Unilever Case Questions
• How would you evaluate Paul Polman’s 2010 decision to implement a
new strategy based on Unilever Sustainable Living Plan? What
benefits did it offer? What risks did it present?
• How effective has the implementation of the new strategy been to
date? What has it done most effectively? What problems or concerns
do you have with the implementation?
• What actions should the company take now? Which of the three
options identified at the end of the case would you recommend
management take?
• How would you go about implementing your recommendations?
McKinsey 7S Framework – Strategy Implementation
Shared Values - Corporate Philosophy
• ‘Doing well by doing good’
philosophy
• Commitment to sustainability,
ethical business, and responsible
sourcing
• Corporate purpose: Aligning
brand goals with social impact
• Challenges: Resistance from
traditional managers
Strategy
• Unilever Sustainable Living Plan
(USLP) - Sustainability-driven
growth
• Consumer-centric strategy rather
than shareholder-first
• Commitment to doubling
revenues while reducing
environmental footprint - 80% of
the growth for 80 billion dollar
business would come from
developing countries
Unilever Sustainable Living Plan
• Purpose
• To halve environmental footprint
• To positively affect the health and wellbeing
• To enhance livelihood of millions
• Company, value chain and entire product cycle, part of compass vision
• Alignment and fit of the USLP Strategy
• Fit with unilever’s corporate values: doing well by doing good
• Alignment with consumer trends and health, environment and sustainability
• Ability to energize people
• Opportunity to provide an integrated theme across all company’s businesses,
functions and geographies
Structure
• Centralized leadership
(Unilever Leadership
Executive - ULE)
• Balance between Category
Teams (global focus) &
Country Teams (local focus)
• Decentralized decision-
making for operational
flexibility
Organizational Structure
• Three basic structure types
• Simple structure
• Functional structure
• Multidivisional structure (M-form)
• Strategy and structure have a reciprocal relationship
• Structure flows from or follows the selection
of the firm’s strategy, but…
• once in place, structure can influence current strategic actions as well as
choices about future strategies.
Functional (U-form) Design
Functional (U-form) Design
Matrix (M-form)
Diversification strategy requires
firm to change from functional
structure to a multidivisional
structure.
Systems
• Sustainability tracking:
Greenhouse gas emissions,
water usage, waste reduction
• Supplier & retailer engagement
systems (e.g., Partner to Win
program)
• Challenges: Difficulty in
measuring long-term
sustainability ROI
Establishing Balanced
• Controls
Organizational Controls
• Formal, information-based procedures used by managers to maintain or alter
patterns in organizational activities.
• Controls help strategic leaders to:
• build credibility
• demonstrate the value of strategies to the firm’s stakeholders
• promote and support strategic change
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Organizational Controls
• Purposes of organizational controls
• Guide the use of strategy
• Indicate how to compare actual results
with expected results
• Suggest corrective actions to take when
the difference between actual and
expected results is unacceptable
• Two types of organizational controls
• Strategic controls
• Financial controls
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Organizational Controls
Strategic Organizational Financial
Controls Controls Controls
• Strategic Controls: Subjective criteria
• Concerned with examining the fit between:
• what the firm might do (opportunities in its
external environment).
• what the firm can do (competitive advantages).
• Evaluate the degree to which the firm focuses
on the requirements to implement its strategy
11–18
Strategic Control
• Premise Control: A strategy relies on a premise or
assumption about the internal and external factors of the
business. Its aim is to identify the primary assumptions, monitor
changes, and determine the effect of these changes on the
company’s strategy and implementation.
• Implementation Control: It ascertains whether the plans and
programs framed for the implementation of the strategy are
leading the organization towards the accomplishment of
predetermined objectives or not. In addition, if it is found that
the resources allocated are not reaping the benefits which are
expected of them, then the resources allocated are withheld. In
conclusion, it causes strategic rethinking.
• Strategic Surveillance: Strategic Surveillance is
about generalized and comprehensive control that tends to
observe an array of activities and events, inside and outside the
firm, which is expected to intimidate the progress of the firm’s
strategy.
• Special Alert Control: Special alert control is based on a trigger
mechanism to facilitate instant response and reassessment of
the strategy while considering abrupt events. To exercise such
control, contingency strategies can be formulated and
responsibility can be assigned to the crisis management
department to handle unanticipated events.
