MANAGING HINDUSTAN

UNILEVER STRATEGICALLY
Yashasvi Mohandas
BBM Professional

WHAT IS HINDUSTAN UNILEVER?

Unilever is one of the worlds oldest multinational companies.
In 1930, the companies merged to form Unilever that diversified into food

products in 1940s. Emerged as a major fast-moving consumer goods (FMCG)

multinational operating in several businesses.

In 2004, the Unilever 2010 strategic plan was put into action with the mission to

bring vitality to life and to meet every day needs for nutrition, hygiene and
personal care with brands that help people feel good, look good and get more
out of life. The corporate strategy is of focusing on core businesses of food,
home care and personal care.

Internationalization is based on the principle of local roots with global scale

aimed at becoming a multi-local multi-national.

The present corporate strategy of HUL is to focus on core businesses such as

home and personal care and food. Apart from the two product divisions, there
are separate departments for specialty exports and new ventures.

 Strategic management at HUL is the responsibility of the board of directors headed by a chairman.

There are five independent and five whole-time directors.

The operational management is looked after by a management committee comprising the Vice

Chairman, CEO and managing director and executive directors of the two business divisions and
functional areas. The divisions have a lot of autonomy with dedicated assets and resources. A
divisional committee having the executive director and heads of functions of sales, commercial
and manufacturing looks after the business level decision-making.

The functional-level management is the responsibility of the functional head. For instance, a

marketing manager has a team of brand managers looking after the individual brands. Besides
the decentralized divisional structure, HUL has centralized some functions such as finance, human
resource management, research, technology, information technology and corporate and legal
affairs.

Unilever globally and HUL nationally, operate in the highly competitive FMCG products are finicky:

its difficult to create customers and much more difficult to retain them.

Price is often the central concern in a consumer purchase decision requiring producers to be on

continual guard against cost increases.

Sales and distribution are critical functions organizationally. HUL operates in such a milieu.
It has strong competitors such as the multinationals Proctor & Gamble, Nivea or LOreal and

formidable local companies such as, Amul, Nirma or the Tata FMCG companies to contend with.

Rivals have copied HULs strategies and tactics, especially in the area of marketing and

distribution.

 Its innovations such as new style packaging or distribution through women entrepreneurs are much

valued but also copied relentlessly, hurting its competitive advantage.

HUL is identified closely with India. There is a ring of truth to its vision statement: to earn the love and

respect of India by making a real differenc

e to every Indian. There is an element of nostalgia associated with brands like Lifebuoy (introduced in

1895) and Dalda (1937) for senior citizens in India.

HUL has attempted to align its strategies in the past to the special needs of the Indian Business

environment. Be it marketing or human resource management, HUL has experimented with new ideas
suited to the local context.
For instance, HUL is known for its capabilities in rural marketing, effective distribution systems and

human resource development. But this focus on India seems to be changing. This might indicate a
change in the strategic posture as well as a recognition that Indian markets have matured to the extent
that they can be dealt with by the global strategies of Unilever. At the corporate level, it could also be
an attempt to leverage global scale while retaining local responsiveness to some extent.
Unilever has formulated a new global realignment under which it will develop brands and streamline

product offerings across the world and the subsidiaries will sell the products.
Other subtle indications of the shift of decision-making authority could be the appointment of a British

CEO after nearly forty years during which there were Indian CEOs, the changed focus on a limited
number of international brands rather than a large range of local brands developed over the years and
the name-change from Hindustan Lever to Hindustan Unilever.

The shift in the strategic decision-making power from the subsidiary to the headquarters
could however, prove to be double-edged sword. An example could be of HUL adopting
Unilevers global strategy of focusing on a limited number of products, called the 30 power
brands in 2002. That seemed a perfectly sensible strategic decision aimed at focusing
managerial attention to a limited set of high-potential products. But one consequence of
that was the HULs strong position in the niche soap and detergent markets suffering owing
to neglect and competitors were quick to take advantage of the opportunity.

Then there are the statistics to deal with: HUL has nearly 80 percent of sales and 85 per
cent of net profits from the home and personal care businesses. Globally, Unilever derives
half its revenues from food business. HUL does not have a strong position in the food
business in India though the food processing industry remains quite attractive both in terms
of local consumption as well as export markets.

HULs own strategy of offering low price, competitive products may also suffer at the cost
of Unilevers emphasis on premium priced, high end products sold through modern retail
outlets.

HULs latest financials are not satisfactory. Net profit is down, sales are sluggish, input
costs have been rising and new food products introduced in the market have yet to pick up.
All this while, in one market segment after another, a competitor pushes ahead.

In a company of such a big size and over powering presence, these might still be minor
events or developments in a long history that needs to be taken in stride. But,
pessimistically, they could also be pointers to what may come.

QUESTION 1

State the strategy of Hindustan Unilever in your own

words

 The purpose of HUL was to bring importance to life and to satisfy the daily needs of the

customers in areas of personal and household care.

It also strived to create an awareness among the people related to nutrition and hygiene.
To grab opportunities in untapped rural and food processing market ,HULs corporate

level strategy was to shift the decision making power from subsidiary to its headquarters.

HULs strategy remained focused in creating power brands and creating margins.
One of HULs strategy is direct selling: For the rural areas , HUL started project

streamline in 1997.

HUL followed the strategy of building its distribution channels in transitional manner.

They have restructured their core business in two divisions i.e. food , home and personal
core products.

It focuses mainly for the improvement in the products already existing in the market.
HUL tries to bring a change in their job management structure by taking the step of

reducing managerial job classes and developing deep level expertise.

Apart from that, HUL also have few pioneering strategies. These include building market

and building brands ,launching brands when innovative pipeline is full.

They also believe in having clarified long term strategies and delivering sustainable

performance.

QUESTION 2

What are the different levels of strategy formulated at

HUL?

There are various levels at which strategy is formed at HUL and these include:
COORPORATE LEVEL STRATEGY: Strategic management at HUL is the responsibility of

the board of directors headed by a chairman .There are five idependent and five whole-time
directors.
OPERATIONAL MANAGEMENT STRATEGY: Operational management is an area of

management concerned with overseeing is looked after by management committee which

comprises of vice chairman, CEO and managing director and executive directors of two
business divisions and functional areas.
BUSINESS LEVEL STRATEGY: In HUL there is a divisional committee having the executive

director and heads of functions of sales, commercial and manufacturing looks after the
business level decision-making.
FUNCTIONAL LEVEL STRATEGY: Its has the responsibility of functional head. It has two

type of structures
o Decentralised and centralised structures

Decentralized structure: Unilever formulated a new global realignment under which it will develop brands and
stream line product offerings across the world and the subsidiaries will sell the product. There focus changed to
limited number of international brands rather than a large range of local brand. For instance under Functionallevel management marketing manager has team of managers looking after individual brand.

o Centralized structure

It comprises finance, human resource management, research, technology and corporate and legal affairs.