ATW 395 INTERNATIONAL BUSINESS

BACHELOR OF ACCOUNTING

YEAR 3 SEMESTER 1

ACADEMIC SESSION 2020/2021

CASE STUDY (CHAPTER 5)

Topic of case study : Unilever’s Comparative and Competitive Advantages

Lecturer : Assoc. Prof. Dr. Shankar Chelliah

Group members’ name :

No. Name Matric No. Question

1. Nur Amirah Binti Abdull Kassim 144424 5-4 (Part 1)

2. Nabilah Maisarah Binti Rusni 142016 5-4 (Part 2)

3. Linarani Muniandy 143862 5-5 (Part 1)

4. Geethanapriya Sathiyananthan 144260 5-5 (Part 2)

5. Nor Fitrah Binti Mohd Haizar 142086 5-6 (Part 1)

6. Nurul Syakirah Binti Mohamed Mehboob 140932 5-6 (Part 2)

7. Pusparajan A/L Antony Das 141717 5-7 (Part 1)

8. Nur Fatin Najihah Binti Azahar 143907 5-7 (Part 2)

 INTRODUCTION OF GROUP MEMBERS’

Hi! I am Geethanapriya,can call me Geetha. I am from

Alor Setar,Kedah. I am currently doing my first
semester of third year for a Bachelor of Accounting at
University Sains Malaysia. I am a more private, calm &
friendly person. Well in fact, hanging with ppl that can
socialize and make new friends is one of my best skills.
I have always taken my studies very
seriously.Besides,I will run errands for an
extracurricular activity which is table tennis and I
personally felt table tennis is an effective stress-buster
for me as I'm a person that easily loses temper. My
ambition is to be an auditor and I believe it would be
the best job for me. The reason why I have chosen to
become an auditor is because of my passion in solving
problems and somehow I love calculations which really
challenged my ability to think quickly. My father has
always taught me a quote “If you think you can do it, you probably can”. which has
given me greater motivation. What I have become today because of my parents
prayers and blessings, I have been able to live the life I want to. I feel I can’t thank
them enough for giving me everything. So i guess that's all i can say about myself.

Hey everyone! I am Linarani @ Lina living in

Kedah, Malaysia. I am studying for a Bachelor of
Accounting at USM. Well, in this photo you all can
see that the ice-cream is more focused than my
face. You know why? Well, because I’m a foodie. I
love to eat food and I love to go to food hunts and
try many varieties of food with my friends. But I am
still looking thin, why? Well, that is god’s gift to me.
Lol. Other than that, I am a fan of music. I enjoy
travelling alone to natural places. Whenever I feel
sad or stressed, I go for a walk on an empty road
or sit in a place and stare at the sky. It makes me
feel so good. Does that sound weird? Haha… Yes.
My mom has always said that I have some weird
tastes compared to my family members. I am a
good dancer and I can sing well too. Besides, I like
to help people. I am a very light-hearted and enthusiastic person. I'm one of those
people who is a brilliant listener, but at the end of the day, things finally do what my
heart pleases and I still feel right. Finally, I believe that shades and sunlight both are
part of our life and we should accept both stages happily. Thank you.

Hi Dr Shankar, my name is Nor Fitrah Binti Mohd Haizar and I am 21 years old. I am
currently a third-year student from Universiti Sains Malaysia. I am studying for a
Bachelor of Accounting (Hons). My hometown is in Kedah, but my family and I stay
 in Penang. I went to SMK Abdullah Munshi for my
secondary school. After that, I went to Penang
Matriculation College and studied in accounting
course. From matriculation, I decided to further my
studies in USM as it is the top university in
Malaysia and it is near to my house. I made many
friends in USM and from that I can learn something
new from them. My ambition is to be a professional
accountant in future as it is the main reason why I
am studying in accounting. I believe that being an
accountant is difficult but if you are incredibly
determined, you can achieve what you really want.
I love to jog in my free time or on weekends as it
can keep me fit and healthy. Usually, my sister and
I go to the park near my house to jog. I think that's
all from me. Thank you.