Organizational Controls
Strategic Organizational Financial
Controls Controls Controls
• Financial Controls: Objective criteria
• Accounting-based measures
• Return on investment
• Return on assets
• Market-based measures
• Economic Value Added (EVA)
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use as permitted in a license distributed with a certain product 11–20
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Matching Control to Strategy
• Relative use of controls varies by type of strategy.
• Large diversified firms using a cost leadership strategy emphasize financial
controls.
• Firms and business units using a differentiation strategy emphasize strategic
controls.
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Balanced Scorecard
• A framework used to verify that the firm has established
both strategic and financial controls to assess its
performance.
• Prevents overemphasis of financial controls at the
expense of strategic controls
• Four perspectives of the balanced scorecard
• Financial
• Internal business processes
• Learning and growth
• Customer
12–22
Balanced Score Card
Style - Leadership & Corporate Culture
• Bold leadership by Paul
Polman
• No quarterly earnings
guidance – long-term
strategy focus
• Consumer-first approach
over short-term profits
Paul Polman
• First external CEO of Unilever
• Took charge in 2009
• Unilever’s stock price had declined 35%
• Massive global financial crisis
• His objective was to double the size the Unilever’s business
• 80% of the growth for 80 billion dollar business would come from
developing countries
• [Link]
• [Link]
Strategic Leadership and Style
• Strategic leadership requires the ability to:
• anticipate and envision.
• maintain flexibility.
• empower others to create strategic change through selecting and
implementing a firm’s strategies as necessary.
• Strategic leadership is:
• multi-functional work involving working through others.
• consideration of the entire enterprise rather than just a sub-unit.
• a managerial frame of reference.
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Top Management Teams
• Composed of the key managers who are responsible for selecting and
implementing the firm’s strategies.
• A heterogeneous top management team:
• has varied expertise and knowledge.
• can draw on multiple perspectives.
• will evaluate alternative strategies.
• builds consensus.
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reserved. May not be copied, scanned, or
duplicated, in whole or in part, except for
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Managerial Discretion
• Responsibility was not given to the CSR office – Keith Weed appointed
as CMO as well as head of communications and sustainability
Staff - Talent & Workforce
• 1,65,000 employees
• Sustainability training for
employees
• High employee engagement and
leadership programs –75%
employee engagement score
• inspiring employees
• Diversity & inclusion initiatives,
human rights advocacy
McKinsey 7S Framework
It is a management framework that describes 7 factors to organize a
company in a holistic and effective way
Together these factors determine the way in which an organization
operates
Managers should take into account all 7 of these factors, to be sure
of successful implementation of a strategy
Large or small, the strategies are all interdependent, so if you fail to
pay proper attention to one of them, this may effect all others as well
Skills - Expertise
• Sustainability-Driven Supply Chain &
Innovation: Expertise in sustainable sourcing,
eco-friendly product innovation (e.g., low-
water detergents, dry shampoos), and
supply chain efficiency (e.g., 100%
sustainable palm oil).
• Data-Driven Consumer Insights & Behavioral
Marketing: Leveraged consumer behavior
analytics to align products with sustainability
(e.g., Lifebuoy’s handwashing campaign,
Persil’s ‘Dirt is Good’ campaign).
• Cross-Functional Leadership & Stakeholder
Engagement: Integrated sustainability across
marketing, R&D, finance, and supply chain,
while collaborating with governments, NGOs
(Oxfam, UN), and retailers (Tesco, Walmart)
to scale impact.
Skill - Human Capital and Social Capital
• Human capital
• The knowledge and skills of the firm’s entire workforce are a capital resource
that requires investment in training and development.
• Social capital
• Relationships inside and outside the firm that help it accomplish tasks and
create value for customers and shareholders.
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reserved. May not be copied, scanned, or
duplicated, in whole or in part, except for
use as permitted in a license distributed 12–33
with a certain product or service or
7S Element Cost Leadership Differentiation
Focus on operational efficiency Focus on innovation, branding, and
Strategy and cost minimization customer experience
Centralized structure for Flexible, decentralized structure for
Structure standardization and efficiency creativity and innovation
Strong cost control systems, lean Customer insights, R&D investment,
Systems supply chains, minimal waste advanced marketing analytics
Shared Efficiency and cost-effectiveness as Innovation, quality, and customer-centricity
Values core values as core values
Authoritative, efficiency-driven Visionary, brand-driven leadership with
Style leadership style customer focus
Performance-driven, cost- Highly skilled, creative, and diverse
Staff conscious workforce workforce
Strong process optimization, lean Strong brand management, design thinking,
Skills manufacturing, logistics expertise market research