Business Model of Unilever IndonesiaThe story how the FMCG
champion maintain its pole position while at the same time
strugling with business issue in competitive industryAkhmad
Rakhmattullah Sofyandi Sedar (29111144) Lecturer: Harimukti
Wandebori Class 45C Master of Business Administration ITB April
18th 2012
TABLE OF CONTENTS I. PREFACE 1.1 Background 1.2 Company Profile
1.3 Internal & External Analysis 1.4 Porters Five Forces 1.5
Business Strategy II. BUSINESS MODEL ANALYSIS 2.1 Business Model
Elements 2.1.1 Customer Value Propositions 2.1.2 Marketing STP
2.1.2 Profit Formula 2.1.3 Key Resources 2.1.4 Key Processes 2.2
Value Chain Analysis 2.3 Generating Alternative Strategies Using
TOWS Matrix 2.4 Recommended Strategies III. CONCLUSION AND ADVICE
3.1 Conclusion 3.2 Advice 3.3 Lessons Learned BIBLIOGRAPHY EXHIBIT
14 14 15 7 8 8 8 8 9 10 11 12 1 2 3 5 6
Business Model of Unilever Indonesia
ii
A R Sofyandi S 29111144 MBA-ITB Batch 45C April 18th 2012
Business Model of Unilever IndonesiaThe story how the FMCG
champion maintain its pole position while at the same time
strugling with business issue in competitive industryI. PREFACE 1.1
BackgroundThe Fast Moving Consumer Goods (FMCG) environment is
rapidly changing. The increasing popularity of line extensions
seems to depend on advantages inherent in brand Unilever Logo
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 Unilevers 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 Unilevers business strategy.
Business Model of Unilever Indonesia
1
40 Brands Rp. 3,387 Billion Net income
8 Factories
Unilever Indonesia385 Disributors
78 years in Indonesia
4,796 employees
Company prospectus and Unilevers brands
1.2
Company Profile
PT Unilever Indonesia Tbk is one of Indonesias leading FMCG
companies. The Companys portfolio of Home & Personal Care, as
well as Foods & Ice Cream products is distinguished by many of
the worlds best known and most trusted brands, including Walls,
Lifebuoy, Vaseline, Pepsodent, Lux, Ponds, 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 Value Customer,
consumer, and community focus Teamwork Integrity Making things
happen Sharing of joy Excellence 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.
Business Model of Unilever Indonesia
2
1.3 External and Internal Analysis SWOT AnalysisStrength 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 suppliers 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 Unilevers products have low
entry barrier. Opportunities Good economic stability, proved by
Indonesias 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.
Business Model of Unilever Indonesia
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Competitor AnalysisDirect CompetiorsLowest budget on
advertising, Rp. 44 billion (2007) Budget price product Follower
strategy, targeting market leader
Wings Group Procter & Gamble KAOCompetitive Profile
MatrixCritical Succes Factor Weight Rating Advertising Product
Quality Price Competitivenes Management Financial Position Customer
Loyalty Global Expansion Market Share Sales Distribution Customer
Service Sum 0.2 0.1 0.1 0.1 0.1 0.1 0.15 0.05 0.05 0.05 1.00 4 3 3
4 3 4 4 3 4 4
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
Unilever Weighted Score 0.8 0.3 0.3 0.4 0.3 0.4 0.6 0.15 0.2 0.2
3.65
Wings Group Rating 3 3 3 3 3 3 4 3 4 2 Weighted Score 0.6 0.3
0.3 0.3 0.3 0.3 0.6 0.15 0.2 0.1 3.15 Rating 3 3 2 3 1 3 3 3 3
3
P&G Weighted Score 0.6 0.3 0.2 0.3 0.1 0.3 0.45 0.15 0.15
0.15 2.70 Rating 3 3 2 3 1 2 3 3 3 3
KAO Weighted Score 0.6 0.3 0.2 0.3 0.1 0.2 0.45 0.15 0.15 0.15
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 leaders move. While both company has strong sales
distribution and
Business Model of Unilever Indonesia
4
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
PoliticsAfter reformation '98, present day is the most stable
condition for political atmosphere in Indonesia Coruption,
colution, and nepotism still exist but at declining phase
EconomyEconomic growth is above average of south asia region,
topped 6.3% in 2010 GDP of Indoneisa has reached US3000 per capita
in 2010 and increase significantly every year
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
EnvironmentalGreen living and eco-friendly product still
popular. Deforestation and illegal loging could become problem for
FMCG industry, hence the material comes from this environment.
