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Unilever strategy in 2000

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Unilever’s Path to Growth Strategy: Is It Working?:

Unilever’s Path to Growth Strategy: Is It Working? Bianca Cole ~ Reginald Green ~ Kameela McClinton ~ Stephanie Richardson ~ Derek Webster

Slide 2:

Company Overview Path to Growth Strategy Results and Recommendations Agenda

Slide 3:

Created in 1930 as result of a merger Life partners and continuous development Key player in the food and household products industry Historically grew through acquisitions Company Overview

Revenues: Product Segmentation:

Revenues: Product Segmentation

Slide 5:

Competitor Comparison Top Segment Top Brand CEO Stock per share Growth Revenues Revenue Growth International Business Segments Employees CG/Foods Consumer care Food Food Dove Tide Mac & Cheese Kit Kat A. Burgmans $66.03 15.58% 42,942M -11.93% 100+ A.G. Lafley 234000 $53.76 9.25% 28.2 BL 19% 42 5 110000 R. Deromedi $30.70 P. Letmathe 8.2% 66.90 11.23% $69 B $31,010 M 4.3%% -1.93% 150+ 86 5 10600 6 253000 3

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S.W.O.T. Analysis S trengths W eaknesses Recognized as a global company Strong brand portfolio Strong relationship with retailers Economies of scale Dual leadership Not connecting with customers Inefficient management of brands Reduced spending for R & D Inability to maximize acquisitions Decrease in revenues O pportunities T hreats Changing consumer preferences Increasing need for healthy products Strong Competition Increasing store brands Tougher Business Climate Exchange rates

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Rationale Attractive Drivers Unilever contributions Build strong portfolio Strategically attractive category Strong customer reach 20% annual growth rate Strong sales and distribution network Opportunity for product Would make Unilever world’s largest ice cream products maker Premium prices Strong brand equity 10 th largest U.S. based food products companies History of growth in revenues and earnings Strong global position SlimFast Bestfoods Ben & Jerry’s $2.3 billion cash International presence $326 million Competencies in the industry $20.3 billion euro cash; assumption of net debt Operating efficiency Similar portfolios and geographic coverage

Slide 8:

Revenues Net Income Financial Analysis

Slide 9:

Net Profit Margin Employees Financial Analysis (cont.)

Slide 10:

Why Path to Growth Strategy Years of slow performance Lack of sound corporate strategy Numerous low-volume brands Small global presence compared to competition Mediocre performance in emerging markets

Slide 11:

5 year growth plan Reduce portfolio to 400 “core” brands Focus R & D and advertising on leading brands Concentrate on product innovation to fuel internal growth Grow through acquisitions Elements of Path to Growth Source: Crafting and Executing Strategy

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Objectives of Path to Growth Expectations Achieve double-digit EPS growth Secure a better competitive position in global food and household Build brand value to gain pricing power Top-line sales growth of 5-6% annually Increase operating profit margins 11% to over 16% Plan to be accomplished by year end 2004 Strategic Targets

Slide 13:

Successfully trimmed unsuccessful brands Leading brands increased sales from 75% to 93% 12 brands with sales of 1B+ Consistent growth in Home & Personal Care Improved overall quality and growth profile of Food portfolio Yes… Global procurement programs have delivered 2.4B, excess of 1.6B target Improved capital efficiency Successful integration of Bestfoods acquisition Operating assets have improved by 9%, exceeding 6% target Is it working?

Slide 14:

Reported a net loss of $318M In 2004, underlying sales grew by only .4%, leading brands by .9% Issued 1 st ever profit warning ahead of third quarter results, 3% decline Lagging behind competitors in terms of marketing and innovation No …. “Unilever was getting there, but getting there too late” Is it working? Failure to increase advertising and marketing efforts Still lack focus and effective strategy execution The company remained too local and fragmented Unilever plans to discontinue the “Path to Growth” Strategy So what’s next?

