Strategic planning for Unilever United Arab Emirates Ltd

For the purpose of this report of ‘Strategic Planning’ for the Ed-excel Level 7 Extended Diploma in Strategic Management & Leadership I have selected Unilever United Arab Emirates Ltd.

The company had a turnover of Rs. 23.3 bn (Euro 309 mn) in 2008, and enjoys a leading position in most of its core Home and Personal Care and Foods categories, e.g. Personal Wash, Personal Care, Laundry, Beverages (Tea) and Ice Cream. The company operates through 5 regional offices, 4 wholly owned and 6 third party manufacturing sites across Middle East.

http://www.unileverme.com

TASK 1

(A) TOOLS TO ANALYSE THE EFFECTS OF CURRENT BUSINESS PLAN, (B) TOOLS TO DEVELOP STRATEGIC OPTIONS FOR THE ORGANIZATION, (D) OPTIONS TO FORM BASIS OF FUTURE ORGANIZATIONAL STRATEGY.

George (1997) Following is the five step model to analysis effects of business plan, develop future strategic options and options to form basis of future organizational strategy. This five step model was presented.

1. Assess the external context, in terms of opportunities and threats (e.g. from

environmental scan, institutiogramme, coverage matrix and/or stakeholder analysis)

2. Prioritise and cluster opportunities and threats

â€¢ If you have more than 15 of each, prioritise (e.g. through voting)

â€¢ Brainstorm which opportunities and threats can be related to each other

Who should participate in the following step? It is often hard to take step 2 with

a group of 15 or more people, although that is ideal. Alternatively a core team

of 1-5 people can do step 2. However, a process facilitator should not do it

alone in a break.

3. Develop strategic options. Formulate strategic options that:

â€¢ Respond to one or more opportunities and/or threats

â€¢ Are actions (or results) related to output, input, mission, vision and/or relations

â€¢ Are straightforward (clearly relate to opportunities and/or threats), but

â€¢ Are also creative (there may be more than the most obvious response. And you

may consider new solutions that respond to new trends, opportunities, and threats)

â€¢ You may develop several options relating to the same opportunity or threat

â€¢ For each threat or opportunity try to formulate at least one strategic option

4. Rate the options in terms of relevance to (note that this is only a preliminary

selection) in the SOP matrix

â€¢ The criteria in your BQ, and/or

â€¢ The mission and aspiration of the organisation

5. Follow-up

â€¢ Implement internal organisational analysis of critical elements

â€¢ Strategic orientation (SOR), the final selection of a (set of) strategic options

TASK 2

(A) ANALYSE THE NEEDS AND EXPECTATIONS OF STAKEHOLDERS OF AN ORGANIZATION.

Each stakeholder brings something different to an organisation in pursuit of their own interests, takes risks in doing so and receives certain benefits in return but is also free to withdraw support when the conditions are no longer favourable.

Shareholders expect increasing value of their investments.

Customers expect high quality and benefit from product or service they receive in return of what they spent on it.

Employees expects good pay and conditions, good leadership and job security but are free to withdraw their labour if they have a legitimate grievance or may seek employment elsewhere if the prospects more favourable.

Suppliers expects payment on time, repeat orders and respect but may refuse to supply or cease supply if the terms and conditions of sale are not honoured.

Society provides a licence to operate in return for benefits to the community as a whole and a respect for ethical values, people and the environment.

(B) propose a suitable structure for a stratefy plan that ensures appropriate participation from all stakeholders of an organization.

The essence of organizational design is the manipulation of a series of parameters that determine the division of labour and the achievement of coordination. By all the time keeping in mind the organizational requirements of the Unilever UAE I would like to suggest a ‘Matrix Organizational Structure’ based on the grouping by the market & functions.

This proposed structure will serve the Unilever UAE’s end markets and because the workflow interdependencies are the important ones to some extent and the organization cannot easily handle them by standardization adopting this structure will tend to favour the market bases for grouping in order to encourage mutual adjustments and direct supervision.

