Managing Innovation in Business

Executive summary
For the preparation of report on the topic Managing Innovation in Business, Unilever Plc has
been chosen. Unilever Plc was established in 1890 and now operating as international brand
spreading almost in 190 countries. Unilever headquarter is located at London, UK and
Rotterdam Netherland. It now owns more than 400 brands where it serves specially two
different nature of product namely consumer goods and personal beauty products.

The entire report is based on the use of secondary research method which
includes use of various journal articles, official websites of government, official websites of
Unilever Plc and other various report published by scholars. The initial aim of this report is
to find out the activities and operations worked by the organization that support the
innovation. In the report, it tries to identify company’s past activities and performances that
helps to build the innovation through work and processes. Report also aims to identify the
actual and present works and activities that company hold to be more innovative.
Moreover, another aim in this report is to find out the overall industrial condition around UK
and linking the information with Unilever. Different findings were identified through the
research on the innovation approach used by the Unilever Plc. It is identified that Unilever
take consumer as main priority in innovation building as consumer changing needs and
preference is important to the innovation for company. Company believes that
understanding consumer is fundamental requirements. Moreover, more than 3 millions of
consumers were contacted via different sources such as phone and internet calls, emails,
and letters and so on. It spends £1 billion on research and development yearly as it is
consider as the way to sustainable growth. More than 6,000 R&D personnel are working to
make brands via benefit led innovation that is open up by science and technology. Report
also shows that online users are increasing day by day and traditional approach of buying
offline is declining. As a international brand, company should focus on their innovation that
helps them to gain competitive advantage by investing more on R&D activities that helps to
create their own custom build system.

Introduction
This report covers the innovative aspects of well known UK based company Unilever Plc. At
the beginning of the report, it presents some background of company and its some history
related to innovation and making one of the famous brands all over the world. Company’s
present innovation activities and future activities to be more effective has discussed by
identifying various product, process, service and production innovation. At the end of this
report, overall industry in UK has been presented by some comparison with Unilever Plc.

Organization and industry overview

Unilever Plc has been chosen for the study of the innovation and to identify its capabilities.
Company serves or provides transnational consumer products as its co-headquartered
located in London, England. It offers various products to its customers such as food, energy,
beverages, beauty items, various soaps item and many more. Unilever as oldest
multinational brand, it now operates in more than 189 countries as it is estimated that it
own more than 400 brands. Unilever contains under consumer goods industry where is
tough market competition among different companies that serves same nature of product.
Every retailer and stores of this industry believes in the innovation and introducing the new
technology to gain the competitive advantage.

Organization and Innovation history

Unilever has long history of its operation since its establishment in 1890 and became
multinational brand with Dutch margarine producer. Their main advantage in the market is
their presence in national and international borders with different nature of products.
Product and market expansion has become key to the success of the organization. Unilever
believes in the innovation in different operating area and process of organization. 1Javad
Mehrabi et al (2016) stated that at the current scenario of competitive market, success of
business entity in keeping and enhancing share of the market and recuperating the
competitive state which depend on finding out such aspects which results acquisition of
competitive advantage. Competitive advantage is achieved through differentiating own
capabilities with other. Unilever Plc is very much focused on the adaption of culture of
different countries that enable them to grow there. Marketing techniques of Unilever is also
very much effecting since the long period of time. In the report of 2Unilever (2005), there
were about 500 factories, out of which 300 for food and 200 for detergents and personal
care products. Company has categorized its major products into two parts as foods and
home & personal care. Unilever always adopts the new structure of operation technique as
in 1999, it introduce acquisition of Bestfoods later named as Unilever Bestfoods and is
considered as huge acquisition in its history. This acquisition helps company to maintain
product based division system in different part of Europe and North America. Company uses
the expansion strategy by merging with the various foreign companies in India, Africa,
Japan, Brazil and many other countries that help them to grow its network. Looking back at
1

https://www.researchgate.net/publication/309077776_Model_of_Marketing_Innovative_Strategies_in_Intern
ational_Entrepreneurship_A_Global_Business_Environment/link/594c073e458515e70348a44f/download
2
https://www.somo.nl/wp-content/uploads/2005/07/Company-Profile-Unilever.pdf
the history of Unilever in-between 1945-1980, it mainly focuses on the expansion activities
in Europe.

