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Business Unilever Indonesia The story how the FMCG champion maintain its pole position while at
Business Unilever Indonesia The story how the FMCG champion maintain its pole position while at

Business

Unilever Indonesia

The story how the FMCG champion maintain its pole position while at the same time strugling with business issue in competitive industry

Model

of

Akhmad Rakhmattullah Sofyandi Sedar (29111144)

Lecturer: Harimukti Wandebori Class 45C Master of Business Administration ITB April 18 th 2012

TABLE OF CONTENTS

I. PREFACE

 

1.1 Background

1

1.2 Company Profile

2

1.3 Internal & External Analysis

3

1.4 Porter’s Five Forces

5

1.5 Business Strategy

6

II.

BUSINESS MODEL ANALYSIS

2.1 Business Model Elements

7

2.1.1

Customer Value Propositions

8

2.1.2

Marketing STP

8

2.1.2

Profit Formula

8

2.1.3

Key Resources

8

2.1.4

Key Processes

9

2.2 Value Chain Analysis

10

2.3 Generating Alternative Strategies Using TOWS Matrix

11

2.4 Recommended Strategies

12

III.

CONCLUSION AND ADVICE

3.1 Conclusion

14

3.2 Advice

14

3.3 Lessons Learned

15

BIBLIOGRAPHY

EXHIBIT

A R Sofyandi S

29111144

MBA-ITB Batch 45C April 18 th 2012

Business Model of Unilever Indonesia

The story how the FMCG champion maintain its pole position while at the same time strugling with business issue in competitive industry

I. PREFACE

1.1

Background

issue in competitive industry I. PREFACE 1.1 Background Unilever Logo The Fast Moving Consumer Goods (FMCG)

Unilever Logo

The Fast Moving Consumer Goods (FMCG) environment is rapidly changing. The increasing popularity of line extensions seems to depend on advantages inherent in brand

leveraging. FMCG manufacturers go into R&D in order to come up with the product that best satisfy consumers because customers become more critical about attaching themselves to a particular brand. They will also like to buy less expensive product due to current economic tide. Meanwhile, environmental and sustainability issue become more concern for consumer and stakeholder. This is the most challenging time for company in FMCG industry like Unilever Indonesia.

Unilever is a british-dutch multinational consumer goods company. It is the most leading brand in Indonesia for FMCG sector with 40 brands, while globally it hold more than 400 brands. In Indonesia, Unilever brands such as Sariwangi Tea, Kecap Bango, Buavita Juice, and Clear Shampoo always become the market share leader of its segment. Thus, the company brands always have top of mind review from their consumer.

In Indonesia, Unilever exists from 78 years ago since 5 December 1933. In the end of 2010, Unilever already have high net sales about Rp. 19.7 trillion and net income Rp. 3.4 trillion (see Exhibit 3 for Unilever’s financial performance). The company is one of the largest non-state owned enterprises companies in Indonesia. Unilever has 4796 employees scattered around this country. The company also has 385 distributors and 8 owned factories.

Managing and running a successful business can be a amusing and challenging, there are many lessons that can be learnt by studying successful business models such as Unilever’s business strategy.

40 Brands Rp. 3,387 8 Billion Factories Net income Unilever Indonesia 385 Disributors 78 years
40 Brands
Rp. 3,387
8
Billion
Factories
Net
income
Unilever
Indonesia
385
Disributors
78 years in
Indonesia
4,796
employees
1.2 Company Profile
years in Indonesia 4,796 employees 1.2 Company Profile Company prospectus and Unilever’s brands PT Unilever

Company prospectus and Unilever’s brands

PT Unilever Indonesia Tbk is one of Indonesia’s leading FMCG companies. The Company’s portfolio of Home & Personal Care, as well as Foods & Ice Cream products is distinguished by many of the world’s best known and most trusted brands, including Wall’s, Lifebuoy, Vaseline, Pepsodent, Lux, Pond’s, Sunlight, Rinso, Blue Band, Royco, Dove, Rexona, Clear, and others. The company ownership is foreign direct investment with 85 percent shares owned by Unilever Indonesia Holding B.V. Vision

“To be the first choice for consumers, customers, and communities”

Mision

“We work to create a better future every day.”

“We help people feel good, look good and get more out of life with brands and services that are good for them and good for others.”

“We will inspire people to take small every day actions that can add up to a big difference for the world.”

