Goals, Strategies and Business Models of Unilever and Procter and Gamble - Case Study Example

BUSINESS SUSTAINABILITY Student’s name Course & code Professor’s name University City Date EXECUTIVE SUMMARY The practice of sustainability in recent times has elevated with need to protect natural resources for future generations. The analysis of Unilever and Procter and Gamble shows the implementation of sustainability by two different organizations. Unilever is known as an Anglo Dutch firm and it provides for the consumer market through provision of food, beverages, personal care products and cleaning agents. Unilever has adopted a sustainable business practice through using sustainable means to create its products thus providing quality consumer goods. Procter and Gamble on the other hand is a multinational company based in the United States that deals with products in the same industry of fast moving consumer goods. Under Unilever’s Sustainable Living Plan, the organization intends to improve the health and well being of communities through committing itself to provide healthy and hygienic products that prevent the spread of diseases and ones that are nutritious to the individuals who consume them. Procter and Gamble promotes sustainability through goals that focus on two areas; environmental and social. This paper analyzes Unilever and Procter and Gamble comparatively; looking at their goals, strategies and business models as related to sustainable business practices. It further analyses the company with the most prospective sustainable practices and their capability to meet probable sustainable challenges. Contents EXECUTIVE SUMMARY 2 1.0Introduction 4 2.0 Integrated Goals supporting Sustainable Business in Unilever 5 2.1 Integrated Goals supporting Sustainable Business in Procter and Gamble 6 2.2 Discussion 7 2.3 Capitals and their Management in Unilever 8 Figure 1: Unilever Business Model and Sustainable Living Plan 9 Figure 2: Unilever Products 9 2.4 Capitals and their Management in Procter and Gamble 10 Figure 3: Procter and Gamble Business Model 11 Figure 4: Procter and Gamble Business Segments 12 2.5 Discussion 12 2.6 Strategic approaches towards emergent environments in Unilever 12 2. 7 Strategic approaches towards emergent environments in Procter and Gamble 13 2.8 Discussion 14 3.0 Conclusion 14 Reference List 15 1.0 Introduction The concept of sustainability is currently a global practice owing to the need to protect natural resources for future generations and to satisfy the current needs of the present generation; one that has increased its awareness of sustainability (Tietenberg et al, 2016). Given that the basic principles behind successful organizations are to gain market power at most and protect their capital base (Child, 2015), the move towards sustainability needs to be integrated towards the planning of the function of the enterprise (Wooltorton et al, 2015). Sustainable business practices thus suggest that the business adopt approaches and operational activities in the present while at the same time protecting the resources that will be needed for the future generation (Roseland and Spiliotopoulou, 2016). In light of this, this retro respect paper analyzes Unilever and Procter and Gamble comparatively; looking at their goals, strategies and business models as related to sustainable business practices. Unilever is known as an Anglo Dutch firm and it provides for the consumer market through provision of food, beverages, personal care products and cleaning agents (Martinez-Blanco, 2015). Unilever has adopted a sustainable business practice through using sustainable means to create its products thus providing quality consumer goods while creating value for the company. Procter and Gamble is a multinational company based in the United States that deals with products in the same industry (Dinnie, 2015). The products under the organization include agents used for cleaning and products for personal care as well. Procter and Gamble’s main purpose is to serve the society before its other stakeholders and owing to this the company has recently implemented a business model aimed towards achieving sustainable and equitable growth. Sustainable practice in business requires approaches that target the protection of the environment, the conservation of the society and the growth of the economy simultaneously (Shevchenko, 2016). Practically, the move has been slow as businesses have had to experience reduced growth and stringent environmental regulations before fully appreciating the benefits of sustainable business. Unilever and Procter and Gamble however pride themselves in the adoption of sustainable business in the running of their companies, a move that has given them competitive advantage in the consumer industry. This paper thus further analyses the company with the most prospective sustainable practices and their capability to meet probable sustainable challenges. 