Unilever Strategy for Organising and Structuring Its Global Operations.
Unilever is a complex global organization that has a portfolio of 400 brands, spanning 14 categories in home and personal care and food products. The company has 163,000 employees in the 170 countries within which it operates (Unilever, 2010). Organizations such as Unilever face the challenge of configuring a global structure that “works well in diverse locations but also brings units together in a coordinated fashion” (Shenkar & Luo, 2007, p. 312). Given its wide range of products and the diversity of countries in which it operates, Unilever has to employ a global organizational strategy that addresses its global complexity and the diversity of its product portfolio. In its portfolio, there are some product lines that can be extended to new markets with little or no modification, while there are others that need to be modified to suit the local preferences. For example, chemical products are highly standardized and require little variation for local markets (Child, 2005, p. 245). Standardization of such products creates economies of scale in production and requires a “high level of global coordination and integration” (Child, 2005) and centralized R&D. On the other hand, some of Unilever’s products, such as packaged foods, require modification to suit local tastes and cultures. There are no production economies of scale for such categories and product development has to be facilitated locally.
These factors present two scenarios for the company – striving for high global integration in the case where products can be introduced to new markets without modification and striving for high local responsiveness where there is need for modification to meet local preferences. Unilever has to therefore adopt a global organizational structure that addresses the two scenarios. The organization employs a transnational strategy, which is best suited for Unilever’s global operations, as it is faced with high pressure for both local responsiveness and global integration (Child,
These factors present two scenarios for the company – striving for high global integration in the case where products can be introduced to new markets without modification and striving for high local responsiveness where there is need for modification to meet local preferences. Unilever has to therefore adopt a global organizational structure that addresses the two scenarios. The organization employs a transnational strategy, which is best suited for Unilever’s global operations, as it is faced with high pressure for both local responsiveness and global integration (Child,
References: • Child, J. (2005) Organisation: contemporary principles and practice. Malden, MA: Blackwell Publishing, pp. 241-253 • Shenkar, O. & Luo, Y. (2007) International business. 2nd ed. Thousand Oaks, CA: Sage Publications. • Unilever Website. Available from: http://www.unilever.com