Background of Unilever Pakistan Ltd Co.

Unilever Pakistan Ltd., a subsidiary of the Unilever Group is operating in

Pakistan since 1948. The Company’s main business lines are Soaps and

Detergents, Personal Products, Cooking Oils and Fats, Packed Teas, and Ice

Creams. Unilever has a long list of brands such as Surf, Vim, Rin, Lifebuoy,

Sunlight, Lux, Rexona, Sunsilk, Close-Up, Blue-Band, Dalda, Planta, Lipton’s

Yellow Label, Taaza and Richbru, Brook Bond’s Supreme and Kenya Mixture

etc. which are common household names in Pakistan.

The Company’s factory at Rahim Yar Khan was one of the first industrial units to

be constructed after the creation of Pakistan. As the consumer base expanded

over the years and the Company entered into new product lines like Personal

Products and Margarine, it invested further in the installation of modern

manufacturing facilities including a factory at Karachi. Today, the Company is

using latest state-of-the-art technology for producing high quality products.

In 1995, the Company established a new factory near Lahore to manufacture the

Wall’s range of ice creams, which have become popular within a short time. In

1996, the present group – Unilever UK acquired the Polka Group that produced

ice creams. In 1999, Pakistan industrial promoters (Private) Limited, owners of

‘Polka’ brands of Ice Cream was merged with Lever.

In order to leverage the synergies of Unilever’s international brand strength,

market edge and corporate image, Lever Brothers Pakistan Ltd. changed its

name to Unilever Pakistan Ltd., in August 2002.

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Vision Statement:

We meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life

Mission Statement:

We are aimed to be leading products company in Pakistan, a

multinational with deep roots in the country.

We will attract and develop highly talented people, who are excited,

empowered and committed to deliver double-digit growth.

We are comitted to serve the everyday needs of all consumers

everywhere for foods, hygiene and beauty through branded products

and services that deliver the best quality and value.

We strive to remain an ever simple and enterprising business.

We will use our superior consumer understanding to produce

breakthrough innovations in brands and channels.

Through managing a responsive supply chain, we will maximise value

from Suppliers to Customers.

We want to be exemplary through our commitment to Business Ethics,

Safety, Health, Environment and involvement in the Community.

.

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Introduction - Unilever Pakistan

Incorporated in 1948, we, Unilever Pakistan Limited, are one of the most

prominent multinationals in the country today. We are proud of being a part of

Pakistan’s history, contributing towards the growth and prosperity of the nation,

providing 150 million people with a better future, a better tomorrow. Our passion

for understanding people's concerns and desires, our ability to create products

that fulfill those needs and our skills in getting those products to market drives

our growing success - and has made us one of the world’s leading consumer

goods companies.

The present company has come about through the original Lever Brothers

merging with Lipton (1988), Brooke Bond (1997), Polka Ice Cream (1998),

presently we are operationally merged with Best Foods since 2001. 1982 saw the

introduction of personal products and 1994 the setting up of the Wall’s ice-cream

business, which was a green field exercise.

W H A T T H E Y D OAt present they market a host of household products named under the following brand names and product groups.

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1. HOME & PERSONAL CARE:

Personal Wash (PW)

Toilet Soaps Lifebuoy

Lifebuoy Gold (2 variants)

Lux (in 5 variants)

Rexona (in 3 variants)

Breeze

Sunlight Bar

Laundry Care: Surf Excel

Sunlight washing powder

Sunlight barWheel washing powder

House Hold Caring: Vim dish wash barVim scourers

Magic bar

Personal products:

Hair Care Sunsilk Shampoo (in 4 variants)

Lifebuoy Shampoo

Skin care Fair & Lovely skin creamPonds

Dental care Close up toothpaste (3 variants)

Pepsodent

2. SPREAD & COOKING PRODUCTS CATEGORY

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Cooking products:

New Dalda

Dalda Cooking Oil

Dalda Sunflower Oil

Planta Cooking Oil

Crisp ‘N’ Dry

Dalda Lajawab

Spreads:

Blue Band

3. BEVERAGES

Lipton Brands Brooke Bond Brands

Leaf TeasYellow Label Supreme

Yellow Label-Danedar Red Label-Danedar

Richbru BB TipsTop Star A-1

Taaza Leaf Tiger

Laojee

Dust Teas Pearl Dust Red Rose

Kenya Mixture

4. ICE CREAM

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WALL’S POLKACornetto (3 variants) Pop Cone

Feast (3 variants) Choc Bar

Top Ten Ice Cream Stick

Star Cup (4 variants) Panda (2 variants)

Callipo Jetspot Orange

Big Split King Kulfa/Big Slice

Big Fruiti King Kulfa Cups

Max Rambo Half Litre(11 variants)

