unilever business case study

Unilever—A Case Study

This article considers key issues relating to the organization and performance of large multinational firms in the post-Second World War period. Although foreign direct investment is defined by ownership and control, in practice the nature of that "control" is far from straightforward. The issue of control is examined, as is the related question of the "stickiness" of knowledge within large international firms. The discussion draws on a case study of the Anglo-Dutch consumer goods manufacturer Unilever, which has been one of the largest direct investors in the United States in the twentieth century. After 1945 Unilever's once successful business in the United States began to decline, yet the parent company maintained an arms-length relationship with its U.S. affiliates, refusing to intervene in their management. Although Unilever "owned" large U.S. businesses, the question of whether it "controlled" them was more debatable.

Some of the central issues related to the organization and performance of multinationals after the Second World War can be illustrated by studying the case of Unilever in the United States. Since Unilever's creation in 1929 by a merger of British and Dutch soap and margarine companies, 1 it has ranked as one of Europe's, and the world's, largest consumer-goods companies. Its sales of $45,679 million in 2000 ranked it fifty-fourth by revenues in the Fortune 500 list of largest companies for that year.

A Complex Organization

Unilever was an organizational curiosity in that, since 1929, it has been headed by two separate British and Dutch companies—Unilever Ltd. (PLC after 1981), and Unilever N.V.—with different sets of shareholders but identical boards of directors. An "Equalization Agreement" provided that the two companies should at all times pay dividends of equivalent value in sterling and guilders. There were two head offices—in London and Rotterdam—and two chairmen. Until 1996 the "chief executive" role was performed by a three-person Special Committee consisting of the two chairmen and one other director.

Beneath the two parent companies a large number of operating companies were active in individual countries. They had many names, often reflecting predecessor firms or companies that had been acquired. Among them were Lever; Van den Bergh & Jurgens; Gibbs; Batchelors; Langnese; and Sunlicht. The name "Unilever" was not used in operating companies or in brand names. Lever Brothers and T. J. Lipton were the two postwar U.S. affiliates. These national operating companies were allocated to either Ltd./PLC or N.V. for historical or other reasons. Lever Brothers was transferred to N.V. in 1937, and until 1987 (when PLC was given a 25 percent shareholding) Unilever's business in the United States was wholly owned by N.V. Unilever's business, and, as a result, counted as part of Dutch foreign direct investment (FDI) in the country. Unilever and its Anglo-Dutch twin Royal Dutch Shell formed major elements in the historically large Dutch FDI in the United States. 2 However, the fact that all dividends were remitted to N.V. in the Netherlands did not mean that the head office in Rotterdam exclusively managed the U.S. affiliates. The Special Committee had both Dutch and British members, and directors and functional departments were based in both countries and had managerial responsibilities without regard for the formality of N.V. or Ltd./PLC ownership. Thus, while ownership lay in the Netherlands, managerial control was Anglo-Dutch.

The organizational complexity was compounded by Unilever's wide portfolio of products and by the changes in these products over time. Edible fats, such as margarine, and soap and detergents were the historical origins of Unilever's business, but decades of diversification resulted in other activities. By the 1950s, Unilever manufactured convenience foods, such as frozen foods and soup, ice cream, meat products, and tea and other drinks. It manufactured personal care products, including toothpaste, shampoo, hairsprays, and deodorants. The oils and fats business also led Unilever into specialty chemicals and animal feeds. In Europe, its food business spanned all stages of the industry, from fishing fleets to retail shops. Among its range of ancillary services were shipping, paper, packaging, plastics, and advertising and market research. Unilever also owned a trading company, called the United Africa Company, which began by importing and exporting into West Africa but, beginning in the 1950s, turned to investing heavily in local manufacturing, especially brewing and textiles. The United Africa Company employed around 70,000 people in the 1970s and was the largest modern business enterprise in West Africa. 3 Unilever's total employment was over 350,000 in the mid-1970s, or around seven times larger than that of Procter & Gamble (hereafter P&G), its main rival in the U.S. detergent and toothpaste markets.

A World-wide Investor

An early multinational investor, by the postwar decades Unilever possessed extensive manufacturing and trading businesses throughout Europe, North and South America, Africa, Asia, and Australia. Unilever was one of the oldest and largest foreign multinationals in the United States. William Lever, founder of the British predecessor of Unilever, first visited the United States in 1888 and by the turn of the century had three manufacturing plants in Cambridge, Massachusetts, Philadelphia, and Vicksburg, Mississippi. 4 The subsequent growth of the business, which was by no means linear, will be reviewed below, but it was always one of the largest foreign investors in the United States. In 1981, a ranking by sales revenues in Forbes put it in twelfth place. 5

Unilever's longevity as an inward investor provides an opportunity to explore in depth a puzzle about inward FDI in the United States. For a number of reasons, including its size, resources, free-market economy, and proclivity toward trade protectionism, the United States has always been a major host economy for foreign firms. It has certainly been the world's largest host since the 1970s, and probably was before 1914 also. 6 Given that most theories of the multinational enterprise suggest that foreign firms possess an "advantage" when they invest in a foreign market, it might be expected that they would earn higher returns than their domestic competitors. 7 This seems to be the general case, but perhaps not for the United States. Considerable anecdotal evidence exists that many foreign firms have experienced significant and sustained problems in the United States, though it is also possible to counter such reports with case studies of sustained success. 8

During the 1990s a series of aggregate studies using tax and other data pointed toward foreign firms earning lower financial returns than their domestic equivalents in the United States. 9 One explanation for this phenomenon might be transfer pricing, but this has proved hard to verify empirically. The industry mix is another possibility, but recent studies have suggested this is not a major factor. More significant influences appear to be market share position—in general, as a foreign owned firm's market share rose, the gap between its return on assets and those for United States—owned companies decreased—and age of the affiliate, with the return on assets of foreign firms rising with their degree of newness. 10 Related to the age effect, there is also the strong, but difficult to quantify, possibility that foreign firms experienced management problems because of idiosyncratic features of the U.S. economy, including not only its size but also the regulatory system and "business culture." The case of Unilever is instructive in investigating these matters, including the issue of whether managing in the United States was particularly hard, even for a company with experience in managing large-scale businesses in some of the world's more challenging political, economic, and financial locations, like Brazil, India, Nigeria, and Turkey.

The story of Unilever in the United States provides rich new empirical evidence on critical issues relating to the functioning of multinationals and their impact. — Geoffrey Jones

Finally, the story of Unilever in the United States provides rich new empirical evidence on critical issues relating to the functioning of multinationals and their impact. It raises the issue of what is meant by "control" within multinationals. Management and control are at the heart of definitions of multinationals and foreign direct investment (as opposed to portfolio investment), yet these are by no means straightforward concepts. A great deal of the theory of multinationals relates to the benefits—or otherwise—of controlling transactions within a firm rather than using market arrangements. In turn, transaction-cost theory postulates that intangibles like knowledge and information can often be transferred more efficiently and effectively within a firm than between independent firms. There are several reasons for this, including the fact that much knowledge is tacit. Indeed, it is well established that sharing technology and communicating knowledge within a firm are neither easy nor costless, though there have not been many empirical studies of such intrafirm transfers. 11 Orjan Sövell and Udo Zander have recently gone so far as to claim that multinationals are "not particularly well equipped to continuously transfer technological knowledge across national borders" and that their "contribution to the international diffusion of knowledge transfers has been overestimated. 12 This study of Unilever in the United States provides compelling new evidence on this issue.

Lever Brothers In The United States: Building And Losing Competitive Advantage

Lever Brothers, Unilever's first and major affiliate, was remarkably successful in interwar America. After a slow start, especially because of "the obstinate refusal of the American housewife to appreciate Sunlight Soap," Lever's main soap brand in the United Kingdom, the Lever Brothers business in the United States began to grow rapidly under a new president, Francis A. Countway, an American appointed in 1912. 13 Sales rose from $843,466 in 1913, to $12.5 million in 1920, to $18.9 million in 1925. Lever was the first to alert American consumers to the menace of "BO," "Undie Odor," and "Dishpan Hands," and to market the cures in the form of Lifebuoy and Lux Flakes. By the end of the 1930s sales exceeded $90 million, and in 1946 they reached $150 million.

By the interwar years soap had a firmly oligopolistic market structure in the United States. It formed part of the consumer chemicals industry, which sold branded and packaged goods supported by heavy advertising expenditure. In soap, there were also substantial throughput economies, which encouraged concentration. P&G was, to apply Alfred D. Chandler's terminology, "the first mover"; among the main followers were Colgate and Palmolive-Peet, which merged in 1928. Neither P&G nor Colgate Palmolive diversified greatly beyond soap, though P&G's research took it into cooking oils before 1914 and into shampoos in the 1930s. Lever made up the third member of the oligopoly. The three firms together controlled about 80 percent of the U.S. soap market in the 1930s. 14 By the interwar years, this oligopolistic rivalry was extended overseas. Colgate was an active foreign investor, while in 1930 P&G—previously confined to the United States and Canada—acquired a British soap business, which it proceeded to expand, seriously eroding Unilever's market share. 15

The soap and related markets in the United States had a number of characteristics. Although P&G had established a preponderant market share, shares were strongly contested. Entry, other than by acquisition, was already not really an option by the interwar years, so competition took the form of fierce rivalry between incumbent firms with a long experience of one another. During the 1920s and the first half of the 1930s, Lever made substantial progress against P&G. Lever's sales in the United States as a percentage of P&G's sales rose from 14.8 percent between 1924 and 1926 to reach almost 50 percent in 1933. In 1930 P&G suggested purchasing Lever in the United States as part of a world division of markets, but the offer was declined. 16 Lever's success peaked in the early 1930s. Using published figures, Lever estimated its profit as a percentage of capital employed at 26 percent between 1930 and 1932, compared with P&G's 12 percent.

Countway's greatest contribution was in marketing. During the war, Countway put Lever's resources behind Lux soapflakes, promoted as a fine soap that would not damage delicate fabrics just at a time when women's wear was shifting from cotton and lisle to silk and fine fabrics. The campaign featured a variety of tactics, including washing demonstrations at department stores. In 1919 Countway launched Rinso soap powder, coinciding with the advent of the washing machine. In the same year, Lever's agreement with a New York agent to sell its soap everywhere beyond New England was abandoned and a new sales organization was established. Finally, in the mid-1920s, Countway launched, against the advice of the British parent company, a white soap, called "Lux Toilet Soap." J. Walter Thompson was hired to develop a marketing and advertising campaign stressing the glamour of the new product, with very successful results. 17 Lever's share of the U.S. soap market rose from around 2 percent in the early 1920s to 8.5 percent in 1932. 18 Brands were built up by spending heavily on advertising. As a percentage of sales, advertising averaged 25 percent between 1921 and 1933, thereby funding a series of noteworthy campaigns conceived by J. Walter Thompson. This rate of spending was made possible by the low price of oils and fats in the decade and by plowing back profits rather than remitting great dividends. By 1929 Unilever had received $12.2 million from its U.S. business since the time of its start, but thereafter the company reaped benefits, for between 1930 and 1950 cumulative dividends were $50 million. 19

Many foreign firms have experienced significant and sustained problems in the United States. — Geoffrey Jones

After 1933 Lever encountered tougher competition in soap from P&G, though Lever's share of the total U.S. soap market grew to 11 percent in 1938. P&G launched a line of synthetic detergents, including Dreft, in 1933, and came out with Drene, a liquid shampoo, in 1934 both were more effective than solid soap in areas of hard water. However, such products had "teething problems," and their impact on the U.S. market was limited until the war. Countway challenged P&G in another area by entering branded shortening in 1936 with Spry. This also was launched with a massive marketing campaign to attack P&G's Crisco shortening, which had been on sale since 1912. 20 The attack began with a nationwide giveaway of one-pound cans, and the result was "impressive." 21 By 1939 Spry's sales had reached 75 percent of Crisco's, but the resulting price war meant that Lever made no profit on the product until 1941. Lever's sales in general reached as high as 43 percent of P&G's during the early 1940s, and the company further diversified with the purchase of the toothpaste company Pepsodent in 1944. Expansion into margarine followed with the purchase of a Chicago firm in 1948.

The postwar years proved very disappointing for Lever Brothers, for a number of partly related reasons. Countway, on his retirement in 1946, was replaced by the president of Pepsodent, the thirty-four-year-old Charles Luckman, who was credited with the "discovery" of Bob Hope in 1937 when the comedian was used for an advertisement. Countway was a classic "one man band," whose skills in marketing were not matched by much interest in organization building. He never gave much thought to succession, but he liked Luckman. 22 This proved a misjudgment. With his appointment by President Truman to head a food program in Europe at the same time, Luckman became preoccupied with matters outside Lever for a significant portion of his term, though perhaps not to a sufficient degree. Convinced that Lever's management was too old and inbred, he dismissed about 15 percent of the work force soon after taking office, and he completed the transformation by moving the head office from Boston to New York, taking only around one-tenth of the existing executives with him. 23 The head office, constructed in Cambridge by Lever in 1938, was subsequently acquired by MIT and became the Sloan Building.

Luckman's move, which was supported by a firm of management consultants, the Fry Organization of Business Management Experts, was justified on the grounds that the building in Cambridge was not large enough, that it would be easier to find the right personnel in New York, and that Lever would benefit by being closer to the large advertising agencies in the city. 24 There were also rumors that Luckman, who was Jewish, was uncomfortable with what he perceived as widespread anti-Semitism in Boston at that time. The cost of building the New York Park Avenue headquarters, which became established as a "classic" of the new postwar skyscraper, rose steadily from $3.5 million to $6 million. Luckman had trained as an architect at the University of Illinois, and he was very involved in the design of the pioneering New York office.

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How Unilever Is Preparing for the Future of Work

How should the consumer goods company upscale its global workforce for the future?

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Launched in 2016, Unilever’s Future of Work initiative aimed to accelerate the speed of change throughout the organization and prepare its workforce for a digitalized and highly automated era. But despite its success over the last three years, the program still faces significant challenges in its implementation. How should Unilever, one of the world’s largest consumer goods companies, best prepare and upscale its workforce for the future? How should Unilever adapt and accelerate the speed of change throughout the organization? Is it even possible to lead a systematic, agile workforce transformation across several geographies while accounting for local context?

Harvard Business School professor and faculty co-chair of the Managing the Future of Work Project William Kerr and Patrick Hull , Unilever’s vice president of global learning and future of work, discuss how rapid advances in artificial intelligence, machine learning, and automation are changing the nature of work in the case, “ Unilever’s Response to the Future of Work .”

