Introduction:

Since its introduction in 1979, Porters Five Forces has become the de facto framework for industry analysis. The five forces measure the competitiveness of the market deriving its attractiveness. The analyst uses conclusions derived from the analysis to determine the companys risk from in its industry (current or potential). The five forces are (1) Threat of New Entrants, (2) Threat of Substitute Products or Services, (3) Bargaining Power of Buyers, (4) Bargaining Power of Suppliers, (5) Competitive Rivalry Among Existing Firms. In this assignment, we tried to analyze a companys risk from in its industry in case of the bargaining power of Buyers & Suppliers.

Threats of Buyers:

The threats of buyers describe the impact customers have on an industry. When buyer power is strong, the relationship to the producing industry becomes closer to what economists term a monophony. A Monophony is a market where there are many suppliers and one buyer. Under these market conditions, the buyer has the most influence in determining the price. Few pure monopolies actually exist, but there is often a connection between an industry and buyers that determines where power lies. The threats of buyers can be following types: a) Number of buyers are small b) Undifferentiated & Standard c) Economic profit d) Background of vertical integration

Threats of suppliers:
Suppliers can become a Threat to a firm by charging higher prices for the goods or services they supply or by reducing the quality of those goods or services. However, when a supplier sells to a cost leader, that firm has greater flexibility in absorbing higher1

cost suppliers than does a high-cost firm. Higher supply costs may destroy any abovenormal profits for high-cost firms but still allow a cost-leader firm to earn an abovenormal profit. The suppliers threats can be occurs for following reasons: a) Dominated by small firms b) Highly differentiated c) Not important customers for suppliers d) Forward of vertical integration

In the followings we are discussed about the multinational company Unilever and tried to find out the Buyers & Suppliers threats of the company in different parts of the country.

History of Unilever:
In the 1890s, William Hesketh Lever, founder of Lever Bros, wrote down his ideas for Sunlight Soap his revolutionary new product that helped popularize cleanliness and hygiene in Victorian England. It was 'to make cleanliness commonplace; to lessen work for women; to foster health and contribute to personal attractiveness, that life may be more enjoyable and rewarding for the people who use our products'. In a history that now crosses three centuries, Unilever's success has been influenced by the major events of the day economic boom, depression, world wars, changing consumer lifestyles and advances in technology. And throughout we've created products that help people get more out of life cutting the time spent on household chores, improving nutrition, enabling people to enjoy food and take care of their homes, their clothes and themselves.

Timeline

19th Although Unilever wasn't formed until 1930, the companies that joined forces to create the century business we know today were already well established before the start of the 20th century. 1900s Unilever's founding companies produced products made of oils and fats, principally soap and margarine. At the beginning of the 20th century their expansion nearly outstrips the supply of raw materials. Tough economic conditions and the First World War make trading difficult for everyone, so many businesses form trade associations to protect their shared interests. With businesses expanding fast, companies set up negotiations intending to stop others producing the same types of products. But instead they agree to merge - and so Unilever is created. Unilever's first decade is no easy ride: it starts with the Great Depression and ends with the Second World War. But while the business rationalizes operations, it also continues to diversify. Unilever's operations around the world begin to fragment, but the business continues to expand further into the foods market and increase investment in research and development. Business booms as new technology and the European Economic Community lead to rising standards of living in the West, while new markets open up in emerging economies around the globe. As the world economy expands, so does Unilever and it sets about developing new products, entering new markets and running a highly ambitious acquisition program. Hard economic conditions and high inflation make the 70s a tough time for everyone, but things are particularly difficult in the fast-moving consumer goods (FMCG) sector as the big retailers start to flex their muscles. Unilever is now one of the world's biggest companies, but takes the decision to focus its portfolio, and rationalize its businesses to focus on core products and brands. The business expands into Central and Eastern Europe and further sharpens its focus on fewer product categories, leading to the sale or withdrawal of two-thirds of its brands.

1910s 1920s

1930s

1940s 1950s

1960s 1970s

1980s 1990s

The 21st The decade starts with the launch of Path to Growth, a five-year strategic plan, and in 2004 century further sharpens its focus on the needs of 21st century consumers with its Vitality mission. In 2009, Unilever announces its new corporate vision working to create a better future every day with brands that help people look good, feel good and get more out of life.

 Suppliers of Unilever:
Unilever's ambitious growth agenda means that across the 170 countries in which they can sell their products, their Procurement teams are purchasing from a network of around 160,000 suppliers worldwide. Unilever suppliers' materials and services are an integral part of their commercial operations, ensuring their sites and factories in more than 100 countries are capable of manufacturing, marketing and continually improving the thousands of unique items they produce today. Together they can deliver innovative solutions to meet their consumer and customer needs and achieve the commitments set out in their Sustainable Living Plan.

