organizational change at unilever case study

Unilever Change Management Case Study

In today’s fast-paced business environment, change is inevitable.

Companies need to evolve and adapt to remain competitive, but managing change is not an easy task. Effective change management is crucial to the success of any organizational transformation, as it ensures that the changes are implemented smoothly and effectively.

In this blog post, we will examine a case study of change management at Unilever, one of the world’s largest consumer goods companies.

We will explore the challenges faced by Unilever, the change management approach it took, and the results of its initiatives.

Brief History and Growth of Unilever 

Unilever is a British-Dutch multinational consumer goods company that was founded in 1929 through a merger between Dutch margarine producer Margarine Unie and British soap maker Lever Brothers.

Unilever has a long history of growth through mergers and acquisitions, with notable acquisitions including Bestfoods, Ben & Jerry’s, and Dollar Shave Club.

The company operates in over 190 countries and has a diverse portfolio of products, including food and beverages, cleaning agents, beauty and personal care products.

Unilever has also been committed to sustainability and social responsibility, and in 2010, it launched the Unilever Sustainable Living Plan, which aims to reduce the company’s environmental impact and improve the health and well-being of its customers.

Today, Unilever is one of the world’s largest consumer goods companies, with a revenue of over €50 billion in 2020.

External factors that led to organizational changes at Unilever

Unilever is a multinational consumer goods company that has undergone several organizational changes over the years. Here are three external factors that led to organizational changes at Unilever:

• Changing Consumer Preferences: The changing preferences and behaviors of consumers can have a significant impact on a company’s strategy and operations. For example, as more consumers started to prioritize eco-friendliness and sustainability, Unilever had to shift its focus towards more sustainable products and packaging. This led to the introduction of products like the “Dove Refillable Deodorant” and “Omo EcoActive” laundry detergent, as well as a commitment to reduce its plastic packaging by half by 2025.
• Competitive Pressure: Competition is another external factor that can force companies to make organizational changes. For example, when Unilever faced increasing competition from other consumer goods companies in emerging markets like India and China, it had to restructure its operations to be more efficient and cost-effective. This led to the consolidation of its global supply chain, as well as a greater emphasis on localizing its products and marketing strategies to better appeal to these markets.
• Technological Advancements: Advances in technology can also lead to organizational changes, as companies need to adapt to new ways of doing business. For example, as more consumers started to shop online, Unilever had to develop a strong e-commerce presence and optimize its digital marketing efforts. This led to the creation of Unilever Digital, a team dedicated to digital marketing and e-commerce, as well as a partnership with Alibaba to expand its online distribution in China.

Internal factors that led to organizational changes at Unilever

In addition to external factors, internal factors can also lead to organizational changes at Unilever. Here are three examples of internal factors that have led to organizational changes at the company:

• Management Changes: Changes in top management can often lead to organizational changes. For example, when Paul Polman became CEO of Unilever in 2009, he initiated a major restructuring of the company that aimed to streamline operations and focus on sustainable growth. This led to the consolidation of Unilever’s foods and personal care divisions, as well as a greater focus on emerging markets and sustainability.
• Financial Performance: Poor financial performance can also prompt organizational changes. For example, in 2017, Unilever reported slower-than-expected sales growth, leading the company to undertake a strategic review of its operations. This resulted in a decision to sell or spin off Unilever’s spreads business and focus on higher-growth areas like beauty and personal care.
• Organizational Culture: Organizational culture can also drive organizational change. For example, when Unilever identified a need to become more agile and innovative, it undertook a major cultural transformation initiative called “Connected 4 Growth.” This involved restructuring the company into smaller, more autonomous business units and giving employees greater freedom to experiment and take risks. The initiative aimed to foster a more entrepreneurial culture within the company and enable faster decision-making and innovation.