BRIAN KENNY: On November 30, 2022, OpenAI launched the latest version of ChatGPT, the largest and most powerful AI chatbot to date. Within a few days, more than a million people tested its ability to do the mundane things we really don’t like to do, such as writing emails, coding software, and scheduling meetings. Others upped the intelligence challenge by asking for sonnets and song lyrics, and even instructions on how to remove a peanut butter sandwich from a VCR in the style of King James. But once the novelty wore off, the reality set in. ChatGPT is a game changer, and yet another example of the potential for AI to change the way we live and work. And while we often view AI as improving how we live, we tend to think of it as destroying how we work, fears that are fueled by dire predictions of job eliminations in the tens of millions and the eradication of entire industries. And while it’s true that AI will continue to evolve and improve, eventually taking over many jobs that are currently performed by people, it will also create many work opportunities that don’t yet exist. Today on Cold Call , we welcome Professor William Kerr, joined by Patrick Hull of Unilever, to discuss the case, “Unilever’s Response to the Future of Work.” I’m your host, Brian Kenny, and you’re listening to Cold Call on the HBR Podcast Network. Professor Bill Kerr is the co-director of Harvard Business School’s Managing the Future of Work initiative. His research centers on how companies and economies explore new opportunities and generate growth, and he is a fellow podcaster. He hosts a show called Managing the Future of Work . Bill, thanks for being here.

Bill Kerr: Thanks for having us.

BRIAN KENNY: And Patrick Hull is Unilever’s VP of Global Learning and Future of Work. He goes by Paddy. Paddy, thanks for joining us.

PATRICK HULL: Thank you very much for having me.

BRIAN KENNY: It’s great to have you both here today. I think people will really be interested in hearing this case and how Unilever is thinking about the future of work. So why don’t we just dive right in. And, Bill, I’m going to ask you to start by telling us what the central issue is in the case, and what your cold call is to start the discussion in class.

Bill Kerr: Well, Brian, I think your introduction clearly outlined the central issue, which is technology is really transforming the world of work. And that means, companies must learn how to do things different than what they’ve done over 50 or a hundred year history. And it also means they must transform the skill base in how they’re approaching employees and talent. I think we can simply say: that ain’t easy, and it’s also going to introduce significant challenges and tensions for organizations. A big company like Unilever is going to really want to appeal to employees, put the purpose of the company in front of employees, embrace that, but it’s also going to have to make challenging decisions regarding employees and their transition of skills and what’s the future workforce going to look like. So the most common cold call is a really simple question, which is: has Unilever, through its Future of Work Program, resolved the paradox of profit and purpose? And pretty quickly, the answer to that is, “no.” It hasn’t fully resolved that. I will occasionally get maybe one person that goes all the way there. So then we’ve got to start unpacking, okay, how close is it to resolving that? And are we very near the end point or are we farther away?

BRIAN KENNY: Yeah. Simple question to you maybe, but probably not to others who are listening. That sounds like a pretty complex question. I mentioned your involvement with the Managing the Future of Work initiative here. So I know you think a lot about this. This is on your mind all the time. How did you hear about what Unilever was doing, and why was it important to you to write this case?

Bill Kerr: Well, it’s interesting. The history of the connection came through another case that we wrote. Very early in our project on Managing the Future of Work , we’re always very deliberate about putting the “managing” in front of the future of work, and that we want to think about how leading companies are reacting to the forces that are shaping the future, like digitization and demographic changes and so forth. So, we’ve written a case about Vodafone, which we did a Cold Call a while back. With Vittorio Colao. And Vittorio was on Unilever’s board and said, “You have got to go and meet this organization and see what they’re doing,” because they have one of the most comprehensive, well thought out programs for the future of work that he had come across. And in fact, that was the connection that then followed on. And yes, for a sector that Unilever’s working in that has end-to-end change going on from the manufacturers, all the way down through the consumers or the products, to be able to have an organization that’s thought very deeply about what pillars do we need to put into place to make the change occur is great. The other thing that was delightful about Unilever and writing this case study is that, a lot of times, companies want to talk about their programs, only after they know that it was a success. They would prefer to wait until they’ve… They’re like, wait another two years and then we’ll write the case study about this transformation. But Unilever’s been very upfront in saying, “The future of work’s a big challenge. We have to get in front of that. Here’s what we’re doing. We haven’t necessarily figured it all out yet, and some of this will prove wildly successful. Others may be challenging, but this is where we’re going.” And that’s been a great thing to really spark a lot of executives and students a conversation about, what will the future of work require, and how can we get there?

BRIAN KENNY: Yeah. So, Patty, I have to ask, I have to start by asking you, what’s your job? Because your title’s very lofty. It basically calls you a visionary. You are the VP of Global Learning and Future of Work. So what do you do?

PATRICK HULL: I’ve got a funny answer to that question. Since the pandemic, and obviously, been working a lot from home, and I work in a slightly open area, so my wife gets to hear a little bit of what I’m talking about. She seems to think that what I do is laugh a lot and chat a lot to people. So that’s what-

BRIAN KENNY: Kind of like we’re doing today. So, she’s listening in…

PATRICK HULL: She says, “When do you do some real work?” But yes, I guess what I do is work with a really passionate, dedicated team of people who are looking at how are we preparing our organization, and our people in particular, for a future that is very different to what we’ve been experiencing in our traditional work models up to this point. You mentioned ChatGPT as well. I mean, that really is the talk of the town at the moment. And I guess we’ve been thinking for a bit of time, as Bill mentioned, about the impact of things like that on our business, and trying to get on the forefront of what’s our response to that. So I wouldn’t quite say visionary. I think, at this stage in business and what’s going on, it’s quite hard to be truly visionary, but trying to stay one or two steps slightly ahead of what’s going on in the world of work, that’s, I guess, what my job’s all about.

BRIAN KENNY: Yeah. That’s great. For our listeners who… I think most people have heard of Unilever, but for people who aren’t really aware of the scope and scale of Unilever, can you describe the business for us a little bit?

PATRICK HULL: Yes. So we’re a fast moving consumer goods business. So most of you will probably interact with one of our brands or products every day. In fact, we say that we serve 3.4 billion people every day. That’s how often someone buys one of our products or uses one of our products. We’ve got about 400 brands in 190 countries across the world, ranging from global brands like Dove, Sunsilk, Hellmann’s, Rexona, all the way through to what we call local jewels like Marmite in the UK, which is one of those brands that you either love it or hate it.

BRIAN KENNY: How big is the workforce at Unilever?

PATRICK HULL: The workforce is about 149,000 people who are directly employed by us. But we always often speak about how we have an extended workforce of around 3 to 5 million people, who if you ask them who they work for, they would say Unilever, even though they’re actually employed by someone else.

BRIAN KENNY: Yeah. So we know Unilever well at Harvard Business School. We’ve had lots of cases written on over the years by our faculty, and we’ve actually talked about it on Cold Call before, particularly, the focus on sustainability. Unilever really stands out in this regard. And I wonder if you could talk a little bit about how important this is to the culture at Unilever.

PATRICK HULL: It is. I can’t tell you how important it is. In fact, when Paul Polman, previous CEO, came into the organization in 2009, he launched the Unilever Sustainable Living Plan in 2010. And he did this beautiful job when he launched it of reminding us that sustainability has been part of Unilever since day one. When Lord Leverhulme started selling Sunlight soap, his mission was to make cleanliness commonplace. That was back in the late 1800s. And what Paul did beautifully is he then simply shifted that a little bit and said, “We are now here to make sustainable living commonplace, because now we impact so many more people and so many more homes. If we can help every consumer out there make more sustainable choices with how they eat, how they clean, how they use plastic, how they use water, then we can have a massive impact, positive impact, on the planet and society, and that’s good for business.” That was the business model that we’ve ascribed to. So we hire on it. We are tracked on it. We develop on it. It’s definitely part of the way things get done here.

BRIAN KENNY: Bill, let me turn back to you for a second. The FMCG sector is fast moving, as it indicates. What are some of the forces that are putting pressure on that particular sector these days?

Bill Kerr: Yeah. The case outlines three forces, and let me walk through those and also say a little bit of, before I do that, why we think this sector’s amazing to watch. If you want to have a kind of front row seat as to how the future of work may play out in other sectors, I often direct them towards the fast moving consumer good sector because the technology forces, the demographic forces, the gig workplace force that we’ll talk about are all happening already. They’re deep into this sector, so we can learn a lot from it. So, the first one is clearly technology that links through all the way to our opening conversation. There’s many ways in which the touch points between consumers and the outlets and last mile delivery and drones possibly dropping off future packages reverberates all the way up through the supply chain to Unilever and its suppliers above. A simple kind of easy metric is, think about the speed that we now demand or expect of our package delivery. It’s no longer that we’re going to go to the store and pick this up and the store can replenish itself over a week-long horizon. It’s going to be, I just pressed the button in the app and I’m expecting it in the next five minutes to be handed to me. That puts a lot of demands on how an organization needs to function, and also increase the expectation about the customization and the personalized products that consumers will require. So, the technology requires Unilever to think differently. The second is a broader force, but equally as impactful, and even more predictable for the future, which is the role of aging populations and demographic change in the workplace that is quite different than the workplace of the 20th century, where many of the large companies today kind of got their grounding. One of the early kind of points that it makes is that, in the UK, about a third of the workforce currently is over the age of 50, and that’s true in most every advanced economy, as well as also, increasingly across East Asia and elsewhere, that we have older populations. We have workforces that are going to span many more generations in the workplace. And then the third one, which in our project, Managing the Future of Work , we think of as kind of an outcome of tech and demographics coming together is the gig workplace. Paddy talked about the extended workforce beyond Unilever, and the case tries to unpack some of the ways they’re approaching bringing people to work that aren’t the traditional full-time jobs that most companies got built up around. And the gig workplace is activated by that technology that lets us schedule and involve people in gig works. And also, as we think about low unemployment rates and older populations and tacked out and so forth, the degree that we can, as a company, attract in people that are currently not working or at the edge of working and tempt them to come work for us on projects is a very valuable labor supply to these organizations.

BRIAN KENNY: Paddy, you’re in it, literally. So what are you seeing as some of the things that have shifted over time?

PATRICK HULL: So, when I started, I’m going to give my age away here a little bit, but back in the 1990s, I remember us talking a lot about, how could we get direct to the consumer? Back in those days, we sold everything through big box retail, and it was all about maintaining those relationships, making sure you had great store shelf positioning and great relationships with those buyers. One of the most massive shifts is that direct to consumer is the channel now. Bill spoke about how we all just order stuff off Amazon directly. We don’t have any advantage anymore in terms of getting to consumers. You and I, any little startup, can throw some ads on Instagram, speak to a few influencers and start sending their products out. So the whole game has changed in terms of how are we reaching people.

BRIAN KENNY: And I can already imagine, just based on the examples you’ve both given, I’m already seeing areas where there would be churn in the workforce around some of these developments. So let’s talk a little bit about Unilever’s Future of Work plans. And there’s a framework that goes along with it. I wonder if you could describe that and talk about the three pillars that support that framework.

PATRICK HULL: Yes, our three pillars are: change the way we change, ignite lifelong learning, and redefining the Unilever system of work. And I’ll explain a little bit about each of those. So changing the way we change. The first one is, what we’ve realized is that change is continuous. Disruption is continuous in our organization. It’s not about standalone moments where we see that, oh, we need to shut down a factory or change something because of a dramatic shift. Change is happening all the time. All of our factories are rapidly automating all of our office processes, so we can’t stick to the old traditional model of change, which was a very slow moving consultative approach, and also, where management held its cards close to its chest until sort of the last moment and then announced, “This is happening.” We’ve realized that, really, to be true to our purpose around making sustainable living commonplace, we need to enter into a far more open, early, proactive dialogue with our people around the change that’s affecting our organization, and how to help start preparing them well in advance of any actual impact on them in terms of how they can prepare for that change. So that’s the first one, changing the way we change. The second one around igniting lifelong learning is about engaging with our people to make sure that they’re all equipped to thrive, both now and into the future, and that we are showing them a bit of what that future looks like and where they need to be focusing their attention. And then the third, redefining the whole system of work is a bit of what Bill was mentioning earlier. Here, we really want to embrace this notion of accessing talent rather than owning talent. We’ve felt that if we just keep on trying to hold onto all our FTEs and compete against everyone else with talent, we are never going to have the people and the skills in our organization that we need to take us forward into the future. So we really want to redefine new models of working, so it’s not just you’re either fixed or you’re a gig worker, but how can we find some flex in the middle that helps people transition out of this traditional life cycle of work, the kind of 40-hour, 40-week, 40-year traditional employment pattern, and help get them future fit for a hundred year life, where they may want to slowly move into retirement, where they may want to spend some time looking after their kids, where they may want to set up their side hustle. How do we create that sort of flexibility?

BRIAN KENNY: There’s definitely, and understandably, a lot of emotion involved with some of these things. And I’m wondering if maybe you could give our listeners a sense, based on all the research you’ve done in the initiative, about what kinds of jobs are going to go away, and what kinds of skills you think are going to be most important for people to think about in the future?

Bill Kerr: Well, Brian, I come back with, that we don’t think of jobs really going away. And I think it’s important to instead think of jobs as a collection of tasks. And certain tasks will be taken over by the machine and require less human input, as the technology gets more advanced. And that could be in a very manual kind of sense. It could also be with ChatGPT in a more cognitive relationship. And perhaps, the thing that we’re experiencing right now that’s very front and center in the world of work is, lots of ways that technology is coming in towards more cognitive tasks that are complex, they’re non-routine. They were not able to be done by the computer before, but artificial intelligence machine learning and so forth are able to take those off. So if you think about how supply chain forecasting will happen at Unilever, that’s going to be done in a fundamentally different way than it would’ve been even 10 years ago.

BRIAN KENNY: Sure.

Bill Kerr: But we always think about new tasks emerging, and it’s hard to predict exactly what those tasks will involve. When you think about the skills, we know that having digital fluency and also social skills are the two biggest things that you can put money on, bank on, those being important enough for the future. But there’s also going to be judgment, and there’s going to need to be innovativeness. So even if the computer starts to do a really good job at predicting about how salespeople should arrange the shelves or how they should approach consumers, you still have to think about, as an organization, what data are we feeding into the system? And where could Unilever develop a proprietary data advantage? And how would we collect those data streams and put them into it? So the technology will be there, it’s going to take over evermore parts of work as it has been for 150 years at this point, but there’ll also be places where humans will be complementing and helping to achieve the goals of the company.

