1. Discuss the suitability of the new organisational structure that Unilever adopted from 2004 in achieving its corporate goals and objectives.
2. Using suitable business tools, describe the internal and external sources that created the need for Unilever to change its organisational structure.
3. Organisational change is one of the most persistent, pervasive, and powerful challenges that manager’s face today (Hitt et al, 2008).Suggest and explain using suitable change theories, how managers at Unilever could implement the change identified in the case study?
The whole world is turning with change that people are facing is natural for every individual as well as organization which shift with variability whether this is external change otherwise an internal one. The vital idea of the report is about analytically examining organizational structure plus some more of the firm named Unilever to know the way in which the organization works and also to analyse the organizational change steps that were taken by the firm and ways in which the organization handled the same as well as sustained in the UK market. The report concludes with the total analysis and evaluation of the steps taken by the firm.
Unilever is amongst world’s oldest multinational firms with some extensive goods offerings within food, detergent, as well as personal care industry. It also generates yearly revenue in the excess of some $50 billion plus a wide variety of some branded goods in virtually all the nations. By 1990s the firm decided to put down this structure and centralize the organization similar to their competitors like P&G, Gamble and Nestle. Later the firm divided itself into divisions where the European Business set had a particular division that focused upon detergents and another that focused upon ice cream plus frozen foods, and many other (Danish environment minister wins court case against Unilever and P&G, 2009). Later Unilever even slashed down its number of selling brands from 1600 to 400 and also slashed manufacturing plants from 380 to 280.
1: Organizational structure for any firm is very essentials as it is considered as the fundamental design of the organization, satisfaction among staffs, performance of the employee, experiences, jobs as well as work tasks and sometimes even affects individual personality as well as differences. People are extra attracted otherwise like to retain in firms that attract and emphasizes more on their personality. Organizational structure also is something which matters vitally in firms as it even clarifies who actually has to get placed where plus what duties are to be performed by the assigned person in the firm and the way through which goals could in reality be met powerfully and successfully (Floyd, 2002). Unilever was no exceptional. The firm’s organizational structure was actually seen to be less effective and was not working properly as it was expected. Competitors all around were increasing day by day and a cut throat competition was observed from many rivals like P&G and Nestle. In 1990s, Unilever actually was struggling under weight of 1,600 brands that existed in above 50 nations. Revenues also were lopsided as some 3% of brands supplied 63% of the revenues — and company was never growing. The growth and development of the firm totally was constant and it was observed that competitors were attaining better and extra market share. In the year 2002, Unilever aimed to launch and actually launched a proper program towards reducing the number of actual brands to some 400 brands. They were all the “core” brands in order to ensure that the firm could properly concentrate all its resources upon the fewer products. The firm also combined all its branding strategies through placing 400 in some three categories said as international brands like Dove plus Lipton, second was the regional brands like a spread named Flora in United Kingdom as well as Becel in the Germany and last was the local brand with some strong positions within single nations including the Wishbone salad dressing within United States plus Persil detergent within England. As current world is moving extra rapidly as well as it has become very difficult to control it organizations, the firm need to change along with environmental changes plus the more simple an organizational structure exist the change could easily be met the more complex any organizational structure exist the more difficult is to adjust with the changes taking place all around. For Unilever there were some core competitors like P&G, Nestle. Bothe the firm never supplied extra assortment of goods and services but whatever was supplied had quality in itself. Thus the firm gained market shares leaving Unilever behind in the race. The new organizational structure which included cutting down of number of brands as well as slashing down of the number of manufacturing plants helped a lot and worked as a catalyst for the firm and even performed well in the tasks of motivating, guiding as well as encouraging the staffs to attain goals plus targets within required time, efficiently plus effectively. This also helped the firm a lot in the process of critically analyzing the objectives, as well as goals of the firm and helped it to get more confined and aware about the same enabling the firm towards better handling of both human as well as financial resources.
Unilever productively divested its whole frozen food industry in past. As a portion of the five-year agenda, the firm also targeted towards reduction of its quantity of brands. By this process the firm was able to properly centralize the operation and these centralizing operations helped the firm to maintain vital decisions within hands of the topic experts (Hayes, 2001). After this Human resource experts were capable of putting together as well as leading the HR activities extra effectively. Professional buyers also were able to purchase extra otherwise all of goods sold the stores. Also marketing experts even were able to lead all the marketing efforts intended for firm instead of than entrusting the local stores along with the task. Centralization also led towards highest quality carry out in very of the functional fields of the firm named Unilever. Instead of having any inconsistent decisions taken at the store levels, the centralized Unilever typically had extra consistency within its decisions as well as implementations. Since very core cluster of the HR professionals take decisions as well as oversee hiring plus training, such processes were then similar at every business unit which helped the firm to maintain a proper standard all over. Right from marketing viewpoint till the selling the firm was capable of building a more brutal brand image as each of its business units delivered the same product as well as service to its customers. Costs also lowered in the centralized setup.
