free reports

7/30/2019 Free Reports

1/40

Free Reports, Assignments, Presentations, MBA Reports, BBA Reports, BusinessReports, Analysis of Annual Reports

Report on Strategic Management of Unilever

Organization Introduction

Lever Brothers Pakistan Limited is a multinational organization. Unilever PLC London is its parentcompany. Unilever is a European based company with headquarters in London, and their shares arequoted at the stock exchange of several European countries. They deal in all kinds of products fromanimal foodstuff to foods and detergents plus other personal and consumer products. Unilever has itssubsidiaries 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 Brothersin 1827 in England Sunlight was the first product of Lever Brothers, which makes the beginning of themarketing 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:

Buying raw material

Selling finished goods

Consequently both the companies loosing out money in term of profit. These problems led to think of themergers 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 wasestablished in England and Rotter Dam.

Unilever has 500 operating companies in 80 countries. It has 0.3 million employees and turnover of salesin 23000 million pounds. The global business proportion is 60% in Europe20% in North America and20% in rest of the world. An identified board of directors control the activities of subsidiary companiesthroughout 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 andHVM company based at Karachi. As a result of merger Lever Brothers Pakistan Limited was incorporatedas an independent Unilever operating company in 1955. The company is quoted onthe Karachi, Lahore and Islamabad Stock Exchanges. Lever Brothers Pakistan Limited has around 1900employees inPakistan.

Lever Brothers Pakistan Limited played a dynamic role in boosting consumer products market. It stand ata unique position due to its honesty and integrity. Lever Brothers Pakistan Limiteds main divisions of

business are:

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 isquoted on Karachi and Lahore Stock Exchange market. The company is manually engaged in the
http://download-reports.blogspot.com/http://download-reports.blogspot.com/


2/40

blending, packaging and marketing of tea. It also has a small business in the sale of packing apices. Thecompany employ around 850 persons. And has three manufacturing locations situated in Karachi andKhanewal. 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 thecombined 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, MehranInternational Limited and Ambrosia International Limited, which is known as Polka Group of Ice CreamCompanies.

Product Mix

At present Lever Brothers Pakistan Limited is engaged in marketing of diversified varieties and classes ofproducts and playing a dynamic role in boosting consumer product market. It stand at a unique positiondue 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 likedifferent 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 linesare called product length and no of products in each product line are called depth of product line. LeverBrothers 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

Fabrics And Home Care


3/40

Fabric Wash

Surf ExcelPower 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

Fair & Lovely Skin Cream and LotionDental Care

Close-up Tooth Paste

Pepsodent

Oil And Dairy Based Foods

Banaspati

Dalda

Cooking Oil

Dalda Cooking Oil(Soya Bean)


4/40

Dalda Sunflower Oil

Planta

Margarine

Blue BandIndustrial Fats

A whole range of product for bakery and oils for the industry.

Beverages

Leaf Teas

Yellow Label

Yellow Label Danedar

Richbru

Top Star

Taaza Leaf

Supreme

Brooke Bond

Dust Teas

Pearl DustRuby Dust

Laojee

Mixture Tea

TaazaIce Cream

Cornetto (in 3 varieties)


5/40

Feast (in2 varieties)

Feast Stickless

Top Ten

Star Cup (in 4 varieties)

Sundae ( 2 variant)

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 hereto 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 tofollow 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 dominantposition 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 ourbusiness over 5 years and thereby delivering superior value creation.

2.We will achieve this by adopting a broad view of our market by seeking thenew opportunities in the core categories of Unilever and by staying closerto all consumers than competitors, understanding their evolving needs


6/40

and focusing on constant delivery of superior value for our brandsthrough innovation.

3.Competitive advantage will also be developed by driving down relentlessly onrelative cost positions and outpacing competition in operationalefficiency improvement.

4.We shall build on our strong network of distributors to maximizepenetrations and visibility in existing channels and to develop all newchannels relevant to our consumers.

5.We shall establish Unilevers core brands in Afghanistan, building brandloyalty and strong distribution in the market.

6.To achieve these standards of performance, Lever Brothers Pakistan Limitedwill develop a strategically focussed organization and will motivate itspersonnel to use its full potential of creativity and commitment. It willalso leverage Unilevers best practices and maintain the higheststandards 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 suchpractices inPakistan.

Analysis Of Mission Statement

Mission Contents

Organization Philosophy

People

Peoples are key to strengths of Lever Brothers Pakistan Limited. The development of their potential iscore 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 BrothersPakistan 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 ateam analyzes that customer complaint is right or not and then they send the detailed response tocustomer along with gift of their products. With a questionnaire for suggestion for further improvementon the top of which is written WE CARE ABOUT YOU.

Suppliers


7/40

Suppliers are considered the partners of Lever Brothers Pakistan Limited and Lever Brothers PakistanLimited 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 theenvironment in which they live and work.

Profit

It is considered to be the ultimate measure of Lever Brothers Pakistan Limiteds performance and it isrequired to maintain and grow their business.

Product Market Domain

This factor indicates where they are going to compete. Lever Brothers Pakistan Limiteds field ofoperations is the consumer products and business and this is very clearly stated in their missionstatement.

Organization Key Value

It defines that what do they want. They people of organization to be good at or how do they want them tobehave and this very clearly stated in mission statement as always stay responsive to change, go forinnovation, employee commitment to organizational objectives and mission and creating value forcustomers. So, if we check the mission statement through this aspect then we can easily state that theyhave 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 orindustry. The mission statement outlines this as adopting a broad view of our market, by seeking the newopportunities in the core categories and by staying closer to all consumers than competitors andunderstanding their evolving needs and focusing on constant delivery of superior value for our brandsthrough innovation.

So far them critical success factor is consumer connectivity and commitment to excel and to providesuperior value to customers and products of superior quality and value.

