Study of Internationalization Process of Unilever

Sneha Sivakumar,
MBA in Marketing, Christ University
Abstract:
Unilever is one of the foremost companies in the Fast-Moving Consumer Goods (FMCG)
Industry. Unilever products are sold in about 190 countries through 100 subsidiaries established
in these countries and over 2.5 billion people use the company’s products every day. The
company’s global turnover in the year 2020 was 50.7 billion euros, Unilever has consistently
growing revenues with slight fluctuations due to the ongoing pandemic. This report aims to
examine the internationalization process of Unilever; Starting with an overview of the FMCG
industry, followed by the description of the internationalization of Unilever.

Keywords: International Business, Unilever, Internationalization, FMCG Industry

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Introduction
FMCG Industry Overview
The FMCG Industry is expected to generate about $15,361.8 billion by 2025, with a CAGR of
5.4% between 2018 to 2025. As a growing industry, the industry has to cater to the ever-changing
consumer needs and preferences.

Trends in the FMCG industry:

• Growth of eCommerce. Due to the pandemic consumers shifted more towards digital
platforms for their purchases. The consumer behavior has changed drastically, they prefer
products and services to be delivered to them at their doorstep.
• Big Data and Analytics. More and more companies are relying on big data to understand
consumer behavior and to predict the trends in the market. More digitization and
automation is leading to generate data and the insights drawn from the data are being
leveraged for profit maximization.
• Sustainability. Consumer awareness about best practices is increasing rapidly, as
environment depletes as rampant rates companies are reworking their strategies especially
in aspects like packaging and production. The companies are incorporating sustainability
in their functioning.

About Unilever
Unilever owns more than 400 brands and the brand is available in about 190 countries globally.
Unilever continues to maintain the two parent companies Unilever NV (Netherlands) and Unilever
PLC (UK). The company has over 172,000 employees. The 3 main divisions that the company is
organized into: Foods and Refreshments; Home Care; and Beauty & Personal Care. There are
research and development facilities established in countries like United Kingdom, the United
States, Netherlands, India and China.

The company has been successful through corporate acquisitions like Ben & Jerry’s (2000), Best
Foods (2000), Brooke Bond (1984) and recently the famous skincare brand Paula’s Choice.

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Internationalization of Unilever
Unilever was established in London, English on 2nd September 1929, 92 years ago through the
unification of two companies Lever Brother of United Kingdom and Margarine Unie of the
Netherlands. Unilever is one of the leading companies in the FMCG Industry. The company
expanded its operations worldwide in the latter half of the 20th century. Unilever first began its
internationalization process in Africa and Latin America in the 1930s.

Change in approach and international strategies

Geocentric approach. While the subsidiaries function to carter to the needs of the local markets,
the company believes in hiring only the best talent irrespective of their nationalities, the view of
management approach is in the global talent pool, the most competent candidate should be hired
irrespective of their ethnicity and identity. For example, while most of the high-level management
for HUL (India) are comprised of Indians, one individual of Dutch Nationality also comprises of
the board.

Hiring the best suited

candidates irrespective
of their nationalities

Parent Subsidiary Company

Company i.e. Host Country
(Unilever) (For example HUL)

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 Image 1. Geocentric approach taking Unilever as example

International Strategy. Multinational Strategy. Multinational strategy has locations or facilities

in multiple countries, but each location functions in its own way, essentially as its own entity (Syed
Kashif Mushtaq, 2021).

Image 2. Approach and International Strategies

Unilever has its subsidiaries that function
independently on its own based on the culture of the local markets. While there are brands and its
products like Dove that is common and well known globally, but marketing approach of Unilever
is localized. The main core idea of the brand remains unified across nations but its manifestation
as products are highly localized. The company hence uses what is known as the glocal approach
in the recent times. Unilever’s success comes from its ability to acquire locally famous brands and
building companies in different markets efficiently.

Mode of Entry
• Own Subsidiaries; through mergers and acquisitions. Having had formed from the merger

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 of two companies, Unilever has further expanded through building its corporate empire by
its subsidiary companies which were established through strategically calculated
acquisitions and divestments.
• Glocal approach. Unilever has an extremely diversified product portfolio that consists of
wide variety of products, using these products, the company influences the consumer
preferences globally. The company evidently thinks global, acts local in its functioning.
The products that the company offers are specifically localized according to the local needs
of the consumer. The main strategy that Unilever uses is the multidomestic strategy, as it
has high responsiveness to the local markets. The mergers and acquisitions that the
company undertakes is targeted at obtaining the companies that are key to the local market,
for example, acquisition of Bru and Horlicks in India, Chile ice cream products, Lenor
Japan, a skincare brand in Japan and China etc.

Competitive Advantage
• Darwinian system. Unilever has tried to capture the local consumers’ interests, but for the
brands and the products that do not perform well like Unipath and Diversey Lever, have
been sold out. This allows the company to maintain its wealth while exploring different
markets. The successful brands like Dove, has ensured that the brand is available across
the world under the same name ensuring global brands are built under the umbrella of
Unilever.
• Diversification. Unilever has products in almost every domain of the FMCG industry and
is ever expanding its product portfolio. Unilever products are ubiquitous and ingrained in
the everyday habits of its consumers.

