Report on Strategic Management of Unilever

Organization Introduction

Lever Brothers Pakistan Limited is a multinational organization. Unilever PLC London is

its parent company. Unilever is a European based company with headquarters in London,
and their shares are quoted at the stock exchange of several European countries. They
deal in all kinds of products from animal foodstuff to foods and detergents plus other
personal and consumer products. Unilever has its subsidiaries in over 80 countries of the
world, to which it spreads its vast knowledge and resources.

William Lever (its originator) commences business in England as a grocer. He

established Lever Brothers in 1827 in England Sunlight was the first product of Lever
Brothers, which makes the beginning of the marketing of branded products at the same
time Margarine Uni was established in Nether Land by Simon Van Berg and Anton
Jurgens. These two companies in term of:

• Buying raw material

• Selling finished goods

Consequently both the companies loosing out money in term of profit. These problems
led to think of the mergers in 1930. These two companies merged together and renamed
the business as Unilever PLC / the word UNI is taken from margarine Uni and Lever is
taken from Lever Brothers. Its head quarter was established in England and Rotter Dam.

Unilever has 500 operating companies in 80 countries. It has 0.3 million employees and
turnover of sales in 23000 million pounds. The global business proportion is 60% in
Europe 20% in North America and 20% in rest of the world. An identified board of
directors control the activities of subsidiary companies throughout the world. Lever
Brothers Pakistan Limited started its operations in 1948. A merger of Sadiq Vegetable
Oils and Allied Industries existed in Rahim Yar Khan was taken place with Lever
Brothers and HVM company based at Karachi. As a result of merger Lever Brothers
Pakistan Limited was incorporated as an independent Unilever operating company in
1955. The company is quoted on the Karachi, Lahore and Islamabad Stock Exchanges.
Lever Brothers Pakistan Limited has around 1900 employees in Pakistan.

Lever Brothers Pakistan Limited played a dynamic role in boosting consumer products
market. It stand at a unique position due to its honesty and integrity. Lever Brothers
Pakistan Limited’s main divisions of business are:

Merger With Brooke Bond

Brooke Bond Pakistan Limited was incorporated in 1948. Company’s 40% shares are
held by Unilever, 21% by financial institutions, 24% by individuals, and 10% by
insurance companies. The company is quoted on Karachi and Lahore Stock Exchange
market. The company is manually engaged in the blending, packaging and marketing of
tea. It also has a small business in the sale of packing apices. The company employ
around 850 persons. And has three manufacturing locations situated in Karachi and
Khanewal. It also have three regional sales offices. The head office of the company is
located in Karachi.

After the amalgamation of Lever and Brooke Bond, Unilever will have a majority
shareholding in the combined company and it will provide a comparable level of
technical, management and financial resources. The proposed merger will benefit the
consumer in term of price and quality.

Acquisition

Lever Brothers Pakistan Limited acquire the shares of Pakistan Industrial Promoters
Limited, Mehran International Limited and Ambrosia International Limited, which is
known as Polka Group of Ice Cream Companies.

Product Mix

At present Lever Brothers Pakistan Limited is engaged in marketing of diversified

varieties and classes of products and playing a dynamic role in boosting consumer
product market. It stand at a unique position due to its honesty and integrity. Lever
Brothers Pakistan Limited has both product length and depth i.e. it has by length a largest
of product lines available and under each product line there are lots of variants like
different weights, 100mg, 500mg, 1000mg, sache pack, family pack or in case of ice
creams different brands have lots of flavor available which determines its product depth.
So different no of product lines are called product length and no of products in each
product line are called depth of product line. Lever Brothers Pakistan Limited’s main
product groups are listed below:

Home And Personal Care

Personal Wash (PW)

Toilet Soaps

Lifebuoy (Carbolic Soap)

Lifebuoy Plus

Lifebuoy Gold
Lux (in 4 varieties)

Rexona (in 2 varieties)

Liril

Hamman

Fair & Lovely Soap

Fabrics And Home Care

Fabric Wash

Surf Excel
Power Surf

Sunlight Washing Powder

Soap Wheel

Home Care

Vim Dish Washer / Scourers

Vim NSD Bard (in 2 varieties)

Vim Powder Poly Bag

Personal Product

Hair Care

Sunsilk Shampoo (in 7 varieties)

Harmony Soap
Lifebuoy Shampoo

Skin Care

Fair & Lovely Skin Cream and Lotion

Dental Care

Close-up Tooth Paste

Pepsodent

Oil And Dairy Based Foods

Banaspati

Dalda

Cooking Oil

Dalda Cooking Oil(Soya Bean)

Dalda Sunflower Oil

Planta

Margarine

Blue Band

Industrial Fats

A whole range of product for bakery and oils for the industry.

Beverages

Leaf Teas

Yellow Label
Yellow Label – Danedar

Richbru

Top Star

Taaza Leaf

Supreme

Brooke Bond

Dust Teas

Pearl Dust

Ruby Dust

Laojee

Mixture Tea

Taaza

Ice Cream

Cornetto (in 3 varieties)

Feast (in2 varieties)

Feast Stickless

Top Ten

Star Cup (in 4 varieties)

Sundae ( 2 variant)

Chocu Bar
Minimill

Sola

Jet Spot

Ice Lolly

Wall’s Kulfi

Panda

Pop Corn

g Three

Vision Of Lever Brothers Pakistan Limited

The vision of Lever Brothers Pakistan Limited is driven by is the commitment to excel
and we are here to sell aspiration not brand. So, the core vision is integrating and that is
to excel in every field whatever Lever Brothers do to provide customer delight and value.
The Lever Brothers have been able to follow the track set by their vision and to achieve
the standards set by their customers.

Mission Statement of Lever Brothers Pakistan Limited

Lever Brothers Pakistan Limited will be the foremost consumer company in Pakistan
with the dominant position in laundry, personal wash, skin, ice creams and spreads: a
leading position in tea, hair, dental and household care and a sustainably profitable
position in cooking oil and fats.

1. We will aim at delivering a 15% UVG rate, hence doubling the size of our
business over 5 years and thereby delivering superior value creation.
2. We will achieve this by adopting a broad view of our market by seeking the new
opportunities in the core categories of Unilever and by staying closer to all
consumers than competitors, understanding their evolving needs and
focusing on constant delivery of superior value for our brands through
innovation.
3. Competitive advantage will also be developed by driving down relentlessly on
relative cost positions and outpacing competition in operational efficiency
improvement.
4. We shall build on our strong network of distributors to maximize penetrations
and visibility in existing channels and to develop all new channels relevant
to our consumers.
5. We shall establish Unilever’s core brands in Afghanistan, building brand loyalty
and strong distribution in the market.
6. To achieve these standards of performance, Lever Brothers Pakistan Limited
will develop a strategically focussed organization and will motivate its
personnel to use its full potential of creativity and commitment. It will also
leverage Unilever’s best practices and maintain the highest standards of
operational control.
7. Through its commitment to high levels of care and safety for its employees, its
consumers and the environment, Lever Brothers Pakistan Limited will be
exemplary and will participate in the dissemination of such practices in
Pakistan.

Analysis Of Mission Statement

Mission Contents

Organization Philosophy

People

Peoples are key to strengths of Lever Brothers Pakistan Limited. The development of
their potential is core to Lever Brothers Pakistan Limited business.

So they provide extensive attention to developing human resources.

Customers

Lever Brothers Pakistan Limited is the customers focus organization. They do delight
customers with their products and service. Their brands always deliver the high quality as
they premise. Lever Brothers Pakistan Limited pays extra attention to the complaints of
consumers.

e.g. if the consumer complaints that detergent harmed any cloth or skin they send the
sample for lab test a team analyzes that customer complaint is right or not and then they
send the detailed response to customer along with gift of their products. With a
questionnaire for suggestion for further improvement on the top of which is written “WE
CARE ABOUT YOU”.

Suppliers
Suppliers are considered the partners of Lever Brothers Pakistan Limited and Lever
Brothers Pakistan Limited maintain mutually beneficial relationship with them.

Integrity

Lever Brothers Pakistan Limited never compromise on integrity management adhere to

high standards in all they do.

Environment responsibility

Management adhere to all national and Unilever standards to ensure health, safety and
protection of the environment in which they live and work.

Profit

It is considered to be the ultimate measure of Lever Brothers Pakistan Limited’s

performance and it is required to maintain and grow their business.

Product Market Domain

This factor indicates where they are going to compete. Lever Brothers Pakistan Limited’s
field of operations is the consumer products and business and this is very clearly stated in
their mission statement.

Organization Key Value

It defines that what do they want. They people of organization to be good at or how do
they want them to behave and this very clearly stated in mission statement as always stay
responsive to change, go for innovation, employee commitment to organizational
objectives and mission and creating value for customers. So, if we check the mission
statement through this aspect then we can easily state that they have clearly stated what
should be the organizational key values and how to reinforce them.

Critical Success Factor

The central issue of this factor is that what do they have to be good at to succeed in this
market or industry. The mission statement outlines this as “adopting a broad view of our
market, by seeking the new opportunities in the core categories and by staying closer to
all consumers than competitors and understanding their evolving needs and focusing on
constant delivery of superior value for our brands through innovation”.

