Unilever

founded: 1930

Contact Information:

headquarters: lever house, 390 park avenue
new york, new york 10022-4698 phone: (212)888-1260 fax: (212)906-4666 email: [email protected] url: http://www.unilever.com

OVERVIEW

Unilever is one of the world leaders in packaged consumer goods. Its many products include personal hygiene products, frozen foods, margarine, tea, and washing powders. According to the company, 150 million people choose their brands every day to "feed their families and clean their homes." Despite being one of the most successful corporations, and having a global presence, Unilever is a company whose brand names are more well-known than that of their producer. Unilever manufactures and sells products like Slim-Fast, Dove, Ben & Jerry's, Q-Tips, Wisk and Lipton.

When Unilever purchased Bestfoods, famous for the Hellmann's and Skippy brand names, it became one of the world's top three food companies, behind Nestlé and Kraft. It is also the world's second largest packaged consumer goods company, behind Procter & Gamble. Today, Unilever is based in two global divisions: Unilever Bestfoods and Home and Personal Care. Both divisions have an executive board, responsible for divisional strategy and global implementation. Truly a multinational corporation, Unilever sells its products in over 150 countries.

COMPANY FINANCES

At the end of fiscal year 2000, Unilever reported sales of $44,813,000,000, which represented sales growth of 2.7 percent.

ANALYSTS' OPINIONS

At the turn of the century, Unilever was ranked as the top FMCG company in the Dow Jones Sustainability Index 2000. At the same time, investors were concerned about Unilever's performance when the company bought Bestfoods in 2000. In fact, the integration caused Credit Suisse First Boston to downgrade Unilever from a "hold" to a "sell" rating. Unilever, however, expressed optimism, pointing out that its sales rose 35 percent by June 2001. It estimated that the acquisition would produce an annual savings of $32 million. Further, Unilever said it expected to realize low double-digit growth in earnings per share for the full year of 2002. Analysts on Wall Street were expecting Unilever to earn $3.09 per share in that same period.

HISTORY

Unilever's roots go back to the nineteenth century, when Lever Brothers, a British soapmaking company, was founded in 1885 by William Hesketh Lever. In 1917, the company diversified into food products, including fish, ice cream and canned goods. In 1930 that company merged with Margarine Unie, a Dutch Margarine company, to form Unilever. The move seemed a logical one, as both companies competed for the same raw materials and consumer market. During the 1920s, Margarine Unie had grown through mergers with other margarine companies. Between them, Lever and Maragarine Unie now had operations in 40 countries.

Throughout the next three decades, Unilever improved its technology, and its business grew and diversified and it expanded its reach into Latin America. It also tried out different business areas. During World War II, the company helped make tank periscopes and soldiers' food rations. Unilever entered the synthetic detergent market in 1954, when it introduced Omo, a blue detergent powder. From there, the company developed brands like Persil and Skip, and it has vied with Proctor & Gamble for top positions in the market.

Throughout the 1950s, Unilever entered into chemicals, packaging, and market research and advertising. At the beginning of the Lever-Unie merger, soap products accounted for 90 percent of Unilever's profits, but as the company moved into other areas that figure decreased. By 1980, soap products only contributed to 40 percent of its profits.

In the latter half of the twentieth century, the company began streamlining its operations. It rid itself of its packaging companies, its chemicals business, and some of its agricultural enterprises, and it concentrated on personal hygiene and food products. In the 1980s, it scored several important acquisitions including the Brooke Bond tea company, Chesebrough-Pond's Inc., and the Faberge/Elizabeth Arden brand lines. In buying Brooke Bond, it strengthened its position in the tea market. When it bought Chesebrough-Pond's, Unilever became a leader in the world's skin care market.

In the 1990s, Unilever sold much of its remaining agribusiness interests and it began to focus on what it considered its core products and activities. In 1999, Unilever further streamlined its organization, as it announced that it would focus on fewer and stronger brand names. This, it believed, would spark faster growth. At one point, Unilever had 1,600 brands. The figure is now down to about 400.

FAST FACTS: About Unilever

Ownership: Unilever is a joint venture of Unilever NV (The Netherlands) and Unilever PLC (UK), the parent companies. The two companies have operated as one since 1930. They trade separately but have one board of directors. Unilever's corporate centers are London and Rotterdam. In the United States, it is traded on the New York Stock Exchange.

Ticker Symbol: UN

Officers: Niall Fitzgerald, Chmn., Unilever PLC, VChmn., Unilever NV, 56; Antony Burgmans, Chmn., Unilever, VChmn., Unilever PLC, 54; Clive Butler, Corporate Development Dir., 54; Rudy Markham, Financial Dir., 54

Employees: 295,000

Principal Subsidiary Companies: Unilever, a multinational organization, operates over 300 companies in 90 different countries. Its United States operations consolidated into two main companies, specializing in foods and home and personal care. Unilever has 104 offices and manufacturing sites in 27 states and Puerto Rico.

