1. Organization Change
at Unilever
Bhushan Patil
Sandesh
Wadekar
Rajesh Mudaliyar
A7

2. The Case discusses a long organization restructuring exercise undertaken
by Unilever, a Old multinational global fast moving consumer goods (FMCG)
company. It examines in details the important elements of the
restructuring programme
The Case focuses on the changes made with respect to the organizational
structure, various Unilever businesses, branding strategies and supply chain
management practices. It discusses the results of the restructuring exercise
and examine the company’s future prospects in the light of its falling Market
share and the faster growth of many of P&G brands (detergents)

3. Unie
 In 1872, two Dutchmen, Jurgens and Van Der Bergh had
ventured into the margarine business
 In 1927, they decided to merge to form two companies,
Margarine Unie NV, based in the Netherlands and Margarine
Union Ltd, based in the UK
Strategy:
Growth
Tool: Merger

4. Lever
William Hesketh Lever founded “Lever Brothers in 1885
By 1887, introduced “SUNLIGHT, thee worlds 1st packaged
Laundry soap
Lever & CO. was making 450 tons of Sunlight soap a week
He expanded his business from UK to Australia, North
America and other parts of Europe
In 1890, Lever & CO became a limited company – LEVER
BROTHERS LTD, by 1894, they went PUBLIC
Diversified into other businesses, acquired pears soap and
wall’s
Launched its innovative product, VIM
Strategy:
Tool:
Growth

5. A New Beginning
 Unilever was formed in 1930 from two companies
 It was a full business merger, operating as a single business
entity
 Two separate legal parent companies were maintained:
Unilever NV(Netherlands) & Unilever PLC (UK)
 This works through an equalization agreement and other
contracts between the two companies

7. About Unilever
Around 173000 Employee at the end of 2012
On a given day, 2 billion consumer worldwide use Unilever product
Product Offerings: Personal Care, Detergent, food etc
Annual revenue: in excess of $ 51 billion
Sells more than 400 products in virtually 190 country
Detergents accounts for 25% of the revenue
Omo is one such detergent which is sold in over 50 countries
Personal Care products account for 15% sales
It includes Cosmetics, Oral care & skin care lotion
Food products account for 60% sales
It includes tea, ice cream, frozen foods & bakery products
In this Unilever market share in most of the countries exceeds 70%

8. HUL IN INDIA
In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati
Manufacturing Company, followed by Lever Brothers India Limited (1933)
and United Traders Limited (1935). These 3 companies merged to form
HUL in November 1956
HUL’s Brands like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely,
Pond’s, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan,
Kwality Wall’s – are household names across the country. They are
manufactured over 40 factories across India
The operation involve over 2,000 suppliers and associates. HUL’s
distribution network, comprising about 4,000 redistribution stockiest,
covering 6.3 million retail outlets reaching the entire urban population,
and about 250 million rural consumers

9. Decentralized Structure of Unilever before 1990’s
 Unilever was organized on a decentralized basis
 In Europe the company had 17 subsidiaries in the early 1990s, each
focused on a different national market
 Subsidiary companies in each major national market were responsible for
the production, marketing, sales and distribution of products in that
market
 Each was a profit center and each was held accountable for its own
performance
 The structure allowed local managers to match product offerings
 Marketing strategy to local tastes and preferences
 To alter sales and distribution strategies to fit the prevailing retail
systems
 To drive to localization, Unilever recruited local managers to run local
organization
 To build a common organizational culture among its managers

10. Reason for, the need or frequent restructuring at
Unilever???
Strategy
Period
Features
Independent units at
Matrix Organizational
1930 - 1979
various location
Structure
Advantages
Disadvantages
Localization
High Cost structure,
duplication of
manufacturing facilities at
various locations
Concentration on 4
Too many acquisitions,
industries, 100
concentration on both
accountability &
Focused Growth
1980 - 1995
acquisition, 38
developed & Emerging
responsibility, complexity,
companies acquired in
markets
difficulty in decision making
1995
Variable Pay, 3
Focus on core
No fit between structure &
member committee
competencies,
strategies, Dip in market
was dissolved, 7
Breakthrough
Operations were
share prices, too many
1996 - 1999 member committee
Sustainability Strategy
grouped by product
brands resulted in "Last
was appointed, 1st
combination of "Global Focus". Big dip in market
Non Dutch & British
Push & Local Pull"
share
Chairman appointed

