Unilever's Strategies in China

            
 
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Case Details:

Price:

Case Code : BSTR131 Electronic Format: Rs. 400;
Courier (within India):Rs. 25 Extra
Business Strategy | Case Study in Management, Operations, Strategies, Business Strategy, Case Studies

Themes

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Case Length : 13 Pages
Period : 1986 - 2004
Organization : Unilever (Shanghai) Co. Ltd.
Pub Date : 2004
Teaching Note : Not Available
Countries : China
Industry : FMCG

Abstract:

Inspite of major difficulties, Unilever was committed to building and sustaining a successful business in China. The company therefore adopted several measures like enhanced research and development, modern management systems and large scale organizational restructuring to anticipate and integrate the needs and aspirations of the Chinese customers into its growth plan. In the mid 1980s and 1990s, the large number of joint ventures entered by the company failed to earn profits for the multinational and also proved unsuccessful in integrating Unilever to mainstream Chinese economy. Therefore, in 1999, the company entered into large scale consolidation and integrated its various units under one holding company.


Special localized strategies like hiring of local employees, setting up an R&D unit, and planning for stock market listing were initiated to strengthen the company's position in China. Unilever China responded to the complex needs of the country's consumers by developing a portfolio of brands-both local and global, and incorporated traditional Chinese sciences with technological enhancements. The company aimed to identify itself as the brand that was quality conscious and consistently endeavored to meet local needs and tastes. Global brands-Dove, Lux, Ponds, Lipton-promised international expertise in their formulation and development but had local professionals to manage them to ease communication between the company and its customers. Similarly, local brands such as Hazeline and Lao Cai soy sauce benefited from Unilever's extensive knowledge and resources, without losing their local character. Thus, Unilever China endeavored to balance global and local needs by developing solutions that satisfied the demands of its target consumer segment.

Issues:

Understand the approach taken by multinationals to tap new markets

Determine the various issues involved in the setting up of a new company in a foreign market

Appreciate the localization strategies that need to be adopted to counter local issues and problems

Appreciate the complexity of a growing market like China

Evaluate the growth of a European FMCG major in China

Discuss the strategies that Unilever adopted in China and examine the reasons for its initial failure

Compare and discuss Unilever's market expansion policies viz-a-viz that adopted by Procter and Gamble

Contents:

  Page No.
Introduction 1
Background Note 1
Early Strategies 3
Localization Strategies 4
Looking Ahead 7
Exhibits 8

Keywords:

Case, Unilever Plc., Unilever China, Niall FitzGerald, Alan Brown, Joint Ventures, Unilever (Shanghai) Co. Ltd., Wholly Owned Subsidiaries, Restructuring, Distribution System, P&G, Cultural Mismatch, Expatriates, Localization Strategies, Synergies, Shanghai Stock Exchange

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