By adopting the proposed organizational structure the Unilever UAE can take advantage of the followings key benefits;

Because key people can be shared, the project cost is minimized

Conflicts are minimal, and those requiring hierarchical referrals are more easily resolved

There is a better balance between time, cost and performance

Authority and responsibility will be shared

Stress is distributed among the team

Improved ability to access resources across the old functional and geographic silos.

better coordination on shared technologies across the organization (such as IT)

Faster decentralized decisions

Improved access to a diverse range of skills and perspectives.

Improved global or regional projects

Increased communication and coordination across the business

Reflects the needs of regional customers

Ref; Christian Scholz, Leadership management in Europe, 2008, page 248-249

(c) DEVELOP CRITERIA FOR REVIEWING POTENTIAL OPTIONS FOR A STRATEGY PLAN.

An organization is viable if it can survive in a particular sort of environment. Although its existence is separate, so that it enjoys some kind of autonomy, it cannot survive in a vacuum. Hence in my opinion apart from the typical SWOT and PESTL analysis, following benchmarking criteria should also be used for reviewing potential options regarding a management strategy.

Managerial, operational and environmental varieties, diffusing through an institutional system tend to equate; they should be designed to do so with minimal damage to people and cost.

The four directional channels carrying information between the management unit, the operation, and the environment must each have a higher capacity to transmit a given amount of information relevant to variety selection in a given time than the originating sub system has to generate it in that time. Wherever the information carried on a channel capable of distinguishing a given variety crosses a boundary, it undergoes transduction; the variety of the transducer must be at least equivalent to the variety of the channel.

Further to that to review the potential options for the management strategy and organizational structure we must make sure that the best possible strategy clearly considers the age and size of the organization, technical systems, environment and the governing framework. Since the Unilever UAE has a long existence history and it is operating at a multinational level hence the proposed management strategy should more elaborate its structure; that is’ the more specialized its jobs and units and the more developed its administrative components.

The prospective strategy must avoid technological uncertainties; it should provide which production and operational technology will prove to be the most efficient? It should be free of strategic uncertainty. It the prospective management strategy should be clearly identified and different firms are groping with different approaches to product/market positioning, marketing, servicing, and so on, as well as betting on different product configurations or production technologies.

Unilever’s pressure to develop products to meet demand is so great hence the proposed management strategy should make sure that bottlenecks and problems are dealt with expediently rather than as a result of an analysis of future conditions. Similarly implementing new strategy costs millions to the organization hence it should make sure that reduce operative cost and increase the efficiency of the organization.

Ref: Mark A. Huselid, The workforce scorecard, 2005, page 134

(d) DEVELOP CRITERIA FOR REVIEWING POTENTIAL OPTIONS FOR A STRATEFY PLAN.

For the organizational development, Unilever UAE should often undergo significant change at various points in their development. Change management entails thoughtful planning and sensitive implementation, and all the above. Consultation with involvement of people affected by the changes. If the firm force change on people normally problems arise. Change must be realistic, achievable and measurable. These aspects are especially relevant to managing personal change. Besides that following dissemination processes may also be helpful to gain commitment;

Alignment – employees should be encouraged to recognise, accept and buy in to the organisation’s vision and strategy

Equity – employees should be made to feel a sense of equality in the way they are treated, recognised and rewarded

Integrity – the organisation should be seen to be fair and respect people, regardless of status

Consensus – management should seek to develop relationships based on mutual understanding and support

Achievement – individuals are motivated by pride and satisfaction in the quality and performance of their work. Achievement should therefore be recognised and rewarded

Rationality – a systematic approach to problem solving and communication in the organisation encourages an environment in which people are honest, consistent and open, which creates greater trust and therefore engagement

Development – individuals should be made to feel they operate in an environment which enables them to learn and grow

Teamwork – team spirit and co-operation encourages managers to get the best performance from each group member

Belonging – managers should aim to be role models who take pride in what they and their co-workers achieve together.

