Unilever's Strategies in China
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Case Code: BSTR131 Case Length: 13 Pages Period: 1986 - 2004 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.400 Organization: Unilever Industry: FMCG Countries: China Themes: - |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Early Strategies
Since its inception in 1923, Unilever has undertaken a number of strategic shifts in the way it conducted its business in China. In the 1980s, the company had sought the guidance of renowned consultants in drawing out its strategic plan for the country. The advice that it received highlighted a few very important socio-economic dynamics that existed in the mainland. Chinese consumers were mostly ignorant about international brands and were not very attracted to these brands. The experts also pointed out that the belief that since China was under a monolithic communist rule it had a homogenous society, was far from the truth. In reality, the various government units often defied central directives and acted independently of each other...
Localization Strategies
Notwithstanding all its problems, the company was determined to stay the course and explore the vast consumer base that the huge population of the Chinese mainland offered. So the company entered into an extensive restructuring programme. The first task was to consolidate the various joint ventures into a unified whole. Unilever hoped to realize greater synergies by consolidating all its partners under one holding company. It expected this consolidation to help to overcome the internal conflicts that the fragmented structure gave rise to and bind the organization towards meeting a common goal. Unilever had to struggle to arrange terms with its seven partners who were unwilling to swap their big stakes for a minority share in the proposed holding company. The company was helped by officials from the Netherlands (one of its home countries) who lobbied Shanghai officials to support the consolidation plan...
Looking Ahead
Prior to the restructuring programme initiated in 1999, Unilever was rapidly losing ground in China to its rival Procter and Gamble (For details on the localization strategies adopted by Procter and Gamble in China, please refer to Exhibit IV). Unilever had about one-fifth of P&G's turnover in the late 1990s. Analysts observed that Chinese supermarkets more aggressively displayed P&G's products like Rejoice shampoo, Crest toothpaste and Tide laundry detergent over Unilever- owned brands like Lux and Lifebuoy soap or Close-Up toothpaste...
Exhibits
Exhibit I: Unilever in China
Exhibit II: Comparative Performance of Unilever With Competing Brands
Exhibit III: Research and Development Laboratory at Shanghai
Exhibit IV: Localization Strategies Adopted by P&G in China
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