GROWTH STRATEGY OF UNILEVER IN EMERGING MARKETS

II. BASIC CONCEPTS OF GROWTH STRATEGY

Growth strategy refers to a strategic plan that is created and undertaken to expand a firm’s business activities. A firm may strive to redefine the business, penetrate into new markets, enter new business fields which involve or does not involve its main businesses or diversify its product portfolio. The firm can have a large number of choices to do these things by changing product categories, target markets and its functions. Hence, the growth can be accomplished internally or externally.

The objective of internal growth is to gain growth in assets, revenues and profits. A business may implement internal growth due to the increase in operations globally and domestically. In practice, internal growth strategy can be undertaken by expansion, modernization and diversification. To grow internally, the business will put an emphasis on making the effective use of its strengths and resources in order to produce growth and high annual returns on its invested capital.

External growth is formulated for the same targets as internal growth. However, it is done through acquisitions, mergers and strategic alliance for the purpose of obtaining market share, increasing brand awareness on the global and enhancing competitive advantages. Providing that the external growth strategy is properly executed, the firm can maximize growth potentials at the right pace, especially when its growth opportunities are limited by financing or other constraints or are not the best choice in terms of strategic opportunities and shareholder purposes (Lucky, D. 2007).

Growth strategies play a vital role in the existence and development of all companies whatever industry or sector they operate in. Since the business environment of the firms is typically dynamic and highly competitive, the firms are required to grow to survive. A growth strategy helps the company to expand its sales and market share as well as gain more efficient management experience. As the firm increase in size, it will take advantage of economy of scale and control its costs more efficiently. In addition, growth strategies allow the firm to have closer access to consumers and markets and respond quickly to changes in market demands. Therefore, a firm that fails to move ahead may fall behind in the competitive race and lose its market share to the competitors.

III. GENERAL INFORMATION OF UNILEVER

Unilever is a multinational corporation providing a variety of consumer goods. The corporation is known as a giant in the world’s fast moving consumer goods market. It owns more than 400 brands including 14 “billion euro brands”, which each earns annual revenues in excess of € 1 billion. Its portfolio ranges from nutritionally balanced foods to indulgent ice creams, affordable soaps, luxurious shampoos and daily household care products. It produces many world-leading brands, namely Omo, Knorr, Dove, Lipton, Axe and Hellmann’s, alongside trusted local names such as Blue Band, Pureit and Suave.

Nowadays, there are about 2 billion consumers worldwide using a Unilever product on any given day. Its products are being sold in more than 190 countries across the world. In addition, with more than 50 years experience in Brazil, China, India and Indonesia, Unilever has become one of the corporations that have the longest footprint in the emerging markets. It is important to note that it is strongly positioned in almost every market where its products present (see the figure below).