2.0 Integrated Goals supporting Sustainable Business in Unilever Based on the effects resulting from climate change; which is a direct consequence of most human activities (Jantz et al, 2015), Unilever has positioned itself to be part of the solution to manage climate change (Hasan, 2015). Unilever’s vision involves positioning their organization for growth while reducing their footprint on the environment and increasing their impact on the society in a positive manner (Galpin et al, 2015). The organization has a plan known as the Unilever Sustainable Living Plan which is programmed to ensure that the growth of the company does not impact negatively on the environment; that the positive impact upon the society is elevated while profitable growth is achieved simultaneously with saving of costs and encouraging innovation (Varadarajan, 2016). The goals that the plan is insistent upon are thus making health and the general well being of individuals and communities better, reducing negative environmental effects and making livelihoods better through the business. Given the intent that Unilever has on growing its market share in its industry, the move towards maximum sustainability is a strategic decision that goes with current trends in the legal system and the expectations of most communities (Lim, 2015). Unilever’s business strategy involves business processes which promote the growth of the company while satisfying the sustainable needs of their consumer market. Unilever brands currently provide products that are well balanced in terms of nutrition and the provision of good hygiene (Galpin et al, 2015). The products additionally go through a process that is protective of the environment and approved by sustainability laws. Furthermore, there is a culture of respect that has been promoted towards the people and the communities that Unilever interacts with throughout the globe (Henderson et al, 2015). Through the sustainability plan, Unilever has desisted from involving itself in the use of resources that encourage deforestation. Moreover, the organization’s focus is one the promotion of sustainable agriculture which serves to better the lives of the farmers involved and increases the production of food through innovative agricultural methods (Lim, 2015). Unilever thus promotes its sustainability plan through lowering costs which impacts on its economic strategies, earning more trust with the society, reducing risks and increasing its growth. The subsequent section discusses sustainable business at Procter and Gamble to provide an ample comparison. 2.1 Integrated Goals supporting Sustainable Business in Procter and Gamble P & G has put in place sustainability as one of its objectives towards creating products that lead in value for their consumer base while at the same time protecting the environment (Du et al, 2016). Responsibility over the environment and the society that the organization caters for is a practice that has been integrated into the daily operations of Procter and Gamble and the workforce culture. Procter and Gamble has several practical measures in place that show their practice in environmental and social sustainability (Galpin, 2015). There are both present operations that are sustainable and future plans targeted towards making the organization more protective of the environment. Most of the products used by Procter and Gamble are from the natural environment and this has made the sustainability objective a challenge. Nevertheless, with proper management and a good implementation system, the company has been able to practice the sustainability measures to their desired effect. Procter and Gamble has engaged its consumers towards sustainable practices such as developing their products to reduce waste (Cervantes et al, 2015). An instance is the dish washing soap which cleans dishes with one wash thus helping to save on water. Procter and Gamble are additionally researching on resources that are less damaging to the environment (Ingwersen, 2016). Among the decisions is the move towards zero deforestation. The packaging used on the products moreover can be recycled and is made of material that does not emit greenhouse gases. Apart from the environment, Procter and Gamble has invested in improving livelihoods through corporate social responsibility. The water purifying agent innovation is a great invention that has helped communities in dry areas such as Kenya and Indonesia. This move has additionally saved lives in various countries where healthy water has been scarce to find. P & G additionally provides essentials such as sanitary towels for girls, Safeguard soap for washing and Pantene wigs for women who have lost their hair during cancer treatments. These products are accompanied by campaigns such as #Like a girl, which is meant to boost the confidence of girls. Safeguard promotes cleaning of hands to promote healthiness while Pantene helps to improve the self esteem of cancer patients (Vermeulen and Metselaar, 2015). These practices done at Procter and Gamble promote the conservation of the environment, sustainability of the communities and grow the organization at the same time through innovation and keeping their consumers satisfied. 