Luận văn A comparison the business strategy of unilever and procter & gamble in Asian market
THE UNIVERSITY OF DANANG
UNIVERSITY OF ECONOMICS
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RESEARCH PAPER
A COMPARISON THE BUSINESS STRATEGY OF UNILEVER AND
PROCTER&GAMBLE IN ASIAN MARKET
Academic advisors:
Class: 42K01.5
Trịnh Thúy Hường
Student’s name:
Phan Công Anh
Hồ Thị Vui
Huỳnh Ngọc Toàn
FONGSAVANH VILAYPHONE
Danang, June,2020
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LIST OF PICTURE
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INTRODUCTION
1. Rationale
Nowadays, as globalization is becoming popular and necessary for every country in the
world, multinational companies are also formed quickly with the desire to reach out to the
international market, creating an increase. growth in size and sales. Growth is
indispensable to maintain for each company, so choosing the strategy to reach out to the
international market plays an extremely important role for each company. The right
strategy not only helps the company gain profits in the short term but also paves the way
for long-term development.
Markets around the world are different in culture, economy, income level, demographics,
etc. Understanding different strategies of different companies has become an
indispensable experience for each company.
In the world, two famous corporations in the field of consumer goods, Unilever and P&G,
are typical for approaching the market with different strategies that bring different
advantages, especially in Asian markets. .
2. Objects and scope of research
The scope of the study is the operation of Unilever and P&G in typical countries in Asia
such as Japan, Vietnam, Singapore, ... The research period is conducted from the time
when companies penetrate the market and the main ones. The book has changed to adapt
to that market.
3. Methodology
The paper is studied by methods of data collection and data analysis.
4. Layout of the thesis
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The paper consists of 4 chapters:
Chapter 1: Theoritical basic
Chapter 2: UNILEVER'S ASIAN MARKET STRATEGY
Chapter 3: P&G'S BUSINESS STRATEGY IN ASIAN MARKETS
Chapter 4: COMPARE STRATEGY OF P&G AND UNILEVER
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Chapter 1
THEORETICAL BASIS
1.1 Multinational company
Multinational companies are often referred to as MNC (multinational corporation) or
MNE (multinational enterprise), which refers to companies producing or providing
services in two countries, which can greatly influence relationships. international relations
when they have a major economic impact on some areas with abundant financial
resources, serving public relations and political corridors. Multinational companies
operate and are based in many different countries.
Multinational companies play an important role in the process of globalization, a new
form of MNE is formed corresponding to the process of globalization - it is a global
consortium enterprise.
1.2Characteristics of multinational companies
Centralized ownership: affiliates, subsidiaries, and agents around the world are owned by
the parent company, even though they have specific daily activities that are not exactly
the same.
1.3The purpose of development of multinational companies
First, there is the need to internationalize manufacturing and markets to avoid trade
restrictions, quotas, import duties in countries of purchase, use of raw materials, cheap
labor, and exploitation of local potential. Second, it is the need to use the competitiveness
and comparative advantages of the host country, making the transfer of high-tech
industries.
Third, seek higher profits and risk dispersion. As well as avoiding the instability caused
by the business cycle when manufacturing in a single country In addition, protecting the
monopoly of technology or production know-how in an industry that does not want to be
transferred is also a reason to expand the locality for production. Besides, cost
optimization and market expansion are also the goals of MNC. The operation of MNCs,
because it is carried out in an international environment, issues such as input markets,
output markets, transportation and distribution, capital mobilization, payment ... have
certain risks. The common risks of MNCs fall into the following two groups: - Risks in
buying and selling goods such as: tariffs, transportation, insurance, supply-demand cycles,
other macro policies ... - Risks in transition finance such as risks when local government
policies change, risks of exchange rates, inflation, foreign exchange management policies,
taxes, debt crisis ...
1.4International business strategies of multinational companies
1.4.1 The International Strategy
The product is manufactured in the domestic market and sold to other countries with
minimum adjustments according to local requirements. Each Strategic Business Unit has
the right to actively apply this strategy. This strategy is less under pressure to reduce costs
and the pressure of local requirements (because production is primarily localized). But it
is highly sensitive to exchange rate and political risks
Features of the international strategy:
• Exploiting comparative advantage, domestic position to turn into a competitive
advantage
• Entering into skills-deficient markets of MNC. Value is created by moving the
core of competition from the country to abroad, where competitors are not able
to develop, respond, and maintain in a similar fashion when expanding markets.
foreign school
• Centralizing product development functions such as R&D in the country,
producing products according to domestic market demand standards.