Country Market Entry Strategies

• HUL Hindustan Unilever (India)
The first Indian subsidiary was set up by Unilever in the year 1931 as Hindustan
Vanaspati Manufacturing Company, followed by other 2 subsidiaries which were all
combines in the year 1956. While HUL has always been responsive to economic
growth, accompanied with diversification that is responsive to the consumer needs of
the local market. HUL is one of the largest FMCG company in the country. The

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 company has built its own Joint Ventures in the market.
• Unilever in China. While Unilever has tried to adapt to the Chinese market about a
century back in 1923, but the political scenario of China did not allow the penetration
of the company in the Chinese market. However, Unilever returned to China in 1986
due to change in governance that allowed for companies to enter the market under the
open-door policy. Then Unilever set up 14 Joint ventures in the local market. Recently
Unilever acquired a factory in China and is aiming to shift its regio-centric approach to
the company’s predominant geocentricism.

Timeline of Product Expansion of Unilever globally

Timeframe Country & Description
1929 United Kingdom - September – Unilever formed by the merger of 2 companies
1930s 1. Africa & Latin America- Acquired United Africa Company
2. Indonesia - Unilever Indonesia was set up (1933)
1943 & 1944 1. Acquired Lipton then called as T.J. Lipton
2. Also procured majority stake in Frosted Foods along with Batchelors Peas
3. Acquired Pepsodent
1941-1975 1. Sunsilk launched in the UK (1954), later launched in the year 1957 in the
US
2. Good humor ice cream, US based business acquired in 1961
3. Acquired Lipton Ltd
1976-1990 1. Acquired Brooke Bond through Unilever’s first ever successful hostile
takeover
2. Acquired Chesebrough-Ponds (formed from the merger between 2
companies
3. Acquired CK Cosmetics, Faberge, Elizabeth Arden, which was later sold by
Unilever
1990-2000 1. Unilever Ghana was created from a merger between UAC Ghana Limited
and Lever Brothers Ghana Limited (1992)
2. Unilever merged Elida Gibbs and Lever Brothers (1996)
3. Purchased Helene Curtis thus increasing its market presence in the toiletries

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 market in the US (1996)
4. Sold the specialty chemicals division (1997)
5. Began the sustainable agriculture program (1998)
6. Acquired Bestfoods, Slim Fast, Maille, Ben & Jerry’s
7. Bestfoods acquisition led to emergence of new brands like Knorr, Borvil etc
8. Also divested some businesses
2001-2020 1. Sections division – Foods and Home & Personal Care (2001)
2. Divestment of Loders Croklaan
3. Bangladesh – Unilever Bangladesh changed its name (2004)
4. Partnership with Rainforest Alliance for sustainable sourcing of its tea
(2007)
5. Followed by many more global acquisitions and divestments

Impact of Business Environment

• PESTLE Analysis of Unilever globally.
-Political Factor. As a multinational, Unilever’s different subsidiaries and Joint
Ventures must be compliant with the political inclinations of the markets in which it
operates. For example, while HUL (India), Unilever (US) have liberty to do business
independently in the given political scenario, political environment in places like China
is not friendly to the business.

-Economic Factor. The consumption of FMCG products has increased rampantly in

the recent times, parallelly the competition has also increased; hence Unilever needs to
be constantly on its toes in terms of its products and services offered. Constant
innovation is required in the FMCG industry.

-Social Factor. Socially consumers are becoming more inclined towards buying online
and obtaining products delivered to them directly. The customers living in urban and
semi-urban are becoming more inclined towards health and ‘affordable luxury’
products. Unilever is hence diversifying accordingly.

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 -Technological Factor. Unilever invests in R&D, increases the technological facilities
to help improve the overall supply chain, and making the supply chain cost effective.
Automation is something that most brands use now to provide better services to its
customers. Unilever could use technologies like Artificial Intelligence to understand
the market better and intuitively.

-Legal Factor. Unilever has faced many legal issues like being accused for the pricing
cartel formation. Unilever has faced lawsuits in the past and improved its business
operations accordingly. Hence, companies need to comply with the localized legal
conditions of the markets that it operates in.

- Environmental Factor. More and more companies are moving sustainable practices
as there is a huge need for the practice. While Unilever is known for its sustainable
practices, the company is often criticized for aspects like animal testing or unethical
procurement processes. Hence, the market environment requires the companies to be
more responsible environmentally.

Conclusion
Unilever as a multinational company has expanded globally through prudent mergers,
acquisitions and joint ventures. The company is strategic in its acquisitions and divestments that
caters to the local consumer needs across the globe. Unilever is glocal in approach, the company
thinks global but acts local, hence it is extremely ubiquitous in the market. Unilever will have to
continue its plight to beat competition to become the best and remain so in the market.

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