Running Head: Case study of Unilever

Culture and Organization: Unilever Case Study

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Running Head: Case study of Unilever 1

Table of Contents

1. Introduction…………………………………………………………..………2
2. Background of Unilever…………………………………………………...2
3. Hofstede culture dimension theory ……………………………………..3
4. General culture of Unilever……………………………………..…………4
5. Hofstede Culture model of Vietnam, UK and Unilever Vietnam ……5
6. Issues of Labor in Vietnam Operations…………………………………8
7. Efforts taken by the company to deal with the labor issue…………9
8. Advantages of establishing a good culture policy …………………..10
9. Conclusion………………………………………………………………….11
10. Reference………………………………………………………………….12

Introduction
Running Head: Case study of Unilever 2

Cross-cultural relationships are imperative for businesses to expand operations.

It is imperative to understand the nuances of each culture. Only then can
businesses thrive in a new environment (Hofstede, 2011) The Hofstede culture
analysis determines the traces of each work culture. From this the differences
between the cultures can be worked out. For the purpose of this analysis the
organizational culture of Unilever in Vietnam has been studied. The global
Unilver culture and the culture of Unilver Vietnam will be examined in this report.
The Culture of Unilever, its Corporate Social Responsibility practices will be be
studied. It will compare with the existing theoretical models like the Hofstede
culture models. The labor issues operation supply in Unilever Vietnam operations
has been discussed in this analysis. The rectification process undertaken by the
company has also been discussed. From the changes the impact of the company
in the markets has been reviewed in this analysis.

Background of Unilever
The company was originally founded in 1880 in England. The company has
segmented itself into three divisions and focuses on food, homecare and
personal care. The company has sustained and thrived in spite of the different
kinds of events in history. It is truly a global brand. The Unilever brand is well
known around the world. It has operations in over 170 countries and it sells 160
million products worldwide. In UK the annual sales of the company is 2 billion
Euros. It has 40 brands out of which 16 are market leaders (Unilevercouk, 2015).
The company has good brand image and equity all around the world. Similar to
this trend it is popular in UK as well. Unilever being a global brand has
understood the imperative need of having a good corporate social responsibility.
Integrity, Respect, Responsibility and Pioneering form the basis of their company
culture policy. The organizational culture of the company focuses on
performance, quality and efficiency (Gregory, 2015). Analysts conclude that the
company has sustained and thrived through many events in history because of
effective leadership and corporate culture policy (Gregory, 2015). The company
is found to have some unified principles of management and some principles of
Running Head: Case study of Unilever 3

management that are specifically catered to the location where they operate
(Gregory, 2015). This organizational culture policy of the company is found to be
dynamic.
Unilever in 2002 has shifted production operations from Shanghai, China to
Anhui in 2002. The cost of personnel is significantly less than that of China.
Owing to this factor the company has shifted operations to Vietnam (Chongquin
and Foshan, 2010).

The GLOBE and the Hofstede culture model can be used to determine the
culture of a company. Each of this theory has its own inherent set of advantages.
GLOBE model is used to understand the overall framework of a country. The
GLOBE model enables the analyzer to understand the macro environment. The
Hofstede model is more specific (Shi & Wang, 2011). Hence this model is
preferred over GLOBE method owing to its specificity. It can exactly pinpoint the
smaller issues of the organization and also point towards the macro implications
of the small policy changes of the organization.

