Question 3 SUBJECT CODE: MAN 30056

KEELE ID: 10019525

What is culture? The fundamental meaning of culture is what human perceive, think, value, feel and it is experienced through participation in a cultural system. Culture can be realized within the structure of human interactions and through a close relationship with other human. On the other hand, what globalization has changed the culture of human kind? From the perspective of globalization, culture are seen as a complex process as in the knowledge of human kind as an inseparable species common to earth and the cultivation in social action on a global scale (Dicken, 2011). Different peoples from a different part of the world are different from one another. For instance, theres what Indiana looks like, theres what American looks like and theres what Chinese looks like (Cowen, 2003). Today, if the world has globalizes enough, there will not have so much of culture shock than it is today. As refer to the globalization perspective, all individuals are on a collective level where it is exposed to challenges such as to understand the humans needs in reality and cooperate to develop products or services to achieve their satisfaction on a global scale. In reality, Human have cultures and it is changing accoring to their surrounding and one must be able to invent or develop something new out of its own creativity but not just to copy blindly what others have done (Carrithers, 1992). It is understable that culture is in the continuous state of changes and development.

Culture changes through globalization can be seen in Unilever. It is one of the most established Multi-national company in the world. Unilever was founded in the year 1930 when a Dutch margarine company named Margarine Unie merged with a British soap and food company named Lever Brothers (Mostert, 2007). Today Unilever has more than 300 operating units across 88 countries and it has more than one thousand well-known brands which has been marketed in over 150 countries around the globe. Unilever employs 255,000 employees and it produces leading brands such as Dove, Lipton, Magnum, Rexona and Knorr (Reitsma, 2001). Besides, Unilever also specilizes in professional cleaning business, DiverseyLever, which provides hygience products and cleaning services for the industrial and institutional markets. In the year of 1999, Unilever generated revenue $43.7 billion and a net income of $4.6 billion. Majority of Unilevers sales came from Europe, followed by

North America and the rest from other parts of the world. Unilever invested approximately $1 billion in research and development to ensure quality improvement and assurance and to market their brands in the markets (Reitsma, 2001). The companys vision is to touch the lives of people every day (Unilever UK & Ireland, 2012). They belief in the power of their bands to provide better quality for peoples lives and as their responsibilities increases, their business grows as well. In Unilever, they emphasized on strategic focus and the purpose is the drive to meet everyones needs in daily life and to serve consumers creatively and competitively. In order to achieve this, they have different brands and products to meet the local needs in different countries. In Unilever, research and development is the heart of everything that they do in order to improve brands and innovation (Unilever Global, 2012). They spent billion of dollars in 2010 to discover the most advanced technologies for better and faster innovations and able to catch up and respond to competitor activity, or an opportunity to gain market share. Research and development have to be reconstruct in order to focus on both global and local concerns (Krogh, Nonaka, and Aben, 2001). There are differeces between global research and local research. Global research focuses on all the problems or issues that face by all consumers in the market and this includes activities such inventing a perfect formulation to develop a new product that is easy to store and redesign packaging that suits the product format (Unilever Global, 2012). As for local research has three different aspects. First, they focus on the basic needs of consumers who are at the bottom of the pyramid in a particular country. For instance, Unilever has done research in India and China on the water usage. Their priority in usage of water is for drinking, washing, cooking, cleaning and grooming (Prahalad, 2000). Secondly, local research also search for solutions from other markets and other ways to adapt to the local needs. For example, Unilever has done research and prove that most of their food and beverage products are added with a daily dosage of vitamins in it. Trusted Unilever brand like Astra in Sri Lanka have been chosen by the local consumer because their margarine is fortified with Vitamin A and it is essential for the functioning of immune system and good for eyesight (Unilever, 2012). Lastly, local research must observe and analyze the local practices to identify the potential applications in developing new products. For example, through their obervations in India, Indian women will usually oil their hair before washing it and Western

shampoos that do not remove the oil will not be sellable in the market (Anon., 2008). Therefore, Unilever has reformulated its shampoo to meet the local needs in India and remove all the conditioner from the shelf.

