GLOBAL MANAGEMENT

Group Report

Submitted By: Rajwinder Kaur (153103)

Paritosh Parashar (141136)

Spandan Patel (151 )

Himanshu Shekhar (151324)

Advit Seth (141403)

Submitted To: Prof. Deepak Shrivastava

Institute of Management, Nirma University

Date of Submission: 29th October, 2016
HISTORY AND ORIGIN

Unilever was created when British firm Lever Brothers and the Dutch-owned Margarine
Unie signed an agreement

Built on 2nd of September 1929

William Lever thought his first business lesson: there had to be potential in improving
things

Second business lesson: expansion brought success

William want to package his quality soaps from several suppliers all under the Sunlight
brand name

With the help of two soap-making experts they made a winning recipe formula based on
Copra oil, tallow, cotton oil, and resin.

Production for packaging the soap with full-colour visual on the box started in January
1885.
 Two years later, his factory was bursting at the seams, making 450 tons a week

By the mid-1890s, Sunlight sales were at a staggering 40,000 tons a year

Lifebuoy was launched in 1894

Launched Sunlight Flakes, a waste from the bar cutting machines

It was then rebranded as Lux Soap Flakes in 1900

Cleaning needs like scouring powder with Vim launched in 1904

Laundry powder with Omo first conceived simply as a bleaching powder in 1908

William never forgot the lesson as a salesman: scale was a big benefit

1915 was his greatest triumph being the snaring of the famous Pears soap company

In 1919, William Lever set up operations in United States, Switzerland, Canada, Australia
and Germany

In 1892, he begun the integration back up of his supply chain of Copra oil to an arduous
journey to Fiji and Samoa

The company began developing a palm plantations in the Solomon Islands

In 1920, an investment in Nigeria was near disastrous and terminal for Williams
leadership

The Niger Company purchase had precipitated, installed one of the companys
accountants, Francis DArcy Cooper, as the new managing director

In 1921, the company's head office was moved from Port Sunlight to London

William Lever passed away in 1925

In 1914, it starts to manufacture margarine, as per asked by the British Government

EARLY EVOLUTION

Unilever has two holding companies with had different shareholders:

British Unilever Ltd. listed on the London Stock Exchange and capitalized in sterling

Dutch Unilever NV listed on the Rotterdam Stock Exchange and capitalized in guilders

The largest U.S. manufacturer of tea, the Thomas J. Lipton Company, was acquired

In the war years, Lifebuoy soap provided a free washing and bathing service to bomb out
civilians in Britain

The most notable acquisition in 1943 was the purchase of Batchelor Foods

Unilever had majority stakes in Frosted Foods, owned by Birds Eye brands according to
U.K. rights

1944 was the acquisition of Pepsodent Toothpaste

In 1919, Crosfield was acquired

Post-war acquisitions were Chicago-based margarine manufacturer and Americas oldest

cosmetic firm, Harriet Hubbard Ayer

In 1954, they launched Sunsilk in U.K. and by the end of the decade it was being sold in
18 countries

Purchased a French soap and toothpaste company, Thibauld Gibbs in 1956

It then transitioned over to hair-care products under the more alluring-sounding name of
Elida Gibbs

Unilever runs the very first television advertisement for Gibbs S.R. toothpaste

Signal was launched in the U.S. market in 1957, as a breath-freshening toothpaste

Also launched Dove, a brand of soap containing 25% moisturizing crme

 In 1959, Germany operation came up with the idea of selling margarine in tubs

Netherlands Unilever bought an ice cream company

The Niger Company renamed to United African Company

By the mid-1950s it was earning 15% of Unilevers entire profits

In 1960, bought The Streets in Australia (now Magnum Bar) and Frisko in Denmark

Their U.S. Operations bought the Breyers Good Humor brand in 1961

1962 acquisition of Italys Spica, with Cornetto in its portfolio brought success into the
company

Followed acquisition in Europe was a juiced up partnership with Nestle

Cif/Jif, the first liquid abrasive household cleaner, quickly spread around the Unilever
empire

It is set to expand their slaughter house business for the Walls and Hartog Meat Brands

The company was also expanding its operations in animal feeds, chemicals, paper,
packaging and transportation

Unilever had an in-house advertising agency called Lintas

Unilever was now in over twenty countries and taking on work from any non-competing
advertiser

United African Company was the main agent for Caterpillars heavy earth-moving
equipment

Also for Africas largest brewer through joint ventures with Heineken and Guinness

United African Company was expanding beyond Africa

The company opened up operations in the Middle East and Pacifica Islands

In the late 1960s, Unilever almost merged with Allied Breweries

 In the end of 1960s, Unilever had more sales than P&G, Colgate-Palmolive, Nestle and
Henkel combined

Unilever enjoyed a 12% global market share, 50% of the market share accounted for by
butter

In personal care, the company was barely beginning has a global share of 4%

Unilever became the worlds second-largest soup manufacturer in a subsidiary of T.J.