Hofstede Culture dimensions theory

Hofstede culture dimensions theory is used to understand the cross-cultural
communication. It is used as a basic framework to analyze the culture of the
company in different countries. The Hofstede model looks at the dimensions of
the national culture, sentimental and culture value of the country where the
operations are being done to the culture of the parent company (Hostede, 2011).
It is used as an indicator to find out about the vulnerabilities and strategic
advances of the company culture policy (Hofstede, 2011)
Hosftede culture dimensions basically comprises of six dimensions they are
power distance, uncertainty avoidance, Individualism vs. Collectivism,
masculinity vs. femininity, long-term vs. short term orientation (Hofstede, 2011).
The power distance speaks about the hierarchical framework of the culture.
Based on this the companies take a centralized or decentralized approach. The
aggressiveness and the compassion factor of the society is discussed in
Running Head: Case study of Unilever 4

masculinity and femininity index. The importance given for individual growth and
the importance given to societal growth is another index used in this dimension
theory. Uncertainty avoidance refers to the attitude of the people and their driven
nature to achieve results (Hofestede, 2011). This framework is used as a formula
to analyze the organizational culture of the company. Hofestede has
implemented this culture models and defined all the variables involved in the
different countries in his analysis. From this the culture differences between the
different countries can be observed. This will improve the cross-cultural
relationships between companies.

General principle of organizational culture followed in Unilever

Performance, Integrity, responsibility, quality and efficiency are some of the basic
concepts that is seen to be present in Unilever global culture. Corporation has a
uniform policy regarding many issues. The hallmarks of the organizational culture
of the company are that it has an effective leadership this has been translated
into its management polices (Van Beek & Garchev, 2010). The company adheres
to the wage policy of the country of operation. The company ensures that the
personal are treated with respect. It is an equal opportunity employer. The
company has a strong brand image owing to its cultural values. It is only because
of its cultural values that the company has managed to sustain for so long (Van
Beek & Garchev, 2010).

Hofstede Culture model of Vietnam, UK and Unilever Vietnam

When countries expand operations to other countries. Cultural barriers become
the number one issues. The company and the culture of the country must find
ways to coexist in order to develop proper businesses. They should maintain a
healthy balance between their core values and the adapt according to the culture
of the country. This will benefit all the stakeholders involved in the operation
(Berkama et al., 1996). The company has its own corporate policy Unilever
based on the needs of the situation (Tung & Verbeke, 2010).
Running Head: Case study of Unilever 5

Unilever is based in UK and has operations in 170 countries. But for the purpose
of comparing cultures based on the Hofstede model the culture dynamics of both
the countries are studied in this analysis. Apart from this the Unilever Vietnam
operative culture is studied in this analysis. A comparison is done between the
different cultures. The different dimensions of the Hofstede culture are done in
this analysis.

The figure below shows the culture scores of Vietnam country based on the 5-D
model.

(Hofstede, 2012)

The figure below shows the culture dimensions score for Great Britain based on
Hofstede culture dimension theory.
Running Head: Case study of Unilever 6

(Nazarchenko, 2014)

As shown in the figures above the culture dynamics of Vietnam can be studied.
Power distance relationship: In this it can be seen that the power distance
relationship is 70. This means that the people generally adhere to the
hierarchical structure (Hofstede, 2012). The power distance is quite low in UK
(Nazarchenko, 2014). This means that UK is less hierarchical than Vietnam.
Unilever maintains a balance between its global decentralized policy and
centralized policy in Vietnam. The company changes its power distance equation
based on the conditions of the country (Nguyen & Nguyen, 2012)

IDV refers to the degree of Individualism. It is only 20 for the country. From this it
can be understood that the concept of I is very less in the country. The country is
basically a collectivistic society (Hofestede, 2012) The Individualization process
of UK is high hence there is increased focus for individual development. This is
very different from Vietnam (Nazarchenko, 2014). The Unilever Vietnam is
sensitive to the emotions of the local people. It does not fundamentally deter from
collectivism. It ensures that the people work in teams in order to maximize
productivity from the people (Nguyen & Nguyen, 2012). Unilever official corporate
policy in Vietnam states that the company states that the company provides
individual comforts for the employee. It ensures employee benefits; holidays are
sanctioned for the employee (Nguyen & Nguyen, 2012) the company policy
Running Head: Case study of Unilever 7

states that the company tries to maintain a balance of its global corporate policy
and the local cultural values of Vietnam.