So far them critical success factor is consumer connectivity and commitment to excel and
to provide superior value to customers and products of superior quality and value.

Concern For Different Stakeholders

Mission statement describes that what are the obligations to different stakeholders i.e.
stockholders, employees, suppliers, customers and community at large. Lever Brothers
Pakistan Limited’s mission statement contains concerns about all stakeholders. First be
foremost consumers and then other stakeholders and describes it as: “Through its
commitment to high level of core and safety for its employees, its consumers and
environment. Lever Brothers Pakistan Limited will be exemplary and will participate in
the dissemination of such practices in Pakistan”.

Form And Sources Of Competitive Advantages

Mission statement of Lever Brothers Pakistan Limited completely describes the form and
sources of competitive advantage as:

“Competitive advantage will be developed by driving down relentlessly on relative cost

positions and outpacing competitor’s in operational efficiency improvements and through
building strong network of distributors and by developing a strategically focused
organization and by motivating its personnel to use its full potential of creativity and
commitment and by maintaining the higher standards of operational control”.

They are going for unique combination of cost reduction and superior value to customers
so they entirely provide the form and source of competitive advantage that what they
wanted to achieve and how they will achieve it.

Scope And Types Of Mission

Are the external dimensions covered?

Global

Mission

Organization

Mission

Market

Mission

No

Mission

Yes

No
 Yes

No

Are the internal

dimensions covered?

The mission of Lever Brothers Pakistan Limited covers both the external dimension
(product market domain, critical success factors) and internal dimensions (philosophy,
organization key values, form and sources of competitive advantage, and concern for
different stakeholders) so therefore, we can say that the mission statement of Lever
Brothers Pakistan Limited is a global mission as according to the following exhibit.

Lever Brothers Pakistan Limited wants to be market leader in consumer products. It

enjoys greatest market share as compared to competitors by providing superior quality
products. And customer value is what they value. And this is reflected in mission
statement. The very first 3 points are all customer focused and has provided customer
value as their main focus.

As both the dimensions are extensively covered so we can say that the mission of Lever
Brothers Pakistan Limited is global mission. Now we can further go for rating of mission
of Lever Brothers Pakistan Limited on a scale of 1-10 for testing of mission, which is as
under:

Testing The Mission

Does the mission statement make it clear what the organization stands for 10
and why it exists?
Does the mission statement makes it clear where we have to compete and 5
who are our customers?
Does mission statement tell us the values we should adhere to in working 8
of this organization?
Does mission statement make it clear what we have to be good at to 10
survive and prosper?
Do different parts of mission statement hand together, does it make sense? 10
Is the mission statement short enough so that people can understand it? 10
Is the mission statement well written enough so that people will remember 5
it?
Is the mission statement challenging and exiting, will it motivate us? 10
Does the mission statement tell us what we should be doing and what we 5
should not be doing?
Total 83

Criteria: 100 = Excellent

50 = Medium

00 = Poor or no mission

The total score indicates that the mission statement of Lever Brothers Pakistan Limited is
approximately near to excellent standards and gives complete help for setting priorities
guide strategic decision making, and performance evaluation or in short it fulfills the
essential role i.e. to define the business in such a manner which is important in overall
strategic management.

Objectives Of Lever Brothers Pakistan Limited And Attainment Of Objectives

Objectives of Lever Brothers Pakistan Limited

1. Their main objective is to have a double-digit growth and resultant cash flows
will be utilized in improving the product quality and contents to enhance
the value to customer and final users.
2. Lever Brothers Pakistan Limited has an objective to have a responsive supply
chain and technological based processes.
3. They want to have consumer connectivity, i.e. they want to know what they eat,
drink, how they spend their lives, what are their preferences. So in this way
they wan to be very close to customer, to know their real insight and desires
so they can develop new strategy for product design and can implement
their strategy in better manner i.e. avoidance of hit and trial approach and
hitting the right target with right strategy at right time in right and accurate
manner.
4. They want to be cost efficient i.e. they want to reduce in their cost of
production, cost of transportation, distribution and packaging cost and
finally reducing all the human cost to offer a competitive price to customer
maintain the high standards of quality.
5. To have a partnership with their suppliers to enable them to provide high quality
low cost material.
6. Have entered and will be aggressively developing new markets.
7. Be exciting to their customers with stream of innovative products.
8. To be no in all their existing markets.

Attainment Of Objectives

An objective or set of objective to be ideal must be “SMART” i.e.

1. Specific

2. Measurable

3. Attainable

4. Realistic

5. Time frame

Specific

The objective of Lever Brothers Pakistan Limited are specific not general e.g. they want
to be number one i.e. market leader in terms of market share. They want to be cost
efficient it is specific i.e. they have to reduce their costs without compromising on
quality. They want to have focused strategic thrust i.e. they are to simply reduce non-
valuable slow moving product. So the non-value added products are quite obvious with
their sale figure and popularity.

Measurability

Objectives of Lever Brothers Pakistan Limited are measurable as you can easily measure
the double-digit growth with their balance sheet footings and cash flow analysis.
Reduction in cost easily be measurable from reduced price level and cost of production.
Responsive supply chain objective can easily be measured with quantity of real
information available on computer terminals of Lever Brothers Pakistan Limited.

Attainable
All of the objectives are attainable. They can be market leader e.g. they are in Lux, Blue
Band, Fair & Lovely, Lipton and Supreme. They have portfolio and cash flows to invest
in their product categories to achieve their quality standards thereby becoming market
leader with their increased share, sales and growth. Thereby getting brand loyalty among
their customers.

Reliability

One has to be at the top so to be number one in its realistic objectives. Other objective
e.g. reduction in cost is realistic, you an reduce your cost by focusing on value chain.
Cost of inbound and outbound logistics.

The objective of launching innovative products is also realistic objective, it comes only
from creative ideas and implementation of these innovative ideas comes up from
investment.

Time Frame

All these objectives are to be attained in some specific time period.

Attainment Of Objectives

Lever Brothers Pakistan Limited’s strategy to attain the objectives is:

1. Maximum coverage of outlets

2. Desirable sales volume

3. Display and merchandizing of products

4. Developing quality and want satisfying product.

Since every company is formed to accomplish certain objectives. There is no company,

which had no goals. So Lever Brothers Pakistan Limited also has targets before it.

These main targets and objectives are:

1. Profits

2. Consumerism

3. Welfare of consumer

The first objective of Lever Brothers Pakistan Limited is to earn maximum profit but
keeping in view the customer demands as well company deals in those products which
are profitable.
If there are any indication that any item is not good from profit point of view, it will try to
find out the reasons. Will soon what steps should be taken to overcome these reasons.

Company will introduce different marketing strategies if there are problems in marketing.
Here I would like to code two very famous examples, 1st of Sunlight soap and Sunlight
washing powder of Lever Brothers Pakistan Limited.

Lever Brothers Pakistan Limited initially developed a sense of consumer to use washing
powder other than washing soap, consumer switched s a result towards Sunlight washing
powder, i.e. popular segment of washing powder and than the market share for Sunlight
soap declined with passage of time, now the consumer who realized the convenience of
washing powder started using it, but at the same time, as a result marketing strategy of
Lever Brothers Pakistan Limited awareness of people, people switched to surf and wheel
i.e. premium segment detergents. Finally due to the decrease in the market shares and
sales volume of Sunlight soap and was light powder Lever Brothers Pakistan Limited
management finally decided to stop the production of this very product i.e. it is now
obsolete.

Second example is related to the change of brand name of Surf to Surf Excel. The reason
behind was introduction of competitor’s brands like Arial by P&G which had brightness
features, which caused the people to switch from Surf to Arial, Lever Brothers Pakistan
Limited realized the fact due to disturbance in sale volume of Surf and introduced new
brand name “Surf Excel” with extra brightness power.

Company also takes into consideration the welfare of the consumer. It takes into mind the
taste and habits of the customer. They pay much attention on the customers’ complaints.
It also works for the welfare and interest of Pakistan, as it is an environment friendly
organization.

Strategic Management At Lever Brothers Pakistan Limited

Now we will proceed with strategies being pursued by the Lever Brothers Pakistan
Limited at different organizational level. First we will discuss the corporate level
strategy.

Corporate Level Strategy

At corporate Lever Brothers Pakistan Limited is pursuing the strategy of vertical

diversification i.e. driving away from the previously adopted strategy of vertical
integration i.e. now they don’t want to perform more than one step of the processes
involved in converting raw materials into a product delivered and ready for consumption.
Lever Brothers Pakistan Limited’s operations are so complexed and involves 200 brands
in Pakistan so now they wanted to reduce the operational complexity and going for
strategic alliances with their suppliers, instead of producing themselves and going into
complex operations now they want their suppliers to produce for them.
The outsourcing the production so that they don’t have to invest heavily in the production
and to reduce the capacity problems, they now going for the third party contracting to
produce themselves and now they want them to be restricted to marketing and
distribution of products.

Diversification strategy is being pursued by the Lever Brothers Pakistan Limited but they
mainly go for related diversification as against unrelated diversification for
conglomerates, they are diversified into number of businesses as mentioned earlier but
they are all related to consumer products. Through vertical diversification they will be
able to eliminate the operational complexity and costs of buying and selling i.e. the
transactional costs. Now they mainly wanted to step away from operations and want to
focus more on customers.

