Unilever also competes for a wide-ranging of customers based on price. In case of Unilever, to become a cost leader strategy, Unilever keeps focus on the price strategy followed its competitors and its continuous efforts to keep prices low relative to its competitors. In addition, by using cost leadership strategy, Unilever can positively gain a wider market share.
Cash Cows
Cash cows may define as those segments with a high relative market share and compete in the low-selling growth sector. Since the home care and refreshment segments of Unilever have a high market share in the low-growth sector, they could be labeled as cash cows. Both businesses are facing a drop-in revenue. America division contribute 33% of company’s revenue each year. The investment in these products is the least, still they tend to generate cash. In case of Unilever, products like Surf Excel washing powder, Lifebuoy soaps, Ponds cream, Lipton iced, Close Up toothpaste, Rexona deo, Blue Band margarines and finally Knorr soups, that held the market strongly for Unilever.
Question Mark
Question marks are those markets which have a low relative market share and are involved in the fast growth of the revenue sector. The food division of Unilever and some of the home care divisions comes under the heading of question mark.
Unilever's market share in the food sector is shrinking last year, considering the high rate of revenue growth in the food sector. Unilever needs to concentrate on this market in order to turn this division into a star because the sector has the capacity to expand.
In order to defeat its rival and grow its market share in the food industry, the company should spend more in product growth. If that does not happen, then after years of cash extraction, the product will degenerate into dogs when market growth declines. As far as the regional section is concerned, Europe falls into the group of question mark because Europe contributes the lowest share of business sales. Clear Shampoo, Rin and comfort are the three products that proved to be a question mark for Unilever.
Dogs
Dogs products are the products that barely contribute to make income for the company, still sums are paid off. The ROA ratio is depressing for a business that is generating significant income. The dog’s product mostly waste resources by being in the market. Unilever’s Slim-Fast brand was one of the examples of Unilever’s sleeping dog product that was sold in 2014 to private-equity firm, Kainos Capital, to focus on other brands with greater appeal and growth potential.
Figure 7: BCG Matrix of Unilever
In conclusion, Unilever got huge impact of COVID-19 this year. A lot of government restrictions and regulation that make people lockdowns in their home.
This regulation negatively impacted the food service including of home ice cream and the prestige business of Unilever. Food service declined by nearly 40% and out of home ice cream declined by nearly 30%. Consumers have changed their behavior moving from offline to online platform, driving e-commerce growth of 49%. As people spent more time in their homes, there are some growth in home consumption of foods, ice cream and tea. That also meant that people had less chances for personal care to go to work or socialize, and there was a drop-in personal care, with the exception of hygiene products. The efficacy of good hygiene practices against the spread of COVID-19 improved demand for hand and home hygiene products, each increasing by two digits. Since the products of Unilever covers almost every aspect in our life especially hygiene products, Unilever should take advantage of this moment to gain a momentum to boost its sale and covers all of underdogs products or even non-profit products during pandemic. Furthermore, Unilever need to keep improving its investment and acquisitions in each division to maintain the quality and eventually move the cash-cows’ products to the Stars.
Operating Synergy of SBU in Unilever
Unilever new leadership team is leading our transition towards potential success:
a tangible target at the core of our corporate plan, simplifying our corporate structure.
To help Unilever form a faster, more flexible business, they have reintroduced the
position of Chief Operating Officer and streamlined systems in Europe, South East Asia and Australasia. These actions are all part of building a culture of growth at Unilever: becoming a more agile organization that makes smarter decisions faster, and with consumers and customers front of mind.
The transition is focused on technology that evolves at all levels of its operation.
It helps to boost the provision of raw materials, including investigating AI's ability to measure optimum collection periods in the Kenya tea plantations. And in their production processes it generates new efficiencies. By the end of 2019, thirty-one of Unilever facilities were broadcasting real time data using a 'digital twin,' which monitors physical environments and employs machine-learning for information retrieval and system optimization, eliminating waste as well as lower usage of resources. The organization's goal in 2020 is to connect Forty new sites. In 2020, the Organization aims to connect Forty new locations. Unilever also builds digital links with its clients and develops even more reliable models of operation. By utilizing predictive analytics, they get closer to customers to understand patterns on social networks and through their customer offerings. These experiences help everyone to be in position with the desired products at the right moment.
Unilever also built an enviable reputation for leadership on these topics under the Unilever Sustainable Living Strategy (USLP). Unilever now want to expand on that, not least because many of the problems facing the planet – such as the climate crisis or rising injustice – are becoming more urgent. By incorporating sustainability into a modern, forward-looking strategy, Unilever Scope plan with two main directions.
Next, Unilever will keep leveraging its size and scope to speed up change in their extended supply chain. The ambitious pledge made last year by Unilever to address the plastic packaging crisis by reducing consumer use of new material by promising to generate more disposable packages than they produce by 2025 was indeed a great example. Unilever would also expand its label names to make society and the environment improvement movements more famous. A lot of brands from Unilever do this already, and now they intend to turn it into an essential one of any organization.