GLOBAL BUSINESS IN CONTEXT

BMG705 (30745)

VAIBHAVI VIKAS DONGA

STUDENT ID: 10223617

WORD COUNT: 2037

TABLE OF CONTENTS

Introduction.................................................................................................................................................................... 3
Company Overview......................................................................................................................................................3
Background and Complex Issue................................................................................................................................3
Challenges THAT uNILEVER FACED IN TERMS OF bREXIT.............................................................................4
Political events have an impact on supply chain decisions................................................................................4
Sourcing.................................................................................................................................................................4
Manufacturing.......................................................................................................................................................5
OPPORTUNITIES THAT UNILEVER PERFORMS TO OVERCOME BREXIT...................................................5
Challenges THAT uNILEVER FACED IN TERMS Rise of Inflation Rate.............................................................6
OPPORTUNITIES THAT UNILEVER PERFORMS TO OVERCOME INFLATION RATE........................6
Challenges THAT uNILEVER FACED IN TERMS Ukraine-Russia War...............................................................7
OPPORTUNITIES THAT UNILEVER PERFORMS TO OVERCOME UKRAINE-RUSSIA WAR.....................7
Recommendation:........................................................................................................................................................8
Conclusion..................................................................................................................................................................... 8
Reference list................................................................................................................................................................9
INTRODUCTION

There are many risks in the "global business" market, but there are also opportunities for risk

reduction and price capture. Operations can only take place in a setting that encourages the

company's success. This can happen when a business has in-depth information and is adept at

analysing each of the micro and macro conditions to guarantee its financial success. The

organisation must recognise the complicated nature of the macroenvironment and respond

appropriately in order for management control to be effective and for leaders to lead. (Alan and

Mangion, 2020).

COMPANY OVERVIEW

Unilever is a multinational consumer goods corporation based in the United Kingdom and the

Netherlands. It was formed in 1929 and has offices in London, the UK, and Rotterdam,

Netherlands. The corporation works in more than 190 nations and has a portfolio of over 400

brands, including Axe/Lynx, Dove, Lipton, Hellmann's Chocolate Knorr, and numerous others.

Unilever's products include anything from beverages and food to grooming products and

household cleaning supplies. The corporation is committed to sustainable and ethical business

practices, and it has set ambitious targets to minimize its environmental effect and promote the

health and happiness of people worldwide. Unilever is also noted for its distinctive corporate

structure, which consists of two parent businesses, Unilever PLC, and Unilever NV, which  function

as a single economic entity. This structure enables the corporation to maintain a significant

presence in both the United Kingdom and the Netherlands while also allowing for flexibility in

mergers and acquisitions.

BACKGROUND AND COMPLEX ISSUE.

Unilever is a significant and reputable company, but because to its size, it must deal with

numerous complex issues. To address these issues, the company has employed several different

strategies (Ronald and Griffin, 2019). More recently, the firm has had to deal with challenging

issues including Brexit, an increase in inflation, the war in Ukraine and Russia, COVID-19, and

climatic conditions. We'll talk about some of the problems and opportunities that Unilever
experienced in the following sections. A firm has many additional problems when operating on a

worldwide scale. We will use business theories and examples to assist the conversation in order to

know more about business ethics. (Newspaper Limited 2023, 2022)

CHALLENGES THAT UNILEVER FACED IN TERMS OF BREXIT

As we move further with the report the major challenges Unilever faced in 2023 are Brexit, as the

UK has left the EU, and due to that the Company has faced a lot of challenges in their business

here we will discuss how Brexit isolation impacts the Unilever supply chain.

Political events have an impact on supply chain decisions.

On June 23, 2016, UK citizens made the decision to leave the European Union. According to

Treanor, Goodley, and Allen (2016), the GBP declined by more than ten percent against the USD

on that day. The UK has been a part of the European Community (EC, or common market) since

1973. The distribution networks of multinational firms like Unilever may be significantly impacted if

more than 40 years of globalisation and trade integration are reversed.

Source: Havard.education.com

The "sourcing" and "manufacturing" portions of the supply chain are the most unstable in terms of

its UK operations as a result of the Brexit vote.

