Unilever is a leading consumer goods business in the global market. This SWOT analysis highlights business strengths that ensure the company’s long-term success. The SWOT analysis model identifies the relevant strengths and weaknesses (internal strategic factors) and the opportunities and threats (external strategic factors). In this case, the SWOT analysis of Unilever shows significant opportunities for further international growth and expansion. The business is in a strong position to withstand the threats in its external environment. However, Unilever must consider all the factors outlined in this SWOT analysis to guide strategic formulation for global operations.
This SWOT analysis of Unilever depicts the conditions of the business and its external environment. These conditions require business decisions for achieving a strategic fit that makes the consumer goods company capable of fulfilling its business purpose. Strategies based on business strengths and market opportunities can boost business performance and bring the organization closer to the realization of Unilever’s corporate mission statement and corporate vision statement.
Unilever’s Strengths (Internal Strategic Factors)
Organizational and business strengths are identified in this section of the SWOT analysis of the consumer goods company. Strengths are internal strategic factors based on the company’s characteristics, such as human resources, production processes, organizational structure, and investments. The following are Unilever’s strengths:
- Strong brands
- Broad product mix
- Economies of scale
- Strong presence in the global consumer goods market
Unilever has some of the strongest brands in the consumer goods industry. This strength enables the company to penetrate markets and effectively compete against other firms. The broad product mix shows the extent of Unilever’s business growth. For example, the company has increased its product portfolio through years of mergers and acquisitions, leading to organizational growth and corresponding increases in revenues. On the other hand, economies of scale support the production efficiency necessary for competitive pricing strategies, as shown in Unilever’s marketing mix (4P). Through years of international expansion, the company has also increased its market presence, which is a strength that reinforces brand popularity. The internal strategic factors in this section of the SWOT analysis of Unilever show strengths that the company can use to sustain global growth and success in the consumer goods market.
Unilever’s Weaknesses (Internal Strategic Factors)
Despite its strong market position, the consumer goods company has weaknesses that limit its potential growth. This section of the SWOT analysis presents the internal strategic factors that impose barriers to organizational and business development. The following are Unilever’s weaknesses:
- Imitable products
- Limited business diversification
- Dependence on retailers
One of Unilever’s weaknesses is the imitable nature of its products. For example, even though the company heavily invests in its product development processes, other firms can imitate some qualities of Dove and Rexona products. Also, despite its broad product mix, Unilever is weak because of limited diversification in businesses outside the consumer goods industry. Moreover, the company lacks a direct strong influence on consumers, considering that retailers are the ones who directly affect buyers. Thus, based on the internal strategic factors in this section of the SWOT analysis of Unilever, the weaknesses emphasize the importance of diversification, innovation, and enhanced marketing efforts.
Opportunities (External Strategic Factors)
Unilever must take advantage of growth opportunities in consumer goods markets around the world. This section of the SWOT analysis determines such opportunities or external strategic factors that can facilitate business development. The following are Unilever’s opportunities:
- Business diversification
- Product innovation for health
- Business enhancement for environmental conservation
Unilever has opportunities to diversify by entering businesses outside the consumer goods industry. Diversification reduces market-based risks and improves business resilience. On the other hand, product innovation can increase Unilever’s product attractiveness by addressing the needs of increasingly health-conscious consumers. Similarly, the company has an opportunity to make its business more sustainable and environmentally friendly to attract and retain environmentally conscious consumers. These opportunities require strategies for product development and business growth, which are addressed through Unilever’s generic strategy for competitive advantage and intensive strategies for growth. The external strategic factors in this section of the SWOT analysis of Unilever point to major opportunities to grow the business despite its weaknesses.
Threats (External Strategic Factors)
A variety of external factors can limit or reduce Unilever’s business performance. The SWOT analysis model considers these external strategic factors as threats to the company. The following are the threats to Unilever’s consumer goods business:
- Tough competitive rivalry
- Product imitation
- Increasing popularity of retailers’ house brands
Unilever faces tough competition, which is a threat based on the strengths of other firms in the industry. In the SWOT analysis model, competitors are a threat that can reduce the company’s market share and corresponding financial performance. As presented in the Five Forces analysis of Unilever, the company competes with multinational consumer goods firms, like Procter & Gamble, Colgate-Palmolive, and Johnson & Johnson. Considering its food products and BRU coffee, the company also competes with food and beverage businesses, such as PepsiCo, Coca-Cola, and Red Bull, as well as food-service firms that offer home-brew and instant coffee products, like McDonald’s, Dunkin’, and Starbucks. On the other hand, product imitation is a threat to Unilever. Imitation of the company’s products can occur in the form of other firms’ consumer goods that have similar characteristics. Moreover, retailers impose a threat by selling their own brands. These brands are known as house brands, store brands, or generic brands. For example, Costco uses Kirkland Signature as a house brand, just as Walmart and Amazon have their own house brands that compete with Unilever’s brands. Based on the external strategic factors in this section of the SWOT analysis, strategies must focus on improving the consumer goods company’s competitive advantages.
Key Points – SWOT Analysis of Unilever
This SWOT analysis of Unilever highlights internal and external factors that managers must include in strategy development. The weaknesses of limited business diversification and imitable nature of products are significant because they influence business stability and performance. In this regard, a recommendation is to diversify the multinational company through the acquisition of related firms that are not necessarily in the consumer goods industry. Also, Unilever needs to consider product innovation as an opportunity to address competition and imitation. Based on this SWOT analysis, the consumer goods company must use its strengths, such as economies of scale, for product innovation to protect the business against the major threats in its industry environment.
References
- Bocken, N. M., Harsch, A., & Weissbrod, I. (2022). Circular business models for the fastmoving consumer goods industry: Desirability, feasibility, and viability. Sustainable Production and Consumption, 30, 799-814.
- Taherdoost, H., & Madanchian, M. (2021). Determination of business strategies using SWOT analysis; Planning and managing the organizational resources to enhance growth and profitability. Macro Management & Public Policies, 3(1), 19-22.
- U.S. Department of Commerce – International Trade Administration – Consumer Goods Industry.
- Unilever – Our Approach.
- Unilever at a Glance.
- Unilever PLC – Form 20-F.