05 biggest steps taken by Unilever to implement changes

Unilever is a multinational consumer goods company that has undergone several organizational changes over the years. Here are the five biggest steps taken by Unilever to implement changes:

1. Sustainable Living Plan

In 2010, Unilever launched its Sustainable Living Plan, a comprehensive sustainability strategy that aimed to reduce the company’s environmental footprint, improve social impact, and drive profitable growth. The plan set ambitious targets for Unilever to achieve by 2020, such as reducing greenhouse gas emissions by 50% and improving the livelihoods of millions of people in its supply chain. The Sustainable Living Plan has been a driving force behind many of Unilever’s organizational changes, such as the introduction of sustainable products and packaging and a greater emphasis on transparency and accountability.

2. Organizational Restructuring

Unilever has undertaken several major organizational restructuring initiatives over the years to streamline its operations and focus on high-growth areas. For example, in 2016, Unilever announced a plan to consolidate its foods and personal care businesses into a single division, with the goal of achieving greater efficiency and cost savings. Similarly, in 2017, Unilever announced a strategic review of its operations in response to slower-than-expected sales growth, resulting in a decision to sell or spin off its spreads business and focus on higher-growth areas like beauty and personal care.

3. Digital Transformation

As more consumers started to shop online, Unilever recognized the need to invest in its digital capabilities to stay competitive. In 2017, the company launched Unilever Digital, a team dedicated to digital marketing and e-commerce, and entered into a partnership with Alibaba to expand its online distribution in China. Unilever also invested in technology startups and acquired several digital companies to enhance its digital capabilities and drive innovation.

4. Cultural Transformation

Unilever recognized that its organizational culture needed to change to foster greater agility and innovation. In 2016, the company launched its “Connected 4 Growth” initiative, which involved restructuring the company into smaller, more autonomous business units and empowering employees to take more risks and experiment. The initiative aimed to create a more entrepreneurial culture within the company and enable faster decision-making and innovation.

5. Portfolio Transformation

Unilever has undergone several portfolio transformations over the years to focus on its core brands and divest non-core businesses. For example, in 2018, Unilever acquired the personal care and home care brands of Quala, a Latin American consumer goods company, to strengthen its presence in emerging markets. At the same time, the company divested its spreads business and announced plans to exit its tea business to focus on higher-growth areas. These portfolio transformations have helped Unilever to stay agile and adapt to changing market conditions.

05 Results of change management implemented at Unilever

The change management initiatives implemented at Unilever have had several positive outcomes and impacts. Here are some of the key examples:

• Increased Sustainability: The Sustainable Living Plan has been a key driver of Unilever’s sustainability efforts, and the company has made significant progress in reducing its environmental footprint and improving social impact. For example, by 2020, Unilever had achieved its target of sending zero non-hazardous waste to landfill from its factories, and had also reduced its greenhouse gas emissions by 46% per tonne of production.
• Improved Financial Performance: Unilever’s focus on portfolio transformation and strategic acquisitions has helped the company to improve its financial performance. For example, in 2020, the company reported a 1.9% increase in underlying sales growth and a 2.4% increase in operating profit margin.
• Enhanced Digital Capabilities: Unilever’s investments in digital transformation have enabled the company to stay competitive in a rapidly evolving digital landscape. For example, Unilever’s partnership with Alibaba has helped the company to expand its online distribution in China, while its investments in technology startups have helped to drive innovation and enhance its digital capabilities.
• Improved Organizational Agility: Unilever’s organizational restructuring and cultural transformation initiatives have helped to create a more agile and entrepreneurial company culture. This has enabled Unilever to make faster decisions and respond more quickly to changing market conditions.
• Increased Customer Satisfaction: Unilever’s focus on innovation and product development has resulted in the launch of several successful new products and brands, such as the plant-based meat alternative brand, The Vegetarian Butcher. These products have helped to increase customer satisfaction and drive growth for the company.

Final Words

Unilever’s successful implementation of change management is a testament to the company’s commitment to innovation, sustainability, and organizational excellence. By undertaking a variety of initiatives, such as the Sustainable Living Plan, organizational restructuring, digital transformation, cultural transformation, and portfolio transformation, Unilever has been able to adapt to changing market conditions and position itself for long-term success.