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 missionstatement contains concerns about all stakeholders. First be foremost consumers and then otherstakeholders and describes it as: Through its commitment to high level of core and safety for itsemployees, its consumers and environment. Lever Brothers Pakistan Limited will be exemplary and willparticipate in the dissemination of such practices in Pakistan.

Form And Sources Of Competitive Advantages


8/40

Mission statement of Lever Brothers Pakistan Limited completely describes the form and sources ofcompetitive advantage as:

Competitive advantage will be developed by driving down relentlessly on relative cost positions andoutpacing competitors in operational efficiency improvements and through building strong network ofdistributors 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 operationalcontrol.

They are going for unique combination of cost reduction and superior value to customers so they entirelyprovide the form and source of competitive advantage that what they wanted to achieve and how they willachieve it.

Scope And Types Of Mission

The mission of Lever Brothers Pakistan Limited covers both the external dimension (product marketdomain, critical success factors) and internal dimensions (philosophy, organization key values, form andsources of competitive advantage, and concern for different stakeholders) so therefore, we can say that themission statement of Lever Brothers Pakistan Limited is a global mission as according to the followingexhibit.

Lever Brothers Pakistan Limited wants to be market leader in consumer products. It enjoys greatestmarket share as compared to competitors by providing 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 focusedand has provided customer value as their main focus.

As both the dimensions are extensively covered so we can say that the mission of Lever Brothers PakistanLimited 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


9/40

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? 10Is the mission statement well written enough so that people will remember

it?

5

Is the mission statement challenging and exiting, will it motivate us? 10

Does 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 approximatelynear 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 business in such amanner 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 flowswill be utilized in improving the product quality and contents to enhancethe value to customer and final users.

2.Lever Brothers Pakistan Limited has an objective to have a responsive supplychain and technological based processes.

3.They want to have consumer connectivity, i.e. they want to know what theyeat, drink, how they spend their lives, what are their preferences. So inthis way they wan to be very close to customer, to know their real insightand desires so they can develop new strategy for product design and can

implement their strategy in better manner i.e. avoidance of hit and trialapproach and hitting the right target with right strategy at right time inright and accurate manner.

4.They want to be cost efficient i.e. they want to reduce in their cost ofproduction, cost of transportation, distribution and packaging cost andfinally reducing all the human cost to offer a competitive price tocustomer maintain the high standards of quality.


10/40

5.To have a partnership with their suppliers to enable them to provide highquality 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

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 onei.e. market leader in terms of market share. They want to be cost efficient it is specific i.e. they have toreduce their costs without compromising on quality. They want to have focused strategic thrust i.e. theyare to simply reduce non-valuable slow moving product. So the non-value added products are quiteobvious with their sale figure and popularity.

Measurability

Objectives of Lever Brothers Pakistan Limited are measurable as you can easily measure the double-digitgrowth with their balance sheet footings and cash flow analysis. Reduction in cost easily be measurablefrom 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 standards thereby becoming market leader with their increased share, sales andgrowth. 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 incost is realistic, you an reduce your cost by focusing on value chain. Cost of inbound and outboundlogistics.


11/40

The objective of launching innovative products is also realistic objective, it comes only from creative ideasand 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 nogoals. So Lever Brothers Pakistan Limited also has targets before it.

These main targets and objectives are:

1.Profits

2.Consumerism

3.

Welfare of consumer

The first objective of Lever Brothers Pakistan Limited is to earn maximum profit but keeping in view thecustomer 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 thereasons. Will soon what steps should be taken to overcome these reasons.

Company will introduce different marketing strategies if there are problems in marketing. Here I wouldlike to code two very famous examples, 1st of Sunlight soap and Sunlight washing powder of LeverBrothers 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 segmentof washing powder and than the market share for Sunlight soap declined with passage of time, now theconsumer who realized the convenience of washing powder started using it, but at the same time, as aresult marketing strategy of Lever Brothers Pakistan Limited awareness of people, people switched to surfand 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 finallydecided to stop the production of this very product i.e. it is now obsolete.


12/40

Second example is related to the change of brand name of Surf to Surf Excel. The reason behind wasintroduction of competitors brands like Arial by P&G which had brightness features, which caused thepeople to switch from Surf to Arial, Lever Brothers Pakistan Limited realized the fact due to disturbancein sale volume of Surf and introduced new brand name Surf Excel with extra brightness power.

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 andinterest 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 differentorganizational 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 toperform 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 involves200 brands in Pakistan so now they wanted to reduce the operational complexity and going for strategicalliances with their suppliers, instead of producing themselves and going into complex operations nowthey want their suppliers to produce for them.

The outsourcing the production so that they dont have to invest heavily in the production and to reducethe 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 Pakistan Limited but they mainly go forrelated diversification as against unrelated diversification for conglomerates, they are diversified intonumber of businesses as mentioned earlier but they are all related to consumer products. Through verticaldiversification they will be able to eliminate the operational complexity and costs of buying and selling i.e.

the transactional costs. Now they mainly wanted to step away from operations and want to focus more oncustomers.

As means of diversification which are being utilized by the Lever Brothers Pakistan Limited as all thetime, been acquisition, neither joint ventures i.e. strategic alliances nor the internal development. Here wecan take the example of the acquisition of Brooke Bond and Polka for example which have Brotheracquired through a hostile takeover. And to step away from operational complexities now they go forsubcontracting with the suppliers and want them to produce for Lever Brothers Pakistan Limited as incase 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 ofstrategies. First and foremost strategy they want to follow is the cost leadership. They wanted to controlcost 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 forcost efficient subcontracting.

Second they want to achieve cost efficiency through responsive and cost efficient supply chain, want to bein touch with suppliers all the time and for that they have connected themselves with the suppliers and to


13/40

their suppliers as well to minimize cost related to forecasting now they want better forecasting throughcomputer 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 gettingcloser to the concept of just in time except for those products for which they have to brought in rawmaterials from far flung areas like tea and moreover routings of logistics as well like air routing or shiprouting to curtail the costs other than cost efficiency, they have adopted the strategy ofconsumerconnectivityi.e. want to stay closer to consumers rather to operations and want to focus all alternationsto consumers through more research and customer profiles and demographics and wants to explore newcustomers and usage of products.

