3.

Unilever’s organizational structure

3.1. Overview of Unilever’s organizational structure
Organizational structure is considered as the framework of roles,
responsibilities, authority relationships, and communication
channels within a company. In other words, it is likely to be the
foundation of each organization to help the manager control and
operate the company more effectively. Unilever’s organizational
structure has been changed through each period. This is
reasonable because the market is always changing, requiring
managers to flexibly change the way the company is organized to
adapt to that. Changes in Unilever’s organizational structure help
it overcome the limitations of the traditional way, as well as allow
managers to operate it in a sustainable manner.
3.2. Decentralization structure (1950-1980)
Unilever’s decentralized structure allowed managers at the
regional and national levers to have decision - making authority.
Each geographic area could modify its operation, marketing
strategies, and product offerings to meet the regional economic
situations. Additionally, this type of structure gave Unilever an
advantage as they had the flexibility to change based on
consumer needs. They appointed managers who were local to
that place so that the company gained a deep understanding of
the local market.
However, the decentralization structure prevented Unilever from
having a common corporate culture. It also led them to duplicate
products, resulting in high costs. For example, disparate areas
may create comparable products without coordinating, which
leads to unnecessary cost. Decentralization structure also limited
Unilever’s global vision, making it difficult to standardize products
or take advantage of economies of scale.
3.3. Centralization structure (early 2000s)
Unilever recognized that the decentralized structure had
prevented the company from leveraging its global presence, so
they decided to switch the company to a centralized structure.
The company became more centralized by focusing on core
functions such as marketing plans, product development, and
supply chains. By implementing this, the company could
standardize its products and improve cost efficiency because of
reducing resource duplication.
Nevertheless, the centralization structure made Unilever meet
challenges in responding to local market trends that led to a
potential of disruption between global strategies and local
consumer preferences. Additionally, this structure limited the
freedom of local teams to innovate and adapt products to the
market because decision-making had to shift to central teams. As
a result, balancing the benefits between global efficiency and
local market adoption became a key challenge that made Unilever
have to modify their organizational structure.
3.4. Matrix structure (2000s)
Unilever realized that they needed to find a structure that can
balance between centralization and decentralization. The matrix
structure was designed to combine both strengths of these
previous structures. This structure included two axes: one based
on product categories (Home Care, Personal Care, Food &
Refreshments) and the other focused on geographic regions
(North America, Europe, Asia). By applying matrix structure,
Unilever not only maintains flexibility in local markets but also
improves their global plans. Dividing the organization into both
geographical regions and product categories allows Unilever to
collaborate across functions that can benefit from economies of
scale in production and supply chain management.
One of the most disadvantages of matrix structure is it creates
dual reporting lines that may increase confusion or conflict of
interest, leading to slowed down decision - making. Besides that,
it requires coordination between global and regional teams
carefully because sometimes the priorities of global product
teams do not always align with the needs of specific regions.
Although matrix structure brought a lot of advantages to Unilever,
it became too complex and slowed down decision - making.
Unilever realized that they need a more effective structure to
adapt in a rapidly changing market. As a result, this company
decided to transition from matrix structure to a business group-
focused organizational structure.
3.5. Five business groups structure (2022-present)
The new structure divided the organization into 5 business
groups: Beauty & Wellbeing, Personal care, Home care, Nutrition,
and Ice cream. This structure allows each business group to
concentrate on its strengths across its product types.

By applying new structure, it is easy for Unilever to meet

consumers’ needs and market trends because of categorizing
products. This makes each business group focus on their own
specific product lines and tailor strategies to adapt to the market
environment. Additionally, they will have their own clear strategy
for each type of product to achieve their target consumer
With products organized by categories, Unilever is completely
confident to adapt market changes or customer demand through
their flexibility strategy for each business group. For example, the
Nutrition group brands like Knorr, Lipton, Hellmann’s can focus on
health trends and customers’ dining preferences, while the
Beauty & Wellbeing group can prioritize natural ingredients and
beauty trends. This helps the company reach the customer target
and build strong relationship with them by efficient marketing and
relevant products
This new structure promotes innovation within each business
group because the leader of each group can focus only on product
development that is tailored to their market segment. For
example, Beauty & Wellbeing and Nutrition groups realize that the
customers are more likely to be concerned about self-care and
health, so they will improve their products that are eco-friendly to
meet customer demand. Each business group can have a deep
understanding of their target customer needs and then, they will
innovate their product rather than having to balance priorities
across multiple unrelated product lines in the previous matrix
structure.
One of the most benefits of group-focused organizational
structure is enhancing accoutability. Five business groups in
Unilever have to be responsible for their own profit-and-loss (P&L)
outcomes. Each group can track performance more easily rather
than the previous traditional structure that require accountability
across product lines
Allocating resources for each product line becomes more effective
thanks to adapting this new structure. The company can make
sure that resources are provided to areas directly. For example,
the Home Care group can use funds to focus on their strategy like
developing sustainable cleaning solutions, while the Nutrition
group can allocate to expanding healthy food that satisfies their
consumer demands. This led to reduced the dilution of resources
that might have when multiple product categories competed for
the same budget.

Unilever has been successful in applying product-based

organizational structure in its company to enhance efficiency and
effectiveness across its product lines. The product is divided into 5
main categories: Beauty & Wellbeing, Personal Care, Home Care,
Nutrition and Ice Cream ensure that each category has their own
responsibilities on innovating products and developing operations.
In the fast-paced consumer goods industry, this structure not only
helps Unilever reach their target consumer but also maintain the
competitive advantage on market. By continually following this
organizational structure, Unilever positions itself for ongoing
success and market leadership.