Lipton

The Dutch meat business Zwanenbergs was acquired in 1970

Launched the Impulse deodorant in South African business

Bought a chemical company, National Starch for $487 million in 1978

It was during the U.S. production crisis low-down

In 1983, the supplier launched a brand of its own, a low-fat spread called Country Crock

It became an immediate success

A bright spark in the ice cream R&D team was Vienetta

Vienetta is an affordable luxury ice cream dessert

It has a production technology protected by patent with many years left to run

The French personal products division created Axe body spray (branded Lynx in the
U.K.)

By the end of the decade, Axe was Unilevers largest deodorant

Dove had been relaunched in the United States and then became the countrys best-
selling soap bar
GLOBAL EXPANSION

Belgium, Germany, France, Switzerland and Holland were the thriving Lever Brothers
sales agencies by 1889

In 1906, 25% of the capital employed were from Belgium, Germany, Switzerland,
Canada, Australia and US

Sunlight Soap became the largest selling soap in the world in 1880s.

Sales offices in New York and Toronto were opened in 1888

In 1899, William Lever bought an American manufacturer, Benjamin Brooke &Co., the
makers of the popular Monkey Brand soap

After William died, operations in Thailand, Indonesia, China, Argentina, Brazil started

One of the best example of any western company cracking an emerging market is India

India, as a leading part of the British Empire, first sold Sunlight in their market by 1888,
soon followed by Lifebuoy in 1895

Other Lever bestsellers such as Pears, Lux and Vim followed

In 1918, Vanaspati was launched, a brand of hydrogenated vegetable fat used in place of
butter in Indian cooking

Vanaspati was the first Unilever brand to be manufactured in India itself, starting up in
1932

Two years later a modern soap factory was up and running in Bombay, followed by the
setting up of third subsidiary, United Traders Limited

The three companies merged to form Hindustan Unilever Ltd. (HUL) in 1956

HUL, by which time has a Calcutta-based factory making a range of personal products
 By 1967, Hindustan Unilever Ltd. was one of the top five companies in India

It has 7,000 employees and 6 factories producing a highly diversified product

At the governments request, HUL sold condoms

In the mid-1970s, the leading detergent brand Surf was decimated due to a low cost
competitor

Launched Wheel in 1987, which six years later had a market share of over 20%

Came a merger between Hindustan Unilever Ltd. and Tata Oil Mills Company in 1993

In 1996, HUL formed a 50:50 joint venture with another Tata subsidiary, Lakme

In 1994, HUL and Kimberly Clark had a joint venture to market Huggies and Kotex

HUL also set up a subsidiary in Nepal, Unilever Nepal Limited (UNL)

In 1994, Brooke Bond India and Lipton India (BBILI) merged to form Brooke Bond
Lipton India Ltd.

The merger immediately launched the Wall's range of frozen desserts

It also acquired distribution rights for other leading brands

Brooke Bond India and Lipton India (BBILI) merged with Hindustan Unilever Ltd. in
1996

It was followed by the merger of Pond's (India) Limited with Hindustan Unilever Ltd. in
1998

In 2000, Unilever had 74% of the government-owned bread business, Modern Foods

HUL acquired the full control two years later

Unilevers first soap powder brand sold in Brazil had been the cheap and cheerful Rinso

In 1959, it was supplanted by Brazils first synthetic brand, Omo

 By 1970, Unilever had 22 operating companies with an annual sales of over 30 million a
year

14 companies were based outside the U.K. and the Netherlands

Excluding North America and Europe, Unilever India was accounting for 24%, South
Africa 11% and Turkey 7%

Japan had also been a rocky road for the company

In 1913, Lever had built a soap factory in Japan but was sold after 10 years.

The company name became Nippon Lever in 1977

The breakthrough came with the ever-dependable Sunsilk, launched in 1977

In 1985, Unilever formed a 50:50 venture to form Shanghai-Lever

Beginning with the production of Lux in 1987

By 1990, Unilevers sales in China had reached a respectable $32 million a year

Though, the figure was still small in comparison to the companys total overseas sales
(excluding Europe and North America) of nearly 5 billion a year

In Czech Republic, Hungary and Russia by 2001 the company had seven manufacturing
sites

It included a margarine factory in Moscow, dressing, tea, home and personal care
factories in St Petersburg, and food and ice cream factories in Tula and Omsk
MODERN BUSINESS

The company embarked on its first-ever hostile takeover bid, that is winning through in
September 2004 at a price of 390 million

Unilever bought Chesebrough-Ponds in January 1987 for 2 billion

Brands such as Vaseline and Ponds catapulted Unilever to 4th largest global skincare
company

Most notably acquisition approached to Unilever was Elizabeth Arden-Faberg who

made their pitch in October 1988

This deal was consummated in 1989 for 996 million and soon followed by Calvin Klein
with its highly successful Obsession and Eternity brands

One small acquisition that would pay back many times over was that of a small U.S.
margarine manufacturer, J. H. Filbert

The Becel margarine brand was proving a success

Sunsilk now selling in over 30 countries

The brand has 12% of the world shampoo market in 1985

Signal was sold in 18 countries and had 5% of world toothpaste sales

The companys Unipath subsidiary developed a successful pregnancy testing kit called
Clearblue

The Dove brand began its European rollout in 1989

The same year that the Magnum brand appeared as a response to the entry of Mars into
the ice cream category

