unilever strategic report
TRANSCRIPT
-
8/3/2019 Unilever Strategic Report
1/60
Organization Introduction
Lever Brothers Pakistan Limited is a multinational organization. Unilever PLC
London is its parent company. Unilever is a European based company with
headquarters in London, and their shares are quoted at the stock exchange of
several European countries. They deal in all kinds of products from animal
foodstuff to foods and detergents plus other personal and consumer products.
Unilever has its subsidiaries in over 80 countries of the world, to which it
spreads its vast knowledge and resources.
William Lever (its originator) commences business in England as a grocer. He
established Lever Brothers in 1827 in England Sunlight was the first product
of Lever Brothers, which makes the beginning of the marketing of branded
products at the same time Margarine Uni was established in Nether Land by
Simon Van Berg and Anton Jurgens. These two companies in term of:
yBuying raw material
ySelling finished goods
Consequently both the companies loosing out money in term of profit. These
problems led to think of the mergers in 1930. These two companies merged
together and renamed the business as Unilever PLC / the word UNI is taken
from margarine Uni and Lever is taken from Lever Brothers. Its head quarter
was established in England and Rotter Dam.
Unilever has 500 operating companies in 80 countries. It has 0.3 million
employees and turnover of sales in 23000 million pounds. The global
business proportion is 60% in Europe 20% in North America and 20% in rest
of the world. An identified board of directors control the activities of subsidiary
companies throughout the world. Lever Brothers Pakistan Limited started its
operations in 1948. A merger of Sadiq Vegetable Oils and Allied Industries
existed in Rahim Yar Khan was taken place with Lever Brothers and HVM
-
8/3/2019 Unilever Strategic Report
2/60
company based at Karachi. As a result of merger Lever Brothers Pakistan
Limited was incorporated as an independent Unilever operating company in
1955. The company is quoted on the Karachi, Lahore and Islamabad Stock
Exchanges. Lever Brothers Pakistan Limited has around 1900 employees in
Pakistan.
Lever Brothers Pakistan Limited played a dynamic role in boosting consumer
products market. It stand at a unique position due to its honesty and integrity.
Lever Brothers Pakistan Limiteds main divisions of business are:
1 Merger With Brooke Bond
Brooke Bond Pakistan Limited was incorporated in 1948. Companys 40%
shares are held by Unilever, 21% by financial institutions, 24% by individuals,
and 10% by insurance companies. The company is quoted on Karachi and
Lahore Stock Exchange market. The company is manually engaged in the
blending, packaging and marketing of tea. It also has a small business in the
sale of packing apices. The company employ around 850 persons. And has
three manufacturing locations situated in Karachi and Khanewal. It also have
three regional sales offices. The head office of the company is located in
Karachi.
After the amalgamation of Lever and Brooke Bond, Unilever will have a
majority shareholding in the combined company and it will provide a
comparable level of technical, management and financial resources. The
proposed merger will benefit the consumer in term of price and quality.
Acquisition
Lever Brothers Pakistan Limited acquire the shares of Pakistan Industrial
Promoters Limited, Mehran International Limited and Ambrosia International
Limited, which is known as Polka Group of Ice Cream Companies.
Product Mix
-
8/3/2019 Unilever Strategic Report
3/60
At present Lever Brothers Pakistan Limited is engaged in marketing of
diversified varieties and classes of products and playing a dynamic role in
boosting consumer product market. It stand at a unique position due to its
honesty and integrity. Lever Brothers Pakistan Limited has both product
length and depth i.e. it has by length a largest of product lines available and
under each product line there are lots of variants like different weights,
100mg, 500mg, 1000mg, sache pack, family pack or in case of ice creams
different brands have lots of flavor available which determines its product
depth. So different no of product lines are called product length and no of
products in each product line are called depth of product line. Lever Brothers
Pakistan Limiteds main product groups are listed below:
Home And Personal Care
Personal Wash (PW)
Toilet Soaps
Lifebuoy (Carbolic Soap)
Lifebuoy Plus
Lifebuoy Gold
Lux (in 4 varieties)
Rexona (in 2 varieties)
Liril
Hamman
Fair & Lovely Soap
-
8/3/2019 Unilever Strategic Report
4/60
Fabrics And Home Care
Fabric Wash
2 Surf Excel
Power Surf
Sunlight Washing Powder
Soap Wheel
Home Care
Vim Dish Washer / Scourers
Vim NSD Bard (in 2 varieties)
Vim Powder Poly Bag
Personal Product
Hair Care
Sunsilk Shampoo (in 7 varieties)
Harmony Soap
Lifebuoy Shampoo
Skin Care
3 Fair & Lovely Skin Cream and Lotion
-
8/3/2019 Unilever Strategic Report
5/60
Dental Care
Close-up Tooth Paste
Pepsodent
Oil And Dairy Based Foods
Banaspati
Dalda
Cooking Oil
Dalda Cooking Oil(Soya Bean)
Dalda Sunflower Oil
Planta
Margarine
4 Blue Band
Industrial Fats
A whole range of product for bakery and oils for the industry.
Beverages
Leaf Teas
Yellow Label
Yellow Label Danedar
-
8/3/2019 Unilever Strategic Report
6/60
Richbru
Top Star
Taaza Leaf
Supreme
Brooke Bond
Dust Teas
5 Pearl DustRuby Dust
Laojee
Mixture Tea
6 Taaza
Ice Cream
Cornetto (in 3 varieties)
Feast (in2 varieties)
Feast Stickless
Top Ten
Star Cup (in 4 varieties)
Sundae ( 2 variant)
-
8/3/2019 Unilever Strategic Report
7/60
Chocu Bar
Minimill
Sola
Jet Spot
Ice Lolly
Walls Kulfi
Panda
Pop Corn
g Three
Vision Of Lever Brothers Pakistan Limited
The vision of Lever Brothers Pakistan Limited is driven by is the commitment
to exceland we are here to sell aspiration not brand. So, the core vision is
integrating and that is to excel in every field whatever Lever Brothers do to
provide customer delight and value. The Lever Brothers have been able to
follow the track set by their vision and to achieve the standards set by their
customers.
Mission Statement of Lever Brothers Pakistan Limited
Lever Brothers Pakistan Limited will be the foremost consumer company in
Pakistan with the dominant position in laundry, personal wash, skin, ice
creams and spreads: a leading position in tea, hair, dental and household
care and a sustainably profitable position in cooking oil and fats.
1. We will aim at delivering a 15% UVG rate, hence doubling the size of our
business over 5 years and thereby delivering superior value creation.
-
8/3/2019 Unilever Strategic Report
8/60
2.We will achieve this by adopting a broad view of our market by seeking the
new opportunities in the core categories of Unilever and by staying closer
to all consumers than competitors, understanding their evolving needs and
focusing on constant delivery of superior value for our brands through
innovation.
3.Competitive advantage will also be developed by driving down relentlessly on
relative cost positions and outpacing competition in operational efficiency
improvement.
4.We shall build on our strong network of distributors to maximize penetrations
and visibility in existing channels and to develop all new channels relevant
to our consumers.
5.We shall establish Unilevers core brands in Afghanistan, building brand loyalty
and strong distribution in the market.
6.To achieve these standards of performance, Lever Brothers Pakistan Limited
will develop a strategically focussed organization and will motivate its
personnel to use its full potential of creativity and commitment. It will also
leverage Unilevers best practices and maintain the highest standards of
operational control.
7.Through its commitment to high levels of care and safety for its employees, its
consumers and the environment, Lever Brothers Pakistan Limited will be
exemplary and will participate in the dissemination of such practices in
Pakistan.
Analysis Of Mission Statement
Mission Contents
Organization Philosophy
People
-
8/3/2019 Unilever Strategic Report
9/60
Peoples are key to strengths of Lever Brothers Pakistan Limited. The
development of their potential is core to Lever Brothers Pakistan Limited
business.
So they provide extensive attention to developing human resources.
Customers
Lever Brothers Pakistan Limited is the customers focus organization. They do
delight customers with their products and service. Their brands always deliver
the high quality as they premise. Lever Brothers Pakistan Limited pays extra
attention to the complaints of consumers.
e.g. if the consumer complaints that detergent harmed any cloth or skin they
send the sample for lab test a team analyzes that customer complaint is right
or not and then they send the detailed response to customer along with gift of
their products. With a questionnaire for suggestion for further improvement on
the top of which is written WE CARE ABOUT YOU.
