Unilever’s Organizational Structure for Product Innovation

Unilever’s organizational structure, characteristics, advantages and disadvantages, consumer goods business corporate structure case study and analysis
A Unilever facility in Poland. Unilever’s organizational structure facilitates product innovation for competitiveness in the consumer goods industry. (Photo: Public Domain)

Unilever’s corporate structure is responsible for ensuring adequate support for product innovation in the firm’s global business. A company’s organizational structure or corporate structure is the design that defines the arrangement and systems used to build and interconnect various organizational components, such as offices and teams. Unilever’s organizational structure adapts to changes in the consumer goods industry and global market. At present, the company maintains a structure that addresses corporate needs in terms of managing product types across the world. As a leading consumer goods firm, Unilever has an organizational structure that suitably supports diversified global operations.

With an organizational structure that enables effective product development, Unilever continues its position as one of the biggest consumer goods companies in the world. Such organizational structural design ensures Unilever’s continuing success despite the large scale of its global operations.

Features of Unilever’s Organizational Structure

Unilever has a product type divisional organizational structure. The organization is divided into components based on their product focus. For example, the company has a division for personal care products and another division for home care products. The following are the main characteristics of Unilever’s organizational structure:

  1. Product type divisions (most significant feature)
  2. Corporate executive teams
  3. Geographic divisions (least significant feature)

Product Type Divisions. A product type division functions as a unit that enables Unilever to manage the development, manufacturing, distribution and sale of its consumer goods. For example, corporate managers use this feature of the organizational structure to match markets needs with appropriate products. An advantage of this structural characteristic is its facilitation of the company’s efforts to apply product differentiation, which is Unilever’s generic strategy for competitive advantage. This corporate structure is beneficial, especially because the company already has a diverse portfolio of products. Unilever maintains the following product type divisions in its organizational structure:

  1. Personal Care
  2. Foods
  3. Home Care
  4. Refreshment

Corporate Executive Teams. Corporate teams are a secondary characteristic of Unilever’s organizational structure. This structural feature is based on business functions. For example, Unilever has a team for finance and another team for marketing communications. These teams make up the Unilever Leadership Executive (ULE) group. The following are the corporate executive teams in Unilever’s organizational structure:

  1. Chief Executive
  2. Human Resources
  3. Research & Development
  4. Supply Chain
  5. Refreshment
  6. Personal Care
  7. North America
  8. Home Care
  9. Finance
  10. Legal
  11. Foods
  12. Marketing & Communications
  13. Europe

Geographic Divisions. Geographic divisions are a minor feature of Unilever’s organizational structure. The company uses this structural characteristic to support regional strategies. For example, Unilever’s marketing strategies for Europe are different from strategies applied for Asian consumer goods markets. Also, this corporate structure feature is used to analyze the company’s financial performance. The following geographic divisions are maintained in Unilever’s organizational structure:

  1. Asia/AMET/RUB (Africa, Middle East, Turkey; Russia, Ukraine, Belarus)
  2. The Americas
  3. Europe

Unilever’s Corporate Structure – Implications, Advantages & Disadvantages

An advantage of Unilever’s organizational structure is its support for product development and innovation. For example, each product type division has its semi-autonomous capabilities to develop products that directly suit the needs in consumer goods market segments. This corporate structure is also advantageous because it enables Unilever to differentiate its products despite the large size of its global operations.

A disadvantage of Unilever’s organizational structure is its minimal support for regional strategic implementation. Even though geographic divisions are one of its structural features, the company focuses more on product type divisions. As a result, there is limited support for market-specific or regional strategic reforms. Thus, to improve this organizational structure, a recommendation is that Unilever must increase its emphasis on geographic divisions to empower regional managerial teams. Such structural change improves strategic effectiveness in regional consumer goods markets.

References
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  • Martin, R., Muuls, M., de Preux, L. B., & Wagner, U. J. (2012). Anatomy of a paradox: Management practices, organizational structure and energy efficiency. Journal of Environmental Economics and Management63(2), 208-223.
  • Menguc, B., & Auh, S. (2010). Development and return on execution of product innovation capabilities: The role of organizational structure. Industrial marketing management39(5), 820-831.
  • Tang, F., Mu, J., & MacLachlan, D. L. (2010). Disseminative capacity, organizational structure and knowledge transfer. Expert Systems with Applications37(2), 1586-1593.
  • Unilever – Investor Relations – Annual Reports and Accounts Overview.
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