The Masculinity and Femininity ratio is 40. If the score of masculinity ratio is high
the country is driven by competition and aggressive advancements in career. If
the femininity index is high it means that the country cares a lot for others. This
country ranks high in the femininity index. This shows that the country cares a lot
for the society. There is increased focus of developing the society (Hofestede,
2012) in UK the masculinity is high hence they want aggressive personal growth
more than the growth of the society (Nazarchenko, 2014). Again this factor is
significantly different from Vietnam. The people who are promoted and
appreciated in the company are people who are compassionate and have a good
rapport with the colleagues and subordinates (Nguyen & Nguyen, 2012).

The uncertainty avoidance is 30. This means that the country has a relaxed
attitude regarding work. The workers have an attitude and propensity to relax.
They prefer relaxed work environment rather than hectic schedules (Hofestede,
2012). The Uncertainity avoidance is only 35 and hence this is similar to that of
Vietnam (Nazarchenko, 2014). Since this factor is similar they adhere to the
global corporate culture policy
The long-term orientation is high for this country. This means that the country is
more accepting of the latest’s trends. This also points towards their adaptability
towards accepting other cultures. This is a very important index and this country
scores high in this context (Hofestede, 2012). The long term orientation or
pragmatism of the country is lower than in Vietnam. This policy makes it ideal for
the people of Vietnam to adapt to the Unilever corporate culture (Nguyen &
Nguyen, 2012). Apart from this both the people of Vietnam and the Unilever
corporate culture want to work in harmony towards productivity (Nguyen &
Nguyen, 2012). This makes Unilever company location ideal
Running Head: Case study of Unilever 8

Another factor that needs to be added in this cross culture analysis is that the
people of governmental organizations and the people in the western
organizations have different ways of working. When working with the
governmental bodies and with the people who follow older traditions the western
companies needs to tread carefully (Lidén, 1994). There is a general hostility
between the two cultures of working new foreign companies needs to be careful
not to hurt any one sentiments regarding the same (Lidén, 1994) Unilever has
managed to establish itself in spite of the cultural differences between the two
countries.

From these three analyses it can be said that Vietnam is an ideal location for
setting up of new business. Unilever Vietnam has effectively established itself in
the Vietnam market by understanding the nuances of the Vietnamese culture
(Nguyen & Nguyen, 2012). There is prediction for more growth of this company
owing to their culture model.

Issues of Labor in Vietnam Operations:

The company Unilever shifted operations from China to Vietnam mainly
because of the costs involved in China. But when they moved to Vietnam they
did not pay the workers adequately. This resulted in issues in supply chain labor
issues. The Oxfam report also reiterated these facts (Smedly, 2013)
According to the 2011 and 2012 Oxfam report Unilever did not pay properly
towards wages. The company was criticized in this report for its supply chain
activities (Smedly, 2013). This trend continued in 2013 as well. According to
2013 report of Oxfam, it was said that the company did not pay proper wages to
the personnel. The working hours of the company were also very long. The
company paid only minimum wage to the employee. Overall the labor policy was
criticized in this report. The report basically said that the company should change
its way of conducting operations (Oxfam, 2013). Apart from this the report said
that there was no clear policies for contract employees. The employees were too
scared to voice their grievances in fear of retribution. Oxfam report said that
Running Head: Case study of Unilever 9

Unilever has basically been intimidating its employees (Venkatachalam, 2013).

This report was used and the company was widely criticized for its operations in
Vietnam.
Other than this factor it was observed that the labor in Vietnam were also
not up to the international labor standard. The workers simply did not contribute a
lot to the management. When analyzing about the labor relations to the company
it is found that the employees do not come up with a lot of innovative ideas. They
preferred to follow orders rather than make new recommendation (Nguyen &
Nguyen, 2012).