Hi Dr. My name is Nurul Syakirah binti Mohamed

Mehboob, and I am 21 years old. I’m from Penang.
I am currently a 3rd year accounting student in
USM. I usually spend my leisure time watching
movies or reading novels. I am a big fan of Harry
Potter and I watched the movies too much until I
knew every single line in the movie. Movie genre
that I like the most would be fantasy, action and
thriller. When I was young, I actually had a dream
that I was accepted to Hogwarts. It was so real that
I was sad that it was only a dream. I was also kind
of sad that we couldn’t watch movies in the theatre
anymore due to covid-19 but I was glad that my
last movie in theatre is Tenet. I really enjoyed
watching movies and it is like a stress reliever for
me whenever I’m dealing with too much workload or feeling down. I also enjoyed
listening to music and my favorite song for now is VVS produced by GroovyRoom.
The song is about a person who undergoes hardship in
order to succeed in his life. I usually listen to music while
studying and it keeps me less sleepy while doing it. That’s
all from me. Thank you!
Salam, everyone! I’m Nabilah Maisarah Binti Rusni, 21-year-old and I’m from
Selangor. Currently I am a third-year student in Universiti Sains Malaysia (USM)
which is located at Penang’s Island. I personally think it's a good opportunity to be
able to travel from one place to another while studying. I was shortly attending a form
6 when I was waiting for the matriculation entrance result for 3 months. Then, I went
to matriculation which is located at Changlun, Kedah for a year, before I further my
study at USM. The more I see the world with different cultures and society believes,
the deeper my understanding towards how human beings naturally behave,
depending on what the society feeds them. This basically means, people can easily
change themselves to suits and blend well with society. This year, due to the rapid
rise of covid-19 cases, I have the opportunity to go back to my hometown at the end
of March, right before the commencement of the Movement Control Order (MCO).
To tell more about myself, I really enjoyed sweating and the freshness after hiking
and jogging. The picture of myself attached together and tells the world of how
happy and enjoyable the moment was.

Hi Dr Shankar, my name is Nur Fatin Najihah binti Azahar

and you can call me Fatin. I am 21 years old and currently
staying in my hometown at Juru, Penang. I am currently a
third year Bachelor of Accounting student in USM. Before I
further my study in USM, I went to Kolej Matrikulasi Pulau
Pinang. My father was an ATM army and due to his
commitment to work, me and my family used to move from
one place to another. We had been in Kuala Lumpur for 2
years, Sungai Ara in Penang Island for 3 years, and Port
Dickson in Negeri Sembilan for about 5 years. Therefore, I
think I had enough of travelling and decided to pursue my
study in Penang only because I already felt the pain and
tiredness of travelling in a long journey. Furthermore, I
have been interested in pursuing my study in USM since
secondary school because I was amazed with USM when I
attended a competition that was held in USM. During matriculation, I heard a sharing
about USM from my senior who was a student of USM at that time and since then,
I’m telling myself that I’m going to study in USM no matter what. I still remember the
day I went to the interview session at USM, you are one of the panel interviewers
and to be honest your warm welcoming makes me feel very comfortable and
confident to answer all the questions. During my free time, I love to read books. I
have a collection of books I have kept since childhood such as comics, novels,
motivational books and others. I guess that’s all from me. Thank you.
Greetings everyone! I’m Pusparajan here, and can call me Rajan. I’m from Kuala
Ketil, Kedah. 21 years old and doing my first semester, third year in USM as an
accounting student. Generally I’m an introvert, but it’s like an introverted extrovert.
Once we get the rapport, there’s no holding back of me being a clown around you.
As for my dream or ambition, it always changes from time to time but one thing sure
 sticks with me is, entrepreneur. It intrigues
me more than any other and off course I
have deep passion in numbers (which is one
of the reasons why I chose this course) but
my dream to be an entrepreneur stands still,
so it is safe to say one day I will be heading
in that path with the knowledge I have
gathered. As for personal interest, I have
always been pretty good at painting, so my
leisure time usually goes with paint brush
and colours in my hands. My paintings are
usually based on nature and related to that.
When it comes to social or community, I tend
to help as much as possible for those who
are in need if it’s within my capabilities. One
thing my parents touch the most with me is
the importance of being humble, which is kind of my personal mantra for life. I have
always reminded myself with the mortal nature of my being, so usually I try my best
in doing anything so that there is no regret in me. This is as far as I can put into
words about myself, but I can promise that once you get to know me, we can surely
have a lot of fun.