2.2 Discussion Under Unilever’s Sustainable Living Plan, the organization intends to improve the health and well being of communities through committing itself to provide healthy and hygienic products that prevent the spread of diseases and ones that are nutritious to the individuals who consume them. Furthermore, the organizations has made moves to reduce its environmental impact through using processes and products that produce less greenhouse gases, managing water and waste and sourcing sustainably. Livelihoods are enhanced through promoting fairness at the workplace environment, creating opportunities for women and improving business of persons such as small scale farmers. The organization is additionally involved in campaigns that encourage hygiene such as washing of hands with Safeguard and supporting the girl child by improving their confidence with the use of sanitary towels. Procter and Gamble on the other hand promotes sustainability through goals that focus on two areas; environmental and social. The environmental goals are involved with conservation of resources, renewing of resources and being innovative with waste. The social goals are targeted towards improving livelihoods through promotion of health and hygiene and the provision of clean water. 2.3 Capitals and their Management in Unilever Unilever’s business model begins with the definition of its core purpose which is to meet the diverse and dynamic consumer preferences in a dynamic and complex world (Karmasin et al, 2016). The model promotes sustainable living and further enhances a plan to achieve the same. The key inputs identified in the plan for sustainable living are the brand, the operations of the company and the people. The team at Unilever researches on the needs of the consumer and uses this information to grow the organization’s brand. The operations are thus targeted towards supporting these preferences identified. The growth circle henceforth shows profit which is a result of innovation of products and building of the brand (Karmasin et al, 2016). The marketing strategies additionally contribute to the profits which provide for the creation of more innovative products thus making the performance of the organization productive. The capital structure of Unilever is founded on the decisions that the management makes after balancing all of the essential elements of the financial strategy that are required to meet the objectives and core purpose of the organization (Park et al, 2015). Among the imperative performance measures is thus the return on capital that has been invested (Iqbal, 2015). Intellectual capital in Unilever is treated as a valuable asset as seen from its focus on research and development and the training and development programs aimed towards growing their employees professionally. It is through this capital that the organization has been able to research on sustainable products that go hand in hand with their consumer preferences thus keeping their brand strong. Unilever’s workforce boasts of being competitive, productive healthy and sustainable. These features have been achieved through measures such as saving on carbon by reducing employee commuting, building a stronger employee value profile and increasing the capability of employees which relates to improving productivity (Park et al, 2015). This portrays the competence that the human capital of Unilever has. Unilever’s social capital is observed from the bond that is shares with the groups of small scale farmers who supply to the organization. The relationship is beneficial to both parties especially with the strategy towards sustainability where the farmers practice sustainable agricultural activities. In its sustainable strategy, Unilever has committed to buy 100% of its palm oil from sources that can be traced thus showing their keenness towards human capital. The multiple capital approach used at Unilever is integrated into its strategy for sustainable business in order to maximize on performance. Figure 1: Unilever Business Model and Sustainable Living Plan Source: Parekh, 2016 Figure 2: Unilever Products Source: Parekh, 2016 2.4 Capitals and their Management in Procter and Gamble Procter and Gamble’s business model is reliant on the growth of the present brands and their success (Bhattacharya and Khausar, 2016). The consumer industry is very competitive thus the organization has focused on aggressively marketing the products of Procter and Gamble and ensuring that all possible market segments are targeted. Procter and Gamble’s market covers over one hundred and eighty countries and the presentation of the products are aimed at ensuring maximum impact on the consumer (Park et al, 2015). The key product categories of Procter and Gamble cover personal care, family care, health care, baby and beauty products. The key customers of the