Ref; James R. Morris, New Leadership, 1957, 16 page

Ref; Ricky W. Griffin, Managing people and organizations, 2009, page 243-244

TASK 3

(A) COMPARE ETHICAL, CULTURAL, ENVIRONMENTAL, SOCIAL AND BUSINESS WITH THE CURRENT BUSINESS OBJECTIVES OF AN ORGANIZAITON.

ETHICAL BACKGROUND OF UILEVER UAE;

The Unilever UAE comprises several departmental units. Their ethics part is very important. In the case of Unilever UAE organization, they should follow ethics for both individuals and public. As a production firm it should follow social responsibility. Where, it should ensure that they don’t make harmful process maintaining against environment. Even it has environment effecting wastages or garbage it should recycle or dispose without harmful. They operate several units. They bring changes in the organization. But change arrive, they have responsibility to job secure of employees. Also there are pressures in management level. Key element of pressure is dissatisfaction of clients. It may cause to lower revenue and higher cost for the firm. Even if they face increased cost they should follow customer loyalty and pay tax to government properly. Those are key roles in ethical background of Unilever. There customer dissatisfaction has been increasing with its product/ service. As a business organization it should satisfy its clients’ needs.

Cultural background of Unilever

The Unilever has a culture which is participative management style in the organization. But each unit has general manager. Their management structure doesn’t follow functional structure. Here a professional team working going on. Still they found poor staff morale. In order to find solution, they should identify the reasons for poor staff morale.

Environmental background;

Organizational environment consist of all factors that in one way or another are affected by the organizational decision.

Unilever Organizational environment refers to the forces that can make an impact. Forces made up opportunities and threats. Organizations dose not exist in isolation. It works with the overall environment. These can be divided into two main parts as, Internal Environment and External Environment

Internal Environment

Organizations internal environment refers to the elements within the organization. Internally, an organization can be viewed as a resource conversion machine that takes inputs (labour, money, materials and equipment) from the external environment (i.e., the outside world), converts them into useful products, goods, and services, and makes them available to customers as outputs.

Management- A manager is someone skilled in knowing how to analyze and improve the ability of an organization to survive and grow in a complex and changing world. This means that managers have a set of tools that enable them to grasp the complexity of the organization’s environment. A management system describes the organization and the set of significant interacting institutions and forces in the organization’s complex and rapidly changing environment that affect its ability to serve its customers. The firm must continuously monitor and adapt to the environment if it is to survive and prosper. Disturbances in the environment may spell profound threats or new opportunities for the firm. The successful firm will identify, appraise, and respond to the various opportunities and threats in its environment.

Share holders-they are the owners of an organization. A shareholder or stockholder is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. A company’s shareholders collectively own that company they invests there recourses to an organization in order to obtain a profit.

External Environment

It consists of all the outside institutions and forces that have an actual or potential interest or impact on the organization’s ability to achieve its objectives:

Competitive

Technological

Political

Legal

Social background:

Here they introducing computer technology for minimise the costs for production. On the other hand they intend to redundancy the employees’ volume. Where, it causes to poor staff morale with the change of technology and minimum job secure to employees.

Business background;

As a business organization, the Unilever UAE should identify the customer needs and wants before supply its products. If they did it well the customer will satisfy and retain with them. But here the customer dissatisfaction is being increased in this case. So they need greater strategy to satisfy the customer.

Ref; Karen Sobel Lojeski, Uniting the Virtual Workforce, 2008, page 179-181

(B) DEVELOP APPROPRIATE VISION AND MISSION STATEMENTS FOR AN ORGANIZATION.

A vision statement gives a broad, aspiration image of the future that an organization is aiming to achieve. Vision statement is more about the organizational values rather than bottom line measures. Whereas a mission statement is a brief summary of a couple of sentences that provides a bird eye view of the organizational background and purpose of existence.