Hello Dr. Shankar. My name is Nur Amirah Bt Abdull

Kassim and I’m 21 years old. I am third year
accounting student at Universiti Sains Malaysia. My
hometown is Penang. My hobby is playing games
and watching cartoon. I also love listening to songs
to feel free from stress and work. I am an
independent girl who try to do work by myself and
plan to finish my work on time. I schedule my time in
a table form to make sure I didn’t miss any work or
assignments. I am also friendly person which is easy
to mingle with everyone and make new friends. I also
love to watch horror movie even it is quite scary. My
motivation quotes are “push yourself, because no
one else is going to do it for you”. This make me to
be stronger when i feel down and stressed. Besides,
I also spend my time with my friend and family by
having a outing which create smore memories
between us. That’s all from me. Thank you.

CASE STUDY: UNILEVER”S COMPARATIVE AND COMPETITIVE

ADVANTAGES

Case Question 5-4:

Unilever has used FDI extensively to internationalize its activities around the world.
What advantages does FDI provide the Firm? What steps can Unilever take to
ensure its FDI ventures success?
Answer:

Name of student: Nur Amirah Binti Abdull Kassim

FDI provides Unilever with the flexibility to ascertain market subsidiaries and
factories everywhere the globe, the flexibility to regulate internal operations and
lower the danger of managing foreign counterparts and partners. FDI has allowed
Unilever to internationalize on a larger scale and increase Unilever’s presence
globally. Unilever has been victimisation FDI to extend their presence in countries
like Asian nation, Colombia, Canada, and Russia. Unilever has noninheritable
multiple countries in foreign countries and take their location and resources so as to
grow their own business and advantage in those countries. for instance. Unilever has
noninheritable Carver Choson that may be a South Korean skin care complete and
Quala that is found in Colombia. Unilever has additionally placed their factories in
countries everywhere the globe. Unilever has factories set in Russia, Canada,
Indonesia, Mexico, Ireland, and Turkey.

Name of student: Nabilah Maisarah Binti Rusni

FDI helps Unilever a lot in internationalizing its activities around the world, hence it’s
crucial for Unilever to take steps to ensure its FDI ventures succeed. First, Unilever
needs to enter a new market then obtain access to it. Unilever can expand the size
of the market obtained when they enter the market. Market access is rising and it will
help to boost the business and its profit base. Apart from that, obtaining access to
the new market will also indirectly increase a market share of specific industry in
Unilever’s activities as well as obtaining an access to a specific target group of
consumers. Second, Unilever needs access to the resources to ensure its FDI
ventures succeed. R&D is the most important part in order to make sure business
can last for longer by having good research and developing the best quality of
product. Thus, Unilever needs to conduct more R&D and strengthen it by doing
many collaborative ventures. New technologies, raw materials, resources,
management skills and cooperation opportunities will help in developing new
products as well as ensure the FDI ventures succeed. Third, reducing the production
cost. No production can survive longer when the cost is too expensive and end up
with lesser profit. Business is not about selling and buying only, but cost and profit
should be in consideration as well. Having new resources such as raw materials will
make the cost cheaper because it is produced by them and they own the resources.
This means they could save more and not spend money to buy resources from third
parties. With lower cost of production, it allows a higher quality of labor force which is
able to produce higher quality of product, effectively and efficiently.