To get customer connectivity they do the market research to check the trends of their customers. The dopre-launch, post-launch research, e.g. their did before and after lunching while antidandruff Sunsilk. Theresponse 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 basicstrategy to implement and achieve the customer connectivity and to fulfill their customer demand.

Here Lever Brothers Pakistan Limited has used the strategy of product development i.e. by modifying andimproving their Sunsilk it into Sunsilk antidandruff (white), they have increased their sales. They areapplying 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 varianti.e. Sunsilk antidandruff white. They have added conditioner in it as initially the conditioner was missingin 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 BrothersPakistan Limited i.e.focusing on core brands or want 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 offurther variants like Surf Ultra, Surf Micro, Power Surf etc. and in Sunsilk number of variants, Black,Green, Pink, etc. to name a few and how they have curtailed all these slow moving brands like focusingattention to Surf Excel only and in case of Sunsilk Black and White (antidandruff) and discarding slowmoving items like Sunsilk Pink and Green etc.

So, to avoid cannibalization effect now instead of number of brands to flood in the market only few betterand 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 neverwent for CPR i.e. they have not come up with a new brand in last few years. Only the improvements ornew variants in existing brands or using the same old brand name to introduce a new product likeLifebuoy Shampoo or Fair & Lovely Soap. So it can easily be said that they believe more in adoptingchanges rather generative ones or go for single loop learning only because according to them its very veryexpensive to introduce a new brand name.

Strategy Evaluation

Now after outlining the objectives and discussing the strategies we can now evaluate these strategies thatwhether they are in harmony with the objectives of Lever Brothers Pakistan Limited or not. And then wewill 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 seethat 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 withsuppliers 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


14/40

with their suppliers and having more responsive and cost effective supply chain and to achieve growthmore focused strategy in case of reduction of brands, etc. So these strategies are true measures to achievethose objectives. But other than objectives there is some other criterion which each strategy has to fulfillto be 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 theorganization 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 thestrategies 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 moreresponsive value chain. All these strategies are not only suitable to the present condition but areprerequisite for future success as well i.e. by outsourcing production more focus towards customer needsand wants would be provided and it would help Lever Brothers Pakistan Limited to achieve even highercustomer 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 receivebetter quality at relatively lower cost and Lever Brothers Pakistan Limited would be able to providesuperior products quality and value to customers. Now a days, success lies at cost reduction and superiorquality which the Lever Brothers Pakistan Limited has successfully opted for. Other than this, next factoris that whether strategy can exploit the core competencies of the organization or not. The answer is verysimple that by reducing operational complexity and brands complexity more resources would be availableto focus more on the quality of the products as compared to the previous situation. So on the basis ofthese 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 andrisk if the strategies are implemented and the extent to which it would be in line with the expectations ofthe stakeholders.

In case of returns, its pretty much assured that returns would definitely be enhanced when the cost woulddecrease and strategies would result in better quality products. But the elements of risk is there whichcould be quite significant in the case of subcontracting, whether the suppliers would be able to meet thequality standards or not. And as we inquired it from the branch manager of Lever Brothers PakistanLimited, 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 bebeneficial from the better quality as well and it would not increase the cost in case of maintaining controlover the suppliers as its partnership more as compared to only placing and receiving order we will workfor 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 theproduction is out-sourced so they would definitely feared the unemployment but they said that we willarrange it with our suppliers and will try to accommodate them as much as possible and in case ofshareholders, they would receive benefits of this strategy and would receive higher returns on theirinvestments and they would be able to maximize their earnings and in other stakeholders suppliers would


15/40

now play more important role by entering into strategic partnership with the organization. Consumersreceive more attention now and would get more satisfaction as more and more products would bedeveloped on the basis of the targets being set by the consumers. So after analyzing these factors it caneasily be said that strategies being pursued by Lever Brothers Pakistan Limited has higher returns andlesser 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 moreconcerned with the assessment of practicalities of resourcing and strategic capabilities i.e. quantitativeassessment, which is beyond the scope of this report, so, as an overview, all strategies seems feasible andsome 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 ofLever Brothers Pakistan Limited.

Structural Analysis

Organizational structure and management of Lever Brothers Pakistan Limited

Lever Brothers Pakistan Limited restructure the organization after the merger with Brooke Bond PakistanLimited. The chairman is the executive officer of Lever Brothers Pakistan Limited. He leads the sevenmembers management committee, which is the top of decision making. The management is responsiblefor corporate strategy of Lever Brothers Pakistan Limited and for initiating policies and overall planningas well as their general management duties. Management committee members are each responsible forspecific function. Reporting to the management committee members are departmental heads who areresponsible for advising the management committee for planning and implementation of policies forensuring 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)


16/40

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 followingpersonalities:

Mr. Lain Strachan Sangster

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 andPakistanis business professionalists. The management of the company includes Syed Babar Ali asdirector, who is also involved in many other organizations i.e. Packages and other industries. It includesin its board meetings one member from each province i.e. Punjab, Sindh, NWFP and Baluchistan. The topmanagement 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


17/40

All over Pakistan 6 branches of Lever Brothers Pakistan Limited are working. Its head office is locatedin Karachi at Avari Towers. The chairman and management committee as well as the most of thedepartment 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 tobe carried out such as production, accounting, finance, marketing, etc. and then there is separatedepartment for each function and these functions are carried out by directors and they are assisted bymanagers of that very particular function like marketing manager and those managers have divided eachproduct category into home and fabric care category, spread and cooking category, etc. And thesecategories 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 functionalstructure as in functional structure CEO is in direct supervision of each primary activity but LeverBrothers Pakistan Limited have also included layers of vice chairman and very important managementcommittee as described earlier. This structure maximizes the basic advantage of functional structure thatthe CEO is in charge and well informed about each primary activity and minimizes the basic disadvantageof 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 BrothersPakistan Limited and to offset this disadvantage they have created additional layer of managementcommittee which is responsible of coordination between CEO and chairman, vice chairman, and thefunctional directors to take a strategic perspective on problems. So, Lever Brothers Pakistan Limited hasan 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.