11. Path to Grow
Strategy
1999 - 2004
Growth to vitality
Strategy
2005 - 2010
Sales dropped by
15%, Profits fell by
Focus on core
13%, Top Line
Brand portfolio of
competencies. 400 Growth reduced to
1600 became 400 for
brands contributed
3%, Share price
better focus. 150
93% Sales increased felled down by 7%,
units closed down
by 30%, focus on
EPS effected, High
for cost control,
brands & decision cost & advertising
55000 employees
making. Profit
budget for
laying off
increased by 4-5%
maintaining non
performing 1200
brands
High concentration
on Emerging
41% revenues were
markets. Company
generated in
simplified its
developing
management
countries. Focus on
structure, 20000 job
advertising and
cuts in Europe.
promotion
Target: 3 - 5 %
Organic growth

12. Why there was a need for New Organizational Structure???




Early 1990s the competitive environment was changing
Creation of a single market in 1992 in European Union
This made it possible to manufacture certain items such
as detergents and margarine at favorable central
Unilever introduced a new organizational architecture based on
regional business groups, each of which contained product division
 Unfortunately for Unilever, some of its global competitors moved
more rapidly to exploit this changes in the competitive environment
 To reestablish a fit between competitive environment, Unilever had to
embrace the difficult process of strategic & Organizational Change

13. Centralized Unilever
•
Facilitate Coordination
•
Decision Making
•
Authority & Power
•
Avoid Duplication of Subunits
•
Cut from 10 to 2
•
Manufacturing at Only One Site
•
Pan-European Advertising
By taking these Steps, Unilever estimated it may save as much
as $400 million a year in its European Operations

14. Problems at Unilever
Unilever’s Market Capitalization of about £ 82 Billion in June
1999 Shrank to £ 20 billion by January 2000 (Stock Prices
Plunged)
Company’s existing brand structure had lost its focus
Unilever was criticized for spending large amounts of funds
due to frequent restructuring over the year
Unilever market share was taking a big time hit
There was no fit between the company’s organizational
structure and its strategies

15. Current Structure
 The Day to day operation are supervised by the National Management
comprising the Vice Chairman, Managing Director (HPC), Managing
Director (Foods) and the Finance Director
 Each division is self-sufficient with dedicated resources and assets in
sales, marketing, commercial, and manufacturing
 In Marketing each category has a Marketing Manager who heads a team
of Brand Managers dedicated to each or a group of brands
 Unilever grouped its worldwide operations into 2 global division. Foods
and Home and Personal Care. It uses the worldwide geographic area
structure

16. ASIA
Australia
United
States
Africa
Latin
America
Multinational
Head Quarters
Europe

17. In 2012, we continued to make good progress in the transformation of Unilever to a
sustainable growth company. We exceeded €50 billion turnover, with all regions and
categories contributing to growth.
Key Financial Indicators
Underlying
SALES Growth
Underlying
Volume Growth
Core Operating
Margin
6.9%
3.4%
13.8%
2011: 6.5%
2011: 1.6%
2011: 13.5%
Turnover by Geographical Area
40%
33%
27%
Asia/AMET/RUB
The Americas
Europe
38%
35%
27%
Free Cash Flow
€ 4.3billion
2011: €3.1%
Operating Profit Geographical
Area
Asia/AMET/RUB
The Americas
Europe

18. Challenges of Unilever & Our Learning
Challenges in 21st Century
• Divestment/Reduce Number of
Target
• Cost Cutting & improving
margins
• Streamline the management &
Leadership to fight risk &
competition
• Concentration of 400 Brands
• Acquisitions
• Concentration on Asian Giants
Our Key Learning's
• Importance of Organization
structure in Global
competitive market
• Importance on “Acquisition”
as an Strategy
• Adaptability of Unilever in
Global Market
• Dynamics of changing
international market
• Importance of Employee
Training

23. What was the need for unilever to have separate legal identity
but operate as a single entity ?? Can unilever plc and unilever
nv fuse, in future ???
What was the reason for, the need of frequent restructuring at
unilever ??
Pan European Advertising Worked????
Had unilever grown more than its cradle ??
Should unilever opt for umbrella branding ever in future ? If
yes, why?? If no, why???