“We will develop new ways of doing business that will allow us to double the size of our company while reducing our environmental impact.”

Value

Customer, consumer, and community focus

Teamwork

Integrity

Making things happen

Sharing of joy Excellence

1.3 External and Internal Analysis

SWOT Analysis

Strength

Leader in consumer goods sector in Indonesia based on the sales and market share.

Increasing market size for important products category such as skincare, savoury, and ice cream.

Intimate relationship with suppliers and distributors. Unilever treat its supplier’s fairly in purpose to create loyalty among them like customers

Unilever has extensive distribution channel, spread across the country. Therefore for rural area n Indonesia, Unilever could deliver its products.

Efective promotion srategy. Based on one marketing magazine, Unilever is one of companies that had large budget on advertising. Weaknesses

Matrix structure, Unilever organization is based on products division (Exhibit 6). It is difficult for company to do coordination and communication between departments. It also has conflict resolution between support system departments (HRD, finance) with product line department.

Large number of employee.

Bureaucracy system, Unilever Indonesia waited order from the headquarters before made a decisison.

Slow internal consolidation for making a decision.

Majority of Unilever’s products have low entry barrier. Opportunities

Good economic stability, proved by Indonesia’s economic growth that reach 6.3%. This number is above some well-developed countries.

Strong economic growth on non-Java region like Sumatera, Kalimantan, Sulawesi, and Papua.

High dependance of consumer on some consumer goods brands. This is reflected on consumer loyalty on some brands consumer goods products such as Pepsodent and Sariwangi.

Market potential is quite large; approximately 250 million people live in Indonesia. These people are attractive target market for consumer goods product.

High satisfaction of consumers, proved by Indonesia Customer Satisfaction Award (ICSA) 2010 and Indonesia Most Trusted Company Award 2010, both from SWA Sembada Magazine.

Threat

Rising price of important commodities like palm oil, coconut-sugar, and petroleum based commodities as an impact of increase on oil price, chemical material, and other material.

Instability of Rupiah value against foreign exchange.

Bad infrastructure for public road, made it expensive to distribute products.

Threat from energy supplies since inconsistent gas supply from Pertamina

Threat from lower price subtitute products, from competitors’ products and also from Chinese knock-off.

Competitor Analysis

Direct Competiors

Wings Group Procter & Gamble KAO Competitive Profile Matrix •   Lowest budget on advertising,

Wings Group

Procter &

Gamble

KAO

Competitive Profile Matrix

Lowest budget on advertising, Rp. 44 billion (2007) • Budget price product • Follower strategy, targeting market leader

Research oriented company • High budget on advertising, especially on cosmetic ads • Higher price compared with competitors

Medium price, always do price checking with competitors • Promotion strategy using diferentiation and customer experience • Hold patent rights on raw material processing

Critical Succes

         

Factor

Weight

 

Unilever

Wings Group

 

P&G

 

KAO

   

Rating

Weighted

Rating

Weighted

Rating

Weighted

Rating

Weighted

Score

Score

Score

Score

Advertising

0.2

4

0.8

3

0.6

3

0.6

3

0.6

Product Quality

0.1

3

0.3

3

0.3

3

0.3

3

0.3

Price

                 

Competitivenes

0.1

3

0.3

3

0.3

2

0.2

2

0.2

Management

0.1

4

0.4

3

0.3

3

0.3

3

0.3

Financial Position

0.1

3

0.3

3

0.3

1

0.1

1

0.1

Customer Loyalty

0.1

4

0.4

3

0.3

3

0.3

2

0.2

Global Expansion

0.15

4

0.6

4

0.6

3

0.45

3

0.45

Market Share

0.05

3

0.15

3

0.15

3

0.15

3

0.15

Sales Distribution

0.05

4

0.2

4

0.2

3

0.15

3

0.15

Customer Service

0.05

4

0.2

2

0.1

3

0.15

3

0.15

Sum

1.00

 

3.65

 

3.15

 

2.70

 

2.60

Competitive profile matrix is a tool to identify main competitors in the industry. This tool corelated with internal and external factors influence company performance. This comparative analysis gives strategical information regarding competitor strengths and weakness.

Based on competitive profile matrix above, Unilever has reached the highest score on competitive profile matrix with score 3.65. This number meaning that Unilever has strong position as a market leader compared with its direct competitor. The most important factor for Unilever success is on adverstising. This is not a surprise since Unilever is company with the highest marketing and advertising budget compared with its competitors.

