A Study On Unilever’s International Operation Strategy

As economic globalization develops deeply, all the enterprises will contact with the global society inevitably. Enterprises’internationalization has become an irreversible trend. With the development of economy and the accession to the WTO, Chinese enterprises are speeding up to go out and looking for opportunities to do multinational business. A multinational or transnational enterprise is an enterprise that engages in foreign direct investment (FDI) and owns or, in some way, controls value-added activities in more than one country.The prototype of the multinational enterprise first appeared in1500s and grew up after1870s. Large multinational companies are the only international business planners, organizers and managers. Their behaviors not only affect other enterprises, organizations and government, but also, have a very close relationship with our daily life.With the rapid development of economy and the fierce competition in the international market, all enterprises from different countries that want to survive in the cruel competition must be bigger and stronger. Enterprise internationalization is the inevitable result of the competition. However, in a long term, a lot of enterprises often meet with many difficulties on the road of international operation. The real cause of this kind of problem lies in that the enterprise can’t make accurate judgment and adopt reasonable strategy in the unknown overseas market. Unilever is a multinational enterprise which has a history of more than80years. During so many years, it has faced a lot of choices and challenges in operation. This thesis chooses Unilever’s management strategy in China and other overseas markets as the main research object and analyzes its marketing strategy, brand strategy and investment strategy in overseas markets. Summarize the successful experience in the process of Unilever’s multinational operation to put forward ideas and suggestions for Chinese enterprises business innovation.In the beginning of the thesis, it introduces the main study methods and literature review. The study methods in this thesis are comparative analysis, case analysis and SWOT analysis by using international trade theory, international investment theory and related marketing theory. It tries to analyze Unilever’s international operation strategy by linking theory with practice.There are a lot of factors that influence the operation of the multinational enterprises. Many experts and scholars have tried to explain multinational enterprise activities through their theories. These theories have explained multinational enterprise’s business activities to some degree. The influential ones are international trade theory, FDI theory, the competitive advantage of nations and international brand management. The second part of this thesis introduces these theories briefly and lays a foundation for the analysis of the management strategy of enterprises. International trade theory mainly focuses on the flow of goods or service between different countries. Theory of foreign direct investment (FDI) is the theory that studies the decisive factors, development condition and behavior of multinational corporation direct investment. The Harvard professor Michael Porter proposed the diamond model, and he attempted to synthesize different theories’advantage in order to offer a more complete explanation. He thought that the domestic economic environment was restricting enterprise to develop its competitive advantages. The most influential factors are production, demand conditions, related industry, strategy and competition of an enterprise. The international brand strategy is a kind of strategy that enterprise takes in the international market. Specifically, the international brand strategy is a kind of brand expansion management strategy that makes the same brand with the same name (or sign), the same or different packaging and advertise expand to different countries and regions. The international brand strategy can integrate global resources according to the size of the scale economy benefits and low cost operation of the enterprise to get maximum profit all around the world.If you want to understand the multinational corporation strategy of Unilever better, the analysis of the current situation and the competitive environment is very necessary. The third part of the thesis is the current situation analysis of Unilever’s operation. In this part, it firstly introduces the marketing history and characteristics of Unilever’s main products. Unilever is a typical enterprise which owns many brands representing different cultural backgrounds and histories. The most important points that the thesis wants to emphasize are business diversification and the brand management idea. Secondly, the thesis analyzes the international competition environment of Unilever, including the internal environment and the external environment. From the internal environment, Unilever has experienced great changes in the21st century. In February2005, global CEO Patrick Cescau’s induction ended the Unilever’s special situation owning two headquarters and two global chairmen in Netherlands and Britain. The group CEO and newly formed operation group got the management authority. From external environment, Unilever has been facing unprecedented fierce competition in recent years. Whether from the turnover or profit, Unilever’s performance is behind its traditional rivals, P&G and Nestle. At last, this thesis uses SWOT analysis to analyze the Unilever’s transnational management strengths, weaknesses, opportunities and threats.After theory introduction and operation analysis, the fourth part of the thesis shows the transnational operation strategy of the Unilever, which includes target market segment and localization, acquisition strategy and international brand strategy. First of all, Unilever’s products have detailed and clear market segmentation. It not only meets the personalized requirements of consumers, but also tries to open up new markets. Secondly, Unilever is a company growing through merger and acquisition. There are countless successful and failure cases throughout the growth of Unilever. These experiences form a unique acquisition strategy style. This mature acquisition mode helps Chinese enterprises’overseas mergers and acquisitions. Finally, Unilever’s brand management strategy is the core strategy of its international operation. Multiband strategy is the most advantageous weapon of multinational enterprises to make profits. Unilever is not an exception, either. And its brand quantity experienced growing and falling. Based on specific analysis of operation strategy, this chapter also concludes some faults of the Unilever, including underestimating the risks of emerging markets, diversified business influencing the overall performance, wrong estimation of market demand and unsuccessful brand mergers in China and so on.The fifth chapter of the thesis gives some reasonable suggestions to Chinese enterprises’internationalization according to the experiences of Unilever’s multinational operation. The suggestions include strengthening the consciousness of global brand strategy, positioning an international brand accurately, paying attention to the emerging overseas market, strengthening cross-cultural management of multinational enterprise and centralizing resource to develop core business. Firstly, in the global market environment, those enterprises that do not have global perspective and global strategic vision will eventually fail in the fierce international competition. Therefore, during market brand expansion process in the overseas market, Chinese enterprise should consider the layout in major global market as early as possible under the global strategic thinking, and gain a firm foothold in the industry or in the field of those landmark markets as far as possible. Most enterprises in China are still in the primary stage of international brand strategy. However, for those who have direct investment in overseas markets, making globalization oriented international brand has important significance. Secondly, at present, it is a common problem that brand orientation is not accurate, which makes Chinese brand cannot set up the unique brand image in the international market. So accurate international brand positioning is an important premise for the implementation of international brand strategy for Chinese enterprises. In addition, developing overseas market is necessary for multinational companies to be international and make more profits. Because Chinese multinational companies don’t have sufficient competitiveness in mature markets such as Europe and the United States, enterprises should lock their own profits source in the emerging overseas market. Finally, in multinational management, cultural environment is rather important but easy to ignore. The cultural differences often become the intangible barriers of international business. Therefore, when Chinese enterprises enter the international market, they cannot only consider the pure economic factors and the institutional factors. They should also consider the cultural differences hidden behind them.The last part of the thesis is conclusion. The implementation of the strategy of multinational operation can’t be accomplished in one move and it needs a long process. Therefore, the Chinese enterprise that has already started its multinational operation should speed up the process of enterprises internationalization; the enterprise that encounters some setbacks should summarize the experience, firm the confidence, and adjust strategy; the enterprise that is interested in multinational business should make plan early and catch the time entering the international market. Through the efforts of both enterprise and government, I believe that Chinese enterprises will find their own position in the international market.