Suppliers
Suppliers are considered the partners of Lever Brothers Pakistan Limited and
Lever Brothers Pakistan Limited maintain mutually beneficial relationship with
them.
Integrity
Lever Brothers Pakistan Limited never compromise on integrity management
adhere to high standards in all they do.
Environment responsibility
Management adhere to all national and Unilever standards to ensure health,
safety and protection of the environment in which they live and work.
-
8/3/2019 Unilever Strategic Report
10/60
Profit
It is considered to be the ultimate measure of Lever Brothers Pakistan
Limiteds performance and it is required to maintain and grow their business.
Product Market Domain
This factor indicates where they are going to compete. Lever Brothers
Pakistan Limiteds field of operations is the consumer products and business
and this is very clearly stated in their mission statement.
Organization Key Value
It defines that what do they want. They people of organization to be good at or
how do they want them to behave and this very clearly stated in mission
statement as always stay responsive to change, go for innovation, employee
commitment to organizational objectives and mission and creating value for
customers. So, if we check the mission statement through this aspect then we
can easily state that they have clearly stated what should be the
organizational key values and how to reinforce them.
Critical Success Factor
The central issue of this factor is that what do they have to be good at to
succeed in this market or industry. The mission statement outlines this as
adopting a broad view of our market, by seeking the new opportunities in the
core categories and by staying closer to all consumers than competitors and
understanding their evolving needs and focusing on constant delivery of
superior value for our brands through innovation.
So far them critical success factor is consumer connectivity and commitment
to excel and to provide superior value to customers and products of superior
quality and value.
-
8/3/2019 Unilever Strategic Report
11/60
Concern For Different Stakeholders
Mission statement describes that what are the obligations to different
stakeholders i.e. stockholders, employees, suppliers, customers and
community at large. Lever Brothers Pakistan Limiteds mission statement
contains concerns about all stakeholders. First be foremost consumers and
then other stakeholders and describes it as: Through its commitment to high
level of core and safety for its employees, its consumers and environment.
Lever Brothers Pakistan Limited will be exemplary and will participate in the
dissemination of such practices in Pakistan.
Form And Sources Of Competitive Advantages
Mission statement of Lever Brothers Pakistan Limited completely describes
the form and sources of competitive advantage as:
Competitive advantage will be developed by driving down relentlessly on
relative cost positions and outpacing competitors in operational efficiency
improvements and through building strong network of distributors and by
developing a strategically focused organization and by motivating its
personnel to use its full potential of creativity and commitment and by
maintaining the higher standards of operational control.
They are going for unique combination of cost reduction and superior value to
customers so they entirely provide the form and source of competitive
advantage that what they wanted to achieve and how they will achieve it.
Scope And Types Of Mission
Are the external dimensions covered?
7 Global
Mission
8 Organization
-
8/3/2019 Unilever Strategic Report
12/60
Mission
9 Market10 Mission
11 No
12
Mission
YesNoYesNo
Are the internal
dimensions covered?
The mission of Lever Brothers Pakistan Limited covers both the externaldimension (product market domain, critical success factors) and internal
dimensions (philosophy, organization key values, form and sources of
competitive advantage, and concern for different stakeholders) so therefore,
we can say that the mission statement of Lever Brothers Pakistan Limited is a
global mission as according to the following exhibit.
Lever Brothers Pakistan Limited wants to be market leader in consumer
products. It enjoys greatest market share as compared to competitors byproviding superior quality products. And customer value is what they value.
And this is reflected in mission statement. The very first 3 points are all
customer focused and has provided customer value as their main focus.
-
8/3/2019 Unilever Strategic Report
13/60
As both the dimensions are extensively covered so we can say that the
mission of Lever Brothers Pakistan Limited is global mission. Now we can
further go for rating of mission of Lever Brothers Pakistan Limited on a scale
of 1-10 for testing of mission, which is as under:
Testing The Mission
Does the mission statement make it clear what the organization
stands for and why it exists?
10
Does the mission statement makes it clear where we have to
compete and who are our customers?
5
Does mission statement tell us the values we should adhere to in
working of this organization?
8
Does mission statement make it clear what we have to be good at to
survive and prosper?
10
Do different parts of mission statement hand together, does it make
sense?
10
Is the mission statement short enough so that people can
understand it?
10
Is the mission statement well written enough so that people will
remember it?
5
Is the mission statement challenging and exiting, will it motivate us? 10Does the mission statement tell us what we should be doing and
what we should not be doing?
5
Total 83
Criteria: 100 = Excellent
50 = Medium
00 = Poor or no mission
The total score indicates that the mission statement of Lever Brothers
Pakistan Limited is approximately near to excellent standards and gives
complete help for setting priorities guide strategic decision making, and
performance evaluation or in short it fulfills the essential role i.e. to define the
-
8/3/2019 Unilever Strategic Report
14/60
business in such a manner which is important in overall strategic
management.
Objectives Of Lever Brothers Pakistan Limited And Attainment Of Objectives
Objectives of Lever Brothers Pakistan Limited
1.Their main objective is to have a double-digit growth and resultant cash flows
will be utilized in improving the product quality and contents to enhance the
value to customer and final users.
2.Lever Brothers Pakistan Limited has an objective to have a responsive supply
chain and technological based processes.
3.They want to have consumer connectivity, i.e. they want to know what they eat,
drink, how they spend their lives, what are their preferences. So in this way
they wan to be very close to customer, to know their real insight and
desires so they can develop new strategy for product design and can
implement their strategy in better manner i.e. avoidance of hit and trial
approach and hitting the right target with right strategy at right time in right
and accurate manner.
4. They want to be cost efficient i.e. they want to reduce in their cost of
production, cost of transportation, distribution and packaging cost and
finally reducing all the human cost to offer a competitive price to customer
maintain the high standards of quality.
5. To have a partnership with their suppliers to enable them to provide high
quality low cost material.
6.Have entered and will be aggressively developing new markets.
7.Be exciting to their customers with stream of innovative products.
8.To be no in all their existing markets.
Attainment Of Objectives
-
8/3/2019 Unilever Strategic Report
15/60
An objective or set of objective to be ideal must be SMART i.e.
1.Specific
2.Measurable
3.Attainable
4.Realistic
5.Time frame
Specific
The objective of Lever Brothers Pakistan Limited are specific not general e.g.
they want to be number one i.e. market leader in terms of market share. They
want to be cost efficient it is specific i.e. they have to reduce their costs
without compromising on quality. They want to have focused strategic thrust
i.e. they are to simply reduce non-valuable slow moving product. So the non-
value added products are quite obvious with their sale figure and popularity.
Measurability
Objectives of Lever Brothers Pakistan Limited are measurable as you can
easily measure the double-digit growth with their balance sheet footings and
cash flow analysis. Reduction in cost easily be measurable from reduced price
level and cost of production. Responsive supply chain objective can easily be
measured with quantity of real information available on computer terminals of
Lever Brothers Pakistan Limited.
Attainable
All of the objectives are attainable. They can be market leader e.g. they are in
Lux, Blue Band, Fair & Lovely, Lipton and Supreme. They have portfolio and
cash flows to invest in their product categories to achieve their quality
-
8/3/2019 Unilever Strategic Report
16/60
standards thereby becoming market leader with their increased share, sales
and growth. Thereby getting brand loyalty among their customers.
Reliability
One has to be at the top so to be number one in its realistic objectives. Other
objective e.g. reduction in cost is realistic, you an reduce your cost by
focusing on value chain. Cost of inbound and outbound logistics.
The objective of launching innovative products is also realistic objective, it
comes only from creative ideas and implementation of these innovative ideas
comes up from investment.
Time Frame
All these objectives are to be attained in some specific time period.
Attainment Of Objectives
Lever Brothers Pakistan Limiteds strategy to attain the objectives is:
1.Maximum coverage of outlets
2.Desirable sales volume
3.Display and merchandizing of products
4.Developing quality and want satisfying product.
Since every company is formed to accomplish certain objectives. There is no
company, which had no goals. So Lever Brothers Pakistan Limited also has
targets before it.
These main targets and objectives are:
1.Profits
-
8/3/2019 Unilever Strategic Report
17/60
2.Consumerism
3.Welfare of consumer
The first objective of Lever Brothers Pakistan Limited is to earn maximumprofit but keeping in view the customer demands as well company deals in
those products which are profitable.
