Unilever's Essay On Diversification And Inclusive Environment Showcases Their Power.

Using an example of an organisation, examine the business case and strategies for promoting diversity and an inclusive environment within the workplace, while also discussing the role of first-line management in embedding this approach.

Diversities in Multinational Corporations and Role of Apex Management: A Case of Unilever

Globalisation, intense international competition and ever changing market conditions have led the multinational companies to take the path of diversification. The companies diversify their products, human resources and business policies to gain competitive advantageous position in the market. All these decisions form a part of the strategic management policies of the apex management. Unilever is one such which has diverse product line, human resource policies and business expansion policies. The assignment starts with the diversities in multinational corporations and the role of the apex management citing Unilever as an example.  The next section delves into the strategies of diversification and inclusive environment, all derivivg strength from Unilever. There are mentions of leaders, brands, subsidiaries and all other facts which go in to justify Unilever among the champions of diversification in modern corporate world.

Today, multinational companies operate in several countries and produce a wide variety of products. Diversity in terms of culture, product lines and operations has become the newest and the most powerful weapons these companies use to gain competitive advantage. The major transnational companies today follow an integrated global operation strategy to operate in the international market.  These companies have committed themselves to employ people irrespective of caste, ethnicity, citizenship and any such background factor(Moosmüller 2015). A strong example of such an organisation is the British multinational consumer goods manufacturer Unilever. The present non executive director of the company, Mary Ma who featured in the Forbes Magazine as well, is from China (Forbes.com 2017).

Unilever has upheld legacy of multicultural human resource in its subsidiaries. Hindustan Unilever, one of the biggest subsidiaries global is led by Harish Manwani, an Indian by birth which exemplifies the multicultural nature of the company.

Unilever is a global consumer manufacturer and owns brands like Lux soap, Clear range of antidandruff shampoos, Axe shaving range, Red Label tea, Kissan jams and sauces and Domex and CIF bathroom cleaners. This diversity of products has given the company a huge consumer base all over the world and has rendered it the high market position it holds. The portfolio of the company is divided into four categories. The food and drink category has products like Lipton tea and Magnum ice cream. The home care division  has brands like CIF, OMO and Domex. Brands like Axe, Dove and Lux honour the personal segment. The last division, water purifier has Pureit as its only components. This diversity of products shows the readiness of the company to satisfy multiple and ever changing needs of its consumers (Unilever global company website 2017).

Strategies of Diversification and Inclusive Environment: Lessons from Unilever

The role of top management of the multinational companies in making them multicultural and multinational companies cannot undermine. The chief executive officer at present Paul Polman is a member of the United Nations Global Compact and Consumer Goods Forum and also co-chairs the Sustainability Committee. This shows the company is committed to the human rights and human welfare (Unilever global company website 2017).

Leena Nair, human resource head and executive director, Hindustan Unilever has been promoted as the global senior vice president for leadership and organisational development (Epaper.timesofindia.com 2017). This clearly shows that initiative of the apex management to maintain a multicultural human resource and multidimensional product line. This reflects the company power to meet the needs of a global consumer base of variety cultural and national backgrounds.

Unilever is a multinational company committed to diversify its resources to satisfy a diversified consumer base.  The company operates in several countries and is exposed to several macroeconomic factors which are responsible for its diversified nature. This diversified nature of the company is driven by the upper level management strategy in three primary areas namely, product line, human resource and business areas.

Unilever is present in more than one hundred and ninety countries and controls the consumer goods market through product diversification strategies. The SWOT analysis of the company shows that the product diversification strategy is one of its biggest strengths. The company is led by Paul Polman who have worked with two of the biggest competitors of the company Procter & Gamble and Nestle. The company has emerged as the leader of product diversification under his able leadership. The company’s product line is divided into food and drink, home care, personal care and water purifier (Dirisu, Iyiola and Ibidunni 2013). This diversification of product strategy has placed Unilever among one of the top consumer companies in the world. The products of the company are available in hundreds of countries at affordable prices which is responsible for the competitive advantage of the company.

Unilever is one of the most sought after employers in the consumer goods market in the world. The business strategy of the company is to grow towards the apex market position and promote development of the entire society. The company’s human resource strategy by the top management follows this policy.  The human resource department of the company seeks to attract and retain the most appropriate candidates and nurture them into world leaders. The company employs people from several host countries which lend it its diversified human resource. The top management led by the CEO maintains an organisation friendly organisational culture that backs the employees regardless of their culture and ethnicity (Ready and Peebles 2015).

Unilever's Product Diversification and Multicultural Human Resource

Mergers and Acquisitions are parts of the strategic management formed by the upper management. Today mergers and acquisitions have become crucial for the multinational companies to gain greater competitive advantage in the world market.  Acquisition helps large global companies to enter new sectors and markets and increase its market penetration. Both require acquisitions of new assets, thus diversifying the liabilities of the company (Rahman and Lambkin 2016).

Unilever has one of the most diversified product diversification strategies among the companies of its category. This diversification of product line can be attributed to the mergers and acquisition strategy of the company. The company acquired Living Proof as an addition to its premium hair care product range in 2017. Unilever gained entry into the male grooming sector by acquiring Dollar Shave Club in 2016. These are examples of the acquisitions which have helped the company to gain enter, gain and retain a vast product line. No doubt, the company owns some of the best consumer brands in the world like Lux and Axe.

Merger is another important strategic management decision when companies merge to form a new company. The new company has its own legal entity and life cycle. A very strong of merger in case of Unilever is its biggest subsidiary which formed by merging of Hindustan Vanaspati Manufacturing Company, Lever Brothers India Limited  and United Traders  Limited in 1956.

