A commonly posed criticism of global companies residing within developing countries is that their universal brands and refined, complex strategies overpower local competitors resulting in their exiting of the business arena. Unilever South Africa (ULSA) produces and sells products which create high competition amongst other competitors (namely Procter and Gamble, Nestle as well as local Tiger brands) (Kapstein, 2008). Although this environment is not controlled by an individual organisation, it unquestionably provides an onerous, complex competitive environment for each organisation to participate within (Kapstein, 2008). When discussing the fast moving consumer goods industry, it is important to understand the nature of this sector.
This industry predominately encompasses the manufacturing, distribution and promotion of
“consumer packaged goods (CPG)”. CPGs can be described as everyday consumables which are purchased by customers on a daily basis, hence the importance of the industry (EconomyWatch, 2010). With consideration of the growing population, these products are continuously required and demanded by consumers. A few of the core functions which fast moving consumer goods organisations also partake in are retailing, advertising, financing, buying, operations management, supply chain, and so on. In order for an organisation to ensure sustained success within the current economic and environmental market, it is essential that sustainability be integrated within all the above mentioned processes (EconomyWatch, 2010).
When considering FMCGs from an investment perspective, it is important to note that organisations demonstrating a long term sustainable competitive advantage are commonly
86 | P a g e sought after since companies of this nature have proven to maintain robust strategies. Thus it is essential to comprehend the specifics of sustainable competitive advantage. According to Boundless.com (2015), “sustainable competitive advantage (SCA) can be defined as the characteristics of a business that allow it to consistently maintain an irreproducible market position” (p. 1). Sustainable competitive advantage focuses on maintaining a sustained competitive advantage for the organisation in question and counteracting the SCA of competitor companies. This advantage can be attained by the successful execution of value- creating strategies which are not concurrently being applied by contending companies. In order for these strategies to generate value, they are required to comprise rarity, importance and should not be interchangeable or transposable. Sustainable competitive advantages are those which are not easily mimicked therefore are able to be maintained over longer periods of time.
However, the successful implementation of these strategies to create an SCA necessitates that strong customer loyalty be established, positive customer service levels, a resilient and optimistic organisational reputation be maintained, and suitable distribution channels, well established vendor relationships, distinctive merchandise, and additional bases for advantage exist (Boundless.com, 2015). With that being said, since its establishment Unilever has encountered numerous competitors constantly fighting within the business environment for market share, consumer loyalty, profit gain, etc. Procter and Gamble (P&G) is one of Unilever’s biggest competitors and has been aggressively fighting towards surpassing Unilever as a highly sustainable company. Despite Unilever acquiring numerous honors for its ethical reputation globally, Procter and Gamble have ‘come on strong’ with their wide encompassing range of “community-betterment” programs (Boundless.com, 2015).
The have instituted at least eight P&G brands with dynamic advertising operations publicising benevolent or environmental efforts (Procter and Gamble, 2016, p. 1). When it comes to environmental sustainability, Procter and Gamble seeks to strategise within the following constructs:
Powering plants with 100% renewable energy (Procter and Gamble, 2016, p. 1).
Using 100% renewable or recycled materials for all products and packaging (Procter and Gamble, 2016, p. 1).
Having zero consumer and manufacturing waste go to landfills (Procter and Gamble, 2016, p. 1).
87 | P a g e
Designing products that delight consumers while maximising conservation of resources (Procter and Gamble, 2016, p. 1).
Additionally, Procter and Gamble continues to execute strong corporate social initiatives, for example the Live, Learn and Thrive initiative aids children’s needs globally in order for them to receive a good education and healthy lifestyle (Procter and Gamble, 2016). In addition, further programs which are aimed at CSR are “Our Always Keeping Girls in Schools” and
“The Children’s Safe Drinking Water” programs. P&G maintains an objective of shaping all employees’ minds towards the incorporation of sustainability into their daily actions and practices (Procter and Gamble, 2016). Additionally, Procter and Gamble have set specific 2020 goals towards which their social and environmental objectives will vigorously be driven. These are:
Substitute petroleum based materials with sustainably found renewable materials (25%), thus using 100% recyclable materials for goods and containment.
Packaging diminution (20% per consumer use).
Consumer solid waste - aimed at understanding how to eradicate landfill consumer waste, whereby no waste goes to landfills (Procter and Gamble, 2016).
The discontinuing of any fossil-based CO2 or toxic emission.
Providing the outflow of good water quality which is superior to influent water quality having no influence on water scarcity (considering the current drought we face (Procter and Gamble, 2016)).
It is important to note that P&G is deemed the biggest consumer packaged goods (CPG) company globally, rendering it as extremely tough competition.
88 | P a g e SYNTHESIS:
The FMCG industry can be characterised by high measures of uncertainty and a highly competitive nature with large prospect for growth. The points below summarise the key issues which if resolved, can yield increased organisational growth.
The fast moving consumer goods industry is increasingly experiencing a product distribution issue.
The de-listing of products is a strong frustration for numerous consumers.
Strong distribution is an important factor to successful advances in Africa (Bright and Fry, 2013).
The presence of in-house brands which are fast growing has placed massive competitive pressure on FMCG brands.
Consumers are shifting more towards “greener” purchasing, and are prepared to pay higher prices for ecofriendly products.
High investments are made for accelerating the development of new greener products and the innovation of current ones to make them more eco-friendly.
With consideration of the growing competition within the fast moving consumer goods industry, it becomes essential that organisations engender and maintain a sustainable competitive advantage.
The next section highlights the study’s conceptual framework in terms of what is sought to be achieved from the research.
89 | P a g e