The remaining portions of UAC - finally sold by 1994

 Agribusinesses followed in 1995

The meat processing and fish businesses in 1997

The same year that the chemicals division was sold to ICI for a hefty 4.9 billion

Significant acquisitions includes the Helene Curtis hair-care business, Ben & Jerrys,
Slimfast in early 2000

Breyers ice cream was also bought which made Unilever Americas largest ice cream
company

In 2000, companys biggest acquisition by far was Bestfoods

It took total company sales to $52 billion a year

Bestfoods brought some leading brands into the fold like Knorr and Hellmans

40% of Unilever sales is from outside North America, an ideal fit with the globalized
Unilever

1,000 of the brands delivered only 8% of total company sales

The collateral damage was that 100 of the 350 factories would go along with 25,000
employees

Only a year later the company portfolio was down to 900 brands as 87 businesses were
sold off
FEATURES THAT AFFECTED THE COMPANYS
INTERNATIONALIZATION AND THE STRATEGY OF ITS
DEVELOPMENT

Great Depression in 1930s The unfavorable economic conditions made the freshly united
enterprise adapt and streamline as fast as possible.

World War II. Unilever was fragmented during the years of war as no connections
between German and Japanese enterprises This resulted in development of the distinct
corporate culture.

local Unilever companies started to operate with high level of independence and focused
on particularities of local markets.

The postwar European prosperity and growth of wealth influenced new Unilever strategy.
The company starts to pay additional attention to perfection of process solutions and
establishes R&D units.

Beginning of 1980s Unilever becomes 26th largest company in the world.

Businesses included tropical plantations, cargo forwarding, manufacturing of plastics,

packing materials, and a wide range of food, personal, care and household maintenance
products.

In 1990s the company changed the strategy abruptly: the strategy of brand portfolio
diversification was replaced with the strategy of focusing on key products and best
selling markets with high growth potential.

By the end of 20th century Unilever decreased the number of marketed product
categories from 50 to 13 and, the company launched first environmental efficiency
programs.
UNILEVERS XXI CENTURY GROWTH PROGRAM.

Aimed to further development of leading brands.

Improvement of production speeding up the company growth.

The company sold 140 various brands and focused on leading brands.

Unilever Health Institute was established in the beginning of the century, dedicated to
R&D in food, health, and life energy.

In 2004, Unilever adopted a new corporate mission. Its essence is formulated in just one
word Vitality.

The new corporate mission statement is Add Vitality to Life.

!
COMPANY STRUCTURE

Unilever was set up with two distinct capitalized entities. Those entities shared the same
board of directors and had separate chairmen. It has an agreements in place to ensure
dividends were paid equally

The first board meeting of each year has each country delegated executive to the Special
Committee which had two British and one Dutch member who collectively acted as the
CEO

There was an understanding that the Dutch side would run continental Europe, while the
British side run the rest of the world

By 1960, an existed structure beneath the Special Committee and the boards to manage
around five hundred operating companies

The six management groups consist of UK Committee, Continental European Group,

Overseas Committee, Plantation, UAC and North America

By 1960, Product Committees had set up for detergents, foods, toiletries and edible fats,
all based in Rotterdam

In 1972, McKinsey (Unilever CEO at that time) had recommended extending co-
ordination to all the other European countries

In 1989, a new Foods Executive was formed in Rotterdam

In 2001, Unilever was organized into two global divisions, Food and Home and Personal
Care, with the aim of optimizing synergies across the product portfolio

In early 2005, this was simplified into a matrix structure, with the two divisions
responsible for strategy and brand development

The regional groups of each division were merged, with the regional level responsible for go-to-
market execution
LEGAL STRUCTURE

The two parent companies, NV and PLC, together with their group companies, operate as
a single economic entity

NV and PLC have the same Directors and are linked by a series of agreements, including
an Equalisation Agreement, which are designed so that the positions of the shareholders
of both companies are as closely as possible the same as if they held shares in a single
company.

The Equalisation Agreement provides that both companies adopt the same accounting
principles.

It also requires that dividends and other rights and benefits attaching to each ordinary
share of NV, be equal in value to those rights and benefits attaching to each ordinary
share of PLC, as if each such unit of capital formed part of the ordinary share capital of
one and the same company.
ORGANIZATIONAL SET-UP OF UNILEVER

Chief
Executive
Director
5 Executive Directors (for
Finance, R&D, HR, Supply Chain, and
Marketing
!