organization are individuals and families who use the products mentioned while partners involve retail sellers, merchandisers, drug stores, department stores and distributors. Raw materials used by the company are sourced from suppliers and the company has its own licenses under registered trademarks. The industry in which Procter and Gamble operates is naturally competitive thus research and development is usually targeted at improving products for customer loyalty. Procter and Gamble employs over 130, 000 staff including interns (Friesike et al, 2015). From the financial reports of Procter and Gamble, the financial capital is well managed as evidenced form the generation of substantial cash from business operations and the shareholder dividends. The products and machinery used at Procter and Gamble are innovative and cost effective. Furthermore, the company corks towards improving the productivity and safety of the systems thus making sure that the manufactured capital is efficient for the processes at Procter and Gamble. The organization employs a rigorous process to recruit and hire competent personnel for its human capital (Giordano et al, 2016). Given that Procter and Gamble is dependent on excellent performance of employees, the human resource department is challenged with getting the best staff that is additionally talented. The organization has a healthy relationship with suppliers and other stakeholders as seen from the initiatives that are carried out as agreed and the progress that has been implemented towards sustainability from both Procter and Gamble and its suppliers (Wallace and Garcia, 2016). In order to protect natural capital, P & G has committed itself towards improving the lives of the communities around the organization and protecting the environment through sustainable thinking and sustainable innovation (Cervantes, 2015). Figure 3: Procter and Gamble Business Model Source: Cervantes, 2015 Figure 4: Procter and Gamble Business Segments Source: Cervantes, 2015 2.5 Discussion From the business models and management of capitals, Unilever has the most transparent sustainable implementation of business practices as compared to Procter and Gamble. While Procter and Gamble seeks to employ the best talent to build its human capital, Unilever focuses more on building the talent of the present employees. Unilever additionally banks on the intellectual capital from both the employees and the technological staff. Procter and Gamble’s business model relays a process of the function of the organization while Unilever shows a circle which is repeated when every factor is implemented successfully. 2.6 Strategic approaches towards emergent environments in Unilever In order to sustain themselves in the rapid emerging environments, Unilever has invested heavily on innovative and marketing strategies. While basing on its key goal of increasing its business while reducing its impact on the environment, Unilever’s research and development team focuses on providing inventive products that foresee the future needs of its customers. The inventive focus looks at all aspects of the products for the consumer such as the product itself, packaging, the region that the product is needed and the design. Innovative strategies are the current trend in businesses and they fall under emergent strategies as companies formulate them as they go and learn from what the business brings to them instead of anticipating future needs (Grant, 2016). Unilever engages the comprehensive use of technology and science to enable it to invest in bigger markets and fit into emergent environments. Research and development has enhanced the quality of products at Unilever and their ability to function for the purposes they are meant for among other uses. The development team is continuously working on ways that ensure that cost effectiveness in its operations. The sustainable living plan that Unilever has implemented provides directions for the company in its bid to maximize growth and reduce carbon imprint. Current businesses structures adopt electronic systems which when combined with sustainable thinking are bound to provide positive results for the organization (Yin and Jamali, 2016). Unilever has targets that it has set for the year 2020 among them being one billion people to improve their livelihoods by that time. The company also intends to produce twice as much on the products that have high standards of nutrition. Additionally, the company intends to reduce waste by a half from the products that is provides and promote human rights across the communities that the Unilever brand is used. 2. 