As means of diversification which are being utilized by the Lever Brothers Pakistan
Limited as all the time, been acquisition, neither joint ventures i.e. strategic alliances nor
the internal development. Here we can take the example of the acquisition of Brooke
Bond and Polka for example which have Brother acquired through a hostile takeover.
And to step away from operational complexities now they go for subcontracting with the
suppliers and want them to produce for Lever Brothers Pakistan Limited as in case of oil
and ghee and soap and with the passage of time will also be implemented in other
categories as well.

Business Level Strategy

At business level Lever Brothers Pakistan Limited is adopting a very unique and
interesting set of strategies. First and foremost strategy they want to follow is the cost
leadership. They wanted to control cost as much as possible and want to reduce cost by
every mean.

First cost efficiency is achieved through outsourcing operations and stop producing
themselves and go for cost efficient subcontracting.

Second they want to achieve cost efficiency through responsive and cost efficient supply
chain, want to be in touch with suppliers all the time and for that they have connected
themselves with the suppliers and to their suppliers as well to minimize cost related to
forecasting now they want better forecasting through computer networks so to get the real
time information about the inventory, stock, demand and supply. They are now reducing
the inventory as well as average carrying the inventory of only 3 days and getting closer
to the concept of just in time except for those products for which they have to brought in
raw materials from far flung areas like tea and moreover routings of logistics as well like
air routing or ship routing to curtail the costs other than cost efficiency, they have
adopted the strategy of consumer connectivity i.e. want to stay closer to consumers rather
to operations and want to focus all alternations to consumers through more research and
customer profiles and demographics and wants to explore new customers and usage of
products.
To get customer connectivity they do the market research to check the trends of their
customers. The do pre-launch, post-launch research, e.g. their did before and after
lunching while antidandruff Sunsilk. The response was quite encouraging. Hence
basically customer and market research and customer feedback, free samples distribution
before and after launching new product / brand/ variant is aiming their basic strategy to
implement and achieve the customer connectivity and to fulfill their customer demand.

Here Lever Brothers Pakistan Limited has used the strategy of product development i.e.
by modifying and improving their Sunsilk it into Sunsilk antidandruff (white), they have
increased their sales. They are applying “Market and Development Strategy” as well in
which by introducing present product (Sunsilk) into a new demographic area i.e. dandruff
conscious market segment with the launch of only new variant i.e. Sunsilk antidandruff
white. They have added conditioner in it as initially the conditioner was missing in all
shampoos of Sunsilk. While it is available in competing brands of P&G.

Other than these two strategies another very important strategy is being followed by tge
Lever Brothers Pakistan Limited i.e. focusing on core brands or want to have a very
focused on brand portfolio in which they wanted to get rid of the slow moving brands
like in Surf you will get number of further variants like Surf Ultra, Surf Micro, Power
Surf etc. and in Sunsilk number of variants, Black, Green, Pink, etc. to name a few and
how they have curtailed all these slow moving brands like focusing attention to Surf
Excel only and in case of Sunsilk Black and White (antidandruff) and discarding slow
moving items like Sunsilk Pink and Green etc.

So, to avoid cannibalization effect now instead of number of brands to flood in the
market only few better and improved brands, cash generating and more focused towards
customers.

Operational Level Strategy

At operational level, Lever Brothers Pakistan Limited has always adopted the strategy of
TQM only never went for CPR i.e. they have not come up with a new brand in last few
years. Only the improvements or new variants in existing brands or using the same old
brand name to introduce a new product like Lifebuoy Shampoo or Fair & Lovely Soap.
So it can easily be said that they believe more in adopting changes rather generative ones
or go for single loop learning only because according to them its very very expensive to
introduce a new brand name.

Strategy Evaluation

Now after outlining the objectives and discussing the strategies we can now evaluate
these strategies that whether they are in harmony with the objectives of Lever Brothers
Pakistan Limited or not. And then we will evaluate these strategies on three types of
evaluation criterion.
Now as against the objectives, if we go through all the strategies being mentioned earlier,
then we can see that all strategies are true reflection of the objectives being targeted by
Lever Brothers Pakistan Limited. As an objective of consumer connectivity, responsive
supply chain getting on line computer network with suppliers and more stronger R&D
department and the objective of cost efficiency is supported by the vertical diversification
in an sense that how they are outsourcing production and going for sub contracting with
their suppliers and having more responsive and cost effective supply chain and to achieve
growth more focused strategy in case of reduction of brands, etc. So these strategies are
true measures to achieve those objectives. But other than objectives there is some other
criterion which each strategy has to fulfill to be of any worth and that criteria is as
follows: its basically three types of evaluation criterion i.e.

1. Suitability

2. Acceptability

3. Feasibility

Suitability

Suitability is a broad assessment of whether the strategy addresses the circumstances in

which the organization is operating. For example, the extent to which the strategy would
fit with the future trends / changes in the environment or how the strategy might exploit
the core competencies of the organization. Now if we evaluate the strategy of Lever
Brothers Pakistan Limited on these factors that whether the strategies fit with its existing
circumstances would able to compete with the future trends like the strategy of cost
reduction and focused brands and outsourcing production and consumer connectivity and
more responsive value chain. All these strategies are not only suitable to the present
condition but are prerequisite for future success as well i.e. by outsourcing production
more focus towards customer needs and wants would be provided and it would help
Lever Brothers Pakistan Limited to achieve even higher customer satisfaction level and
market share and not only that lowering the cost would not only be beneficial for Lever
Brothers Pakistan Limited but for consumers as well i.e. now they would receive better
quality at relatively lower cost and Lever Brothers Pakistan Limited would be able to
provide superior products quality and value to customers. Now a days, success lies at cost
reduction and superior quality which the Lever Brothers Pakistan Limited has
successfully opted for. Other than this, next factor is that whether strategy can exploit the
core competencies of the organization or not. The answer is very simple that by reducing
operational complexity and brands complexity more resources would be available to
focus more on the quality of the products as compared to the previous situation. So on the
basis of these factors it can easily be said that the strategies being implemented are very
suitable to Lever Brothers Pakistan Limited.

Acceptability
Acceptability of strategy is concerned with the expected performance outcomes such as
the returns and risk if the strategies are implemented and the extent to which it would be
in line with the expectations of the stakeholders.

In case of returns, its pretty much assured that returns would definitely be enhanced when
the cost would decrease and strategies would result in better quality products. But the
elements of risk is there which could be quite significant in the case of subcontracting,
whether the suppliers would be able to meet the quality standards or not. And as we
inquired it from the branch manager of Lever Brothers Pakistan Limited, he said, that we
have very strong quality control system and moreover we are entering into strategic
partnership with our suppliers so to maintain quality is in their favor too and they would
be beneficial from the better quality as well and it would not increase the cost in case of
maintaining control over the suppliers as its partnership more as compared to only
placing and receiving order we will work for mutual benefits and complete harmony
which we already have.

As far as the stakeholders are concerned first and foremost effect would be on the
employees as the production is out-sourced so they would definitely feared the
unemployment but they said that we will arrange it with our suppliers and will try to
accommodate them as much as possible and in case of shareholders, they would receive
benefits of this strategy and would receive higher returns on their investments and they
would be able to maximize their earnings and in other stakeholders suppliers would now
play more important role by entering into strategic partnership with the organization.
Consumers receive more attention now and would get more satisfaction as more and
more products would be developed on the basis of the targets being set by the consumers.
So after analyzing these factors it can easily be said that strategies being pursued by
Lever Brothers Pakistan Limited has higher returns and lesser risks and more benevolent
to stakeholders as well.

Feasibility

Feasibility is concerned with whether the strategy could be made to work in practice or
not. And its more concerned with the assessment of practicalities of resourcing and
strategic capabilities i.e. quantitative assessment, which is beyond the scope of this
report, so, as an overview, all strategies seems feasible and some of them has already
been implemented as well like the reduction in brands etc. So assessing;

Is this a good strategy?

Is the positioning viable?

Does it improve value?

Does it exploits core competencies?

Will it lead to good financial performance?

All these factors seems work in favor of Lever Brothers Pakistan Limited after analyzing
the strategies of Lever Brothers Pakistan Limited.