Question 5-5:
What are the roles of comparative and competitive advantages in Unilever’s
success? Provide specific examples of natural and acquired advantages that
Unilever uses to succeed in the global FMCG industry.

Answer:

Name of student: Linarani Muniandy

Comparative advantage describes a nation's superior characteristics that offer

unique advantages in global competition. These qualities are generally derived either
from natural endowments or deliberate national policies. Unilever possesses many
comparative advantages such as supply of capital, strategic location, stable
economics, strong location, and skilled labors. Firstly, the role of competitive
advantage in Unilever’s success is supply of capital. For example, The UK, with an
active stock market which provides a ready supply of capital, is one of the world's
leading banking centres. The ready supply of capital helped by abundant food
supplies, creating a situation where natural resources were plentiful, and increased
the market of British manufacturers. Secondly, strategic location. The Netherlands is
well placed to serve the world and is continental Europe's main entry market. They
expand their market to Europe with their headquarters placed in the Netherlands.
Besides, stable economics. Benefits at the level of production and do not have to
think about excess production that causes the waste of the production factor, such
as labour costs, energy and so on. For instance, steady demand for Unilever
products is guaranteed by both the Netherlands and the UK. Other than that, a
strong location is also one of the comparative advantages in Unilever’s success. Due
to the presence of frequently requested customers, the Netherlands and the UK are
good locations for R&D. Besides, another comparative advantage in Unilever’s
success is skilled labor. Produce more innovative products than they can produce
with their previous labor’s skills and knowledge in the company. For example, the
Netherlands and the UK, with a high concentration of knowledge workers who drive
innovation in product creation and operations, are leading platforms in emerging
technology development.

Name of student: Geethanapriya Sathiyananthan

In a competitive environment, businesses try to stand up from their competitors.For

example,Unilever possesses many competitive advantages such as superior
production factors,superior research and development capability,economies of
scale,marketing capabilities and well-known brand names. In superior production
factors,lower cost and superior labor acquired.Besides, high quality of product in
terms of strong brand is necessary.This ultimately saves cost and uses excess
capital to focus on R&D.For example in this case,Europeans are expecting more
customers and urge Unilever to maintain its production quality.For superior research
and development capability, the Competitive edge over its competitors such as
improve their technology to be more innovative in technology.It also prepare a
platform for creativity and innovation to flourish in Unilever.For instance,Unilever
research and development centers in UK leverage has expert scientist and
responsibility workers as well generate more ideas for innovations.
Furthermore,another factor that contributes to Unilever success is economies of
scale.Economies of scale are cost reduction that occur when companies increase
production.From this case study we can conclude productivity of Unilever increases
and unit of cost fall. Moreover, marketing capabilities help Unilever to compete with
their competitors by getting to know the consumer satisfaction ,experience and
improvement they can make . For example,Unilever has gained massive income by
selling and promoting their products to consumers.A strong brand name has a
powerful influence in consumer behaviour.It also allocates less cost to introduce new
products or test them out before investing them.

Question 5-6:
Discuss Unilever and its position in the FMCG industry in terms of the determinants
of national competitiveness. What are the roles of demand conditions; firm strategy,
structure, and rivalry; factor conditions; and related and supporting industries in
Unilever’s international success?

Answer:

Name of student: Nor Fitrah Binti Mohd Haizar

Unilever has a remarkable place as a global corporation as it is situated in a perfect

location for the production of emerging technologies, development, production,
labour and financial services. The factors that Unilever is successful throughout the
FMCG market are attributable to globalisation and foreign direct investment (FDI),
which also leads to a cost edge and a comparative advantage. In order to be
competitive throughout the manner Unilever thrives in the FMCG market, the
organization is required to succeed both domestically and globally.

