Unilever Organizational Strategies

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One of the world’s oldest multinational corporations is Unilever. Unilever was formed in 1930 when competing rivals producing the same products agreed to merge and create a new company. Today, Unilever generates annual revenues in excess of $50 billion; it is responsible for multiple brands and a variety of products. Twenty-five percent of the company’s revenues come from detergent products, 15% from personal care products, and the remaining 60% from food products. As an international company during the 1990’s, Unilever’s organizational structure was much decentralized. In Western Europe alone, the company had 17 subsidiaries that handled all aspects of the product as were accountable for their own profits. This strategy worked well until the mid 1990’s, when Unilever started to lose market share to Nestlé and Proctor & Gamble. Nestlé and Proctor & Gamble were more successful than Unilever in reducing cost structure by consolidating manufacturing and creating a national brand. The decentralized structure of Unilever was a disadvantage in making the same strides of its competitors because there was a lot of duplication of efforts in many areas, they were unable to use economies of sale to their advantage, and they had a higher cost structure. Also included in these disadvantages was a cumbersome bureaucracy that prevented any type of fast corporate structuring or consolidation. To combat some of these failures, Unilever began restructuring during the mid 1990’s and in 1996 introduced a new structure based on regional business groups that contained numerous divisions specific to each product category. By making these changes, the 17 subsidiaries gave up their control in pursuit of a common goal of creating a unified pan-European strategy. They were able to consolidate manufacturing, create universal packaging that allowed Unilever to take advantage of economies of

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