Structural Analysis

Organizational structure and management of Lever Brothers Pakistan Limited

Lever Brothers Pakistan Limited restructure the organization after the merger with
Brooke Bond Pakistan Limited. The chairman is the executive officer of Lever Brothers
Pakistan Limited. He leads the seven members management committee, which is the top
of decision making. The management is responsible for corporate strategy of Lever
Brothers Pakistan Limited and for initiating policies and overall planning as well as their
general management duties. Management committee members are each responsible for
specific function. Reporting to the management committee members are departmental
heads who are responsible for advising the management committee for planning and
implementation of policies for ensuring that targets are reached. The committee includes:

Mr. Lain Strachan Sangster (Chairman & Chief Executive)

Mr. Mashkoor Alam (Vice Chairman)

Mr. Mujib-ur-Rehman (Technical & Logistics Director)

Mr. Perwaiz Hassan Khan (Director Personnel)

Mr. J. A. Lee (Director Sales)

Mr. A. D. Bandaranayake (Director Commercial)

Mr. N. I. Khockhar (Business Unit manager ODF)

Mr. Clive David Welland (Director Food Business)

Board Of Directors

The board of directors control the whole operation of the organization it includes the
following personalities:

Mr. Lain Strachan Sangster

Mr. Syed Babar Ali

Mr. Fateh Ali W. Vellani

Mr. Mujib-ur-Rehman

Mr. Perwaiz Hassan Khan

Mr. J. A. Lee

Mr. Clive David Welland

Mr. Dr. A. D. Bandaranayake

Mr. S. N. Patel

Mr. M. Asadullah Sheikh

Mr. Abdul GhaniBachani

Mr. Azim Azmat Osman

As we can notice that the management of the company is composed of a mix of

international and Pakistanis business professionalists. The management of the company
includes Syed Babar Ali as director, who is also involved in many other organizations i.e.
Packages and other industries. It includes in its board meetings one member from each
province i.e. Punjab, Sindh, NWFP and Baluchistan. The top management of the
company is fully professional specially marketing department which is headed by Mr.
Jeff Lee who have world wide experience in this field.

Hierarchy

Branch structure

All over Pakistan 6 branches of Lever Brothers Pakistan Limited are working. Its head
office is located in Karachi at Avari Towers. The chairman and management committee
as well as the most of the department heads have their offices there.

Structural Analysis

Lever Brothers Pakistan Limited has a functional structure i.e. its based on the primary
tasks that have to be carried out such as production, accounting, finance, marketing, etc.
and then there is separate department for each function and these functions are carried out
by directors and they are assisted by managers of that very particular function like
marketing manager and those managers have divided each product category into home
and fabric care category, spread and cooking category, etc. And these categories are
headed by one product manager and assistant manager.
We cannot say that the structure of Lever Brothers Pakistan Limited is an ideal or exact
functional structure as in functional structure CEO is in direct supervision of each
primary activity but Lever Brothers Pakistan Limited have also included layers of vice
chairman and very important management committee as described earlier. This structure
maximizes the basic advantage of functional structure that the CEO is in charge and well
informed about each primary activity and minimizes the basic disadvantage of functional
structure that an organization become larger or more diverse, then CEO, senior
management can be over burdened with everyday operational issues, which is true in the
case of Lever Brothers Pakistan Limited and to offset this disadvantage they have created
additional layer of management committee which is responsible of coordination between
CEO and chairman, vice chairman, and the functional directors to take a strategic
perspective on problems. So, Lever Brothers Pakistan Limited has an ideal structure to
oversee the whole organization and to control the operations of the organization which in
turn create problems as of very slow decision making process and very centralized too.

To continue with structure analysis discussion, now let’s turn our discussion to five basic
forces, which determines an organization’s structure i.e.

1. Threat of new entrants

2. Threat of substitutes

3. Buyer power

4. Supplier power

5. Competitive rivalry.

Threat Of New Entrants

This potential threat always exist in every organization. But an organization like Lever
Brothers Pakistan Limited this threat is very minimum because you need a giant to
compete with another giant like Lever Brothers Pakistan Limited and in a relatively small
market like Pakistan, they are enjoying the highest market shares in most of their product
categories like ghee, oil, soaps, spread, fabric care, etc. so, they face no threat of any new
entrant.

Threat Of Substitutes

Same as in the case of new entrant no as such threat they are facing.

Buyer Power

To determine buyer power one condition is always necessary i.e. the buyers are few so
they exert power over an organization. But this condition is not present in case of Lever
Brothers Pakistan Limited, they have very diversified product categories and within each
category they have brands targeted at almost each and every segment of the market so
they don’t face the buyers power as such but still “customer is king” and they do have to
pay a lot of attention to buyers being a consumer product company.

Supplier Power

Suppliers don’t exert any power over Lever Brothers Pakistan Limited rather Lever
Brothers Pakistan Limited provides buyer’s power in this case, no body would like to
loose a buyer like Lever Brothers Pakistan Limited so, they don’t face any significant
supplier power.

Competitive Rivalry

Competition is intense but not cut throat competition and all of them avoid frontal assault
or direct attack. So, situation of healthy competition exist. Competitive rivalry would be
discussed more in detail in the section “competitor analysis”.

Structure Types In Multinational Companies

The growth in the size and importance of multinational business warrants some special
mention, since the structural implications can be significant. In deciding the structure of
multinational critical aspect or factor or issue is the extent to which local independence
and responsiveness take precedence over global coordination. On the basis of these
factors there are generally four types of multinational structures, such as:

In all the four structures, Unilever has assumed the structure of transnational corporations
in which they have developed structure, which attempts to combine the local
responsiveness of the international subsidiary with the advantages available from
coordination found in global product companies. The key is that they wanted to create an
integrated network of interdependent resources and competencies, in which:

1. Each national unit operates independently, but is a source of ideas and

capabilities for the whole corporation.
2. The corporate center manages a global network by first establishing the role of
each subsidiary, then sustaining the culture and system to make the network
operates efficiently or in a way we can say that they have combined global
and multi-domestic strategy, staying independent and responsive towards
local or national market and yet not loosing touch or coordination with the
worldwide network and parent company.

There are interesting differences between countries in the way that global strategy tend to
develop. Companies, which originated in many European countries such as Unilever or
Nestle needed to internationalize their activities at an early stage, owing to the small size
of their home markets. This took the firm of “international subsidiaries” but now their
challenge is to reduce the local autonomy and increase global coordination. But in
contrast US companies with a large domestic market tended to favor “international
divisions” and now they face two challenges:

1. The issue of local autonomy.

2. Barriers between their separate strategic views of the domestic and international
business.

Unilever has well coped with these challenges by adopting the transnational corporation
structure.

Value Chain Analysis Of Lever Brothers Pakistan Limited

This method for accessing strengths and weaknesses divides the business into number of
linked activities that may each produce value for the customer. “Customer value” is a
function of factors that usually fall into one of three broad categories those that
differentiate the product, those that lower its costs, or those that allow the organization to
respond to customer needs more quickly.

The value chain frame work helps analyze the contribution of individual activities in a
business to the overall level of customer value the firm produces and ultimately to its
financial performance. If each part of the business produces value, the firm should be
able to change more and/or incur lower costs either of which will lead to higher profit
margins.

The value chain analysis frame work of Lever Brothers Pakistan Limited appears as
follows and is basically seeking cost leadership as their source competitive advantage.

Explanation Of Value Chain

Lever Brothers Pakistan Limited is basically focusing on cost leadership in branded

shampoos market. For their raw material procurement they have opted “outsourcing”
strategy. Many contents of shampoos are procured from Europe, America, Far East and
some of raw material is locally available it increases the lead-time. Lever Brothers
Pakistan Limited handles this situation with “near to JIT system” i.e. called Automatic
Replenishment System. Through this system the suppliers of raw material are well
connected through computer terminal, the detail and current level of all raw materials,
inventory level is reflected on supplier terminal and on specific interval they ship the raw
material automatically which reduces time for repeated requisition.

After releasing the material from customs the ingredients are shipped to Rahim Yar Khan
Plant. These ingredients are processed (both local and imported) in the machinery
specifically designed for this purpose. Normally for sache packs 8 lanes are processed at
a time in one lot.
8 lanes = 8 reels

1 r eel = 1 ton or 1000 kg of shampoo in quantity

It’s cutting and packaging is completed as final step. Packaging material is typically not
available around factory area. Lever Brothers Pakistan Limited has to purchase all
packaging material from Packages Limited Lahore.

Hence both primary and secondary packaging material comes from Packages Limited
Lahore. Primary packaging material includes bottles and sache packaging while that of
secondary material includes the cartons. After packaging of shampoo bottles and sache
passes through distributor to retailer.

Outbound logistics start from here on demand of 6 depots of Lever Brothers Pakistan
Limited, the lot is packed and delivered to the wholesaler.

Now we will discuss that how each individual activity of value chain (both primary and
supporting activity contributes towards the maximization of profits to deliver value to
final customer.

Supportive Activities

Firm Infrastructure

Lever Brothers Pakistan Limited has a well established infrastructure. They have
knowledgeable expert top management and middle management who have expertise in
the consumer goods fields. Moreover they have some arrangements with hair exports to
furnish their product knowledge.

They have a very good and effective management information system, which not only
shares the information within the organization i.e. Lever Brothers Pakistan Limited but
also with their suppliers and wholesalers as well. This saves their time and gives them
real-time information.

Marketing research department is also sharing consumer research data to improve their
standards according to customer demand and trends e.g. conditioner was missing in
Sunsilk Research and Development searched out and found that competitors are
providing conditioner also in shampoo which Sunsilk and Lifebuoy shampoo didn’t have
in them. But this has been done very late and implementation is also very slow.
Production people (manager) upon sharing this information from marketing research
department has recently launched the antidandruff white Sunsilk with conditioner which
has shown a very successful performance in market and has improved the sales of Sunsilk
of Lever Brothers Pakistan Limited especially of this white variant.

