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A Strategic Management Term Paper on

UNILEVER Philippines













In Partial Fulfillment of the
course requirements in
Strategic Management (STRAMAN)
3rd Term 2013-2014







Submitted to:
Prof. Alfred S. Cabuang






Submitted by:
Tito Freds Friends
Reyes, Andrenel
Tan, James
Ygaa, Jason



I. Executive Summary

This study aims to develop an understanding of a multinational company in the
Philippines specifically, Unilever Philippines. The reason for choosing this company is that this
company has been flourishing in the Philippines for years and its growth is promising. The
development from just producing coconut oils to offering a lot of products used in our daily lives
will make us question what made it grow and what are the strategies that they took so that they
can be recognized as a strong company. They have truly made their business presence very
visible that it can cover a margin of potential markets. The information was collected from
internet sources and also library sources such as euromonitor. All of the frameworks chosen is
provided for in the book. Some parts of it are included as tables in this paper .

1.4 Values, Philosophy and ideology
As a multi-local multinational we aim to play our part in addressing global environmental and
social concerns through local actions and in partnership with local governments and
organisations.

Our corporate purpose states that to succeed requires "the highest standards of corporate behaviour towards
everyone we work with, the communities we touch, and the environment on which we have an impact."

Innovation enables us to meet people's needs and aspirations in ways that engage and appeal.

The Unilever community is shaped and led by its people, who operate creatively within a framework of shared values
and business goals.

-the Unilever Philippines Inc. website

Unilever acts to make a good combination of its organization, innovation, and its people. Their Philosophy is by
thriving for the well-being of others by providing quality products through innovation of its people which will be their
road to their sustainable, profitable growth, creating long-term value for shareholders, people, and business partners.

1.2 Mission Statement
To meet the everyday needs of people all around the world for nutrition,hygiene and personal
care. The company do this with products that help people feel good, look good and get more out
of life.Every day around 160 million people in 150 countries will buy a Unilever brand.
Consequently, the social and environmental impacts which the company have on the world
around us come largely from its brands. They are increasingly embedding sustainability thinking
into the day-to-day activities of the brand management and R&D teams. The company have
done this through a simple tool called Brand Imprint. Brand Imprint forces management to think
carefully about both the resources they use (such as water, packaging, energy and raw
materials) and the social and economic impacts that our brands have in the countries where
they are sold. For example, it encourages managers selling soap to consider the positive effects
which they can have on public health through improved hygiene. For those marketing tea, it
prompts them to think about where they source their ingredients and how they can get value
from communicating this to consumers.
1.3 Vision
The vision of the company is to touch the lives of over 160 million people whether through
feeling great because of shiny hair and brilliant smile, keeping their homes fresh and clean or by
even just enjoying a great cup of tea, satisfying meal or healthy snack. The company believes
that they can give people the confidence that their small actions, together with those of millions
of others who buy the brands every day, can make a big difference.
For example, together we are already saving over 3 million lives by encouraging hand hygiene,
improving the oral health of tens of millions of people by creating a toothbrush that are
affordable even to low income earners, and supporting millions of farmers and their families by
purchasing tea from sustainably approved sources.
Our small actions really do add up to creating a better future every day.
1.3.1 Effective Elements
Graphic-kind of company that Unilever is trying to picture themselves, is the company
that satisfies the everyday normal routine needs of the people.
Directional-Unilever doesn't only want to satisfy the needs of the customers in a short
term basis but most importantly in a long term one since the people's need are constant.
Flexible-The company over all is flexible. They are not only focusing on one industry but
they offer a lot of products to the market. They offer hair care products, hygiene and a lot more.
Feasible-Unilever's vision is feasible especially right now since they are reaching out to
the different parts of the world, the world that needs their products.
Desirable-the directional path makes good sense since its vision is not really to gain
profit but help the people as they gain profit.


1.3.2 Shortcomings

Vague or incomplete-Unilever is a flexible company. Unfortunately, due to its flexibility,
they were unable to really deliver on their target market.
Too Broad-they say that they want to build up confidence to the people who buy their
products however, they did not state how they are going to do it.
Not distinctive-It is truly every company's dream to help the people through their product
but Unilever should think in a different way, in a different perspectie to attract or inspire more
shareholders.