To continue with structure analysis discussion, now lets turn our discussion to five basic forces, whichdetermines 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 PakistanLimited 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 highestmarket shares in most of their product categories like ghee, oil, soaps, spread, fabric care, etc. so, they faceno 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


18/40

To determine buyer power one condition is always necessary i.e. the buyers are few so they exert powerover an organization. But this condition is not present in case of Lever Brothers Pakistan Limited, theyhave very diversified product categories and within each category they have brands targeted at almosteach and every segment of the market so they dont face the buyers power as such but still customer isking and they do have to pay a lot of attention to buyers being a consumer product company.

Supplier Power

Suppliers dont exert any power over Lever Brothers Pakistan Limited rather Lever Brothers PakistanLimited provides buyers power in this case, no body would like to loose a buyer like Lever BrothersPakistan 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 directattack. So, situation of healthy competition exist. Competitive rivalry would be discussed more in detail inthe section competitor analysis.

Structure Types In Multinational Companies

The growth in the size and importance of multinational business warrants some special mention, since thestructural implications can be significant. In deciding the structure of multinational critical aspect orfactor or issue is the extent to which local independence and responsiveness take precedence over globalcoordination. On the basis of these factors there are generally four types of multinational structures, suchas:

In all the four structures, Unilever has assumed the structure of transnational corporations in which theyhave developed structure, which attempts to combine the local responsiveness of the internationalsubsidiary with the advantages available from coordination found in global product companies. The key isthat 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 andcapabilities for the whole corporation.

2.The corporate center manages a global network by first establishing the roleof each subsidiary, then sustaining the culture and system to make thenetwork operates efficiently or in a way we can say that they havecombined global and multi-domestic strategy, staying independent andresponsive towards local or national market and yet not loosing touch orcoordination 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 tointernationalize their activities at an early stage, owing to the small size of their home markets. This tookthe firm of international subsidiaries but now their challenge is to reduce the local autonomy andincrease global coordination. But in contrast US companies with a large domestic market tended to favorinternational divisions and now they face two challenges:

1.The issue of local autonomy.


19/40

2.Barriers between their separate strategic views of the domestic andinternational 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 activitiesthat may each produce value for the customer. Customer value is a function of factors that usually fallinto one of three broad categories those that differentiate the product, those that lower its costs, or thosethat allow the organization to respond to customer needs more quickly.

The value chain frame work helps analyze the contribution of individual activities in a business to theoverall level of customer value the firm produces and ultimately to its financial performance. If each partof 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 isbasically 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 shampoosare procured from Europe, America, Far East and some of raw material is locally available it increases thelead-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 connectedthrough computer terminal, the detail and current level of all raw materials, inventory level is reflected onsupplier 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. Theseingredients are processed (both local and imported) in the machinery specifically designed for thispurpose. 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

Its cutting and packaging is completed as final step. Packaging material is typically not available aroundfactory 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. Primarypackaging material includes bottles and sache packaging while that of secondary material includes thecartons. 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 ispacked and delivered to the wholesaler.


20/40

Now we will discuss that how each individual activity of value chain (both primary and supporting activitycontributes 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 experttop management and middle management who have expertise in the consumer goods fields. Moreoverthey 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 theinformation within the organization i.e. Lever Brothers Pakistan Limited but also with their suppliers and

wholesalers as well. This saves their time and gives them real-time information.

Marketing research department is also sharing consumer research data to improve their standardsaccording to customer demand and trends e.g. conditioner was missing in Sunsilk Research andDevelopment searched out and found that competitors are providing conditioner also in shampoo whichSunsilk 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 researchdepartment 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 PakistanLimited especially of this white variant.

One important thing to be noticed is that though they have integrated information sharing network butthe implementation on the needed strategy by production people is seeming to be very late as theirdecisions 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 wascommunicated to production department as well but a implication and action has been taken after a verylong time when problems of sales become visible. We can say this is due to long term approach to strategyformation and implementation of Lever Brothers Pakistan Limited. Hence infrastructure contributes as asupporting 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 itis 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 appropriatehuman resources. We can surely say that Lever Brothers Pakistan 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 thetasks and target efficiently and effectively. Hence we can say that there is healthy type of network amongLever Brothers Pakistan Limited staffs department.

Lever Brothers Pakistan Limited offers the training programmes and arranges seminars for further skilldevelopment and career development purposes of its brand managers, marketing managers, research anddevelopment managers, and other staff, which enhances their efficiency to support the primary activitiesof value chain of shampoo product line of Lever Brothers Pakistan Limited.

Due to necessary training, healthy pay scales, balanced empowerment, informal and formal combinationof communication network the job satisfaction of each and every employee is very high. Which reducesthe employees turnover to minimal. All of them contribute a lot and positively for the support of value


21/40

chain primary activities i.e. procurement manager putting his efforts for the purchase of high and rightquality 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 PakistanLimited are available on each shopping outlet of Pakistan i.e. from large shopping stores to small shopcovering 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 ofLever Brothers Pakistan Limited marketing and sales manager with their retailer and distributors. Due tothis retailer give preference to the competitors brands of shampoos e.g. P&G. Hence Lever BrothersPakistan Limited is providing training and job satisfaction to its human resources in turn there is lowemployee turnover and they support value chain except good relationship and incentive to retailers whichis of primary importance.

Technological Development

By technological development as a supportive activity we mean that how much organization is bringingfurther improvements in its products and product development. Lever Brothers Pakistan Limited mainlythrough 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 ofSunsilk and Lifebuoy shampoo. But still Lever Brothers Pakistan Limited are laggards in bringing thisimprovement.