2: Microeconomic as well as macroeconomic factors are very helpful because they actually tend to carry about element of the competition amongst players within any given segment. Competition also makes few firms to move violently while others tend to reduce their costs and then move towards attainment of profit margin. Other firms who are powerless to stay buoyant exit the marketplace. As an outcome the firm would need extra staffs thereby creating extra jobs opportunities plus indirectly expanding economy. Both internal as well as external factors affect all the existing firms and also have vital influence on their behaviors (Marks, 1998). Initially starting with the external factors that affected Unilever’s change of organizational structure:
Political- government of UK has always tried to observe that there exists very healthy competition within the nation amongst all the vital players. Microeconomic policies also helped several firms to supervise conduct of the sectors that were in reality competitive and through which all players were given an equal chance to struggle with each other in market. There were few micro economic elements which used the approaches like corporation structures as well as privatization. The firm Unilever was also forced for the same as the whole industrial ecology was changing.
Economic- Shoppers within Europe were suffering from effects of longest as well as deepest recession within post-war phase. Data through Eurostat also demonstrated that the household consumption actually fell radically across the Europe following recession, plus while there existed some recovery within past years; the household consumption was yet not back towards the pre-2008 level. Additionally, unemployment also rose up and wages also stagnated within many of economies where Unilever supplies to consumers. Lower household uses, high unemployment as well as falling wages also brought drops within consumer demand that adversely affected the manufacturers such as Unilever. During the recessions, households also slashed back upon the non-essentials that probably impacted few parts of firm’s product portfolio (Senior and Fleming, 2006).
Social- The Life expectancy also was seen increasing with passing time within all the wealthy countries. For example, in UK within 1980, the life expectancy was at 70.4 years-men plus 79.8 years-women. By the year 2010, it increased to about 79.3 years plus 83.6 years, for men plus women respectively. At same time, fertility rate also was falling with time. The enhancement in the life expectancy plus a below substitute fertility rate joined with ageing of named ‘baby boom’ cohort and they accelerated the population ageing. The UK government also estimated that proportion of population aged as 30 and also under is positioned to fall, while proportion aged as 60 plus above would increase. And this forecast needed the firm to change its structure in order to handle its operations more effectively as the new generation would demand more and more.
Internal sources which created the need were:
Competitors- The firm had several competitors in the market like P&G and Nestle and they were attaining extra profit as compared to Unilever. The fear of losing the market and observation of the falling image and lower customer base enforced the firm to change its structure worldwide. Also the firm analyzed that it was undergoing loss and this was actually affecting its brand image, it needed to save more and then attempt at expansion (Shah, 2011). The firm knew that it was never possible without centralization of the operations as it saw that decentralized process was a total failure and the firm had to suffer due to the same.
Products- A vast proportion of the Unilever’s products as well as services were less profitable brands and very less was the premium ones. The firm required to cut down its number of brands and then get confined to the core ones for aiming at consumers along with relatively higher levels of the disposable income. This was also considered as a threat regarding the current economic situation of the firm.
Cost- Though the decentralized units helped in proper localization of the firm and through this Unilever became extra capable of attaining better local market yet this raised the cost for the firm as all the operations were handled double of triple times in several different locations and there was lot of duplication observed. Centralized Unilever was able to maintain better cost and also supply good in less price as economies of scale was attained by the firm
Employees- managerial costs of extra decentralization plus diversification into the businesses as diverse as ferries plus floor coverings became very evident as oil crisis within 1973 also transformed Unilever's market within Europe from very fast-growing "wonder" economy to one troubled by the recession as well as inflation. Unilever also found itself totally burdened by the low-margin trades. The developing strength of the European retailers as well as private labels damaged profitability of the branded food goods. Global competitors also eroded the Unilever's market positions (Vishwanath and Singh, 2012).
3: Today all the teams as well as organizations actually face fast change such as never before. The globalization also has enhanced markets as well as opportunities for extra growth plus revenue. Moreover, increasingly varied markets also have a cast variety of requirements as well as expectations which must be properly understood only if they are towards becoming strong customers as well as collaborators. Simultaneously, scrutiny of the stakeholders has also increased as few executives also have been offenders of some illegal actions within their firms, and compensation of the managers seems to get increasing while the wages of some others appear to be declining otherwise levelling off. Therefore, ability towards managing the change, while progressing to meet requirements and all the needs of the stakeholders is even a very vital skill needed by today's market leaders as well as managers. The proper organizational change also is undertaken towards improvement of performance of organization or the part and parcel of firm, for instance, a process otherwise team. Thus, it's very helpful for any firm to consider organizational change as a vital topic of concern. Depending upon market needs, any firm organization is a setup as per to- resource allotment, production ability, technological need etc. This is the reason why organizations also have to continually change towards adapting to ever-changing and altering market at the same time securing organization's viewpoint (Williamson and Wilson, 1970). Depending upon market situation, it could be the crisis alteration or even the chosen change. There also are many change theories which can be applied by Unilever towards management of the change and implementation of the same.
