Business environment 1

Identify the mission, objectives and responsibilities of an organization within its environment Investigate the economic, social and global environment in which organizations operate Evaluate the impact of macroeconomic policy measures and influence of the global economy on selected organization and stakeholders in your country

I OVERVIEW OF MULTINATIONAL COMPANIES IN VIETNAM

Vietnam is a developing country with a lot of opportunities and challenges in the process

of reaching industrialization and modernization Nowadays, Vietnam is striving for the

sake of rich people and powerful nation This elevated target partially depends on the

importance contribution of operating results of Vietnamese enterprises especially

multinational companies (MNCs)

In the light of this awareness, the government and the entire political system of Vietnam

always create most favourable condition for these companies to prosper to enrich

themselves and society Therefore, the operation of MNCs in Vietnam is developing more

and more with the useful help of the government One of the most typical MNCs in

Vietnam nowadays is Unilever which is the concern of many Vietnamese people

Unilever appeared in Vietnam in 1995 with their investment of more than USD 120

millions including two companies: Unilever Vietnam JV company and Unilever Vietnam

company Ltd

With their beautiful mission that is to add vitality to life, Unilever Vietnam brings a new

chapter for the Vietnam economy as well as the quality of Vietnamese people’s life The

people are more and more familiar with brands of Unilever Vietnam as their key tools in

their life Some of those brands are Omo, sunlight, Sunsilk, Clear, Close-up, P/S and

Knorr

Today, Unilever Vietnam’s factory is running in Cu Chi in Ho Chi Minh city with their

employment scale about more than 1,500 directly and 6000 people indirectly They are

proud of organizing social programs which are really meaningful As a result, in April

2005, Unilever Vietnam got the second rank labour medal by the president of Vietnam for

its excellent business performance and contribution to socio-economic development of

Vietnam

II MISSION, VALUES AND KEY OBJECTIVES OF

UNILEVER AND THE INFLUENCE OF ITS

STAKEHOLDERS

1 MISSION OF UNILEVER

With its mission is to add vitality to life

by meeting everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good

and get more out of life, Unilever leaves

a special impression in consumers whichany companies dream about

Picture 1 Mission of Unilever

Nowadays, people are more and moreconcerned about the values of life that focus on not only physical health but also their

daily needs and personal satisfactions Knowing this trend, Unilever concentrate on what

people want and appreciate Actually this is a good signal for Unilever to continue their

strategy best

Vitality is considered as nutrition, hygiene which provides energy and excitedness for

people to know that each day is the greatest day Therefore, Unilever’s products are really

interested by most of children, housewives and people who are having a job because the

products bring them comfort and strong enough to do activities and be willing to face

difficulties ahead That is the most wonderful effectiveness of this mission

However, look at the overview, the mission of Unilever focuses more on intangible goals

in order to improve the cost of living of people They forget besides making consumers’

belief, another important factor making perfect development of a business is its products’

convenience and popularity

With the mission only to add vitality to life, Unilever only can be a reliable address of

people who are well off and their unique interest is to use products and services with high

quality that ensure their physical and mental health On the other hand, a significant

number of unemployed, poor people and students whose first worry with a product or

service is its price People all want to consume good quality products but no one can deny

that not all people have enough conditions to realize that Also, no matter how much

these people want to use Unilever’s products, they couldn’t afford to do that Therefore,

with this mistake, Unilever misses a good number of customers whom Unilever should

also have taken notice of To solve this, Unilever should be more interested in tangible

goals so that Unilever is not a dream of many people but become a good friend of

everyone, every family in the world

Overall, Unilever has its own position to consumers and it is developing more and more,

but the important thing is Unilever has to fulfill the needs of more and more people so

that whenever being asked about Unilever, everyone says ‘that is the best company I have

known’

2 VALUE OF UNILEVER

In a fast changing market, values play an important

part in the innovation of a company, especially a

multi-national company like Unilever To develop

more and more, Unilever follows its own value ‘We aim to be a trusted corporate citizen wherever we operate in the world, respected for the values and

standards by which we behave’

