parity.
Marketing & Sales
Value: Of course the amount of money invest in its marketing and sales adds value to the company because it allows them to build a customer loyalty as well as an increase in the brand equity.
Rarity: Nowadays, “the” way of a company getting on a market and increasing brand awareness is the marketing and all the different marketing channels. It is not a secret in this industry (and others) that marketing is crucial to grow and to be successful.
Organizational embeddedness: the different campaigns, the different POS materials and the different strategies must be very well organized in the company otherwise this campaign could not be successful. The results of those campaigns and strategies need to be held by someone in order to know how to proceed in the future.
Value: this way of working is definitely adding value to the company but more important is adds value to what the company is doing and its place in the world. As they also take into account the impact their sourcing has on the society.
Rarity: even if the subject sustainability is growing and is taken more and more in account, the way Unilever is sourcing is still rare. Because they are ready to invest a lot of money is their strategy of sourcing in order to accomplish multiple things: they want to be able to meet the demand of customers who want to buy products only from responsible companies, they are committed to help the environment which becomes a very sensitive subject among the population.
Imitability: companies who want to switch to a sustainable sourcing will have difficulties, will have to invest a lot of money, but eventually they are definitely able to imitate or to have their own way of sustainable sourcing.
Finally, by analyzing the (primary) activities of Unilever, I can say that Unilever owns its success to 2 resources/competencies, which are brand & innovation and its customer service program. Besides this, their sustainable sourcing also gives them a temporary competitive advantage
c. Institutional analysis – Regulatory/Normative/Cognitive framework
This third analysis, the institutional analysis, is important because with “institutional” we mean everything that governs both firm and individual behavior. Company strategies are limited and constrained by institutions and different companies have different rules regarding firms and employees. It's important to make the difference between formal rules and informal rules. While formal institutions are rules, laws and regulations, informal institutions are norms, cultures and ethics. The formal institutions are divided in two groups: the cognitive which refers to the values, beliefs that guide an individual or a firm and that are internationalized, while the normative refers to the values, beliefs and actions known by everyone as norms (which influence the behavior or the individuals and the company) . For the following analysis I will focus on Unilever Belux, but its possible that I take other countries as example.
Laws and government regulations: Unilever its businesses are governed by multiple laws and policies depending on the country and government it occurs (Unilever is also governed by regulations of the European Commission; at least for the countries part of the EU). There are a lot of processes to make sure that products, raw materials and manufacturing activities respect those laws and policies. For example: there is a policy regarding anti-trust legislation and data-protection but also policies to ensure that Unilever's products are safely used and for their purpose. There is another important policy regarding nutrition labeling. Or in Belgium you have the regulations regarding the taxation etc.
Rules: when joining the company each employee receives and need to sign a paper to agree with the company rules; those are clear instructions that every person in the company has to respect in order to ensure the smooth running of the company. At Unilever, every employee receives a personal badge to enter and leave the company and to be able to move within the whole company. It is a rule to not give that badge to anyone else. Another rule was about the behaviors, especially conflicts like fighting, that were not allowed within the company. Or think about the rule of showing respect to your fellow colleagues.
Policies: those are the documents each employee receives when starting in a company. Policies often inform the employees about their rights and will govern how the company its business will run. Those are often made according laws and regulations. Unilever has therefore the Code of Business Principles, which has for example the policy of no-discrimination within the company to ensure a fair chance for everybody.
Norms (Values and beliefs): at the Unilever office it was a norm to work in team and help a member of your team when someone was stuck. Even for our group of interns, coming from different departments, it was normal to help another intern if he or she had a lot of work and if you had a little bit time over when your deadlines were done.
Habits: In Belgium, and especially at the Unilever office in Brussels, you had habits; things that people were used to do. For instance, on Friday a lot of people worked home and it was sort of a habit (except for the interns), it was also the habit to go out for lunch on Friday instead of eating in the restaurant at the office. Another habit was to bring something to the office for your colleagues when it was your birthday of when you were leaving Unilever for another company.
Beliefs: It refers to what I personally believe. For example, I believe (for Unilever) that using recyclable cups at the office, of for instance taking a refillable bottle instead of taking everyday a new plastic bottle is good for our environment and fits very well in the culture of Unilever regarding its sustainability.