Procurement

Procurement especially of raw material contents and packaging material is critical to the product andultimately to the organizations success. Lever Brothers Pakistan Limited purchases its most of thecontents of shampoo from foreign countries like America, Europe andFar East. The procurement systemof 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 verygood long term relationship with their suppliers of local raw material as well. Hence they get the quantitydiscounts 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 thepurchase of basic inputs with their suppliers. Instead of backwardintegration they believe in outsourcing which reduces their cost.

2.Lever Brothers Pakistan Limited faces high lead-time for the global purchaseof its imported raw materials but automatic replenishment system hassolved this problem. Lever Brothers Pakistan Limited is all the timeconnected via its management information system with their suppliers.

3.Quality and reliability of raw material for shampoo product line is checkedand reconceived by the Lever Brothers Pakistan Limited at fixed intervalsas they have centralized buying system.


22/40

Operations

1.Lever Brothers Pakistan Limited has been in shampoo product line since1984. Within these 16 years they have got experience. Experience effecthas 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 whichthey produce different products array with shampoo, capacity of thisplant has been designed in such a way that in current demand they getthe economies of scale very easily which reduces cost of manufacturing ofSunsilk and Lifebuoy on this basis they offer lower prices as compared toP&G.

3.Since Lever Brothers Pakistan Limiteds buying is centralized same is thecase with production and operations methods as well. Rahim Yar Khan

has to follow the predefined production process given by parent headoffice of Lever Brothers Pakistan Limited. Hence production process of

both Sunsilk and Lifebuoy is reliable i.e. there is no fluctuation. Thiselement gives reliability to final consumer.

Out Bound Logistics

1.Final product of shampoo of Lever Brothers Pakistan Limited is shipped to its6 depots via truck on the demand of these depots. Whole Sellers have toadd value themselves. They bear this cost of transportation. Hence Lever

Brothers Pakistan Limited has suppliers and Whole Sellers power overits wholesalers and gives cost cutting edge.

2.Lever Brothers Pakistan Limited covers all the retail and shopping outletsofPakistan. Lever Brothers Pakistan Limited ensures availability and

visibility of its shampoos as each and every large store, medium sizestores, small shops. 100% coverage of outlet is the major strength ofLever Brothers Pakistan Limited.

Marketing And Sales

1. Poor Marketing

Lever Brothers Pakistan Limited has very poor marketing of their product. They concentrate only onNabila 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 reducestheir 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 elementdestroys their repute in retailer class they do prefer P&G and competitors shampoo to


23/40

recommend it to buy and they give more shelf space to P&Gs shampoos as compared to LeverBrothers Pakistan Limiteds Sunsilk and Lifebuoy.

3.Lever Brothers Pakistan Limited has never offered any major incentive, discount or prize scheme toretailers on its shampoos which the retailers often demand. Retailers think that prizeincentives 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

Lever Brothers Pakistan Limited has good service in terms they offer free samples for the relaunch ofSunsilk, 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 withtheir suppliers and subcontracting with them to ensure reliability of raw material.

Before this suppliers outsourcing they already have connected with their customers with their strongR&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 customerconnection in very late.

Hence all the above individual activities (i.e. primary and supportive activities) contribute to enhancecustomer 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 assistanceto Lever Brothers Pakistan Limited so Lever Brothers Pakistan Limitedenjoys a high level of support from Unilever.

2.Another major source of strength for Lever Brothers Pakistan Limited is itsproduct targeting all income groups. Lever Brothers Pakistan Limited isproviding products total income groups i.e. providing quality with

economy as well e.g. Wheel washing powder, Breeze beauty soap, TazaChai, etc.

3.Lever Brothers Pakistan Limited is the oldest company operatingin Pakistanwhich gives him a commanding position is Pakistan to certainextent.

4.Lever Brothers Pakistan Limited enjoys the services of highly professionalmanagement in the area of sales, marketing, technical and production.


24/40

5.Lever Brothers Pakistan Limited has such a strong goodwill in the marketthat some of its brand names has become the generic names for thoseproducts such as Surf for detergents and Dalda for ghee.

6.Lever Brothers Pakistan Limited is the largest producer of consumerproducts inPakistan 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 markethaving the biggest brand Lipton and Brooke Bond.

8.They are market leader in ice cream business of Polka i.e. horizontalintegration with hostile takeover they have captured their competitorsthereby reducing competition.

9.The company has the assets of more than 5 billion. So, it can invest furtherproduct 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 hasmany advantages. Which other do not have. They have know how of themarket. They understand the market very well. Similarly during thisperiod they have developed a very organized distribution network allover 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% ofa retailers shop items are by thissingle company.

Weaknesses

1.Lever Brothers Pakistan Limited unable to capture shampoo and toothpastemarket i.e. low market share.

2.New variants of the company were not able to sustain in the market such asharmony.

3.Lever Brothers Pakistan Limited is relatively week in their innovation

department i.e. being first to introduce Surf but after that has no majorinnovation.

4.Emphasizing only few products while ignoring others which could give thempotential market shares e.g. beverages section.

5.Lever Brothers Pakistan Limited go for long term strategies for all theirproduct categories which prove to be a weakness with change in thecircumstances and taste, trends of people


25/40

Opportunities

1.With the help of further advertising their non competing brands can increasetheir market share i.e. market penetration strategy. People will definitelygo for these products as Lever Brothers Pakistan Limited has a sound

image in peoples mind. Whatever the brand is being sold is mostly onthe basis of brand loyalty.

