MGT247 Final Exam

Q1a: What are the business level strategies?

1. Low-cost to a target market
2. Low-Cost to a broad market
3. Differentiation to a target market
4. Differentiation to a broad market
5. Blue Ocean: Integrated Low-cost and differentiation

Q1b: Which market segment of Unilever will you be focusing on and List 3 Products and say the business level strategy associated with it and why you think this.

Beauty and Wellbeing Segment


1. Vaseline Petroleum Jelly: Blue Ocean because they differentiate by being hypoallergenic, fragrance free, etc. and have become a well-known brand. They are also affordable to consumers.
2. Dove Beauty Bar: Differentiation to a broad market because they offer a luxurious and indulgent shower experience that appeals to a broad market that values gentle, moisturizing skin products
3. TRESemme Shampoo: Low cost to a broad market because they offer a range of affordable products that is appealing to many consumers looking for quality haircare products

Q1c: Recommend a new product and business level strategy that will align with an external opportunity and Unilever’s internal competence.

**New Product:** Personalized skin/face moisturizer that is personalized with different add-ins depending on skin-type. There will be a quiz to recommend add-ins for different skin types (oily, acne, dry, combination, etc.) . The product will be a base moisturizer sold separately from add-ins (hyaluronic acid, niacinamide, shea, etc.) that are added in depending on skin type.

**External Opportunity:** Market for personalized skin care is growing as people are looking for more tailored products that directly meet their needs

Internal Competence: Strong record of developing and producing skin care and great knowledge of the industry

**Business Level Strategy:** Blue Ocean because having a customizable product appeals to a wide range of people because it can be for all skin types. The product will be low-cost so it can be competitive in the market

Q2a: What are the corporate level strategies?

1. Single Business
2. Dominant Business
3. Related Diversification
4. Unrelated Diversification
5. Retrenchment
6. Vertica Integration

Q2b: What are the ways to carry them out?

1. Internal Development (R&D)
2. Contracts
3. Strategic Alliance
4. License
5. Franchise
6. Joint Venture

Q2c: What 3 strategies is Unilever Pursuing? Explain.

1. Related Diversification: Expanding it’s portfolio through acquisitions and partnerships while complimenting the core business. Ex: Dollar Shave Club expanded presence to the male grooming market
2. Retrenchment: Divested underperforming brands and focusing on only brands that fit the core business area. Ex: selling the Tea business
3. Vertical Integration: Unilever has acquired companies that provide key input for production and has invested into their own production facilities. Ex: 50o logistical warehouses

Q2d: What are 3 ways that Unilever is carrying the 3 strategies out?

Internal Development: Participated in a lot of research and development to expand the company for related diversification. Ex: Home care increased investment, using Clean Future as a growth strategy

Licensing and Franchise: Unilever has accomplished vertical integration by gaining access to new markets and production capabilities. Ex: licensing with Pepsi to sell Lipton products in the past

Contracts: Entered into contracts with farmers to ensure reliable supplies of raw material for products to allow for vertical integration and maintain effective supply chain and production

Q2e: What do you recommend Unilever do differently in terms of strategy or the way it carries it out?

To further carry out diversification, Unilever should have a strategic alliance with a digital company that allows consumers to have an immediate restock when they run out of a product. This can be done through delivery or a mobile app.

Q3a: What is agency theory about and what are the 4 governance mechanisms? Describe the relationship between principles and agents in your own words.

Agency Theory: View the firm as a nexus of legal contracts and believes all conflicts should be resolved legally

4 Government Mechanisms: Board of Directors, Large Block Shareholders, Executive Compensation, Market for Corporate Control

Principle and agents have a mutual relationship where they both benefit from each other. The principle pays the agent to complete work for them.

Q3b: Describe 4 ways from class they use one of the 4 corporate governance mechanisms at Unilever. State which governance corresponds to each example. Note if examples are above average examples or if you think more should be done.

1. Board of Directors: 13 people with a good balance of power as many have different backgrounds. They follow many responsibilities and attend many meetings. Average as their could be more representation.
2. Large Block Shareholders: shareholders attended 550 meetings in 2022 and all are encouraged to give feedback. Above average because shareholders have a huge say in the company.
3. Executive Compensation: Compensation committee determines the framework and policy for pay. Above average because the committee approves different pay to make it more fair
4. Corporate Control: Unilever has a structure and governance framework to divide power into separate committees. Above average because of the balance of power.

Q3c: Given the corporate strategy rec. in Q2, which people or industry experience should be added to the board of Unilever?

Zahir Dossa, a founder of Function of Beauty which is a brand that focuses on customization of hair products. He has expertise in engineering for producing the product and offers a background in sustainability.

Q4a: Which categories of ratios will you be calculating and which ratios are included in this?

Profitability Ratios: Net Profit Margin, Return on Total Assets, Return on Stockholders Equity

Q4c: What have you additionally learned about Unilever from these numbers?

Unilever has been able to increase their profitability ratios from 2021 to 2022 . This shows that strategies relating to profitability are working well. I also learned that they have a weak ROA, especially in 2021.

Q4d: Based on these numbers, will your business level strategy recommendation improve them?

I think my product and strategy would end up costing Unilever a lot to start producing and might not be worth it because they have similar products and potentially already sell to the market that this product would also reach through other brands.