8. 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
9. LEVER
William Hesketh Lever founded ‘Lever Brothers’ in 1885
By 1887, introduced ‘SUNLIGHT’, the world’s 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 : GROWTH
TOOL : ACQUISITION
13. PROBLEMS WITH THE
STRUCTURE
Unable to sustain the great depression
Incapable of striking a balance between British and Dutch
interests
Lack of co-ordination between the board of directors of the
two holding companies
Two Masters - Confused Followers (Coalition Governance)
14. 1930 to 1979
In 1937 , acquired Thomas J. Lipton
In 1944, acquired Pepsodent
In 1957, acquired Bird’s Eye
In 1961, acquired Good Humor
In 1978, acquired National Starch and Chemical
Corporation
STRATEGY : rigorous GROWTH
TOOLS : integration ( fwd & back)
acquisition
Diversification ( related & unrelated)
15. ORGANIZATIONAL STRUCTURE
(1930 to 1979)
Concept of strategically independent units- local initiative and
decentralized control
A special, 3-member committee was formed in September 1930,
above the two boards of directors of the company
Matrix organizational structure was opted
17. PROBLEM WITH THE
STRUCTURE
Concept of strategically independent units led
to high cost structure from duplication of
manufacturing facilities at various locations
18. 1980 to 1995
“the sleeping giant”
Rationalized manufacturing approach
Product divisions established to co-ordinate regional operations
Focus on the following four industries, as a part of core strategy
– Foods, Personal Care, Home Care and Specialty Chemicals,
divesting from all other businesses
Between 1992-1996 , Unilever made around 100 acquisitions,
during 1995 alone the company acquired 38 companies
The company decided to target D&E markets
STRATEGY : FOCUSED GROWTH
TOOLS : DIVESTMENT
ACQUISITION
19. List of acquisitions
1984 - BROOKE BOND
1986 - NAARDEN
INTERNATIONAL
1987 - CHESEBROUGH-
POND’S
1989 - FABERGE
1989 - ELIZABETH ARDEN
1989 - CALVIN KLEIN’S
FRAGRANCE BUSINESS
1990 - NORDSEE FAST-FOOD
1993 - EMPIRE OF
CAROLINA INC.
1993 - PHILIP MORRIS
KRAFT GENERAL
FOODS UNIT
List of Divestments
1980 - SERVICE ( TRANSPORT)
& ANCILLARY BUSINESS
1985 - PALM LINE, SHIPPING
COMPANY
1990 - PLANT BREEDING &
OTHER AGRICULTURAL
PRODUCTS
1990 - PACKAGING &
PROFESSIONAL
CLEANING PRODUCTS
21. PROBLEMS WITH THE
STRUCTURE
The unending acquisitions made the operations cumbersome and
the company became inflexible to adapt to the market dynamism
Performance drift
Organizational fatigue
Excess of bureaucracy
Confusion – of accountability and responsibility
Conflicting priorities in the special committee
Decision making became constipated
Structural detritus , accumulated over decades
Absolute chaotic condition
Extra levels of complexity were imposed on an already convoluted
structure
22. 1996 TO 1999
breakthrough restructuring
3- Member special committee which existed since the birth of
Unilever got dissolved , to give way to a 7- Member Executive
committee
The company appointed its 1st Chairman (Niall FitzGerald, an
Irishman) not carrying a British or a Dutch passport
Two layers of the organizational structure consisting of the world-
wide business coordinators and the network of Regional
Directors were swept away to form a single team of 14 business
Presidents
Company’s operations were grouped by product , instead of
geographical regions
From Centrally – Driven expansion to branched expansion
23. …
STRATEGY : SUSTAINABILITY
TOOL : restructuring
Unilever wanted to grow as much by local
pull as by global push
Focus on Company’s Core Competences
Introduction to the new management
incentive system (Variable Pay)
24. ACQUISITIONS
1996- HELENE CURTIS INDUSTRIES, INC., PERSONAL CARE
PRODUCTS
1996- NORTHBRROOK DIVERSEY CORP., CHEMICAL CLEANSER &
SANITIZER
1999- KIBON S.A. INDUSTRIES ALIMENTICA, ICE-CREAM
COMPANY
DIVESTMENTS
1996- CATERPILLAR INC., HEAVY EQUIPMNET, U.K.