One key factor in Unilever’s success has been its ability to align its change management initiatives with its overall business strategy. By focusing on high-growth areas, investing in sustainability, and enhancing its digital capabilities, Unilever has been able to drive growth and improve profitability while also achieving its sustainability goals.

Another key factor has been Unilever’s emphasis on collaboration and stakeholder engagement. By working closely with suppliers, customers, and other stakeholders, Unilever has been able to create a shared sense of purpose and drive greater alignment around its sustainability and innovation goals.

About The Author

Tahir Abbas

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The Research Paper Factory

A Decade of Organizational Change at Unilever

In: Business and Management

Subject: A decade of organizational change at Unilever General description of the company Unilever is an international company, which includes Dutch Unilever NV in Rotterdam, and the UK-based Unilever PLC in London. The company was formed from the combination of Dutch company specializing in manufacture and export of margarine- Margarine Unie and Lever Brothers- English company producing coconut oil, and since 1900 soap from olive oil. Both companies used in their production process vegetable fats. In order to avoid a competitive battle for markets and resources they merged in 1929. Unilever mainly produces food, cleaning products and personal hygiene products (FMCG). Unilever has around 200,000 employees in more than 300 facilities across 6 continents. Unilever now has a total of more than 400 different brands around the world, but the company focuses on thirteen of its most profitable brands- so called “one billion-dollar-brands” with an average annual sales exceeding one billion dollars each. Top 25 Unilever brands provide more than 70% of the total annual income. Central issue of the case Unilever is one of the oldest multinational companies in the world. Has in its offer food, cleaning products and body care products. It generates $50 billion in annual revenue in different countries. In the past, Unilever was organized in a decentralized manner. Unilever had other companies that were responsible for the production, marketing, sales and distribution of products in different markets. They had full autonomy and were able to independently make a decisions. In the early 1990s Unilever had 17 such companies in Europe, which focused exclusively on the markets in their countries. Back then decentralization was good for the company because it allowed local managers to adapt their products and marketing strategies to local tastes and preferences of customers. In the mid-nineties, this decentralized structure has become too old for the rapidly changing competitive environment. Unilever's main competitors, Nestle and Procter & Gamble have been more successful on several fronts, such as building a global brand and reducing the cost of the product. They were able to effectively combine manufacturing operations while introducing products to the global market. After a while, it was clear that decentralized Unilever strategy worked against efforts to build global brands, also causing high costs of introducing new products to the market. Therefore, in mid-1990s, Unilever has presented a fresh strategy based on regional business groups. Each group consisted of a number of divisions and each division has been focusing on a particular category of products. Through these various groups, it was possible to reduce the cost and accelerate introduction of new products. This new approach was more effective and helped to reduce the number of factories producing the same products. So that costs were significantly reduced. Despite these changes in 2000, the company is still behind its competition. Unilever started reorganizing its structure and product portfolio. Expected savings from reducing the number of brands (from 1600 to 400), will until 2004 reach $1.6 billion. Unilever also announced: the closure of about 100 factories, investing in e-commerce and restructuring several brands. The company’s goal Since the establishment in 1929, Unilever has undergone many organizational changes, but the last two decades seem to be more turbulent. Due to the evolution in communication, free trade and development of such markets as Latin America, Asia and Eastern Europe, Unilever become a global company, so it had to adapt its actions to the new environment. According to Unilever’s CEO- Paul Polman success in the future depends on its ability to separate the company's growth from its environmental impact, while increasing the positive impact of business on society. These are the main objectives of company’s plan to build sustainable business, which was introduced 2 years ago and is the main long-term goal of the company. Unilever focuses on providing eco-friendly, consistent with ethics and good quality products. This is why the company works with many global organizations on many different levels. Essential and very important group for success of Unilever are employees. In the interest of company is to ensure that they are committed, healthy and motivated. To achieve this, Unilever creates ethically and culturally diverse job programs that develop talents and leaders. In 2011, the company launched only four product categories: Foods, Refreshment, Home Care and Personal Care. Previously, it was 11 categories. The global market is now divided into 8 units (previously 22) and functions of IT, R&D, HR, finance and supply chain are supported globally. Unilever's new strategy was based on increased promotion of leading brands- such as cosmetics and perfume by Calvin Klein, Lux and Dove soap, Magnum