2.They have capital to invest they can explore new product categories e.g. infood and beverages they can develop new products like Rafhan haslaunched custard, jelly, kheer mix, rasmalai mix, etc. through it again

will broaden their product categories and will make their operationscomplex but this could be avoided with sub contracting i.e. strategicpartnership with their suppliers. These products can prove a cash cowsas customer in Pakistanalways 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.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 toSurf Ultra and then to Surf Excel, with little change of name and littlechanges in its formula. If Lever Brothers Pakistan Limited launch itsproducts with in prevailing product categories, with entirely new nameand new formula then they can capture new market shares as it will gaincapture the attention of its target market more as compared to existingone. Though apparently it will increase the advertising cost but it will becompensated with exciting sales as you have to advertise more even incase 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 yourbrand portfolio, it can satisfy the needs of customers which wereunsatisfied with the previous brands, its names, its formula, e.g. peopleused to say Surf fades the clothes, they changed formula and not nameonly gave it a suffix of Excel i.e. Surf Excel now the people who developedthis perception that it fades the color, remain reluctant for long timeeven after its relaunch and heavy advertisement.

Threats

1.P&G is giving very serious threats to Lever Brothers Pakistan Limited in thebusiness of detergents and personal wash and shampoos.

2.No of local companies producing detergents and market them at very lowprices which is a threat to Surf.

3.In the case of ghee and oil business Habib is giving very tough competition toLever Brothers Pakistan Limited by introducing its variety of products.


26/40

4.Treat is promoting Bodyguard very much and trying to produce acompetition in the carbolic soap market.

5.Increasing inflation in the country, persistently reducing the purchasingpower of the people and dropping people from high price products to lowprice products e.g. the detergents and providing fuel to the expansion of

unorganized sector.

6.Increased import duties are also adding to the prices of the products andinPakistan which is a very price for all the firms not only Lever BrothersPakistan 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 todifferent manufacturing companies like Lever Brothers Pakistan Limitedand Colgate Palmolive.

PEST Analysis

PEST analysis is used to assess that what environmental factors affecting different organization and whichof 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 doaffect but not particularly Lever Brothers Pakistan Limited same as it affects any other organizationaround 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 BrothersPakistan Limited. In Pakistan right now following liberalization policy under SAP by IMF made whichthey have to waive off all restrictions and moreover due to huge investment by Lever Brothers PakistanLimited no government can afford to create hurdles in the way of an organization like Lever BrothersPakistan Limited.

And they dont have to go for only lobbying or what so ever as not action of Pakistangovernment hasaffected them adversely as such.

Economical Factors

Economical factors affect Lever Brothers Pakistan Limited in the same way as it affect any otherorganization 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 everyorganization and according to them Lever Brothers Pakistan Limited have edge that they have targeted allpossible segments through their vast product category i.e. the width and length too. So one way or otherthey find way to cover it up.

Capital Markets

In other economic factors like interest rates and inflation has affected the borrowing ability oforganization but Lever Brothers Pakistan Limited stayed unaffected as a company having business in


27/40

billions and when in need of financing no single bank can fulfill the need, they have to make a consortiumto finance Lever Brothers Pakistan Limited and with very good credit standing and very low risk definitelythey 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. Incase of change in lifestyle, the world has converted into global town now and people have readily access toevery sort of information and they are becoming more quality conscious. Now more concerned towardsenvironmental issues now and demand more social responsibility on the part of organizations now. Tocope up with all these factors now Lever Brothers Pakistan Limited which always maintained the qualitystandards needs to work towards other social factors like social responsibility and environmentalconcerns like P&G did in its Arial campaign and image of a society responsible organization.

Technological Factors

In technological factors comes R&D first and foremost that how much an organization spending in termsof product improvement or development of new products or improvement in production process or in theraw 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 thingsand new things as well they continuously launched variants in brands etc. and moreover in the market likePakistan in product categories of consumer products rates of obsolescence is not very high rather veryslow so no great pressure to launch new products,.

Other than the factors smuggling affects Lever Brothers Pakistan Limiteds sales very negatively. Thisissue would be discussed more in detail in the problem statement.

Problem Statement

Our problem statement is regarding the shampoo segment of Lever Brothers Pakistan Limited. They havemanaged such a deep and broad product category and manage to do so well that some of their brandname 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 keptLever 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 broadercategories.

1.Internal problems

2.External problems

Internal problems

These problems are normally faced by organization due to elements, factors and weaknesses which arepresent inside or which are existing internally in the organization e.g. problems due to organizationalpolicies, 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.


28/40

1.Companys management rely on long term strategies which they receiveready made from their parent company, head office as a modus operandi.

And hence a strategy or a policy approval, formulated and implemented50 years back becomes obsolete and discard in prevailing scenario andchanging environment e.g. in their advertising campaigns of Sunsilk

shampoo they only use Nabila as their celebrity (Hair Expert) and theyhave never tried any other sports or film media celebrity for thepromotion of their product which their competitors use extensively. Herein this field they lag behind due to their long term strategy even in fieldof advertising given by their parent head office.

Hence being an influenciable organization they exhibit bureaucraticmanagement style they want to maintain their status quo before theseenvironmental changes like advertising trend.

2.Offices and branches of Lever Brothers Pakistan Limited are normally placedin domestic setup especially Multan branch, since it is a marketingorganization, its office outlook and location must be in professional and

well to do area which will contribute in proper functionality of branchand 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 arrangeexcessive operational meeting, they have less emphasis on the strategyimplementation part as compared to strategy formulation and planning.

4.All the decisions regarding product planning, development, distribution andeven targets of the branches are centralized and are in hands of central

sales office of Lever Brothers Pakistan Limited. They dont believe inMBO (Management by objectives). Branches are given inflexible targetsof sales though data on these branch managers negotiate this figure butit takes too long.

5.Due to heavy capital investment in their brands Lever Brothers PakistanLimited is unable to observe their slow moving brands which create acost burden.

6.Since removing old/discarded brand is very expensive due to expensiveinstalled machinery, technology and capital investment, launching new

brand is also very expensive for Lever Brothers Pakistan Limited due tothe same reason. As to launch a new brand complete research anddevelopment setup is required which is inflexible and can not be re-utilized for another brand along with its consumer market is heavilyflooded with products, there is very low probability that market willabsorb new brands.