Sourcing

Unilever answered in the immediate future by hiking prices (where possible) in response to an

unexpected spike in the cost of inputs because this had a rapid impact on the profitability of its
products. Increase in grain and petroleum input costs in GBP terms immediately highlight the cost

of Unilever goods like Marmite for an additional commodities buyer like the UK (Times, 2016). In

the wake of Brexit, Unilever decided to increase costs on certain of the products it distributes in

the UK by 10%, particularly Marmite and PG Tips. This immediately caused a highly publicised

argument with Tesco, the biggest retailer in Britain, who refused to cover the additional cost. The

"Marmite Wars" ended when Tesco finally gave in. Even though Unilever had the advantage in this

situation due to price adaptability and bargaining power, these factors will almost certainly result in

lower profitability for Unilever's more obscure, price-inelastic products. For other products,

Unilever will rely upon currency hedging to lessen the impact on revenues (Getty, 2016).

Manufacturing

In the coming months and years, Unilever will face pressure to "localise" the company's

manufacturing base even more. Unilever broadens its manufacturing operations and makes every

effort to localise production given its worldwide footprint. According to the most recent annual

report of the corporation (Unilever, n.d.), In 69 nations, Unilever operates 306 facilities. However,

when compared to its overall footprint in 190 countries, it exhibits a disconnect across its revenue,

impact on the environment and cost footprint (because of advantageous labour arbitrage

conditions). In the context of European regulations, the forty years of free trade could have further

"globalised" the European supply chain. Decisions regarding whether to make investments in

potential expansion and even where to site the company's headquarters must now be made by

Unilever management (Hutton and Morales, 2017).

OPPORTUNITIES THAT UNILEVER PERFORMS TO OVERCOME BREXIT

With the development in globalization, a growing appetite for amenities and the Western lifestyle

may present an opportunity for Unilever to satisfy its needs. Unilever may benefit from the growing

number of consumers who are health-conscious in developing countries (Unacademy, 2021).

Unilever's biggest clients are millennials. Unilever's great track record instils confidence in both its

old and novel offerings. Even after Brexit, Unilever intends to carry out its existing activities in the

United Kingdom. However, it did state that "the business's operating model will change
fundamentally." We believe that this could mean moving the main corporate offices of the

corporation to a location that is not within the UK. However, in alongside the United Kingdom,

Unilever currently also has co-headquarters in the Netherlands. (Team, 2020).

CHALLENGES THAT UNILEVER FACED IN TERMS RISE OF INFLATION RATE

Unilever's business performance is affected by the state of the world's economy (Newspaper

Limited 2023, 2022). The CPG behemoth raised prices by 11.3% in 2022, with a 13.3% increase

alone in the final quarter of the year. While the price increases increased Unilever's essential

fundamental sales growth (USG) by 9% and helped the company's turnover surpass EUR60 billion

(US$64.2 billion) to earn the first time, they came at a price. (Butler, 2022).

Unilever reported that the increase in manufacturing and shipping costs, which were only partially

offset by our price strategy and savings delivery, resulted in a 210-basis point reduction in gross

margin. Volumes suffered as well, dropping 3.6% in the last quarter and 2.1% over the past year.

Speaking to economists, CFO Graeme Pitkethly stated that Unilever has raised prices for eight

consecutive quarters despite inflationary headwinds to maintain its peers' competitiveness.

Unilever is the owner of Ben & Jerry's and Hellmann's mayonnaise. He said that volumes have

"held up well". Cost inflation will continue to be a major issue in 2023, according to Pitkethly, who

stated that Unilever experienced "significant increases in fuel, energy, and labour costs in our

supply chain." (Butler, 2022b)

OPPORTUNITIES THAT UNILEVER PERFORMS TO OVERCOME INFLATION RATE.

The consumer goods company announced on Thursday (October 27) that underlying sales had

increased 10.6% in the third quarter of the year. The company has UK locations in London,

Surrey, and Gloucestershire as well as a research base at its ancient Wirral home at Port Sunlight.