One important thing to be noticed is that though they have integrated information sharing
network but the implementation on the needed strategy by production people is seeming
to be very late as their decisions are centralized and are in hands of parent company and
the implementation is also very slow. This problem of absence of conditioner was
identified by marketing research people very earlier and was communicated to production
department as well but a implication and action has been taken after a very long time
when problems of sales become visible. We can say this is due to long term approach to
strategy formation and implementation of Lever Brothers Pakistan Limited. Hence
infrastructure contributes as a supporting activity for providing value to the customers
and on some aspects e.g. centralized decision making and late implementation it proves
to be a weak support.

Human Resource Management

Human resource management is the one of the most important supporting pillar of the
value chain and it is useful for its analysis. A firm’s higher technological and financial
resources cannot do any thing for the betterment of company unless these two and rest of
the resources are handled by the good appropriate human resources. We can surely say
that Lever Brothers Pakistan Limited has a skilled, qualified, expert, communicative
management and officers staff.

They have both formal and informal network of communication in their organization to
complete the tasks and target efficiently and effectively. Hence we can say that there is
healthy type of network among Lever Brothers Pakistan Limited staff’s department.

Lever Brothers Pakistan Limited offers the training programmes and arranges seminars
for further skill development and career development purposes of its brand managers,
marketing managers, research and development managers, and other staff, which
enhances their efficiency to support the primary activities of value chain of shampoo
product line of Lever Brothers Pakistan Limited.

Due to necessary training, healthy pay scales, balanced empowerment, informal and
formal combination of communication network the job satisfaction of each and every
employee is very high. Which reduces the employees turnover to minimal. All of them
contribute a lot and positively for the support of value chain primary activities i.e.
procurement manager putting his efforts for the purchase of high and right quality
making inbound logistics.

Operations / brand manager is focusing ensuring the relationship of the shampoo

production.

Sales and distribution manager of Lever Brothers Pakistan Limited is ensuring the
complete coverage of retail outlets of Pakistan. He ensures that all variants and sache and
shampoos of Lever Brothers Pakistan Limited are available on each shopping outlet of
Pakistan i.e. from large shopping stores to small shop covering both rural and urban
areas.
But here we would like to add that one thing is missing as a support of value chain i.e.
good relations of Lever Brothers Pakistan Limited marketing and sales manager with
their retailer and distributors. Due to this retailer give preference to the competitor’s
brands of shampoos e.g. P&G. Hence Lever Brothers Pakistan Limited is providing
training and job satisfaction to its human resources in turn there is low employee turnover
and they support value chain except good relationship and incentive to retailers which is
of primary importance.

Technological Development

By technological development as a supportive activity we mean that how much

organization is bringing further improvements in its products and product development.
Lever Brothers Pakistan Limited mainly through its R&D department has recently
brought a major improvement in its Sunsilk shampoo i.e. launch of antidandruff white
shampoo. Hence this very element has also been supportive in value chain of Sunsilk and
Lifebuoy shampoo. But still Lever Brothers Pakistan Limited are laggards in bringing
this improvement.

Procurement

Procurement especially of raw material contents and packaging material is critical to the
product and ultimately to the organization’s success. Lever Brothers Pakistan Limited
purchases its most of the contents of shampoo from foreign countries like America,
Europe and Far East. The procurement system of Lever Brothers Pakistan Limited is
mostly globally centralized and is long term as well. For purchase of local raw material
Lever Brothers Pakistan Limited is outsourcing with its suppliers. They have get very
good long term relationship with their suppliers of local raw material as well. Hence they
get the quantity discounts and manage lead time as well.

Primary Activities Of Value Chain Of Lever Brothers Pakistan Limited

Inbound Logistics Of Value Chain Of Lever Brothers Pakistan Limited

1. Lever Brothers Pakistan Limited is focusing on the outsourcing for the purchase
of basic inputs with their suppliers. Instead of backward integration they
believe in outsourcing which reduces their cost.
2. Lever Brothers Pakistan Limited faces high lead-time for the global purchase of
its imported raw materials but automatic replenishment system has solved
this problem. Lever Brothers Pakistan Limited is all the time connected via
its management information system with their suppliers.
3. Quality and reliability of raw material for shampoo product line is checked and
reconceived by the Lever Brothers Pakistan Limited at fixed intervals as
they have centralized buying system.

Operations
1. Lever Brothers Pakistan Limited has been in shampoo product line since 1984.
Within these 16 years they have got experience. Experience effect has
raised efficiency, they have very old operations and product method as
there has been no major turn around in production methods of its shampoo.
2. Lever Brothers Pakistan Limited has a factory at Rahim Yar Khan in which they
produce different products array with shampoo, capacity of this plant has
been designed in such a way that in current demand they get the economies
of scale very easily which reduces cost of manufacturing of Sunsilk and
Lifebuoy on this basis they offer lower prices as compared to P&G.
3. Since Lever Brothers Pakistan Limited’s buying is centralized same is the case
with production and operations methods as well. Rahim Yar Khan has to
follow the predefined production process given by parent head office of
Lever Brothers Pakistan Limited. Hence production process of both Sunsilk
and Lifebuoy is reliable i.e. there is no fluctuation. This element gives
reliability to final consumer.

Out Bound Logistics

1. Final product of shampoo of Lever Brothers Pakistan Limited is shipped to its 6

depots via truck on the demand of these depots. Whole Sellers have to add
value themselves. They bear this cost of transportation. Hence Lever
Brothers Pakistan Limited has suppliers and Whole Sellers power over its
wholesalers and gives cost cutting edge.
2. Lever Brothers Pakistan Limited covers all the retail and shopping outlets of
Pakistan. Lever Brothers Pakistan Limited ensures availability and visibility
of its shampoos as each and every large store, medium size stores, small
shops. 100% coverage of outlet is the major strength of Lever Brothers
Pakistan Limited.

Marketing And Sales

1. Poor Marketing

Lever Brothers Pakistan Limited has very poor marketing of their product. They
concentrate only on “Nabila” as their celebrity. They mainly focus on females for Sunsilk
and ignore the rest potential market; males and kids. In case of Lifebuoy they focus only
on males and ignore females and kids which reduces their market share as compared to
P&G’s shampoo Penteane, Head & Shoulder.

2. Lever Brothers Pakistan Limited has no strategy to make good relations with retailers.
This element destroys their repute in retailer class they do prefer P&G and
competitor’s shampoo to recommend it to buy and they give more shelf space to
 P&G’s shampoos as compared to Lever Brothers Pakistan Limited’s Sunsilk and
Lifebuoy.

3. Lever Brothers Pakistan Limited has never offered any major incentive, discount or
prize scheme to retailers on its shampoos which the retailers often demand.
Retailers think that prize incentives with product or any other prize scheme
offered to retailers or consumer etc enhance sales. Lever Brothers Pakistan
Limited has never paid any head to it.

Services

Lever Brothers Pakistan Limited has good “service” in terms they offer free samples for
the relaunch of Sunsilk, which helps as a primary activity.

A Transition In Value Chain

Lever Brothers Pakistan Limited is now focusing as extended value chain i.e. they are
outsourcing with their suppliers and subcontracting with them to ensure reliability of raw
material.

Before this supplier’s outsourcing they already have connected with their customers with
their strong R&D Department. But one of thing in which they lag’s in they have
centralized long term strategy, formulated on system and implementation of results of
R&D Department research based on customer connection in very late.

Hence all the above individual activities (i.e. primary and supportive activities) contribute
to enhance customer values and ultimately improves firm’s financial performance.

Lever Brothers Pakistan Limited becomes able to incur lower costs which leads to higher
profit margins.

SWOT Analysis

The SWOT analysis of Lever Brothers Pakistan Limited are as follows:

Strengths

1. Unilever PLC England the parent company all over the world gives assistance to
Lever Brothers Pakistan Limited so Lever Brothers Pakistan Limited enjoys
a high level of support from Unilever.
2. Another major source of strength for Lever Brothers Pakistan Limited is its
product targeting all income groups. Lever Brothers Pakistan Limited is
 providing products total income groups i.e. providing quality with economy
as well e.g. Wheel washing powder, Breeze beauty soap, Taza Chai, etc.
3. Lever Brothers Pakistan Limited is the oldest company operating in Pakistan
which gives him a commanding position is Pakistan to certain extent.
4. Lever Brothers Pakistan Limited enjoys the services of highly professional
management in the area of sales, marketing, technical and production.
5. Lever Brothers Pakistan Limited has such a strong goodwill in the market that
some of its brand names has become the generic names for those products
such as Surf for detergents and Dalda for ghee.
6. Lever Brothers Pakistan Limited is the largest producer of consumer products in
Pakistan and has strong brands in every field such as Close Up, Dalda, Surf,
Lifebuoy, Lux, etc.
7. Lever Brothers Pakistan Limited having the biggest shares in tea market having
the biggest brand Lipton and Brooke Bond.
8. They are market leader in ice cream business of Polka i.e. horizontal integration
with hostile takeover they have captured their competitors thereby reducing
competition.
9. The company has the assets of more than 5 billion. So, it can invest further
product innovation and development.
10. It has the largest and efficient distribution network then any its competition.
11. Lever Brothers Pakistan Limited is the only company in Pakistan which has its
own corner research department.
12. The company is very strong financially.
13. The company is working for almost 50 years in Pakistan. That’s why it has
many advantages. Which other do not have. They have know how of the
market. They understand the market very well. Similarly during this period
they have developed a very organized distribution network all over the
country. Another advantage is there wide range of products, which give
them a position to monopolize the retailer’s shop. It is estimated that over
more than 30% of a retailer’s shop items are by this single company.

