Unilever’s SWOT Analysis &

Recommendations
UPDATED ONUPDATED ON FEBRUARY 21, 2017 BY DANIEL
KISSINGER

A shelf in Kaufland
supermarket in Ceska Lipa, the Czech Republic displays products sold as Axe, one of
Unilever’s brands. A SWOT analysis of Unilever indicates diversification as a way to grow
the consumer goods business. (Photo: Public Domain)
Unilever is a leading consumer goods business in the global market. A SWOT analysis of the
company highlights business strengths that ensure long-term success. The SWOT Analysis
model identifies the relevant strengths and weaknesses (internal strategic factors) and the
opportunities and threats (external strategic factors). Unilever’s SWOT analysis shows
significant opportunities that the company can use for further international growth and
expansion. The business is in a strong position to withstand the threats in its external
environment. However, Unilever must consider all of the factors outlined in this SWOT
analysis to guide strategic formulation for global operations.

A SWOT analysis of Unilever depicts the conditions of the business, as well as its external
environment. Strategies based on business strengths and market opportunities can boost
Unilever’s performance in the long term.

Unilever’s Strengths (Internal Strategic Factors)

Unilever’s organizational and business strengths are identified in this section of the SWOT
analysis. Strengths are internal strategic factors based on the company’s conditions, such as
human resources, production processes, organizational structure and investments. The
following strengths are significant in Unilever’s consumer goods business:

1. Strong brands
2. Broad product mix
3. Economies of scale
 4. Strong global market presence

Unilever has some of the strongest brands in the consumer goods industry. This strength
enables the company to penetrate markets and effectively compete against other firms. The
broad product mix shows the extent of Unilever’s business growth. For example, the
company has increased its product portfolio through years of mergers and acquisitions,
leading to organizational growth and corresponding increases in revenues. On the other hand,
economies of scale support production efficiency necessary for competitive pricing strategies,
as shown in Unilever’s marketing mix. Through years of international expansion, the
company has also increased its market presence, which is a strength that reinforces brand
popularity. The internal strategic factors in this section of Unilever’s SWOT analysis show
strengths that the company can use to sustain global growth and success in the consumer
goods market.

Unilever’s Weaknesses (Internal Strategic Factors)

Despite its strong market position, Unilever has weaknesses that limit its potential growth.
This section of the SWOT analysis presents the internal strategic factors that impose barriers
to organizational and business development. Unilever must address the following
weaknesses:

1. Imitable products
2. Limited business diversification
3. Dependence on retailers

One of Unilever’s weaknesses is the imitable nature of its products. For example, even
though the company heavily invests in its product development processes, other firms can
imitate Dove and Rexona products. Also, in spite of its broad product mix, Unilever is weak
because of limited diversification in businesses outside the consumer goods industry.
Moreover, the company lacks direct strong influence on consumers, considering that retailers
are the ones who directly affect buyers. Thus, based on the internal strategic factors in this
section of the SWOT analysis of Unilever, the weaknesses emphasize the importance of
diversification, innovation, and enhanced marketing efforts.

Opportunities for Unilever (External Strategic Factors)

Unilever must take advantage of growth opportunities in consumer goods markets around the
world. This section of the SWOT analysis determines such opportunities or external strategic
factors that can facilitate business development. The following opportunities are significant in
Unilever’s external environment:

1. Business diversification
2. Product innovation for health
3. Business enhancement for environmental conservation
4. Market development

Unilever has opportunities to diversify by entering businesses outside the consumer goods
industry. Diversification reduces market-based risks and improves business resilience. On the
other hand, product innovation can increase Unilever’s product attractiveness by addressing
the needs of increasingly health-conscious consumers. Similarly, the company has an
opportunity to make its business more sustainable and environmentally friendly to attract and
retain environmentally conscious consumers. In addition, market development can grow
Unilever’s business by increasing revenues from the sale of its current products in new
market segments. For example, the company can market its Lipton products as health drinks
for consumers with special diets. The external strategic factors in this section of Unilever’s
SWOT analysis point to major opportunities to grow the business despite its weaknesses.

Threats Facing Unilever (External Strategic Factors)

A variety of external factors can limit or reduce Unilever’s business performance. The SWOT
Analysis model considers these external factors as threats that the company must strategically
tackle. The following are the threats relevant to Unilever’s consumer goods business:

1. Tough competitive rivalry

2. Product imitation
3. Increasing popularity of retailers’ house brands

Unilever faces tough competition, which is a threat based on the strengths of other firms in
the industry. Competitors threaten to reduce the company’s market share and corresponding
financial performance. Product imitation is also a major threat against Unilever. For example,
local firms can develop products highly similar to Unilever’s. Also, retailers impose a threat
by selling their own brands. These brands are known as house brands, store brands or generic
brands. For example, Costco uses Kirkland Signature as a house brand, and Walmart has its
own house brands that directly compete against Unilever’s products. Based on the external
strategic factors in this section of the SWOT analysis of Unilever, strategies must focus on
improving the company’s competitive advantage.

Unilever’s SWOT Analysis – Recommendations

This SWOT analysis of Unilever highlights a number of internal and external strategic factors
that managers must include in strategy development. For example, the weaknesses of limited
business diversification and imitable nature of products are significant because they influence
business stability and performance. In this regard, a recommendation is to diversify
Unilever’s business through acquisition of related firms not in the consumer goods industry.
Also, Unilever needs to consider product innovation as an opportunity to boost business
performance. It is recommended that the company must use its strengths, such as economies
of scale, for product innovation to address competition and the threat of imitation.

References

 Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). Recent research on team and
organizational diversity: SWOT analysis and implications. Journal of
Management, 29(6), 801-830.
 Leigh, D., & Pershing, A. J. (2006). SWOT analysis. The Handbook of Human
Performance Technology, 1089-1108.
 Nikolaou, E. I., Ierapetritis, D., & Tsagarakis, K. P. (2011). An evaluation of the
prospects of green entrepreneurship development using a SWOT
 analysis. International Journal of Sustainable Development & World Ecology,18(1),
1-16.
 U.S. Department of Commerce – The Consumer Goods Industry in the United States.
Select USA.
 Unilever – Investor Relations – Annual Reports and Accounts Overview.
 Valentin, E. K. (2001). SWOT analysis from a resource-based view. Journal of
Marketing Theory and Practice, 54-69.

TAGS: CASE STUDY & CASE ANALYSIS, CONSUMER GOODS

INDUSTRY, SWOT ANALYSIS, UNILEVER
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