If there are any indication that any item is not good from profit point of view, it
will try to find out the reasons. Will soon what steps should be taken to
overcome these reasons.
Company will introduce different marketing strategies if there are problems inmarketing. Here I would like to code two very famous examples, 1st of Sunlight
soap and Sunlight washing powder of Lever Brothers Pakistan Limited.
Lever Brothers Pakistan Limited initially developed a sense of consumer to
use washing powder other than washing soap, consumer switched s a result
towards Sunlight washing powder, i.e. popular segment of washing powder
and than the market share for Sunlight soap declined with passage of time,
now the consumer who realized the convenience of washing powder startedusing it, but at the same time, as a result marketing strategy of Lever Brothers
Pakistan Limited awareness of people, people switched to surf and wheel i.e.
premium segment detergents. Finally due to the decrease in the market
shares and sales volume of Sunlight soap and was light powder Lever
Brothers Pakistan Limited management finally decided to stop the production
of this very product i.e. it is now obsolete.
Second example is related to the change of brand name of Surf to Surf Excel.The reason behind was introduction of competitors brands like Arial by P&G
which had brightness features, which caused the people to switch from Surf to
Arial, Lever Brothers Pakistan Limited realized the fact due to disturbance in
sale volume of Surf and introduced new brand name Surf Excel with extra
brightness power.
-
8/3/2019 Unilever Strategic Report
18/60
Company also takes into consideration the welfare of the consumer. It takes
into mind the taste and habits of the customer. They pay much attention on
the customers complaints. It also works for the welfare and interest of
Pakistan, as it is an environment friendly organization.
Strategic Management At Lever Brothers Pakistan Limited
Now we will proceed with strategies being pursued by the Lever Brothers
Pakistan Limited at different organizational level. First we will discuss the
corporate level strategy.
Corporate Level Strategy
At corporate Lever Brothers Pakistan Limited is pursuing the strategy of
vertical diversification i.e. driving away from the previously adopted strategy of
vertical integration i.e. now they dont want to perform more than one step of
the processes involved in converting raw materials into a product delivered
and ready for consumption. Lever Brothers Pakistan Limiteds operations are
so complexed and involves 200 brands in Pakistan so now they wanted to
reduce the operational complexity and going for strategic alliances with their
suppliers, instead of producing themselves and going into complex operations
now they want their suppliers to produce for them.
The outsourcing the production so that they dont have to invest heavily in the
production and to reduce the capacity problems, they now going for the third
party contracting to produce themselves and now they want them to be
restricted to marketing and distribution of products.
Diversification strategy is being pursued by the Lever Brothers PakistanLimited but they mainly go for related diversification as against unrelated
diversification for conglomerates, they are diversified into number of
businesses as mentioned earlier but they are all related to consumer
products. Through vertical diversification they will be able to eliminate the
operational complexity and costs of buying and selling i.e. the transactional
-
8/3/2019 Unilever Strategic Report
19/60
costs. Now they mainly wanted to step away from operations and want to
focus more on customers.
As means of diversification which are being utilized by the Lever Brothers
Pakistan Limited as all the time, been acquisition, neither joint ventures i.e.
strategic alliances nor the internal development. Here we can take the
example of the acquisition of Brooke Bond and Polka for example which have
Brother acquired through a hostile takeover. And to step away from
operational complexities now they go for subcontracting with the suppliers and
want them to produce for Lever Brothers Pakistan Limited as in case of oil and
ghee and soap and with the passage of time will also be implemented in other
categories as well.
Business Level Strategy
At business level Lever Brothers Pakistan Limited is adopting a very unique
and interesting set of strategies. First and foremost strategy they want to
follow is the cost leadership. They wanted to control cost as much as possible
and want to reduce cost by every mean.
First cost efficiency is achieved through outsourcing operations and stop
producing themselves and go for cost efficient subcontracting.
Second they want to achieve cost efficiency through responsive and cost
efficient supply chain, want to be in touch with suppliers all the time and for
that they have connected themselves with the suppliers and to their suppliers
as well to minimize cost related to forecasting now they want better
forecasting through computer networks so to get the real time information
about the inventory, stock, demand and supply. They are now reducing the
inventory as well as average carrying the inventory of only 3 days and getting
closer to the concept of just in time except for those products for which they
have to brought in raw materials from far flung areas like tea and moreover
routings of logistics as well like air routing or ship routing to curtail the costs
-
8/3/2019 Unilever Strategic Report
20/60
other than cost efficiency, they have adopted the strategy of consumer
connectivity i.e. want to stay closer to consumers rather to operations and
want to focus all alternations to consumers through more research and
customer profiles and demographics and wants to explore new customers and
usage of products.
To get customer connectivity they do the market research to check the trends
of their customers. The do pre-launch, post-launch research, e.g. their did
before and after lunching while antidandruff Sunsilk. The response was quite
encouraging. Hence basically customer and market research and customer
feedback, free samples distribution before and after launching new product /
brand/ variant is aiming their basic strategy to implement and achieve thecustomer connectivity and to fulfill their customer demand.
Here Lever Brothers Pakistan Limited has used the strategy of product
development i.e. by modifying and improving their Sunsilk it into Sunsilk
antidandruff (white), they have increased their sales. They are applying
Market and Development Strategy as well in which by introducing present
product (Sunsilk) into a new demographic area i.e. dandruff conscious market
segment with the launch of only new variant i.e. Sunsilk antidandruff white.They have added conditioner in it as initially the conditioner was missing in all
shampoos of Sunsilk. While it is available in competing brands of P&G.
Other than these two strategies another very important strategy is being
followed by tge Lever Brothers Pakistan Limited i.e. focusing on core
brands orwant to have a very focused on brand portfolio in which they
wanted to get rid of the slow moving brands like in Surf you will get number of
further variants like Surf Ultra, Surf Micro, Power Surf etc. and in Sunsilknumber of variants, Black, Green, Pink, etc. to name a few and how they have
curtailed all these slow moving brands like focusing attention to Surf Excel
only and in case of Sunsilk Black and White (antidandruff) and discarding slow
moving items like Sunsilk Pink and Green etc.
-
8/3/2019 Unilever Strategic Report
21/60
So, to avoid cannibalization effect now instead of number of brands to flood in
the market only few better and improved brands, cash generating and more
focused towards customers.
Operational Level Strategy
At operational level, Lever Brothers Pakistan Limited has always adopted the
strategy of TQM only never went for CPR i.e. they have not come up with a
new brand in last few years. Only the improvements or new variants in
existing brands or using the same old brand name to introduce a new product
like Lifebuoy Shampoo or Fair & Lovely Soap. So it can easily be said that
they believe more in adopting changes rather generative ones or go for single
loop learning only because according to them its very very expensive to
introduce a new brand name.
Strategy Evaluation
Now after outlining the objectives and discussing the strategies we can now
evaluate these strategies that whether they are in harmony with the objectives
of Lever Brothers Pakistan Limited or not. And then we will evaluate these
strategies on three types of evaluation criterion.
Now as against the objectives, if we go through all the strategies being
mentioned earlier, then we can see that all strategies are true reflection of the
objectives being targeted by Lever Brothers Pakistan Limited. As an objective
of consumer connectivity, responsive supply chain getting on line computer
network with suppliers and more stronger R&D department and the objective
of cost efficiency is supported by the vertical diversification in an sense that
how they are outsourcing production and going for sub contracting with their
suppliers and having more responsive and cost effective supply chain and to
achieve growth more focused strategy in case of reduction of brands, etc. So
these strategies are true measures to achieve those objectives. But other than
objectives there is some other criterion which each strategy has to fulfill to be
-
8/3/2019 Unilever Strategic Report
22/60
of any worth and that criteria is as follows: its basically three types of
evaluation criterion i.e.