Buyers of Unilever:

Unilevers buyers are scattered all around the world and they are in billions. In true sense, they are not so powerful to pull prices down. On the other hand, it is easier for the customers to switch to a competitor. Therefore, Unilever has to be very precautious in deciding about prices and keep the customers satisfied.

The threats of Buyers of Unilever:

It is based on the relationship between the firm and the buyer. The main question in this part of the five factor model is who has the power over whom? In this case, the retailers are the buyers and Unilever is the firm. Obviously, the source with the most power will be able to control the other. If the company has the most power then they will be able to raise prices and most likely be the only source around. If the buyer has the most power then the company will have to lower its costs and add a lot more expenses to its list.

a) differentiated & Standard: There is a lot of differentiation when comparing Unilever products and the products of other competitors in the industry. According to their plan Unilever has narrowed their range to three different subjects; these subjects are beauty, household care, and health and well-being. All of these areas have been differentiated accordingly. Unilever has some of the best product names and quality in retailer stores and pharmacies around the world. With new ideas coming up every year, it gives them an advantage when dealing with retailers. This product differentiation gives them more power when dealing with retailers. b) Switching costs: The cost of these customers switching from Unilever to other companies would be low in certain products. This is because most of these products on
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the shelf are close to the same price. However, the quality they would receive would be less in most cases. Example: Johnson & Johnson would have similar quality to Unilever but the other smaller competitors could not compete with the price and quality. This is not an industry to get started in if you are small because these huge companies already have a major head start on you. A large company in this industry could switch to another large company if it was the last resort. c) Price Sensitivity: Unilever is much differentiated, and because of this, it has to be less price sensitive. In this industry, like most, the best option is to sell at the price desired. If companies can do this then they have power when dealing with buyers (retailers). Some of these retailers are Wal-Mart, HEB, Walgreen, etc. Buyers want the best products on their shelves. These large retailers are forced to keep their own costs down. Compromising with them more will help to put more products on the shelf. The companys brand image can also help your business in a competitive industry. With the advertising and high quality expected in Unilever brands, retailers will be Convinced that these products will create profits for them. If the product is a small part of the buyers costs, they are less likely to look elsewhere for a better price. d) Importance of Product for Costs and Quality: In the personal products industry, it is very important to have brand power and quality. If one is lacking it will be very difficult to start a new company and compete with others. All of the top companies like Unilever in the personal products industry are greatly helped by already having the best brand names. These companies have more bargaining power with customers because their superior products demand a premium price.

The threats of Suppliers of Unilever:

Suppliers are valued partners in the success of business. Company relationships with them must be characterized by honesty and fairness. Suppliers are selected on a competitive basis based on total value, which includes quality, service, technology, and
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price.

a) Dominated by small firms: When there are fewer companies, the supplier is able to have more control over a firm in this industry. But Unilever is a large company so that the suppliers cant dominate over it. b) Sustainability guidelines: Unilever has many sustainability guidelines that must be followed in order to be involved with their suppliers. Some of these guidelines are legal compliance, human rights, employment practices, forced labor, and child labor. Most of the companies in this industry have guidelines like these because they are ethical companies who want to do the right thing. c) Supplier diversity: Supplier diversity is a fundamental business strategy at Unilever. Since Unilever has this option, this allows them to be more diversified. This also allows them to have some power over their suppliers. If one of the suppliers is trying to raise prices, they can just go to another. d) Brand name: A great portion of a companys success in this industry depends on brand name. These suppliers know this, which leaves them with some power. Suppliers have to provide good materials for people to see the quality. There are a few companies in this industry that can manage and compromise with suppliers like Unilever. Because of their large size and name, these companies are not only able to get whom they want, but
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they can also control prices. This is a big plus for these companies in this industry.

Now we are discussing about the Buyers & Suppliers threats of Unilever based on different countries.

UNILEVER BANGLADESH LIMITED:

Unilever Bangladesh Ltd is one of the worlds most successful fast moving consumer goods manufacturing companies with local manufacturing facilities, reporting to regional business groups for innovation and business results. Unilever Bangladesh Ltd. as a subsidiary of Unilever is leading the home care, personal care and food product market of Bangladesh. On 25 th February 1964 the eastern plant of Lever Brothers Pakistan Ltd. was inaugurated at Kalurghat, Chittagong with a soap production capacity of approximately 485 metric tons. It was a private limited company with 55% share held by Unilever and the rest by the Government of Pakistan. After independence the eastern plant was declared abandoned. However, on 5 th July 1973 it was registered under the name of Lever Brothers Bangladesh Ltd. as a joint venture company of Unilever PLC and the Govt. of Bangladesh with a share arrangement of 60.75% to Unilever and 39.25% to the Bangladesh Govt.