LegalIndonesia still use oldlaws from Dutchcolonial era.
Coruption is common practice in trade-court and tax agency.
1.4 Porters Five ForcesThis 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 supplies - Low Threat
of substitute Product - High
Bargaining Power of Buyers: Medium Unilevers 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.
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
Business Model of Unilever Indonesia
5
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 suppliers from switching to
other competitors and charge higher rates.
1.5 Business Strategy Main StrategyWhile 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 companys
sustainaibility. Market Penetration StrategyMarket Penetration
Product Development and Multibrand
Acquisition
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, Walls, Ponds and Blueband. So, the strategy is not just
about gaining more consumers using Unilvers brand, but also about
to keep present consumer satisfied and protect consumers
loyalty.
Business Model of Unilever Indonesia
6
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 Unilevers 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: Walls Moo
lauching Dates Vienetta Clear Men Molto Ultra Paddle Pop Cyberion
Ponds Anti Aging
Supporting StrategyDivestiture 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 ElementUnilever
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 threevalue
discipline: consumer intimacy, operational excellence, and product
leadership.
Business Model of Unilever Indonesia
7
2.1.1 Customer Value PropositionValue 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 STPSegmenting Gender: Male and Female Size of
household: single, couple, and family Age: 8-70 Income: low,
medium, high Needs: basic consumer goods 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 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 FormulaThe 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.
Business Model of Unilever Indonesia
8
2.14 Key ResourcesThe 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: : 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.
Technological Resources
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. : 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. : 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.
Innovation Resources
Reputational Resources
2.1.5 Key ProcessesThe 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 highquality product
to its consument. Figure below ilustrates Unilevers business from
the supply of its raw material, to sourcing, through UI production
to the marketplace.
Business Model of Unilever Indonesia
9
Key processe are business process that, in a managements view,
is critical to the success of the firms 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 ecoefficiency, 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 AnalysisThe 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
Business Model of Unilever Indonesia
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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 industrys likely profitability is
conducted in Porters five forces model. A business has to
understand the dynamics of its industries and markets in order to
compete effectively in the marketplace.
2.3 Generating Alternative Strategy Using TOWS MatrixFrom SWOT
analysis from page 3, we can conclude TOWS Matrix to determine
strategies Unilever could use based on approached on SWOT.
SO-Strategy1. 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)
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11
4. Improvement on collaborative pattern with supplier and
distributors. (S3, O4) 5. Strengthening the monitoring system (S3,
S4, O3)
WO-Strategy1. Enhancement of public relations role in efective
promotion and positioning of product. (W1, W2, W4, O3) 2.
Improvement on employees 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 futures growth. (W5, O2)
ST-Strategy1. 2. 3. 4. 5. Consolidation of SDM value by
philosophy of respect to people. (S3, T5) Changing distribution
system from using public road to use alternative transportation.
(S4, T3) Using price fixing method for important commodities. (S2,
T1, T2, T5) Generate more ads to promote Unilevers strength on
brands and product quality. (S5, T5) Improvement on coordination
process with government or related institution. (S1, T4)
WT-Strategy1. 2. 3. 4. Improvement on organization structure to
anticipate futures change. (W1, W4 T1, T2) Strengthening the human
capital management system. (W2, T1) Improvement in value of
entrepreneurship and profesionalism. (W2, W5, T5) 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 StrategiesFor 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.
Business Model of Unilever Indonesia
12
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. 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.
Unilevers 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 products
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.
Business Model of Unilever Indonesia
13
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. Unilevers 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 tomanager 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 Unilevers
brands. As the result, Unilevers 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.
Business Model of Unilever Indonesia
14
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 Unilevers share price.
3.3 Lesson Learnt Glocalizatioan is a new way to do a business.
Unilever is multi-national company. But itsacquire 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-
Business Model of Unilever Indonesia
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BibliographyIreland, 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.
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