1.Suitability
2.Acceptability
3.Feasibility
Suitability
Suitability is a broad assessment of whether the strategy addresses the
circumstances in which the organization is operating. For example, the extent
to which the strategy would fit with the future trends / changes in the
environment or how the strategy might exploit the core competencies of the
organization. Now if we evaluate the strategy of Lever Brothers Pakistan
Limited on these factors that whether the strategies fit with its existing
circumstances would able to compete with the future trends like the strategy
of cost reduction and focused brands and outsourcing production and
consumer connectivity and more responsive value chain. All these strategies
are not only suitable to the present condition but are prerequisite for futuresuccess as well i.e. by outsourcing production more focus towards customer
needs and wants would be provided and it would help Lever Brothers
Pakistan Limited to achieve even higher customer satisfaction level and
market share and not only that lowering the cost would not only be beneficial
for Lever Brothers Pakistan Limited but for consumers as well i.e. now they
would receive better quality at relatively lower cost and Lever Brothers
Pakistan Limited would be able to provide superior products quality and value
to customers. Now a days, success lies at cost reduction and superior quality
which the Lever Brothers Pakistan Limited has successfully opted for. Other
than this, next factor is that whether strategy can exploit the core
competencies of the organization or not. The answer is very simple that by
reducing operational complexity and brands complexity more resources would
-
8/3/2019 Unilever Strategic Report
23/60
be available to focus more on the quality of the products as compared to the
previous situation. So on the basis of these factors it can easily be said that
the strategies being implemented are very suitable to Lever Brothers Pakistan
Limited.
Acceptability
Acceptability of strategy is concerned with the expected performance
outcomes such as the returns and risk if the strategies are implemented and
the extent to which it would be in line with the expectations of the
stakeholders.
In case of returns, its pretty much assured that returns would definitely be
enhanced when the cost would decrease and strategies would result in better
quality products. But the elements of risk is there which could be quite
significant in the case of subcontracting, whether the suppliers would be able
to meet the quality standards or not. And as we inquired it from the branch
manager of Lever Brothers Pakistan Limited, he said, that we have very
strong quality control system and moreover we are entering into strategic
partnership with our suppliers so to maintain quality is in their favor too and
they would be beneficial from the better quality as well and it would not
increase the cost in case of maintaining control over the suppliers as its
partnership more as compared to only placing and receiving order we will
work for mutual benefits and complete harmony which we already have.
As far as the stakeholders are concerned first and foremost effect would be on
the employees as the production is out-sourced so they would definitely
feared the unemployment but they said that we will arrange it with our
suppliers and will try to accommodate them as much as possible and in case
of shareholders, they would receive benefits of this strategy and would receive
higher returns on their investments and they would be able to maximize their
earnings and in other stakeholders suppliers would now play more important
role by entering into strategic partnership with the organization. Consumers
-
8/3/2019 Unilever Strategic Report
24/60
receive more attention now and would get more satisfaction as more and
more products would be developed on the basis of the targets being set by
the consumers. So after analyzing these factors it can easily be said that
strategies being pursued by Lever Brothers Pakistan Limited has higher
returns and lesser risks and more benevolent to stakeholders as well.
Feasibility
Feasibility is concerned with whether the strategy could be made to work in
practice or not. And its more concerned with the assessment of practicalities
of resourcing and strategic capabilities i.e. quantitative assessment, which is
beyond the scope of this report, so, as an overview, all strategies seems
feasible and some of them has already been implemented as well like the
reduction in brands etc. So assessing;
Is this a good strategy?
Is the positioning viable?
Does it improve value?
Does it exploits core competencies?
Will it lead to good financial performance?
All these factors seems work in favor of Lever Brothers Pakistan Limited after
analyzing the strategies of Lever Brothers Pakistan Limited.
Structural Analysis
Organizational structure and management of Lever Brothers Pakistan Limited
-
8/3/2019 Unilever Strategic Report
25/60
Lever Brothers Pakistan Limited restructure the organization after the merger
with Brooke Bond Pakistan Limited. The chairman is the executive officer of
Lever Brothers Pakistan Limited. He leads the seven members management
committee, which is the top of decision making. The management is
responsible for corporate strategy of Lever Brothers Pakistan Limited and for
initiating policies and overall planning as well as their general management
duties. Management committee members are each responsible for specific
function. Reporting to the management committee members are departmental
heads who are responsible for advising the management committee for
planning and implementation of policies for ensuring that targets are reached.
The committee includes:
Mr. Lain Strachan Sangster (Chairman & Chief Executive)
Mr. Mashkoor Alam (Vice Chairman)
Mr. Mujib-ur-Rehman (Technical & Logistics Director)
Mr. Perwaiz Hassan Khan (Director Personnel)
Mr. J. A. Lee (Director Sales)
Mr. A. D. Bandaranayake (Director Commercial)
Mr. N. I. Khockhar (Business Unit manager ODF)
Mr. Clive David Welland (Director Food Business)
Board Of Directors
The board of directors control the whole operation of the organization it
includes the following personalities:
Mr. Lain Strachan Sangster
-
8/3/2019 Unilever Strategic Report
26/60
Mr. Syed Babar Ali
Mr. Fateh Ali W. Vellani
Mr. Mujib-ur-Rehman
Mr. Perwaiz Hassan Khan
Mr. J. A. Lee
Mr. Clive David Welland
Mr. Dr. A. D. Bandaranayake
Mr. S. N. Patel
Mr. M. Asadullah Sheikh
Mr. Abdul GhaniBachani
Mr. Azim Azmat Osman
As we can notice that the management of the company is composed of a mix
of international and Pakistanis business professionalists. The management of
the company includes Syed Babar Ali as director, who is also involved in
many other organizations i.e. Packages and other industries. It includes in its
board meetings one member from each province i.e. Punjab, Sindh, NWFP
and Baluchistan. The top management of the company is fully professional
specially marketing department which is headed by Mr. Jeff Lee who have
world wide experience in this field.
Hierarchy
Branch structure
-
8/3/2019 Unilever Strategic Report
27/60
All over Pakistan 6 branches of Lever Brothers Pakistan Limited are working.
Its head office is located in Karachi at Avari Towers. The chairman and
management committee as well as the most of the department heads have
their offices there.
Structural Analysis
Lever Brothers Pakistan Limited has a functional structure i.e. its based on the
primary tasks that have to be carried out such as production, accounting,
finance, marketing, etc. and then there is separate department for each
function and these functions are carried out by directors and they are assisted
by managers of that very particular function like marketing manager and those
managers have divided each product category into home and fabric care
category, spread and cooking category, etc. And these categories are headed
by one product manager and assistant manager.
We cannot say that the structure of Lever Brothers Pakistan Limited is an
ideal or exact functional structure as in functional structure CEO is in direct
supervision of each primary activity but Lever Brothers Pakistan Limited have
also included layers of vice chairman and very important management
committee as described earlier. This structure maximizes the basic advantage
of functional structure that the CEO is in charge and well informed about each
primary activity and minimizes the basic disadvantage of functional structure
that an organization become larger or more diverse, then CEO, senior
management can be over burdened with everyday operational issues, which
is true in the case of Lever Brothers Pakistan Limited and to offset this
disadvantage they have created additional layer of management committee
which is responsible of coordination between CEO and chairman, vicechairman, and the functional directors to take a strategic perspective on
problems. So, Lever Brothers Pakistan Limited has an ideal structure to
oversee the whole organization and to control the operations of the
organization which in turn create problems as of very slow decision making
process and very centralized too.
-
8/3/2019 Unilever Strategic Report
28/60
To continue with structure analysis discussion, now lets turn our discussion to
five basic forces, which determines an organizations structure i.e.
1.Threat of new entrants
2.Threat of substitutes
3.Buyer power
4.Supplier power
5.Competitive rivalry.
Threat Of New Entrants
This potential threat always exist in every organization. But an organization
like Lever Brothers Pakistan Limited this threat is very minimum because you
need a giant to compete with another giant like Lever Brothers Pakistan
Limited and in a relatively small market like Pakistan, they are enjoying the
highest market shares in most of their product categories like ghee, oil, soaps,
spread, fabric care, etc. so, they face no threat of any new entrant.
Threat Of Substitutes
Same as in the case of new entrant no as such threat they are facing.
Buyer Power
To determine buyer power one condition is always necessary i.e. the buyers
are few so they exert power over an organization. But this condition is not
present in case of Lever Brothers Pakistan Limited, they have very diversified
product categories and within each category they have brands targeted at
almost each and every segment of the market so they dont face the buyers
power as such but still customer is king and they do have to pay a lot of
attention to buyers being a consumer product company.
-
8/3/2019 Unilever Strategic Report
29/60
Supplier Power
Suppliers dont exert any power over Lever Brothers Pakistan Limited rather
Lever Brothers Pakistan Limited provides buyers power in this case, no body
would like to loose a buyer like Lever Brothers Pakistan Limited so, they dont
face any significant supplier power.
Competitive Rivalry
Competition is intense but not cut throat competition and all of them avoid
frontal assault or direct attack. So, situation of healthy competition exist.