BOARD OF DIRECTORS

1. Michael Treschow Chairman

2. Ann Fudge Vice-Chairman and Senior Independent Director

3. Paul Polman Chief Executive Officer

4. Graeme Pitkethly Chief Financial Officer

5. Nils Andersen Non-Executive Director

6. Laura Cha Non-Executive Director

7. Vittorio Colao Non-Executive Director

8. Professor Louise Fresco Non-Executive Director

 9. Judith Hartmann Non-Executive Director

10. Mary Ma Non-Executive Director

11. Hixonia Nyasulu Non-Executive Director

12. John Rishton Non-Executive Director

13. Feike Sijbesma Non-Executive Director

14. Tonia Lovell Group Secretary

UNILEVER LEADERSHIP EXECUTIVE

Paul Polman, Chief Executive

1. Doug Baillie, Chief Human Resources Officer

2. David Blanchard, Chief R&D Officer

3. Marc Engel, Chief Supply Chain Officer

4. Kevin Havelock President, Refreshment

5. Alan Jope, President, Personal Care

6. Kees Kruythoff, President, North America

7. Leena Nair, Chief Human Resources Officer

8. Nitin Paranjpe, President, Home Care

9. Graeme Pitkethly Chief Financial Officer

10. Ritva Sotamaa Chief Legal Officer

11. Amanda Sourry President, Foods

12. Keith Weed Chief Marketing & Communications Officer

13. Jan Zijderveld President, Europe

UNILEVER ORGANIZATIONAL STRUCTURE AT REGIONAL LEVEL

The organization has a matrix structure, with the following basic departments by
function:

Sales function is represented by Customer Development Department

Supply function is represented by Supply Chain Department,

Marketing function is represented by Brand Development and Brand Building

Departments

Other departments: Human Resources, Finance, IT, Legal, and PR. Each Department
is headed by a Vice President.
UNILEVERS ORGANIZATIONAL STRUCTURE FOR PRODUCT
INNOVATION

Unilevers corporate structure is responsible for ensuring adequate support for product
innovation in the firms global business. A companys organizational structure or corporate
structure is the design that defines the arrangement and systems used to build and interconnect
various organizational components, such as offices and teams. Unilevers organizational
structure adapts to changes in the consumer goods industry and global market. At present, the
company maintains a structure that addresses corporate needs in terms of managing product
types across the world. As a leading consumer goods firm, Unilever has an organizational
structure that suitably supports diversified global operations.

With an organizational structure that enables effective product development, Unilever continues
its position as one of the biggest consumer goods companies in the world. Such organizational
structural design ensures Unilevers continuing success despite the large scale of its global
operations.

FEATURES OF UNILEVERS ORGANIZATIONAL STRUCTURE

Unilever has a product type divisional organizational structure. The organization is divided into
components based on their product focus. For example, the company has a division for personal
care products and another division for home care products. The following are the main
characteristics of Unilevers organizational structure:

1. Product type divisions (most significant feature)

2. Corporate executive teams

3. Geographic divisions (least significant feature)

Product Type Divisions. A product type division functions as a unit that enables Unilever to
manage the development, manufacturing, distribution and sale of its consumer goods. For
example, corporate managers use this feature of the organizational structure to match markets
needs with appropriate products. An advantage of this structural characteristic is its facilitation of
the companys efforts to apply product differentiation, which is Unilevers generic strategy for
competitive advantage. This corporate structure is beneficial, especially because the company
already has a diverse portfolio of products. Unilever maintains the following product type
divisions in its organizational structure:

1. Personal Care

2. Foods

3. Home Care

4. Refreshment

Corporate Executive Teams. Corporate teams are a secondary characteristic of Unilevers

organizational structure. This structural feature is based on business functions. For example,
Unilever has a team for finance and another team for marketing communications. These teams
make up the Unilever Leadership Executive (ULE) group. The following are the corporate
executive teams in Unilevers organizational structure:

1. Chief Executive

2. Human Resources

3. Research & Development

4. Supply Chain

5. Refreshment

6. Personal Care

7. North America

8. Home Care

9. Finance

10. Legal
 11. Foods

12. Marketing & Communications

13. Europe

Geographic Divisions. Geographic divisions are a minor feature of Unilevers organizational

structure. The company uses this structural characteristic to support regional strategies. For
example, Unilevers marketing strategies for Europe are different from strategies applied for
Asian consumer goods markets. Also, this corporate structure feature is used to analyze the
companys financial performance. The following geographic divisions are maintained in
Unilevers organizational structure:

1. Asia/AMET/RUB (Africa, Middle East, Turkey; Russia, Ukraine, Belarus)

2. The Americas

3. Europe

UNILEVERS CORPORATE STRUCTURE IMPLICATIONS, ADVANTAGES &

DISADVANTAGES

An advantage of Unilevers organizational structure is its support for product development and
innovation. For example, each product type division has its semi-autonomous capabilities to
develop products that directly suit the needs in consumer goods market segments. This corporate
structure is also advantageous because it enables Unilever to differentiate its products despite the
large size of its global operations.

A disadvantage of Unilevers organizational structure is its minimal support for regional strategic
implementation. Even though geographic divisions are one of its structural features, the company
focuses more on product type divisions. As a result, there is limited support for market-specific
or regional strategic reforms. Thus, to improve this organizational structure, a recommendation is
that Unilever must increase its emphasis on geographic divisions to empower regional
managerial teams. Such structural change improves strategic effectiveness in regional consumer
goods markets.
Unilevers Global Strategy

As one of the strong and healthy companies in the world with many successful brands, Unilever
has an opportunity to expand into foreign markets that it is not yet operating in, in order to gain
access to customers around the world. Supported by strengths of its four key global brands
Dove, Sunsilk, Rexona and Lux, Unilever firstly entered in foreign market to compete
internationally by entering just one or select few foreign markets. Once successfully introduced
its product in several market, Unilever expands its success brand to many other markets and
starting to compete globally.

