Restructuring Unilever
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Case Code: BSTR576 Case Length: 18 Pages Period: 2016-2019 Pub Date: 2019 Teaching Note: Not Available |
Price: Rs.500 Organization: Unilever Industry: FMCG Countries: Europe Themes: Organizational Restructuring, Corporate Restructuring, Competitive Advantage, Diversification, Digital Ecosystem, Organization Structure |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The Connected 4 Growth (C4G) Strategy
In July 2016, Unilever announced the Connected 4 Growth (C4G) strategy, aimed at increasing its penetration in fast-growing markets, advancing its portfolio through acquisitions, and developing more channels to sell its products. The C4G strategy was expected to increase growth as well as the profitability of the company by focusing on innovation and faster product launches as the company was battling a fast- changing environment. “With the transformation of Unilever, we have built on a portfolio of strong and growing brands delivered to consumers across the world. We have established a responsible investment-led growth model that is well-equipped with global scale and unrivaled distribution strength in emerging markets. This has resulted in consistent, competitive, profitable and responsible growth and attractive returns for our shareholders. The faster pace of change that we are seeing in our markets and competitive set requires us to continue to set the bar higher," said Polman, commenting on the C4G strategy ...
Implementing C4G
To increase penetration in fast growing markets, Unilever set up new Country Category Business Teams (CCBTs) in 2017. These teams would help the company increase category focus at the local level. By giving autonomy to local teams, the company ensured that they would be more agile in spotting local trends and innovations while continuing to benefit from the global scale of its research & development and innovation program. By separating its local and global innovation machinery, the company intended to be more responsive in the global roll-out of its products while acting promptly to respond to local consumer requirement...
Benefits of C4G and a Failed Attempt to Move Corp.Hq
Between 2009 and 2016, Unilever's average underlying sales growth increased by 5% and the underlying operating margin by 190bps. Free cash flow doubled. In 2016, the return on invested capital was 18%. In the third quarter of 2017, Unilever announced that its underlying sales had grown 2.6% to £11.8 billion (€13.2billion, $14.93 billion) compared with the same period in 2016. In emerging markets, the underlying sales growth was 6.3% while volume increased by 1.8%. Sales, excluding spreads, increased by 2.8% to £11.23 billion (€12.5billion, $ 14.14 billion). While food sales grew by 1.5% to £2.6 billion (€2.9billion. $ 3.28 billion), refreshment sales (including ice-cream)......
Unilever Under Alan Jope: The Road Ahead
With the departure of Polman, a prominent advocate of multi-stakeholder capitalism, analysts were worried whether Unilever would be able to continue with its restructuring efforts. Polman had led Unilever for about a decade. During his tenure, the company had delivered consistent top and bottom-line growth ahead of its markets and created outstanding returns for its shareholders, delivering a Total Shareholder Return of 290% over that period. Unilever's shares had far outperformed the FTSE 100 index, rising about 150 percent since 2009, while the FTSE was up 70 percent (Refer to Exhibit VI for Unilever’s Performance during Polman’s Tenure)...
Exhibits
Exhibit I: Unilever's Product Portfolio
Exhibit II: Unilever's M&A Deals
Exhibit III: Unilever's Underlying Sales Growth (2008-2017)
Exhibit IV: Key Highlights of Unilever's Initiatives to Accelerate Sustainable Shareholder Value Creation
Exhibit Va: Unilever's Key Financials (2015-2017)
Exhibit Vb: Unilever's Key Financials by Categories (2015-2017)
Exhibit VI: Unilever's Performance During Polman's Tenure
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