(2014) Case Study: Unilever Indonesia, Group Assignment in Marketing Management / MBA, 2013/2014

CASE STUDY 3DR. RAIMOND SELKEPRIYAL SUGUNASILANLOVINIA SUGUNASILAN

24 FEBRUARY2014

Unilever Indonesia

ContentIntroductionBackground ReportProblem StatementSWOT Analysis

SolutionsRecommended SuggestionsConclusionsQ & A

Introduction – History Lesson

Introduction – Poverty Report

Introduction

Introduction - Diversification

Introduction – Trends Worldwide

Introduction – Economy 2020, where?

Introduction – Indonesia’s Economy

Problem StatementsThe idea of Project SMALL’s implementation carries along various risks for PT ULI. Have to monitor the project very carefully Have to prove that investing in the

franchising strategy is really the way forward for PT ULI

Evaluate the milestones, obstacles, and lessons learnt from the pilot operations

SWOT Analysis Strength Weakness Opportunities Threatof PT ULI

StrengthsSet up a network of over 350 third-party key distributors

Life-giving injection to local economics

Creating jobs Improving standards of living

Global reputation for high environmental, health and safety standards

Level of monitoring and training was effective

Penalty system for deviations from Unilever standard

Strengths (cont…)Engage with the SME sector

Key role in developing strong domestic market

Provide local employment

Partnerships Developing the capacity of existing

networks Follow its strategy Create win-win solution

WeaknessesMajor shortage of educated people

Training and business education for SME’s were still non existent/not tailored to needs.

Formal financing at competitive rates are almost impossible.

Aid agencies had failed to make a significant contribution to the national program

OpportunitiesProject SMALL: A big initiative

• Provide Indonesians with no established business networks the chance to become entrepreneurs.

• Contributing to Indonesian economy that needed a ‘jump-start’

• Providing new entrepreneurs with essential ingredients to success.

• Joined with IPPM (private management institute) to accelerate the process.

• Possible new forms of partnership

Opportunities (cont…)Out of House, Out of Home: A New Channel for Unilever

• Designed as an innovative channel for Unilever products

• Creation of new franchised type o hawker to attract middle-income customers

• Hundred of carts to be dotted around the country eventually (if successful)

• Signed a partnership with YIPG which provided technical skills and expertise trainings in entrepreneurial techniques

Obstacles, lessons and milestones learnt : Basis for designing the curriculum of the academy

ThreatsOutside partners causing delaysProduct tamperingGeneral decline in standardsUnhealthy competition from traditional hawkersCompetition from less traditional foreign-based fast food franchisesLimited time for trainingsDirect interface with customers

Solutions from the caseProject has to be monitored very carefully

Prove that the business strategy of investing in franchises is indeed a way forward

• Unique combination of skills transfer to local people

• Energetic and thoughtful marketing• OOH concept could potentially raise

standards and expand markets

Recommended SuggestionsWe need to bear in mind… Advantages from the Franchisor’s point of view: Financial (cash flow, R & D);

Operational (uniformity of procedure); Strategic (self motivation); Administrative (spreading of risks)

Advantages from a Franchisee’s point of view: avoiding the unnecessary trial and error period in starting and operating a new business; franchisee has access to accumulated business experience and technical know-how in managing the business

Disadvantages from a Franchisor’s point of view: the franchisor has to disclose confidential information to franchisees and this may constitute a risk to the business etc.

Disadvantages from a Franchisee’s pint of view: requirement to pay the franchise fees and royalty to the franchisor; transfer of all goodwill built in the local market to the franchisor upon expiration or termination of the franchise contract; reduced corporate profit margin due to payment of royalties and levies

Recommended Suggestions (cont…)

Wilmar, Unilever Palm Oil Supplier, Sumatra

Recommended Suggestions (cont…)

Monitor and repair issues, like human rights abuse; poverty, debt bondage, changes in consumer behavior

To increase revenue: develop a premium house brand in cosmetics, food, beverages etc. (segmentation)

Conclusion goals feasible; but need pay attention to Generation Y, mobile devise, information age, currency threat/devaluation, competitors in an emerging market, big potential for others, the market is still increasing etc.

Our Tip to monitor Unilever…

http://www.behindthebrands.org/en/brands

Our Tip to monitor Unilever… (cont…)

Q & A