For a comparative advantage, Unilever's base in Rotterdam, the Netherlands, has

been a vital point with a long-standing partnership with the United Kingdom (UK),
and Unilever therefore shares the benefits of a technologically advanced, mature
and globalized UK sector. The position of Unilever makes it the main entry point for
continental Europe. There are some comparative advantages of the large range of
countries in which Unilever exists.

For the sake of competition, the Netherlands and the United Kingdom are great R&D
regions despite the existing of incredibly demanding customers, improved
manufacturing factor, mainly in labour and capital, and multiple strong rivals who are
forcing Unilever to compete. Europeans are challenging buyers and forcing Unilever
to produce superior goods. Intense competition in the FMCG market is under intense
pressure from Unilever to introduce new products and develop existing ones.
Unilever obtains properties beyond its boundaries and fully develops and relies on
extensive sales networks, creative technology, customer satisfaction, superior
business skills, and cost - effectiveness and competitive labour from manufacturers
around the globe.

In this case study, the national competitiveness of high marketing based in Brazil,
Canada, China, Indonesia, Mexico, Ireland and Turkey is least expensive and high
standard labour. Unilever R&D centres in India, China, the Netherlands, the United
States and the United Kingdom. China produces skin care products underneath the
names of Pond, Dove and Vaseline.

The position of the conditions of demand refers to the existence of the demand for
particular goods and services on the home market. The existence of competitive
consumers pushes companies to innovate more efficiently and deliver quality goods.
Europeans are challenging buyers and forcing Unilever to manufacture high-quality
goods. Intense competition in the FMCG market is under intense pressure from
Unilever to introduce innovative goods and improved current goods. Aligned with the
modern trade philosophy, Unilever gains vast economies of scale by exporting its
goods around the world. Unilever spent $2.7 billion to acquire skincare brand Carver
Korea in South Korea to extend its presence in Asia.

Name of student: Nurul Syakirah Binti Mohamed Mehboob

Firm strategy, structure and rivalry are basically the nature of domestic rivalry and
conditions in a country that shows how firms are created, organized, and managed.
Strong competition puts firms under endless pressure to keep on improving and
innovating their firm.The presence of vigorous competitors in a country helps to
create and maintain the national competitive advantage. Unilever supplies food,
personal care, and beauty products in Europe. Unilever is constantly pressured by
fierce competition in the FMCG industry to launch new products or improve existing
products. .For instance, Unilever's top competitors include Procter & Gamble and
Nestle which will stimulate Unilever’s competitive advantage.

Factor conditions define the resources of the country, including manpower, natural
resources and advanced factors such as technology, capital, advanced skills in the
workforce,and entrepreneurship.This factor condition gives rise to competitive
advantage. Unilever has basic resources such as natural resources and labor.For
instance, Unilever's Durban, South Africa plant, benefits from prime advantages
throughout natural resources, physical infrastructure, and low-cost high-quality
workforce. Unilever also has advanced factor conditions in which it should be
upgraded continuously either by developing new skills or investing in new research
and development so that it is able to compete with other competitors such as Nestle
and Procter & Gamble.The R&D centres of Unilever in the United Kingdom utilize the
extensive scientists and knowledge workforce of the country as well as the capital
that is needed in order to fund the innovation. The upgrading that Unilever makes
would eventually increase the competitive advantage which would make them
succeed internationally.

Related and Supporting Industries are basically the involvement of a group of

vendors, competitors and experienced and skilled workforce. When there is an
existence of related and supporting industries, it actually gives basis on which the
focal sector will excel. For example, Unilever set its research and development
centers in India, United States, Netherlands, United Kingdom and China which are
advanced in technology, knowledge and skills individuals required in performing
research. Operating within a pool of similar and supporting sectors will eventually
offer opportunities through information and technology sharing that would potentially
result in cost savings and be able to compete globally.

Question 5-7:
In terms of Dunning’s eclectic paradigm, describe the ownership-specific
advantages, location-specific advantages, and internationalization advantages that
Unilever holds. Which of these advantages do you believe has been most
instrumental to the firm’s success? Justify your answer.