Additionally, turnover increased by 17.8% to €15.8 billion (£13.7 billion), with currency effects of

8.8% and acquisition divestitures of 2.1%. Unilever claimed to have continued "reshaping" its

portfolio by buying the hair health company Nutrafol and finalizing the disposal of its international

tea business. Despite greater adverse underneath growth in volume compared to the first nine

months, predicted overall revenue growth for the entire year was expected to be above 8%.
According to the corporation, cost pressures brought on by currency depreciation and increasing

raw materials prices are projected to persist beyond 2023 (Baker, 2022).

CHALLENGES THAT UNILEVER FACED IN TERMS UKRAINE-RUSSIA WAR

Unilever has banned all goods imports and exports into and out of Russia as well as all advertising

and media investment as of March 2022. Additionally, we have stopped all capital transfers

between and within of the nation. We continue to provide people in the nation with our standard

food and hygiene goods created in Russia (Woolfson and Gill, 2023).

when accessing the three main options, to proceed with the business Unilever (London, 2023).

first to attempt to shut down the company, which now has 3,000 employees spread over four

industrial facilities and a headquarters. However, it is obvious that if Unilever were to stop

operating in the nation and withdraw its brands, the Russian government would seize control of

them and run them. The next attempt might be to sell the company, but up to this point, we have

been unable to come up with a plan that both protects our citizens and prevents the Russian state

from possibly reaping additional benefits. The third choice is to let the company continue operating

under the stringent restrictions we imposed in March. It should be noted that none of these

choices are ideal. Nevertheless, they consider the third to be the best choice, both to reduce the

chance that the company will end up in direct or indirect control of the Russian state and to

support the protection of the populace.

OPPORTUNITIES THAT UNILEVER PERFORMS TO OVERCOME UKRAINE-RUSSIA WAR

To support its expanding business and show its long-term commitment to the nation, Unilever

announced today that it will make investments the equivalent of twenty million euro in a new

manufacturing facility in the Ukraine's Kyiv region. Construction is anticipated to start this year,

and the facility is expected to open in 2024.

About 100 jobs will be generated by the new factory, which will produce shampoos and shower

gels for companies like Dove, Axe, TRESemmé, and Clear. The center will primarily serve the

domestic Ukrainian market, but it may eventually export goods to markets in Europe.
Additionally, using renewable energy sources, the factory will be constructed to the highest ethical

standards, helping Unilever reach its goal of having net zero emissions throughout its supply chain

by 2039 (Bovdilov, 2023). More than 100 employees are currently employed by Unilever in

Ukraine. Unilever has concentrated on safeguarding the safety and well-being of its Ukrainian

employees and their loved ones ever since the war in their country broke out. Working

collaboratively with the UN agencies and regional NGOs to get aid to the areas that need it most,

Unilever has provided more than €15 million in support and critical goods made by Unilever to the

worldwide humanitarian relief effort. We will keep supplying humanitarian help to the Ukrainian

people (Murphy, 2022).

RECOMMENDATION:

While creating a national and internationalisation approach in the consumer goods sector, Unilever

must prioritise a number of opportunities and threats. The company's strategy is urged to take into

account the external component of rising customer health consciousness. Unilever can improve its

food selection by taking advantage of this possibility. In order to take advantage of corporate

sustainability opportunities, it is also suggested that the company strengthen its sustainability

initiatives. Another idea is to see growing organisational automation as a risk that offers Unilever's

rivals, especially those that compete in specific markets, more sway. By digitising their production

processes, local enterprises can increase their competitive advantage.

CONCLUSION

According to the study, there are many factors, including innovation, distinctiveness, and a strong

client base, that must be considered if a business is to reach the ideal degree of stability. Realities

must be matched with any unique traits that may exist to ensure that better challenges will be

solved to boost the business's cultural component and profitability. The organization must take on

a lot of responsibility to succeed, which is great for the company's atmosphere because it will

result in a better grasp of the setting or market where they are growing. If qualified personnel are

recruited to comply with the company's strategy, customers' needs and supplies can be met. In

order to implement the necessary measures and changes that comply with the plan in order to
guarantee that risks are minimized, it is necessary to have a thorough understanding of the

environment.

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