BRIAN KENNY: So that’s an optimistic viewpoint, Paddy. And I’m wondering what the response is from people when you start to talk about these ideas with them. And how do you move them beyond just their own insecurity and concern for themselves, to really embrace learning new skills and thinking about a different way of working in the future?

PATRICK HULL: This is a fundamental dilemma facing us, Brian. I’m so glad you asked me that question. And whilst I don’t know if we’ve cracked it, I think we’ve got a really good hypothesis around what helps this. One of the things we know is, the way not to motivate people to learn new skills is to tell them, “You better re-skill or the robots are going to take your job away.” So we’ve taken the view that if we can help people to discover their purpose, what makes them unique, how do they approach work in their own way, and then start from that point and say, “Okay, when you are at your best, you are doing these things. How do we make sure that you are developing the skills in line with that, that are going to keep you future fit in an environment that is changing around you in terms of the nature of your job and how you work?” And we’ve found that when people come from that place of purpose, they do feel far more agency over it. They are far more motivated to learn new skills, to continue to be relevant, but it’s coming from a much more positive place. It’s not coming from that fight or flight or freeze sort of mode. It’s coming from a place of agency. And in fact, we partnered with some academic institutions to measure the impact of starting people thinking about purpose and then creating future fit plans from there. And we’ve found that it does lead to people being 25% more engaged in thinking about the future, in going the extra mile, in having this intrinsic motivation to take it on. And they’re 22% more productive, which is another great benefit to us.

BRIAN KENNY: Yeah. So, Bill, we’ve been through situations like this before. If you look back over the long arc of history, we’ve had movement from an agrarian society to an industrial society. We’ve had manufacturing sector turned on its head when a lot of manufacturing jobs have gone overseas. And I think each time we’ve done that, there’s been a portion of the workforce that’s just not been able to make the leap to the new mode of doing things. Unilever is talking about ensuring that 80% to 100% of their workforce can be transitioned in the right way. Is that too big of a promise to make?

Well, to their credit, I believe they stayed at the pretty top end of that range so far. And I think the workshops and so forth that Paddy just outlined are best in class for trying to stay up there. I do think, Brian, you see organizations, and I’m spanning out from Unilever at this point, that are trying to set a new contract with workers, both explicitly and implicitly, that says, “Our part of the bargain is, we’re going to give you great clarity as to what roles we see the company needing in the future, and help you kind of think about where you are today and what you would need to acquire skill-wise to get to that future point. And we’re going to give you the platform to acquire those skills. But your part of the bargain has to be to put the time and the investment in to be having those skills when that time comes.” And so I think we’re seeing a shift in a bit of the, we want to be a great place for you to have worked and developed your career, but we’re not going to be guaranteeing a lifelong employment. We’re going to focus on the skills that are needed and help you make the investments and choices that should be made.

BRIAN KENNY: Yeah. And what does that start to look like at Unilever, Paddy? What are some of the ways that you’re sort of redefining the systems of work there?

PATRICK HULL: So, one of the big initiatives that we’ve undertaken was this whole idea of, how do we help people create more flexibility in their roles, so that they can discover new ways of working, discover new skills, grow in new and different ways? And I mentioned to you earlier that we thought there’s this sort of gridlock that, on the one hand, you’ve got full-time employees, you’ve got lots of security, but no flexibility in terms of how and where they work. And on the other hand, you’ve got gig workers, freelancers, lots of flexibility, but not much security in terms of guaranteed income. And we’ve set ourselves a challenge of, how do we create this responsible alternative to the gig economy? And our idea was something called U-Work. U-Workers no longer have a job title. They work on gigs and projects in Unilever, but they are still 100% Unilever employees. They are not gig workers, so they’re not contractors or anything. In fact, they’re an internal pool of contractors, if you like, but they remain Unilever employees. They get a guaranteed retainer. They get a package of social care, pension benefits, healthcare benefits. And they get a learning stipend. But in return for that, they then only need to work on projects. They can set up their own business on the side. They can look after their kids or aging parents, or they can gradually move into retirement. And I think it’s this kind of thing that we need to continue to explore, as we see in the impact of automation and digitization, and also this trend or this desire for people to have more flexibility to choose how and when they work.

BRIAN KENNY: Yeah. It actually sounds kind of appealing. So you also get variety that goes along with that. You get to move from one project to another, and you’re not sort of locked in on the same kinds of things, all the time.

PATRICK HULL: And, Brian, the one thing, just to emphasize on that, people get very locked into the thing of, ah, does someone have the skill I need for the job? In fact, what we found is, one of the most important skills is knowing the organization. So U-Work is great because they are Unilever employees. They know the organization. They know how to get things done in Unilever. And we must never underestimate the power of that skill

BRIAN KENNY: Bill, it seems like anytime that we enter into one of these huge labor market transitions, manufacturing jobs, take it on the nose. And so I’m wondering, as you think about the implications for jobs in the future, what are the implications for manufacturing specifically?

Bill Kerr: Well, I think, Brian, we’re already been seeing that in motion for a while. Manufacturing has been at the forefront of technology adoption for decades. I think time will tell how it will continue to evolve. I would anticipate more skilled, more advanced, more technology enabled, but there could also be some interesting twists. It’s not the current case study that we’re talking about, but there’s another case study at Harvard Business School, done by Raj Choudhury, our colleague, with Unilever that’s about remote manufacturing. So how can the remote workforce be connected into the manufacturing sector? So we’ll see a lot of innovation towards the future.

BRIAN KENNY: And how is Unilever thinking about that, Paddy?

PATRICK HULL: So actually, the whole genesis of this future of work framework was done together, well, co-created together with our European Works Council actually, so our manufacturing representatives coming together with management to think about, how is the future of work impacting the manufacturing environment? So actually, our whole framework came from them. So, we very much see this as a critical way of addressing the impact of digitization and automation in the manufacturing environment. We’ve found some fantastic examples where we’ve started people thinking about their roles in future. And what we’ve found is, there’s quite a strong correlation between some of the skills our manufacturing workers have and lab assistants in our R&D labs. And funnily enough, we tend to have quite big R&D centers right next to our factories. So we’ve seen quite a bit of movement of people being able to re-skill from manufacturing environment into R&D labs in a way, a more sustainable future environment, all because they’ve identified, what’s the work that they really enjoy doing, what are they really good at, and then what are the skills required to go into the future?

BRIAN KENNY: Yeah. That’s a huge win-win, right? For the worker and for the firm.

PATRICK HULL: Correct.

BRIAN KENNY: This has been a great conversation. I’ve really enjoyed it. I’m wondering if… I’ve got time for one question for each of you left here. So, I’m going to start with you, Paddy. How is Unilever going to know if they’re succeeding in this? Is there a sort of an end game in mind here?

PATRICK HULL: The big goal is obviously that we are proving that our sustainable business model is more effective than others in terms of driving superior performance. So the big number is still, how are we doing as an organization? I would say the key input metrics are things like, how well are we able to re-skill our people for the future? We really believe that re-skilling is the way forward. We know it’s cheaper than recruiting from outside. It’s better for our people. It’s a way of getting people who know our business to continue to do good things. So we do measure that. How many people are we helping to transition? And then it’s about, how attractive do we continue to be as an employer for new recruits and for the people within our organization? So we’ll track the traditional input metrics like engagement, attrition, our employer brand, how well people are collaborating going forward.

BRIAN KENNY: Yeah. It sounds like you’re off to a fantastic start. Bill, I’ll give you the last words, since you wrote the case. If there’s one thing you’d like people to remember about this case, what is it?

Bill Kerr: Well, let me go back. We started with the cold call, so let me tell you how I end the class. There’s a video of one of Paddy’s colleagues, Nick Dalton, who is quoting President Kennedy, who was in turn quoting an Irish writer named Frank O’Connor. And Kennedy was speaking about the space mission, and Frank O’Connor was describing, as a kid, when they would come to this orchard wall that was too high for them to climb over. They had no idea how they were going to do it. They would take their hats and they would throw them over the orchard wall, so that they just committed themselves to figuring it out. And Nick basically thought of the Unilever program as a bit of, “We’re throwing our hat over the wall. We don’t know exactly how we’re going to climb over this future of work wall, but we know we must do it. And this is our public commitment to making that happen.” And the thing I’d come back to listeners around this is, the future of work is scary. And we talked about job transitions and how quickly the new technologies are coming. This time last year, we had no thought of ChatGPT as being part of this Cold Call podcast, but now, it’s what we lead with. And so, hopefully, people can unfreeze a little bit and can start thinking about, regardless of what the twists and turns may lie ahead, they need to begin a journey with their employees. And Unilever is showing, here’s how we’re approaching that. Now, let’s all work on it together.

BRIAN KENNY: Yeah. Well, I suspect I’m not alone when I say we’re rooting for you. We hope that you get this right. There’s a lot at stake.

PATRICK HULL: Thanks, Brian.

BRIAN KENNY: Thank you both for joining me.

Bill Kerr: Thanks.

BRIAN KENNY: If you enjoy Cold Call , you might like our other podcasts, After Hours , Climate Rising , Deep Purpose, IdeaCast , Managing the Future of Work , Sk ydeck , and Women at Work . Find them on Apple, Spotify, or wherever you listen, and if you could take a minute to rate and review us, we’d be grateful. If you have any suggestions or just want to say hello, we want to hear from you. Email us at [email protected] . Thanks again for joining us. I’m your host, Brian Kenny, and you’ve been listening to Cold Call , an official podcast of Harvard Business School and part of the HBR Podcast Network.

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BUS604: Innovation and Sustainability

Case Study: A Vision for Unilever

In 2009, the multinational company Unilever adopted a new strategic vision that integrated societal and environmental responsibilities. The company's Sustainable Living Plan was the center of this strategy. This plan aims to help more than a billion people improve their health and wellbeing, decouple Unilever's growth from its environmental impact, increase its social impact, and enhance the livelihoods of all those involved in its supply chain. Read this chapter to discover how Unilever merged sustainability with profitable growth.

What steps did Unilever take to re-engineer the company and implement the Sustainable Living Plan successfully? How did sustainable innovation play a role in helping Unilever achieve its goals? What were the results?

Vision and Concept

Polman's vision for Unilever was rooted in the company's history. William Lever had always seen Lever Brothers as much more than a vehicle for making money for himself: he saw no trade-off between seeking to make a profit and seeking to improve society. Its products helped to improve public health and hygiene, and the company treated its employees with dignity and respect. After it became Unilever and grew into a multinational corporation, it continued to make everyday products and to treat its employees well. But when Polman took over, he decided to refashion Unilever so that social responsibility moved from an important facet of the company to become its driving force. He had always seen business as needing to play an important role in the development of a more just and equal society. 

At the beginning of the twenty-first century, other factors had to be taken into account: climate change, globalization, population growth, scarcer natural resources, greater individual wealth, an expanding middle class in both the developed and developing worlds, more informed and demanding customers, and more active shareholders.

An important response popular at the time to address this combination of factors was the philosophy of "frugal innovation", defined as the ability to do more with less, creating increased business and social value while minimizing the use of ever-diminishing resources. One way of doing so is to strip non-essential and unnecessary items out of everyday products, such as cars and mobile telephones, to make them cheaper and more available to the less affluent and to the ecologically aware. 

Paul Polman showed his commitment to this philosophy by writing the Foreword to the book Frugal Innovation: How To Do Better With Less, written by two pioneers of the concept, Navi Radjou, and Jaideep Prabhu, and published in 2015 by The Economist and Profile Books, London. He wrote: "The insatiable demand for ever higher quality products will continue to rise while at the same time the availability of the resources needed to satisfy that demand will remain constrained. Reconciling this apparent conflict is rapidly emerging as one of the biggest business challenges of our age". 

He concluded: "By combining the frugal ingenuity of developing nations with the advanced R&D [research and development] capabilities of advanced economies, companies can create high-quality products and services that are affordable, sustainable and benefit humanity".

In 2010, Unilever unveiled the new concept through which it would apply Polman's vision: its Sustainable Living Plan, which would be applied to every aspect of the company's operations, from top to bottom. Launching the plan, Polman summarized its ambitions: "We have to develop new ways of doing business which will increase the positive social benefits arising from Unilever's activities while at the same time reducing our environmental impacts. We want to be a sus tainable business in every sense of the word". But, he added, "We do not believe there is a conflict between sustainability and profitable growth".

In 2010, Unilever unveiled the new concept through which it would apply Polman's vision: its Sustainable Living Plan, applied to every aspect of the company's operations.

He outlined vision, strategy, and targets: "Our vision is to create a better future in which people can improve their quality of life without increasing their environmental footprint. Our strategy is to increase our social impact by ensuring that our products meet the needs of people everywhere for balanced nutri tion, good hygiene, and the confidence  which comes from having clean clothes and good skin.

"We recognise that, to live within the natural limits of the planet, we have to decouple growth from environmental impact. This starts with our own operations. We now send zero waste to landfill across our entire global factory network, cut CO2 from energy by 47% per tonne of production in our operations, many of our factories run on renewable energy and we'll be carbon positive by 2030. 

"However, our impact goes beyond our factory gates. The sustainable sourcing of raw materials and the use of our products by the consumer at home have a far larger footprint. That's why our plan is designed to reduce our impacts across the whole lifecycle of our products. Innovation and technology will be the key to achieving these reductions".

Polman announced three hugely ambitious targets as a part of the USLP: to help more than a billion people take action to improve their health and wellbeing by 2020; to decouple Unilever's growth from its environmental impact by 2030, achieving absolute reductions across the product lifecycle and halving its environmental footprint; and enhancing the livelihoods of "hundreds of thousands" of people involved in its supply chain by 2020.

Polman himself has always had a strong personal moral compass, stemming from his upbringing as one of the six children of a Catholic family in Enschede, Netherlands. As a teenager he considered becoming a priest and then a doctor before deciding on a business career. Just as importantly, he recognised that in the first decades of the twenty-first century a growing number of customers, both actual and potential, were becoming more concerned about the quality of life than mere consumerism and the pursuit of material things, and buying into the notion of sustainability. 

Polman told us: "Consumers are asking for it and citizens are asking for it. The circular economy and issues like climate change are becoming more and more relevant. People want to have food that is more natural or organic. People are moving from a concept of 'my world' to 'our world'. Millennials are more purpose-driven". That also applies to Unilever's own staff. "We have no problem attracting millennials: about 50 percent of the people who work for Unilever are millennials. And they want to make a difference in life. There is absolutely no question about it: they are an engine for change".

