Unilever: Diversification Strategy

Currently a Unilever brand can be found in one out of every two households in the world. Yeti t is remarkable to see that the corporate image of a company whose brands are so well known, and whose operations are so widespread, is so indistinct. There were times between the 1960s and 1990 when Unilever appeared amorphous. It was not merely that the corporate name was not found on any brands or local companies. It was also the sheer spread of businesses it owned beyond packaged consumer products, including African trading, plantations, specialty chemicals, paper and packaging, transport, advertising, and market research companies. Unilever, which seems at times to resemble more of a holding company or conglomerate than anything else, is barely unknown by its consumers.

Unilever was founded on soap and margarine - both products essentially sharing the same raw materials - with diversification into other business areas starting in the midfifties.

The second phase started in the mid-fifties when rapid growth in the Western world resulted in increased competition and lower margins in the company's traditional categories. Unilever's strategy was an active diversification programme through acquisition. The vigour with which this was pursued, while successfully introducing the company into valuable new categories, also brought in a lot of peripheral activities.

Unilever's thirteen core business sectors are: ice cream, tea-based beverages, culinary products, hair care, skin care and deodorants (all with superior growth potential);spreads, oral care, laundry care and household care (steady growth); and frozen foods, fragrances and professional cleaning (selective growth).

Unilever also exemplifies balance between specialization and diversification. With five hundred companies operating in more than sixty countries, Unilever is so complicated that few outsiders understand its structure. Its activities range from growing oil-bearing seeds and catching fish to selling all kinds of goods to the ultimate consumer. Yet it is at the same time a highly specialized business with a major concentration in marketing grocery products, from fish and processed foods to soaps and toiletries. Any business within Unilever, whether it is a chain of grocery stores or a fleet of fishing vessels, can be understood in terms of the highly specialized knowledge and competence of a grocery-products business.

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