The close competitor for Unilever is Wings Group with score 3.15. Wings Group use “follower strategy” to adept with the market leader’s move. While both company has strong sales distribution and

global expansion, Unilever still take the pole position in advertising, management, customer loyalty, and customer service. Based on this, we can also conclude using Porter generic strategy that Unilever use differentiation strategy (which are: quality and brands) by focusing on broad market scope.

PESTEL Analysis

Politics Economy Environmental Legal •   After reformation '98, present day is the most stable
Politics
Economy
Environmental
Legal
•   After
reformation '98,
present day is
the most stable
condition for
political
atmosphere in
Indonesia
•   Coruption,
colution, and
nepotism still
exist but at
declining phase
•   Economic
•  Indonesia
growth is above
average of south
asia region,
topped 6.3% in
still use old-
laws from
Dutch-
2010
Social
  Society
conciousnes
for healthy
living is
increasing
•   Middle class
society is
growing
larger and
shopping
more
Technology
•   IT spending
in FMCG
industry has
increase
significantly
•   Consumer is
become more
tech-savvy
•   Social media
like Facebook
and Twitter
become
phenomenon
in Indonesia
•   Green living
and eco-friendly
product still
popular.
•   Deforestation
and illegal
loging could
become
problem for
FMCG
industry, hence
the material
comes from this
environment.
colonial
•   GDP of
Indoneisa has
reached US3000
per capita in
2010 and
increase
significantly
every year
era.
•  Coruption
is common
practice in
trade-court
and tax
agency.

1.4 Porter’s Five Forces

This model is based on five important elements of an organisation and uses both internal as well as external competences and threats faced by a business organisation. The function is to understan more about industry analysis. These five elements including:

Bargaining Power of Buyers: Medium

Unilever’s buyers are scattered and they are in millions. In true sense they are not so powerful to pull prices down. But on the other hand it is easier for the customers to switch. Unilever has to be very precautious in deciding about prices and keep them satisfied.

Bargaining power of supplies - Low Threat of substitute Product - High Intensity of rivalry
Bargaining power of
supplies - Low
Threat of substitute
Product - High
Intensity of
rivalry
- High
Bargaining power of
buyers - Medium
Threat of new entrant -
Low
Intensity of Rivalry: High

In consumer products business Unilever has a large number of competitors and these competitors are in reality very strong. They range from small local corner shop retailer to big giants like P&G, KAO and Wings Group. These competitors almost provide equally attractive products and services and

sometimes better. These competitors have the power to attract and influence the customers by more attractive substitute, prices and marketing techniques.

Threat of Substitutive Product: High

Continuous research and development in the consumer and household products has brought about a revolution in the consumer market and today customers like to try something new and better. This trend has reduced the customer loyalty and product lifecycle. Unilever is under continuous threat of substitute products and its competitors are already spending huge sums on R&D and new product development. Unilever has to be very adoptive and closer to its customers so as to get what exactly its customers want.

Threat of New Entrant: Low

As Unilever operates in different geographical markets so threat of new entrants varies in different markets. In well-developed countries where big players like Unilever have a very strong hold and brand image, it is very hard for a new entrant to enter the market because of higher cost to set up a business. On the other hand in less developed markets, it is easier to enter as legal requirements and capital needed is not as much as in a developed market. Unilever has its presence almost in every market either through its subsidiaries, branches or franchises. But its brand image is a strong barrier in the way of new entrants.

Bargaining Power of Supplier: Low

Unilever has a policy of local buying and local manufacturing. Which provides itself an edge to break power of its suppliers and make them weaker to negotiate at its own terms. Most of time Unilever has blanket agreements with its suppliers to provide for a certain period of time at a certain rate. This strategy help to prevent supplier’s from switching to other competitors and charge higher rates.

1.5 Business Strategy Main Strategy

While doing its business operation, Unilever Indonesia has three main strategies regarding its position as market leader in FMCG sector. This strategy has main function as a fundamental guidance for company’s sustainaibility.

Market Penetration Strategy

This strategy has a goal to achive more market share from its competitors. The implementation of this strategy is using above the line and/or below the line marketing strategy. Unilever has 80% market share in FMCG industry, contributed by succesful brands like Lifebuoy, Wall’s, Pond’s and Blueband. So, the strategy is not just about gaining more consumers using Unilver’s brand, but also about to keep present consumer satisfied and protect consumer’s loyalty.