Competitive rivalry would be discussed more in detail in the section
competitor analysis.
Structure Types In Multinational Companies
The growth in the size and importance of multinational business warrants
some special mention, since the structural implications can be significant. In
deciding the structure of multinational critical aspect or factor or issue is the
extent to which local independence and responsiveness take precedence over
global coordination. On the basis of these factors there are generally fourtypes of multinational structures, such as:
In all the four structures, Unilever has assumed the structure of transnational
corporations in which they have developed structure, which attempts to
combine the local responsiveness of the international subsidiary with the
advantages available from coordination found in global product companies.
The key is that they wanted to create an integrated network of interdependent
resources and competencies, in which:
1. Each national unit operates independently, but is a source of ideas and
capabilities for the whole corporation.
2.The corporate center manages a global network by first establishing the role of
each subsidiary, then sustaining the culture and system to make the
-
8/3/2019 Unilever Strategic Report
30/60
network operates efficiently or in a way we can say that they have
combined global and multi-domestic strategy, staying independent and
responsive towards local or national market and yet not loosing touch or
coordination with the worldwide network and parent company.
There are interesting differences between countries in the way that global
strategy tend to develop. Companies, which originated in many European
countries such as Unilever or Nestle needed to internationalize their activities
at an early stage, owing to the small size of their home markets. This took the
firm of international subsidiaries but now their challenge is to reduce the
local autonomy and increase global coordination. But in contrast US
companies with a large domestic market tended to favor internationaldivisions and now they face two challenges:
1.The issue of local autonomy.
2. Barriers between their separate strategic views of the domestic and
international business.
Unilever has well coped with these challenges by adopting the transnational
corporation structure.
Value Chain Analysis Of Lever Brothers Pakistan Limited
This method for accessing strengths and weaknesses divides the business
into number of linked activities that may each produce value for the customer.
Customer value is a function of factors that usually fall into one of threebroad categories those that differentiate the product, those that lower its
costs, or those that allow the organization to respond to customer needs more
quickly.
-
8/3/2019 Unilever Strategic Report
31/60
The value chain frame work helps analyze the contribution of individual
activities in a business to the overall level of customer value the firm produces
and ultimately to its financial performance. If each part of the business
produces value, the firm should be able to change more and/or incur lower
costs either of which will lead to higher profit margins.
The value chain analysis frame work of Lever Brothers Pakistan Limited
appears as follows and is basically seeking cost leadership as their source
competitive advantage.
Explanation Of Value Chain
Lever Brothers Pakistan Limited is basically focusing on cost leadership in
branded shampoos market. For their raw material procurement they have
opted outsourcing strategy. Many contents of shampoos are procured from
Europe, America, Far East and some of raw material is locally available it
increases the lead-time. Lever Brothers Pakistan Limited handles this
situation with near to JIT system i.e. called Automatic Replenishment
System. Through this system the suppliers of raw material are well connected
through computer terminal, the detail and current level of all raw materials,
inventory level is reflected on supplier terminal and on specific interval they
ship the raw material automatically which reduces time for repeated
requisition.
After releasing the material from customs the ingredients are shipped to
Rahim Yar Khan Plant. These ingredients are processed (both local and
imported) in the machinery specifically designed for this purpose. Normally for
sache packs 8 lanes are processed at a time in one lot.
8 lanes = 8 reels
1 r eel = 1 ton or 1000 kg of shampoo in quantity
-
8/3/2019 Unilever Strategic Report
32/60
Its cutting and packaging is completed as final step. Packaging material is
typically not available around factory area. Lever Brothers Pakistan Limited
has to purchase all packaging material from Packages Limited Lahore.
Hence both primary and secondary packaging material comes from Packages
Limited Lahore. Primary packaging material includes bottles and sache
packaging while that of secondary material includes the cartons. After
packaging of shampoo bottles and sache passes through distributor to
retailer.
Outbound logistics start from here on demand of 6 depots of Lever Brothers
Pakistan Limited, the lot is packed and delivered to the wholesaler.
Now we will discuss that how each individual activity of value chain (both
primary and supporting activity contributes towards the maximization of profits
to deliver value to final customer.
Supportive Activities
Firm Infrastructure
Lever Brothers Pakistan Limited has a well established infrastructure. They
have knowledgeable expert top management and middle management who
have expertise in the consumer goods fields. Moreover they have some
arrangements with hair exports to furnish their product knowledge.
They have a very good and effective management information system, which
not only shares the information within the organization i.e. Lever Brothers
Pakistan Limited but also with their suppliers and wholesalers as well. Thissaves their time and gives them real-time information.
Marketing research department is also sharing consumer research data to
improve their standards according to customer demand and trends e.g.
conditioner was missing in Sunsilk Research and Development searched out
-
8/3/2019 Unilever Strategic Report
33/60
and found that competitors are providing conditioner also in shampoo which
Sunsilk and Lifebuoy shampoo didnt have in them. But this has been done
very late and implementation is also very slow. Production people (manager)
upon sharing this information from marketing research department has
recently launched the antidandruff white Sunsilk with conditioner which has
shown a very successful performance in market and has improved the sales
of Sunsilk of Lever Brothers Pakistan Limited especially of this white variant.
One important thing to be noticed is that though they have integrated
information sharing network but the implementation on the needed strategy by
production people is seeming to be very late as their decisions are centralized
and are in hands of parent company and the implementation is also very slow.This problem of absence of conditioner was identified by marketing research
people very earlier and was communicated to production department as well
but a implication and action has been taken after a very long time when
problems of sales become visible. We can say this is due to long term
approach to strategy formation and implementation of Lever Brothers Pakistan
Limited. Hence infrastructure contributes as a supporting activity for providing
value to the customers and on some aspects e.g. centralized decision making
and late implementation it proves to be a weak support.
Human Resource Management
Human resource management is the one of the most important supporting
pillar of the value chain and it is useful for its analysis. A firms higher
technological and financial resources cannot do any thing for the betterment
of company unless these two and rest of the resources are handled by the
good appropriate human resources. We can surely say that Lever BrothersPakistan Limited has a skilled, qualified, expert, communicative management
and officers staff.
They have both formal and informal network of communication in their
organization to complete the tasks and target efficiently and effectively. Hence
-
8/3/2019 Unilever Strategic Report
34/60
we can say that there is healthy type of network among Lever Brothers
Pakistan Limited staffs department.
Lever Brothers Pakistan Limited offers the training programmes and arranges
seminars for further skill development and career development purposes of its
brand managers, marketing managers, research and development managers,
and other staff, which enhances their efficiency to support the primary
activities of value chain of shampoo product line of Lever Brothers Pakistan
Limited.
Due to necessary training, healthy pay scales, balanced empowerment,
informal and formal combination of communication network the job
satisfaction of each and every employee is very high. Which reduces the
employees turnover to minimal. All of them contribute a lot and positively for
the support of value chain primary activities i.e. procurement manager putting
his efforts for the purchase of high and right quality making inbound logistics.
Operations / brand manager is focusing ensuring the relationship of the
shampoo production.
Sales and distribution manager of Lever Brothers Pakistan Limited is ensuring
the complete coverage of retail outlets of Pakistan. He ensures that all
variants and sache and shampoos of Lever Brothers Pakistan Limited are
available on each shopping outlet of Pakistan i.e. from large shopping stores
to small shop covering both rural and urban areas.
But here we would like to add that one thing is missing as a support of value
chain i.e. good relations of Lever Brothers Pakistan Limited marketing and
sales manager with their retailer and distributors. Due to this retailer give
preference to the competitors brands of shampoos e.g. P&G. Hence Lever
Brothers Pakistan Limited is providing training and job satisfaction to its
human resources in turn there is low employee turnover and they support
-
8/3/2019 Unilever Strategic Report
35/60
value chain except good relationship and incentive to retailers which is of
primary importance.
Technological Development
By technological development as a supportive activity we mean that how
much organization is bringing further improvements in its products and
product development. Lever Brothers Pakistan Limited mainly through its R&D
department has recently brought a major improvement in its Sunsilk shampoo
i.e. launch of antidandruff white shampoo. Hence this very element has also
been supportive in value chain of Sunsilk and Lifebuoy shampoo. But still
Lever Brothers Pakistan Limited are laggards in bringing this improvement.