The other key element making sustainability possible is technology. "Technology has developed very rapidly and is opening up new possibilities. Electric vehicles are one example: very soon electric vehicles will be more popular than internal combustion engines. 

At Unilever we find that moving to zero waste in our factories and shifting to renewable energy makes economic sense. Increasingly data shows that companies operating more responsibly tend to perform better because they reflect the needs of society better. They probably set more realistic targets, they make more data public, which lowers the cost of capital, and so on.

"Implementing our Unilever Sustainable Living Plan is not that difficult, as long as we are all aligned on the direction we need to take and why it needs to be done. But what you need to focus on is the speed and skill of implementation.

"What we find is that our brands with a social purpose are an enormous engine for innovation. Our Sustainable Living Brands, as we call them, grow 70 percent faster than the rest of our portfo lio. An example is in water-scarce regions, such as parts of Africa, where rinsing out the soap suds from laundry accounts for around 70 percent of domestic water use.

"It is really the energy that comes from people in terms of having a meaning, having a purpose, that drives innovation".

With our Sunlight soap brand we developed a new anti-foam molecule called SmartFoam which breaks down suds more quickly. This reduces the amount of water needed, as well as speeding up the process of rinsing. People prefer that product, they see the multiple benefits, and the brand grows by addressing a societal problem.

"Take Domestos, or Domex as it is called in India, our toilet-cleaning product. If you just sell toilet-cleaning products, that is not a very exciting thing. But if you address open defecation, suddenly you start to innovate quite differently. For example, we have just launched the first small powder sachet, Domex Toilet Powder. The brand provides an affordable toilet-cleaning solution to consumers. And not surprisingly the brand is growing. 

"Or take Lifebuoy soap, with its mission to help a child reach the age of five. So far, we have reached 426 million people with handwashing behavior-change programmes in developing countries. We do that because we want to help enhance people's wellbeing, and at the same time the brand is growing very well. 

"But it also works in developed markets. Our compressed deodorant technology is a good example. Scientists at our R&D facility in Leeds, northern England, reengineered the spray system of our aerosols to reduce the flow rate. Using 50 percent less propellant gas and 25 percent less aluminum in the packaging, we have reduced the carbon footprint per can by about 25 percent. This also means that more cans can be transported at a time, resulting in a 35 percent reduction in the number of lorries on the road. We felt so strongly about it that we did not patent the technology to encourage wider industry use". 

How does the need for innovation fit into the broad framework of the Sustainable Living Plan?

"It starts as a broad purpose that aligns everybody in whichever  direction you want to take," Polman replied. "We have translated the Unilever Sustainable Living Plan into what we call a Compass, so everybody has the same true North. And in that Compass we look at winning with innovation, we look at winning in the marketplace, winning with people, and winning with continuous improvement, which we call efficiencies. But we want innovation running through all of these areas. 

"The packaging is up to 30% lighter and allows us to get 40% more product on a pallet, which means we could reduce the number of trucks on the road by 800 per year".

We provide the tools and we explain to  people what sort of objectives there are. Anything we do now in our innovation programme has to go through what we call the sustainability phenomenon. It has to be in line with the Unilever Sustainable Living Plan.

"It is really the energy that comes from people in terms of having a meaning, having a purpose, having a contribution to life, that drives innovation. We spend one billion euros on R&D, we have 7,500 R&D professionals and 20,000 patents. But the global population is 7.6 billion. So, you need to have an open innovation system where you work together with everyone else to expand your consumer base and achieve wider success. For example, our top 15 suppliers are involved in about 50 percent of our innovations. 

"We have Unilever Ventures, our venture capital and private equity arm which invests in young and innovative companies to help accelerate their growth. Then there is our Unilever Foundry, where we help start-ups and social entrepreneurs scale up their ideas for greater positive impact. Unilever Foundry also enables our brands to collaborate and experiment with evolving technologies. And then our Mergers and Acquisitions strategy is geared to finding innovative brands like air purification company Blueair, or Seventh Generation, a cleaning products company in the US that thinks seven generations ahead. 

"Our M&A activity is for us an incubator for innovations as well. We are trying to find smaller companies and then make them bigger by leveraging our size and scale. But the main driver is the passion of our people. It cannot come from anywhere else. It is our people who go out there and want to make this a better world. They stay connected, they see what is needed. They see the challenges that consumers struggle with. It boils down to the people and their purpose.

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Prithwiraj Choudhury

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Reimagining the employee experience

Understanding the challenges.

Unilever asked us for a vision for its employees globally – a world-class experience which would be dynamic and personalized.

Unilever saw an opportunity to simplify the way employees found information through its many processes, systems and content resources. They realized that such a change would also free up support agents’ time to focus on higher value human interactions.

To understand how the employees felt, we asked them directly. We conducted a qualitative study of one-to-one interviews with employees of all levels, across different markets.

Co-designing the vision

Using this valuable insight, Accenture worked collaboratively with Unilever to co-design their vision, including a Rumble™ that generated ideas to explore and develop. Our long-standing relationship with Unilever brought a deep understanding of their business, which, coupled with our service design approach, enabled the co-creation of a groundbreaking, real vision built on what mattered most to Unilever’s employees.

Unilever had articulated three core pillars that would inspire their new employee experience: human experiences, simple interactions, meaningful impact.

The “Employee Universe” was created to enable the vision, which comprised a matrix of interconnected components, fronted by a chatbot named Una. We created Una’s personality, and designed her human-like conversation to reinforce Unilever’s brand and values. Una becomes a personal assistant, guiding the employee to what they need in that moment. Her conversations were contextually relevant, and continuously improved through a built-in learning loop.

Test, learn and iterate

We ran a “Living Lab”, whereby we would rapidly test, assess and fine-tune throughout to ensure we maximized Una’s impact. We delivered a Proof of Value to demonstrate how new hires would feel about using AI chatbot technology to answer day-to-day queries and test and iterate the underpinning technology.

Employees who tested the pilot enjoyed their initial experience of using Una, giving her a rating of 4.6/5, and 85% employee satisfaction. Our vision and chatbot, plus Living Lab, became the foundation for a broader program of transforming the employee experience at Unilever.

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Sustainability as Opportunity: Unilever’s Sustainable Living Plan

• First Online: 08 March 2018

Cite this chapter

• Joanne Lawrence 4 ,
• Andreas Rasche 5 &
• Kevina Kenny 6  

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Sustainability, as it relates to both social and environmental issues, is treated very differently among companies that incorporate the subject into their business strategies. In this case, we explore sustainability at Unilever whose management addresses it not as a risk to be managed or cost to be avoided, but as an opportunity for competitive advantage and growth. With emerging markets as the backdrop, we learn about Unilever’s Sustainable Living Plan, and what the company has done to integrate sustainability principles into its business model and build on its core competencies, such as innovative product development and marketing expertise, to realise the potential of the fast-growing emerging markets (57% of its 2014 revenues came from emerging markets compared to less than 17% of most multinationals). Issues considered are the role of corporate culture and competencies, the importance of committed and courageous leadership, the willingness to set ambitious goals, and the challenge of creating internal and external alignment around strategic goals.

This case was developed with assistance from Hult EMBA student Kevina Kenny and with the generous help of Gail Klintworth, former Chief Sustainability Officer at Unilever and Karen Hamilton, Vice President of Sustainable Business, who kindly shared their unique perspectives and keen insights with us. Developed originally as part of an Executive Series intended to initiate discussions by Boards of Directors, such as those participating in the UN Global Compact LEAD/PRME Program, and senior managers on critical issues of the day, both the original (2013) and its revision (2015) are published by Hult International Business School. Used with permission.

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The World Bank, Multipolarity: The New Global Economy Global Development Horizons 2011. Retrieved from http://siteresources.worldbank.org/INTGDH/Resources/GDH_CompleteReport2011.pdf , Overview, p.3.

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Joanne Lawrence

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Andreas Rasche

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Appendix 1: Unilever’s Business Model: A Virtuous Circle of Growth

Our virtuous circle of growth describes how we generate profit from our sustainable growth business model.

Making sustainable living commonplace for our consumers is helping to drive profitable growth. By focusing on sustainable living needs, we can build brands with a significant purpose. By reducing waste and material use, we create efficiencies and cut costs. This helps to improve our margins. By looking at product development, sourcing and manufacturing through a sustainability lens, opportunities for innovation open up. And we have found that by collaborating with partners including not-for-profit organisations, we gain valuable new market insights and extend channels to engage with consumers.

Source: http://www.unilever.com/Images/uslp-Unilever-Sustainable-Living-Plan-Scaling-for-Impact-Summary-of-progress-2014_tcm244-424809.pdf (p. 14).

Appendix 2: Unilever’s Governance of Sustainability and Corporate Responsibility

• Source: Unilever Annual Report, 2014, p. 66

Appendix 3: The Unilever Sustainable Living Plan: From Seven (2010) to Nine Commitments (2013)

• Source: http://www.unilever.com/Images/uslp-Unilever-Sustainable-Living-Plan-Scaling-for-Impact-Summary-of-progress-2014_tcm244-424809.pdf p.20–21; https://www.unilever.com/Images/ir_Unilever_AR14_tcm244-421557.pdf , p.11
• Note: In 2013, Unilever’s management increased the original seven Commitments of the Unilever Sustainable Living Plan to nine. The orginal seventh Commitment – Enhancing livelioods – was expanded to encompass more human rights issues, such as ensuring fair compensation, healthy and safe working conditions, and employee development, to more specificaly target women by upholding diverity and offering them opportunties, and to focus on bringing more people into the economy by helping to train and support smallholder farmers in particular.

Appendix 4: Unilever Sustainable Living Plan and the ESG Value Driver Framework

The ESG (Economic, Social and Governance) Value Driver Framework was developed by the Principles of Responsible Investment Management and the UN Global Compact to help companies communicate how sustainability- related actions link with business benefits. Following are examples from Unilever’s Sustainable Living Plan Reports for 2012–2014.

• Source: Unilever Sustainable Living Plan Report 2012; Annual Report, Sustainable Living Report, 2014

Appendix 5: Consolidated Income Statement and Key Indicators Since USLP Launch

• Source: http://www.unilever.com/Images/charts_2005-2015_ar14_tcm244-416973_en.pdf

Appendix 6: Share Price Versus Market Index

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Lawrence, J., Rasche, A., Kenny, K. (2019). Sustainability as Opportunity: Unilever’s Sustainable Living Plan. In: Lenssen, G.G., Smith, N.C. (eds) Managing Sustainable Business. Springer, Dordrecht. https://doi.org/10.1007/978-94-024-1144-7_21

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How Unilever Went From Soap Manufacturer To Multinational Giant

Table of contents, here’s what you’ll learn from unilever’s strategy study:.

• How to make the most out of the opportunities you meet.
• How to be proactive with market changes and thrive by adapting quickly.
• How product innovation becomes the source of competitive advantage.
• How strengths like in-depth knowledge of specific markets become powerful expanding factors.
• How to grow by taking advantage of unparalleled localization.
• How growth opportunities are revealed by empowering your management.
• How sustainability can be used as a brand lever.

With over 2.5 billion people consuming its products on any given day, it’s difficult to find any corner of the world where Unilever has not reached.

What started as one soap brand has now become one of the world’s largest consumer brand conglomerates, spreading into beauty and personal care, home care, and food and refreshments.

Unilever's market share and key statistics:

• Staggering turnover of €52.4 billion in 2021
• Portfolio of 400+ brands, 13 of which feature in Kantar Worldpanel Global Top 50
• 14 brands with a $1 billion turnover
• Over 53,000 supplier partners
• Number of employees worldwide: 148,000
• Owning  280 factories, 270 offices and 450 logistics warehouses globally
• A reach spanning over 190 countries

From innovative strategies and impeccable management to effective marketing and commitment to sustainability, there are several reasons behind the success of this multi-industry giant.

In this study, we analyze them closely to highlight how Unilever has been able to continuously expand its horizons over the years and across countries as well as continents, gaining a competitive edge while growing exponentially.

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Humble beginnings: How did Unilever start?

Although it wasn't until 1929 that the company we now instantly recognize as Unilever was formed, its story goes way back to the late 19th Century.

In fact, it is set in two different countries simultaneously, with two major companies operating in seemingly different industries coming together and setting the foundation of Unilever.

In many ways, it can be said that it set the tone for what sort of brand Unilever was going to be in the coming years.

More than just soap

William Hesketh Lever began his career in the 1880s as a salesman in his family's grocery business. At the time, The Long Depression was still affecting the global economy, and many companies were struggling to survive.

Amidst the chaos, Lever saw an opportunity to step into the manufacturing of soap, which he believed had great potential for growth.

Thus, in the 1890s, as the founder of Lever Brothers, William Lever penned his ideas for Sunlight Soap: "to make cleanliness commonplace; to lessen work for women; to foster health and contribute to personal attractiveness, that life may be more enjoyable and rewarding for the people who use our products."

Mission and vision statements were hardly a thing during the Victorian era. Yet, Lever was well ahead of his time. They envisioned changing attitudes towards hygiene and personal care in the UK and solve customers’ problems simultaneously.

Soon, the company was not only making waves in the British Isles, but also began expanding its reach in many parts of Europe, North America, Australia, and South Africa.

The first bar of Sunlight Soap was in 1884

Diversifying operations

In the early 1900s, much of Britain's consumption of butter and margarine was sourced from Dutch and Danish companies. However, with the threat of WWI and trade coming to a standstill, the British government asked Lever to produce margarine as well.

Recognizing that the required raw materials, including oils and fats, were quite similar for soaps and margarine, William Lever welcomed the opportunity with open hands.

From there on, Lever became more than a soap company as it took its first step towards forming a multi-brand legacy that would inspire and lead the world of consumer brands for the next century and probably, beyond.

A manufacturing company through and through

Not only did Lever plan to manufacture its products, but it also extended its operations to produce its raw materials itself.

From mills to crush seeds for vegetable oil to whole transportation and packaging operations, Lever became a well-established vertically integrated company, taking giant strides to redefine the consumer goods industry.

The Dutch side of things

Before Lever Brothers had set foot in the margarine industry, there was already intense competition in the Dutch market.

To see off new entrants exporting their products at lower prices and to make the most of the global economic situation, two Dutch giants Jurgens and Van den Bergh joined hands in 1908.

A few years later, in 1920, these two companies combined with Schitt and established their operations in the Netherlands as Margarine Unie NV and in England as Margarine Union Limited.

This put them in direct competition with the Lever Brothers and what ensued was a tussle of giants for most of the following decade. 