Chief Competitors: Unilever's main competition comes from the consumer non-cyclical sector of the food processing industry. Major competitors include ConAgra Foods, Inc., Kraft Foods, Nestle, Proctor & Gamble, Sara Lee Corp., and Tyson Foods, Inc.

In 2000, Unilever bought Slim-Fast, which became one of its top sellers. That same year, Unilever implemented corporate initiatives to further spark growth, including organizational restructuring and the splitting of the company into two global units (food and home products, and personal care products). As part of this strategy, it also started selling the subsidiary businesses that weren't turning enough profit.

STRATEGY

Unilever's declared strategy is to focus on research and development-which it invests billions of dollars a year into-and marketing of brands most popular with consumers. Despite the streamlining the organization has experienced in recent years, it intends to continue developing new brands in anticipation of future consumer needs. At the same time, it seeks to foster growth by focusing on key brands and simplifying its business systems. It hoped to accomplish these aims when it consolidated its best-selling brands into two global divisions: Foods, and Home and Personal Care. So far, the company has been pleased with the results.

As part of its strategy, Unilever institutionalized a corporate structure designed to be effective. Specifically, the purpose of the structure is to clarify roles, responsibilities, and decision making. One of its critical elements is the executive committee, which is responsible for agreeing company priorities and allocating resources; setting overall corporate targets; agreeing and monitoring business group strategies and plans; identifying and exploiting opportunities created by Unilever's scale and scope; managing external relations at the corporate level; and developing future leaders. The committee is led by the chairmen of Unilever PLC and Unilever N.V.

The structure also includes regional presidents, advisory directors, and senior corporate officers. Regional presidents are responsible for delivering business results in their respective regions. Advisory directors are the principal external presence in Unilever's government. One of their key roles is assuring that government provisions are adequate and reflect best practices. They attend quarterly meetings, committee meetings, conferences of the directors and the Executive Committee, as well as meetings with the Chairmen. Senior corporate officers see to it that board meetings and board committee meetings are supplied with the information they need.

Underlying the corporate structure is a strict code of business principles. Main principles include a high standard of conduct, avoidance of conflicts of interest, product assurance, and reliable financial reporting, among others.

INFLUENCES

To a large extent, the growth and success that Unilever has achieved in result years results from recognition of its diversity as well as a faithfulness to its own mission statement. The company's stated purpose is to meet "the everyday needs of people everywhere," which refers to its expansive global reach. In keeping with its mission statement, Unilever regularly adapts it line of products as to target different cultures in different parts of the world. The organization's radical restructuring in the last years of the 20th century was part of this plan. One of the aims of the restructuring was to decentralize responsibility and move it to specific international regions and product areas.

CURRENT TRENDS

The most significant part of Unilever's reorganization is the strategic plan it calls "The Path to Growth." Essentially, this involves a significant streamlining of its product portfolio. As it headed into the twenty-first century, the company felt it necessary to reduce its brands from 1,600 to 400. When it made the decision, in September 1999, the company reasoned that focusing on fewer and stronger brands would promote faster growth. The stated goal of the strategy was to accelerate top line growth and step up the rate of margin improvement in five years.

CHRONOLOGY: Key Dates for Unilever

1885:

Lever Brothers is founded by William Hesketh Lever

1917:

Lever Brothers diversifies its product line to include food items

1930:

Lever merges with Margarine Unie to form Unilever

1954:

Unilever entered the synthetic detergent market

1999:

Unilever begins a radical streamlining of its organization.

2000:

Unilever purchases Slim-Fast, which becomes one of the company's top sellers; Unilever sells 27 business as part of its organizational restructuring; Unilever purchases Bestfoods

"The Path to Growth" involved a shake-up at the top level of management, splitting the company into two global units, and selling off any subsidiary businesses making less than average profits. The concentration on core brands resulted in the selling of 27 businesses during 2000. At the same time, Unilever acquired several well-known companies, including Bestfoods, Ben & Jerry's, and Slim-Fast.The restructuring resulted in specific changes in its divisions. Unilever's Foods division was renamed Unilever Bestfoods. Its categories now included dressings, beverages, spreads and cooking, health and wellness, frozen foods, and ice cream. Home and Personal Care division categories now included deodorants, hair care, household care, laundry, skin care and cleansing, oral care and prestige products.

At the start of the new century, Unilever also decided to venture into cyberspace-that is, it deemed e-commerce a key component of its growth strategy. As part of this, Unilever formed alliances with companies like Compaq, IBM, and Microsoft. Also, in February 2000, Unilever and iVillage formed a new Internet company.