Procurement
Procurement especially of raw material contents and packaging material is
critical to the product and ultimately to the organizations success. Lever
Brothers Pakistan Limited purchases its most of the contents of shampoo from
foreign countries like America, Europe and Far East. The procurement system
of Lever Brothers Pakistan Limited is mostly globally centralized and is long
term as well. For purchase of local raw material Lever Brothers Pakistan
Limited is outsourcing with its suppliers. They have get very good long term
relationship with their suppliers of local raw material as well. Hence they get
the quantity discounts and manage lead time as well.
Primary Activities Of Value Chain Of Lever Brothers Pakistan Limited
Inbound Logistics Of Value Chain Of Lever Brothers Pakistan Limited
1. Lever Brothers Pakistan Limited is focusing on the outsourcing for the
purchase of basic inputs with their suppliers. Instead of backward
integration they believe in outsourcing which reduces their cost.
2.Lever Brothers Pakistan Limited faces high lead-time for the global purchase of
its imported raw materials but automatic replenishment system has solved
-
8/3/2019 Unilever Strategic Report
36/60
this problem. Lever Brothers Pakistan Limited is all the time connected via
its management information system with their suppliers.
3.Quality and reliability of raw material for shampoo product line is checked and
reconceived by the Lever Brothers Pakistan Limited at fixed intervals asthey have centralized buying system.
Operations
1.Lever Brothers Pakistan Limited has been in shampoo product line since 1984.
Within these 16 years they have got experience. Experience effect has
raised efficiency, they have very old operations and product method as
there has been no major turn around in production methods of itsshampoo.
2.Lever Brothers Pakistan Limited has a factory at Rahim Yar Khan in which they
produce different products array with shampoo, capacity of this plant has
been designed in such a way that in current demand they get the
economies of scale very easily which reduces cost of manufacturing of
Sunsilk and Lifebuoy on this basis they offer lower prices as compared to
P&G.
3.Since Lever Brothers Pakistan Limiteds buying is centralized same is the case
with production and operations methods as well. Rahim Yar Khan has to
follow the predefined production process given by parent head office of
Lever Brothers Pakistan Limited. Hence production process of both Sunsilk
and Lifebuoy is reliable i.e. there is no fluctuation. This element gives
reliability to final consumer.
Out Bound Logistics
1.Final product of shampoo of Lever Brothers Pakistan Limited is shipped to its 6
depots via truck on the demand of these depots. Whole Sellers have to
add value themselves. They bear this cost of transportation. Hence Lever
-
8/3/2019 Unilever Strategic Report
37/60
Brothers Pakistan Limited has suppliers and Whole Sellers power over its
wholesalers and gives cost cutting edge.
2. Lever Brothers Pakistan Limited covers all the retail and shopping outlets of
Pakistan. Lever Brothers Pakistan Limited ensures availability and visibilityof its shampoos as each and every large store, medium size stores, small
shops. 100% coverage of outlet is the major strength of Lever Brothers
Pakistan Limited.
Marketing And Sales
1. Poor Marketing
Lever Brothers Pakistan Limited has very poor marketing of their product.
They concentrate only on Nabila as their celebrity. They mainly focus on
females for Sunsilk and ignore the rest potential market; males and kids. In
case of Lifebuoy they focus only on males and ignore females and kids which
reduces their market share as compared to P&Gs shampoo Penteane, Head
& Shoulder.
2. Lever Brothers Pakistan Limited has no strategy to make good relations
with retailers. This element destroys their repute in retailer class they do
prefer P&G and competitors shampoo to recommend it to buy and they
give more shelf space to P&Gs shampoos as compared to Lever
Brothers Pakistan Limiteds Sunsilk and Lifebuoy.
3. Lever Brothers Pakistan Limited has never offered any major incentive,
discount or prize scheme to retailers on its shampoos which the retailers
often demand. Retailers think that prize incentives with product or any
other prize scheme offered to retailers or consumer etc enhance sales.
Lever Brothers Pakistan Limited has never paid any head to it.
Services
-
8/3/2019 Unilever Strategic Report
38/60
Lever Brothers Pakistan Limited has good service in terms they offer free
samples for the relaunch of Sunsilk, which helps as a primary activity.
A Transition In Value Chain
Lever Brothers Pakistan Limited is now focusing as extended value chain i.e.
they are outsourcing with their suppliers and subcontracting with them to
ensure reliability of raw material.
Before this suppliers outsourcing they already have connected with their
customers with their strong R&D Department. But one of thing in which they
lags in they have centralized long term strategy, formulated on system and
implementation of results of R&D Department research based on customer
connection in very late.
Hence all the above individual activities (i.e. primary and supportive activities)
contribute to enhance customer values and ultimately improves firms financial
performance.
Lever Brothers Pakistan Limited becomes able to incur lower costs which
leads to higher profit margins.
SWOT Analysis
The SWOT analysis of Lever Brothers Pakistan Limited are as follows:
Strengths
1.Unilever PLC England the parent company all over the world gives assistance
to Lever Brothers Pakistan Limited so Lever Brothers Pakistan Limited
enjoys a high level of support from Unilever.
2. Another major source of strength for Lever Brothers Pakistan Limited is its
product targeting all income groups. Lever Brothers Pakistan Limited is
-
8/3/2019 Unilever Strategic Report
39/60
providing products total income groups i.e. providing quality with economy
as well e.g. Wheel washing powder, Breeze beauty soap, Taza Chai, etc.
3.Lever Brothers Pakistan Limited is the oldest company operating in Pakistan
which gives him a commanding position is Pakistan to certain extent. 4. Lever Brothers Pakistan Limited enjoys the services of highly professional
management in the area of sales, marketing, technical and production.
5.Lever Brothers Pakistan Limited has such a strong goodwill in the market that
some of its brand names has become the generic names for those
products such as Surf for detergents and Dalda for ghee.
6.Lever Brothers Pakistan Limited is the largest producer of consumer products
in Pakistan and has strong brands in every field such as Close Up, Dalda,
Surf, Lifebuoy, Lux, etc.
7. Lever Brothers Pakistan Limited having the biggest shares in tea market
having the biggest brand Lipton and Brooke Bond.
8. They are market leader in ice cream business of Polka i.e. horizontal
integration with hostile takeover they have captured their competitors
thereby reducing competition.
9.The company has the assets of more than 5 billion. So, it can invest further
product innovation and development.
10.It has the largest and efficient distribution network then any its competition.
11.Lever Brothers Pakistan Limited is the only company in Pakistan which has its
own corner research department.
12.The company is very strong financially.
13.The company is working for almost 50 years in Pakistan. Thats why it has
many advantages. Which other do not have. They have know how of the
market. They understand the market very well. Similarly during this period
they have developed a very organized distribution network all over the
country. Another advantage is there wide range of products, which give
them a position to monopolize the retailers shop. It is estimated that over
more than 30% of a retailers shop items are by this single company.
-
8/3/2019 Unilever Strategic Report
40/60
Weaknesses
1. Lever Brothers Pakistan Limited unable to capture shampoo and toothpaste
market i.e. low market share.
2.New variants of the company were not able to sustain in the market such as
harmony.
3. Lever Brothers Pakistan Limited is relatively week in their innovation
department i.e. being first to introduce Surf but after that has no major
innovation.
4. Emphasizing only few products while ignoring others which could give them
potential market shares e.g. beverages section.
5.Lever Brothers Pakistan Limited go for long term strategies for all their product
categories which prove to be a weakness with change in the
circumstances and taste, trends of people
Opportunities
1.With the help of further advertising their non competing brands can increase
their market share i.e. market penetration strategy. People will definitely go
for these products as Lever Brothers Pakistan Limited has a sound image
in peoples mind. Whatever the brand is being sold is mostly on the basis
of brand loyalty.
2. They have capital to invest they can explore new product categories e.g. in
food and beverages they can develop new products like Rafhan has
launched custard, jelly, kheer mix, rasmalai mix, etc. through it again will
broaden their product categories and will make their operations complex
but this could be avoided with sub contracting i.e. strategic partnershipwith their suppliers. These products can prove a cash cows as customer
in Pakistan always welcome food items especially they will welcome due to
brand image of Blue Band and Dalda ghee in food category and due to
Lipton and Supreme in beverages category.