7.Whenever Lever Brothers Pakistan Limited launch any product they firstlaunch it in India if product proves a big success they try it


29/40

in Pakistan which is not a good strategy due to cultural difference andreligious differences.

8.Lever Brothers Pakistan Limited has very poor relationships with theirdealers 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 areoffered by Lever Brothers Pakistan Limited to their retailers. No prizescheme and incentive is given to dealers, retailers, wholesalers of LeverBrothers Pakistan Limited. Even Lever Brothers Pakistan Limited brandmanager never bargain on the proper and prominent shelf space of theirshampoos (Sunsilk and Lifebuoy).

9.Lever Brothers Pakistan Limited has not been able to place any check on itssmuggling shampoos into Pakistan e.g. Indonesian Sunsilk is madeaccording to the demographic of Indonesia, when it will be used inPakistan it will damage the hair of people, which deteriorate the brandimage. Which create problem on local sales of Pakistan.

10.Employment insecurities in Lever Brothers Pakistan Limited also contributenegatively towards the performance of branch operations. All branchmanagers, brand managers and operation are transferred within

branches of Lever Brothers Pakistan Limited allover Pakistan. Thiscreate an uncertainty among management team, new managers takesmuch time to settle in new branch and to understand new setup of

branch and new dealers network. This affects the branch operations andperformance.

External problems

Lever Brothers Pakistan Limited is not facing any prominent external problem as already analyzedin 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 asClinic in 1985. For the reason that no other competitor was there in the market their sales figures was


30/40

high in start, but as shampoo market started to develop and imported shampoo and other competitorsentered into the market their sales started declining so they re-launched it as Clinic Plus. Due to theirpoor marketing in 90s Clinic Plus faced big failure. The sales of Clinic Plus was not up to the expectationsof 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 ofstrong competitors like P&G (Pentene, Pert Plus, Rejoice, Head & Shoulder), Bio Amla & other importedshampoos 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 differentvariants with new name of fruitamines. Now the focus was on different kind of hair i.e. how manyvariation of Sunsilk are there with aspect of ingredients and contents. Then they reduced their frutaminesSunsilk 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 soapwhich was popular among lower income segment. They launched Lifebuoy shampoo using this brandname in 1998. Initially it was successful according to the retailers every one was asking about it and askedfor retailers opinion as well. But it flopped badly because it was mainly targeted towards lower and middleincome segment and Lever Brothers Pakistan Limited wanted this segment to switch from bath soap toshampoo and wanted to develop shampoo market in this segment as well. But this class did not switchedto Lifebuoy shampoo because they were in habit of using soap for washing their hair, more over they didnot find any thing unique and new about the shampoo. Other than being liquid. So, they again returned toLifebuoy soap.

SWOT Analysis Of Shampoo Product Line

Strengths

1.Lever Brothers Pakistan Limited has a good name as a market leader inconsumer 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 includeany harmful chemicals which could damage their hair.

3.First trial image of user are positive and they are generally brand loyal.


31/40

4.Sunsilk and Lifebuoy shampoos users believe that it is economical. Due tocost leadership strategy of Lever Brothers Pakistan Limited in shampooproduct line.

5.They have recently launched antidandruff shampoo (white variant) withadditional feature of conditioner which has been highly valued by the

customers. It is competing successfully with P&Gs shampoos which werealready having conditioner in them.

Weaknesses

1.Packaging of Sunsilk and Lifebuoy shampoo is the biggest weaknesses ofLever Brothers Pakistan Limited. Retailers complaint that one leaked

bottle of Sunsilk spoils the whole lot. But Lever Brothers PakistanLimited do not pay any head to it.

2.Advertisement of Sunsilk does not promote the product very well rather itscelebrity like Nabila is promoted. They dont switch their celebrity asthey have to follow long term promotion and advertising designed by

their head office as Elida (France) has always used beauty expert as theircelebrity.

3.They focus on only females in their advertisement and they have ignoredtheir bigger segment of males.

4.Lever Brothers Pakistan Limited does not pay any attention on the incentivesand discounts given to the distributors and retailers.

5.Sales manager, brand manager and sales representatives do not conduct anypersonal 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 Rangetold us that the brand manager of Lever Brothers has never been visitedtheir store and they even never bothered about their shelf space.

7.Due to very huge number of variants in Sunsilk, Lever Brothers PakistanLimited fined it very difficult to focus on particular variants and itcreated confusion among customers as well and increased complexity ofoperations to a large extent and created cannibalization effect. Thoughrecently they have reduced their variants of Sunsilk from 12 to 6 and thenlaunched another one Sunsilk white. Still it needs further reduction.

Opportunities

1.Due strong company image and strong distribution network if they promotetheir products through incentives, bonuses, allowances and discounts tothe retailers they can get better shelf space in the display stores ofretailers especially in shampoo product line.

2.Lever Brothers Pakistan Limited has very strong and resourceful researchdepartment. They can conduct through their personnel in allover Pakistanboth in rural and urban areas and hence they can launch


32/40

the new shampoo with new formula and with new name. For this theyhave such a big portfolio that they can afford its cost and returns will bemaximized as a result of increased sales which will definitely offset thecost 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 launchingthe 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 areused, as shampoos are the threats for the shampoo product line of LeverBrothers Pakistan Limited especially Sunsilk. Since people are not thatmuch price sensitive in case of shampoo but they have more concernabout 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 theSunsilk. 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 andLifebuoy shampoos.

Competitors Analysis

The major competitors of Sunsilk can be categorized in two ways (all percentages have been provided byLever Brothers Pakistan Limited:

1.Direct competitors 75%

2.Indirect competitors 25%

Direct Competitors

These competitors are in terms of product category. With reference to the product category we can divideusers of shampoo into following segments:

Upper Class

This class normally use Pentene, Head & Shoulder, Pert Plus. These shampoos are giving toughcompetition to Sunsilk.