Answer:

Name of student: Pusparajan A/L Antony Das

Ownership advantages refers to the possession of a certain valuable, uncommon,

difficult-to-imitate, and organizationally integrated resource that enables a business
to have a competitive advantage over foreign competitors. Via its patents, superior
R&D expertise, high-quality goods, creative technology, economical size, cross-
business synergies, deep distribution networks, excellent marketing capabilities,
well-known brand names, loyalty to consumers and access to lower costs and
superior labour through factories worldwide, Unilever has these advantages. It is
stated that some of these capabilities also gives monopolistic advantages for
Unilever, strengths which few companies have. This kind of advantages gives
Unilever a degree of monopoly power control over local companies in international
markets, which provides Unilever with the ownership advantages.

The location advantage focuses more on the geographic advantages of the host
country or countries. The Netherlands has been well placed to serve the world and
also continental Europe's main entry market. As Unilever is located in the
Netherlands, strategically locating suitable countries for R&D, production and sales,
offers tremendous location-specific benefits, including links to excellent labour and
the ability to sell in top markets. We can see this in, Unilever plant in Durban, South
Africa, profits from the highest benefits in terms of natural resources, physical
infrastructure and low-cost, high-quality labour. The company's palm oil plantation in
Malaysia benefits from a good environment, plentiful palm trees, and low-cost labour,
as Unilever uses palm oil in some of its goods. In the United Kingdom, Unilever R&D
centres harness the abundant scientists and knowledge workers of the country as
well as the capital required to finance innovation.

Besides this, Unilever's plant in Hefei, China, manufactures goods for personal care.
As it is the top manufacturing location due to ample low-cost high-quality labour,
China provides the location advantage. The abundant land of the country helps to
keep rentals and other costs related to property, low. China is also home to major
stock markets and half of the world's largest 10 banks, which generates the funds for
the many activities Unilever is doing there.

Name of student: Nur Fatin Najihah Binti Azahar

Internalization advantages means the advantages gained from production of the

commodities itself rather than from joint ventures of partnership business. Firm gains
these benefits from internalizing foreign-based manufacturing, distribution or other
value chain activities. Profit will be transferred to its ownership-specific advantages
across national borders within its own organization rather than let the profit be
dissipated to the independent foreign entities. As mentioned in case of Unilever’s
Comparative and Competitive Advantages, Unilever internalizes its value chains,
including R&D, procurement, manufacturing, distribution, and marketing and sales.
Unilever utilizes a variety of foreign market entry strategies, including exports and
FDI. The benefits of internalization advantages are the ability to control how the firm
run its production and marketing, greater control of its proprietary knowledge, and
greater buyer certainty about product value. Internalization advantages help Unilever
to control its international operation and minimize the risk that arises when dealing
with outside partners. For instance, Unilever acquired a South Korean skincare
brand namely Carver Korea to extend the presence of Unilever in Asia.

I believe that location-specific advantages are the most instrumental to the firm’s
success. The reason for my answer is that from location-specific advantages,
Unilever will be in a better position in producing its commodities in their domestic
countries then export them to the foreign market. This will generate a higher revenue
for Unilever. Unilever also can benefit from resources from various countries since
every country has its own resources in terms of its geographic and demographic. As
in the case study, Unilever had benefited the natural resources, physical
infrastructure, and low-cost, high-quality labor from its plant in Durban, Africa.
Unilever takes advantage of the low-cost labor, abundant palm trees, and good
climate in Malaysia for oil palm plantations to produce margarine, ice cream, soap
and shampoo. Unilever also leverages the UK’s abundant scientists and knowledge
workers as well as capital needed for fund innovation by setting up R&D centers in
the UK. In a nutshell, all these shows that Unilever succeed to lower their cost for
specific types of products that have a lower production cost and natural resources in
other countries and leverage a country with knowledgeable people and capital for its
innovation that is crucial for the firm’s future. Unilever indirectly can generate a
higher revenue from location-specific advantages.