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  • Unilever's Change to Growth

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    Melody Merry
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    Unilever changed from a decentralized structure in the 1980s to a more centralized structure in the 2000s. Under the decentralized structure, decisions were made at the country level and Unilever had over 1,600 brands with varying performance. The centralized structure implemented in 1994 and 2000 consolidated brands, improved manufacturing efficiency, and placed more strategic decision-making at the headquarters level while execution occurred regionally. This led to improved sales, profitability, and ability to adapt globally while maintaining local uniqueness.

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    Centralized and Decentralized of Unilever Structure

    Original Title

    Unilever Centralized & Decentralized.

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    Unilever changed from a decentralized structure in the 1980s to a more centralized structure in the 2000s. Under the decentralized structure, decisions were made at the country level and Unilever had over 1,600 brands with varying performance. The centralized structure implemented in 1994 and 2000 consolidated brands, improved manufacturing efficiency, and placed more strategic decision-making at the headquarters level while execution occurred regionally. This led to improved sales, profitability, and ability to adapt globally while maintaining local uniqueness.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    1K views19 pages

    Unilever's Change to Growth

    Uploaded by

    Melody Merry
    Unilever changed from a decentralized structure in the 1980s to a more centralized structure in the 2000s. Under the decentralized structure, decisions were made at the country level and Unilever had over 1,600 brands with varying performance. The centralized structure implemented in 1994 and 2000 consolidated brands, improved manufacturing efficiency, and placed more strategic decision-making at the headquarters level while execution occurred regionally. This led to improved sales, profitability, and ability to adapt globally while maintaining local uniqueness.

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    © All Rights Reserved
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    of 19

    CHANGE TO

    GROWTH
    WHO UNILEVER IS ???

    BRAND REGION EMPLOYEE


    Over 400 Brands Over direct employee
    Over 190 countries
    All around the world 172.000+
    Around the world
    HISTORY BEGAN ON 1930

    1930 1940 1980 1990

    Limited resources Globalization Mapping Region

    Limited delivery High Cost Brand Focus


    Nearly collapse Tough Competition Global Strategy

    Full business merger Start to decentralized


    UNILEVER Problems Occurs Start to Restructuring
    Multiple manager
    UNILEVER STRUCTURE BEFORE 1980

    HQ

    D
    COUNTRY A COUNTRY B COUNTRY C COUNTRY D COUNTRY

    IZE
    Finance
    A
    MarketingL
    TR
    Sales

    E N
    Factory

    Operation MARKET BRAND PERFORM

    E C
    D
    Decentralized Concept Unilever
    BU 1 1. Marketing Strategy by Country

    BU 5 BU 2 2. Strong Local Brand

    3. Decision on Country Level

    BU 4 BU 3 4. Performance by Area

    BUILDING STRONG BRAND


    Operation MARKET BRAND PERFORM

    IN MULTIPLE MARKETS
    Decentralized Works Great Before
    1980
    National Culture
    was important
    Inefficient Logistic
    International & Communication
    exposure still low

    High Trade Barrier


    Before 1980

    Operation MARKET BRAND PERFORM


    However, in 1990 Unilever facing a
    problem
    > Have to built 1.600 Brand
    SALES 15%
    > High Overhead cost

    > High Operational Expense

    > Not all Brand & Area Performed


    PROFIT 13%
    SOME FACTORS
    BRAND SALES

    1600
    STOCK 7%
    7%
    PRICE
    400 93%
    Contingencies of Organizational Design

    External Organizational Organizational


    Technology
    Environments Size Strategy

    Consumer prefered Increase Business Globalization & Line Unilever Going to


    Global Brand Size Production Global Competition
    UNILEVER CHANGING STRUCTURE IN
    1994
    CHANGE IN 1994
    HQ
    - Building 4 Core Division

    EUROPE N. AMERICA ASIA - Regional Business Group

    FOODS Personal Home care Chemicals

    Why Unilever need to change structure?


    Globalization Create Homogenous
    Market
    Reducting Manufacturing & Marketing Cost
    CHANGE STRUCTURE IN 1994 STILL
    TRACED PROBLEMS
    No Fit between structure & Strategy
    Still too many brands resulted
    Higher cost structures

    Less efficient manufacturing concept

    HQ

    N.
    EUROPE ASIA
    AMERICA

    FOODS Personal Home care Chemicals


    UNILEVER STRUCTURE AFTER 2000
    HQ
    Strategic in HQ
    Execution in
    FOOD HOME PERSONAL
    Region / Area /
    DIVISION CARE
    Country

    Manufactur by
    EUROPE AMERICA OTHERS

    E D Region / Area

    L IZ Performance

    RA global & area

    T
    Marketing Develop Manufactur

    E N Administration by

    C
    area
    Centralized Structure Unilever

    1
    1. Building only 1 Global Brand

    5 2
    2. Cross Financial Performance

    3. Efficiency Manufactur Process

    4. Execution manage by area 4 3


    CENTRALIZED STRUCTURE HAVE GREATE IMPROVEMENT

    No Trade Barrier Consumer prefer

    After 2000- Global Brand

    Cutting Brands from


    1.600 to 400 brands

    Effiency Manufactur
    & Distribution
    VIDEO
    UNILEVER RESULT AFTER CHANGE

    - Efficients & reducing OPEX manufacture


    400 Brands contribute 55% sales
    - Increasing marketing Expense
    +57% growth from
    - Increasing Brand awareness
    emerging market in 2013 - Sharp sales & marketing strategies
    & adapting local uniqueness in
    each country
    3% reduce turnover
    - Headquarter have the ability to
    control strategic decision making
    Global Brand strategic - Need more time to elevate &
    decision making
    UNILEVER BUSINESS PROCESS AFTER
    CENTRALIZED

    Supplier Manufacture Distributor Retailer Consumer

    GLOBAL / REGION LOCAL EXECUTION GLOBAL


    STRATEGIC &
    LOCAL ADAPTING
    Summary
    Centralized Decentralized

    Decision making in Headquarter Decision making in each area

    Performance by HQ / Region Performance by each area

    Strategic by HQ & executed in area Strategic by area

    Global Brand Mulitple Brand

    Slow local responsiveness Fast local responsiveness

    External Organizational Organizational


    Technology
    Environments Size Strategy
    Summary

    Centralized Decentralized
    Core Competencies Transfer Duplication activities in various area

    Coordination & Objectives Coordination problem

    Experience & Location curve economies The cost of manufacture & others activities

    No local responsiveness Local Responsiveness

    Less empowerment More empowerment

    Conflict of interest Fast decision making


    WHAT QUESTION
    DO YOU HAVE?

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