In entering and competing in foreign markets for its cosmetics and toiletries product, Unilever
follows a global strategy, also called by a think-global and act-global strategy, The strategy
using essentially the same competitive strategy approach in all country markets where the
company has a presence (with only minimal responsive to local conditions), sells much the same
products everywhere (make minor adaption to local countries where needed to accommodate
local countries preferences), strives to build global brands, and coordinates its actions worldwide
(centralized).

A global strategy used by the Unilever is preferable to localized strategies because Unilever can
more unify its operations and focus on establishing a brand image and reputation that is uniform
from country to country. It strategy implies to the Unilever success in building strong character
brand such as Dove, Sunsilk, Rexona and Lux. Moreover, with a global strategy Unilever should
coordinated its marketing, operational and distribution worldwide.

Unilever is increasing its efforts to build on its long-established local roots in developing
regions. Through its well-established distribution network in both the traditional and modern
retail outlets and with a good ability to adapt successful global brand concepts to suit local
markets, Unilever is in a good position to be able to capitalize on the growth forecast in these
regions.
Once Unilever became one of the most successful global companies in the world, it has many
profit sanctuaries. By having multiple profit sanctuaries, Unilever has strong competitive
advantage over its competitor with a single or few sanctuaries.

In the cosmetics and toiletries globally competitive industry, there are no doubt that Unilevers
major rivals over the next few years will be Procter & Gamble and LOral, both of which give
significant resources to new product development activity, and respond to changes in the market
faster than Unilever. LOral also has the benefit of being exclusively involved in cosmetics and
toiletries, unlike both Unilever and Procter & Gamble which both have cross-industry
involvement, such as in packaged food. Much the same group of rival companies competes in
many different countries. Therefore, the competition pursues the company to be more innovative
in developing its products and maintaining its brands. The following diagram shows the market
performance of Unilevers skin care and hair care market share:

!
Unilevers marketing strategy for competing in foreign market

For its marketing strategy Unilever combines its strategy with social project in many countries.
Educational campaigns have been important tools for raising awareness for Unilever brands such
as Close-Up and Dove. The companys partnership with the World Dental Federation has seen it
become involved in oral healthcare projects in both developed and emerging nations, including
Austria and Brazil. In 2006, Unilever developed a low-cost toothbrush, the Pepsodent Fighter,
which retails at a price equivalent to just EUR0.20 and is distributed in India and Indonesia.

The company also has more directly brand-related programs, including Close-Ups Project Smile
in Nigeria, which used small kiosk outlets to showcase both its products and oral hygiene
information, and the Dove Self-Esteem Fund, which has joined with organizations such as the
Girl Scouts of the USA and the UKs Eating Disorder Association to fund educational Body Talk
programs in schools to improve body-related self-esteem.

Less directly, a Brazilian recycling partnership with Pao de Acucar, a major Brazilian retailer, not
only helped employ more than 300 people in a local recycling co-operative, but also gave
Unilevers products greater in-store prominence as well as raising the profile of brands including
Rexona by having their logos on point-of-sale information and educational materials.
The companys successful brand innovation program is supported with a high level of marketing
and advertising activities including most media. Investment in advertising and promotions
increased by nearly EUR300 million, from 12.6% to 13.1% of sales in 2006, in order to support
major brand launches. Particularly successful was the Campaign for Real Beauty for Dove,
which continues its global roll-out and campaigns for self-confidence. A central idea behind the
companys product development and marketing strategy is that of Vitality: essentially
producing products that are felt to be life-enhancing, to make consumers feel good, look good
and get more out of life.

Organisational Change - Restructuring at Unilever

In the 1990s, Unilever began to transform its worldwide detergents activities from a loose
confederation into a tightly managed business with a global strategy. The shift was prompted by
Unilevers realisation that its traditional way of doing business was no longer effective in an
arena where it had become essential to realise substantial cost economies, to innovate, and to
respond quickly to changing market trends.

Unilever was handicapped by a high-cost structure from the duplication of manufacturing

facilities from country to country and by the companys inability to enjoy the same kind to scale
economies as P&G. Unilevers high costs ruled out its use of competitive pricing.

To change this situation, Unilever established product divisions to coordinate regional

operations. The 17 European companies now report directly to Lever Europe. Implicit in this
new approach is a bargain: The 17 companies are relinquishing autonomy in their traditional
markets in exchange for opportunities to help develop and execute a unified pan-European
strategy.

As a consequence of these changes, manufacturing is now being rationalised, with detergent

production for the European market concentrated in a few key locations. The number of
European plants manufacturing soap has been cut from 10 to 2, and some new products will be
manufactured at only one site. Product sizing and packaging are being harmonised to cut
purchasing costs and to pave the way for unified pan-European advertising. By taking these
steps, Unilever estimates it may save as much as $400 million a year in its European operations.