Company uses different marketing strategy through which they gain the innovation
on their system. Unilever Plc always wants to gain the top spot in the market that drives
them to be more innovative in their operation. In the countries like India and Pakistan it
introduces detergent and soap with different quantity and price range for the different
purpose of use that let its customers to buy whatever they want. HR has huge contribution
for the innovative activities for the company. It ensures only right people for the right
position are recruited who will generate the ideas towards the innovation. It never failed to
introduce the different scheme as it introduces five year strategic in 2000 plan that is series
of connected start up created to combine whole business entity behind ambitious plans to
speed up growth and expanding markets. This was achieved by concentrating on company’s
leading brands and helping them with proper innovation. Main reason for the success is
through the knowledge management and innovative process management scheme that
focused at the coordination of innovation start up all over the company and prioritise on
giving information and clear source of knowledge.

Organization existing innovation performance and capabilities

Unilever is always focused to acquire the innovation in their system and products with the
coordination with different part and processes of the organization. 3Unilever believes that
innovation is the main sources for the sustainability and technology along with product
development capable to serve consumer with proper brand which benefits lives and have
good influence on environment and society. In the report of 4Unilever (2014), consumer
changing needs and preference is important to the innovation for company. Company
believes that understanding consumer is fundamental requirements. Focus group and
quantitative studies has been applied by the company and further it spends some time with
consumer at the stores and even at the home or through the internet survey to identify
what are the preferences. In 5Unilever’s (2019), report it was counted that more than 3
millions of consumers were contacted via different sources such as phone and internet calls,
emails, letters and so on. Company uses different software such as kantar, Nielsen and Ipsos
to consult with about two million consumers. Unilever applies value creation model that
focuses on the consumer insights. Unilever with more than 27 people data centres all over
the world are tracking the changing preference of consumer. Company uses proper team
work with research & development and marketing team to acquire product development.
This kind of activities let Unilever to produce and offer the products as per the need of its
consumer. It is interesting that the way they use such information and data gathered though
such interaction to convert it into real product. Service innovation adopted by the
organization has become effective as e-commerce sales for company grew by 30% in 2019
3
https://www.unilever.com/about/innovation/innovation-in-unilever/
4
https://www.unilever.com/Images/ir_strategic_report_ar14_tcm244-421555_en.pdf
5
https://www.unilever.com/Images/unilever-annual-report-and-accounts-2019_tcm244-547893_en.pdf
that covers the 6% of total turnover. Company seems to be quiet slow on the e-commerce
analyzing the total turnover. Unilever is practicing to create balanced e-commerce model by
partnering with big retailers like Wallmart, Tesco, Carrefour and so on that promotes the
sales model to ensure it reaches consumers.

Moreover, in the report, it spends £1 billion on research and development yearly as it is

consider as the way to sustainable growth. More than 6,000 R&D personnel are working to
make brands via benefit led innovation that is open up by science and technology.
Innovation in their networking is also very much effective in the organization as company
believe partner to win. Company through the partnership encourage acquiring the supplier
ecosystem that operates with each other to make breakthrough in various goods and
packaging to provide innovation and long term solution to catch the growth aims. Unilever
has added the open innovation where it partners with external sources such as start-ups,
academics and inventors. Startups support in the field like enterprise technology and areas
of digital marketing. Though there is question raised on Unilever expanding its way to open
innovation due to the emergence of digitally native brands. Proper value chain system of
company enable them to transform raw material into finished product as company acquire
thousands of suppliers and spending almost £34 billion of products and services. Because of
its innovative distribution channel, company has able to distribute products in each and
every corner of its global presence. Company uses different forms of distribution channels
such as producer to consumer, producer to retailers to consumer and producer to
wholesaler to retailer and finally to consumer.
6
Unilever counted more than 300 manufacturing all over the world scattered in 69
countries. Presence of its operation from huge super markets, hypermarket, wholesales to
small convenience stores and growing activities in e-commerce and direct to customer
support to reach products through international coordinated distribution centres. Unilever
spreading over 190 countries not only focuses in the huge opportunity but also looks for the
small and social responsibility. Unilever initiated the Shakti group in India that aims rural
villages of country having almost 1500 to 2000 populations to provide opportunities to rural
women. It supports delivering the health and hygiene information and knowledge and now
speeded in 15 states that count 80,000 villages.