FRANCHISEE
1997- NATIONAL STARCH & CHEMICAL CORPORATION
1998- PLANT BREEDING INTERNATIONAL CAMBRIDGE LTD.
26. PROBLEMS WITH THE
STRUCTURE
Unilever’s Market Capitalization of about £ 51 Billion (~ $ 82 Billion) in
June 1999 shrank to £ 20 Billion by January 2000 (Stock prices
Plunged)
Company’s Existing brand structure had lost its Focus (Too many
Brands)
Unilever was criticized for spending large amounts of funds due to
frequent restructuring over the years
Unilever’s market share was taking a big time hit (Dip)
There was no Fit between the company’s organizational structure and
its strategies (Persil Power shook the giant to its foundations)
It was believed that, every big organization that is running into trouble
needs a crisis to convince it of the necessity for fundamental change,
and that for Unilever this situation had already arrived long ago
27. 2000 TO 2004
PATH TO GROWTH STRATEGY
In February 2000, the company announced a € 5 Billion Five –
Year Growth Strategy
Unilever was “Shrinking to Grow”
Laying off over 25, 000 employees ( ~ 10% of the employee
base)
Unilever was split into two, separate global units : Foods and
Home & Personal Care (HPC), headed by two executive
Directors separately
Unilever reorganized its 300 operating companies into 10
Regional Groups
Unilever Further Decentralized its Control over its subsidiaries
Unilever Shut down more than 100 manufacturing units for
cost reduction
28. …
STRATEGY : CONSOLIDATION
TOOL : restructuring
More than half of its Top Executives were replaced with young
blood
Brand Portfolio of 1, 600 was pruned to 400 (For better focus
on leading brands)
Company came up with a Brand Focus Strategy “Nourishing the
Core”
Unilever started to exploit brands within the existing product
categories but outside their scope
29. UNILEVER- REGIONAL GROUPS
Division Regional Groups
Foods Foods north America, Middle east and Turkey
Unilever Bestfoods Asia
Unilever Bestfoods Latin America
Unilever Bestfoods North America & slimfast Worldwide
Unilever Bestfoods , Europe
Home & Personal Care Home & Personal care, Asia
Home & Personal care, Europe
Home & Personal care, North America
HPC North Africa, Middle East & Turkey
HPC Division, Latin America
SOURCE: WWW.UNILEVER.COM, 2009
30. ACQUISITIONS
In 2000 - BESTFOODS , U.S.A.
In 2000 - GROUPO CRESSIDA CENTRAL AMERICA FOODS
CORPORATION, CENTRAL AMERICA
In 2000 - AMORA MAILLE, CULINARY PRODUCTS, FRANCE
In 2000 - JABONERIA NA, FOODS & HPC
In 2000 - BEN & JERRY’S HOMEMADE INC., ICE CREAM
In 2000 - CRESSIDA, FOODS, SOAPS & DETERGENTS
In 2000 - CODEPAR/SPCD , HPC
In 2000 - SLIM FAST, SLIMMING PRODUCTS , U.S.A
In 2000 - ENGLEWOOD CLIFFS, FOODS, NEW JERSEY
32. BENEFITS OF THIS
STRATEGY
Focused and Effective streamline decision making
Sales shot up by 16 %
Unilever’s Share price had recovered by 30 %
Company’s Turnover rose from € 40, 977 Million in
1999 to € 47, 582 Million in 2000
Supply Chain Restructuring saved € 1.75 Billion
Annual Top line Growth of about 4 % to 5 % was
achieved
Average Earnings Per Share increased by 9 %
33. UNILEVER FINANCIALS (IN € MILLION)
BY GROUP
1998 1999 2000 2001 2002
Group Turnover 40,437 40,977 47,582 51,514 48,270
Group Operating Profit:
Group operating Profit BEIA 4,293 4,595 5,729 7,149 7,165
Exceptional items 125 (269) (2,113) (588) (879)
Amortization Of Goodwill and
Intangibles
(8) (23) (435) (1,387) (1,245)
Total Gross Operating Profit 4,410 4,303 3,181 5,174 5,041
Income from Fixed Investments 37 52 53 96 111
Interest 156 (14) (632) (1,646) (1,173)
Profit On Ordinary Activities
Before Taxation