-
8/3/2019 Unilever Strategic Report
41/60
3. Lever Brothers Pakistan Limited relaunches most of its products with same
name or little change in the name e.g. Surf Micro to Surf Extra, ,then to
Surf Ultra and then to Surf Excel, with little change of name and little
changes in its formula. If Lever Brothers Pakistan Limited launch its
products with in prevailing product categories, with entirely new name and
new formula then they can capture new market shares as it will gain
capture the attention of its target market more as compared to existing
one. Though apparently it will increase the advertising cost but it will be
compensated with exciting sales as you have to advertise more even in
case of relaunch of products with little change in names and formulas. So
why not to go for new name and new formula as it will increase your brand
portfolio, it can satisfy the needs of customers which were unsatisfied with
the previous brands, its names, its formula, e.g. people used to say Surf
fades the clothes, they changed formula and not name only gave it a suffix
of Excel i.e. Surf Excel now the people who developed this perception that
it fades the color, remain reluctant for long time even after its relaunch and
heavy advertisement.
Threats
1. P&G is giving very serious threats to Lever Brothers Pakistan Limited in the
business of detergents and personal wash and shampoos.
2. No of local companies producing detergents and market them at very low
prices which is a threat to Surf.
3.In the case of ghee and oil business Habib is giving very tough competition to
Lever Brothers Pakistan Limited by introducing its variety of products.
4.
Treat is promoting Bodyguard very much and trying to produce a competition inthe carbolic soap market.
5.Increasing inflation in the country, persistently reducing the purchasing power
of the people and dropping people from high price products to low price
products e.g. the detergents and providing fuel to the expansion of
unorganized sector.
-
8/3/2019 Unilever Strategic Report
42/60
6. Increased import duties are also adding to the prices of the products and in
Pakistan which is a very price for all the firms not only Lever Brothers
Pakistan Limited who are using imported raw material.
7.
Threats of new entrants are also present. As ICI is a potential threat indetergents industry, because they are already involved in chemical
business and providing raw material for detergent production to different
manufacturing companies like Lever Brothers Pakistan Limited and
Colgate Palmolive.
PEST Analysis
PEST analysis is used to assess that what environmental factors affecting
different organization and which of them are more important and how they
affect the organization. It is indicator of political, economical, social and
technological influences on organization.
Political & Legal Factors
As far as the Lever Brothers Pakistan Limited concerns according to them that
political instability have do affect but not particularly Lever Brothers Pakistan
Limited same as it affects any other organization around and specially they
are in consumer products business which never make them out of business.
In case of legal factors, any trade policy or import duties is not affecting
particularly Lever Brothers Pakistan Limited. In Pakistan right now following
liberalization policy under SAP by IMF made which they have to waive off all
restrictions and moreover due to huge investment by Lever Brothers Pakistan
Limited no government can afford to create hurdles in the way of an
organization like Lever Brothers Pakistan Limited.
And they dont have to go for only lobbying or what so ever as not action of
Pakistan government has affected them adversely as such.
Economical Factors
-
8/3/2019 Unilever Strategic Report
43/60
Economical factors affect Lever Brothers Pakistan Limited in the same way as
it affect any other organization like current economic situation in Pakistan and
inflation has reduced consumers disposable income too, which in turn has
reduced the purchasing power of consumer but affect is same for every
organization and according to them Lever Brothers Pakistan Limited have
edge that they have targeted all possible segments through their vast product
category i.e. the width and length too. So one way or other they find way to
cover it up.
Capital Markets
In other economic factors like interest rates and inflation has affected the
borrowing ability of organization but Lever Brothers Pakistan Limited stayed
unaffected as a company having business in billions and when in need of
financing no single bank can fulfill the need, they have to make a consortium
to finance Lever Brothers Pakistan Limited and with very good credit standing
and very low risk definitely they get the lowest or justified interest rate as well.
Socio-Cultural Factors
In socio-cultural factors, factors like lifestyle changes and level of education
affects an organization. In case of change in lifestyle, the world has converted
into global town now and people have readily access to every sort of
information and they are becoming more quality conscious. Now more
concerned towards environmental issues now and demand more social
responsibility on the part of organizations now. To cope up with all these
factors now Lever Brothers Pakistan Limited which always maintained the
quality standards needs to work towards other social factors like social
responsibility and environmental concerns like P&G did in its Arial campaign
and image of a society responsible organization.
Technological Factors
-
8/3/2019 Unilever Strategic Report
44/60
In technological factors comes R&D first and foremost that how much an
organization spending in terms of product improvement or development of
new products or improvement in production process or in the raw material etc.
and what is the trend in the industry as Pakistan is not that big and not very
much innovation seeking as the other developed countries. Yet they keep on
finding new ways of doing things and new things as well they continuously
launched variants in brands etc. and moreover in the market like Pakistan in
product categories of consumer products rates of obsolescence is not very
high rather very slow so no great pressure to launch new products,.
Other than the factors smuggling affects Lever Brothers Pakistan Limiteds
sales very negatively. This issue would be discussed more in detail in theproblem statement.
Problem Statement
Our problem statement is regarding the shampoo segment of Lever Brothers
Pakistan Limited. They have managed such a deep and broad product
category and manage to do so well that some of their brand name has
become the generic names for that particular product but this is not the story
with Sunsilk and recently launched Lifebuoy Shampoo. Our problem
statement is that what are the causes, which kept Lever Brothers Pakistan
Limited away from market leader position in shampoo market.
Problems
Whenever we look for the problems of company its problems can be
bifurcated into two broader categories.
1.Internal problems
2.External problems
Internal problems
-
8/3/2019 Unilever Strategic Report
45/60
These problems are normally faced by organization due to elements, factors
and weaknesses which are present inside or which are existing internally in
the organization e.g. problems due to organizational policies, culture,
structure, information sharing networks, organizational strategies or even
employees, they can be positive force and the problem child as a source of
internal problem as well.
1.Companys management rely on long term strategies which they receive ready
made from their parent company, head office as a modus operandi. And
hence a strategy or a policy approval, formulated and implemented 50
years back becomes obsolete and discard in prevailing scenario and
changing environment e.g. in their advertising campaigns of Sunsilkshampoo they only use Nabila as their celebrity (Hair Expert) and they
have never tried any other sports or film media celebrity for the promotion
of their product which their competitors use extensively. Here in this field
they lag behind due to their long term strategy even in field of advertising
given by their parent head office.
Hence being an influenciable organization they exhibit bureaucratic
management style they want to maintain their status quo before these
environmental changes like advertising trend.
2.Offices and branches of Lever Brothers Pakistan Limited are normally placed
in domestic setup especially Multan branch, since it is a marketing
organization, its office outlook and location must be in professional and
well to do area which will contribute in proper functionality of branch and its
employees as well. This severe problem is being faced by Multan branch
of Lever Brothers Pakistan Limited as well.
3. Management team of Lever Brothers Pakistan Limited normally arrange
excessive operational meeting, they have less emphasis on the strategy
implementation part as compared to strategy formulation and planning.
4. All the decisions regarding product planning, development, distribution and
even targets of the branches are centralized and are in hands of central
-
8/3/2019 Unilever Strategic Report
46/60
sales office of Lever Brothers Pakistan Limited. They dont believe in MBO
(Management by objectives). Branches are given inflexible targets of sales
though data on these branch managers negotiate this figure but it takes
too long.
5. Due to heavy capital investment in their brands Lever Brothers Pakistan
Limited is unable to observe their slow moving brands which create a cost
burden.
6. Since removing old/discarded brand is very expensive due to expensive
installed machinery, technology and capital investment, launching new
brand is also very expensive for Lever Brothers Pakistan Limited due to
the same reason. As to launch a new brand complete research and
development setup is required which is inflexible and can not be re-utilized
for another brand along with its consumer market is heavily flooded with
products, there is very low probability that market will absorb new brands.
7.Whenever Lever Brothers Pakistan Limited launch any product they first launch
it in India if product proves a big success they try it in Pakistan which is
not a good strategy due to cultural difference and religious differences.
8.Lever Brothers Pakistan Limited has very poor relationships with their dealers
and retailers. They are far away form their competitors like P&G, in case of
retailer relationship. Their brand manager makes very rare visits to the
retailers to know their problems, very little discounts are offered by Lever
Brothers Pakistan Limited to their retailers. No prize scheme and incentive
is given to dealers, retailers, wholesalers of Lever Brothers Pakistan
Limited. Even Lever Brothers Pakistan Limited brand manager never
bargain on the proper and prominent shelf space of their shampoos
(Sunsilk and Lifebuoy).
