As a big multinational is also affected by diseconomies of scale, which are factors that tend to increase the cost as a company grows. One examples of these disadvantages that brings diseconomies of scale are the lack of control and coordination, in Unilever it is more difficult to coordinate all the actions in everybody department of the company and communicate to everybody. Other disadvantages are: poorer working relationships, bureaucracy, this refers that in a big company you need more rules and requirements to do and respect. With diseconomies of scale, the employees are more affected than any other factor by boredom and complacency, which means as the company grows with success the employees can get bored from their activities, so this will decrease their efficiency and the productivity of the company.
Unilever is a worldwide firm that fortunately has executives with high entrepreneurial skills that will guide the company to success. Also, it is one of the multinational leading global consumer goods with a strong portfolio of trust brands of food, household and personal care. Thirteen of their brands reached annual sales of 1,000 million or more as Axe / Lynx, Blue Band, Dove, Flora / Becel, Heartbrand ice line. Hellmann’s, Knorr, Lipton, Lux, Omo, Rexona, Sunsilk y Surf. Their top twenty fifth brands represent the 70% of sales around the world, with centers of operations in more of 100 countries, and unilever products are sold in over 50 countries more.
With consumers, customers, suppliers and shareholders in all the continents, this company described itself as a multi-local multinational and an important part of local communities in every country Unilever operates.
Globalization effects on Unilever.
Globalization or global economy is affecting the entire world, such as multinationals, in this case Unilever. Globalization is a fact of the current economy in the world, a process by which regional economies, societies, and cultures have become integrated through a global network of communication, transportation and trade.
Global economy brings positive and also negative effects for Unilever. One big impact of globalization on Unilever is arranged of improvement in trade, decreasing the obstacle of the international trade, becoming rapid transfer of production, information and human as a result of the development in the technology, this is one positive effect for the company, but no for the employees because their activities become less important and directly affects them in their salaries or wages. A representative case of this positive effect is when Unilever tried to begin their operations in little countries of Africa, here globalization facilitates all, because Unilever can expand and extend their business to more countries where it’s no established as Algeria in Africa; also in some countries not all the products are sold, in this case will be more easy for the multinational to enter in a new market which is not easy but globalization brings free trade barriers as a positive effect, which means the government policy or regulation that restricts the international trade can be eliminated such as quotas, tariffs and subsidies.
A big proof of the free trade barriers is the international trade between Russia and Mongolia; there’s no Unilever company established in Mongolia, so Russia provides of some products to Mongolia with free trade barriers, which decrease the cost of these products to Mongolia. Other benefit of globalization is Communication, it improves as globalization grows, and this can be demonstrated in Unilever factories, where all the departments need to be communicated about all the production of one day. If there are problems, immediately employees need to tell to the manager or supervisor of the area to solve the problem and be more efficient.
Another big and positive impact of globalization on Unilever is the development and improvement of the technology as I mentioned, this helps to the productivity of the company. Also, helps to improve the quality of the products, investigating about new ways to produce a new or better product. So, with this advance of technology, Unilever can be more recognized around the world for their high quality products. Here globalization produce another benefit for the multinational, if their products are high quality and recognized around the world, this means sales can increase , which means the company can grows more and this produce job for new people that requires .
Globalization brings positive effects but there are negative too. Examples of negative effects of globalization are the competition between multinationals, as a company is more recognized in the world, there will other companies that want to do the same as Unilever; the other companies will operates in different countries to compete in the same position. Other example of a negative effect of globalization is that cause that the multinational can’t expand in other countries that there’s no established because of the lack of experience and control to administrate a big company like this in a new place where they do not how are the regulations from government to work there.
Also globalization cause for Unilever that with the coming of technology the number of labor required decreased and this resulted in many people being removed from their jobs, so affects the whole company. In other words, this new technology will replace the workers, which is not good because increase the unemployment in the country which the company is established. Also, with new technology the company will need workers with new skills which makes more difficult because is not easy find high skills workers for this new machinery.
The effects of globalization on Unilever companies have proved to be positive as well as negative in all aspects. The executive officers of Unilever must try to avoid the negative effects or if that’s not possible, they should maintain the positive with a high number than negatives to equilibrate these effects and do not affect to the productivity of Unilever in a future.
The effect of Unilever on the host country: Mexico.
A multinational like Unilever have different effects in every country that is operating, in this case the host country is Mexico. Big empires like Unilever helps to the economy and population of one country to develop by helping with their big and important operations, the company gives job to 5000 people that really needs in just one city of Mexico. This means that unemployment of Mexico decrease, Unilever contribute significantly to national socio-economic development through doing their business.