4,603 4,341 2,602 3,624 3,979
Profit On Ordinary Activities
After Taxation
3,088 2,972 1,320 2,077 2,441
Net Profit 2,944 2,771 1,105 1,838 2,129
Source : Unilever Annual reports 1998 - 2002
34. BY GEOGRAPHIC REGIONS
GEOGRAPHIC REGION 1998 1999 2000 2001 2002
Group Turn Over:
Europe 18,165 18,040 18,967 20,119 19,573
North America 8,417 8,838 11,631 13,767 12,446
Africa, Middle East and Turkey 3,034 3,048 3,296 3,191 3,139
Asia and Pacific 5,803 6,723 8,038 7,846 7,679
Latin America 5,018 4,328 5,650 6,591 5,433
Total 40,437 40,977 47,582 51,514 48,270
Group Operating Profit:
Europe 2,254 2,131 1,693 2,689 1,750
North America 942 847 48 1,092 1,435
Africa, Middle East and Turkey 268 302 321 202 286
Asia and Pacific 457 642 776 862 1,077
Latin America 489 381 343 328 493
Total 4,410 4,303 3,181 5,174 5,041
Source : Unilever Annual reports 1998 - 2002
35. BY OPERATIONS
OPERATION 1998 1999 2000 2001 2002
Group Turn Over:
Food 20,919 20,339 23,898 28,155 26,937
Home & Personal Care 18,783 19,781 22,825 22,739 20,801
Other Operation 735 857 859 620 532
Total 40,437 40,977 47,582 51,514 48,270
Group Operating Profit:
Food 1,801 1,788 1,735 2,303 2,185
Home & Personal Care 2,093 2,361 1,415 2,823 2,814
Other Operation 516 154 31 48 42
Total 4,410 4,303 3,181 5,174 5,041
Source : Unilever Annual reports 1998 - 2002
36. 2003
UNWELCOME LOSS OF WEIGHT FOR
UNILEVER
Sales dropped by 15 %
Profits fell by 13 %
Annual Top line Growth of about 4 % to 5 % came
down to 3 %
Share Price fell by 7 %
Company was unable to cope up with the
Competitive Market Dynamics
37. 2004 to 2010
growth to vitality strategy
Brand Portfolio of 400 Brands would be reduced to 40 Mega
World Brands, the retained ones would have sales in excess of a
Billion Dollar
High Concentration on Developing and Emerging markets (D & E)
3 to 5 % of Organic Growth was targeted
Margin Enhancement through portfolio mix
Business on strict Value creation criteria
First Non – Executive Chairman was appointed
Concept of “ONE UNILEVER”
Unilever started soft selling under this ‘VITALITY’ strategy
STRATEGY : FOCUSED GROWTH
TOOLS : DIVESTMENT
ACQUISITION
40. 2008
restructuring again
Announced 20, 000 Job Cuts
Combined its two Global units Food & HPC into a
single one
Focus on personal care Products Division
44. WHATS IN THE NEWS
ACQUISITIONS IN 2009
UNILEVER ACQUIRED SARA LEE’S PERSONAL CARE &
EUROPEAN DETERGENT UNIT FOR $ 1.9 BILLION,
GAINING SANEX SHOWER GEL
IN ADDITION , UNILEVER IS BUYING SEVERAL OTHER
STRONG REGIONAL BRANDS LIKE RADOX BUBBLE BATH ;
DUSCHDAS, GERMAN SHOWER GEL & SWITZAL,
BABY SHAMPOO
45. REFERENCES
Renewing Unilever – Transformation and Tradition, Geoffrey Jones
Munching on Change, Economist, January 06, 1996
Unilever to create “Power Brands”, http://news.bbc.co.uk, September
21, 1999
Rohan Mike, Refocused Unilever on Global Acquisition Spree, www.
Itsfood.com, January 04, 2000
Unilever Changes Track, http://news.bbc.co.uk, February 22, 2000
Unilever to Axe 25,000 Jobs in Cost Overhaul,
www.industrysearch.com.ai , February 23, 2000
Shrinking To Grow, Economist, February 26, 2000
Harvilicz Helen, Unilever Undertakes Massive Restructuring, Chemical
Market Reporter, February 28, 2000
Stevens Robert, Unilever to Shed 10 Percent of Workforce in Global
Restructuring, www.wsws.org, March 01, 2000
Fat & Thin, Economist, April 15, 2000
47. 1. 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 ???
48. 2. What was the reason for, the need of frequent
restructuring at unilever ??
49. 3. Have unilever’s top brands paid the debt for
the Structural detritus of unilever ???
