By analysing that revolution, there have been huge changes inside Unilever China as well as outside environment which might affect Unilever’s current business operation. However, Unilever still felt that revolution had not totally achieved its desired purpose. Therefore, before I came to the UK, I heard some news directly from Unilever China IT department about that Unilever had made a decision on carrying out the second revolution in China. In fact, until now, Unilever have dismissed one factory of Shanghai Lever which produced Lux and Hazeline soap and shampoo in Yangpu and moved whole production lines to the factory of Shanghai Ponds which is more far away from the city centre in Minhang. Those production lines have been combined with the previous one in Minhang and become a new efficient production line compared with past situation. Moreover, Unilever China has cut down nearly half amount of its employees, which was one hundred and fifty, owing to the combination. Nevertheless, it will not be the end of Unilever’s revolution. In its approaching plan, all the manufactures in Shanghai are going to be closed and moved to Hefei Lever in order to reduce the operation cost. (Unilever China, 2001)
Stage of organisational development
According to “The David Solution” (Stewart, 1993), Unilever China is definitely in the Integrated stage now which could be distinguished by the following analyses.
As mentioned before, there are a number of separate manufactures which produce different products totally or partly managed by Unilever China. Those factories also have been divided into three major regions controlled by three individual companies, which are Unilever Company Ltd., Unilever Foods (China) Ltd. and Wall's (China) Co., Ltd. which are all the branches of Unilever in China. These circumstances could be clearly described as ‘Decentralisation’ and ‘Delegation of authority to line managers’. (Stewart, 1993) It could be impossible for Unilever China to administer all the companies straight by the head offices, although Unilever had attempted to do so. Consequently, that had incurred the high cost of foreign staffs. The change was, therefore, there were a lot of local employees which had been the members of manager team. Furthermore, the jobs of those three companies’ head offices are to focus on the whole business plans and communication to the world headquarters.
In every factory, there are different sales and customer service teams owing to many particular brands. Another reason for that is there are several different partners who are local shareholders or business co-operators. They also have the responsibilities of managing the companies. They should be able to deeply understand the local customers’ needs and communicate with them well rather than Unilever. Some of them have a long time experience in some special areas such Shanghai Toothpaste company which have fifty years time on producing toothpaste in China. Thus, Unilever China could obtain the information about the feedback of products from both inside and outside environments.
Product/Service mix and maturity
The definition of ‘product mix’ is ‘the total set of brands marketed in a company. It is also the sum of the product lines offered. Thus, the width of the product mix can be gauged by the number of product lines that an organisation offers.’ (Jobber, 2001, p.230) Furthermore, the definition of ‘product line’, which should be considered with ‘product mix’ concurrently, is ‘a group of brands that are closely related in terms of their functions and the benefits they provide. The depth of the product line depends upon the pattern of customer requirements, the product depth being offered by competitors, and company resources.’ (Jobber, 2001, p.229)
According to these points of view, by analysing the whole products which are produced by Unilever China group, it is certain that Unilever China is a multi-product company and all of its products have been mixed very well. In general, the major products of Unilever could be regarded as industrial consumer goods and exactly is consumer non-durable goods. There are two main business areas which Unilever China has focused on: one is Home & Personal Care; another is Food. In both two areas, it offers a number of different brands. For example, in Home & Personal care area, which could be separated to such parts as Skin Care, Personal Wash, Hair Care, Oral Care and Laundry, Lux is in both Hair Care and Personal Wash; Hazeline is in all of Hair Care, Personal Wash and Skin Care. In some particular part, such as Laundry and Food, Unilever China provides several different brands and products which may offer more selections to the customers.
Perhaps, for the reason that there are some problems in the product mix strategy, it could be not easy for Unilever China to manage all the products including some local brands which have been combined by Unilever. However, owing to the long time successful management experience and accomplishing the two revolutions, Unilever China tends to manage every brand in an efficient way. Moreover, in accordance with another important principle of marketing which is product life cycle, we also could discover some evidence to support this opinion.
Figure 3.1 The product life cycle
Source: Boston Matrix – Refresher
Figure 3.2 The Boston Consulting Group Growth-Share Matrix
Source: Boston Matrix – Refresher
According to those two figures and based on some sales figure from Unilever’s marketing department, it is clear that most of its products are in the maturity stage and ‘Cash-Cow’ products except for some new products which are undergoing the introduction stage or growth stage because there are many similar new products which are developed in China and focusing on Chinese consumer. The annual sales figure appear that, in personal care sector, its products have been kept in a slightly increase or decrease lever and tend to grow to a stable maximum level. However, because of in the huge market, the amount of sales normally is significant. This situation, therefore, could be effective for Unilever China run and maintain its business owing to the enormous cashflow. It also contributed to launching Unilever’s sixth Research and Development (R & D) Laboratory in China, 2000 in order to meet the everyday needs of the Chinese consumer and develop more products for the Chinese market. Facing the pressure form not only another large firm ‘P & G’ but also a lot of local booming manufactures, Unilever China has adopted a lot of effective measures in order to compete with them. For instance, frequent products promotion with the purpose of offering more profits to the customers and keeping the lower price. In addition, in order to maintain the awareness of brands, Unilever launches a lot of brilliant advertisements by using many famous pop stars in every season.