Putting Uni and Lever together

Both the Dutch and English companies knew they would benefit from synergies if they came together rather than going head-to-head in the soap and margarine industries.

Thus, after two years of discussions, they merged in 1929 to form Unilever, which was owned by two holding companies, Unilever Limited and Unilever NV, with setups in both countries.

The structures for the holding companies were identical, and the profit-sharing was on an equal basis.

This merger allowed the company to foray into multiple industries and establish dominance with its hold on manufacturing operations.

Key takeaway 1: cash In on opportunities

With the amalgamation of two companies – Lever Brothers and Margarine Unie – Unilever was formed.

From Lever entering an utterly new soap manufacturing business to competitors Jurgens and Van den Bergh combining, there are countless examples of the founders of Unilever realizing an opportunity and being quick to grab it. 

Navigating The Great Depression – Initial Challenges

Unilever was still in its early years when the Great Depression struck, and the company was riddled with challenges on all fronts.

Its products’ prices plummeted 30% to 40% within the first year while at the same time butter came forward as an even cheaper alternative, further lowering the demand for margarine. The company’s agricultural products, such as cattle cake, also took a major hit and its retail grocery and fish shops saw a major decline in revenues.

Things did not look too bright for the company that had already shown so much promise and growth. However, just as William Lever had come out of the Long Depression as a successful business, Unilever responded proactively to this crisis too.

Responding to the challenge

The 1930s saw fresh faces managing the operations at Unilever with Francis D'Arcy Cooper at the helm of affairs.

This new management’s initial response to the Great Depression was to form a special committee that would oversee the firm’s operations in both Netherlands and UK. It also supervised two further committees; one that would handle the company’s business in Europe and one for other regions.

These actions helped the company mitigate the immediate effects of the recession and lay the groundwork for further changes.

Restructuring & redistributing assets

Initially, the Dutch group contributed two-thirds of Unilever's total profits while the British side accounted for the remaining. However, owing to trade conflicts in Europe, similar to those preceding WW1, the equation was reversed, and the British group's contribution increased.

Therefore, in 1937, Cooper convinced the company’s boards that it was time for restructuring, and Unilever needed to align itself with its original goal of equal profit sharing. As part of this dynamic shift, one significant action was selling the Lever Brothers Company in the United States and other Lever Brothers' assets outside Britain to Unilever's Dutch group.

This allowed the two factions to operate with nearly equal profit volumes and assets and overcome the trade challenges.

Key takeaway 2: proactively adapt to the situation

Had Unilever not set up the special committee and undergone the changes it did in the 1930s, it is possible it would not have survived the Great Depression. But with pro-activeness and resilience, it was able to tackle the challenges successfully and come out on the other side stronger than before.

Growth Through Localization & Innovation

Following the years of the Great Depression and WWII, the world’s economic landscape completely transformed. At that point in time, Unilever was establishing itself in various countries and needed a strategy to localize its products, marketing efforts, and management.

It realized that growth in new markets now was not limited to or even dependent on increasing production capacities or lining up products. It needed to have a strong footing in research and development to keep up with changing consumer preferences and increasing competition.

This meant that the company had to make some much-needed changes in its approach and it did just that.

Heading into new markets

Unilever was growing and expanding its operations into many new countries and diverse communities. This meant more local challenges wherever it set up operations. However, much of the management was still under the control of Dutch and English representatives of the parent companies.

Undoubtedly, the people from the parent head offices were capable managers and had contributed to the company's growth, but the challenge here was different. Markets such as India, Brazil, or even the USA did not function in the same way as European Markets.

Customers had different preferences, supply chains were unique, and external influencing factors, such as laws and regulations, were also always specific to the respective regions. Therefore, Unilever's management needed local players who could understand what was required in their region and develop effective strategies to achieve it. 

Hence, in the 1940s, Unilever started a localization policy referred to as 'ization.’ The Dutch and English representatives were recalled, and local positions were handed over to local executives.

It began to be implemented as early on as 1942, with the company’s Indian subsidiary going through the process of Indianization. Australianization, Brazilianization, and more followed it. These centers had greater autonomy in decision-making and marketing, which enabled the company to penetrate further into these new markets and localize its products.

Unilever continued with this localized, decentralized management system throughout WWII and several years following. However, they did encourage Unileverization, sharing a common mission across their various subsidiaries during this time, and took it up more rigorously later on.

Embracing research & innovation

The embracing of research did not occur before facing a few setbacks. For instance, the market for soap, Unilever’s main product, revolved around color, scent, and application on fabrics. This changed when in the 1950s, their competitor in the US Market, Proctor & Gamble, introduced Tide. This nonsoap synthetic detergent powder was far superior and solved many plumbing problems caused by insoluble soaps.

For some years, Unilever remained behind its competitors until it found a way to solve the shortcomings of new detergent.

Tide was formed from petrochemicals, and its residues in sewerage systems and rivers were causing major problems. Now, Unilever had the chance to explore chemical technology and retain its position in the market. By 1965, they had launched their very own biodegradable version of the product.

It wasn’t just soap where Unilever invested in research. The company also established 11 research centers, including laboratories, all around the world to come up with innovative solutions for food preservation, health, and animal care. That was going to define the company as one that looked ahead into the future and relied on improving itself to remain at the top.

Another significant example of Unilever's constant innovation can be seen in its margarine. When butter was short in supply, margarine became a convenient alternative – one of the reasons why the Lever Brothers started manufacturing it in the first place. However, butter soon became available widely again, and that too at lower prices. Now, there was not much that made margarine an enticing option to customers.

Unilever's laboratory in Vlaardingen was tasked to find a way to improve the quality of margarine and make it stand out, whether through better nutrition, flavor, or convenience. The solution came in the form of enhanced refining of soybean oil, a key raw material in margarine production. 

Benefiting from tariff lift

A major boost to Unilever's operations was the formation of the European Economic Community and its efforts to make Europe a common market in the 1950s and 1960s.

Previously, Unilever has based its factories and production in various European countries to avoid tariff restrictions. It was, however, an inconvenient solution. Not only did they have to bear additional costs of production in expensive locations, but such a spread-out production system posed the challenges of supply, logistics, capacity, and more.

Through the common market, there was no need to restrict themselves anymore. Unilever now took its production to wherever costs could be minimized, and operations could be consolidated. Thus, they were able to produce in greater quantities and accelerate their processes.

Key takeaway 3: innovate & solve

Unilever's growth in 1940 to 1960s had a lot to do with improving their products and their management system to cater to modern problems. This helped them stay ahead of the competition and keep their production up-to-date and cost-effective all the while delighting customers.

Expansion & Acquisitions Till The 1990s

As a well-known multi-industry firm, Unilever was no stranger to acquisitions and takeovers. They expanded in the US Market in 1937 by adding the tea manufacturer Thomas J. Lipton Company to their portfolio. Later on, in 1944, they also entered the toothpaste industry by acquiring Pepsodent.

In the post-WWII era, they continued to take over larger firms like Birds Eye, a UK frozen foods company, in 1957. By 1961, they had also taken control of US ice cream producer, Good Humor. 

Unilever acquires Birds Eye parent company T. J. Lipton in 1943

However, these were only gradual acquisitions that allowed them to explore new product lines. From the 1980s, Unilever's approach took an aggressive turn, and they set their eyes on bringing many more brands under their banner.

The shopping spree of the 80s

Unilever’s targets changed in the 1980s. They wanted to expand but with a plan to strengthen their hold in industries in which they had resources and expertise and the market had a lucrative potential for growth. This meant they were sticking to foods, detergents, toiletries, etc. but were ready to eliminate the competition.

Thus, they began by selling off their ancillary business and services, such as transporting, packaging, and initiating their acquisitions. In 1984, Unilever oversaw a hostile takeover of the British tea company Brooke Bond for £376 million. The company complemented Unilever’s Lipton in the USA, and now, the road was clear for further growth.

One of Unilever’s biggest acquisitions was of Chesebrough-Pond in 1986. The company owned some very high-potential and popular products in the USA like Vaseline Intensive Care and Pond's Cold Cream. Moreover, with over $3 billion in annual sales, it was the perfect chance to cement itself in the personal product business internationally.

Another major market that the company dominated with its acquisitions in the late 1980s was the perfume and cosmetic industry. It simultaneously became the owner of Shering-Plough's perfume business in Europe, Calvin Klein in the US, and Fabergé Inc. The latter was bought for $1.55 billion and handed Chloe, Lagerfeld, and Fendi perfumes to Unilever.

Now, the company was a force to reckon with, if not the leader in its primary industries and in the markets it predicted would generate the most gains.

The global giant

Unilever clearly showed its aggressive intent in the 1980s, and they were not going to stop in the 1990s.

By 1992, the conglomerate consisted of over 500 businesses in 75 countries. In the mid-1990s, they went on to acquire over 100 more companies. From buying personal care giant Helene Curtis for $770 million to sweeping the US ice cream market by buying Philip Morris's Kraft General Foods’ division for $215 million, there was no shortage of the treasure chest Unilever had.

By 1999, they had grown from 500 businesses to 1600 brands. But this brought them back to where they started the extensive series of acquisitions, with many companies that didn't have the potential to grow or simply didn't fall in with Unilever's strengths.

It was time for a major strategy shift and to go back to the basics. Out of 1600 brands, 400 were generating 90% of the revenue. Unilever decided to let go of the remaining 1200 and put all its efforts into strengthening its already powerful brands.

This has been their path ever since and one that has enabled them to maintain their position as one of the top consumer products companies in the world.

Toppling competitors

Along with buying their competitors, Unilever did not stop introducing new products into the market. In 1984, their product Whisk overtook P & G’s Cheer in the US laundry detergent market.

Two years later, Whisk was introduced in Britain, along with Breeze, a soap powder the company had only seen of in Surf. Unsurprisingly, Unilever recorded a 50% growth in operating profits for detergent products while it also experienced increasing returns in the food industry.

This multi-pronged strategy of introducing new products and acquiring ones with potential did not allow Unilever to capitalize fully on the market's potential for growth and left little room for competitors to adjust.

Standing out from the competition

From Lever Brothers and Margarine Unie taking on their rivals head-on to Unilever PLC establishing its unique identity despite battling against giants P&G and Nestle, the company has always embraced healthy competition.

One of the main reasons Unilever has been so successful in standing out is its expansion in over 190 countries through products they specialize in and dominate in. Moreover, it hands significant decision-making power to local managers to strengthen their position in diverse markets. Both P&G and Nestle have not been able to grow as much in terms of reach.

Another, key aspect that differentiates Unilever is its emphasis on and funding towards Research & Development. They continue to improve their products and adapt to changing consumer needs by providing enhanced solutions.

Last but not least, Unilever’s sustainable plans set them apart from major competitors, whereby they show their commitment to the collective betterment of people and societies.

Key takeaway 4: stick to your strengths

Unilever’s origins lay in soap and margarine – industries they knew very well and had the potential to grow in. They expanded their portfolio but stuck to their strengths and, as a result, grew exponentially.

Changing Product Groups With Evolving Markets

Throughout the nearly 100 years of Unilever, they have acquired and sold brands and expanded their reach into many territories. Naturally, they experiment with product groups and divisions to decide which suits their goals best and when.

At times, their product groups have had a significant influence on their strategies, whereas at other times, they were merely playing advisory roles. But whatever the situation, Unilever has kept an eye on how operations and revenues were affected and carefully reorganized their groups accordingly.

Understanding complex markets

There is no one fixed way to distribute product groups. Sometimes, they require to focus on research and distribution while emphasizing localization from time to time. For instance, the food industry, from which many of Unilever's top brands belong, undergoes changes every few years. It can be categorized into three regional groups.

Firstly, the global fast-food category. Fried chicken, burgers, soft drinks, etc., are famous worldwide, from Asia to Europe and beyond. The core products remain the same, and the tastes do not differ greatly.

The next category is international foods. These are products that belong to one country but are also popular in other countries as well—for example, Chinese, Indian, and Italian foods.

Hence, the third category leads to national foods – those that represent and are popular in their country of origin. For Unilever's base region, the UK, pies, puddings, steaks, etc., are considered national foods.

Now, that is only one way to look at food markets. Another method or problem, as you may call it, is that a product may not even be defined or preferred the same way in different regions.

For example, take something as simple as tea - a globally consumed product. The British like their tea hot and with milk; Americans prefer it iced; Middle Easterners drop the milk and add sugar.

Therefore, Unilever cannot keep its product groups fixed or stringent and must recognize where it can churn out the most profits.

Giving more autonomy to product groups

Until the 1960s, Unilever's localization policy played a major role in its decisions and actions. Product groups served advisory or assisting roles with little power. That was how to company was progressing, and there was no need for change.

Carrying on the example of food products, during and post-WWII, raw material sourcing was a crucial factor in the production of Unilever foods. But then, when the 60s came, and firms, along with Unilever, started to invest in research, the dynamic shifted towards preservation technology and logistics.

Gradually, the power of determining revenues was handed to product groups, and local managers took a backseat. A pivotal change made in the new structure was introducing three separate food units: edible fats, frozen foods and ice cream, and a general food and drinks group.

These groups proved fruitful and helped the company expand in the European and North American markets. 

Rising consumer awareness

The 1970s was the time the marketing arena transformed. With every brand wanting to stand out, they popularized concepts, such as healthy eating and natural ingredients.

The surge in demand for low-calorie foods was also a result of effective marketing. The challenge for Unilever was that all three of its food groups contained low-calorie products. It came in the way of their progress and dented their profits.

But how could they form a system that resolved this problem and kept local managers and product groups intact?

Unilever formed a committee called “Food Executive” consisting of three directors. Its role was to control all food products instead of leaving it to specific groups or managers.

Now, there are 5 product groups:  edible fats, meals and meal components, beverages, ice cream, and professional markets. They play an essential role as advisors (more valued than in the 1960s) but are not responsible for profits.

Simultaneously, local managers are allowed to oversee the regional needs and preferences of consumers.

Key takeaway 5: balancing decentralization and product groups

Managers and product groups are both vital components of a multinational firm. To ensure their products satisfy consumers’ wants, Unilever continues to come up with ways to combine the two productively.

Unilever Strategy - Management Dynamics Over The Years

One of the key factors that have fueled Unilever's growth ever since 1929 is its evolving management dynamics that have allowed the company to stay true to its roots while adapting to the local areas it operates in. 

Think globally. Act locally!

Think globally and act locally has been at the heart of Unilever's operations and enabled it to make a mark in even the most far-flung areas successfully. As a result of trial and error, Unilever's management dynamics over the years showcase the company's drive to excel, innovate, learn, and get the job done. 