Market Penetration Product Development Acquisition and Multibrand
Market
Penetration
Product
Development
Acquisition
and
Multibrand

Corporate Acquisition Strategy

By doing acquisition to consumer-friendly company, Unilever diversified its brands. Unilever also doing cost-saving practice because do not need to spend money to develop and promoting brands from acquired company. Beside, this strategy also reduces a risk of failure to entering new market with new product. Unilever has its own acquisition division under finance department. Newest and notable acquisition of Unilever is acquisition of Buavita and Gogo Drink from Ultrajaya Tbk. But acquisition has its own downturn also; the cost from product acquisition sometmes could be more expensive compared by developing its own brands. So, the trick is to find brands with high-value brand equity (well known by consumers) then polished with Unilever’s marketing strategy.

Product Development and Multibrand Strategy

This strategy has a function to conquer every existing market segment. By doing this strategy, company also could do cross-subtitution. Therefore, every marketing effort could be done without anxiety to keep the profit margin still profitable. By practice, the implication of this strategy is by doing re-design or re-concept of previous product. Somehow, Unilever still could be fail doing this strategy. Proved by failed brand like Mie & Mie and Tara Nasiku. The examples of this strategy are:

Wall’s Moo lauching

Dates Vienetta

Supporting Strategy

Clear Men

Molto Ultra

Paddle Pop Cyberion

Pond’s Anti Aging

Divestiture

Defensif strategy is strategy with a point to save organization sustainability. This strategy is occurred when cost rasionalization strategy is done but could not reach recovery target. And then those divisions become a germ that influenced corpoorate performance. The example of this strategy is stoppage of Kimberly-Lever product distribution, a joint venture of Unilever with Kimberly-Clark. By doing this strategy, the profit margin increase 22% and net income increase 14%, while SGA decrease.

Related Diversification

Unilever Indonesia prefers using organic growth to develop its brand. Unilever would not conquer forward nor backward diversification only to save its value chain and reduce business risk. To do diversification, Unilever prefer to use acquisition rather than building its own division.

II. BUSINESS MODEL ANALYSIS 2.1 Business Model Element

Unilever Indonesia as market leader has its own advantage compared with competitors. The business model element that has huge impact on Unilever operational activity is their approach to three- value discipline: consumer intimacy, operational excellence, and product leadership.

2.1.1

Customer Value Proposition

Value proposition is a promise of value to be delivered and a belief from the customer of value that will be experienced. The value proposition offered by Unilever to Indonesian consumer is “a premium yet localized Consumer Goods Company.”

This value has an image in consumer mind that Unilever have high quality product based on the premium titled the value proposition stated. While maintaining its high quality product, Unilever also create “glocalization” image of giant multi-national company, which contained of local brand taste and style.

This image has created product leadership, consumer intimacy and also operational excellence approach for value discipline model. Product leadership is a discipline which fosued on inovation, design and branding. Unilever have high brand equity since the product have a promised of high quality and guarenteed. Operational excellence is value discipline, which focused on eficiency, streamlined operation, and tight quality control. This discipline create eficiency and at the end low-cost operation that create value for consumers. Customer intimacy is focused on consumer experience, thus good CRM (Customer Relationship Management) is necessary. This discipline also required high adaptability to consumer trends and needs, since flexibilty and speed is one of the most important ingredients for Unilever to adopt this discipline.

2.1.2 Marketing STP

Segmenting

Gender: Male and Female

Size of household: single, couple, and family

Age: 8-70

Income: low, medium, high

Needs: basic consumer goods

The main target segements: B-B+ with medium income and urban family

Positioning

Unilever have a motto “adding vitality to life”, it means Unilever would produce daily consumer goods with good quality and affordable price.

2.1.3 Profit Formula

The profit formula is the blueprint that defines how the company creates value for itself. In Unilever, brand equity is the most important aspect that creates value for consumer and company. In Indonesia brands portfolio is factor driven which atract customers. Unilever Indonesia has diferent strategy than another Unilever in the world. In Indonesia, brand portfolia is 3:1 for home personal care and food and ice cream. While in global, Unilever brands is 46% for home and personal care and 54% for food and beverages.