Max Kulfi Litre Pack(15variants)

Blue Berry 10 Litre Pack(14

variants)

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We are going to conduct our project in three stages:

INPUT STAGE: SWOT analysis PESTEL analysis Mission statement IFE Matrix CPM matrix

MATCHING STAGE TOWS matrix BCG matrix SPACE matrix GRAND matrix

DECISION STAGE: QSPM

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INPUT STAGE

SWOT ANALYSIS OF THE COMPANY

STRENTHS

Number of Products Advance technology Supply Chain Management Financial Backing Experience Top Management

OPPERTUNITIES

Hygiene Consciousness Increasing Population Innovation (R&D) Product Diversification Explore New Markets

WEAKNESSES

Tall Organization Structure High Operating Expenses High Cost of Production Long term strategies Only few products

THREATS

Product smuggling Increase demand for

Antibacterial Soaps Counterfeit Products International Trends Local Competition

INTERPRETATION:

STRENGHTS

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unilever 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.

unilever Pakistan Limited is the only company in Pakistan which has its own corner research department.

It has the largest and efficient distribution network then any its competition

The company is very strong financially unilever Pakistan Limited enjoys the services of highly professional management

in the area of sales, marketing, technical and production

WEAKNESS Due to tall structure it is difficult to handle the organisation easily. No doubt its sales are large but in same time its operating expenses are huge. As in the production unilever keeps its environment very neat and clean, and

produce high quality products so cost of production is very high. Increased import duties are also adding to the prices of the products

unilever 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

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

OPPERTUNITIES

People are becoming more conscious about their health and are becoming more conscious about brands. As unilever has good positioning in consumer’s mind so it can increase their market share to launch products in hygienic category.

As population is increasing it may lead to creat valuable opportunity to enhance the growth of unilever.

Innovation in unilever may creat opportunity to more penetrate in the market.

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, etcThese products can prove a “cash cows” as customer in Pakistan always welcome food items especially they will welcome

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due to brand image of Blue Band and Dalda ghee in food category and due to Lipton and Supreme in beverages category.

Unilever Pakistan has opportunity to develop new markets by identifying the needs of customers.

THREATS

unilever 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 Pakistan it will damage the hair of people, which deteriorate the brand image. Which create problem on local sales of Pakistan.

Demand for antibacterial soaps like safeguard is increasing while unilever has not yet been produced any antibacterial soaps,it may switch the brand loyals of unilever.

Their may be imitation of products in Pakistan which may damage the goodwill of unilever Pakistan lmtd.

People of Pakistan prefer to purchase the products of foreign companies, it may be prove to be a threat for unilever Pakistan lmtd.

number of local companies producing detergents and market them at very low prices which is a threat to unilever Pakistan lmtd.

PEST ANALYSIS

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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 don’t have to go for only lobbying or what so ever as not action of Pakistan government has affected them adversely as such.

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Economical Factors

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 consumer’s 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

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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,.

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EFE MATRIX

Key External Factors Weight Rating Weighted Score

Opportunities

Hygiene Consciousness 0.2 4 0.8

Increasing Population 0.15 3 0.45

Innovation (R&D) 0.10 2 0.2

Product Diversification 0.10 4 0.4

Explore New Markets 0.05 4 0.2

Threats

Product smuggling 0.15 1 0.15

Increase demand for Antibacterial Soaps 0.05 3 0.15

Immitation of Products 0.10 3 0.3

International Trends 0.05 3 0.15

Local Competition 0.05 4 0.2

Total 1.00 3.10

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IFE MATRIX

Key Internal Factors Weight Rating Weighted Score

Strengths

Number of Products 0.1 4 0.4

Advance Technology 0.05 4 0.2

Supply Chain Management 0.05 3 0.15

Financial Backing 0.2 4 0.8

Experience Top Management 0.2 3 0.6

Weakness

Tall Organization Structure 0.1 2 0.2

High Operating Expenses 0.05 2 0.1

High Cost of Production 0.05 2 0.1

Long term strategies 0.1 2 0.2

Only few products 0.1 1 0.1

Total 1.00 2.85

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TOWS ANALYSIS

THE TOWS

MATRIX

Strength-S Weaknesses-WNumber of Products Tall Organization

StructureAdvance Technology High Operating ExpensesSupply Chain Management

High Cost of Production

Financial Backing Increasing Number of Small Competitors

Experience Top Management

Unbranded Products

Opportunities-O SO Strategies WO StrategiesHygiene Consciousness Create awareness

among customers about hygiene.