Let's delve deep into the management dynamics to better understand the growth of the company. 

Given that both the parent companies of Unilever had a tradition of scaling their business through export as well as local production that British and Dutch expatriates mostly ran, it comes as no surprise that Unilever, too, had the same management style initially. British and Dutch executives ran the show, at least for the first decade. However, in the early 1940s, Unilever began changing things by hiring local managers to lead the operations in respective parts of the world, as already highlighted in Chapter 3.

The localization and decentralization began with the subsidiary in India in 1942. Key roles were given to Indian managers, who were also provided with the freedom and flexibility to run operations on their own with little involvement from the head office on a day-to-day basis. 

This process of localization of management, in addition to the growing competition as well as the alienation of the subsidiaries during World War 2, led to decentralization, with each subsidiary becoming a self-reliant and self-sufficient unit. 

This is where the senior management decided that while decentralization has indeed paid off, it would be in the company's best interest to guard against too much of it. Hence, to ensure that the Unilever culture, vision, and mission were shared among all subsidiaries, Unileverization was promoted. 

It has now become a long-standing practice at Unilever to regularly train managers from around the world, be it at a Unilever Four Acres facility or hired facilities in local areas, to ensure that Unilever's values are ingrained and followed everywhere.

The Unilever management matrix, which mainly consists of local talent and initiative with centralized control, is empowered to think transnationally. From nurturing local talent to cross-posting managers worldwide so that they can gain diverse experiences, better understand the Unilever culture, and establish unity, an array of practices are followed. 

Break communication barriers

Given the sheer size and scale of Unilever around the globe, effective communication across borders is an essential need for it. It doesn’t come as a surprise that the most relevant and used language for all forms of communication is English.

Hence, Unilever actively looks for employees with fluency in the English language when hiring and regularly invests to develop the English language as well as communication skills in general for its employees through various training programs. 

Pick the cream of the crop

Alone you can only go so far; together the sky is the limit with what you can achieve. Unilever takes it a step further by hiring the best as well as the brightest and then unifying them to achieve remarkable results. 

While it comes as no surprise that Unilever pays huge emphasis on onboarding the right people, the way how it goes about the process of recruitment offers a lesson to other businesses. Right from the mid-twentieth century, Unilever has continued to pioneer employee section systems.

From getting involved in universities to spot talent early on to sponsoring an extensive range of business courses, Unilever has done it all. Plus, trainees – as part of a group – are offered on-job experiences and courses at training facilities, allowing Unilever to create a holistic network of individuals whose informal experiences act as a glue that drives the company.

In addition to this, the vast system of attachments that allow employees to work on temporary assignments and projects in different parts of the world further grooms them offers them exposure and provides the 'know-how' of how Unilever functions. This empowers them and helps them further the unique Unilever way of working wherever they go next. 

The company's formal structure, together with the informal exchanges leads to the transfer of ideas, enhances communication, and fosters collaboration, which in turn, boosts innovation and helps solve problems, allowing Unilever to continue to grow. 

Modern workforce and workplace

Being resourceful is the new corporate approach of Unilever, which accounts for a number of organizational changes to prepare for the future, including:

• Tapping the open talent economy to boost the workforce whenever needed
• Harnessing the power of digital to drive business growth
• Being more creative and thinking out of the box to achieve goals
• Creating a better work-life balance and work environment

One example of Unilever’s unique approach to setting itself up for success in the future and unlocking its capacity to grow is its “YourFreelo” program in which internal resources of the company are offered holistic support through freelancers with different perspectives and handy skills.

Iterative improvements thanks to trial & error

From the outside, it may appear that it is Unilever's transnational strategy that has helped pave its way to success. While that wouldn’t be wrong to conclude but if we delve deep, we can find that it’s the messier revolution brought to the fore by continuous trial and error that has driven the company.

Hiring and training managers and leaders carefully, as well as linking decentralized units with a common culture, are the primary reasons behind the company's growth. That being said, the company has cautiously treated the path of an informal transnational network, realizing that it can elevate risks and lead to complacency.

To guard against it, the company continues to shake up the system every now and then, shifts roles, and responsibilities and evolves in the dynamic business world where change is the only certainty. By rethinking, reviewing, and reforming the strategies, the company manages to tackle the tricky waters and win.

Key takeaway 6: Develop bold middle-management

One of the major reasons behind the success and growth of Unilever has been its management, which doesn’t shy away from taking bold steps when needed. In addition to this, Unilever continues to invest in human capital and experiment as well as explore to stay a step ahead in the ever-evolving dynamic age.

Sustainable Living Plan – The Game-Changer For Business Growth

Seldom do businesses as large as Unilever get a chance to re-invent themselves and throw caution to the winds by taking the difficult long-term approach that can even negatively impact their bottom line.

In 2010, Unilever did just that by launching the Unilever Sustainable Living Plan (USLP), pioneering a new business model. 

Playing their part in the environment

At the core of the plan lies Unilever's commitment to doing right by people and the planet with its purpose-driven ambition of halving its environmental footprint while doubling its size and making the world a better place for 8 billion people.

Fighting climate change by ending deforestation, ensuring food security by championing sustainable agriculture, and investing in water, safety, and hygiene to uplift people's lives, Unilever set the bar higher than ever before.

Has Unilever been successful in achieving its targets? You bet it has.

By pushing the company in a unique way, further than ever before, in its quest to build a sustainable and equitable future, Unilever has delighted all stakeholders, appealed to the masses, and showed how companies can lead from the front by taking a stand at issues that matter.

Following are some of the highlights of the USLP more than ten years after its launch depicting how Unilever has made an explicit positive contribution to address the key challenges:

• Reached over 1.2 billion worldwide with health and hygiene programs
• Lowered the environmental footprint per customer by one-thirds
• Reduced greenhouse gas emissions by two-thirds
• Achieved 100% renewable grid electricity across all plants
• Achieved zero landfills across all factories
• Cut down on over €1 billion on costs by reducing waste and enhancing energy as well as water efficiency

"Brands with purpose grow; companies with purpose last; and people with purpose thrive."

Embedding sustainability into the business has yielded remarkable results for Unilever.

Unilever's purpose-led brands have contributed immensely to Unilever's growth in a day and age where sustainability has become mainstream as around two-thirds of consumers opt for a particular brand because of its stand on social issues, and more than 90% of millennials prefer brands that strive to elevate humanity. 

According to Unilever , its purpose-driven brands contribute to almost 75% of the company's growth and are growing 69% faster than the rest of the business, depicting that the huge bet has indeed paid off. 

While Unilever could have easily waited for consumers and governments worldwide to push it to embrace sustainability rather than do it all by itself – that too ahead of the time – it portrayed itself as the leader with the focus on the bigger picture which stands by its values and is not afraid to do the right thing even when the odds are stacked against it.

Key takeaway 7: Make sustainability part of your business strategy

Pioneering sustainability businesses, Unilever started a movement for social change in 2010 that helped it re-invent itself for good. It has paid off for the company, making customers fall head over heels for their brands.

Why is Unilever so successful?

Unilever is always in transition, equipping itself to continue making a difference well into the future. It isn’t perfect given its fair share of products that don’t seem sustainable or advertising campaigns that don’t go hand in hand with its values. However, it is a company on a big mission to transform the world, setting an example for the rest to follow.

Performance beyond expectations In challenging & uncertain circumstances

The year 2020 was volatile and unpredictable in ways more than one for all businesses operating around the globe. From supply chain bottlenecks to change in the way consumers shop and employees work, there were an array of disruptions, leading to an uncertain business environment.

Yet, in the face of such adversity, Unilever has stayed true to the values that have always made it a force to be reckoned with – resilience and agility – and hence, not only survived but also thrived. 

While underlying operating profit fell by 5.8% in 2020, the company experienced a boost in underlying sales growth of 1.9%. This can be mainly attributed to the company’s long-term planning, flexibility, and sustainable objectives.

Hence, where other companies focused on driving growth temporarily, Unilever developed their current and future strategies on sustainability and inclusiveness for growth. An example is their stronghold in emerging economies of China, India, and the USA, where they have always looked to include locals and contribute to society’s uplift.

Moreover, Unilever went ahead with a major shift in its legal structure in 2020 to stabilize and unify its operations worldwide. Formerly run by cross-border companies, Unilever NV and Unilever PLC, Unilever has consolidated itself into the single umbrella of Unilever PLC, becoming stronger than ever.

Below is a graph of Unilever's annual revenue in Euro Millions

Growth by the numbers

List of key strategic takeaways.

• Impact-driven Businesses Succeed

Now more than ever, it has become difficult for companies to achieve a competitive advantage. So, what can a business do? Be relevant to society and offer a multi-stakeholder return, benefiting all and crafting real change. It definitely pays off.

• Always Be Proactive and Flexible

Change is the only certainty, so you need to embrace it. Your best bet is to be on the lookout for potential opportunities that present themselves from time to time and grab them with both hands. You can do that if you remain agile and act quickly.

• Prioritize Investing In Human Capital

Your single most important asset is your people. Empower them so that they can help you elevate your brand. Right from hiring the ‘right’ people to nurturing them, you need to continuously invest in human capital in order to achieve lasting success.

• Take Risks To Grow

You can only reach the top with iterative improvements made possible by continuous innovation and risk-taking. Keep experimenting, testing, and exploring: if you achieve the desired result, you win, if you don’t, you learn.

• Encourage Sustainable Living And Make It Effortless

Weave sustainability into your processes and value chains. From the raw material used to the packaging, make sure you use eco-friendly practices to add value to the lives of people. This way you can win consumer goodwill and trust.

• Stay Intune With The DNA Of Your Brand

In the quest to do more and become more, you can easily forget to stay true to your ultimate purpose. Go back to the drawing board whenever needed, regularly communicate your purpose to your target audience, and stand up for what you stand for to separate yourself from the rest.

Unilever’s journey from one soap brand with a handful of sales and customers to the leading multinational consumer goods company with billions of consumers worldwide has been incredible and offers a number of lessons, including:

While we don’t know what the future holds, we are pretty much certain that Unilever is here to stay and dominate, doing right by the people and planet.

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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Unilever PESTEL Analysis

Before we dive deep into the PESTEL analysis, let’s get the business overview of Unilever. Unilever is one of the world’s leading suppliers of fast-moving consumer goods in food, home care, and personal care. 

Founded in 1929 due to a merger between the British soapmaker Lever Brothers and the Dutch margarine producer Margarine Unie, Unilever has become a global powerhouse in the FMCG (Fast Moving Consumer Goods) sector.

Here is an overview of Unilever’s business:

• Products and Brands : Unilever’s portfolio includes a wide range of products across diverse categories. Some of its most recognizable brands include Dove, Axe/Lynx, Ben & Jerry’s, Lipton, Magnum, Hellmann’s, Knorr, Sunsilk, and Surf, among others.
• Global Presence : Unilever operates in over 190 countries, and its products are used by billions of consumers daily. The company’s operations are often divided into regions: Europe, the Americas, Asia, Africa, and the Middle East.
• Beauty & Personal Care : This is the largest segment and includes skincare, haircare, deodorants, and oral care products.
• Home Care : This includes laundry detergents, household cleaning products, and related offerings.
• Foods & Refreshment : This segment comprises a diverse range of food products, including soups, bouillons, sauces, snacks, mayonnaise, salad dressings, spreads, and ice cream.

Financial Performance of Unilever

Turnover increased 14.5% to €60.1 billion, and the underlying operating profit was €9.7 billion, up 0.5% versus the prior year.

Business Strategies that set FMCG giant “Unilever” a class apart

Here is the PESTEL analysis of Unilever

A PESTEL analysis is a strategic management framework used to examine the external macro-environmental factors that can impact an organization or industry. The acronym PESTEL stands for:

• Political factors: Relate to government policies, regulations, political stability, and other political forces that may impact the business environment. 
• Economic factors: Deal with economic conditions and trends affecting an organization’s operations, profitability, and growth. 
• Sociocultural factors: Relate to social and cultural aspects that may influence consumer preferences, lifestyles, demographics, and market trends.
• Technological factors: Deal with developing and applying new technologies, innovations, and trends that can impact an industry or organization. 
• Environmental factors: Relate to ecological and environmental concerns that may affect an organization’s operations and decision-making.
• Legal factors: Refer to the laws and regulations that govern businesses and industries. 

In this article, we will do a PESTEL Analysis of Unilever.

PESTEL Analysis Framework: Explained with Examples

Political 

• Trade Regulations and Tariffs : Unilever operates in over 190 countries, so changes in trade policies, such as the imposition of tariffs or trade barriers, can have significant implications on its supply chain and distribution strategies.
• Political Stability : Countries with political unrest or instability can affect Unilever’s operations. For instance, civil strife, sudden regime changes, or political violence can disrupt the company’s manufacturing, distribution, or sales processes in those regions.
• Government Policies : Governmental policies related to health, safety, and quality standards can impact Unilever’s product formulations. For instance, certain countries may restrict specific ingredients in personal care or food products.
• Taxation Policies : Changes in tax regulations or corporate tax rates in countries where Unilever has significant operations can influence its financial performance.
• Regulation on Advertising and Promotion : Governments may impose regulations on how certain products (like foods with high sugar content or skincare products) are advertised or promoted. This can affect Unilever’s marketing strategies.
• Environmental Regulations : Political decisions related to environmental conservation can affect Unilever, especially given the company’s sustainability objectives. For example, regulations related to plastic packaging or waste management can impact Unilever’s operations.
• Foreign Relations and Geopolitical Issues : Political relationships between countries can affect Unilever’s operations, especially in regions with geopolitical tensions. For instance, strained relations between countries could affect trade and business operations.
• Regulations on International Investment : Some countries may have restrictions or policies encouraging or discouraging foreign investments. This could influence Unilever’s decisions to set up factories and distribution networks or even to enter or exit specific markets.
• Labor Laws : Political decisions related to labor, such as minimum wage regulations, worker rights, and union-related policies, can impact how Unilever manages its workforce in different countries.

