Restructuring Unilever: The 'Path To Growth' Strategy
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Case Code: BSTR095 Case Length: 17 Pages Period: 2000 - 2003 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.500 Organization: Unilever Industry: FMCG Countries : Europe Themes: Corporate Restructuring |
Abstract Case Intro 1 Case Intro 2 Excerpts
Background Note
Unilever (called the Unilever Group) functioned as the operational arm of Unilever NV (Netherlands), and Unilever Plc., (UK), its two parent companies. Though the parent companies operated as separate legal entities (with separate stock exchange listings), they functioned as a single business, with a single set of financials and a common board of directors (See Exhibit I for the group's structure). Unilever was formed in 1930 when a Dutch margarine company, Margarine Unie, and a British soap company, Lever Brothers merged (See Exhibit II for a brief timeline of Unilever). While, Margarine Unie had been formed by merging many margarine companies during the 1920s and was a leading global player in the business, Lever Brothers was a name worth reckoning with in the worldwide soap market and had soap factories across the world.
Lever Brothers, diversified into many other businesses (primarily related to foods). At the time of the merger, Margarine Unie and Lever Brothers, together, had operations in over 40 countries. In the 1930s and 1940s, Unilever strengthened its presence in the US by acquiring Thomas J. Lipton (1937) and Pepsodent (1944). While the company's competitive position was adversely hit when its arch rival P&G launched Tide, a synthetic detergent, in 1946, it continued to prosper in Europe. This was because of the post-war boom in the demand for consumer goods, the growing popularity of margarine and personal care products, and the new detergent technologies. During the 1960s and 1970s, Unilever rapidly expanded its operations through vertical and horizontal integration, emerging as a diversified conglomerate by the early 1980s. Diversification into different businesses was prompted in one way or the other by the existing business lines. For instance, oilseeds crushed for use in the margarine and soap businesses, yielded a by-product called 'cattle cake,' and this led the company into the animal feeds business. Likewise, by-products such as glycerine and fatty acids, formed from processing oil for use in margarine and soap production, prompted its entry into the chemicals business. The company operated 24 packaging plants (for its consumer products) in six European countries, from where goods were distributed worldwide. This activity made the company one of the largest truckers in Britain and one of the largest shipping company owners...
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