Efforts taken by the company to deal with the labor issue:

The corporation gave a lot of importance to the Oxfam report. It tried to rectify the
bad publicity generated by the Oxfam report. It has asked Oxfam to return in two
years and see the changed in the supply china labor polices (Smedley, 2013).
Unilever and Oxfam worked in conjunction and evaluated the policies of the
company. Based on the evaluations changes in the company policy are being
done. The company is specifically changing its labor policy. There has been due
diligence efforts taken by the company in order to ensure employee comfort. The
concepts of sustainable operations and changes in strategic leadership choices
are being done in the company. Unilever has introduced “Unilever Supplier
Code” This code has a number of ethical principles that the company is following
when dealing with the suppliers. All operations in the supply chain were
examined for improvement (Morden, 2013). The issues of labor issues in supply
chain were the primary issue that was mentioned in the Oxfam report. Unilever
has also promised to work in conjunction with other partners and ensure worker
safety (Morden, 2013).
In 2013, Vietnam introduced Unilever Future league programs to empower the
interns and new employees (Unilever 2015). Employee relations have also been
mentioned in the Oxfam report. This was one of the efforts undertaken by the
company. Unilever Vietnam has also partnered with the governmental agencies.
Running Head: Case study of Unilever 10

They are contributing for causes for women development, developing of healthier
Vietnam. Partnering with the governments to undertake in sustainability projects.
Apart from the improving of labor relations in the supply chain Unilever has
become a good corporate citizen (Unilever, 2015)
The Unilever sustainable living plan 2020 is another effort undertaken by the
company to improve the lost brand equity. There is increased focus in creating a
sustainable environment in Vietnam. This effort is being collaborated with the
Vietnamese government ( Vietnamiese business council, 2020)
All these policy undertaken by the company is basically to improve people
relationship with Vietnam. The employees will develop a feeling of good will
towards the company.
As stated earlier, Vietnamese people work for collectivism. This was clearly
stated by Hofstede in the Vietnamese culture model If they know that the
company is improving their society, they will be a lot more productive. This will
result in improvement for all the stakeholders involved in Unilever.

Advantages of establishing a good culture policy

More than 50% of the profits generated by the company come from emerging
markets. Vietnam is an important revenue generator for the company (Vietnam
News, 2015). The company has indulged in a number of efforts to reconnect with
the people and improve brand equity for the company in the country (Vietnam
news, 2015).
According to the latest news Unilever Vietnam is the market leader of Vietnam. It
has had a market penetration of 100%. The company has remained on top. The
company has managed to redeem itself in the eyes of the people in Vietnam.
This changes in the culture policy has enabled Unilever to remain on top.
Unilever has also aided towards the growth of the Vietnam economy (Vietnam
Net, 2015)
The company has grown tremendously owing to the efforts undertaken by then in
the culture policy. This is seen in their stock value (Appendix 1) This has been
reflected in their market growth. There are no real disadvantages of this policy
Running Head: Case study of Unilever 11

implementation. The company has grown. Vietnam economy has also greatly
improved owing to Unilever operations in the country. Unilever has also improved
the local environment. All the stakeholders in the operation has been immensely
benefitted by the new policy (Nguyen & Nguyen, 2012). This global policy effort
undertaken by the company can be used as a paradigm for other companies to
create an effective policy.

Conclusion
The Hofstede culture model was used to analyze the nuances of the work
culture in Vietnam and UK. A comparative analysis was done based on the 5 D
model of the culture dimension. From this the Unilever global culture and
Unilever Vietnam corporate culture was studied. The event that was discussed in
detail in this analysis is the labor issues in Supply chain operations in Vietnam.
The Oxfam report from 2010 to 2013 spoke about the poor labor conditions of the
Unilever employees. This leads to a public outrage and a loss of brand image to
the company. The company then teamed with Oxfam and tried to rectify the
processes. The primary issue of this event and rectification process done by the
company to improve relations with the employee was discussed in detail.
Unilever is currently the number one employer and the market leader in Vietnam.
It has involved itself in a number of corporate social relationship activities. It has
immense brand equity in this country.
Running Head: Case study of Unilever 12

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Running Head: Case study of Unilever 13

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Appendix 1.

(Denning, 2013)