7 Strategic approaches towards emergent environments in Procter and Gamble The anticipated growth in the consumer market is bound to diversify the needs of customers thus creating new markets and new segments that need to addressed (Rakthin et al, 2016). These segments have to be addressed with sustainability in mind in order to maintain the consistency provided by the products from the business. Procter and Gamble’s strategies towards emergent environments include marketing of their products to different consumer segments that have not been effectively reached (West et al, 2015). This relates to the tactic to reach the low income consumer whose impact on revenue will help protect the company for economic downturns that have not been predicted. The availability of a market that provides the slightest income is enough for the company to break even in times of economic crisis. The strategy is however limited to existing products as the introduction of new products is mostly at a higher cost aimed at returning the cost of the investment of capital (Bharadwaj, 2015). The major strategy that Procter and Gamble has invested in is corporate sustainability where the organization has analyzed its external and internal environment and set goals that are meant to see the vision of sustainability through and simultaneously position the organization in a stable place in the industry. Procter and Gamble’s innovative strategy is also targeted towards using of alternative energy sources such as biomass in their manufacturing plants and reduction on the use of energy in its processes (Patterson et al, 2016). Given the sustainability laws such as those on carbon tax, the activities on the environment is expected to emit less green house gases thus pressure is placed on companies to produce less. 2.8 Discussion The need to survive and plan for emergent environments has seen both Unilever and Procter and Gamble adopt different strategies to position themselves adequately in the fast moving consumer goods industry. Unilever highly embraces the innovation strategy as this is their core competency in the organization. In as much as Unilever outsources production processes form different companies, its research and development team goes through the products to determine and ensure their quality before they are released into the market. Furthermore, the research team is involved in monitoring of the processes and contributing new ideas where necessary to ensure that standards and the quality of the products are maintained at a high and consistent level. Procter and Gamble on the other hand focuses on marketing as a strategy and has invested in a corporate sustainability plan where it has set sustainability goals to direct the effective use of energy resources, management of waste and corporate social responsibility. Procter and Gamble is additionally aggressive in its marketing and seeks out market segments that are rarely addressed such as the low income consumers. With a balance of incoming revenue from all consumer segments, Procter and Gamble has input a strategy that will protect it in case of an extreme economic crisis. 3.0 Conclusion Sustainability is presently a trend, a competitive advantage and a strategy that is certain to ensure the existence and survival of the next generation (Bharadwaj et al, 2015). As discussed above, both Procter and Gamble and Unilever have adopted sustainability as a business practice to conform to the need to protect the environment and the society. The strategy also ensures their viability in the business industry given the dire need to conform in order to gain any share in the industry. Unilever has adopted a Sustainable Living Plan as its strategy towards sustainability. This approach has encompassed all the goals, mission, operations and functions of the organization in the plan. Procter and Gamble on the other hand has specific goals that target environmental and social sustainability. The comparative analysis reveals that Unilever is more attuned to the sustainability objective as evidenced from its business model. Procter and Gamble has yet to adopt a current business model that focuses on sustainability. The organization however campaigns for and implements sustainability in the processes of the organization and its current practices that aim to conserve energy, reduce waste and promote livelihoods. Unilever integrates all its functions its capitals and strategies towards sustainability thus reflecting their holistic approach towards the strategy. The sustainability strength as seen in Unilever thus provides a lucrative opportunity to work with the team towards conservation of the environment and protection of the society. Reference List Bharadwaj, S., 2015. Developing new marketing strategy theory: addressing the limitations of a singular focus on firm financial performance. AMS Review, 5(3-4), pp.98-102. Bharadwaj, S.G., Varadarajan, P.R. and Fahy, J., 2015. Sustainable competitive advantage in service industries: a conceptual model and research propositions. In Proceedings of the 1992 Academy of Marketing Science (AMS) annual conference, Springer International Publishing (pp. 441-443). Bhattacharya, S. and Kaursar, A., 2016. Study on Corporate Social Responsibility as Strategic Instrument for Creating Sustainable Corporate Brand Value: An Analysis with Structural Equation Modelling. Management