Targeting

Gender: Male and Female

Size of household: single, couple, and family

Age: 8-70

Income: low, medium, high

Needs: basic consumer goods with affordable price

2.14 Key Resources

The key resources (or assets) are the people, technology, products, facilities, equipment and brand required to deliver the value proposition to the targeted customer. The focus here is on the key elements that create value for the customer and company, and the way those elements interact. Resources itself divided into intangible and tangible resources.

Tangible Resources at Unilever Indonesia

Financial Resources

Organizational Resources

Physical Resources:

Technological Resources

: Unilever has net income Rp. 3.4 trillion with compunded annual growth rate (CAGR) 14%.

: Unilever organization is lean and division-based, while its matrix structure helps Unilever to focus on product category.

: Unilever has eight owned factory and 385 distributors depots. This made Unilever has flexibility and capability to produce consumer goods at high volume while lowering the cost and transport products widely.

: Unilever already implemented newest ERP technology from SAP AG. Unilever also implement state-of-art IT system that helps strategy and planning, innovation, business partnering, and services delivery.

Intangible Resources at Unilever Indonesia

Human Resources

: Unilever has implement knowledge management in organization, the implementation consist of performance development program, coaching culture, and sharing knowledge cultur.

Innovation Resources : Unilever breaktrough in innovation is drive by its learning organization and collaboration procces to adding value for consumer and share holder. For example, in Indonesia Unilever introduce Pureit as affordable fresh water purifier that become high-value product innovation.

Reputational Resources : Unilever has good reputation among supplier for its fair policy. Unilever also create good reputation with society for its CSR and sustainable environmental project. Unilever is awarded as most trusted and satisfied award from SWA Sembada Magazine and Majalah Marketing.

2.1.5 Key Processes

The business operations of a large company like Unilever are at the centre of a complex value chain with both forward and backward linkages into the company. Unilever has a motto “operational excellent with no compromise on quality”, which mean Unilever operation is focusng to deliver high- quality product to its consument. Figure below ilustrates Unilever’s business from the supply of its raw material, to sourcing, through UI production to the marketplace.

Key processe are business process that, in a management’s view, is critical to the success

Key processe are business process that, in a management’s view, is critical to the success of the firm’s strategy and give competitive advantage. Based on the figure above, key process of Unilever business process divided into three processes: sourcing, production, and distribution.

On the sourcing side, Unilever has 334-supplier company to help Unilever gaining raw materials for its business. Unilever has fair policy regarding its relationship with supplier. This policy creates “blanket” that protect suppliers’ rights while at the same time provide Unilever with its necesarry resources. While some raw materials and manufactured goods are bought abroad and imported for manufacturing in Indonesia, UI purchases the great majority of its goods and services (84 per cent – see below) through a local supply chain, made up of Indonesian and international companies with operations in Indonesia

On the producing side, Unilever implement three important policy practices: quality control, environmental responsibility, and social responsibility. In this, quality control means Unilever care about eficiency and safety in product manufacturing, thus incorporating consumer safety into goods production. Environmental responsibility has a meaning that Unilever manage and reduce impact, improve eco- efficiency, manage resources, and reduce emissions regarding environmental issues. On social responsibility, Unilever incorporating fair renumeritation, safety, and comfort working condition.

On the distributing side, Unilever is the largest FMCG that have budget on advertising and marketing. This also helped by 385 distributors that reached half a million retailers accros Indonesia.

2.2 Value Chain Analysis

The goal of these activities is to offer the customer a level of value that exceeds the cost of the activities, thereby resulting in a profit margin for Unilever Indonesia. The primary value chain activities are:

Inbound Logistics: the receiving and warehousing of raw materials and their to manufacturing as they are required. Unilever the inbound logistic on two supply center they has.

Operations: the processes of transforming inputs into finished products and services. By using 8 factories they has, Unilever has production capacity of 700.000 ton

Outbound Logistics: the warehousing and distribution of finished goods. Using 350 distributor, Unilever could reach half of million retail store in Indonesia.

Marketing & Sales: the identification of customer needs and the generation of sales. Marketing budget of Unilever is nearly infinite. Using trade marketing and cooperation with big retailer like Hypermart and Carefour, Unilever develop marketing campaign.

Service: the support of customers after the products and services are sold to them. Customer relation officer in Unilever is one of prestigious and important job for the company.