Commentary on the three underlying systems: Technical, People, Economic (including: Organisational use of Information and Communication Technologies (ICT)
- Technical
When I was working in ChinadotCom corporation Shanghai branch, I had had a lot of opportunities of communicating with IT staff of Unilever China. According to the information which I have gained form them, it is clear that if there was no supporting from Information and Communication Technologies (ICT), possibly, all of its business and management would be out of control. ICT plays a significant role of management in lots of successful western firms as well as in Unilever. Thus, when Unilever re-entered China in 1990, it also brought some advanced management systems especially Enterprise resource planning (ERP) software which it had already operated in most of its subsidiaries into Unilever China. Throughout six years’ development, based on original ERP system, Unilever China has been building a brand-new Management Information System (MIS) which is different between the common MIS during current years. This new MIS concentrates in generating and analysing date source which forwards to provide efficient reports rather than the function of information communication. Unilever China has launched a number of separated information systems such as Dealer Management System (DMS), Sales Information System (SIS) and Supplier Management System as well. All of them have integrated with MIS through ERP in order to offer standard data source. Moreover, it has planned to launch a Customer Relationship Management (CRM) system owing to maintain high proportion of royalty among its consumers.
As we know, most multinational companies adopt single united globe standard for their IT equipments including hardware and software as well as Unilever. It should be easy and effective for the companies to manage and maintain the whole systems for example, once any engineer of Unilever turns on any PC of Unilever, there would be the same operation system and application software in the PC. However, for Unilever China, this situation could lead to some problems when it would like to merge other companies. It also has cost Unilever China much money and labour to integrate all the different systems which the fourteen joint ventures had been used, when it was carrying out the two revolutions.
- People
In a world where technologies and markets are speedily changing, as well as in China, both local knowledge and globe proficiency have been required to deeply understand and meet the complex needs of the 150 million customers who choose Unilever’s products everyday. It is very important, therefore, for Unilever China to make its employees localising as possible as it could. At its beginning stage, Unilever China had employed more one hundred foreign staffs including managers and professionals. Although they had more working experience and good management approaches, there still had been some disadvantages of this state. Firstly, it had led to the high cost of labour because Unilever should pay nearly six times more than employing local people. Secondly, most of foreign staffs, they had not had enough knowledge of Chinese economy environment. This might provide some wrong decisions in both marketing and manufacture areas. Finally, because they had been so proud of their characters and positions, they tended to be difficult to communicate with local people. All in all, thus, Unilever China has modified its mind to reduce the number of foreign staffs and offer more opportunities to local employees. (Unilever China, 2001)
In every recent year, Unilever China has sent numbers of its local managers abroad to practise for senior positions in their own countries. Its target of 95 percent local management in China includes five percent of local managers who are also working overseas at any given time. On the other hand, in purpose of reducing the cost of workforce, Unilever China decided to cut down the number of workforce in Shanghai which is in the highest level of working payment in China, and move its manufactures to the lower cost place.
- Economic
Inside Unilever China, the significant motive of two revolutions is to decrease their working expenditures and utilise all the business resource efficiently. The production lines of most its products such as shampoo and shower are quite similar including the raw material as well. There had been several same production lines among the fourteen joint ventures, before Unilever China re-structured them. In addition, the waste also happened to the IT departments, administration department and supporting department. Once Unilever China had held a new joint venture, it had had to build an individual business system for it. It seems to be more efficient and having more abilities of competition, when the two revolutions have been accomplished. Furthermore, the changes also facilitate Unilever to concentrate its brands in order to meet the needs of different markets. For instance, in Shanghai which is the huge developed city in China, its key products are in the personal care and wash area including Lux, Dove, Hazeline and Ponds.
Due to the changing of Chinese government economy policy, China is going to be more open for the foreign companies. As a result that China has joint World Trade Organisation (WTO), more foeign companies will enter China. Most local manufactures tend to become stronger because they will have more chance to gain the advanced management approaches and learn the business skills by competing with more foreign companies. They also could the big challenge to the Unilever China. Another purpose of its changes, thus, is to maintain its leader position in China. Since these changes, Unilever China becomes more flexibility because it clearly to allocate its business targets to three groups. Every group has its own responsibility of manufacturing and selling particular products. Thus, both of them could be the professional in their own economical environment.
Discussion of management activities and approaches (including “typical” errors)
Until this section, it seems that there has been no obvious evidence which could show that Unilever China has made some clear mistakes of management so far. However, there might be no completely perfect result once you have accomplished some changes. In the short-term, we could regard it as more positive than negative but no one could image the future. Also, before the two revolutions happened, there had been some typical management errors which Unilever China had made.