To develop a vision and mission statement of the Unilever UAE first of all I investigated into the idea that will make Unilever stand out from its competitors, then I indentified the key measures of the success, combined these ideas and measures into a tangible and measurable goal and last of all refined the words until the concise and precise statements were made including all the elements of its definition.

Ref; Karen Sobel Lojeski, Uniting the Virtual Workforce, 2008, page 179

UNILEVER’S VISION STATEMENT;

”Validity is at the heart of everything we do. It’s in our brands, our people and our approach to business”.

UNILEVER’S MISSION STATEMENT;

”Unilever’s products touch the lives of over 2 billion people everyday whether that’s through feeling great because they’ve got shiny hair and a brilliant smile, keeping their homes fresh and clean, or by enjoying a great cup of tea, satisfying meal or healthy snack”.

(C) PRODUCE AGREED FUTURE MANAGEMENT OBJECTIVES FOR AN ORGANIZATION.

Objectives are those destinations which ultimately satisfies corporate desires. Different organizations have different objectives, before starting any business, its objectives are defined. Though like many other profit making companies, Unilever UAE’s ultimate objective is profit maximization. Apart from profit maximization, business may have various other objectives. Before defining objectives, the strategic management must make sure that objectives are not virtually impossible and mutually agreed upon. The objectives which are focused on results consistent, specific, measurable, related to time and attainable are usually mutually agreed upon. To attain such goals different sets of management strategies are implemented. It is less or more true that objectives of management strategy are same as that of the organization as a whole. Following is a brief summary of objectives by Unilever UAE;

Understand customers, competition and industry, and meet specific customer requirements.

Improve product / service / channel / customer congruency.

Grow the company by reaching new markets through new channel partners.

Develop company values and culture.

Hire the best people.

Some management strategies might succeed better than others. It depends upon the three key success criteria which can be used to evaluate the viability of strategic options. These three key elements of evaluating the strategic options are suitability, acceptability and feasibility.

Suitability; is concerned with whether a strategy/objectives address the key issues that have been identified in understanding the strategic position of the organization. In particular this requires an assessment of the extent to which any strategic option would wit with key drivers and expected changes in the environment, exploit strategic capabilities and be appropriate in the context of stakeholder expectations and influence. There are number of tools that can be used to access the suitability of strategic options, I-e: TOWS matrix, relative suitability of options that matters, ranking strategic options, decision tree and scenarios etc.

Acceptability; It is concerned with the expected performance outcomes of a strategy. These can be of three types; returns, risk and stake holders reactions. Returns are the benefits which stake holders are expected to receive from the strategy which may be calculated by financial analysis and cost benefit analysis etc. Risk can be accessed similarly by conducting sensitivity analysis, financial ratios, share holders value analysis and reactions etc.

Feasibility; this is concerned with whether an organization has the resources and competence to deliver a strategy. A number of approaches can be used to understand feasibility; I-e: financial feasibility, resource deployment etc.

Ref: Thomas L. Quick, Successful team building, 1992, page 63

TASK 4

(A) EXPLAIN THE IMPORTANCE OF EXTERNAL FACTORS AFFECTING AN ORGANIZATION.

In analyzing the macro-environment, it is important to identify the factors that might in turn affect a number of vital variables that are likely to influence the organization’s supply and demand levels and its costs (Kotter and Schlesinger, 1991; Johnson and Scholes, 1993). The “radical and ongoing changes occurring in society create an uncertain environment and have an impact on the function of the whole organization” (Tsiakkiros, 2002). A number of checklists have been developed as ways of cataloguing the vast number of possible issues that might affect an industry. A PEST analysis is one of them that is merely a framework that categorizes environmental influences as political, economic, social and technological forces. Sometimes two additional factors, environmental and legal, will be added to make a PESTEL analysis, but these themes can easily be subsumed in the others. The analysis examines the impact of each of these factors (and their interplay with each other) on the business. The results can then be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans (Byars, 1991; Cooper, 2000).