The Eventual Evolution of Unilever as a Transnational Company

These days, Unilever is often described as one of the foremost transnational companies. Yet the
organization of diverse operations around the world is not the outcome of a conscious effort to
become what is now known among academics as a transnational. When Unilever was founded in
1930 as a Dutch-British company, it produced soap, processed foods, and a wide array of other
consumer goods in many countries. Ever since then, the company has evolved mainly through a
Darwinian system of retaining what was useful and rejecting what no longer workedin other
words, through actual practice as a business responding to the marketplace.

But regardless of the process, Unilever has become a transnational company in the most basic
sense: they think globally as well as act locally. The very nature of their products requires
proximity to local markets; economies of scale in certain functions justify a number of head-
office departments; and the need to benefit from everybodys creativity and experience makes a
sophisticated means of transferring information across their organization highly desirable. All of
these factors led to their present structure: a matrix of individual managers around the world who
nonetheless share a common vision and understanding of corporate strategy.

In essence, Unilevers story is one example of how a single company has come to manage far-
flung units that share a common culture. Over the course of its particular lifetime, the company
has successfully weathered numerous changes. Within just the last 30 years, for example,
Unilevers most important product group, the foods business, has gone through two major
reorganizations. The details of how the foods business has reshaped itself in response to new
market trends illustrate Unilevers overall combination of structural formality and managerial
flexibility.
Linking Corporate Strategy to HR Strategy and Leadership
Development

Unilever, a fast moving international consumer goods company, has undertaken an intensive
search for practical solutions in absorbing leadership competencies into its corporate strategies.
To this end, Unilever seriously considered behavioural resources for winning in the global
markets and developed their own competency model, the Leadership for Growth
Profile (LGP), which has been implemented world-wide throughout the company.

At the same time, however, Unilever has continued to emphasize its willingness to operate most
effectively in local markets as a multi-local multinational company. Unilevers Corporate
Purpose Statement points out Unilevers focus on local culture, describing what the company
aspires to be, as well as expressing its values and beliefs. In this multi-local multinational
company, local operating companies are able to draw on the resources of a global corporation
and bring together global scale and local relevance.
BRIEF BACKGROUND

Black & Decker Corporation is an American manufacturer of power tools, accessories, hardware,
home improvement products and technology based fastening systems headquartered in Towson,
Maryland. It was founded in 1910 by S. Duncan Black and Alonzo G. Decker as a small machine
shop in Baltimore. Decker, who had a seventh grade education, had met Black in 1906, when
they were both 23-year-old workers at Rowland Telegraph Co. On March 12, 2010, Black &
Decker merged with Stanley Works to become Stanley Black & Decker. It remains as a wholly
owned subsidiary of that company.

This acquisition gave its internationalization strategy a big push as Stanley Works was a fortune
500 company and had operations spread across a lot of regions across the world.

THE INTERNATIONALIZATION PROCESS

The companys internationalization has been through the use of a Transnational Strategy.
A transnational strategy refers to an international business structure where a company's global
business activities are coordinated via cooperation and interdependence between its head office,
operational divisions and internationally located subsidiaries or retail outlets. A transnational
strategy offers the centralization benefits provided by a global strategy along with the local
responsiveness characteristic of domestic strategies.
The company customizes its power tools and home improvement products for different markets
but at the same time ensures that the quality lives up to the standards of the Black and Decker
name.

A key element of this strategy is maintaining local responsiveness along with cost effectiveness.
Hence the company owns a lot of different subsidies in different countries. As mentioned earlier
a big step in this direction was being acquired Stanley Works.

MAJOR ACQUISITIONS

Black and Deckers modus operandi in internationalizing itself has been inorganic. Hence to put
it differently they have acquired a lot of companies to spread themselves internationally. Some of
the acquisitions are listed hereunder.

1960 Acquired DeWalt from American Machine and Foundry.

1975 Francis P. Lucier succeeded Alonzo G. Decker, Jr. as chairman of the board, the
first time a family member did not hold the post.

1984 Acquired small-appliance business from General Electric Company.

1989 Acquired Emhart Corporation which includes the brand names Kwikset, Price
Pfister faucets, Molly wall anchors, POP rivets, True Temper golf club shafts and other
consumer and commercial products.

2010 Black & Decker merges with Stanley Works to become Stanley Black & Decker
A pictorial representation of the subsidiaries of Black and Decker

ORGANIZATIONAL STRUCTURE
The organizational structure of this particular company is a Product Based Matrix Structure.
Matrix structure is an organizational structure that facilitates the horizontal flow of skills and
information. It is used mainly in the management of large projects or product development
processes, drawing employees from different functional disciplines for assignment to a team
without removing them from their respective positions.

Employees in a matrix organization report on day-to-day performance to the project or product

manager whose authority flows sideways (horizontally) across departmental boundaries. They
also continue to report on their overall performance to the head of their department whose
authority flows downwards (vertically) within his or her department.

A key feature of a matrix structure is multiple reporting relationships. Now as is evident from the
organizational structure, different product division heads report to different domain heads. For
example the President of Infrastructure in here is reporting to the Vice President of Human
Resources. Similarly the president for Engineering Fastners Mike Tyill is reporting to the staff
Executive Denise Nemchev.

An organizational structure that facilitates the horizontal flow of skills and information. It is
used mainly in the management of large projects or product development processes, drawing
employees from different functional disciplines for assignment to a team without removing them
from their respective positions.