Picture 2 Value of Unilever

Unilever has carried out its values by their dedication to the quality of life of their

consumers as a trusted corporate citizen The more they are trusted, the greater the

opportunity to prosper They approach to provide unique and best brands associated with

their mission that is to make people feel good and look good With its diversity of 400

brands spanning 14 categories of home, personal care and foods products, Unilever could

be totally proud of their products which can help people everywhere in the most

convenient conditions

Nowadays, consumers not only want their favorite brands to support specific social

causes but they are also interested in brands that resonate with their hopes and concerns

as citizens, as well as their desires and needs Therefore, they have reached two billion

consumers worldwide to use a Unilever product on any day

As far as valuation is concerned, Unilever is confident to provide its famous product line

such as washing-powder, tooth-brush, soaps, and tea that always leave good impressions

on customers By inspiring people take small daily actions that can add up to a big

difference to the world, Unilever prove their real value which relates to making

perfection in people’s life which is a dream of many people

3 OBJECTIVES OF UNILEVER

To finish its roles, this is primary

objective of Unilever ‘the highest standards of corporate behavior towards everyone we work with, the communities we touch and the environment on which we have an impact’.

Picture 3 Objectives of Unilever

Unilever adopted their highest standards of corporate behavior towards their employees,

integrity They realize this by treating their employees with open and fair working styles.

For example, in Saudi Arabia, while people deter women from working outside the home

on cultural grounds, Unilever’s local managers have guaranteed that women are entitled

to work for their company under the permission of the authorities

Besides they also want to make good environment which creates comfort and inspiration

for their employees to get best results Although there are eight executive directors of

Unilever from six different nationalities and their 200 leaders also represent more than 40

nationalities, Unilever can still create an environment where each individual can bring his

or her whole self to work For Unilever, their diverse workforce can not only help them

understand their consumers’ needs and desires better and give them more creative and

competitive advantages but also make them more resilient, responsive and adaptive to

change

Their aim is to help their employees get positive impact through many ways such as their

brands, relationship between their staff, voluntary contributions and other activities that

contribute to develop their organizational culture and fasten relationships inside as well

as outside the company

As a result, it is specific enough to understand but not measurable enough to get

strategies in detail in order to reach it in a particular time Therefore, it does not meet the

requirements of SMART technique, its reality and achievement is not high

Another primary objective of Unilever that need to be concerned is to ‘double the size of

our company while reducing our environmental impact’ To accomplish this objective,

Unilever gave four main strategies as follow:

- Winning with brands and innovation:

 Superior products

Picture 4 Superior product of Unilever

Unilever would like to give people a great experience when they use their brands so they

will invest in improving products quality and making stronger functional diams Besides

they are also interested in designing, packaging, marketing and advertising to make their

brands more persuasively and reliably

 Widespread appeal

Unilever desires to provide a broad range of choice that could meet their customers’

needs about both product quality and the price points

- Winning in the market place

Unilever aim to win in the market place by laeding market development with three ways:

 More users (increasing market penetration)

 More usage (increasing consumption)

 More benefits (getting consumers to buy higher value products)

Besides, Unilever also have intention of winning with winning customers and being an

execution powerhouse

- Winning through continuous

improvement

There are many techniques Unilever uses to

reach this objective:

 Fast and flexible and increasingly competitive

 Making use of global scale

 The best return on brand and customer

investment

Picture 5 Black tea: Russian earl grey

- Winning with people

 Developing a team fit for growth

 A place to succeed

With this strategy, Unilever aims to get the trust from their customers and manage larger

scale With such specific strategies and plans, this objective of Unilever gets requirements

of SMART technique so it is really positive and realistic to do these

4 THE INFLUENCE OF STAKEHOLDERS

There are three main types of stakeholders which are divided by internal stakeholders,

connected stakeholders and external stakeholders Each stakeholder will play a particular

role in an organization and below is the function and influence of six stakeholders of

Unilever

KEY PLAYERS

KEEP SATISFIED

KEEP INFORMED

MINIMAL EFFORT Internal

Table 1 The influence of stakeholders

4a Management

Management is considered as key players for many reasons They are people who make

business strategies for the company so they must have high interest in the company to

have enough information about their company supporting their strategies they must do

