AN ASSESSMENT OF:

UNILEVER IN
VIETNAM
The “Perfect Village” Initiative

Abby Wuestenberg
 ■ Unilever is a multinational with annual sales of about $1B Euro. Its
portfolio includes more than 400 consumer brands. Emerging markets
account for 57% of all business.

■ Commitment to social responsibility goes back to the company’s founding

in 1890 and are seen in dozens of examples over the course of the firm’s
life.

■ In 2009, CEO Paul Polman removed earnings guidance and quarterly

reporting – stating a focus on short-term performance gets in the way of

The
sustainable results – demonstrating true dedication to social responsibility
from the vey top.

■ In 2010, Polman launched the “Unilever Sustainable Living Plan”

Company:
(USLP), which is a corporate commitment to finding new, more sustainable
ways to do business
– Goal: double the size of Unilever’s business and at the same time
reduce its environmental footprint and meet ambitious social

Unilever
impact goals by 2020.

■ In 2013, Harish Manwani , Unilever’s Global Chief operating officer,

eloquently articulated Unilever’s commitment to Social Impact in a TedTalk
entitled “Profit’s not always the Point”
– “I don’t know how many of you know that two million children
don’t reach the year don’t reach the age of five because of illnesses
that can be prevented by a simple act of washing their hands with
soap. With Lifebuoy, we are not running the largest children’s
school hand-washing program in the world… It’s not just about
selling soap. There is a larger purpose out there. And brands
indeed can be at the forefront of social change.”
Introduction to the Case: The
Environment
■ Alex von Behr, Unilever’s Chief Customer Officer, was focused on growing business in developing nations.
■ He formulated a comprehensive go-to-market strategy for rural areas that embed USLP’s sustainability goals into the way his team conducts business.
This came to be called the “Perfect Village” approach
– In addition to traditional marketing and sales efforts, it also included active community engagement and investment in economic development-related activities
– Integrated three key elements: Retailer Support, Market Creation, and Sustainability (linking to USLP-related goals)
– He believed that the ideal method to achieve sustained impact and grow the business in his segment is to build a viable business model with the same level of analysis that
was expected for higher income segments.

■ Rural Vietnam was a key growth market for Unilever

– 9,000 communes, about 68% of the country’s total population
– Business was mostly conducted through distributors managing relationships with end consumers
– Rural areas had seen rapid income growth in recent years, but the markets remained difficult to penetrate due to spread out populations with weak infrastructure links,
however this also meant the competitive intensity was very low

■ Rural challenges closely intertwined with the community’s broader economic development
– Biggest challenge was not simply brining products to market, but creating demand for the categories
– Basics like soap and toothpaste are not regular purchases for the community
– To be successful, Unilever must increase awareness of product usefulness but also develop associated infrastructure and utilities. For example, it’s not useful to teach
people to regularly brush their teeth if they don’t have access to clean water.
Case Study

■ The Perfect Village approach was launched in Vietnam in October 2013 with a ”Think Global, Act Local” mentality
– Relied on decentralized structures that allowed flexibility in adapting to local conditions. More capable of addressing the unique needs of each emerging market
– Templates and best practices were given to countries who were then free to adopt and adapt as they saw best
– Focused on recruiting and training small retailers as a part of its sales network and offering extended credit, business training, and equipment to its local retail partners

■ Stakeholder management was key

– Recognizing a need for a more integrated approach in developing rural areas, Unilever partnered with local NGOs and communities
– Through engaging with the local government and communities, Unilever identified three core areas of contribution in Vietnam:
■ Child development, health and hygiene, and women’s empowerment
■ “We chose these three areas because they are priorities not just for Unilever, but also the three top priorities for Vietnam. The government was our main stakeholder – we development long term strategic
partnerships with them” – Tran Vu Hoai, VP of Communications and Sustainable Business

■ Villages had to meet specific criteria to be accepted in the PV program:

1. Population of more than 1000 people
2. At least 20 stores that can sell Unilever products
3. Must have a school and a medical clinic so there was a platform to launch Unilever’s health and hygiene campaigns
4. Already have active engagement and support from local authorities.