(B) ANALYSE THE MAJOR CHANGES TAKING PLACE IN THE EXTERNAL ENVIRONMENT THAT WILL AFFECT STRATEGY.

World appears to be integrating economically, politically and culturally. Irrespective of the national boundaries huge developments in information, communication and technology has taken place. Ownership patters of corporate sector all over the world have become more complex like joint ventures, cross-border acquisitions etc. Global strategies have emerged in the production of goods and services, distribution and management of labour. These have had an immense impact on business activities. The world economy is now more closely interlinked and the finance has become a global resource.

In the current economic circumstances organizations are facing massive external forces that ultimately make change unavoidable. External forces such as new work force demographics; changing expectations about quality, productivity, and customer satisfaction; and new technologies are dramatically affecting the operating environment in organizations globe wise. Internally, financial limitations, the condition to do more with less, cross-functional groups, mergers and acquisitions and empowered employees all influences organizations’ position to compete in the global marketplace.

(C) REVIEW POSITION OF AN ORGANIZATION IN ITS CURRENT MARKET;

Unilever has annual sales of nearly â‚¬2.4 billion, the UAE is the second largest country in Unilever after US.

Employ 179 000 people in 100 countries worldwide.

Invest â‚¬1 billion every year on research and development.

In 2005 spent over â‚¬78 million on a wide range of community projects

Over half of our worldwide sales are generated by our Foods brands, which include Knorr, Flora, Hellmann’s, Lipton, Slim·Fast, Bertolli and Walls.

Unilever UAE Foods has annual sales of almost £900 million and employs 2 000 people at 11 locations around the UAE.

Unilever has 400 brands globally. In the UAE we have over 35 brands covering foods, home and personal care.

In Ireland, we hold the no.1 or no.2 position in our nine leading categories (ice cream, tea, savoury, spreads, dressings, laundry, household cleaning, deodorants and skin cleansing).

Every day, 150 million people choose our brands to feed their families and to clean themselves and their homes.

35 million cups of PG tips are drunk every day – enough to fill six Olympic-sized swimming pools.

77% of all English mustard bought in the UK is Colman’s.

Over a million tubs of Flora are made every day.

Launched in 1909, Persil is the UK’s leading and longest established washing Powder.

One billion Wall’s ice creams are eaten every year.

TASK 5

(A) EVALUATE THE COMPETITIVE STRENGTHS AND WEAKNESSES OF AN ORGANIZATIONS CURRENT BUSINESS STRATEGY.

STRENGTHS OF UNILEVER UAE:

The size of the company relative to others in the industry

Balance Sheet strength

Cash flows

Perception of the company’s products

Perception of the company’s brands

Advantages of economies of scales that company has over its competitors

WEAKNESS OF UNILEVER UAE:

Poor management.

High labour turnover.

Lack of compliance with the regional legislation.

Health & safety issues at Dubai production plan.

Centralized recruitment process for management that lacks regional understanding.

(b) CONSTRUCT AN AGREED STRATEGY PLAN THAT INCLUDES RESOURCES IMPLICATION.

Management strategy is a systematic analysis of the factors associated with the external and internal environment to provide the basis for rethinking the current management practices. Its objective is to achieve better alignment of corporate policies and strategic priorities. In case of the Unilever UAE the key important points of the proposed mutually agreed strategies are the followings along with their resource implications;

There must be a workflow process in order to achieve results in the form of a product or service.

There must be an Authority Process in order to direct behaviour in the interests of the organization and its participants.

There must be a Reward and Penalty Process to induce people to behave in a way required by the interests of the organization and its participants and / or to behave in a way making associated activity possible.

(C) develop measures for evaluating the strategy plan.

Kindly refer Task 5-E, where monitoring and evaluation process has been discussed in detail.

(D) develop a schedule for implementing a stratefy plan in an organization.

Following is the time table for the strategic planning implementation for the Unilever UAE stating the starting and finishing date;

No.