and Labour Studies, 41(2), pp.88-106. Cervantes, M., Crimson, K., Figueroa, C., Hess, A. and Martinez, E., 2015. GM 105–12: Procter & Gamble company’s 2015 strategic audit. Child, J., 2015. Organization: contemporary principles and practice. John Wiley & Sons. Dinnie, K., 2015. Nation branding: concepts, issues, practice. Routledge. Du, S., Yalcinkaya, G. and Bstieler, L., 2016. Sustainability, Social Media Driven Open Innovation, and New Product Development Performance. Journal of Product Innovation Management, 33(S1), pp.55-71. Friesike, S., Widenmayer, B., Gassmann, O. and Schildhauer, T., 2015. Opening science: towards an agenda of open science in academia and industry. The Journal of Technology Transfer, 40(4), pp.581-601. Galpin, T., Whitttington, J.L. and Bell, G., 2015. Is your sustainability strategy sustainable? Creating a culture of sustainability. Corporate Governance, 15(1), pp.1-17. Giordano, M.C., Manuti, A. and de Palma, P.D., 2016. Human Capital Reloaded: The Use of Social Media in Human Resource Management. In The Social Organization: Managing Human Capital through Social Media (pp. 1-13). Palgrave Macmillan UK. Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons. Hasan, M.M., 2015. Marketing Analysis of Unilever. Total Quality Management, 11, p.13. Henderson, R., Gulati, R. and Tushman, M. eds., 2015. Leading sustainable change: An organizational perspective. OUP Oxford. Ingwersen, W.W., Ceja, M., Weisbrod, A.V., Cabezas, H., Demeke, B., Eason, T., Smith, R.L., Sengupta, D., Zanoli, E., Gausman, M. and Lee, S.J., 2016. Evaluating consumer product life cycle sustainability with integrated metrics: A Paper Towel Case Study. Industrial & Engineering Chemistry Research, 55(12), pp.3433-3441. Iqbal, J., 2015. Impact of working capital management on profitability of the food and personal care products sector in Pakistan (Doctoral dissertation, The Islamia University Of Bahawalpur). Jantz, S.M., Barker, B., Brooks, T.M., Chini, L.P., Huang, Q., Moore, R.M., Noel, J. and Hurtt, G.C., 2015. Future habitat loss and extinctions driven by land‐use change in biodiversity hotspots under four scenarios of climate‐change mitigation. Conservation Biology, 29(4), pp.1122-1131. Karmasin, M., Diehl, S. and Koinig, I., 2016. Convergent Business Environments: Debating the Need for New Business Models, Organizational Structures and Management respectively Employee Competencies. In Media Convergence Handbook-Vol. 2 (pp. 49-68). Springer Berlin Heidelberg. Lim, W.M., 2015. A blueprint for sustainability marketing Defining its conceptual boundaries for progress. Marketing Theory, p.1470593115609796. Martínez-Blanco, J., Inaba, A. and Finkbeiner, M., 2016. Life cycle assessment of organizations. In Special Types of Life Cycle Assessment (pp. 333-394). Springer Netherlands. Parekh, D.R., 2016. The Beacon: A New Framework for Business Model Reconfiguration for Complex Enterprises. Park, S.H., Ungson, G.R. and Cosgrove, A., 2015. Co-aligning Strategies with Management Structures and Systems. In Scaling the Tail: Managing Profitable Growth in Emerging Markets (pp. 91-107). Palgrave Macmillan US. Patterson, V., Patterson, V., Knott, J., Knott, J., Melnick, R. and Melnick, R., 2016. Achieving more with less: Henkel’s Factor 3 strategy. Journal of Business Strategy, 37(3), pp.3-11. Rakthin, S., Calantone, R.J. and Wang, J.F., 2016. Managing market intelligence: The comparative role of absorptive capacity and market orientation. Journal of Business Research. Roseland, M. and Spiliotopoulou, M., 2016. Converging Urban Agendas: Toward Healthy and Sustainable Communities. Social Sciences, 5(3), p.28. Shevchenko, A., Lévesque, M. and Pagell, M., 2016. Why firms delay reaching true sustainability. Journal of Management Studies, 53(5), pp.911-935. Tietenberg, T.H. and Lewis, L., 2016. Environmental and natural resource economics. Routledge. Varadarajan, R., 2016. Sustainability and Marketing: Concurrent Pursuit of a Smaller Environmental Footprint and a Larger Market Footprint. In Marketing in and for a Sustainable Society (pp. 1-27). Emerald Group Publishing Limited. Vermeulen, W.J. and Metselaar, J.A., 2015. Improving sustainability in global supply chains with private certification standards: testing an approach for assessing their performance and impact potential. International Journal of Business and Globalisation, 14(2), pp.226- 250. Wallace, G. and Garcia, S., 2016. Connected World. West, D., Ford, J. and Ibrahim, E., 2015. Strategic marketing: creating competitive advantage. Oxford University Press. Wooltorton, S., Wilkinson, A., Horwitz, P., Bahn, S., Redmond, J. and Dooley, J., 2015. Sustainability and action research in universities: Towards knowledge for organisational transformation. International Journal of Sustainability in Higher Education, 16(4), pp.424-439. Yin, J. and Jamali, D., 2016. Strategic Corporate Social Responsibility of Multinational Companies Subsidiaries in Emerging Markets: Evidence from China. Long Range Planning. Read More