Weaknesses

1. Lever Brothers Pakistan Limited unable to capture shampoo and toothpaste

market i.e. low market share.
2. New variants of the company were not able to sustain in the market such as
harmony.
3. Lever Brothers Pakistan Limited is relatively week in their innovation
department i.e. being first to introduce Surf but after that has no major
innovation.
4. Emphasizing only few products while ignoring others which could give them
potential market shares e.g. beverages section.
5. Lever Brothers Pakistan Limited go for long term strategies for all their product
categories which prove to be a weakness with change in the circumstances
and taste, trends of people

Opportunities

1. With the help of further advertising their non competing brands can increase
their market share i.e. market penetration strategy. People will definitely go
for these products as Lever Brothers Pakistan Limited has a sound image in
people’s mind. Whatever the brand is being sold is mostly on the basis of
brand loyalty.
2. They have capital to invest they can explore new product categories e.g. in food
and beverages they can develop new products like Rafhan has launched
custard, jelly, kheer mix, rasmalai mix, etc. through it again will broaden
their product categories and will make their operations complex but this
could be avoided with “sub contracting” i.e. strategic partnership with their
suppliers. These products can prove a “cash cows” as customer in Pakistan
always welcome food items especially they will welcome due to brand
image of Blue Band and Dalda ghee in food category and due to Lipton and
Supreme in beverages category.
3. Lever Brothers Pakistan Limited relaunches most of its products with same
name or little change in the name e.g. Surf Micro to Surf Extra, ,then to
Surf Ultra and then to Surf Excel, with little change of name and little
changes in its formula. If Lever Brothers Pakistan Limited launch its
products with in prevailing product categories, with entirely new name and
new formula then they can capture new market shares as it will gain capture
the attention of its target market more as compared to existing one. Though
apparently it will increase the advertising cost but it will be compensated
with exciting sales as you have to advertise more even in case of relaunch
of products with little change in names and formulas. So why not to go for
new name and new formula as it will increase your brand portfolio, it can
satisfy the needs of customers which were unsatisfied with the previous
brands, its names, its formula, e.g. people used to say Surf fades the clothes,
they changed formula and not name only gave it a suffix of Excel i.e. Surf
Excel now the people who developed this perception that it fades the color,
remain reluctant for long time even after its relaunch and heavy
advertisement.

Threats
1. P&G is giving very serious threats to Lever Brothers Pakistan Limited in the
business of detergents and personal wash and shampoos.
2. No of local companies producing detergents and market them at very low prices
which is a threat to Surf.
3. In the case of ghee and oil business Habib is giving very tough competition to
Lever Brothers Pakistan Limited by introducing its variety of products.
4. Treat is promoting Bodyguard very much and trying to produce a competition in
the carbolic soap market.
5. Increasing inflation in the country, persistently reducing the purchasing power
of the people and dropping people from high price products to low price
products e.g. the detergents and providing fuel to the expansion of
unorganized sector.
6. Increased import duties are also adding to the prices of the products and in
Pakistan which is a very price for all the firms not only Lever Brothers
Pakistan Limited who are using imported raw material.
7. Threats of new entrants are also present. As ICI is a potential threat in detergents
industry, because they are already involved in chemical business and
providing raw material for detergent production to different manufacturing
companies like Lever Brothers Pakistan Limited and Colgate Palmolive.

PEST Analysis

PEST analysis is used to assess that what environmental factors affecting different
organization and which of them are more important and how they affect the organization.
It is indicator of political, economical, social and technological influences on
organization.

Political & Legal Factors

As far as the Lever Brothers Pakistan Limited concerns according to them that political
instability have do affect but not particularly Lever Brothers Pakistan Limited same as it
affects any other organization around and specially they are in consumer products
business which never make them out of business.

In case of legal factors, any trade policy or import duties is not affecting particularly
Lever Brothers Pakistan Limited. In Pakistan right now following liberalization policy
under SAP by IMF made which they have to waive off all restrictions and moreover due
to huge investment by Lever Brothers Pakistan Limited no government can afford to
create hurdles in the way of an organization like Lever Brothers Pakistan Limited.

And they don’t have to go for only lobbying or what so ever as not action of Pakistan
government has affected them adversely as such.
Economical Factors

Economical factors affect Lever Brothers Pakistan Limited in the same way as it affect
any other organization like current economic situation in Pakistan and inflation has
reduced consumer’s disposable income too, which in turn has reduced the purchasing
power of consumer but affect is same for every organization and according to them Lever
Brothers Pakistan Limited have edge that they have targeted all possible segments
through their vast product category i.e. the width and length too. So one way or other
they find way to cover it up.

Capital Markets

In other economic factors like “interest rates” and “inflation” has affected the borrowing
ability of organization but Lever Brothers Pakistan Limited stayed unaffected as a
company having business in billions and when in need of financing no single bank can
fulfill the need, they have to make a consortium to finance Lever Brothers Pakistan
Limited and with very good credit standing and very low risk definitely they get the
lowest or justified interest rate as well.

Socio-Cultural Factors

In socio-cultural factors, factors like lifestyle changes and level of education affects an
organization. In case of change in lifestyle, the world has converted into global town now
and people have readily access to every sort of information and they are becoming more
quality conscious. Now more concerned towards environmental issues now and demand
more social responsibility on the part of organizations now. To cope up with all these
factors now Lever Brothers Pakistan Limited which always maintained the quality
standards needs to work towards other social factors like social responsibility and
environmental concerns like P&G did in its Arial campaign and image of a society
responsible organization.

Technological Factors

In technological factors comes R&D first and foremost that how much an organization
spending in terms of product improvement or development of new products or
improvement in production process or in the raw material etc. and what is the trend in the
industry as Pakistan is not that big and not very much innovation seeking as the other
developed countries. Yet they keep on finding new ways of doing things and new things
as well they continuously launched variants in brands etc. and moreover in the market
like Pakistan in product categories of consumer products “rates of obsolescence” is not
very high rather very slow so no great pressure to launch new products,.

Other than the factors smuggling affects Lever Brothers Pakistan Limited’s sales very
negatively. This issue would be discussed more in detail in the problem statement.

Problem Statement
Our problem statement is regarding the shampoo segment of Lever Brothers Pakistan
Limited. They have managed such a deep and broad product category and manage to do
so well that some of their brand name has become the generic names for that particular
product but this is not the story with Sunsilk and recently launched Lifebuoy Shampoo.
Our problem statement is that what are the causes, which kept Lever Brothers Pakistan
Limited away from market leader position in shampoo market.

Problems

Whenever we look for the problems of company its problems can be bifurcated into two
broader categories.

1. Internal problems

2. External problems

Internal problems

These problems are normally faced by organization due to elements, factors and
weaknesses which are present inside or which are existing internally in the organization
e.g. problems due to organizational policies, culture, structure, information sharing
networks, organizational strategies or even employees, they can be positive force and the
problem child as a source of internal problem as well.

1. Company’s management rely on long term strategies which they receive ready
made from their parent company, head office as a modus operandi. And
hence a strategy or a policy approval, formulated and implemented 50 years
back becomes obsolete and discard in prevailing scenario and changing
environment e.g. in their advertising campaigns of Sunsilk shampoo they
only use “Nabila” as their celebrity (Hair Expert) and they have never tried
any other sports or film media celebrity for the promotion of their product
which their competitors use extensively. Here in this field they lag behind
due to their long term strategy even in field of advertising given by their
parent head office.
Hence being an influenciable organization they exhibit bureaucratic
management style they want to maintain their status quo before these
environmental changes like advertising trend.
2. Offices and branches of Lever Brothers Pakistan Limited are normally placed in
domestic setup especially Multan branch, since it is a marketing
organization, its office outlook and location must be in professional and
well to do area which will contribute in proper functionality of branch and
its employees as well. This severe problem is being faced by Multan branch
of Lever Brothers Pakistan Limited as well.
3. Management team of Lever Brothers Pakistan Limited normally arrange
excessive operational meeting, they have less emphasis on the strategy
implementation part as compared to strategy formulation and planning.
4. All the decisions regarding product planning, development, distribution and
even targets of the branches are centralized and are in hands of central sales
office of Lever Brothers Pakistan Limited. They don’t believe in MBO
(Management by objectives). Branches are given inflexible targets of sales
– though data on these branch managers negotiate this figure but it takes too
long.
5. Due to heavy capital investment in their brands Lever Brothers Pakistan Limited
is unable to observe their slow moving brands which create a cost burden.
6. Since removing old/discarded brand is very expensive due to expensive installed
machinery, technology and capital investment, launching new brand is also
very expensive for Lever Brothers Pakistan Limited due to the same reason.
As to launch a new brand complete research and development setup is
required which is inflexible and can not be re-utilized for another brand
along with its consumer market is heavily flooded with products, there is
very low probability that market will absorb new brands.
7. Whenever Lever Brothers Pakistan Limited launch any product they first launch
it in India if product proves a “big success” they try it in Pakistan which is
not a good strategy due to cultural difference and religious differences.
8. Lever Brothers Pakistan Limited has very poor relationships with their dealers
and retailers. They are far away form their competitors like P&G, in case of
retailer relationship. Their brand manager makes very rare visits to the
retailers to know their problems, very little discounts are offered by Lever
Brothers Pakistan Limited to their retailers. No prize scheme and incentive
is given to dealers, retailers, wholesalers of Lever Brothers Pakistan
Limited. Even Lever Brothers Pakistan Limited brand manager never
bargain on the proper and prominent shelf space of their shampoos (Sunsilk
and Lifebuoy).
9. Lever Brothers Pakistan Limited has not been able to place any check on its
smuggling shampoos into Pakistan e.g. Indonesian Sunsilk is made
according to the demographic of Indonesia, when it will be used in Pakistan
it will damage the hair of people, which deteriorate the brand image. Which
create problem on local sales of Pakistan.
10. Employment insecurities in Lever Brothers Pakistan Limited also contribute
negatively towards the performance of branch operations. All branch
managers, brand managers and operation are transferred within branches of
Lever Brothers Pakistan Limited allover Pakistan. This create an
uncertainty among management team, new managers takes much time to
 settle in new branch and to understand new setup of branch and new dealers
network. This affects the branch operations and performance.