1.5 Goals( long term)
1.5.1 Corporate
To be the consumers preferred choice in the categories where they are present.
To be a team working as friends and sharing the same passion to deliver excellent results.
To be the leading manufacturer of fast moving consumer goods in the Philippines.
To be a key partner in developing communities and caring for the environment

1.5.2 Financial

1.5.3 Social
To improve health and well-being
To reduce environmental impact and source 100% of agricultural raw materials sustainably
To enhance the livelihoods of people across the value chain.

1.6 objectives(short term)
Objectives are the strategic visions which are converted to be specific
performance targets. It also reflects the aspirations of management for the companys
performance in spite of the prevailing economic and competitive conditions of the industry and
the internal capabilities in the company. For these objectives to be well stated, it must contain
quantifiable or measurable attributes and also a deadline for achievement. These objectives
are valuable due to its criterion of tracking the companys performance and progress toward its
vision.

1.6.1 Strategic( corporate) objectives
Strategic Objectives are the performance targets of a company that yields on what the
management wants to accomplish and indicates that the company is able to strengthen its
market standing, competitive vitality, and business perspectives in the future.
To develop innovative products that address different consumer needs at different price
points.
To constantly enhance brands for delivering more intense and rewarding product
experiences.
Development of new products and developing tried and tested brands to meet changing
tastes, lifestyles, and expectations. By having strong roots in local markets, gives response to
consumers at the local level.



1.6.2 Financial objectives
The companys extensive financial objectives are to accomplish on delivering consistent top line
growth and to have an improved profitability.

The company should accomplish an underlying sales growth of 3-5% per annum to have a
positive growth in the market.

To reach an operating profit margin of over 15% will reflect disciplined cost management and an
increased focus on consistent improvement on gross profit margin.

The company also attains an outlook of an ungeared free cash flow that will be driven up by
higher operating profit and improvement in working capital management.

The company obtains to have an improved return on invested capital and an improved capital
and tax efficiency.

1.6.3 Social Objectives
One of the prime concerns of the company is to make a positive impact for the society through
the brands that they produce and sell, through relationships and commercial operations, through
the voluntary contributions intended to the community and through a wider engagement with the
society.

The company commits to make continuous improvements in the management to the
environmental impacts and to work towards the longer-term goal of sustainable business
development through corporate social responsibility.

1.7 Financial Analysis (2010,2011 & 2012)

1.7.1
Profitability Ratios
2010 2011 2012 Expl
anati
on
Gross
Profit
Margi
n
(35,735,971,982-
15,907,224,349)/
35,735,971,982
(38,859,784,486-
20,405,310,623)/
38,859,784,486
(40,676,810,450-
21,156,776,410)/
40,676,810,450

55.49% 47.49% 47.99% Decr
ease
d in
2010
to
2011
but
stabl
e in
2011
-
2012
Opera
ting
Profit
Margi
n
4,716,436,025/35,735,9
71,982
4,368,719,160/38,859,7
84,486
4,668,508,682/40,676,8
10,450

13.2% 11.24% 11.48% Decr
ease
in
2010
-
2011
but
stabl
ed in
2011
-
2012
Net
Profit
Margi
n
3,088,423,629/35,735,9
71,982
2,901,445,258/38,859,7
84,486
3,080,739,178/40,676,8
10,450

8.64% 7.47% 7.57% Decr
ease
in
2010
-
2011
but
stabl
ed in
2011
-
2012
Total
Retur
n on
Asset
s
(3,088,423,629+349,49
8,361)/21,099,327,873
(2,901,445,258+395,56
9,576)/23,025,511,950
(3,080,739,178+418,40
8,542)/23,079,836,097

16.29% 14.32% 15.16% Decr
ease
in
2010
-
2011
but
incre
ased
in
2011
-
2012
Net
Retur
n on
Total
Asset
s
3,088,423,629/21,099,3
27,873
2,901,445,258/23,025,5
11,950
3,080,739,178/23,079,8
36,097