Also, the operation of the company is under their strategies, so they have high influence

in their company

Paul Polman, the Chief Executive Officer of Unilever, is responsible for sharpening the

strategy, improving execution in the market place, sharpening the emphasis on innovation

and injecting a new sense of energy and urgency into the Group Therefore, he plays an

important part in the development of the company and has a great influence on the group

with his interest and ideas as well as strategies he promotes

4b Employees

Employees play an important role in the operation of a company especially Unilever This

company is really interested in their employees by many different ways Firstly, Unilever

proposes to make a various working environment so that their employees feel trusted,

respected with their tasks and responsible for the performance and reputation of the

company

On the other hand, Unilever also carries out many motivation poplicies with convenient

promotion based on sole basis of the qualifications and abilities required

They are committed to safe and healthy working conditions for their employees They

also respect the individual freedom of their staff without using any forms of obligation or

compulsoriness by maintaining good communication with their staff With their care, the

employees are always regarded as keep informed members of the company

4c Shareholders

Shareholders keep satisfied members who have low interest but high influence in the

company because they are investors who only want to get back their capital in the

company without any hard supervisors with the operation of the company On the other

hand, Unilever must always offer timely, regular and reliable information on their

activities, structure, financial situation and performance to all shareholders

4d Consumers

Like shareholders, consumers play an extremely important part in impact on unilever To

reach its own objectives as well as strategies, Unilever has to take great notice of the

needs of consumers to provide branded products and services which offer value in terms

of price and quality and safe for their intended use

Besides, to touch more and more consumers, Unilever ought to advertise and promote

their products with logical and understandable methods

4e Central government

The government has low interest but high influence in Unilever through many aspects The first

thing is that wherever Unilever operate, they must obey laws and rules there They suffer from the

influence of tax policies, resources allocation policies and even the force from governments.

Another thing is that they can also make use of opportunities to develop and promote their

company In particular, Unilever can widen their long-term view for going further in Vietnam

with intergration of Vietnam into WTO in 2007, Unilever has got more and more competitive

environment to discover their strengths

4f Professional Group

American chamber of commerce in Vietnam is one of the most typical professional

groups in Vietnam that has high interest in Unilever This organization is greatly

interested in Unilever’s activities with a lot of information they get from Unilever as their

concern They have a special concern about Unilever’s products, social programs and

achievements

III THE EXTENT TO WHICH UNILEVER ACHIEVES THE

OBJECTIVES OF THREE STAKEHOLDERS

Each company has its strategies and policies to meet the objectives of its stakeholders

Following that, to meet their objective, Unilever should know clearly about their

objectives so that they will evaluate what they achieve and what they have not yet

achieved, and then they will have plans and strategies to realize them Below are the

objectives of three stakeholders of Unilever including employees, customers and central

 Good income (salary)

Follow government lawsand regulation

Follow legal proceedings

Achieved

Achieved

Higher and higher tax Not achieved

Table 2 Objectives of 3 stakeholders of Unilever

1 EMPLOYEES

Unilever believes in providing a good working environment where individuals can

achieve their goals, both professionally and personally Therefore, to attract and retain the

best people, Unilever recognize their success depends on innovation, so they do

everything they can to ensure that the enterprising people they employ have the freedom

to act They give them all the support and encouragement they need At the same time

they empower them to make tough decisions, implement new ideas and use their

initiative As a result, the employees have a passion for achievement; strive for

outstanding results and are determined to get things done

Unilever always believes in their employees’ ability to develop and grow, and that life at

work should be a continuous learning journey and that every Unilever’s employee has an

equal right to take advantage of the opportunity to develop themselves In Unilever

group, seizing the opportunity to make a difference is more important than simply

progressing up the ladder

Considered as one of fundamental requirement of every employee, insurance is an

important factor in the agreement between an employee and an employer Unilever also

really concentrates on this sector which they call ‘personal vitality’ in which they take

seriously their responsibility to provide a safe workplace They aim to continuously

improve the health, safety and well-being of everyone working for or on behalf of