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• Establish production and marketing divisions in key regions and countries
where they do international business
• Headquarters headquarters strictly control marketing strategies and products,
local adaptation is limited.
• International activities ranked second after the market in the country
Limitations:
• May miss opportunities in local market.
• Not specifically grasping the needs of other localities.
• Not a long-term strategy
1.4.2 The Transnational Strategy
The strategy that MNC seeks to achieve global efficiency and respond locally, sharing the
common mission of MNC but taking action that varies according to local requirements
(standardizing where possible, adapting where required) Selecting an optimal location
cannot guarantee that the quality and cost of the inputs there will also be optimal. Transfer
of experience can be a core resource of competitive advantage, but experience cannot be
transferred automatically.
Features of the Transnational strategy:
• Competitive advantage can be developed in any of MNC's operating units
• Try to achieve low cost based on regional economy, economies of scale, effective
learning as well as production differentiated products for customers in different
areas, encourage opening up in places where developing operational skills in
global operations
• The product and skills line can be transferred between units in MNC, collective
promote the development of skills in global learning institutions
• The value created by innovation reinforces and exchanges ideas, products and
processes
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Limitation: Implementing this strategy has many difficulties. because local response
increases cos
Two trends need to be avoided: focus the company's operations too large on a central
location, or because it wants to increase the level of local adaptability that distributes the
company's operations across too many different locations.
1.4.3 The Global Strategy
MNC expands overseas markets based on standardization and competitive costs; Value is
created based on product design for the global market and the most effective production
and marketing. The scale of production and distribution of products has been improved,
facilitating development investment and reducing costs very positively; but difficult to
meet local needs.
Features:
• Link SBU in many countries to share cheap resources, emphasizing the issue of
ensuring the size of economic benefits.
• Standardize global products to maximize profits by exploiting scale, regional
economic learning (strategic location)
• Not trying to meet local - Suitable for industrial products
• Strategic objectives The strategy is to pursue a global low-cost strategy to support
the "aggressive pricing" in the world. some of the most favorable positions on the
global scale (outsource)
• Decentralized decision at headquarters
Limited: inappropriate in markets that need high adaptation
1.4.4 The multi-domestic Strategy
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Strategic decisions and activities disaggregated by business unit of each country. This
strategy has a high customer base but limits the exploitation of economic scale, learning
and coordinating information.
Features of the Mutil-domestic Strategy:
• Focusing on competition in each market
• Make a profit by offering customers a product that meets the tastes of different
national markets, resulting in increased product value in the local national market
and pushing up product prices
• High local decentralization (proximity to location and culture)
• Value created by empowering local administrators to adapt to local economic and
legal economic environment
• Suitable when available many branches in countries and the pressure to reduce
costs is not large - Suitable for consumer products
Limitations: high costs
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Chapter 2
UNILEVER'S ASIAN MARKET STRATEGY
2.1General introduction about Unilever
2.1.1 General infomation
Unilever is a global corporation founded in the 1930s of England and the Netherlands that
is world-renowned in the field of manufacturing and fast-moving consumer products
including home and personal hygiene products, eat, tea and tea drinks. Typical Unilever
brands are widely consumed and accepted globally such as Lipton, Knorr, Cornetto, Omo,
Lux, Vim, Lifebouy, Dove, Close-Up, Sunsilk, Clear, Pond's, Hazeline, Vaseline, ... with
sales of over millions of dollars for each brand has proved Unilever is one of the most
successful companies in the world in the field of consumer healthcare business (Personel
Care) .. Along with Proctol & Gambel (P&G), Unilever currently dominate the world on
these products.
Some basic information of Unilever
Founded: Merged Lever Brothers and Margarine Unie in 1930
Headquarters: London and Rotterdam
Industry: Manufacturing (Household Appliance, Food, Personal Care)
Type: Mass
Key employees: Paul Polman (CEO), Marijn Dekkers (chairman)
Website: www.unilever.com
2.1.2 History of formation
Unilever was founded with the original name of Lever Brothers, starting its soap business.