Initiate catering new markets and new segments

Increasing Population Accommodate rural demand by your supply network

Accommodate local demand by joint ventures

Innovation (R&D) Launch new products for lower class

Product DiversificationExplore New Markets

Threats-T ST Strategies WT StrategiesTall Organization Structure

Control Cost Make creative and competitive strategies

High Operating Expenses Cost reductionHigh Cost of ProductionLong term strategiesOnly few products

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BCG MATRIX

RELATIVE MARKET SHARE POSITION IN THE INDUSTRY

High1.0

Medium0.50

Low0.0

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INTERPRETATION

QUESTION MARK:

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High +20

Medium 0

Low -20

Home & Personal care

Ice Cream Oil Products

?INDUSTRY SALES GROETH RATE (%)

Detergents

Oil products of unilever come in this region which has low market share but yet competing in high growth industry.cash need is high and cash generation is low.its upto the organisation whether to strengthen this SBU by an intensive strategy or to sell them.

STAR:Icecream of unilever Pakistan comes in this region as it shows best long

run opportunities for growth and profitability.it has high market growth as well as high market share.intensive and integration strategies are suitable for this SBU.

CASH COWS:Detergents comes in this SBU.they create cash in excess of their needs,

they should be managed to maintain their long position. Product development and diversification are suitable strategies.

DOGS:No SBU of unilever comes in this region.

INTERNAL-EXTERNAL MATRRIX

THE IFE TOTAL WEIGHTED SCORE

4.00 3.0 2.0 1.0

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3.0

2.0

1.0

THE EFE total weighted score

INTERPRETATIONUnilever’s strategy is to invest and hold.it can use intensive and integration strategies.

SPACE MATRIX

Financial Strength

1. Net revenue 2.52. Net income 2.5

Total 5.0 Average 2.5

Industry Strength

1. Competition due to substitute products 4.02. Customer Loyalty 2.0

Total 6.0 Average 3

Competitive Advantage

1. Largely customer base -1.02. Strong Marketing and management -1.0

Total -2.0 Average -1.0

Environmental Stability:

1. Less developed countries facing high inflation -2.0 Total -2.0 Average -1.0

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SPACE MATRIX

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GRAND STRATEGY MATRIX

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QSPM

Key FactorIntegration Intensive

Weight AS TAS AS TASOpportunities:

Hygiene Consciousness 0.2 - - 2 0.20Increasing Population 0.15 2 0.30 2 0.40Innovation (R&D) 0.10 3 0.30 2 0.20Product Diversification 0.10 4 0.40 3 0.30Explore New Markets 0.05 - - 1 0.05

Threats:

Product smuggling 0.15 1 0.15 1 0.15Increase demand for Antibacterial Soaps

0.05 1 0.05 2 0.10

Immitation of Products 0.10 3 0.30 - -International Trends 0.05 4 0.20 2 0.4Local Competition 0.05 4 0.20 - -Total 1.00 3.85 5.15

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Key FactorIntegration Intensive

Weight AS TAS AS TASStrengths:

Number of Products 0.1 2 0.20 3 0.30Advance Technology 0.05 3 0.15 3 0.15Supply Chain Management

0.05 2 0.10 3 0.15

Financial Backing 0.2 3 0.60 4 0.80Experience Top Management

0.2 - - 3 0.60

Weaknesses:

Tall Organization Structure

0.1 3 0.30 2 0.20

High Operating Expenses

0.05 2 0.10 3 0.15

High Cost of Production 0.05 - - 2 0.10Increasing Number of Small Competitors

0.1 3 0.30 - -

Unbranded Products 0.1 2 0.20 2 0.15Total 1.00 1.95 2.65

Total score of INTEGRATION STRATEGY = TAS OF EFE+TAS OF IFE = 3.85 + 1.95 = 5.8 Total score of INTENSIVE STRATEGY = TAS OF EFE+TAS OF IFE = 5.15 + 2.65 = 7.8INTERPRETATION

As the total average score of intensive strategy(market penetration, market development, product development) is high so it is more favourable for unilever Pakistan lmtd to adopt this strategy.

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Conclusion & Recommendation

After the analysis of the IEFM and EFEM, we see that the company is

above average. With respect to SPACE and GRAND matrix analysis,

Unilever is placed in aggressive quadrant and it can follow any of the

strategies e.g. market penetration, forward integration, backward

integration etc.

According to the analysis in QSPM, we would like Unilever to pursue

Cost Reduction strategy which is a market development strategy.

Although the current business strategy of Unilever is Product

Development as they are bringing different product like Green Tea in

the market. They are also modifying their products for e.g. Lipton in

new round tea bags and Lux by adding a different ingredient.

Some recommendations are followings:

Reduce packaging expenses

Reduce international purchases of raw material cost as Unilever

purchases 90% raw material from international suppliers.

Reduce retailer’s commission cost

Reduce transportation cost

Reduce inventory-holding cost

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