Employees in a matrix organization report on day-to-day performance to the project or product

manager whose authority flows sideways (horizontally) across departmental boundaries. They
also continue to report on their overall performance to the head of their department whose
authority flows downwards (vertically) within his or her department.

Internationalization Strategy
Black & Decker is one of the oldest multinational corporation founded in Baltimore,
Maryland ,in 1910,today company deals in consumer power tools and professional power tools.
Company was founded by two entrepreneurs Duncan black and Alonzo g Decker in
1910 .Company first plans open in Towson suburb of Baltimore .In 1927 companys common
stock was listed on Baltimore exchange and in 1928 black& Decker makes its first acquisition
of another tool company and begins manufacturing outside US.IN 1936 companys common
stock got listed on new york stock exchange .Currently company has got distribution of their
product over 100 nations and has revenue of $5 billion .

Due to its strong brand name In 1950s and 1960s ,the company has got monopoly in the market
of their products ,during this time company has expanded rapidly in international market ,at that
time company has adopted localization strategy which focused on increasing profitability by
customizing goods and services of the company in order to match taste and standard of
consumers in different part of world .However in this strategy pressure of the cost is low and
pressure of local responsiveness is localization is appropriate when consumer tastes and
preferences differ across nations and cost pressures are not too intense.

Firm persuading localization strategy focus on local responsiveness ,the firm perusing
localization strategy do no need for integrating mechanism .The lack of interdependence implies
that performance ambiguity in such enterprise is low .However localization can increase cost of
production of firm , as for every country different set up required like manufacturing, marketing
and engineering but if the local demand is higher ,then company can easily co-up with the cost of
production and increase their profit .as this company deals in tool , which are always in demand
in every country ,moreover at that time companys got monopoly of their product worldwide and
localization is appropriate strategy at that point of time.

Black & Decker has adopted decentralization organization structure rather than centralization at
that time .Company choose decentralization because it gives top management time to focus on
critical issues by delegating more routine issues to lower level managers, decentralization favors
motivational research, its permit greater flexibility in an organization, its results in better
decisions In decentralization, decision can made on information by any individual rather than
any manager. moreover decentralization can increase control, decentralization can be used to
establish self-contained subsidies within organization there was monopoly of the companys
product in the market, it was best time to expand at international level, company decided to
choose decentralization as they wanted to explore domestic market of every country, moreover
there were no cost pressure at that time and company had more chance to increase their
profitability. As company is adopting localization strategy, it creates strong pressure for
decentralization operation decisions to foreign subsidiaries.

In 1980s company was still following decentralization and had 23 wholly owned subsidiaries in
foreign nations and two joint subsidiaries. However by mid1980s decentralization structure has
started becoming untenable as new competitors arrived in market such as Bosch, Makita and
Panasonic as a result black & Decker monopoly eroded in market .due to stagnant demand and
high cost ,company forced to shut down some of their production unit and company move
towards the global standardization strategy where cost and demand became intense.

Global standardization strategy focuses on increasing profitability and profit growth by reaping
cost reduction that comes from economies of scale ,learning effect and locational
economies .Company has adopted this strategy as Major competition arrived in market .due to
that demand remain the same but supply has went up and moreover cost of production also went
down because of competitors .this strategy make most sense when there are strong pressure for
cost reductions and minimal demand for local responsiveness as we can see the same thing in
this case study .after 1985 ,once globalization standardization strategy has implemented sound
progress was made in designing and marketing product for worldwide markets .

As company move towards global standardization strategy, in 1990s the rise of powerful
retailers like home depot and Lowes in the united states has further pressured prices in power
tool market ,in order to get better manufacturing efficiencies black & Decker closed more
factories and company had shifted production unit to Mexico and china in order to reduce
production cost to survive in market .so the company move towards from centralization
organization structure to decentralization organization structure. centralization can facilitate
coordination ,as company has shifted production base to china and Mexico ,the activities of two
operations must be coordinated with head office in order to get smooth flow of
production .moreover Major decisions are now will be taken by managers at corporate
headquarters , centralization can help ensure that decisions are consistent with organizational
objectives ,as in case of decentralization decisions taken by lower level managers can be
variance with top management goals .however in centralization important decisions minimize the
chances of this inconsistency occurring. Centralization can avoid duplication of activities that
occurs when various subunits within the organization carry on similar activities ,in this case
company has cut down their basic R& D unit from eight to two in order to avoid duplication and
also to reduce cost on R & D .by concentrating power and authority in one individual or a
management team, centralization can give top-level managers the means to bring major changes
in organization.

In 2000s, Black & Decker reduced workforce by 700 people to 4500 and they have shut long
time established factories in US and Britain and shifting production to low-cost locations,
cooperation separate their business into two global division one was charged with global
development ,manufacture ,and marketing of corporation and other one charged with
professional DE Walt brand. As they were no changes in cost pressure reduction and demand
was also minimal for local responsiveness ,company was following same strategy of global
standardization strategy as they were following over the decade.