Middle Class

This segment is normally using shampoos in following percentage:


33/40

*All the percentages have been provided by LBPL.

Sr. No. Shampoo Percentage1 Bio Amla 102 Head & Shoulder 203 Pentene 35

4 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 BioAmla. This is a shampoo which has the largest number of liters sales in Pakistan. Only lower middle andmiddle 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 overthey re getting the promised results. They have targeted both males and females due to which they havegot more number of shares in market.

Pentene

Pentene is the strongest hair care product of P&G both formula and advertisement wise. As alreadyexplained they are giving top incentive to retailers and distributors. P&G sales staff pay more visits totheir retailers and stores to check the shelf space of their shampoo. Thus due to these efforts they aregetting 35% of market share.

Pert Plus

This shampoo is almost getting 25% of market shares and it is also a very strong brand of P&G. P&G hastargeted on young busy people who want stylish hair within five minutes. So the need of separateconditioner is also committed.

Sunsilk

Rest of the market share i.e. only 10% is with Sunsilk.

Sales Analysis

Now we will discuss briefly only Pentene and Sunsilk from retailers point of view i.e. how much order aregenerally placed by retailers in a month.

1.Pentene of P&G

2.Sunsilk of Lever Brothers Pakistan Limited

Pentene Of P&G


34/40

According to the retailers like Range & Prince Store and other small shop keepers, normally place fourorder in a month i.e. the shelf space is refilled 04 times in a month or every week due to the increasedsales of Pentene. It reflects the highest turnover of Pentene.

Sunsilk Of Lever Brothers Pakistan Limited

On the other hand only one order is normally placed in month by retailers due to the low demand byconsumers. Hence the shelf space of Sunsilk is refilled 12 times in a year or once in a month. We can saythat ratio for order placement is 1:4 for Sunsilk and Pentene respectively. In other words 75% of theorders are of Pentene and only 25% of the orders are secured by Sunsilk if we compare only these two.

Indirect Competitors

Indirect competitors include:

Imported shampoos 40%

Branded soaps 35%

Unbranded shampoos and soaps 25%

Imported Shampoos

Higher income segment is very quality conscious. They are major innovators and variety seekers. Theychange their shampoo more often than any other segment. They are mostly influenced by advertisementand word of mouth or on the basis of the consultation of their beauty experts.

Examples of imported shampoos include:

1.

Finess

2.Agree

3.Saloon Selective

4.American Pentene (Pentene lively clean, ,Pentene Moisture lock)

5.Vidal Sasoon

6.Temi Tei

40% of the indirect competition is provided by these imported shampoos.

Branded Soaps

These soaps include:

1.Lifebuoy (Lever Brothers Pakistan Limited)


35/40

2.Safeguard (P&G)

3.Bodyguard (Treet)

4.Johnson & Johnson (J&J) mainly targeted on kids

These soaps account for 35% of indirect competition.

Unbranded Shampoos & Soaps

They are unbranded shampoos and soaps and are normally used by lower income segment. Theseunbranded soaps and shampoos provide a major competition to Lifebuoy shampoo for which LeverBrothers Pakistan Limited focuses on low income segment. Lifebuoy soap is also providing indirectcompetition to Lifebuoy shampoo, as users of Lifebuoy soap have not shifted to Lifebuoy shampoo.

These unbranded soaps and shampoos account for 25% of indirect competition.

Strengths And Weaknesses Of Competitors

For this purpose or major competitor of concern are P&G and their shampoos like Pentene, Head &Shoulder and Pert Plus are providing major competition to Sunsilk and Lifebuoy.

Strengths Of P&G

1.Their shampoo like P&G has conditioner in its which Lever Brothers PakistanLimited has only in one variant (Sunsilk White). This is most demandingfeature of shampoo which P&G has focused upon.

2.Advertisement of P&G focuses on males and females both to appeal potentialmarkets as their customers.

3.P&G has very strong relationship with their retailers. Their marketing and

sales manager bimonthly visits these retailers to get knowledge of theirproblems. They provide them good incentive like discounts i.e. three tofour percent on their sales, quantity discounts on large sales, moreoverthey launch price schemes continuously for their retailers. LeverBrothers Pakistan Limited have this very healthy strategy i.e.relationship with retailers.

4.P&G provides transportation facilities to its distributors and retailers whichattract these distributors and retailers to buy the P&Gs shampoo ascompared to Lever Brothers Pakistan Limiteds one.

5.P&Gs management bargain and stresses more on its prominent shelf space

with their retailers. In return of all above incentive not only retailers givea good shelf space but also promote P&Gs products.

6.P&G fills its shelf space four times a months due to its high demand ofshampoos. While Lever Brothers Pakistan Limiteds shampoos order areplaced once in a month due to low demand by retailers. Hence high sales

volume is an other strength of P&Gs.Weaknesses


36/40

1.People have perception that P&Gs shampoo (e.g. Pentene) has harmfulchemical, it causes fall of hair. It is a weaknesses of P&G people thinkthat it softens the hair and gives silky touch but it causes the hair fall.

2.Though there is not too much big difference of price of Sunsilk and Pentenebut people perceive that Pentene and P&Gs shampoo are of high prices.

Due to this they face competition from Lever Brothers Pakistan Limited.But now they have overcome this element by price reduction i.e. from Rs.120 to Rs. 99 i.e. just one rupee below the retail price of Sunsilk (retailprice of Sunsilk family size bottle is Rs. 100).

Existing Strategies Of Sunsilk

The strategy rather group of strategies adopted by Lever Brothers Pakistan Limited for Sunsilk are asfollows:

Four main groups of strategies are available to us i.e.

1.Product development

2.Market development

3.Market penetration

4.Diversification

Out of these four strategies Lever Brothers Pakistan Limited has adopted the market development

strategies i.e. finding new market or target customers for the Sunsilk in case of launching shortly newvariant of Sunsilk White antidandruff and second strategy followed is diversification which they are knowabout to follow through l

free reports

Documents