External problems

Lever Brothers Pakistan Limited is not facing any prominent external problem as already
analyzed in PEST analysis.

Introduction Of Sunsilk And Lifebuoy

Sunsilk Shampoo

Lever Brothers Pakistan Limited stepped into shampoo business in 1984 with Sunsilk
initially with only two variants:

1. Sunsilk (egg shampoo)

2. Sunsilk (shikaki shampoo)

This was the first branded shampoo in Pakistani market then they launched another
shampoo named as “Clinic” in 1985. For the reason that no other competitor was there in
the market their sales figures was high in start, but as shampoo market started to develop
and imported shampoo and other competitors entered into the market their sales started
declining so they re-launched it as “Clinic Plus”. Due to their poor marketing in 90s
Clinic Plus faced big failure. The sales of Clinic Plus was not up to the expectations of
the company and they abandoned the production of Clinic Plus. They have recently
launched the brand with the new name and new formula (as they claim) named as “Clinic
All Clear” dandruff shampoo.

Company re-launched Sunsilk shampoo with following five variants in 1998:

Sunsilk Black for dull hair

Sunsilk Yellow for normal hair

Sunsilk Green for thin hair

Sunsilk Pink for dry hair

Sunsilk Orange for oily hair

They promoted these 5 variants heavily but this could not get them their market share
back due to entry of strong competitors like P&G (Pentene, Pert Plus, Rejoice, Head &
Shoulder), Bio Amla & other imported shampoos as these shampoos got more shelf space
in the retail outlets.

Lever Brothers Pakistan Limited again re-launched the Sunsilk at the end of 1999 with 12
different variants with new name of fruitamines. Now the focus was on different kind of
hair i.e. how many variation of Sunsilk are there with aspect of ingredients and contents.
Then they reduced their frutamines Sunsilk to six variants. Now with launch of White
Sunsilk they have seven variants of Sunsilk.

Lifebuoy Shampoo

Lever Brothers Pakistan Limited also tried to encash its another very popular brand name
Lifebuoy soap which was popular among lower income segment. They launched
Lifebuoy shampoo using this brand name in 1998. Initially it was successful according to
the retailers every one was asking about it and asked for retailers opinion as well. But it
flopped badly because it was mainly targeted towards lower and middle income segment
and Lever Brothers Pakistan Limited wanted this segment to switch from bath soap to
shampoo and wanted to develop shampoo market in this segment as well. But this class
did not switched to Lifebuoy shampoo because they were in habit of using soap for
washing their hair, more over they did not find any thing unique and new about the
shampoo. Other than being liquid. So, they again returned to Lifebuoy soap.

SWOT Analysis Of Shampoo Product Line

Strengths
1. Lever Brothers Pakistan Limited has a good name as a market leader in
consumer products this image always help its shampoo product line.
Customer are brand loyal and of shampoo product line.
2. People have favorable opinions about Sunsilk that its contents do not include
any harmful chemicals which could damage their hair.
3. First trial image of user are positive and they are generally brand loyal.
4. Sunsilk and Lifebuoy shampoos users believe that it is economical. Due to cost
leadership strategy of Lever Brothers Pakistan Limited in shampoo product
line.
5. They have recently launched antidandruff shampoo (white variant) with
additional feature of conditioner which has been highly valued by the
customers. It is competing successfully with P&G’s shampoos which were
already having conditioner in them.
Weaknesses
1. Packaging of Sunsilk and Lifebuoy shampoo is the biggest weaknesses of Lever
Brothers Pakistan Limited. Retailers complaint that one leaked bottle of
Sunsilk spoils the whole lot. But Lever Brothers Pakistan Limited do not
pay any head to it.
2. Advertisement of Sunsilk does not promote the product very well rather its
celebrity like “Nabila” is promoted. They don’t switch their celebrity as
they have to follow long term promotion and advertising designed by their
head office as Elida (France) has always used beauty expert as their
celebrity.
3. They focus on only females in their advertisement and they have ignored their
bigger segment of males.
4. Lever Brothers Pakistan Limited does not pay any attention on the incentives
and discounts given to the distributors and retailers.
5. Sales manager, brand manager and sales representatives do not conduct any
personal visits to the retail stores which gives them dissatisfaction.
6. Lever Brothers Pakistan Limited does not pay any attention to the shelf space
given to the Sunsilk in the retail stores. The store manager of “Range” told
us that the brand manager of Lever Brothers has never been visited their
store and they even never bothered about their shelf space.
7. Due to very huge number of variants in Sunsilk, Lever Brothers Pakistan
Limited fined it very difficult to focus on particular variants and it created
confusion among customers as well and increased complexity of operations
to a large extent and created cannibalization effect. Though recently they
have reduced their variants of Sunsilk from 12 to 6 and then launched
another one Sunsilk white. Still it needs further reduction.
Opportunities
1. Due strong company image and strong distribution network if they promote
their products through incentives, bonuses, allowances and discounts to the
retailers they can get better shelf space in the display stores of retailers
especially in shampoo product line.
2. Lever Brothers Pakistan Limited has very strong and resourceful research
department. They can conduct through their personnel in all over Pakistan
both in rural and urban areas and hence they can launch the new shampoo
with new formula and with new name. For this they have such a big
portfolio that they can afford its cost and returns will be maximized as a
result of increased sales which will definitely offset the cost and will result
in maximum market shares.
3. People have ignored the relaunch of Sunsilk and its different offered variants.
Lever Brothers Pakistan Limited should implement the idea of launching
 the new shampoo with new name and new formula because of this they
well be better able to attract target market.
Threats
1. All new and existing and important shampoo and branded soaps, which are
used, as shampoos are the threats for the shampoo product line of Lever
Brothers Pakistan Limited especially Sunsilk. Since people are not that
much price sensitive in case of shampoo but they have more concern about
the ingredients, formula and quality of their shampoo.
2. Competitors of Lever Brothers Pakistan Limited like P&G have very strong
relations with retailers and distributors which is greater threat to the
Sunsilk. The detail of discounts offered by P&G re as followed:
Order in Rs. Discount in %
Below 50,000 2-3%
Above 50,000 5-6%
While Lever Brothers Pakistan Limited offers even less than the above stated discounts
on Sunsilk and Lifebuoy shampoos.

Competitors’ Analysis

The major competitors of Sunsilk can be categorized in two ways (all percentages have
been provided by Lever Brothers Pakistan Limited:

1. Direct competitors 75%

2. Indirect competitors 25%

Direct Competitors

These competitors are in terms of product category. With reference to the product
category we can divide users of shampoo into following segments:

Upper Class

This class normally use Pentene, Head & Shoulder, Pert Plus. These shampoos are giving
tough competition to Sunsilk.

Middle Class

This segment is normally using shampoos in following percentage:

*All the percentages have been provided by LBPL.

Sr. No. Shampoo Percentage

1 Bio Amla 10
2 Head & Shoulder 20
3 Pentene 35
4 Pert Plus 25
5 Sunsilk 10

Bio Amla

Normally young girls and women want lengthy hair and try to avoid split edges of hair so
they prefer Bio Amla. This is a shampoo which has the largest number of liters sales in
Pakistan. Only lower middle and middle group people are using Bio Amla.

Head & Shoulder

20% shampoo users are using Head & Shoulder as they are dandruff conscious people.
99% of the people are influenced by the advertisement of Head & Shoulder on daily use
to get rid of dandruff and more over they re getting the promised results. They have
targeted both males and females due to which they have got more number of shares in
market.

Pentene

Pentene is the strongest hair care product of P&G both formula and advertisement wise.
As already explained they are giving top incentive to retailers and distributors. P&G sales
staff pay more visits to their retailers and stores to check the shelf space of their
shampoo. Thus due to these efforts they are getting 35% of market share.

Pert Plus

This shampoo is almost getting 25% of market shares and it is also a very strong brand of
P&G. P&G has targeted on young busy people who want stylish hair within five minutes.
So the need of separate conditioner is also committed.

Sunsilk

Rest of the market share i.e. only 10% is with Sunsilk.

