Analysis of Business Strategy and Sustainable Development of Unilever Company

There are more than 400 Unilever’s brands give customers a wide range of choice in the lives of people around 190 countries. Consumers enjoy lower-calorie food s with a healthier balance of nutrients or affordable soaps that has strong sterilization, high repurchase rated shampoos or household care products, some well-known household-name brands include Lipton, Knorr, Dove, Axe, Hellmann’s and Omo. According to the statistics, two billion people use Unilever products and service every day and seven in every ten households have at least one Unilever product around the world.

Unilever Sustainable Living Plan

It launched in 2010, it has adopted stretching targets on three dramatic sections: Improving health and well-being, reducing environmental impact and enhancing livelihoods. It has recognised that economic growth causes environmental pollution and a mass of depletion, both of them are inadvisable and commercially unsustainable. Sustainable growth is the only acceptable model for their business and pursue a continual vivo sphere to help people improve the quality of life and promote human wellbeing through access to social welfare. Unilever products are sustainable at every stage in their life-cycle, the process of research and development about products that working with their suppliers, governments, NGOs consumers, and other businesses to help create value.

Sustainability challenges

This part will discuss some serious “big issues” of global which is mostly concerned about deforested, climate change, air pollution, and transferred pollution. Analysing these factors will be utilizing a specific case.

Deforestation and climate change

Today, alone with the rise of the industrial revolution, scientific technological have achieved historic leaps and bounds, production is going up, so is the people’s standard of living. Besides, economic integration is moving faster. But more and more people have come to realize that they have plundered the “false profit” by the expense of massive energy consumption and environmental degradation to raise the speed of economic growth, the breakage of the forest plays more and more strong. It was statistics that an estimated 18 million acres (7. 3 million hectares) of forest are lost each year, which is roughly the size of the country of Panama by United Nations' Food and Agriculture Organization, Forest deterioration cause between 6 percent and 12 percent of annual global carbon dioxide emissions while oxygen in the air are reducing. This pie chart illustrates six primary reasons of deforestation.

Overall, deforestation including the land available for agriculture, industrial site, urbanization and cattle ranches, the biggest factor is from agriculture, and it accounted for 64% that occurs in rainforests, it was cut down to make room for grow crops, farmers can get additional income. The second largest proportion is logging industry, it took up at 18%, fuelwood and cattle ranches accounted for 10% and 8% respectively. Due to the human activities, excessive deforestation and the burning will produce large amount of carbon dioxide. In additional, customer goods producers will seize the opportunities which using tree creates business value and potential such as paper, furniture and homes, or extract ingredients as precious medicinal herbs or process into the product with easily absorb nutrition, such as the oil from palm trees or from spice from agalwood. All in all, people often cut down substantial forest in order to make the land available for other just for their own short term profit, however, deforestation is the permanent destruction of forests.

Carpet manufacturing cause air pollution There is a specific case in order to analysis and discuss the sustainability challenges. most carpet manufacturing is not an environmentally commendable industry, because the majority of carpeting is derived from petroleum. Besides, carpet manufacturing factories are heavy industrial, its waste produced from process cover plenty of toxins and heavy metals, and large amounts of CO2 emission, and in practically, carpet is also make of nylon-based products which are not recycled and therefore usually ends up in landfills.

Transferred pollution A new competitive environment has emerged, consumer goods producers face pressing ecological and social challenges. Some companies from developed countries export production to developing countries or build heavy industry in emerging economic market in order to protect their home environment and enjoy alone. The consumer goods producers such as furniture production enterprise, carpet manufactures, coal industry, and several illegal trade about rare animal will cause enormous losses. These companies with high levels of greenhouse gas emission face new and rising financial risk and contribute to climate change is increasing when value from stakeholders to shareholders in upper left quadrant of value transfer in sustainable value model.

Value creation and embedding sustainability

This part will introduce value creation by its definition combine with sustainable value framework and 1+7 levels of strategic model, then discuss embedding sustainability including its benefit.

Evaluate the notion of value creation

The definition of value creation

Value creation means business entity creates on going value for an organization shareholders and stakeholders. "Value creation" no longer limited financial area, for instance, value is not only referring a business earns revenue or a return on capital, but also represents intangible factors like innovation, people, ideas, and brand. Value creation model organisational purpose based on the maximisation of ‘sustainable value’.

The sustainable value framework

According to four squares of the sustainable value framework, it is clear to locate any product or company and to visualize its development track over time. In this framework, three of the quadrant have a fundamentally flaws, because companies deliver value to shareholders while destroying stakeholders value. Upper left quadrant and bottom right quadrant represent companies value transfer, the former create shareholder value by low cost strategy and avoid environmental rules while stakeholders suffer from risk in the next few years, the latter transfer value from shareholders to stakeholders, it may have short term benefit from increasing employee job opportunities and pure charities. but it brings higher financial cost for shareholders. Upper right quadrant refer to value is created for stakeholders and shareholders. Sustainable value is created only in this quadrant. Companies design and manufacture product with less depletion and less pollution by clean technology strategy, pollution prevention strategy and product stewardship strategy. Sustainable value is also created when companies provide nutrition and clean water to the poor. it is important that companies bring environmental and social benefits to stakeholder without asking customer to pay the green premium.

1+7 levels of strategic focus

The 7 levels of strategic focus are critical tool for identifying value creation. The majority of companies have made great progress in mitigating risk (level 1) and the process of cost reduction (level 2) by minimising waste and improving energy efficiencies, relatively few companies’ operation revenue depends on product (level 3) or brand differentiation (level 5), even fewer have used stakeholder value creation as a way to drive to enter new markets (level 4) and effect industry rules (level 6).

Evaluate the construct of embedding sustainability

Embedding sustainability is putting environment, health, and social value into the company’s core business with no trade off in quality and no social, with the goal of ‘Sustainable Value’ and implementing sustainability-driven initiatives throughout the organisation. Sustainability performance is largely invisible, but it makes positive effect in motivating and restraining everyone. It can reach seven levels of sustainable value creation and control methodically the product or service life cycle value chain. Embedding sustainability leads to entirely new market opportunities based on “doing well” that build transformational relationships. For example, developing a shared solution to build system-level change with all key stakeholders including NGOs and regulators. Therefore, embedding stainability can improve strategic position of company. The embedding sustainability framework which called the ES Cloud, it makes clear how sustainable value supports business strategy. Companies should map their business on the ES Cloud that have a clear development prospect.