14.64% 12.60% 13.35% Decr
ease
in
2010
-
2011
but
incre
ased
in
2011
-
2012
Retur
n on
stockh
older
s
equity
3,088,423,629/3,821,38
1,081
2,901,445,258/4,534,30
5,789
3,080,739,178/4,603,10
5,337

80.82% 63.99% 66.93% Decr
easin
g
Retu
rn on
Equit
y
Retur
n on
invest
ed
Capita
l
3,088,423,629/(3,821,3
81,081+6,050,124,557)
2,901,445,258/(4,534,3
05,789+6,052,905,138)
3,080,739,178/(4,603,1
05,337+6,475,191,126)

31.29% 27.41% 27.81% Decr
ease
in
2010
-
2011
but
stabl
ed in
2011
-
2012
Earnin
gs per
Share
3,088,423,629/245,926,
150
2,901,445,258/245,926,
150
3,080,739,178/245,926,
150

12.56% 11.80% 12.53% Decr
ease
in
2010
-
2011
but
incre
ased
in
2011
-
2012





Liquidity Ratio
Curre
nt
Ratio
7,724,811,108/11,227,
822,235
9,088,502,631/12,385,
606,905
7,938,995,421/12,001,
539,634

68.80% 73.38% 66.15% Increasi
ng in
2010-
2011
but
decrea
sed in
2011-
2012
Worki 7,724,811,108- 9,088,502,631- 7,938,995,421-
ng
Capita
l
11,227,822,235 12,385,606,905 12,001,539,634
-3,503,011,122 -3,297,104,269 -4,062,544,209 Increasi
ng in
2010-
2011
but
decrea
sed in
2011-
2012

Leverage Ratio
Tota
l
Deb
t-
to-
Ass
ets
Rati
o
17,277,946,792/21,099,3
27,873
18,491,206,161/23,025,5
11,950
18,476,730,760/23,079,8
36,097

0.8189:1 0.8031:1 0.8006:1 Decr
easin
g
curre
nt
debt
Lon
g-
ter
m
Deb
t-
to-
Capi
tal
Rati
o
6,050,124,557/(6,050,12
4,557+3,821,381,081)
6,052,905,138/(6,052,90
5,138+4,534,305,789)
6,475,191,126/(6,475,19
1,126+4,603,105,337)

0.6129:1 0.5717:1 0.5845:1 Decr
ease
d in
2010
-
2011
but
incre
ased
in
2011
-
2012
Deb
t-
to-
Equi
ty
Rati
o
17,277,946,792/3,821,38
1,081
18,491,206,161/4,534,30
5,789
18,476,730,760/4,603,10
5,337

4.52:1 4.08:1 4.01:1 Decr
easin
g
Debt
to
equit
y
Lon
g
Ter
m
Deb
t-
to-
Equi
ty
Rati
o
6,050,124,557/3,821,381
,081
6,052,905,138/4,534,305
,789
6,475,191,126/4,603,105
,337

1.58:1 1.33:1 1.41:1 Decr
ease
d in
2010
-
2011
but
incre
ased
in
2011
-
2012
Tim
es-
Inte
rest
-Ea
rne
d
Rati
o
4,716,436,025/349,498,3
61
4,368,719,160/395,569,5
76
4,668,508,682/418,408,5
42

13.49:1 11.04:1 11.16:1 Decr
ease
d in
2010
-
2011
but
incre
ased
in
2011
-
2012

Activity Ratios
Days
of
inven
tory
3,123,447,652/(15,907,
224,349/365)
3,491,908,466/(20,405,
310,623/365)
2,970,054,375/(21,156,
776,410/365)

71.67 62.46 51.24 Decrea
sing
time
holding
inventor
y
Inven 15,907,224,349/3,123,4 20,405,310,623/3,491,9 21,156,776,410/2,970,0
tory
turno
ver
47,652 08,466 54,375
5.09 5.84 7.12 Increasi
ng
inventor
y
Avera
ge
collec
tion
perio
d
1,259,124,152/(35,735,
971,982/365)
2,603,704,745/(38,859,
784,486/365)
2,442,442,284/(40,676,
810,450/365)