Unilever A key measure of their progress in this area is their total recordable accident

frequency rate, which counts all employee workplace accidents except those requiring

only simple first aid treatment Unilever is committed to meeting the needs of customers

and consumers in an environmentally sound and sustainable manner, through continuous

improvement in environmental performance in all their activities

As a multinational business, it is essential that Unilever exercises the same concern for

the environment wherever they operate The environmental measures that they regard as

the most significant in relation to their business are those relating to the amounts of CO2

from energy that they produce, the water that they consume as part of their production

processes, and the amount of waste that they generate for disposal The table below

shows the results for the last three years

Table 3 The rate of accident at workplace of Unilever

As a consequence of improving Unilever’s safety performance over many years, in 2009

Unilever decided to increase the denominator used to calculate TRFR from 100,000 to

1,000,000 hours Using this new higher factor has the effect of increasing our current and

historical TRFR data by a factor of ten, as shown in the table above

This sector is one of strong field of Unilever when they have programmes and activities

in place which are designed to help everyone in the business take care of themselves and

encourage a better quality of life By creating a vitalizing work experience and

environment for employees, Unilever helps them feel energetic and able to perform the

best of their ability

Furthermore, Unilever has made an inclusive environment where employees can bring

their whole self to work; they do not have to change to fit in The company wants its

employees to be themselves This drives a higher level of engagement and, as a direct

result, improves all-round performance

Base salaries are reviewed annually with effect from 1 January taking into account our

competitive market position, individual performance, Unilever’s overall performance and

levels of increase in the rest of the organization Base salaries for Executive Directors

were not increased from 1 January 2009 and will not be increased in 2010

Table 4 Key management compensation of Unilever

The policy for Pension and other benefits is that Executive Directors are members of the

all employee pension arrangement in their home country (or an alternative of similar

value) and make personal contributions at the same rate as other employees in that

arrangement Executive Directors enjoy similar benefits to those enjoyed by many other

employees of Unilever

Table 5 Permanent and temporary employment figures for the year 1999 and 2000

2 CUSTOMERS

As far as customers in connected stakeholders are concerned, Unilever also set their

objectives to achieve to keep good relationship with the current customers as well as to

get more and more customers in the future To get the first objective for customers’

satisfaction in Unilever products’ diversity, Unilever diversified their products with 400

brands spanning 14 categories of home, personal care and foods products, which helps

Unilever touch so many people’s lives in so many different ways To support this

objective, Unilever also invests nearly €1 billion every year in cutting-edge research and

development, and has 5 laboratories around the world that explore new thinking and

techniques to help develop their products In 2008, Unilever invested €927 million in

research and development, for example in opening new Centres of Excellence for product

research and development in Italy, Poland and the UK They employ more than 6000

R&D professionals in six global research centres, 13 global product development centres

and regional and country development and implementation centres This objective

achieved when it is identified that on any given day, 2 billion people use Unilever

products and among their strong portfolio of foods, home and personal care brands, the

top 25 brands account for over 70% of Unilever’s sales

Besides, to achieve customers’ satisfaction in their product quality, Unilever keep

improving their products in many ways By providing foods that taste great and are good

for people, Unilever’s aim is to become the world’s leading food and nutrition business

To realize that, Unilever is continuously improving the nutritional profile of their product

range and giving consumers a wider choice of tasier, healthier more natural options as

well as functional foods with additional health benefits The fact is as follow

 Hellmann’s Extra Light uses citrus fibre to create a very low fat mayonnaise that

still tastes great

 Knorr StockPot revolutionizes bouillon with a new jelly format that provides a

more authentic, a close-to-fresh bouillon that smells delicious, melts naturally into

the food, develops a great aroma and tastes genuine and delicious

 Breakthrough technology that uses Ice Structuring Proteins (ISP) in ice cream

enables Unilever to deliver healthier options and better quality

 Catechin-rich tea helps people improve their body shape

Similarly, with the desire of Unilever to be clean and healthy and to look good is

beauty since the late 19th century and continue to play a vital role in millions of homes

around the world today, for example:

 The Vaseline Skin Fund gives one million people better access to information

about managing skin complaints

 Unilever’s Oral Care teams run promotional and education programmes in

partnership with the FDI World dental Federation

 Sunlight hand dishwashing liquid uses an ultra-concentrated formula that

requires less water in production and less packaging

 All Rexona, Axe and Dove brands incorporate a lightweight packaging design

This objective is evaluated to be achieved because according to Unilever data, every day,

160 million people choose Unilever brands to feed their families and to clean themselves

and their homes Unilever is considered as the global market leader in all the Food

categories in which Unilever operates: Savoury and Dressings, spreads, weight

Management, Tea, and Ice Cream Unilever is also global market leader in Skin and

Deodorants and has very strong positions in other home and personal care categories

With its effort in many different ways, Unilever has not yet achieved the objective that is

to provide their consumers with added-value products There are three important

activities Unilever aim to do to get this objective:

 Creating and nurturing attractive brands that are trusted and preferred by

consumers and which seek to address consumer needs and aspirations better than

other brands;

 Developing and rolling out new and better products and concepts across their

regions and product categories, supported by innovative communication campaigns;

and

 Optimizing and improving the productivity and efficiency of their cost and asset

base whilst ensuring consistent high quality of Unilever’s products

The result Unilever has get from these strategies is that around 70% of their turnover is in

countries and categories where Unilever has relationship position, as measured by the

value of turnover From that, Unilever holds the global number 1 position in savoury,

spread, dressings, tea, ice cream, deodorants and mass skin care Unilever holds the

global number 2 position in laundry detergents and daily hair care They also have strong

local positions in household care and oral care Unilever’s products are sold in over 170

countries around the world, so the transactions with related parties are conducted in

accordance with agreed transfer pricing policies and include sales to joint ventures and

associates

3 CENTRAL GOVERNMENT

Unilever has a large portfolio of patents and trademarks, and they conduct some of their

operations under licenses that are based on patents or trademarks owned or controlled by

others They are not dependent on any patent or group of patents They use all appropriate

efforts to protect their brands and technology

On the other hand, Unilever business are governed by laws and regulations designed to

ensure that products may be safely used for their intended purpose and that labeling and

advertising are truthful and not misleading Unilever businesses are further regulated by

data protection and anti-trust legislation Important regulatory bodies in respect of their

businesses include the European Commission and the US Food and Drug Administration

Unilever has processes in place to ensure that their products, ingredients, manufacturing

processes, marketing materials and activities comply in all material respects with the

above-mentioned laws and regulations

Moreover, Unilever is involved from time to time in legal and arbitration proceedings

arising in the ordinary course of business Details of significant outstanding legal

proceedings and regulatory investigations are as follow:

In June 2008 the European Commission initiated an investigation into potential

competition law infringements in the European Union in relation to consumer detergents

Unilever has received a number of requests for information from the European

Commission regarding the investigation and has been subject to unannounced

investigations at some of its premises

In December 2009, Unilever received separate statements of objection from the French

competition authority and from the Italian competition authority in connection with

investigations into certain product markets in France and Italy respectively An earlier

decision by the Greek authority fining Unilever in relation to alleged restrictions o

parallel trade within certain of its contracts with retailers in Greece is under appeal

Appropriate provisions have been made in relation to these investigations and the fining

decision

3b Tax cases Brazil

During 2004 the federal Supreme Court in Brazil (local acronym STF) announced a

review of certain cases that is had previously decided in favor of taxpayers Because of

this action, Unilever established a provision in 2004 for the potential repayment of sales

tax credits in the event that the cases establishing precedents in its favor are reserved

In June 2007, the federal Supreme Court ruled against the taxpayers in one of these cases