ice cream and Lipton tea- and few leading brands in some local markets. This resulted in limited employment of Unilever mainly in Europe and both Americas. The company had to incur huge costs of restructuring without which it would not be possible to achieve sales growth of 5 percent in 2004 and profit’s growth by 15 percent. The announced restructuring has increased the share price by 4.7 percent in London and by 6.2 percent in Amsterdam. Thanks to this investment bank Warburg Dillion Read changed share recommendation from "hold" to "definitely buy". Although this restructuring process was difficult it resulted in increasing the profitability of the company. The constraints of global operations Why Unilever's decentralized organizational structure had earlier sense? Because then there was almost no competition in the markets in which company's products were offered. Unilever remained the largest market share and there wasn’t so much international influence of other companies. However, this structure has started to create problems for the company. Other companies, competitors (Nestlé and Procter & Gamble) started to offer global branded products at a lower price, and by consolidating factories reduced the manufacturing cost, while using the opportunity to placing the same products in several markets. The decentralized structure of Unilever worked against efforts to build a global brand because it drove the company to duplication of production and others processes such as marketing, the company also did not exploit economies of scale and thus generated high costs. The process of structural change requires a number of steps and it takes a lot of time. By avoiding these steps the company creates only the illusion of rapid change, which does not give acceptable results. (Kotter, 2007). Over the years Unilever adapt its business to the changing structure of the market and competition. The current vision of building a sustainable business comes from inside the company and constantly faces threats both internal and external during implementation. The main risks are related to the people. Consumer preferences are constantly changing, so the R&D function must be sensitive to new trends in the market in order to develop a strategy for each brand. It is very important for a global company operating in many different markets and introducing their new products to remember about the culture, behavior and habits of consumers. Also employees may be crucial to success of the company so the company should have the ability to attract, develop and retain qualified people from different countries and cultures. The company should have emergency plans in addition to various negative situation associated with suppliers, their bankruptcies and changes in prices or the quality of incoming raw materials. Such situations affect reputation and profits of the company. Such plans can be fixed much easier in a global company that has access to a wide range of suppliers from around the world. Other important factors that threaten the activities of organization are related to the business environment (politics and society). Unilever as a company which operates globally is more vulnerable to external economic and political risks arising from the volatility of the local law or public sentiment. And these local factors may adversely affect the business operations. The opportunieties The main advantage of global operations is access to new markets, new customers and suppliers. Global companies are also increasing their economic efficiency by centralizing some functions of the company (IT, R&D, HR). Thanks to that they better perform specialized tasks such as manufacturing, sales and marketing. Global companies also benefit from the diversity of cultural, economic and geographic. Acting in different markets and in different cultures have some kind of protection as a global company is not dependent on functioning of single market. Global company has also access to a skilled workforce and a lot of other resources, which may increase the competitive advantage of the organization. Vast resources of skills, knowledge and experience of its stuff are invaluable asset and development factor (Dewhurst, Harris, Heywood, 2012). Unilever has still limited product categories and clusters which helps in faster decisions making and gives more focus on customer. The company also contributes to the creation of regional economies of scale. Go further A major challenge for global players is the scale and diversity of markets in which they occur. Resource allocation and policy making processes are due to diversity of clients and customs in different markets. Firms that decide to go global lose the customization options to local actions. However, Unilever has ability to adjust the organizational structure and culture to an enlarged scale of operations and to changes in the environment. To reduce costs and achieve economies of scale the structure should be based on the regional working groups which allows better understanding of customers and their needs. Managing a global company is a challenge for years. According to Dewhurst, Harris and Heywood (2012), a global company based in rising markets are developing quicker than their equivalents based in developed countries. McKinsey Global Institute implies that 400 medium-sized cities in emerging markets will cause nearly 40 percent of global growth over the next 15 years. International Monetary Fund affirms that over the next 10 years, the fastest-growing economies will come from emerging markets (Dewhurst, Harris, Heywood, 2012). Unilever's strong presence in these markets suggests that the development of the company under the current structure, seems to be not threatened in the coming years.