Inside most of joint ventures in China, there are two different manager teams: one group of them are assigned straight by foreign companies; another are the people who have already worked in the companies which are going to co-operate with the foreign companies. However, both of them have the responsibilities of managing the new companies which we exactly classify as Chinese-foreign joint ventures in China. Thus, because of different working background in different economics system, these two manager teams provide two different management styles.
For the managers who have been worked in Unilever world group for a period of time, because of underlying the western developed management theory, their management approach could be considered as ‘Proactive & Positive’. The management approaches have been argued and developed by a lot of western researchers for a long time. Those effective management approaches, such as ‘team work’, ‘business culture’ and ‘management information system’, have been widely utilised in Unilever. This also could contribute good forecast of marketing and sales, efficient decision making and powerful capability of competition. Those advantages could be clearly embodied in the two revolution of Unilever China. In particular, in order to avoid more waste of resource, Unilever China terminated some business in 2002 in Shanghai and transferred them to the low cost place which was in HeFei. During this process, certainly, it should deal with the loss of re-investment and high risk of changing. Nevertheless, due to some typical management errors which it had made at the beginning of re-entering China, it has had to change its temporal situation. The typical mistakes could be ‘Market Share wars’ and ‘The “big project”’. The evidences of these errors could be discovered by some investigation in its process of growth. For instance, only in a decade, it had constructed fourteen joint ventures in China to take the leader position of Chinese market and compete with ‘P & G’. Following its step, ‘P & G’ China also carried out some measures which might beat its challenge. Finally, that lead to both of these two firms had to reduce their products’ price in order to obtain more market share. Those fourteen joint ventures had caused numerous waste of fix assets, labour and operation cost.
When Unilever China decided to perform the revolution, there was no other choice for them to ‘push’ its business partners to follow its decision. This style of persuasion tended to be effective in the short term. As mentioned before, Unilever had made a great firm decision by itself and it also had met a lot of pressure from the local government and employees. Owing to so many reasons, another manager team had not totally agreed to Unilever. However, they also had no choice; otherwise perhaps they would lose their jobs. So, it is important to analysis what management approach they belong to.
For those people who have been in the environment of planned economy, their management style could be ‘Reactive & Negative’. On one side, they hope that they could learn more about advanced management theory by working with Unilever. On the other side, because of underlying the bureaucracy situation, they seem to be more likely as passive executors. They attempt to supply some advice about modifying the current circumstances in order to make the business more efficient. However, they always worry about the result could be not as well as their expecting. Moreover, in their minds, traditionally they believe that if you have done more, there would be more mistakes; if you have done nothing, there would be no mistake.
Findings/Conclusions
According to this report, although there have been a few problems which occurred before the two revolutions of Unilever China and maybe could happen in the future, obviously the changes of Unilever China have partly achieved the purpose of Unilever China. However, yet, there are some problem which Unilever China should deal with. For example, how to keep the pleasant relationship with local governments and business partners? These changes cause many people losing their jobs, although it is due to many sensible reasons such as low growth rate of globe economy and using high technologies. It has led to a lot of complaints from both inside the company and society.
For Unilever China itself, it has obtained the current success, but in the long term plan there would be more changes which could happen in the future. However, having a long time successful experience, efficient business management style, using ICT to support its business effectively and more, those could be the important advantages for Unilever China.
In conclusion, in my opinion, these two revolutions could be the useful sample about how the successful company changes its situation in order to fit different local markets. We also could acquire more details of performing the changes in an organisation. In addition, by analysing these changes, perhaps we could understand the reason why Unilever has succeeded in its area for a long time. Simply, it is ‘change’.
References:
Jobber, D. (2001) Principles & Practice of Marketing 3rd Edition Maidenhead: McGraw-Hill Publishing Company
Stewart, V. (1993) The David Solution Aldershot: Gower Publishing Company Limited.
Unilever, (2002) ‘Our History’
[WWW] (09/12/2002)
Unilever China, (2001) ‘History’
[WWW] (10/12/2002/)
Unilever China, (2001) ‘Our people’
[WWW] (10/12/2002)
Unilever China, (2001) ‘Unilever Launches New Laboratory in China’
[WWW] (10/12/2002)
Bibliography:
Galbraith, J.K. (1983) The New Industrial State Harmondsworth: Penguin Books Ltd.
Myers, I.B. and Myers, P.B. (1980) Gifts Differing Palo Alto: Consulting Psychologists Press.
Wilson, C. (1954) The History of Unilever: A Study In Economic Growth and Social Change London: Cassell & Company Ltd.
Bocij, P., Chaffey, D., Greasley, A., Hickie, S. and edited by Chaffey, D. (2003) Business Information Systems: Technology, Development and Management for the e-business Essex: Pearson Education Limited