Unilever Plc is always aware of changing phenomenon in the business environment that
occurs due to the different reasons. 7Company believes that when there is change there is
opportunity as well for the sustainable growth. Company could face different challenges
such as changes in commodity prices, unstable markets and lack of proper and sustainable
raw materials. Sustainable development goals can help industry to fight almost 18 of world’s
emerging challenges that open up the chances for market of $12 trillion per year. Unilever
always deploy team that focuses in the R&D to cope with future problems and launch new
products that is liked by customers. Company to cope with the future changes, connected
6
https://www.unilever.com/Images/unilever-annual-report-and-accounts-2018_tcm244-534881_en.pdf
7
https://www.unilever.com/sustainable-living/our-strategy/
for growth programme (C4G) has been introduced. This programme will promotes in the
long term performance and enhance shareholder value. 8Big move is going to be operated
as Dutch N.V. and UK Plc is differently own since 1930 as both parties are planning to create
single holding company by introducing one class of shares and global pool of liquidity.

Industry in 2016
9
During 2016, 13 out of 50 brands globally owned by the Unilever as close competitors
owned only five and further it owns 13 billion euro brands. Use of e-commerce has
increased in the past 4 and 5 years as people are busy working in various job position. As per
the information provided in the 10Parliament UK, in past people mostly relied on the high
street and at the present globalised world trend has shifted towards the use of online and
internet in retail spending that encounter the increased by 14 percent. It has now become
the trend of online sales on consumer goods that is initiated nationwide. Further, reports
shows that, people ordering through the online was encountered 78% in last three months
of last quarter in 2016 that is highest of entire European Union’s countries.

About £94.8 billion of Gross value added was gained during 2016 by the retail
sector of UK and it was 5 % more than previous year. Numbers of retailers in UK has evenly
increased throughout the country as London and South East areas are increased by the
retailer than the Northern side. For the year 2016, London was one of the favoured city for
the international retailers having almost 57% of global retailers presence in city as about 65
new were open solely in there. UK was the third in the rank for the world most favourite
place for the international online shoppers having 86.6 million consumers taken goods and
services from UK, says the Reports by the parliament of UK. Report also shows that there is
little increment in the employment in the retail sector, as hardly 6% has been increased
since 2000 for the entire workforce of UK. Out of different goods, Consumer goods
encounter less contribution in terms of national economy, employment opportunity and
value added even though in some local areas of country, it is taken as important industry as
consumer goods. Though for the FMCG products, it is considered to be one of the huge
producers for UK that cover 14% of entire manufacturing. Some international brands such as
Mars, L’Oreal and Coca-cola have dominated the market of UK FMCG sector. Comparatively,
about 4% more on FMCG products have increased by 2016 than previous year.

Conclusion
Unilever has its own techniques and system that introduces the innovation in their
operation. Its international presence and most importantly adapting with the culture of
8
https://www.unilever.com/news/press-releases/2018/building-the-unilever-of-the-future.html
9
https://www.unilever.com/Images/ara-2015-2016-2017-reports-2018_tcm244-525925_en.pdf
10
https://www.parliament.uk/documents/commons-committees/Exiting-the-European-Union/17-19/Sectoral
%20Analyses/31-Retail-Report.pdf
different countries are key to success of business. Company’s huge investment in R&D has
paid off the company to acquire the innovation. Data collection from customer through
direct and indirect approach has become key and knowledge management system has very
much accurate that enable ideas into innovation. Company uses proper team work with
research & development and marketing team to acquire product development. This kind of
activities let Unilever to produce and offer the products as per the need of its consumer.