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...Executive Summery Most of the South Asian economies (e.g. India, Pakistan and Bangladesh) have made significant economic progress in the last two decades and are well on track to becoming major regional or even world economic powerhouses. In the recent years, many MNCs are increasingly putting more attention to the emerging. Asian countries for competitive advantage. One classic example is China. With a population of more than 1.3 billion China is predicted to be the largest economy in the world by next 20 years surpassing United States (UN Report 2007). China has become the manufacturing and investment hub for many MNCs. Despite huge success for most of the MNCs, many already failed in doing business in China due to their management’s inability to manage their human resources appropriately. Taking the Chinese lead like the tiger economies in Asia, Bangladesh is also emerging as a dynamic and significant economic player in South Asia. Bangladesh is one of the pioneers in the region for economic liberalization. It has adopted the best policies of South Asia to attract Foreign Direct Investment (FDI). Doing business in Bangladesh is much easier than most of the developing countries. A recent report entitled “Doing Business in 2007: Creating Jobs” published jointly by World Bank and IFC placed Bangladesh in 68th position in terms of easy of doing business among 175 countries (World Bank, 2007). This places Bangladesh ahead of other countries in the region such as India......

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Challenge of Embedding Sustainability in Organizations: the Role of Hrm and Leadership

...Organizations: The role of HRM and Leadership INTRODUCTION In the last decade, the importance of sustainability in any part of business in any industry has increased. Sustainability needs to move from being an add-on to a way of life at the firm such that companies can balance their social, financial and environmental risks and obligations. While companies have begun identifying the need to ingrain sustainability into the organisation, most business leaders still do not have a clear idea on how to go about doing so. THE CULTURE OF SUSTAINABILITY When talking about sustainability in business we mean managing the ‘triple bottom line’ such that decision making takes into account not only profits but also people and the planet along with social and environmental risks and obligations. In this sense, corporate reporting takes into account the environmental and social impact of the firms operations. But a culture of sustainability is more than just the corporate report and the face value of the initiative. It is one in which all the members of the organization share the spirit and the passion for the cause of balancing profitability with environmental accountability and social well being. Such a culture constantly strives to improve the lives of stakeholders while successfully carrying out its operations over the long term. WHAT DIFFERENTIATES SUSTAINABILITY FROM OTHER INITIATIVES? Most organizational change initiatives are largely confined to the boundaries of the......

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Performance Apprisal

...appraisals are widely used for administrating wages and salaries, giving performance feedback, and identifying individual employee strengths and weaknesses (Mathis & Jackson, 2011). Definition of Performance Appraisal P erformance appraisal is the process of evaluating the behavior of the employees in the work place (Maxwell, 1992). This process assumes that the employees are aware of their performance standards, and that the supervisor also provides the employees with the feedback, development, and incentives required to help the person eliminate performance deficiencies. Basically, performance appraisal is intended to engage, align, and coalesce individual and group effort to continually improve overall organizational mission accomplishment (Vance, 2006). According to Dessler (2012, p. 332), “Performance appraisal means evaluating an employee’s current and/or past performance relative to his or her performance standards.” Dessler also emphasized that performance appraisal aims to improve...

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Organizational Study

...[pic] | | |Introduction | |Organizational Study | | | |About the Company | |History | |Company Profile | |Objective of the Company | | | |Mission and Vision | | ...