These primary activities are supported by:

Technology development: technologies to support value-creating activities. The value chain model is a useful analysis tool for defining a firm's core competencies and the activities in which it can pursue a competitive advantage as follows. Unilever has implemented sophisticated system of ERP and IT basis for daily operation activity.

Cost advantage: by better understanding costs and squeezing them out of the value-adding activities. Using cost leadership discipline and economies of scale, Unilever has already surpassed competitors like P & G, Nestle, and KAO on price war.

As Per the Porter's 5 Forces analysis Unilever deals with factors outside an industry that influence the nature of competition within it, the forces inside the Unilever influences the way in which the firms compete, and so the industry’s likely profitability is conducted in Porter’s five forces model. A business has to understand the dynamics of its industries and markets in order to compete effectively in the marketplace.

markets in order to compete effectively in the marketplace. 2.3 Generating Alternative St ra tegy Using

2.3 Generating Alternative Strategy Using TOWS Matrix

From SWOT analysis from page 3, we can conclude TOWS Matrix to determine strategies Unilever could use based on approached on SWOT.

SO-Strategy

1. Penetration and market development of existing products. (S1, S2, O1, O2, O3)

2. Improvement on quality, facility, and infrastructure to anticipate future demand. (S2, O2, O4)

3. Improvement on claim services. (S5, O5)

Business Model of Unilever Indonesia

anticipate future demand. (S2, O2, O4) 3. Improvement on claim services. (S5, O5) Business Model of

11

4.

Improvement on collaborative pattern with supplier and distributors. (S3, O4)

5. Strengthening the monitoring system (S3, S4, O3)

WO-Strategy

1. Enhancement of public relation’s role in efective promotion and positioning of product. (W1, W2, W4, O3)

2. Improvement on employee’s structure by promoting employee with profession degree. (W1, W3, O1, O5)

3. Strengthening on consolidation system. (W2, W3, W4, O4)

4. Improvement on marketing effectivity. (W5, O5)

5. Improvement on capital structure to finance future’s growth. (W5, O2)

ST-Strategy

1. Consolidation of SDM value by philosophy of “respect to people”. (S3, T5)

2. Changing distribution system from using public road to use alternative transportation. (S4, T3)

3. Using price fixing method for important commodities. (S2, T1, T2, T5)

4. Generate more ads to promote Unilever’s strength on brands and product quality. (S5, T5)

5. Improvement on coordination process with government or related institution. (S1, T4)

WT-Strategy

1. Improvement on organization structure to anticipate future’s change. (W1, W4 T1, T2)

2. Strengthening the human capital management system. (W2, T1)

3. Improvement in value of entrepreneurship and profesionalism. (W2, W5, T5)

4. Development on work culture by incorporating creativity and innovation value. (W1, W2, T4,

T5)

5. Development on IT and ERP system to support decision-making processes. (W3, W4, T2)

2.4 Recommended Strategies

For this segment, we will use BCG model and Grand Strategy Matrix to understand the positions that give advantage for Unilever Indonesia.

As shown in figure aside, Division Home and Personal Care is considering as a star division. This consideration is based on the fact that this divison contributed 75% of net sales with strong growth on sales and large market share.

contributed 75% of net sales with strong growth on sales and large market share. Business Model

Division Food and Ice Cream considered as cash cows since the low growth rate of sales but having large market share position relative to its competitors. This is also due to fact that this divison only contributed 25% of net sales to Unilever.

In Stars postion, Unilever Indonesia could choose to do strategy like Market Penetration, Market Development, Product Development, Backward Integration, Forward Integration, and Horizontal Integration. In Cash Cows position, Unilever have an option to do strategy like Product Development and Concentric Diversification.

Grand strategy comprises the purposeful employment of all instruments available and coordinate and directs them, to attain the goal that defined by fundamental policy. This strategy is matching stage at strategy formulation processes. This matrix is based on two-value dimension that is competitive position and market growth.

From Grand Strategy Matrix beside we can conclude Unilever Indonesia has rapid market growth and strong competitive postion.

Rapid Market Growth

1. As foundation of countries economy, society consumption bolster 80% of gross domestic product.

society consumption bolster 80% of gross domestic product. 2. Consumer goods industry at mature stage, with

2. Consumer goods industry at mature stage, with 10-15 percent growth rate.

3. Needs and dependency towards consumer goods is very high because natural cause and universal.

Strong Competitive Position

1. Vast network and distribution channel that consists of 550.000 retail store and small-shop (Warung) by 350 distributors, 17 depots, and two warehouses. Monitoring control and support applied continuously.