To properly understand the change within the firm named Unilever, it is vital to study the firm and its all in one culture. Also this is the reason why changing the organization is actually nothing other than changing all its culture that ultimately causes the alteration and change in the performance.
Leavitt has focused upon four major variables within any organization, also their interdependence as well as their influence upon change process. These variables are-
* Task & subtasks- These are involved within attainment of target. In case on Unilever the firm is losing the market share. It is being hampered by its competitors and the player in the market are extremely focusing upon the goods and services through centralized processes where all of their stores at different locations are managed by one single head quarter and this enables the firm to decrease the cost of production through cutting down duplicated costs.
* People- these are people who actually carry out task. Here the firm is facing a problem as many of the staffs are being paid for the same task due to the decentralized structure of the firm. The firm can aim at centralization and the staffs can be used extra efficiently by the Unilever. These sets of people and divisions actually will be co-coordinating the actions of the national subsidiaries in their region towards driving down the operating costs as well as speeding up process of mounting and introducing novel products
* Technology- is adapted towards achievement of task. The competitors all over are using extra effective technology to attain better market share. Also the firm named Unilever is trying to advance itself technologically. Product sizing as well as packaging will be harmonized to slash the purchasing costs as well as accommodate the unified pan-European promotion.
* Structure of organization- Here the firm will change the whole structure as analyzed and needed by the firm. Within every division there will be a number of the regional business sets which will focus upon developing, manufacturing, as well as marketing either the food otherwise personal care goods within the given region.
Another model that could be used by the firm to implement change can be:
At this initial stage of the change the firm will involve many preparations to accept that the change is actually necessary, and this will also involve the actual break down of existing position quo prior to the building up of a novel way for operating. The main key towards this will be all about developing proper compelling message which will show the reasons why existing path of performing tasks cannot be continued. Here a proper power point presentation can be used to convey the message more effectively to the staffs (Brissonâ€Banks, 2010). This will also be easiest to properly frame when the firm can point towards decreasing sales figures and poor financial outcomes, worrying satisfaction of the customers, and all the other: These will also show things that needs to be changed in a path that every person can properly understand. To properly prepare firm successfully, managers will need to initiate at the core and for this they will need to appropriately challenge beliefs, values, and attitudes, as well as behaviors that presently define the same. Using analogy of the building, the managers will need to examine as well as get prepared for the changes.
After uncertainty created within unfreeze phase, change stage will be the phase where people will start to resolve all of their uncertainty as well as look for novel ways to perform tasks. People here will initiate to believe as well as act in paths that will support novel direction. The actual transition from unfreeze to the change will never happen in one night. People here will consume more time to hug this direction plus properly participate in change. A much related change replica, named as it will be useful to understand the specific aspect.
When changes will be taking their shape as well as people will have to embraced new paths of performing as well as working, the firm will have to be ready to properly refreeze the change so that no further alteration is made. The external signs of refreeze here will be the constant organization chart and the consistent descriptions of the job, increasing competitors, enhancing rivalry, losing market share and many more. This refreeze stage will also require helping the employees and the firm to internalize otherwise institutionalize all the changes. All this will refer to ensuring that changes are utilized all time; plus that they also are included into everyday trade and business. With some novel sense of the stability, employees will actually feel confident as well as comfortable with new paths of working (Valle Santos and Teresa Garcia, 2006).
Through all this the change in structure of the firm will be made more effective and efficient as this will help the managers of the firm to properly maintain the process of change and more effectively implement the same. The actual concept of the "change management" in reality is very familiar with one in the majority of businesses today. Yet, how the businesses need to manage change as well as the way in which these changes are successfully implemented varies extremely on the basis of the nature of business, change as well as people that are involved in the process. Also a vital part of the task depends upon the way in which people within the process understand and analyses the change process. Also the managers need to be very careful about the change and the management of the change for ensuring that the firm attains all its aims and objectives and also gains all proper estimated profit.
When any firm has extra profit that is attained from its income, it will actually invest as well as expand its commerce. Unilever had many advantages of this decision. The firm actually was able to handle its operation more efficiently after the decision was implemented. It was also observed that the firm was able to enhance its saving through this step and this was the biggest benefit it gained. Earlier the firm was actually organised on decentralised basis and subsidiary firms in every vital national market also were accountable for production, marketing and sales plus the distribution of products in their own market.
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