• Global Economic Conditions : Economic downturns, recessions, or global economic crises can affect consumer spending habits. During economic downturns, consumers might switch to cheaper alternatives, which could affect sales of some of Unilever’s premium products.
• Currency Exchange Rates : Given its global operations, fluctuations in exchange rates can significantly impact Unilever’s earnings. A stronger or weaker currency can influence the cost of importing raw materials and sales profitability in foreign markets.
• Interest Rates : Changes in interest rates in different countries can impact Unilever’s financing decisions and costs. Higher interest rates can increase borrowing costs, whereas lower rates might present expansion opportunities.
• Inflation Rates : High inflation in a country can increase raw materials, production, and labor costs. It also affects consumer purchasing power, which might impact sales.
• Consumer Purchasing Power : A rising middle class and increasing disposable income in emerging economies can lead to greater demand for Unilever’s products. Conversely, economic challenges can decrease this power, leading to reduced sales.
• Employment Rates : High employment rates often correlate with higher consumer confidence and spending, benefiting companies like Unilever. Conversely, high unemployment can lead to decreased consumer spending.
• Raw Material Prices : The costs of raw materials, such as agricultural commodities for food products or chemicals for cleaning products, can fluctuate based on global economic conditions. Such fluctuations can impact Unilever’s cost structure and profitability.
• Competitive Landscape : Economic conditions can influence the competitive environment. During challenging times, there might be price wars, new entrants looking for market share, or even consolidation in the industry.
• Economic Policies : The economic policies of countries, such as fiscal policies, monetary policies, or trade policies, can impact how Unilever operates in specific regions.
• Emerging Markets Dynamics : The growth rates and economic conditions in emerging markets, like India, China, or Brazil, can provide opportunities for expansion and growth for Unilever. However, they also come with unique economic challenges and volatilities.

Unilever SWOT Analysis

Sociocultural

• Changing Consumer Preferences : As societal values change, so do consumer preferences. For instance, there’s a growing trend towards natural, organic, and environmentally friendly products. If Unilever doesn’t adapt to these changes, it might lose market share to niche brands that cater to these preferences.
• Health and Wellness Trends : Increased awareness about health and well-being can influence purchasing decisions. There’s a rising demand for healthier food options, skincare products without harmful chemicals, and sustainable products.
• Cultural Nuances : Unilever operates in over 190 countries, each with its own cultural norms and traditions. What’s acceptable or popular in one culture might not be in another. For instance, beauty standards, dietary habits, and cleanliness norms can vary widely.
• Demographic Changes : Factors like aging populations in certain countries or young populations in others can influence product demand. For example, an aging population might increase the demand for certain healthcare or wellness products.
• Gender Norms and Roles : Changing perceptions about gender roles, especially in traditionally conservative societies, can impact the demand for specific products. For example, increasing acceptance of men’s grooming and skincare products in certain cultures can open up new markets for Unilever.
• Lifestyle Changes : As lifestyles change, so do consumption habits. For instance, the rise of urban living might increase the demand for convenience products. Similarly, increasing travel might boost the demand for travel-sized personal care items.
• Ethical and Social Responsibility Concerns : Modern consumers, especially younger generations, often prefer brands that uphold ethical values, support social causes, or have sustainability initiatives. Unilever’s commitment to sustainability, therefore, not only aligns with its corporate responsibilities but also caters to this consumer preference.
• Influence of Social Media : The power of social media influencers and online communities in shaping consumer perceptions and trends cannot be understated. A positive or negative review by a key influencer can significantly impact product sales.
• Family Dynamics : Changes in family structures and dynamics, such as increasing numbers of single-person households or dual-income families, can influence product preferences and consumption habits.
• Education and Awareness : Higher levels of education and awareness in societies can lead to increased demand for quality products and products that align with modern values (e.g., cruelty-free products).

Technological

• E-Commerce and Online Retail : The rise of e-commerce platforms offers a new avenue for sales. Unilever must ensure its products are readily available online and manage logistics efficiently in this digital sales environment.
• Data Analytics and Consumer Insights : Advanced data analytics tools allow companies to understand consumer preferences, habits, and buying patterns in more detail. This data can be leveraged for product development, targeted marketing campaigns, and inventory management.
• Digital Marketing : With consumers spending more time online, digital advertising and marketing techniques (like social media marketing, influencer collaborations, and content marketing) become essential tools to reach potential customers effectively.
• Supply Chain Management Systems : Technological advancements in supply chain management can lead to more efficient and cost-effective processes, reducing waste and ensuring timely delivery of products.
• Product Innovation : Technologies related to product formulation, research, and development can lead to innovative products that cater to evolving consumer needs. For instance, advancements in biotechnology might lead to new skincare formulations.
• Sustainable Technologies : Given Unilever’s commitment to sustainability, investing in technologies that reduce environmental impact (like eco-friendly packaging solutions) is crucial.
• Smart Manufacturing and Automation : Using automation, AI, and Industry 4.0 principles in manufacturing can improve efficiency, reduce costs, and increase production capacities.
• Digital Communication Tools : Technologies like chatbots for customer service, augmented reality for virtual product trials (e.g., virtual makeup testers), or mobile apps for loyalty programs can enhance the customer experience.
• Blockchain : Blockchain technology can be used in the supply chain to ensure transparency and traceability of products, especially for claims like “organic” or “ethically sourced.”
• Internet of Things (IoT) : In the context of consumer goods, IoT can lead to smart appliances that influence product formats. For example, smart fridges might suggest recipes based on their contents, indirectly influencing food product preferences.

Environmental

• Sustainability Initiatives : Unilever has made several commitments towards sustainability. Consumer preferences are also shifting towards products and brands that prioritize sustainability. Addressing this through sustainable sourcing, reducing waste, and other eco-friendly practices can impact Unilever’s brand image and operations.
• Climate Change : Changes in global climate patterns can affect the supply of raw materials, especially agricultural commodities. This might result in price fluctuations or the availability of essential ingredients for Unilever’s products.
• Water Usage : Many of Unilever’s products, especially in the personal care and home care segments, require significant water usage. Given the global concern over water scarcity, there’s a push for products that need less water or companies that adopt water conservation techniques in their manufacturing processes.
• Packaging Concerns : The environmental impact of packaging materials, especially plastics, is significant. To minimize its environmental footprint, Unilever needs to consider alternative packaging solutions that are biodegradable or recyclable.
• Regulations and Compliance : Many countries enact stricter environmental regulations concerning emissions, waste management, and sustainability. To avoid legal issues and potential backlash, Unilever must ensure compliance with these regulations across its global operations.
• Biodiversity : Sourcing certain natural ingredients can impact biodiversity, especially if not done sustainably. Ethical and sustainable sourcing is crucial to ensure that ecosystems are not harmed.
• Carbon Footprint : There’s a growing emphasis on reducing carbon emissions. Unilever’s manufacturing and transportation operations need to consider strategies to reduce their carbon footprint.
• Energy Consumption : Adopting renewable energy sources and optimizing energy use in manufacturing units can lead to operational cost savings and align with global sustainability goals.
• Consumer Awareness : Modern consumers are more informed about environmental issues. This awareness can influence their purchasing decisions, pushing them towards eco-friendly products and brands.
• Waste Management : Efficient waste management, especially in manufacturing units, is essential to reduce environmental impact and ensure compliance with local regulations.

• Regulatory Compliance : Different countries have varying regulations related to product standards, health and safety, labeling, advertising, and quality. Ensuring compliance with these standards across different markets is critical for Unilever.
• Intellectual Property (IP) Rights : Protecting patents, trademarks, and copyrights is vital for a company with numerous proprietary products and brand names. Additionally, Unilever needs to ensure it does not infringe on the IPs of others.
• Labor and Employment Laws : Different countries have diverse labor laws regarding working hours, wages, benefits, and workers’ rights. Adhering to these laws is crucial for Unilever’s operations in various regions.
• Trade and Tariff Regulations : As a global entity, Unilever must navigate international trade laws, customs duties, and tariff regulations that could impact its supply chain and distribution.
• Antitrust and Competition Laws : Given its significant market presence, Unilever needs to be cautious about potential anti-competitive behavior, monopolistic practices, or actions that could be perceived as limiting competition.
• Environmental Laws : Many countries have strict environmental regulations concerning emissions, waste disposal, water usage, and sustainability. Unilever must ensure its operations align with these environmental laws.
• Data Protection and Privacy : With the increasing importance of data in marketing and operations, adhering to data protection regulations like the GDPR in Europe is crucial for Unilever.
• Advertising and Promotion Laws : Countries may have specific rules about how products can be advertised, especially if they pertain to health claims, children’s advertising, or potentially misleading information.
• Taxation Laws : Given its operations across numerous countries, Unilever must navigate the complex web of international taxation laws, ensuring it pays the correct taxes in each jurisdiction and adheres to regulations related to profit repatriation, transfer pricing, and more.
• Contract and Commercial Laws : Engaging with suppliers, distributors, and other stakeholders requires contracts. Adherence to contract laws and international commercial laws is vital for smooth business relationships.

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FMCG Giant Hindustan Unilever Limited (HUL) Case Study

Devashish Shrivastava , Anik Banerjee

Hindustan Unilever Limited (HUL) is a British-Dutch assembling organization headquartered in Mumbai, India. The items of Hindustan Unilever Ltd incorporate nourishments, drinks, cleaning specialists, individual consideration items, water purifiers, and purchaser merchandise. HUL was set up in 1933 as Lever Brothers and following the merger of its constituent gatherings in 1956, HUL was renamed Hindustan Lever Limited. The organization was then renamed in June 2007 as "Hindustan Unilever Limited".

At the start of 2019, the Hindustan Unilever Limited portfolio had 35 items marked in 20 classifications and utilized 18,000 representatives with offers of Rs. 34,619 crores in 2017-18. In December 2018, HUL reported its procurement of Glaxo Smithkline's India business for $3.8 billion out of an all value merger manage ratio of 1:4.39.

However, the joining of 3800 representatives of GSK stayed questionable as HUL expressed there was no provision for maintenance of workers in the deal. In January 2019, HUL said that it hopes to finish the merger with Glaxo Smith Kline Consumer Healthcare (GSKCH India) this year.

History And Journey Of Hindustan Unilever Brands And Products Of Hindustan Unilever Business Model of HUL Business Growth In India Expected Future Growth

History And Journey Of Hindustan Unilever

Hindustan Unilever Limited (HUL) is India's biggest quick-moving customer merchandise organization. HUL works in seven business sections.

The cleanser segment incorporates cleansers, cleanser bars, cleanser powders, and scourers. Individual items incorporate items in the classifications of oral consideration, healthy skin (barring cleansers), hair care bath powder, and shading beautifiers. Refreshments incorporate tea and espresso.

Nourishments incorporate staples (atta salt and bread) and culinary items (tomato-based items natural product-based items and soups). Frozen yogurts incorporate frozen yogurts and solidified treats. Others incorporate synthetic substances and water business.

HUL's item portfolio incorporates family unit brands—for example, Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair and Lovely, Pond's, Vaseline, Lakme, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, and Bru, Knorr, Kissan, and Kwality Wall's. HUL is a backup of Unilever, one of the world's driving providers of food products , home care, personal care, and refreshment items with deals in more than 190 nations and a yearly turnover of $6.08 billion in 2020.

Hindustan Unilever Limited traces its origins to Unilever, a British-Dutch multinational company, which is the parent of HUL. William Hesketh Lever was a popular social reformer and is regarded as one of the main propagators of several significant employee benefits options like benefits of health, savings, and more. Thus, his ideologies largely seeped into Unilver and resulted in developing its strong sense of corporate responsibility and leadership. This culture was invariably passed on to the Hindustan Unilever Limited (HUL).

The British-Dutch company Unilever, which emerged as a result of the merger of the operations of Dutch Margarine Unie and British soapmaker Lever Brothers, when it first came to India, discovered the rich and largely unexplored potential of the Indian market. Soon after, the establishment of Hindustan Vanaspati Mfg. Co. Ltd. followed in 1931, which was succeeded by the foundation of Lever Brothers India Limited (1933) and United Traders Limited (1935). The Indian subcontinent had only been importing FMCG products, branded under Lever Brothers since then, the first of which were spotted as early as 1888. Following this, brands like Lifebuoy stepped in 1895, along with other famous companies like Pears, Lux, and Vim. Vanaspati was launched in 1918 and the famous Dalda brand came to the market in 1937.

The 3 Unilever companies - Hindustan Vanaspati Manufacturing Company, Lever Brothers India Limited, and United Traders Limited eventually merged together to form HUL in November 1956. HUL offered 10% of its equity to the Indians and soon swooped into the news, being the first foreign subsidiary to do so.

The organization obtained Lipton in 1972, and Lipton Tea (India) Ltd was consolidated in 1977. Brooke Bond joined the Unilever overlap in 1984 through a global obtaining. Lake's (India) Ltd joined the Unilever overlap through a worldwide securing of Chesebrough Pond's USA in 1986.

The progression of the Indian economy, which began in 1991, denoted an enunciation in the organization's development bend. The expulsion of the administrative structure enabled the organization to investigate every item and open-door section with no imperatives on the creation limit. At the same time, deregulation allowed acquisitions and mergers .

The Tata Oil Mills Company (TOMCO) converged with the organization with effect from April 1, 1993. In 1996, Unilever and Lakme Ltd framed a 50:50 joint endeavor, Lakme Unilever Ltd, to advertise Lakme's market-driven beautifiers and other suitable results. In 1998, Lakme Ltd offered its brands to Unilever and stripped its half stake in the joint venture.

In 1994, the organization and US-based Kimberly Clark Corporation framed a 50:50 joint endeavor—Kimberly-Clark Lever Ltd—which markets Huggies Diapers and Kotex Sanitary Pads. The organization likewise set up a backup in Nepal called Unilever Nepal Limited (UNL). UNL's production line speaks to the biggest assembling interest in the Himalayan kingdom. In the1992, Brooke Bond gained Kothari General Foods with critical interests in instant coffee.

In 1993, HUL acquired Kissan from the UB Group and the Dollops ice-cream business from Cadbury India. Tea Estates and Doom Dooma, two major organizations of Unilever, were converged with Brooke Bond. At that point, in 1994, Brooke Bond India and Lipton India converged to shape Brooke Bond Lipton India Ltd (BBLIL) to empower more noteworthy concentration and guarantee collaboration in the customary beverages business. BBL converged with Unilever with effect from January 1, 1996.

The internal rebuilding finished with the merger of Pond's (India) Limited (PIL) with HUL in 1998. The two organizations had huge covers in personal products, specialty chemicals, and export organizations; other than a typical appropriation framework since 1993 for personal products. The two additionally had a typical administration pool and an innovation base.

In January 2000, the administration chose to grant 74% value in Modern Foods to Unilever. This started the divestment of government value in open division endeavors (PSU) to private area accomplices. The organization's entrance into bread production is a key augmentation of the organization's wheat business. In 2002, the organization procured the administration's residual stake in Modern Foods.