2. Large amount of cash for promotion purpose.

3. Good economies of scale. Unilever’s division (Home and Personal Care and Food and Ice cream) has a capacity of 700.000 ton.

4. Strong brand equity

5. Competent on product diversification and product variation.

6. Unilever has become a benchmark for any other company, in FMCG sector or another sector.

7. High customer loyalty index (CLI) for Unilever product’s brands.

Since Unilever in quadrant 1 position, recommended position company could use are: Market Development, Market Penetration, Product Development, Forward Integration, Backward Integration, and Related Diversification.

III. CONCLUSION AND ADVICE

3.1 Conclusion

Unilever Indonesia as a giant and market leader in FMCG sector has maintain its approached on consumer intimacy, product leadership, and operational excellence pretty well.

The recommended strategy will strengthen this plan because it is doing what Unilever Indonesia does best and more so. We must never forget the key success factors of the business which really makes the business for what it is today, including operational quality that offer quick, efficient, and inexpensive products.

Marketing strategy is one factor that distinguishes Unilever from its competitor. Unilever has clear value proposition and deliver it by good means and honest ads.

Unilever use corporate acquisition technique when cannot develop its brand on new market segement. Thus, this technique is cheaper and reliable when head to head compete with incumbent.

To understand where the position of the company, manager could use BCG matrix and also Grand Strategy matrix. On this, assesment actually Space Matrix could be use too.

Unilever’s brands portfolio consist of 40 brands and a lot of sub-brands. To monitoring and consolidate with each brand, company could use Enterprise Resource System which implemented for daily operational activities.

Network of sales distributors are one of important primary activities factor that become competitive advantage of Unilever Indonesia.

3.2 Advice

Division Food and Ice Cream of Unilever is still cash cow phase. It is important to manager to increase its market growth rate by having market penetration and reduces number of its sub-brands. Otherwise, Unilever also could use product development strategy and further market education.

The global trend is about helathy living, eco-friendly livestyle, and poverty consciousnes on level of society, national, and international. This could be a good opportunity for Unilever to integrate its CSR into daily activities of company. Unilever could follow Danone-Aqua step like “1 to 10” campaign or The Body Shop campaign on environmental issue.

Social media sites and activities become phenomenon in Indonesia. Unilever could follow this phenomenon by launching its own campaign on social media. This method also can use to improve consumer intimacy with Unilever’s brands. As the result, Unilever’s top of mind would increase.

For overall strategy in Unilever brand and segment, it is better if Unilever is consistent on stay-on-the-offensive strategy. Using approach like market penetration, brand diversification, and acquisition to gather more segments and serving larger group of target segment. This strategy would create bigger and stronger Unilever.

Dilute its share; share price of Unilever stock already reached Rp. 16.500 per share (2010), while its dividend yield only 2.42%. New investor would not happy with this number, so it is better to create stability on Unilever’s share price.

3.3 Lesson Learnt

Glocalizatioan is a new way to do a business. Unilever is multi-national company. But its acquire and develop local brand of indonesia for the sake business sutainablity.

Operational excellence, product leadership, and consumer intimacy is possible to achive at the same time.

One umbrella brand with good GMP (Good Manufacturing Practice) becomes a guarantee of its sub-brands and subsidiaries.

Unilever is a marketing giant, in business industry, one should consider marketing as important factor to improve profitability and market appeal.

Acquisition is another method to try to enter new segment by low risk and easy to develop.

CSR is not become a second purpose of company anymore. Unilever proved it could develop its surounding and answer social-environmental problem by consolidating CSR programme into corporate strategy.

The most importan lesson from Unilever story is about how critical brand image can be to business. Brand image of Unilever is a reprsentation of its value proposition. By keeping its shown and walk the talk, Unilever brand has become one of the most important brand equity in the world

160 times a day, someone, somewhere, one of 6 billion people on this planet

choose Unilevers product Unilever Website-

Bibliography

Ireland, Hoskisson, Hitt. (2011). The Management of Strategy: Concept and Cases. International Edition.

Clay, J. (2005). Exploring the Links Between International Business and Poverty Reduction: A Case Study of Unilever in Indonesia. Eynsham (UK): Information Press.

Unilever Indonesia, Annual Report 2010. Indonesia.