9.Lever Brothers Pakistan Limited has not been able to place any check on its
smuggling shampoos into Pakistan e.g. Indonesian Sunsilk is made
according to the demographic of Indonesia, when it will be used in
-
8/3/2019 Unilever Strategic Report
47/60
Pakistan it will damage the hair of people, which deteriorate the brand
image. Which create problem on local sales of Pakistan.
10. Employment insecurities in Lever Brothers Pakistan Limited also contribute
negatively towards the performance of branch operations. All branchmanagers, brand managers and operation are transferred within branches
of Lever Brothers Pakistan Limited allover Pakistan. This create an
uncertainty among management team, new managers takes much time to
settle in new branch and to understand new setup of branch and new
dealers network. This affects the branch operations and performance.
External problems
Lever Brothers Pakistan Limited is not facing any prominent external problem
as already analyzed in PEST analysis.
Introduction Of Sunsilk And Lifebuoy
Sunsilk Shampoo
Lever Brothers Pakistan Limited stepped into shampoo business in 1984 with
Sunsilk initially with only two variants:
1.Sunsilk (egg shampoo)
2.Sunsilk (shikaki shampoo)
This was the first branded shampoo in Pakistani market then they launched
another shampoo named as Clinic in 1985. For the reason that no other
competitor was there in the market their sales figures was high in start, but as
shampoo market started to develop and imported shampoo and other
competitors entered into the market their sales started declining so they re-
launched it as Clinic Plus. Due to their poor marketing in 90s Clinic Plus
-
8/3/2019 Unilever Strategic Report
48/60
faced big failure. The sales of Clinic Plus was not up to the expectations of the
company and they abandoned the production of Clinic Plus. They have
recently launched the brand with the new name and new formula (as they
claim) named as Clinic All Clear dandruff shampoo.
Company re-launched Sunsilk shampoo with following five variants in 1998:
Sunsilk Black for dull hair
Sunsilk Yellow for normal hair
Sunsilk Green for thin hair
Sunsilk Pink for dry hair
Sunsilk Orange for oily hair
They promoted these 5 variants heavily but this could not get them their
market share back due to entry of strong competitors like P&G (Pentene, Pert
Plus, Rejoice, Head & Shoulder), Bio Amla & other imported shampoos as
these shampoos got more shelf space in the retail outlets.
Lever Brothers Pakistan Limited again re-launched the Sunsilk at the end of
1999 with 12 different variants with new name of fruitamines. Now the focus
was on different kind of hair i.e. how many variation of Sunsilk are there with
aspect of ingredients and contents. Then they reduced their frutamines
Sunsilk to six variants. Now with launch of White Sunsilk they have seven
variants of Sunsilk.
Lifebuoy Shampoo
Lever Brothers Pakistan Limited also tried to encash its another very popular
brand name Lifebuoy soap which was popular among lower income segment.
They launched Lifebuoy shampoo using this brand name in 1998. Initially it
was successful according to the retailers every one was asking about it and
-
8/3/2019 Unilever Strategic Report
49/60
asked for retailers opinion as well. But it flopped badly because it was mainly
targeted towards lower and middle income segment and Lever Brothers
Pakistan Limited wanted this segment to switch from bath soap to shampoo
and wanted to develop shampoo market in this segment as well. But this class
did not switched to Lifebuoy shampoo because they were in habit of using
soap for washing their hair, more over they did not find any thing unique and
new about the shampoo. Other than being liquid. So, they again returned to
Lifebuoy soap.
SWOT Analysis Of Shampoo Product Line
Strengths
1. Lever Brothers Pakistan Limited has a good name as a market leader in
consumer products this image always help its shampoo product line.
Customer are brand loyal and of shampoo product line.
2.People have favorable opinions about Sunsilk that its contents do not include
any harmful chemicals which could damage their hair.
3.First trial image of user are positive and they are generally brand loyal.
4.Sunsilk and Lifebuoy shampoos users believe that it is economical. Due to costleadership strategy of Lever Brothers Pakistan Limited in shampoo product
line.
5. They have recently launched antidandruff shampoo (white variant) with
additional feature of conditioner which has been highly valued by the
customers. It is competing successfully with P&Gs shampoos which were
already having conditioner in them.
Weaknesses1. Packaging of Sunsilk and Lifebuoy shampoo is the biggest weaknesses of
Lever Brothers Pakistan Limited. Retailers complaint that one leaked bottle
of Sunsilk spoils the whole lot. But Lever Brothers Pakistan Limited do not
pay any head to it.
-
8/3/2019 Unilever Strategic Report
50/60
2. Advertisement of Sunsilk does not promote the product very well rather its
celebrity like Nabila is promoted. They dont switch their celebrity as they
have to follow long term promotion and advertising designed by their head
office as Elida (France) has always used beauty expert as their celebrity.
3.They focus on only females in their advertisement and they have ignored their
bigger segment of males.
4.Lever Brothers Pakistan Limited does not pay any attention on the incentives
and discounts given to the distributors and retailers.
5.Sales manager, brand manager and sales representatives do not conduct any
personal visits to the retail stores which gives them dissatisfaction.
6.Lever Brothers Pakistan Limited does not pay any attention to the shelf space
given to the Sunsilk in the retail stores. The store manager of Range told
us that the brand manager of Lever Brothers has never been visited their
store and they even never bothered about their shelf space.
7. Due to very huge number of variants in Sunsilk, Lever Brothers Pakistan
Limited fined it very difficult to focus on particular variants and it created
confusion among customers as well and increased complexity of
operations to a large extent and created cannibalization effect. Though
recently they have reduced their variants of Sunsilk from 12 to 6 and then
launched another one Sunsilk white. Still it needs further reduction.
Opportunities
1. Due strong company image and strong distribution network if they promote
their products through incentives, bonuses, allowances and discounts to
the retailers they can get better shelf space in the display stores of retailers
especially in shampoo product line.
2.
Lever Brothers Pakistan Limited has very strong and resourceful researchdepartment. They can conduct through their personnel in all over Pakistan
both in rural and urban areas and hence they can launch the new
shampoo with new formula and with new name. For this they have such a
big portfolio that they can afford its cost and returns will be maximized as a
-
8/3/2019 Unilever Strategic Report
51/60
result of increased sales which will definitely offset the cost and will result
in maximum market shares.
3.People have ignored the relaunch of Sunsilk and its different offered variants.
Lever Brothers Pakistan Limited should implement the idea of launching
the new shampoo with new name and new formula because of this they
well be better able to attract target market.
Threats
1. All new and existing and important shampoo and branded soaps, which are
used, as shampoos are the threats for the shampoo product line of Lever
Brothers Pakistan Limited especially Sunsilk. Since people are not that
much price sensitive in case of shampoo but they have more concern
about the ingredients, formula and quality of their shampoo.
2. Competitors of Lever Brothers Pakistan Limited like P&G have very strong
relations with retailers and distributors which is greater threat to the
Sunsilk. The detail of discounts offered by P&G re as followed:
Order in Rs. Discount in %Below 50,000 2-3%
Above 50,000 5-6%
While Lever Brothers Pakistan Limited offers even less than the above stated
discounts on Sunsilk and Lifebuoy shampoos.
Competitors Analysis
The major competitors of Sunsilk can be categorized in two ways (all
percentages have been provided by Lever Brothers Pakistan Limited:
1.Direct competitors 75%
2.Indirect competitors 25%
Direct Competitors
-
8/3/2019 Unilever Strategic Report
52/60
These competitors are in terms of product category. With reference to the
product category we can divide users of shampoo into following segments:
Upper Class
This class normally use Pentene, Head & Shoulder, Pert Plus. These
shampoos are giving tough competition to Sunsilk.
Middle Class
This segment is normally using shampoos in following percentage:
*All the percentages have been provided by LBPL.
Sr. No. Shampoo Percentage
1 Bio Amla 10
2 Head & Shoulder 203 Pentene 354 Pert Plus 255 Sunsilk 10
Bio Amla
Normally young girls and women want lengthy hair and try to avoid split edges
of hair so they prefer Bio Amla. This is a shampoo which has the largest
number of liters sales in Pakistan. Only lower middle and middle group people
are using Bio Amla.
Head & Shoulder
20% shampoo users are using Head & Shoulder as they are dandruff
conscious people. 99% of the people are influenced by the advertisement of
Head & Shoulder on daily use to get rid of dandruff and more over they re
getting the promised results. They have targeted both males