12.86 24.46 21.92 Deterior
ating
Collecti
on
periods

1.7.2 Horizontal Analysis (based on latest statement)
Balance Sheet (2010 vs 2011)
2010 2011 Change in Peso Change in
Percentage
Assets
Current
Assets

Cash on hand
& in banks
1,748,913,888 1,117,795,356 (631,118,532) (36%)
Trade and
other
receivables
1,259,124,152 2,603,704,745 1,344,580,593 107%
Due from
related parties
1,110,460,152 912,512,035 (197,948,117) (18%)
Inventories 3,123,447,652 3,491,908,466 368,460,814 12%
Other current 482,865,264 757,469,625 274,604,361 57%
assets
Total Current
Assets
7,724,811,108 8,883,390,227 1,158,579,119 15%

Noncurrent
Assets

Property, Plant
& equipment
2,428,176,859 2,984,897,305 556,720,446 23%
Deferred
income tax
1,073,152,868 1,033,366,761 (39,786,107) (4%)
Investment in
shares of stock
549,168,149 549,168,149 0 0%
Intangible
assets
8,499,973,229 8,818,599,735 318,626,506 4%
Retirement
benefit
267,016,700 191,586,600 (75,430,100) (27%)
Other non
current assets
557,028,960 564,503,173 7,474,213 1%
Total non
current
assets
13,374,516,765 14,142,121,723 767,604,960 5%

Total Assets 21,099,327,873 23,025,511,950 1,926,184,080 9%

2010 2011 Change in Peso Change in
Percentage
LIABILITIES
Current
Liabilities

Due to related
parties, current
1,963,334,077 3,510,980,039 1,547,645,962 79%
portion
Trade and other
Payables
5,405,302,589 6,113,186,664 707,884,075 13%
Provisions 2,554,391,120 2,449,758,538 (104,632,582) (4%)
Income tax
payable
184,794,449 39,375,782 (145,418,667) (79%)
Borrowings 1,120,000,000 325,000,000 (795,000,000) (71%)
Total current
liabilities
11,227,822,235 12,438,301,023 1,210,478,790 11%

Non-current
Liabilities

Due to related
parties, non-
current portion
6,030,000,000 6,030,000,000 0 0%
Other liabilities 20,124,557 22,905,138 2,780,581 14%
Total non-
current
liabilities
6,050,124,557 6,052,905,138 2,780,581 .05%

Stockholders
Equity

Share capital 245,926,150 245,926,150 0 0%
Additional paid-
in capital
2,774,020,968 2,801,468,771 27,447,803 .99%
Share-based
compensation
reserve
11,953,655 11,922,522 (31,133) (.26%)
Fair value
reserve
78,231,700 81,417,700 3,186,000 4%
Unrestricted
retained
earnings
711,248,608 1,393,570,646 682,322,038 96%
Total
stockholders
equity
3,821,381,081 4,534,305,789 712,924,708 19%

Total Liabilities
and
Stockholders
equity
21,099,327,873 23, 025,511,950 1,926,184,080 9%

Balance Sheet (2011 vs 2012)
2011 2012 Change in Peso Change in
Percentage
Assets
Current
Assets

Cash on hand
& in banks
1,117,795,356 1,148,693,356 30,898,000 3%
Trade and
other
receivables
2,603,704,745 2,442,442,284 (161,262,461) (6%)
Due from
related parites
912,512,035 796,651,324 (115,860,711) (13%)
Inventories 3,491,908,466 2,970,054,375 (521,854,091) (15%)
Other current
assets
757,469,625 581,154,082 (176,315,543) (23%)
Total Current
Assets
8,883,390,227 7,938,995,421 (944,394,806) (11%)

Noncurrent
Assets

Property, Plant
& equipment
2,984,897,305 3,973,583,424 988,686,119 33%
Deferred
income tax
1,033,366,761 1,079,910,355 46,543,594 5%
Investment in
shares of stock
549,168,149 781,708,149 232,540,000 42%
Intangible
assets
8,818,599,735 8,727,817,513 (90,782,222) (1%)
Retirement
benefit
191,586,600 _
Other non
current assets
564,503,173 577,821,235 13,318,062 24%
Total non
current
assets
14,142,121,723 15,140,840,676 998,718,950 7%