The initiator of the initial business idea was Wiliam Hesketh Lever. In 1884, he bought
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himself a small soap factory. He then focused on marketing his products, thereby
increasing production by 20 to 450 tons per week. At that time, his workshop had two
strategic products: Lever’s pure Honey and Sunlight. By March 1888, he decided to
expand the factory to an area of over 23 hectares. In 1890, Lever decided to expand the
market beyond Britain's borders with the first overseas markets being Australia, Canada,
Germany, and Switzerland. In 1906, the company acquired Vinolia, a soap-making
company. In 1910, the Company acquired Hudson’s - a major detergent manufacturer in
the UK. From 1910-1915, Lever bought three more British soap-making companies, one
of which was Pears, one of Unilever's rivals.
By 1911, the Lever brothers had a huge market share, and one out of every three soap
bars was Lever.
After World War I, the company continued to expand into Africa.
Until January 1930, a merger of Margarine onion (Netherlands) and Lever Brothers
(England) created an Anglo-Dutch alliance with the new name Unilever.
To avoid double taxation of the two countries, the company has split into Unilever PCl
based in the UK and Unilever NV based in the Netherlands.
2.1.3 Mission, vision, business goals
2.1.3.1 Mission
Activity to create a fresher future every day. Unilever's mission is to make everyone feel
comfortable, improve their beauty and get rid of life's worries with products that are good
for them and those around them. And they achieve this by creating and producing
products that are affordable, suitable for all walks of life and society around the world.
Inspire people through daily actions through our products to make a big difference to the
world. Grow your company with a great caliber but still care about the surrounding
environment.
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2.1.3.2 Vision
With the mission set out above, Unilever believes its products can improve the quality of
human life. Therefore, for the sustainable development of the company, Unilever focuses
on the issues of society and the environment, considers business activities and promotions
that bring value to the company and the whole society..
2.1.3.3 Business goals
• Long-term goals: Meeting the daily needs of consumers around the world,
recognizing the wishes and desires of customers in the future. Respond creatively
and compete fairly with other brands to improve the quality of life. Especially the
goal of sustainable development, developing the company separate from the bad
influence on the natural environment.
• Short-term goals: For each period, the company will have its own short-term goals
depending on business strategies, market activities and the influence of the global
economy.
2.1.4 The organizational structure of Unilever
Unilever's structure is a combination of senior leaders including executives, non-
executive directors, company executives, departments and employees. The departments
will undertake their own functions, operating independently. However, there is still a
connection between departments to create flexibility in business activities.
Functional departments:
• Materials supply department: finding and supplying raw materials to serve the
increasingly complete production activities.
• Accounting Department: is responsible for managing the entire capital and assets
of the company, organizing the inspection and implementation of economic and
financial policies, timely statistics, and the exact situation of assets and capital
sources to help. The director regularly checks the company's business operations.
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• Planning Department: making plans for the company to help the implementation
process be more convenient, avoiding mistakes in the implementation process.
• Human Resources Department: Managing staff, recruiting personnel.
• Marketing Department: Managing product image management.
2.1.5 Product
This company owns many large-scale companies producing the world's consumer goods,
foodstuffs, detergents and cosmetics.
Unilever has more than 400 brands, among the most famous ones are OMO, Surf, Lux,
Dove, Knorr, Comfort, Vaseline, Pond's, P / S, Signal, Close Up, AX, Rexona, Vim, Cif
(Jif), Sunsilk, Sunlight, ...
Currently Unilever is trading in 3 main product lines including:
2.1.5.1 Food line for processing and eating
• Wall’s ice cream: Includes purely flavored diet products. The product is suitable
for all audiences, with the convenient ability to help the brand be chosen by many
people in the current balanced diet.
• Knorr: Knorr is one of the largest and most favorite brands in Unilever in Vietnam
market. With the spice products used in Vietnamese dishes, it brings an attractive
flavor, suitable for the diets of Vietnamese people.
• Lipton: Lipton is one of the leading beverage brands in the world and in Vietnam
Lipton is loved by tea bags to suit the taste of all ages. With convenient features
when stored in bags and reasonable price Lipton has become a major beverage
brand in Vietnam.
• Unilever food solutions: This is a brand used for high-class cooking by
professional chefs with high expertise. With specific spices, brand standards are
gradually becoming an indispensable choice for chefs in the world.
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2.1.5.2 Hygiene and personal care product line
• Lux, Vaseline, Hazeline: known for its shower gel, soap, and facial cleanser with a
charming aroma, suitable for many ages.
• Dove, Sunsilk, Clear: Famous in the Vietnamese market for hair care products
from shampoos, conditioners to professional hair warmers.