Also the company generates big amounts of profits which means Unilever can continue with the investigations to take out a new line product; each day new things appear in the worlds, their Scientifics discover new ways or products that will help to improve the life of every Mexican, so here is a good opportunity in which company can invest in a new product that can bring more profits to the multinational. All Unilever products are very important at in Mexican’s life; each one has an important role in home, can be for personal care, home hygiene or nutrition.
Another way in which Unilever affects Mexico is their relationships with the communities; this company is very responsible with the social environment of the country: some of the actions carried out by Unilever of Mexico in terms of social responsibility are the donations to the Mexican Association of Food Banks, support the planting of trees in the Ecological Park Xochitla in Mexico, environmental education provided to its workers in every operation center of the country, charity and social activities conducted by the Dove Foundation, taking the correct actions to reduce the pollutants and implementing water projects and energy saving within the company. Also Unilever has founded some clinics for communities of low economic resources and promotes the Week of Health and Vitality Center consists of the four clinics founded by the company.
These four clinics are: Cardiovascular Health, Clinic, Wellness Clinic, Clinic of Physical Therapy Activity and Nutrition Clinic. The company’s social and community strategy aims to use its basic competencies (including its brands, its scale and presence in the market, its people) to help address the country’s key social concerns and problems. Therefore, it’s CSR platforms are refined to 3 main areas health and hygiene, education and children development; and women empowerment.
During the last ten years of operation in Mexico, Unilever contributed a total of more than 260 Billions to the local society through a wide range of community projects in the country. Since 2005, Unilever through its brands’ activation programs and corporate commitments has donated 4.3 million per year to all their Corporate Social Responsibility (CSR) activities by its brands which has benefited million of Mexicans especially women and children across Mexico , in disadvantaged and in remote areas. Unilever also helped local distributors to expand their distribution networks and to increase their profitability by enabling a high amount while costs were kept in control. In the donations to the Mexican Association of Food Banks, these banks select and distribute perishable and nonperishable food they receive in donations of food sectors in Mexico, food banks make an organized way to get social welfare institutions and marginalized communities in urban and rural.
Their help is not only in communities, it’s also in the environment in which the company is operating, how the multinational can help to maintain in good conditions the environment in which is established. As I mentioned the Reforestation in the park Xochitla is one big project that Unilever did to celebrate the world environment day in the ecological park promoting the integration of their workers, family life and environmental education.
The workers participate in the activities of that day, as an example is planting activities, maintenance and donation of trees, while the workers enjoy the reunion with nature and be part of educational games related to caring for the environment, such as paper recycling, environmental workshops and an environmental rally.
Another big project that Unilever Mexico applied to this country is Ben & Jerry’s Ice cream, a brand which their main concern has been to fight Global Warming. This brand made different activities as communicate to the society about of the importance to take care the environment, create a a campaign, "Fighting Global Warming" which is responsible for doing activities in the community towards the environment, and also buy ingredients to small communities, that their main economic input is the trade of these ingredients, as long as they commit to do good in the community schools and health centers constructed by Unilever.
This big multinational brings negative effects too; one very important is the competition Unilever Mexico has with the small businesses from Mexico. The competition between the big multinational and the small firms make that the small businesses close because is not profitable to their owners, this also cause unemployment the stagnation of the economic development in Mexico. Unilever does not permit that the small firms can take advantage of the market opportunities.
In conclusion, Unilever is a big british-dutch multinational, multilocal and multicultural corporation founded in 1930 and is operating in 180 countries, with the mission of”Give vitality to life” and satisfies the needs of customers. This big multinational focus on products for personal care, home hygiene and nutrition (food) of high quality, Unilever worries about hygiene and well-being of the people, their global objective is to make their life easy through their brands. Their products are highly recognized around the world and have more than 120 brands.
Unilever is not the company that worries just for the profits and the development of itself, Unilever worries about the society, communities, and environment. The company created different activities such as campaign, projects, support charity institutions because in this way can help to the communities in remote areas of any country and the environment. The company has achieved success despite all the problems they had, it is one of the ethical firms around the world with corporate responsibility. Their executive officers have the necessary managerial skills to guide Unilever to the success and with the capacity to solve any problem with efficiency, create job for people that require and develop the economy. Each day, this multinational works investigation new way or products for society needs, to help them in their daily life, which means Unilever will become better in the future.
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