The new merger Hindustan Unilever became the first Indian company to issue shares to public. This benchmark proved the power of the diversification strategy of Unilever who owns 67.25 percent of the equity shares of HUL (Hindustan Unilever Limited website 2017).

Wholly owned subsidiary is a company whose majority of shares are owned by another company or the parent company. For example Unilever holds more than 67.25% shares of Hindustan Unilever Limited which is its wholly owned subisdiary (Ft.com, 2017). The big subsidiary of Unilever is Unilever Australasia, its Australian subsidiary (Unilever Australasia 2017).  

The subsidiaries of Unilever are largely responsible for the present market penetration of the company. The subsidiaries make products suited to the local demands and consumer preferences. These subsidiaries create and maintain their own supply chain and mange these to accede to the resources of the country. The subsidiaries use their extensive worldwide resources to acquire raw materials at low rates which allow them to keep their cost of production low. Unilever is as a result able to keep the prices of the products low and gain deep market penetration. The subsidiaries follow the organisational culture of the holding or the parent company and contribute greatly to the growth of the parent company. Hindustan Unilever formed an equal joint venture with the American company Kimberley Clark and formed Kimberkey-Clark Lever Limited which followed Unilever Strategic management plans of expansion. HUL bought Kissan from UB Group and acquired Lakme, both of which are among the top brands of the company. Thus, business diversification helps a company to expand its operation and venture into new areas. The purchase of the two stated companies by HUL also increased the asset of Unilever, thus making the company financially stronger (Pradhan 2015).

Unilever's Business Expansion through Mergers and Acquisitions

Unilever aims to achieve success by operating in the highest standard of corporate culture towards all the employees irrespective of their origin. The company also looks forwards towards benefitting the society through its quality and affordable products. It strives to operate in an integrated manner by benefitting the environment and ensure sustainable sourcing of Raw materials. The following are the main components of the inclusive environment of Unilever:

The works in an integrated manner which embraces all the subsidiaries it owns worldwide. The company follows a uniform human resource sourcing policy to ensure equable treatment and facilities to all its employees. The company employs people from all the host countries which gel to its diverse multinational status. The apex management has coined a uniform code of conduct to promote a healthy organisational culture in the company worldwide (Bourgeois 2017).  It is no wonder that today the subsidiaries of Unilever are among the biggest corporate giants with their own chain of subsidiaries all adding to the power of Unilever.

The apex management of Unilever seeks to promote a healthy and positive environment. The company strives towards providing equal opportunities to its employee without discriminating between them on race, ethnicity and gender. The recruitment policies of the company are designed to recruit, promote and employ people on the basis of qualifications and abilities (Benn, Dunphy and Griffiths 2014). The company provides safe and healthy competitive environment to its employees. It abstains from using child labour which is illegal.

The company maintains professional and smooth communication with its employee through the established channel of communication. The company also seeks to enhance the skills and provide training to the employees. Thus, Unilever gives opportunities to its employees to develop their skills and productivity (Allen 2016).

The most important aspect of Unilever is its transformational leadership style which helps the company to flourish under various economies. The management trains and upgrades the skills of its employees helping them to better their productivity. The company encourages its employees to take decision and gain leadership skills (Hawkins 2014). This leadership style of the central management ensures promotion of eligible employees from subsidiary companies with promotion to deserving positions.

The transformation leadership of the apex management has allowed the subsidiaries to increase their own resources. The subsidiaries of Unilever have evolved into multinational public limited companies and own their own individual chain of subsidiary companies and acquisitions. For example, Hindustan Unilever, the Indian subsidiary owns the brands like Lakme and Ponds. The subsidiary of the company itself has a huge brand power and is listed with the big stock exchanges of India. It is able to acquire vast financial resources by issuing shares in the stock market, thus having its own financial strength (Dwivedi 2014).

Unilever's Subsidiaries as the Pillars of Market Penetration

Conclusion:

The above discussion elaborately explains the concepts of diversification in the modern global economy taking Unilever as the matter of study. The assignment delves into several diversification strategies and the role the apex management of the company plays to herald Unilever to the top positions in the global market. The assignment also shows that it is the business policies of the apex management which has allowed the subsidiaries to growth from strength to strength into multinational companies themselves. The role of the strategic management of Unilever behind the market position of the company and its subsidiaries cannot be overruled. It is no doubt that the company owns brands like Lakme, Dove, Lux and Axe.

References:

Allen, M., 2016. Transformational Organizational Change, Reinforcing Structures, and Formal Communication. In Strategic Communication for Sustainable Organizations (pp. 139-188). Springer International Publishing.

Benn, S., Dunphy, D. and Griffiths, A., 2014. Organizational change for corporate sustainability. Routledge.

Bourgeois III, L.J., Bourgeois III, L.J., Mariani, E., Mariani, E., Yu, V.J., Yu, V.J., Bourgeois III, L.J., Bourgeois III, L.J., Mariani, E., Mariani, E. and Yu, V.J., 2017. Ben & Jerry's and Unilever: The Bohemian and the Behemoth. Darden Business Publishing Cases, pp.1-11.

Dirisu, J.I., Iyiola, O. and Ibidunni, O.S., 2013. Product differentiation: A tool of competitive advantage and optimal organizational performance (A study of Unilever Nigeria PLC). European Scientific Journal, ESJ, 9(34).

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Rahman, M. and Lambkin, M., 2016. Re-engineering the Brand Portfolio Following Mergers and Acquisitions (M&A): A Conceptual Framework. In Let’s Get Engaged! Crossing the Threshold of Marketing’s Engagement Era (pp. 41-46). Springer International Publishing.

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Unilever Australasia. (2017). Our History in Australia & New Zealand. [online] Available at: https://www.unilever.com.au/about/who-we-are/our-history-in-australia-new-zealand/ [Accessed 15 Mar. 2017].

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