Threats of buyers in Bangladesh for Unilever: Bargaining power of consumers is very high. This is because in FMCG (fast moving consumer goods) industry the switching costs of most of the goods is very low. There is no threat of buying one product over other. Customers are never reluctant to buy or try new things off the shelf. Threats of suppliers in Bangladesh for Unilever: The bargaining power of suppliers of raw materials and intermediate goods is not very high. There is ample number of substitute suppliers available The raw materials are also readily available and most of the raw materials are homogeneous.
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 There is no monopoly situation in the supplier side because the suppliers are also competing among themselves.

Hindustan Unilever:
Hindustan Unilever Limited (HUL) is one of the largest fast moving consumer goods company in India. The company, a subsidiary of Unilever, sells Foods and Home and Personal Care brands in about 100 countries worldwide. The company, along with its subsidiaries, is engaged in the production and distribution of soaps and detergents, personal products, beverages, foods, ice creams, exports and others products such as chemicals and agricultural products. The major brands of the company include Lux, Hamam, lifebuoy, Dove, RIN, Surf, Wheel, Sunlight, Vim, Fair & Lovely, Clinic Plus, Sun Silk, Close-up, Pepsodent, Lakme, Brook Bond and others. The company has 12 subsidiary companies and over 37 manufacturing plants located across India. The distribution network of the company comprises of 2,000 suppliers and associates and 4,000 redistribution stockiest and covers 6.3 million retail outlets. The company is headquartered at Mumbai, India. Threats of buyers in India for Unilever: Consumer faces weak buying power because customers are fragmented and have little influence on price or product. Considering buyer power retailers it is very high since they are able to negotiate the price with the companies. Strong buyers power from retailers.

Threats of suppliers in India for Unilever: Consumer product faces some amount of supplier power simply because of the cost they incur when switching suppliers. Suppliers that do a large amount of business with these companies are also beholden The suppliers customers are fragmented, so their bargaining power is low,

 Unilever of Pakistan:
Unilever Pakistan (70.4% Unilever equity) is the largest FMCG company in Pakistan, as well as one of the largest multinationals operating in the country Unilever Pakistan Ltd., a subsidiary of the Unilever Group is operating in Pakistan since 1948. The Companys main business lines are Soaps and Detergents, Personal Products, Cooking Oils and Fats, Packed Teas, and Ice Creams. Unilever has a long list of brands such as Surf, Vim, Rin, Lifebuoy, Sunlight, Lux, Rexona, Sunsilk, CloseUp, Blue-Band, Dalda, Planta, Liptons YellowLabel, Taaza and Richbru, Brook Bonds Supreme and Kenya Mixtureetc. which are common household names in Pakistan.

Threats of buyers in Pakistan for Unilever: To determine buyer power one condition is always necessary i.e. the buyers are few so they exert power over an organization. But this condition is not present in case of Unilever Pakistan Limited, they have very diversified product categories and within each category they have brands targeted at almost each and every segment of the market so they dont face the buyers power as such but still customer is king and they do have to pay a lot of attention to buyers being a consumer product company. Threats of suppliers in Pakistan for Unilever: Suppliers dont exert any power over Unilever Pakistan Limited rather Unilever Pakistan Limited provides buyers power in this case, nobody would like to lose a buyer like Unilever Pakistan Limited so, they dont face any significant supplier power.

Conclusion: Unilever brands are trusted everywhere and, by listening to the people who buy them, they've grown into one of the world's most successful consumer goods companies. In fact, 150 million times a day, someone somewhere chooses a Unilever product. After analyzing the Buyers & suppliers threats of Unilever of different countries, we can understand that the bargaining power of the customers is on lower sides and they have very little influence on price or product. On the other hand the bargaining power of suppliers also low because there have so many suppliers for a large company like Unilever and the company can easily switched to another suppliers if they want. So that there were no monopoly situation among the suppliers and they always competing with each other. At last we can say that the Multinational company like Unilever makes a proper control over their buyers & suppliers.
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So that the buyers & suppliers cant make any kind of impact over the company. Unilever is very much aware about their buyers and customers needs and they always making new product for the customers. They also developed a very descent relationship with their suppliers so that the suppliers always helpful to the company. For those reasons the Unilever company has achieved their goals like To manufacture high-standard products. Promoting products to the highest extent Producing large volume to achieve production cost economies. Enabling quality products to be sold out at obtainable prices.

References:
1. 2. 3. 4. 5. 6. 7. 8. www.Unileverglobal.com www.UnileverBangladesh.com www.HindustanUnilever.com www.pakistanUnilever.com www.wikipidia.com http://www.photopla.net/wwp0503/buyer.php Strategic Management Text book Various Articles & newspaper

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