Slide 15:

Strategic Issue What adjustments, both internally and externally, should Unilever make to rebuild a strong and focused competitive strategy?

Slide 16:

1. Reorganize and streamline Unilever’s organizational structure. 2. Implement “Unilever Believer” product and brand extensions. Recommendations

Slide 17:

Recommendation 1

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Recommendation 1 Strategy Justification Unilever maintained two business entities, dual chairperson approach Unilever Group owns Unilever Plc and Unilever NV List stock separately and share board of directors Management typically wear two/three hats Board and business responsibilities conflicted Company remained two local and fragmented Recognize the need to streamline leadership and management structure Reduced effectiveness and slowed the decision making process.

Slide 19:

Unilever Plc Unilever NV One Unilever

Slide 20:

One Unilever An initiative to create an overall umbrella brand across all Unilever’s brands that will eventually consolidate various businesses under one name

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Margarines, spreads, oils Frozen Foods Icecreams Tea-based beverages Culinary Health and Wellness Fragrances Deodorants/toiletry Oral Care Soaps, lotions, skin care Laundry Househould care Cleaning Products Ireland Korea Neverlands Italia US Global Enabling Team Regional Leadership Team Global Process Owners Customer Business Development Finance Human Resources IT Market Research Government Relations Product Supply Public Affairs One Unilever

Slide 22:

Margarines, spreads, oils Frozen Foods Icecreams Tea-based beverages Culinary Health and Wellness Fragrances Deodorants/toiletry Oral Care Soaps, lotions, skin care Laundry Househould care Cleaning Products Ireland Korea Neverlands Italia US Global Enabling Team Regional Leadership Team Global Process Owners Customer Business Development Finance Human Resources IT Market Research Government Relations Product Supply Public Affairs One Unilever KEY TO SUCCESS A simpler management structure will increase accountability and speed the decision making process.

Slide 23:

Provides a greater clarity of leadership, responsibility, and accountability Allows Unilever to focus on the needs of their customers and consumers thus reigniting growth and increasing sales potential Provides the ability to leverage scale of operations Create a strategic platform for brand management Recommendation 1 Deliverables

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Recommendation 2

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Unilever Believer Program that focuses on brand initiatives to the consumer Lets the consumer know more about the product and its uses Objective : Bring top of the mind awareness Strategy : Use advertising that connects with consumer needs Believe in Unilever

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Recommendation 2 Strategy Justification Consumers demand high quality products that both are convenient and delicious Consumers look for new ways to use products More females are working full time jobs Large population of single-parent households Increase consumer focus on health and nutrition

Slide 27:

Products of Focus

Slide 28:

Lipton Extension Energy drinks jumped 56% in sales last year Market has exceed $100 million Main Competitor: Red Bull Positioning Statement: A Healthier Alternative to Energy Drinks Focus on Energy Drinks

Slide 29:

Lipton Extension Product: Lipton Lift Target Market: Young adults 18-32 Uses: stay up all night and/or start a night out Main Ingredients: Caffeine, Vitamin B, Guarana Advertisements: Highlight healthier ingredients of the product while showcasing its ability to give energy and revitalize body

Slide 30:

Featured advertisements on how consumers use Ragu EXAMPLE of new product usage A mom showing how she uses Ragu as a base for her chili Call to Action: How Do U Ragu contest & website with new uses The created new uses will get our consumer involved in being a Unilever Believer How Do You RAGU? Marketing & Advertising

Slide 31:

Focus on Consumers on the Go Ragu Lunch Pack -Ragu sauce -Cooked spaghetti -Garlic Bread How Do You RAGU? Product Line Extension How do I Ragu… On the Go

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Delivers innovative products that capitalizes on changing consumer preferences Allows Unilever to focus on the needs of their customers and consumers thus reigniting growth and increasing sales potential Provides a strong competitive platform against major competitors and private label brands Recommendation 2 Deliverables

Q & A:

Q & A

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