Total Assets 23,025,511,950 23,079,836,097 54,324,140 .24%

2011 2012 Change in Peso Change in
Percentage
LIABILITIES
Current
Liabilities

Due to related
parties, current
portion
3,510,980,039 2,291,539,198 (1,219,440,841) (35%)
Trade and other
Payables
6,113,186,664 7,396,350,957 1,283,164,293 21%
Provisions 2,449,758,538 1,982,111,907 (467,646,631) (19%)
Income tax
payable
39,375,782 1,537,572 (37,838,210) (96%)
Borrowings 325,000,000 330,000,000 5,000,000 6%
Total current
liabilities
12,438,301,023 12,001,539,634 (436,761,390) (6%)

Non-current
Liabilities

Due to related
parties, non-
current portion
6,030,000,000 6,030,000,000 0 0%
Retirement
benefit
obligation
_ 441,664,100
Other liabilities 22,905,138 3,527,026 (19,378,112) (85%)
Total non-
current
liabilities
6,052,905,138 6,475,191,126 422,285,988 7%

Stockholders
Equity

Share capital 245,926,150 245,926,150 0 0%
Additional paid-
in capital
2,801,468,771 2,808,309,072 6,840,301 .24%
Share-based
compensation
reserve
11,922,522 16,397,647 4,475,125 38%
Fair value
reserve
81,417,700 130,814,474 49,396,774 61%
Unrestricted
retained
earnings
1,393,570,646 813,853,242 (579,717,404) 42%
Total
stockholders
4,534,305,789 4,603,105,337 68,799,548 2%
equity

Total Liabilities
and
Stockholders
equity
23, 025,511,950 23,079,836,097 54,324,140 .24%

Income statement (2010 vs 2011)
2010 2011 Change in Peso Change in
Percentage
Net Sales 35,735,971,982 38,859,784,486 3,123,812,500 9%
Cost of Sales (15,907,224,349) (20,405,310,623) 4,498,086,280 28%
Gross Profit 19,828,747,633 18,454,473,863 (1,374,273,770) (7%)
Operating
Expense

Distribution
and selling
costs
(7,816,939,039) (7,296,893,499) (520,045,540) (7%)
Administrative
expenses
(7,446,220,961) (7,223,589,175) (222,631,786) (3%)
Other income,
net
150,848,392 434,727,971 283,879,579 188%
Finance cost (349,498,361) (395,569,576) 46,071,215 13%
Income Before
Tax
4,366,937,664 3,973,149,584 (393,788,080) (9%)
Provisions
from income
tax
1,278,514,035 1,071,704,326 (206,809,709) (16%)
Net
income/(loss)
3,088,423,629 2,901,445,258 (186,978,371) (6%)

Income statement (2011 vs 2012)
2011 2012 Change in Peso Change in
Percentage
Net Sales 38,859,784,486 40,676,810,450 1,817,025,970 5%
Cost of Sales (20,405,310,623) (21,156,776,410) 751,465,790 4%
Gross Profit 18,454,473,863 19,520,034,040 1,065,560,180 6%
Operating
Expense

Distribution and
selling costs
(7,296,893,499) (7,425,227,188) 128,333,689 2%
Administrative
expenses
(7,223,589,175) (7,891,283,957) 667,694,782 9%
Other income,
net
434,727,971 464,985,787 30,257,816 7%
Finance cost (395,569,576) (418,408,542) 22,838,966 6%
Income Before
Tax
3,973,149,584 4,250,100,140 276,950,556 7%
Provisions from
income tax
1,071,704,326 1,169,360,962 97,656,636 9%
Net
income/(loss)
2,901,445,258 3,080,739,178 179,293,920 6%

1.7.3 Vertical Analysis (latest financial statements)
Balance sheet (2010)
Amount Percent
Assets
Current Assets
Cash on hand &
in banks
1,748,913,888 8.29%
Trade and other
receivables
1,259,124,152 5.97%