Unilever would change their business environment to increased their profit. They simplify the working procedures to minimize the resources of employees (Unileve, 2009). The transformation process focused on three major areas. Firstly, Unilever restructure the organization to absorb and reduce the costs that the consumers does not want to pay for. Secondly, they developed and improve employee skills and capabilities and lastly, their culture and behaviours changes according to different countries to align with a more global way of operating business. As their business modal expand and search for higher growth, Unilever will have to enter and compete in the emerging markets such as China, Indonesia, Brazil and India. Emerging markets has helped Unilever to deal with the changing consumption forms in the developed world (Dalal and Nandy, 2012). MNCs need to consider about rethinking packaging before they enter to the emerging markets (Prahalad and Lieberthal, 1998). There are a few factors that embraced in this issue such as the weather, buying power, road conditions, environment, storage and the distribution infrastructure in emerging markets places. In countries such as India, there are many products from Unilever are sold in sachets as an affordable alternative for the consumer instead of going for larger portions (Unilever, 2012). For instance, the buying power of consumers in tier two and three are below average and they can only afford to buy what they need. Therefore they have particular packaging preferences that are different if compare to the Western people. For example, the Europeans who bought the big portions of products or the packets have cut spending and Unilever might will lost out if they did not serve single-serve packets, or sachets size of product. It is extremely common in the countries such as India (Dalal and Nandy, 2012). Besides , daily used products such as shampoos, detergents and cooking oil are sold in sachets in India.

SUBJECT CODE: MAN 30056

KEELE ID: 10019525

Rethinking of capital efficiency is one of the factor that needed to be consider by Unilever before entering to the emerging market (Prahalad and Lieberthal, 1998).

The common problems that happened in emerging markets is that they have insufficient resources such as inefficient banking facilities, poor distribution systems and incompetent logistic services to transport and deliver goods (Prahalad and Lieberthal, 1998). In order to overcome these circumstances in emerging markets, it will require more capital compare to solve these problem. Hindustan Lever, a

subsidiary company of Unilever realized that a low-cost detergent brand from India has became the largest brand of detergent maker in the world among tier-two and tierthree markets. Hindustan Lever realized that by having marginal changes would not help much to outsmart the competitor so they take every aspects into consideration such as distribution, marketing, production and capital efficiency (Prahalad and Lieberthal, 1998). Hindustan Lever is the most established market leader specialized in soaps and detergents and other daily personal care products such as shampoo and skin care (Hindustan Unilever, 2012). Today, Hindustan Lever operates their business with zero working capital. Due to the poor banking facilities in India, the company keeps a number of signed cheques from its dealers and when they received an order, they simply write in the correct amount in the cheque for that particular order. This practice is common in India but it is not practice by the home countries of Unilever Netherlands and United Kingdom.

One of the factor that bring success to Hindustan Lever is the efficient distribution system. Their innovative distribution mechanism has reach million of consumers in both urban and rural areas in India where there is no retail distribution network, limited coverage of advertising, limited choices of transportation and poor road conditions. Unilever as a international MNC, they establish their own distribution system in India to increase the efficiency of work and to save up the costs of resources or costs that incurred if they face any obstacles (Jones, 2005). They are aggressive to extend more deeply in India and moving from urban areas to small towns in rural areas in order to maintain their competitive advantage. The have a operation based in India spread across 70 different locations and they have around 100 factories and 2000 suppliers working closely with 7000 distributor and agents. Hindustan Lever has reached more than 3 million retailers by using transportation such as trucks, trains, camels, carts and many more. Hindustan Lever are very dedicated in operating their businesses, they have received several awards and their factories including export

oriented units are ISO 9002 certified. Some of their depeartments such as Khamgoan soap paint and Sumerpur detergent bar unit are rated as the best group in Unilever. Today, Hindustan Lever have employed more than 36,000 employees and in order to improve the distribution system in the organization, they have converted Rajpura and Gajraula into different viable operations to increase the standard of the organization.

Product redesign is needed in emerging markets even if the consumers wanted to have the same products as other countries (Prahalad and Lieberthal, 1998). Product redesign will deliver differences in use and distribution. Decision on product designs are essential for Unilever to exist in the global market. It is consider as one of the major factor in determining the success or failure of a MNC because it is proven that a good product design can eventually attract the target market and increases sales. For example in soap industry in Unilever, they have products like Lux, Roxona and Lifebuoy (Jones, 2007). They have different startegies to ensure its product designs are accepted in various market and it is analyzed based on the purchasing power and the appropriate product supplied in the markets. For instance, Unilevers fabric softener are sold in ten countries with seven different names with different product design to suits the local consumers. Since there are differences in product designs and Unilever prefer to localized strategies so that it is more systematic in its operations and focus on bringing up the brand image and reputation that is uniform from one country to another. Furthermore, they embraces a decentralized control that product design of a country is handled by country managers. It is the responsibilty of a country manager to ensure that the key elements are maintain in the original product and eliminate those that are not needed. In the Corporate Purpose Statement, they reviewed that Unilever is aspires to be, as well as expresses its value and beliefs and they also mentioned that Unilevers focus on local culture. In this statement, it is describing that in this MNC, the local operating companies are able to manage and draw on the resources of a global corporation and apply global scale in local relevance. In Unilever, they combines its marketing strategy and social projects in all countries (Jones, 2005). For example, they organizaed an educational campaign to create awareness for Unilever brands such as Dove and Close-Up. They give out free samples in sachets and educate the local on choosing the