Values: even if I had working hours, I did not really respect those. Because I was there to work hard, to show what I am worth and to show that I am someone who is not afraid of deadlines and limits. So when we had projects or when I had a deadline short by, it did not bothered me to stay until eight pm at the office, because as an intern, for me, it was important to deliver good work and respect the deadlines.
d. Conclusion – analysis of company strategy
A worldwide company like Unilever has different plans to accomplish certain goals and to bring a desired future. After the external, internal and institutional analysis, it is now time to look which strategy Unilever has chosen to strengthen the firm's position and performance. Unilever uses generic strategies in order to build and maintain a competitive advantage by satisfying consumer's specific needs and preferences. In other words, the company uses strategies to address directly market needs.
Based on the previous analyses and information, Unilever uses differentiation as generic strategy to ensure its competitive advantage in the global consumer goods industry. This strategy is about low-volume and a high-margin approach. The aim is to target customers that are in smaller but well-defined segments and customers who are willing to pay higher/premium prices. Unilever want to emphasize on characteristics that make their products stand out regarding competitors. Another characteristic of the differentiation strategy is to attract customers to special designed products with an unique element like sophistication. And that's what Unilever does for example with their personal care product Dove , they designed a “Dove Cream Bar” in order to answer the need of consumers to have a soap that is not harsh or that is not drying. By coming up with certain types of soap Unilever differentiates itself from other “normal” soaps and makes that people are willing to pay more for that product. The aim is to stand out and attract different competitors.
But for a worldwide company like Unilever that operates in all different corners of the world, it is important to keep in mind that in some countries this strategy of differentiation will not be possible. Therefore “the strategy clock” exists; it represents different cases of the perceived product and service offers/benefits. And regarding these different cases you can choose one or another strategy. It allows us to adapt to the case (of different countries).
7. SCALE AND SCOPE OF CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES
Nowadays, more and more companies are aware that CSR is part of the society and that they need to include such activities in their organization. Because a company needs to take initiatives and actions to assess and take responsibility for the effect it has on the environmental and social wellbeing. Acting as a company that is socially responsible is a must for staying the leader in the playing industry. Unilever uses its CSR activities with the aim to maintain its industry position and to support its business sustainability.
a. Stakeholder analysis of the firm
In our case, stakeholders are all the persons internally or externally of a company who can affect a business its performance or can be affected by the achievement of the organization's objectives. In the case of Unilever, the primary stakeholders are consumers, employees, investors and suppliers and the secondary stakeholders are communities.
Nowadays consumers have an eye on the product, the quality and the price of the product when buying but also of the environmental impact the company has. Their opinion means a lot and is non-negligible but they directly have an impact and determine the profit of a company. The CSR-strategy of Unilever tries to answer those opinions and demands through extensive innovation processes and quality assurance policies. It also tries to decrease its environmental footprint in order to give a positive image of corporate citizenship to influence the consumer perception. Unilever wants to satisfy the consumers as stakeholders to support its corporate citizenship strategy.
The employees are the ones who will have a direct impact on the organization of the company and therefore its performance. Employees are interested in their professional, individual career and therefore they are interested in a competitive compensation and a holistic career development. Unilever has in its Corporate Social Responsibility activities 2 actions: first of all through the Agile Way of Working Program they want to ensure their holistic career development and through effective Human Resource policies they want to ensure their work-life balance. This program allows the freedom and flexibility to work where you want and when as long as you fulfill your job tasks and responsibilities. By doing this they take multiple concerns in account as healthful work practices, the employee's travel distances (which can be hard sometimes and environmentally its better as well)…
This group of stakeholders is the one who is interested in one thing: the performance of the company Unilever in the fast moving consumer goods industry. Because in order for them to have confidence in the company, there has to be a positive revenue and profitability. And their confidence is important because they have an influence in deciding of the fund to support Unilever its businesses. One of the activities to reach them is continue expanding the company its business through for example acquisitions to ensure their dominant position in the industry. Secondly, the company also makes sure there is a better efficiency, productivity and sustainability by putting efforts in product innovation for higher quality.
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