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...SPOTLIGHT ON THE NEW MARKETING ORGANIZATION Spotlight HBR.ORG ARTWORK Markus Linnenbrink DIEDRITTEDIMENSION, 2011 JVA/Prison, Düsseldorf Rath, Germany The Ultimate Marketing Machine Most marketing organizations are stuck in the last century. Here’s how the best meet the challenges of the digital age. by Marc de Swaan Arons, Frank van den Driest, and Keith Weed July–August 2014 Harvard Business Review 55 SPOTLIGHT ON THE NEW MARKETING ORGANIZATION In the past decade, what marketers do to engage customers has changed almost beyond recognition. With the possible exception of information technology, we can’t think of another discipline that has evolved so quickly. Tools and strategies that were cutting-edge just a few years ago are fast becoming obsolete, and new approaches are appearing every day. Yet in most companies the organizational structure of the marketing function hasn’t changed since the practice of brand management emerged, more than 40 years ago. Hidebound hierarchies from another era are still commonplace. Marketers understand that their organizations need an overhaul, and many chief marketing o cers are tearing up their org charts. But in our research and our work with hundreds of global marketing organizations, we’ve found that those CMOs are struggling with how to draw the new chart. What does the ideal structure look like? Our answer is that this is the wrong question. A simple blueprint does not exist. Marketing leaders instead must ask,......

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Gp Mrkt Ananlysis

... (1.1)Unilever Bangladesh Limited(UBL) The origin dates back to 1964, when the first Manufacturing Operations were set up as a part of Lever Brothers Pakistan operations. After independence, it was incorporated as a separate Company under the laws of Bangladesh. Later on the Company diversified into different categories. Over the the last four decades, Unilever Bangladesh has been constantly bringing new and world-class products for the Bangladeshi people to remove the daily problems of life.  Over 90% of the country’s households use one or more of our products. It’s a Fast Moving Consumer Goods company with local manufacturing facilities, reporting to regional business groups for innovation and business resultsUnilever contains 60.75% shares,and The Government of Bangladesh-39.25% of total shares. The company has a Soap Manufacturing factory and a Personal Products Factory located in Chittagong. Besides these, there is a tea packaging operation in Chittagong and three manufacturing units in Dhaka, which are owned and run by third parties exclusively dedicated to Unilever Bangladesh. The main products which are famous in Bangladesh are: Wheel, Lux, Lifebuoy, Fair & Lovely, Pond's, Close Up, Sunsilk, Lipton Taaza, Pepsodent, Clear, Vim, Surf Excel, Rexona, Dove, Vaseline & Lakme. And these products are categorized into 8 divisions: Household Care, Fabric Cleaning, Skin Cleansing, Skin Care, Oral Care, Hair Care, Personal Grooming, Tea based Beverages. Unilever......

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Unilever Tea

...Marketing sustainability • Sustainable sourcing among SME’s • Beyond auditing • Sustainable trading • Retailers and sustainability • Sustainable sourcing and procurement Case study Unilever sustainable tea Part I: Leapfrogging to mainstream y Tania Braga, B Aileen Ionescu-Somers and Ralf Seifert, IMD’s Center for Corporate Sustainability Management Dutch Sustainable Trade Initiative (Initiatief Duurzame Handel) Utrecht, The Netherlands www.dutchsustainabletrade.com [email protected] Foreword A tipping point happens when a critical mass of people begin to shift their perception of an issue and take action in a new direction. As I look across the global landscape, I feel that we are approaching a tipping point concerning global sustainability. It is catalyzed by at least three important realizations by business, government, and civil society: The first is a realization that the world is finite and that a growing population with a higher ambition for living standards will inevitably lead to a world which will be resource and carbon constrained. The second is the realization that to solve the challenges for this future world we need systems solutions. We cannot solve individual problems in silos. The connections between energy, climate change, water, food, urban infrastructure and the imperative of functioning ecosystems are very clear. A third realization is that no part of society ......

Words: 11040 - Pages: 45

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