Sales Analysis

Now we will discuss briefly only Pentene and Sunsilk from retailers point of view i.e.
how much order are generally placed by retailers in a month.
1. Pentene of P&G

2. Sunsilk of Lever Brothers Pakistan Limited

Pentene Of P&G

According to the retailers like Range & Prince Store and other small shop keepers,
normally place four order in a month i.e. the shelf space is refilled 04 times in a month or
every week due to the increased sales of Pentene. It reflects the highest turnover of
Pentene.

Sunsilk Of Lever Brothers Pakistan Limited

On the other hand only one order is normally placed in month by retailers due to the low
demand by consumers. Hence the shelf space of Sunsilk is refilled 12 times in a year or
once in a month. We can say that ratio for order placement is 1:4 for Sunsilk and Pentene
respectively. In other words 75% of the orders are of Pentene and only 25% of the orders
are secured by Sunsilk if we compare only these two.

Indirect Competitors

Indirect competitors include:

Imported shampoos 40%

Branded soaps 35%

Unbranded shampoos and soaps 25%

Imported Shampoos

Higher income segment is very quality conscious. They are major innovators and variety
seekers. They change their shampoo more often than any other segment. They are mostly
influenced by advertisement and word of mouth or on the basis of the consultation of
their beauty experts.

Examples of imported shampoos include:

1. Finess

2. Agree

3. Saloon Selective

4. American Pentene (Pentene lively clean, ,Pentene Moisture lock)

5. Vidal Sasoon

6. Temi Tei

40% of the indirect competition is provided by these imported shampoos.

Branded Soaps

These soaps include:

1. Lifebuoy (Lever Brothers Pakistan Limited)

2. Safeguard (P&G)

3. Bodyguard (Treet)

4. Johnson & Johnson (J&J) mainly targeted on kids

These soaps account for 35% of indirect competition.

Unbranded Shampoos & Soaps

They are unbranded shampoos and soaps and are normally used by lower income
segment. These unbranded soaps and shampoos provide a major competition to Lifebuoy
shampoo for which Lever Brothers Pakistan Limited focuses on low income segment.
Lifebuoy soap is also providing indirect competition to Lifebuoy shampoo, as users of
Lifebuoy soap have not shifted to Lifebuoy shampoo.

These unbranded soaps and shampoos account for 25% of indirect competition.

Strengths And Weaknesses Of Competitors

For this purpose or major competitor of concern are P&G and their shampoos like
Pentene, Head & Shoulder and Pert Plus are providing major competition to Sunsilk and
Lifebuoy.
Strengths Of P&G
1. Their shampoo like P&G has conditioner in its which Lever Brothers Pakistan
Limited has only in one variant (Sunsilk White). This is most demanding
feature of shampoo which P&G has focused upon.
2. Advertisement of P&G focuses on males and females both to appeal potential
markets as their customers.
3. P&G has very strong relationship with their retailers. Their marketing and sales
manager bimonthly visits these retailers to get knowledge of their problems.
They provide them good incentive like discounts i.e. three to four percent
 on their sales, quantity discounts on large sales, moreover they launch price
schemes continuously for their retailers. Lever Brothers Pakistan Limited
have this very healthy strategy i.e. relationship with retailers.
4. P&G provides transportation facilities to its distributors and retailers which
attract these distributors and retailers to buy the P&G’s shampoo as
compared to Lever Brothers Pakistan Limited’s one.
5. P&G’s management bargain and stresses more on its prominent shelf space with
their retailers. In return of all above incentive not only retailers give a good
shelf space but also promote P&G’s products.
6. P&G fills its shelf space four times a months due to its high demand of
shampoos. While Lever Brothers Pakistan Limited’s shampoos order are
placed once in a month due to low demand by retailers. Hence high sales
volume is an other strength of P&G’s.
Weaknesses
1. People have perception that P&G’s shampoo (e.g. Pentene) has harmful
chemical, it causes fall of hair. It is a weaknesses of P&G people think that
it softens the hair and gives silky touch but it causes the hair fall.
2. Though there is not too much big difference of price of Sunsilk and Pentene but
people perceive that Pentene and P&G’s shampoo are of high prices. Due to
this they face competition from Lever Brothers Pakistan Limited. But now
they have overcome this element by price reduction i.e. from Rs. 120 to Rs.
99 i.e. just one rupee below the retail price of Sunsilk (retail price of
Sunsilk family size bottle is Rs. 100).

Existing Strategies Of Sunsilk

The strategy rather group of strategies adopted by Lever Brothers Pakistan Limited for
Sunsilk are as follows:

Four main groups of strategies are available to us i.e.

1. Product development

2. Market development

3. Market penetration

4. Diversification

Out of these four strategies Lever Brothers Pakistan Limited has adopted the market
development strategies i.e. finding new market or target customers for the Sunsilk in case
of launching shortly new variant of Sunsilk White antidandruff and second strategy
followed is diversification which they are know about to follow through launching
complete hair care package i.e. not only shampoo but conditioners and hair dyes and
sprays as well. And in this strategy an other group of sub-strategies being followed is 4-
P’s.
Product Strategy
For product continuous improvement strategy is being adopted i.e. continuously
launching different variants in Sunsilk. Previously launched 12 variants than reduced to 6
variants, and now launched another variant i.e. Sunsilk White antidandruff.
Pricing Strategy
Lever Brothers Pakistan Limited have been using mediocre price strategy i.e. neither too
high nor too low i.e. lower than P&G but higher than Bio Amla Shampoo. Due to cost
focused strategies they are able to provide customers with low prices as to retain their
target market which is mainly the middle class.
Promotion Strategy
In case of promotion, due to restriction from parent company and Elida Hair Institute
they are bounded to follow celebrity beautician focused promotional campaigns (Nabila)
and entirely focusing the female segment for Sunsilk Shampoo.
Placing Strategy
Distribution strategy is not different other than any product same distribution strategies
adopted for complete product line. No separate or customized strategy adopted for
Sunsilk.
Suggested Strategies
From about mentioned for group of strategies considering the weakness inherited in those
strategies and problems faces by Lever Brothers Pakistan Limited, we would recommend
product development strategy instead of market development. And now implication of
this strategy over four P’s.
Product Strategies
They should launch a new product with completely new brand name instead of matured
rather declining brand name and excuse for not launching a new brand. Hence as being
very expensive is no excuse for a company having portfolio for the financing of which
backs have to make a consortium.
Pricing Strategies
Pricing strategies adopted are quite justified.
Promotion Strategies
Main problem lies with promotional strategies being followed by Sunsilk using Nabila
for almost last 5-6 years continuously. They should bring a change in their promotional
campaign and should diversify it not only rely on television but should utilize other
sources as well, should have market penetration strategy effectively.
Place (Distribution) Strategy
Lever Brothers Pakistan Limited should develop long term relationship with their
retailers and provide them more attention and focus on them and listen to their complaints
which they are not doing right now and sales force only are to pick and place orders and
fulfillment of orders and don’t bargain on shelf space and not providing any incentive to
retailer for the promotion of Sunsilk. So, developmental beneficial relationship with the
retailers along with wholesalers.

Existing Strategies Of Lifebuoy

Since Lever Brothers Pakistan Limited has launched a new product of Lifebuoy shampoo
on the basis of its existing product Lifebuoy soap. Lever Brothers Pakistan Limited has
tried to encash it generic brand hence cash cow Lifebuoy soap in a new form Lifebuoy
shampoo. So Lever Brothers Pakistan Limited is following related diversification strategy
in Lifebuoy shampoo. Within this group of strategies I its 4-P’s.
Product Strategy
In case of Lifebuoy shampoo they have made a related diversification in Lifebuoy soap.
Pricing Strategy
The are following cost leadership in Lifebuoy shampoo. Their focus is on low income
group which is already loyal to Lifebuoy soap due to its low prices. Hence brand name
and brand loyalty has been focused.
Place (Distribution) Strategy
Extensive distribution of Lifebuoy shampoo (family sized bottle, medium to small size
sache pack) has been ensured on all retail outlets of Pakistan with 100% coverage.
Promotion Strategy
Lifebuoy shampoo for the promotion of Lever Brothers Pakistan Limited has focused on
lower income segment (due to its low prices) and has used Shehzad Roy as their
celebrity. There is no such heavy advertisement in case of promotion of Lifebuoy
shampoo.
Suggested Strategies
Market Penetration
Lever Brothers Pakistan Limited should use market penetration strategy in case of
Lifebuoy shampoo. They should enhance their advertisement and should boost their
market share of Lifebuoy shampoo with enhanced marketing efforts.
Implementation
Their focus for promotion on celebrity is only on Shahzad Roy for lower class which is
not a source of inspiration for them. So they should use such advertisement appeal which
is based on the problems of low income group and is chosen to their real life situation.
Market Development
Market development is an other proposed strategy i.e. they should identify new markets
with existing product.
Implementation
Focus of Lever Brothers Pakistan Limited in case of Lifebuoy is on males with concept
of hardworking man. They should capture females and kids as well with new soft appeal.
For this they can give a new name to their existing product as well, which will be quite
effective to attract females and a potential portion of middle income group.
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Labels: Human Resource Management (HRM), Management

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