Inventories 3,123,447,652 14.80%
Due from related
parties
1,110,460,152 5.26%
Other current
assets
482,865,264 2.29%
Total Current
Assets
7,724,811,108 36.61%

Noncurrent
Assets

Property, Plant &
equipment
2,428,176,859 11.51%
Deferred income
tax
1,073,152,868 5.09%
Investment in
shares of stock
549,168,149 2.60%
Intangible assets 8,499,973,229 40.29%
Retirement
benefit
267,016,700 1.27%
Other non
current assets
557,028,960 2.64%
Total non
current assets
13,374,516,765 63.39%

Total Assets 21,099,327,873 100%





Amount Percent
LIABILITIES
Current Liabilities
Due to related
parties, current
portion
1,963,334,077 9.31%
Trade and other
Payables
5,405,302,589 25.62%
Provisions 2,554,391,120 12.11%
Income tax payable 184,794,449 .88%
Borrowings 1,120,000,000 5.31%
Total current
liabilities
11,227,822,235 53.21%

Non-current
Liabilities

Due to related
parties, non-current
portion
6,030,000,000 28.58%
Other liabilities 20,124,557 .10%
Total non-current
liabilities
6,050,124,557 28.67%

Stockholders
Equity

Share capital 245,926,150 1.17%
Additional paid-in
capital
2,774,020,968 13.15%
Share-based
compensation
reserve
11,953,655 .06%
Fair value reserve 78,231,700 .37%
Unrestricted
retained earnings
711,248,608 3.37%
Total
stockholders
equity
3,821,381,081 18.11%

Total Liabilities
and Stockholders
equity
21,099,327,873 100%

Balance sheet (2011)
Amount Percent
Assets
Current Assets
Cash on hand & in
banks
1,117,795,356 4.85%
Trade and other
receivables
2,603,704,745 11.31%
Inventories 3,491,908,466 15.17%
Due from related
parties
912,512,035 3.96%
Other current
assets
757,469,625 3.29%
Total Current
Assets
8,883,390,227 38.58%

Noncurrent
Assets

Property, Plant &
equipment
2,984,897,305 12.96%
Deferred income 1,033,366,761 4.49%
tax
Investment in
shares of stock
549,168,149 2.39%
Intangible assets 8,818,599,735 38.30%
Retirement benefit 191,586,600 .83%
Other non current
assets
564,503,173 2.45%
Total non current
assets
14,142,121,723 61.42%

Total Assets 23,025,511,950 100%

Amount Percent
LIABILITIES
Current Liabilities
Due to related
parties, current
portion
3,510,980,039 15.25%
Trade and other
Payables
6,113,186,664 26.55%
Provisions 2,449,758,538 10.64%
Income tax payable 39,375,782 .17%
Borrowings 325,000,000 1.41%
Total current
liabilities
12,438,301,023 54.02%

Non-current
Liabilities

Due to related 6,030,000,000 26.19%
parties, non-current
portion
Other liabilities 22,905,138 .10%
Total non-current
liabilities
6,052,905,138 26.29%

Stockholders
Equity

Share capital 245,926,150 1.07%
Additional paid-in
capital
2,801,468,771 12.17%
Share-based
compensation
reserve
11,922,522 .05%
Fair value reserve 81,417,700 .35%
Unrestricted
retained earnings
1,393,570,646 6.05%
Total
stockholders
equity
4,534,305,789 19.69%

Total Liabilities
and Stockholders
equity
23, 025,511,950 100%

Balance sheet (2012)
Amount Percent
Assets
Current Assets
Cash on hand & in
banks
1,148,693,356 4.98%
Trade and other
receivables
2,442,442,284 10.58%
Inventories 2,970,054,375 12.87%
Due from related
parties
796,651,324 3.45%
Other current
assets
581,154,082 2.52%
Total Current
Assets
7,938,995,421 34.40%