In 2002, the organization made its entry into Ayurvedic well-being with its Ayush item range and Ayush therapy centers. In 2003, the organization procured the Cooked Shrimp and Pasteurized Crabmeat business of the Amalgam Group of Companies, an innovator in marine products trades. Additionally, the organization propelled Hindustan Unilever Network Direct to home business. In 2004, the organization launched the 'Pureit' water purifier.

In 2005, Lever India Exports, Lipton India Exports Ltd, Merry climate Food Products, Toc Disinfectants Ltd, and International Fisheries Ltd were amalgamated within Unilever. In February 2006, Vasishti Detergents Ltd (VDL) converged with Unilever. In September 2006, Modern Foods Industries (India) Ltd & Modern Foods and Nutrition Industries Ltd were included. In October 2006, Unilever stripped its 51% controlling stake in Unilever India Shared Services Ltd, currently known as Capgemini Business Services Pvt. Ltd., to Cap Gemini SA.

In March 2007, Sangam Direct, a non-store home conveyance retail business managed by Unilever India Exports Ltd (UIEL) and a completely possessed auxiliary, was moved to Wadhavan Foods Retail Pvt Ltd (WFRPL) in a droop deal business. Likewise, Unilever completed the demerger of its operational offices in Shamnagar, Jamnagar, and Janmam and shaped three autonomous organizations —Shamnagar Estates Ltd., Jamnagar Properties Ltd, and Hindustan Kwality Walls Foods Ltd. In June 2007, the organization changed its name from Hindustan Lever Ltd to Hindustan Unilever Limited.

In 2008, the organization reported its coordinated efforts with the Indian Dental Association (IDA) related to World Dental Federation (FDI) through the Pepsodent brand to help improve the oral well-being and cleanliness benchmarks in India. In April 2008, the organization demerged and moved certain immovable properties to Brooke Bond Real Estates Pvt Ltd. In January 2010, the organization introduced its new corporate office.

In April 2010, Unilever affirmed the plan of amalgamation of Bon Ltd, an entirely possessed backup of Hindustan Unilever Limited, with it. The selected date for the previously mentioned plan was 1 April 2009 and the plan was made viable from April 28, 2010. Ensuing to the amalgamation, Bon Ltd stopped being an auxiliary of the company.

During 2010-11, Kissan forayed into a new market fragment in three major classifications. It propelled Kissan Fruit and Soya, a delightful mix of organic product juice and soya milk, which appreciated a separated suggestion in this market. The brand likewise went into the Indian (non-sweet) spreads showcase with the dispatch of Kissan Creamy Spread over key towns. In the bakery division, the organization propelled two new items—Chapi and Cream Rolls. The organization stripped 43.31% stake in Hindustan Field Services Pvt Ltd for Smollan Group (the JV accomplice).

Along these lines, Hindustan Field Services Pvt. Ltd. stopped being a backup organization. Lakme Lever Pvt Ltd, a completely claimed auxiliary of HUL, extended the system of Lakme Beauty Salons in that year with the opening of 11 franchises and oversaw salons alongside 18 franchisees' salons.

In December 2011, the organization demerged the FMCG sends-out business, including explicit fares related to assembling units of the organization, into its entirely claimed backup Unilever India Exports Ltd (UIEL). The plan wound up successful on January 1, 2012.

In 2012, the organization went into a concurrence with Unilever to showcase Brylcreem in India. During the year under audit, Unilever and elements of Piramal Realty (Ajay Piramal Group) consented to an arrangement for the task of HUL's leasehold privileges of the land and building named Gulita arranged at Worli Sea Face Mumbai for an exchange estimation of Rs. 452.5 Crore.

On 22 January 2013, the Board of Directors of HUL affirmed a proposition to consent to another arrangement with its parent organization Unilever for the arrangement of innovation exchange imprint permit, trademark registration, and other services on 1 February 2013. This new understanding underlined that the loyalty cost of 1.4% of turnover payable by HUL to Unilever will increment in a staged way to an eminence cost of 3.15% of turnover, no later than the money-related year finishing 31 March 2018.

The expansion in eminence cost in the period from 1 February 2013 to 31 March 2014 is assessed to be 0.5% of turnover and from there on in the scope of 0.3% to 0.7% of turnover in each money related year, paving the way to a complete evaluated sovereignty cost increment of 1.75% of turnover contrasted with existing courses of action no later than the monetary year finishing 31 March 2018.

In 2014, Unilever reported an organization with Internet.org, a Facebook-directed coalition of accomplices to see how web access can be expanded to contact millions of individuals crosswise over India. The organization additionally dispatched Prabhat activity for network improvement in towns around its industrial facilities during the year under survey. Furthermore, the organization also went into association with MTV to embrace its brands during the year under review. In 2015, the organization propelled The Unilever Foundry.

During the year under audit, the organization was perceived as the most inventive advertiser at the Mobile Marketing Association (MMA). The organization additionally resuscitated Ayush with e-dispatch during the year. Besides, it also propelled the 'Swachh Aadat Swachh Bharat' program in India during the year under review. On 8 September 2015, HUL reported that it has further consented to bring forth an arrangement for the deal and the transfer of its bread and pastry shop business under the brand Modern to Nimman Foods Private Limited, an investee organization of the Everstone Group, for an undisclosed amount.

Brands And Products Of Hindustan Unilever

HUL is the market chief in Indian buyer items with products in more than 20 purchaser classes (for example, cleansers, tea, cleansers, and shampoos among others). Sixteen of HUL's brands were included in the ACNielsen Brand Equity rundown of 100 Most Trusted Brands Annual Survey (2014) which was completed by Brand Equity, an enhancement of The Economic Times. There are many brands and products owned by Hindustan Uniliver:

Food Products

• Annapurna salt and Atta (once known as Kissan Annapurna)
• Brooke Bond 3 Roses, Taj Mahal, Taaza and Red Label tea
• Kissan squashes, kinds of ketchup, squeezes and sticks
• Lipton ice tea
• Knorr soups and supper creators and soupy noodles
• Kwality Wall's solidified treat
• Modern Bread, prepared to eat chapattis and other pastry shop things (presently offered to Everstone Capital)
• Magnum (ice cream)

Homecare Brands

• Wheel cleaner
• Cif Cream Cleaner
• comfort cleansing agents
• Domex disinfectant/toilet and bathroom cleaner
• Rin detergent products
• sunlight cleanser and shading care
• Surf Excel cleanser and delicate wash
• Vim dishwash
• magic – Water Saver

Personal Care Brands

• Aviance Beauty Solutions and products
• Axe deodorant and aftershave lotion and soap and accessories
• Lever Ayush Therapy ayurvedic health care and personal care products and items
• International breeze
• Brylcreem hair cream, hair gel and hair products
• Clear anti-dandruff hair products
• Clinic Plus shampoo and oil
• Close Up toothpaste
• Dove skin cleansing & hair care range: bar, lotions, creams, and antiperspirant deodorants
• Denim shaving products
• Fair and Lovely, skin lightening cream
• Indulekha ayurvedic hair oil
• Lakmé beauty products and salons
• Lifebuoy soaps and handwash range
• Liril 2000 soap
• Lux soap, body wash, and deodorant
• Pears soap, body wash
• Pepsodent toothpaste
• Pond's talcs and creams
• Sunsilk shampoo
• Sure antiperspirant
• Vaseline petroleum jelly, skincare lotions
• Vaseline and relevant products

Water Purifier Products

• Pureit water purifier

Business Model of HUL

Hindustan Unilever is an FMCG company that leverages its Direct to Consumer (D2C) business model and has made over 50 billion in revenue, as discovered in 2017. The company has crossed INR 50,000 cr ($6.55 bn) in turnover during FY21, as per the reports on April 2022. HUL is the first pure FMCG brand to hit such a milestone.

The business model of Hindustan Unilever is propelled with the idea of making living sustainable feasible for the masses. With sustainable living, HUL wants to bring about:

• Bettering the future of the children
• A future full of confidence
• A future full of health
• A future that is better for the planet
• A future that is better for the farming and farmers of India

The beauty and personal care segment of Hindustan Unilever helps the company see the most profit, while the food and refreshments segment is declared as the fastest-growing segment of the company. Home care is another segment of the company among its 3 primary segments.

The Hindustan Unilever company gets its competitive advantage from the global footprint it has and the track record of the company for enhancing value for its consumers around the globe.

Some of the prominent patterns that are noticeable in the business model of HUL are:

Reverse Innovation

Reverse innovation refers to the process of building products for industrial countries and then adapting them to the emerging markets. The technique of reverse innovation is what is truly wielded by HUL, which has been a prominent inspiration for many other big brands. The 'Knorr Stock Pot’ that the brand came up with is an excellent example of leveraging reverse innovation. This technique was mastered by HUL by taking references from the famous ‘Dense Soup treasure,’ which was the first major example of reverse innovation, launched in China in 2007.  

Focussing on the financially weak

In contrast to the other foreign subsidiaries, HUL ideated to focus on the financially weaker sections of the country, which led them to focus on the majority of the Indian people. Citing the discovery of Wheel detergent powder is one of the examples where Hindustan Unilever created products for the majority of the Indian consumers. Wheel had lower oil-to-water ratio, which enabled Indian to wash textiles even in rivers with hands. Wheel was then made available cleverly by the brand in the local corner shops as well as via door-to-door representatives.

Staying keen on the Triple Bottom Line

While most of the companies solely focus on the profit part of the follow the Triple Bottom Line with only a little focus on the other segments, HUL has a new approach where the brand decided aimed for the other segments, thereby caring for people and the planet.  

HUL largely focuses on the people, including its consumers and others. For instance, the company changed the name of one of its popular products "Fair and Lovely" to "Glow and Lovely", following the All Black Lives Matter movement that raged globally. This instantly made HUL a favourite!  

Significant Distribution Strategy

The distribution strategy that Hindustan Unilever follows is exemplary! It focuses on hyperlocal markets, retail stores, wholesalers, hypermarkets convenience stores, ecommerce, and more. This hugely helps in the promotion of the HUL products and moving them fast to the consumers!

Business Growth In India

FMCG giant Hindustan Unilever Limited (HUL) announced a 15.98% development in solidified net benefit at Rs 6,060 crore for the monetary year finished March 31, 2019, when contrasted with Rs 5,225 crore in 2018. The net profit that HUL witnessed in FY21 rose by 18% YoY at Rs 7,954 crore.

Remarking on the profit, HUL Chairman and Managing Director Sanjiv Mehta stated, "We have conveyed a solid execution for the quarter regardless of some balance in rustic market development. Our attention to fortifying the center and driving business sector advancement has been reliably conveying great outcomes. We have now developed top line and primary concern for the eighth continuous year and our 2019 outcomes were a demonstration of both our technique and execution."

"Given the large-scale monetary pointers, close term advertise development has directed. Notwithstanding, the medium-term viewpoint remains positive. As an association, we are well-situated to react with speed and nimbleness to address the issues of our shoppers. We stay concentrated on our vital plan of conveying predictable, focused, beneficial, and dependable development," he included.

"Together with the between time profit of Rs 9 for each offer, the all-out profit for the money-related year closure March 31, 2019, adds up to Rs. 22 for every offer," the organization said. "Combined income for 2018-19 remained at Rs 39,860 crore, up from Rs 36,622 crore a year sooner," HUL said in a document to the Bombay Stock Exchange.

HUL's business in India developed by 12%, driven by 10% volume development in the household advertise. In the January-March quarter, the organization posted 13.84% development in its independent net benefit at Rs 1,538 crore when contrasted with Rs 1,351 crore in a similar quarter a year ago. The offers of the organization remained at Rs 9,809 crore in Q4FY19 from Rs 9,003 crore in Q4FY18, enrolling a development of 8.95%. The working benefit (EBITDA) for the March quarter was up 13% year-on-year at Rs 2,321 crore and the EBITDA edge was up 90 bps.

The organization said that the edge improved because of judicious administration of instability in costs (unrefined and money driven) alongside improved blend and working influence.

HUL reported that its Earnings before interest, tax, depreciation and amortisation (EBITDA) stood at Rs 11,324 crore, while the EBITDA margin was reported to be 25% during FY21.

Also read : Unknown Facts About Famous Brands | A Case Study

Expected Future Growth

Hindustan Unilever NSE 0.01 % (HUL) may clock 9-10% development in June quarter benefit despite a slight balance in volumes because of value climbs crosswise over classes. IIFL Institutional Equities expects the FMCG major to report a 6% volume development, a slight control from the 7% volume development recorded in the past quarter.

"Our channel checks give us a feeling that the organization has started value climbs crosswise over classes, (for example, cleansers, espresso), among others. We along these lines gauge a business development of 9%, like the past quarter level. We expect the slight withdrawal in gross edge to be counterbalanced by influence in promotion spending and different costs. In general, EBITDA and PAT are relied upon to develop at 13% and 12%, individually," IIFL said. IDFC Securities expects HUL to report 10.3% to ascend in benefit at Rs 1,728 crore. It sees deals developing at 8% to Rs 10,250 crore.

"We expect 6% volume development and factor in deals development of 11% in home consideration and 7% in close to home consideration portions. Lower advertisement spends (down 80 bps YoY) and commands over different overheads will help EBITDA edges," it stated while proposing edge at 24.3% against 23.7% the previous year. Edelweiss sees income, Ebitda, and benefit development at 7.3%, 8.6%, and 7.7% YoY.

"We anticipate that HUL's volume should grow 5% YoY on a high base of 12% YoY development. Q1FY18 was affected by GST dispatch thus the best approach to take a gander at volume development is three years' normal, which will be 5.6%. Delicate quality in the second 50% of Q4FY19 proceeded for the full quarter in Q1FY20. Provincial development is presently at a similar level as urban development. A mixed value climb of 2.5% has been taken. On EBITDA edge front, we expect 20-30 bps YoY development," the business said.

What is Hindustan Unilever origin?

Hindustan Unilever or Hindustan Unilever Limited (HUL) is an Indian subsidiary of Unilever, which sprung from its Dutch-British roots. HUL is headquartered in Mumbai.  

Who is the owner of Hindustan Unilever Limited?

HUL is owned by Unilever, its British multinational parent, headquartered in London.

What is HUL?

HUL is the acronym for Hindustan Unilever Limited.

Who are Hindustan Unilever founders?

Hindustan Unilever founders can be cited as 3 parent companies - Hindustan Vanaspati Mfg. Co. Ltd., Lever Brothers India Limited, and United Traders Limited, which were merged to form HUL.

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