PRODUCTS

Unilever's products include a large number of well-known name brands listed under several categories. Its cosmetics include Rimmel, Cutex, Elizabeth Arden, and Sensiq. Beauty products include Ponds, Vaseline Intensive Care, and Close-up. Shampoos include All Clear, Cream Silk, Dimension, Pears, Sun-silk, and Salon Selectives. Soaps include Dove, Knights Castile, Lifebouy, Lux, Pears, and Sunsight. Toothpastes include Shield, Signal, and Mentadent. Some it its aftershaves include Lynx, Axe, Rexona, Degree, and Suave. Washing powders and laundry liquids include Persil, Radion, Surf, and Wisk. Its oils, fats, and margarines include Cookeen, Dante, Delight, and Outline, among others. Teas and coffees include Lipton, Lyons, and Red Mountain. Undoubtedly, Unilever's best known products are its food products and brand names like Slim-Fast, Ragu, Skippy, Good Humor, Breyers, and Ben & Jerry's.

GLOBAL PRESENCE

With 300 locations in 90 countries, Unilever is truly part of the global community. Its international business unit, DiverseyLever, has locations in Asia, Europe, Latin America and North America. The company's home and personal care regions include Africa, Middle East & Turkey Home. Its Unilever Bestfoods regions include Africa, Asia, Europe, the Middle East, and North America.

CORPORATE CITIZENSHIP

Unilever proudly points out that it is internationally recognized as one of the world's most environmentally responsible businesses. It has established a corporate policy that commits the company to meeting the needs of customers and consumers in an environmentally sound and sustainable manner. The strategy focuses on achieving its goals through eco-efficiency, eco-innovation and three sustainability initiatives on agriculture, fish and water. Around the world, it has set up various environmental initiatives to ensure minimum impact on local environments. By 2001, 73 of its factories reached the international environmental management system standard ISO 14001.

Unilever recognizes its social responsibility and, as such, it has established the Social Review 2000, which maps out the major areas of the company's social interaction including wealth creation, employment values and practices, consumer commitment, and its responsibilities towards the environment and the communities in which its operate.

As a member of the global community, Unilever is concerned with the health, education, and welfare of the populations of local communities. Each of its operating companies are involved in projects and programs that include dental services for remote communities, funding for hospitals, care for disabled people, and teaching people young and old the importance of personal hygiene. Unilever is also involved in projects and initiatives to raise standards of education in the local communities.

FRANKENBEANS

Not all of Unilever's products have been resounding successes. One notorious failure was its Beanfeast line, marketed in the late 1990s. With Beanfeast, Unilever became the first multinational company to use genetically modified (GM) products. Beanfeast contained soy beans manufactured from the genetic material of a virus. When this was learned, the company was inundated with thousands of angry calls from consumers in the United Kingdom. By 1999 Unilever decided to withdraw Beanfeast and get out of GM foods.

EMPLOYMENT

Unilever believes that success requires the highest standards of corporate behavior toward employees, consumers and communities. To that end, it has created a work environment that embraces diversity and doesn't compromise integrity or professional excellence. As a result, the company consistently ranks among the world's top employers. Corporate leaders are encouraged to foster the pursuit of excellence, while employees are challenged to pursue goals, develop professionally, and maintain a balance between their professional and personal lives.

When recruiting employees, Unilever seeks individuals who can demonstrate leadership, team commitment, integrity, innovation, and drive; and who have a passion for achievement. It seeks experienced professionals for senior positions, and it offers a graduate development program for recent graduates or students nearing graduation. The aim of the program is to develop future business leaders within the organization.

Unilever offers career management processes that provide professional development and recognition. It also provides learning opportunities and has installed feedback systems that ensures individuals are on target with their performance, development and career plans.

SOURCES OF INFORMATION

Bibliography

bbc news. "unilever: a company history." bbci, 22 february 2000. available at http://news.bbc.co.uk.

parker, kay. "old-line goes online." business 2.0, june 2000. available at http://www.business2.com.

semilof, margie. "unilever tackes e-logistics." internet week, 30 october 2001. available at http://www.internetweek.com.

"nestle and unilever go to war" management first, 14 may 2001. available at http://www.managementfirst.com.

For an annual report:

on the internet at: http://www.unilever.com/investorcentre/financialreports

For additional industry research:

investigate companies by their standard industrial classification system codes, also known as sics. unilever's primary sics are:

2038 frozen specialties, not elsewhere classified

2099 food preparations, not elsewhere classified

2841 soap & detergents

2842 specialty cleaning polishing

also investigate companies by their north american industry classification system codes, also known as naics codes. unilever's primary naics codes are:

311412 frozen specialty food manufacturing

325611 soap and other detergent manufacturing

325612 polish and other sanitation good manufacturing

325620 toilet preparation manufacturing