Noncurrent
Assets

Property, Plant &
equipment
3,973,583,424 17.22%
Deferred income
tax
1,079,910,355 4.68%
Investment in
shares of stock
781,708,149 3.39%
Intangible assets 8,727,817,513 37.82%
Retirement benefit -
Other non current
assets
577,821,235 2.50%
Total non current
assets
15,140,840,676 65.60%

Total Assets 23,079,836,097 100%

Amount Percent
LIABILITIES
Current Liabilities
Due to related
parties, current
portion
2,291,539,198 9.93%
Trade and other
Payables
7,396,350,957 32.05%
Provisions 1,982,111,907 8.59%
Income tax payable 1,537,572 .01%
Borrowings 330,000,000 1.43%
Total current
liabilities
12,001,539,634 52.03%

Non-current
Liabilities

Due to related
parties, non-current
portion
6,030,000,000 26.13%
Retirement benefit
obligation
441,664,100 1.91%
Other liabilities 3,527,026 .02%
Total non-current
liabilities
6,475,191,126 28.06%

Stockholders
Equity

Share capital 245,926,150 1.07%
Additional paid-in
capital
2,808,309,072 12.17%
Share-based
compensation
reserve
16,397,647 .07%
Fair value reserve 130,814,474 .57%
Unrestricted
retained earnings
813,853,242 3.53%
Total
stockholders
equity
4,603,105,337 19.94%
Total Liabilities
and Stockholders
equity
23,079,836,097 100%

Income statement(2010)
Amount Percent
Net Sales 35,735,971,982 100%
Cost of Sales (15,907,224,349) (44.5%)
Gross Profit 19,828,747,633 55.5%
Operating Expense
Distribution and
selling costs
(7,816,939,039) 21.7%
Administrative
expenses
(7,446,220,961) 20.8%
Other income, net 150,848,392 .4%
Finance cost (349,498,361) (1%)
Income Before Tax 4,366,937,664 12.2%
Provisions from
income tax
1,278,514,035 3.6%
Net income/(loss) 3,088,423,629 8.6%




Income statement (2011)
Amount Percent
Net Sales 38,859,784,486 100%
Cost of Sales (20,405,310,623) (52.5%)
Gross Profit 18,454,473,863 47.5%
Operating Expense
Distribution and
selling costs
(7,296,893,499) (18.8%)
Administrative
expenses
(7,223,589,175) (18.6%)
Other income, net 434,727,971 1.1%
Finance cost (395,569,576) (1%)
Income Before Tax 3,973,149,584 10.2%
Provisions from
income tax
1,071,704,326 2.8%
Net income/(loss) 2,901,445,258 7.5%


Income statement(2012)
Amount Percentage
Net Sales 40,676,810,450 100%
Cost of Sales (21,156,776,410) (52%)
Gross Profit 19,520,034,040 48%
Operating Expense
Distribution and
selling costs
(7,425,227,188) (18.2%)
Administrative
expenses
(7,891,283,957) (19.4%)
Other income, net 464,985,787 1.1%
Finance cost (418,408,542) (1%)
Income Before Tax 4,250,100,140 10.4%
Provisions from
income tax
1,169,360,962 2.9%
Net income/(loss) 3,080,739,178 7.6%



























2.3 Competitive Environment (Forces)
The competitive environment force in the haircare products industry involves the consumers,
potential new entrants, rivalry among competitors and substitutes. Consumers of the product
have great influence with regards to the sales since they can change their preferences due to
factors such as price increase and brand preference. Although shampoo brands only has small
difference in terms of their price in the market, they are various types of shampoo offered. Anti-
dandruff, anti-hairfall and conditioners are just some of the types of shampoos Unilever has to
its consumers. Compared to other brands like the competitor of Unilever, Proctor and Gamble,
there is a little difference in its price and features. Competition among rivalry in this kind of
industry is very strong, the fact that shoppers are inclined with getting the product they trust.
Suppliers are weak because main manufacturers decides what suppliers to get from in order for
them to reduce cost and gain more profit. New entrants are definitely weak especially because
consumers are loyal to their trusted brands. This is mainly the reason why Unilever invests its
money in advertising TV commercial of their haircare products so that they can establish a
familiar brand to their possible buyers. This would entitle them to have a great advantage over
other products since it is already familiar to the people with its catchy commercials.