Basic Organization structure of the company was centralized as corporation has kept shifting
production to low-cost locations ,since company is following global standardization strategy
corporation implemented partly worldwide product divisional structure as well as with domestic
product divisional structures, each division is self-contained and responsible for their value
creation activities. Headquarters retain responsible for overall strategic development and finance
control of the firm .World-wide division structure was planned to overcome coordination
problem that arises with international division and worldwide area structures .This structures
facilitates the transfer of core competencies within division worldwide operations and facilitates
introduction of new product

Corporation structure got diversified from last 10 years,company operated 36 manufacturing

facilities out of that 18 were out of the US in Mexico, china Czech republic, Germany ,Italy and
Britain. On other hand they kept R& D dept each one in US and Britain, so the headquarters
took responsibility for new product development for global market .

Organizations are big and its very difficult to change structures and strategies, its takes time to do
that. Since black & decker is big organization having their subsidiares in lots of countries and
most substantive changes in an organization requires a change in structure and change in
distribution of power .We can take an example of Phillips in 1990s increased the roles and
responsibility of global product division and decrease the roles and responsibilities of foreign
subsidiary which means the power influence of global division inclined and on other side power
influence of foreign subsidiaries declined .as expected some managers of foreign subsidiary did
not like the change and resist it which slowed down the speed of structure change .

Another problems comes while changing the strategies and structure is existing organizational
culture ,every organization have some set of values on which whole organization runs .if the
formal and informal social element in organization have been emphasizing consistent set of
values for long period and if hiring ,promotion and incentive system have all enforced these
values and then suddenly announces that these values will no longer be appropriate in
organization that change effect employees .

Moreover national regulations including local content rules and policies pertaining to layoff
might be difficult for organization to alter their global value chain. If the organization wish to
take control of manufacturing away from local subsidiaries and give it to foreign subsidiaries
and consolidate manufacturing at few locations .however if local content rules required some
degree of local production and if regulations regarding layoff make it difficult for multinational
to close it operations in the country ,a multinational may find that these factors make it very
difficult for organization to adopt new structures and strategy .that the reason company has
taken more than two decades to change its strategy and structures .

In the U.S. Consumer Products Group, sales decreased by more than 20% due to lower consumer
spending. Similarly European sales decreased approximately 20%, as weakening economic
conditions were compounded by inventory reductions by retailers. However on other hand
Latin America has continued to deliver solid sales growth. Companys product has been
diversified such ad DE-WALT, stud and joist drill, 36 volt stringer trimmer.
We can say that from last 50s years company has faced lots of challenges in terms of making
their strategy and their organizational structure according to market situation .They started their
company with decentralization and localization strategy as company had monopoly in the market
and expanding their base at international level as well that was the appropriate strategy and
structure implemented at that time as more competition arrived in market in 1980s and
company has shifted their base to low-cost production locations like china and Mexico ,they
move towards centralization structure and globalization standardization strategy with time .

Till 2000s company has kept same global standardization strategy however they partially
implemented world-wide product divisional structures. It depends upon company what they use
either centralization or decentralization ,depending upon firms strategy and type of
decision .black & Decker has experienced modest growth in 2000s but some of their market has
been mature and saturated like in USA and Britain ,however Asian and Latin America market is
still unexplored and not matured yet .

The black& Decker has taken more than decade to change their structures as it is big
organization its difficult to change structures as organization culture ,national regulations are
other problems arises while changing structures.
Staffing
Staffing is the process of filling positions in the organization with adequate and qualified
personnel.

Importance of staffing function

1. Optimum use of resources

2.Enhances the corporate image

3.Job satisfaction

Importance of staffing:

Training and development

Effective co-ordination

Effective recruitment and placement

Building effective human resource.

College level graduates who gain entry level professional employment in sales with B&D
traditionally receive their training via a three ring binder that provides information about
B&D products.

B&D has came up with a new employee training program where new hires go through a
combination of classroom courses, online training and hands on learning about
construction and tool uses.

B&D sends its new hires to B&D university where they are trained about the basic
application of tools which they can use in selling the products to retailers.
References

Gaba, V., & Joseph, J. (2013). Corporate structure and performance feedback: Aspirations
and adaptation in M-form firms. Organization Science, 24(4), 1102-1119.

Liao, C., Chuang, S. H., & To, P. L. (2011). How knowledge management mediates the
relationship between environment and organizational structure. Journal of Business
Research, 64(7), 728-736.

Markides, C. C., & Williamson, P. J. (1996). Corporate diversification and organizational

structure: A resource-based view. Academy of Management journal, 39(2), 340-367.

Martin, R., Muuls, M., de Preux, L. B., & Wagner, U. J. (2012). Anatomy of a paradox:
Management practices, organizational structure and energy efficiency. Journal of
Environmental Economics and Management, 63(2), 208-223.

Menguc, B., & Auh, S. (2010). Development and return on execution of product
innovation capabilities: The role of organizational structure. Industrial marketing
management, 39(5), 820-831.

Tang, F., Mu, J., & MacLachlan, D. L. (2010). Disseminative capacity, organizational
structure and knowledge transfer. Expert Systems with Applications, 37(2), 1586-1593.

Unilever Investor Relations Annual Reports and Accounts Overview.