■ Results: The Business Case

– Sales growth in a Perfect Village city was 32%, more than double of the 14% achieved in similar villages not in the PV program without USLP investments
– Social impact also strong: over 70% of people in Perfect Village cities do remember to brush their teeth at night, up from nearly no one doing so prior to the program’s launch.
 ■ Freeman’s Stakeholder Management

Concepts ■
■
Bottom of the Pyramid
Justice by Rawls

Used ■
■
Impact Assessment
Creating Shared Value, Porter and Kramer
Analysis: Perfect Village is making a real
impact but still has room for improvement
■ Freeman’s Stakeholder Management: Good
– Unilever successfully engaged local Governments, NGOs, and Influencers (beauty salon and shop owners) in the rollout of Perfect Village. They aligned their goals to ensure
continued support.

■ Bottom of the Pyramid: Needs Improvement

– While Unilever has targeted rural markets in need of development, they avoided the least developed villages. They are operating at the bottom of the pyramid in a sense, but
there are people in worse conditions, in the same market, that are not being supported.

■ Justice by Rawls: Needs Improvement

– Is the selection process to qualify for the Perfect Village Program Just? According to Rawls, to be Just, the process must:
■ Inequalities arranged to the greatest benefit of the least advantaged
■ Equal rights, similar system of liberty for all
■ Fair equality of opportunity
– From this perspective, it is not Fair and this not Just as the truly least advantaged are filtered out.

■ Impact Assessment: Good

– Unilever maintained the standard business reporting requirements to assess the success and long-term viability of Perfect Village markets.
– Also measured the social impact of its initiatives and compared success across villages with differing levels of investment.

■ Creating Shared Value, Porter and Kramer: Good

– A business needs a successful community, and a community needs successful businesses
– Shared value: “creating economic value in a way that also creates value for society by addressing its needs and challenges” - Porter and Kramer (slide 35, 8-Social Business)
– Moving away from short term performance pressure
■ CEO ending quarterly reporting to focus on long term performance
Recommendations
01
Need to scale
• Only targeting 1,000 villages
as of 2020.
• Unilever’s be-spoke approach
to each village keeps the
process slow and requires
large upfront investment. To
have a greater impact, the
implementation process should
be more standardized over
time as Unilever learns more
about the market.
02
Develop strategy
for a true Bottom
of the Pyramid
approach
• Unilever should launch a
version of Perfect Village that
is suitable to the least
advantaged communities in
Vietnam that do not require as
much existing infrastructure
03 04
Reconsider the Expand Impact
selection criteria Assessment beyond
• Should it be more Just or more financials to include
Utilitarian? more on social impact
• Currently Utilitarian: The
selection criteria ensure • Implement a
Unilver is investing in villages comprehensive qualitative
that are most poised to be analysis, such as the MDI
successful and realize a true
and RDI to gain a holistic
benefit from the program and
thus maximizing the amount of view on community
good. It, however, is filtering development
out the villages in most dire
need of investment and
development. This is be
definition, unfair and thus
unjust, according to Rawls
Sources

■ https://www.ted.com/talks/harish_manwani_profit_s_not_always_the_point?language=en
■ ”Unilever in Vietnam: The ‘Perfect Village” Initiative” case study by Jasjit Singh, Associate
Professor of Strategy at INSEAD
■ “Creating Health, Hygiene and Prosperity in Rural Vietnam” -
https://sellingwithpurpose.unilever.com/?p=255
■ Class Slides:
– Freeman’s Stakeholder Management (Class 3, slide 14)
– Justice by Rawls (Class 3, slide 28)
– Creating Shared Value, Porter and Kramer (Class 8, slide 34)
– Impact Assessment (Class 5, slide