2.4.1 Factors Affecting Strength of Rivalry
Strength of Rivalry
Brand identity is something that the company has already established in the market. Through
advertising and promotions, the company has already instilled to the consumers its identity as a
trusted brand that fulfills their needs as potential buyers of the product. This gives an advantage
to since it is what sets them apart from other businesses and competitors.
Top firms in the industry cannot buy out industry since costs used for the production and
advertisements are relatively high already.
Threats of New Entrants
Firms that are already well established have already gained their share in the market, possible
new products is not a fear for them anymore.
Investing into a same industry such as haircare products should have a high capital. The
technological advancements may hinder its new entrants to enter the market since they are
already in a disadvantage.
Well known brands in the market have well known brand identities and are easily remembered
by consumers with the help of catchy songs for advertisements.
When entering the industry, a lot of requirements should be accomplished such as licenses,
insurance, government approval and many others. Companies must get approval to be able to
sell their product and have license to produce like proper hygiene and etc. Insurance will cover
possible accidents and lawsuits.

Threat of Substitutes
There are no specific substitutes for shampoos except only if there are natural products that
keeps the hair clean and smooth. But other than that, shampoos are mainly a need for
consumers because its what keeps the hair of people clean and healthy.
The company has no fear of possible substitutes since people would really pay for it.




The Philippines is considered as one of the countries in Asia that has the fastest growing economy that
is also continuously growing as it becomes top performing countries in Southeast Asia in terms of
economy. Philippines economys growth has resulted in an increase to the consumers purchasing
power and their disposable income which means that consumers have the ability to spend their money
on products that have greater quality that have prices proportionate to the products overall nature.

Clear, Dove, Tresemme, Vaseline, and Creamsilk are Unilevers brands that are already known
and notable brands due to its remarkability on being products of great quality and affordability
compared to other hair care product brands such as Rejoice, Head & Shoulders, Pantene, and
Palmolive that are from notorious companies of Procter and Gamble and Colgate-Palmolive.

Unilevers hair care product teams are very effectual and productive in contributing to the parts
of the company. These groups are consisted of skilled people who are also experienced on
giving excellent service for the company. Product awareness and loyalty will have an increase
when good service to consumers are implemented and which will also lead to higher revenues
for the company. Because of this, Unilever Philippines leads into one of the best performing
companies over other competitors guided by its sustainable competitive advantage.

Unilever Philippines has a good reputation in the market because they attract and serve a large
portion of the people across the country by touching their lives through the companys products.
The company also devotes in its participation on foundations that will help the society. This is
commonly done by strongly involving the corporate social responsibility that the company has in
relation to their respective mission and vision.

The companys brands are well differentiated being the affordable quality hair care products
compared to its competition. Because of this, Unilever has attained a sustainable competitive
advantage over its competitors in the hair care products industry.

Intangible Resources of Organization
Human workforce and intellectual capabilities- experienced human resource and skilled
employees that are equipped with specialized talents and managerial skills.
Brand image- Brand identity, trademarks, customer loyalty, reputation and company image.
Culture- behavior inside the company
Relationships- alliances of the companies that share the same interests and partnerships that
would help each others priorities.

The human workforce and intellectual capabilities are essential in the production of the
companys services. the haircare product team has been able to addressed the needs of the
company quickly and consistently. the brand image of Unilever has always been off the chart
and is rapidly growing still. Due to its fast service, production of products would not be a
problem. Culture inside the company should be carefully followed while still upholding its values
and principles so that they can build a strong foundation among its employees and its
workplace. Alliances and partnerships are vital for the company to expand their potential
market.

Recommendations

It is highly recommended that the company should do whatever it takes to differentiate their
brands because
at the moment, they are not the market leaders in the industry though progressing.
Differentiating their brands encourages that they must retain their sustainable competitive
advantage which
is the affordability compared to the competition and at the same time, work to develop other
advantages in
the changing demands of the industry and the emergence of new market segments. They must
work with
the divergence of brands and products to achieve superior equity from the competing brands.