ACTION

START

FINISH

Development of Guidance and Pro Forma for Impact Assessment Initial Screening for the strategic change.

1November 2010

7 December 2010

Verbal report to board of directors to outline the proposals for the way forward and to obtain their views regarding the proposed strategy.

8 December 2010

Update and brief on the agreed proposals

5 January 2011

Briefing Sessions for Heads of Service and regional Managers.

14 January 2011

Carry out implementing the agreed strategy and prioritisation for all corporate and task specific functions, policies and procedures.

17 January 2011

4 April 2011

Reviewing and benchmarking the desired and actual status of strategy implementation.

5 April 2011

13 April 2011

Completion of strategy implementation.

30 April 2011

Consultation

1 May 2011

3 May 2011

Monitor & Review

3 May 2011

31 March 2012

Annual Review

1 April 2012

15 April 2012

(E) design MONITORING AND EVALUATION SYSTEMS FOR THE IMPLEMENTATION OF A STRATEFY PLAN IN AN ORGANIZATION;

Monitoring and evaluating the planning activities and status of implementation of the plan is — for many organizations — as important as identifying strategic issues and goals. One advantage of monitoring and evaluation is to ensure that the organization is following the direction established during strategic planning. I would like to suggest Henry Mintzberg’s ‘six basic monitoring & evaluation mechanisms’ for Unilever UAE. According to this model the monitoring and evaluation of any strategic plan can be conducted by following the six formal basis steps that ultimately makes sure that objectives are being oriented and it has an ability to identify any deviation from the desired outcome. Evaluation can be achieved by standardization in effect, automatically, by virtue of standards that predetermine what people do and so ensure that their work is coordinated.

DIRECT SUPERVISION; direct supervision in which one person coordinates by giving orders to others, tends to come into play after a certain number of people must work together. Thus, fifteen people in a war canoe cannot coordinate by mutual adjustment; they need a leader who, by virtue of instructions, coordinates their work, much as a football team requires a quarterback to call the plays

STANDARDIZATION OF WORK PROCESS; it means the specification that is, the programming of the content of the work directly, the procedures to be followed, as in the case of the assembly instructions that come with many children toys.

STANDARDIZATION OF OUTPUTS; it means not of what is to be done but of its results. In that way, the interfaces between jobs is predetermined, as when a machinist is told to drill holes in a certain place on a fender so that they will fit the bolts being welded by someone else, or a division manager is told to achieve a sales growth of 10% so that the corporation can meet some overall sales target. Again, such standards generally emanate from the analysts.

STANDARDIZATION OF SKILLS; as well as knowledge, is another, though looser way to achieve coordination. Here, it is the worker rather than the work or the outputs that is standardized. He or she is taught a body of knowledge and a set of skills which are subsequently applied to the work. Such standardization typically takes place outside the organization for example, in a professional school of university before the worker takes his or her first job. In erect, the standards do not come from the analyst; they are internalized by the operator as inputs to the job he or she takes. Coordination is then achieved by virtue of various operations having learned what to expect of each other. When an anesthetist and a surgeon meet in the operating room to remove an appendix, they need hardly communicate; each knows exactly what the other will do and can coordinate accordingly.

STANDARDIZATION OF NORMS; means that the workers share a common set of beliefs and can achieve coordination based on it. For example, if every member of a religious order shares a belief in the importance of attracting converts, then all will work together to achieve this aim.

MUTUAL ADJUSTMENT; it achieves coordination of work by the simple process of informal communication. The people who do the work interact with one another to coordinate, much as two canoeists in the rapids adjust to one another’s actions. Mutual adjustment is obviously used in the simplest of organizations. It is the most obvious way to coordinate. But paradoxically, it is also used in the most complex, because it is the only means that can be relied upon under extremely difficult circumstances, such as trying to figure out how to put a man on the moon for the first time.

Ref; Michael Armstrong, Strategic Leaders, 2002, page 123-126

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