• Lifebouy: Soap firm is used almost at home in Vietnam
• Closeup, P / s: With the main product is toothpaste with compatibility suitable for
all ages this is a brand that many people choose to use on the oral hygiene market.
• AX: brand of perfume products, hair gel for men
• Rxonae: A popular deodorant brand worldwide
• Pond’s: owns the skin care products trusted by many women because of its quality
and reasonable price compared to cosmetic lines from other brands.
2.1.5.3 A line of laundry products for clothing and household utensils
• Omo, Viso. Surf: These are cleaning brands that dominate the market in Vietnam
today. With quality, easy-to-use laundry soap products, Unilever is trusted by
many customers.
• Comfort: Along with clothes cleaning products, comfort is a brand that includes
clothing products with many scents suitable for many families in Vietnam.
• Sunlight washing dishes, Sunlight cleaning floors, Cif: Sunlight has become a
trusted kitchen cleaning brand that has been trusted for the past 15 years.
• Vim: Vim is a cleaning product that cleans bacteria in the toilet with simple and
effective use.
With 3 current product lines, Unilever owns more than 400 outstanding brands including
many famous brands in Vietnam, including OMO, Surf, Lux, Dove, Hazeline, Ponds, P /
S, Close. Up, Vim, Cif, Sunsilk, Sunlight, ..
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2.2 Unilever's Asian Market Strategy
From the beginning when penetrating into the Asian market, unilever was oriented to
business under the Mutidomestic strategy. For a new market with a large customer base
and diverse cultural, consumer habits, Unilever must make product differentiation to meet
local needs. The favorable condition for unilever to implement this strategy is that
countries in Asia have a large number of people in the same country. For example: China
(1.3 billion people), India (nearly 1 billion people); Indonesia (200 million people),... In
order to pursue this strategy, the company must build activities in almost every function
to suit each target market.
2.2.1 Strategy for the product
In product research and development in Asian markets, Unilever focuses on meeting the
needs and tastes of each country. Each country will need different products with different
characteristics. When the decision to enter a new market is made, unilever will select
existing products that may be suitable for this market, or research to create a new product
based on market resources and needs. Unilever's products are diversified, classified into
many models to meet the diverse needs of customers.
To pursue the Mutidomestic strategy, the company had a large number of industries with
separate product segments. Products with specific characteristics in the same category
will make it easy for customers to choose and fit the tastes of customers to change
products.
Food and beverage group products in Indonesia:
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Picture 2. 3 Unilever 3
Products of personal care group in India:
Picture 2. 4 Uniever 4
Besides the differences in product quality among countries, Unilever also focuses on
product packaging design according to the tastes of each country.
For example, in the Japanese market, eco-friendly products are encouraged to be
manufactured and consumed. Products labeled as Green Power are Dove, Lux, Clear,
Timotei and Lipton.
2.2.2 Strategy for the price
For the price policy, at present, compared to other competitors in the Unilever market,
there is a price segment for products that are spread out. This makes it easy to reach a
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wide range of customers, everyone can access Unilever products as the company's
original mission. The customer segments that the company wants to target are those with
low and medium income. Those who have a basic need for using Unilever products.
Having a large market share in 90 countries around the world, Unilever focuses on not
only countries with developed economies in Europe but also poor countries in Asia.
Unilever is also taking advantage of the development of a wide range of different product
lines to meet the needs and income of millions of people around the world. in many
different countries.
Unilever is also the first company to introduce small packages of shampoo for poor
customers. In many countries like China, Bangladesh, Pakistan, Sri Lanka ... Unilever is
also considered as a "local company".
2.2.3 Strategy for the Promotion
In advertising policy, Unilever focuses on exploiting traditional images, imbued with the
identity of each country. The advertising style changed from classics, direct product
introduction to metaphor in television ads is a prominent highlight in the ads of Unilever.
The advantage of this style is simple, easy to understand and suitable for customers in
many large markets.
The ads of Sunsilk, Clear, Dove are now more closely following new market
developments, have a more attractive storyline and not only limited to the introduction of
pure products but have focused more on the impact factors. targeting specific customers,
so that customers can remember, identify, distinguish and select its products among
similar products in the market.
2.2.4 Strategy for the place
With the low price segment of products and based on the demographic situation of the
Asian market, Unilever's target customers are those who live in rural areas where there is
a high demand for protective products. birth, daily consumer goods. In order to bring
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