right shampoo in their daily life. Additionally, Unilever invloved in oral health care projects organized by the World Dental Federation in both developed and emerging markets such as Austria and India. They have developed toothbrush under Unilever brand called Pepsodent Triple Clean at a lower price so that is affordable in India market which selling at a price approximately to Euro 0.20 and it is widely distribute across the emerging market like India (Jones, 2007). They also offer smaller packaging in India so that people with low or irregular income can afford to purchase these products. In India for example, Unilever sell one sachet of Sunsilk Shampoo at one-rupee per sachet and it is less than Euro 0.10. There are always pros and cons in this approach, the pro is one way to sell their products in small pack sizes but it will bring some disadvantages to social, eonomic and environmental issues in the global context (Nachum, Jones and Dunning, 2001). For instance, in order to produce products in small-pack sizes to bmeet the local demand but it will also contributes to litter in markets whereby they do not have the facilities for reuse and recycle. Therefore, Unilever has been working hard to find solutions to solve this problem without affecting the ecosystem of the nature.

Therefore, as a MNC that wants to be successful in the host countries or emerging markets, the organization have to reconstruct and reconfigure their resources, replan their budget and cost structures, determine the problems face by power distance, research and redesign their product development processes and so forth. In a nutshell, Unilever have achieved global competitiveness simply because they are ever-changing in their business models and adpated to the local needs especially in the emerging market.

References:

Anonymous, 2008. Unilever and Emerging Markets. The Economist, [Online] 31 January. Available at: http://www.economist.com/node/10601552 [Accessed on 3 December 2012]

Carrithers, M., 1992. Why Humans have Culture. Oxford: Oxford University Press.

Cowen, T., 2009. Globalization and Culture. New York: New York Times. Dalal, M. and Nandy. M., 2012. Emerging markets to generate 75% of Unilever sales by 2020. Live Mint & The Wall Street Journal, [Online] 22 Nov. Available at: http://www.livemint.com/Companies/p383EVjk4kE1UN3GPmSOXJ/Emergingmarkets-to-generate-75-of-Unilever-sales-by-2020.html [Accessed 2 December 2012]

Dicken, Peter., 2011. Global Shift. Sixth ed. New York: The Guilford Press.

Hindustan Unilever, 2012. India: Brands in action. Available at: http://www.hul.co.in/brands-in-action/index.aspx [Accessed on 5 December 2012]

Jones, G., 2005. Renewing Unilever: Transformation and Trdition. Oxford: Oxford University Press.

Jones, G., 2007. Learning to Live with Governments: Unilever in India and Turkey, 1950-1980. Enterprises et histoire 49. Krogh, G., Nonaka, I. and Aben, M., 2001. Making the Most of Your Companys Knowledge: A Strategic Framework. Long Range Planning, 34, pp. 421-439.

Mostert, N. M., 2007. Diversity of the Mind as the Key to Successful Creativity at Unilever. Blackwell Publishing, 16(1), pp. 93-100. Nachum, L., Jones, G., Dunning, J. H., 2001. The International Competitiveness of the UK and its Multinational Enterprises. Structural Change and Economic Dynamics, 12(3), pp. 277-294.

Prahalad, C. and Lieberthal, K., 2003. The End of Corporate Imperialism. Harvard Business Review, 81(8), pp. 109-117.

Prahalad, C. K., 2000. Raising the Bottom of the Pyramid: Strategies for Sustainable Growth. University of Michigan Business School.

Reitsma, S.G., 2001. Management Development in Unilever. Journal of Management Development, 20(2), pp.131-144.

Unilever UK & Ireland, 2012. Sustainable Living. [Online] Available at: http://www.unilever.co.uk/sustainable-living/ourapproach/sustainableliving-videos/?name=Footage28286155Feature&item=6 [Accessed 2 December 2012]

Unilever Global, 2012. Research and Development. [Online] Available at: http://www.unilever.com/careers/careerchoices/researchand development/index.aspx [Accessed 4 December 2012]

Unilever Global, 2012. Innovation. [Online] Available at: http://www.unilever.com/innovation/ [Accessed 2 December 2012]

Unilever, 2012. Astra. Available at: http://www.unilever.com.lk/brands/foodbrands/astra.aspx [Accessed 3 December 2012]

Unilever, 2009. Labour Rights and Working Practices: A Summary of Stakeholder Concerns and Our Response. [Online] Available at: http://www.unilever.com/images/sd_A_Summary_of_Stakeholder_Concerns_and_Ou r_Response310709_tcm13-177580.pdf [Accessed 7 December 2012]