Industry associations (of which Unilever is a member) attempted to negotiate a settlement

with the Federal Revenue Service to reduce and avoid the payment of interest on such

amounts On 3 December 2008 the negotiations resulted in the publication of a settlement

by the Brazilian government, open to all taxpayers including Unilever This settlement

was ratified by the President of Brazil in 2009 and was subsequently supported by further

legislation which increased the discount on the interest payable Unilever made a

payment on October 29th, 2009 to settle the claim and this matter is now resolved In

addition, Unilever is involved from time to time in legal and arbitration proceedings

arising in the ordinary course of business

The Group is subject to taxes in numerous jurisdictions Significant judgement is required

in determining worldwide provision for taxes There are many transactions and

calculations during the ordinary course of business for which the ultimate tax

determination is uncertain The Group recognizes liabilities for anticipated tax audit

issues based on estimates of whether additional taxes will be due Where the final tax

outcome of these matters is different from the amounts that were initially recorded, such

differences will impact the income tax and deferred tax provisions in the period in which

such determination is made

(a) Provisions have been released following the favorable settlement of prior year tax audits in a number of

countries, none of which is individually material.

Table 6 Tax charge in Income Statement of Unilever

The reconciliation between the computed weighted average rate of income tax expense,

which is generally applicable to Unilever companies, and the actual rate of taxation

charged is as follows:

(b) The computed tax rate used is the average of the standard rate of tax applicable in the countries in which

Unilever operates, weighted by the amount of profit before taxation generated in each of those countries

For this reason the rate may vary from year to year according to the mix of profit and related tax rates.

Table 7 Reconciliation of effective tax rate of Unilever

IV RESPONSIBILITIES OF UNILEVER AND STRATEGIES

EMPLOYED TO MEET ITS RESPONSIBILITIES TO

STAKEHOLDERS

Specific Responsibilities of Organisation

Strategies Employed to Meet Them

Social

Responsibilities

1 Nutrition helpingmake the healthy choice

2 Hygiene_ changinghabits, helping save life

1 Improving the nutritional quality of allthe products

2 Developing new products

3 Organizing hygiene promotionactivities

4 Organizing annual events to promotethis campaign

Environmental

Responsibilities

environmentalimpact

1 Address the wider impacts byworking with the customers andsuppliers

2 Reduce CO2 emission from energy

in the manufacturing operations

3 Improve energy efficiency andincrease the use of renewable energy

urge governments to act

Ethical

Responsibilities

efficiency at eachstage of the productlifecycle

-Good products forcustomers

1. Reducing the water use inmanufacturing operations

2. Designing products that require lesswater when used by the consumers

- Lifebuoy demonstrates its effectiveness

- Diversity in gender, color, creed, ageand style of Unilever employees

Table 8 Responsibilities of Unilever

1 SOCIAL RESPONSIBILITIES

1a Nutrition helping make the healthy choice

1a.1 Improving the nutritional quality of all the products

This strategy has been carried out since 2005 through Nutrition Enhancement

Programme, Unilever has surveyed the nutritional quality of portfolio of 30,000 products,

equivalent to around 22,000 formulations to make reductions in saturated and trans fat,

sugar and salt

 In Brazil, 36% less added sugar contained in Unilever’s soy-based drink brand AdeS.

 Reducing by 50% the calories in Hellmann’s/Calvé/Amora Light mayonnaises

 In Germany, more than 10% calories was added in Rama soft margarine

 44% of the products were in line with international accepted guidelines for saturated

and trans fat, sugar and salt instead of over a third of these products meets this

 Reducing the amount of salt from 10-15% in powdered soups in Europe and South

America, 25% in Knorr Sidekicks side dishes in Canada, 25% across the Knorr recipe

kits in South Africa

With these good results, Unilever wants to bring the best things for their customers so

that their products could be the first choice of people for their good health

1a.2 Developing new products

 Reducing cholesterol and increasing the intake of

important nutrients like calcium

 Hellmann’s Light and Extra Light mayonnaises

use patented citrus fibre technology to create smooth

and creamy taste with 60-90% less oil

From this strategy, Unilever could be proud that

they contributed considerably to people’s diets

Besides their consumers could have more choice in

the products that were reformulated and improved to

meet the needs of more and more people in daily

nutritional values

Picture 6 Global partnership of Unilever

1b Hygiene_ changing habits, helping save life

1b.1 Organizing hygiene promotion activities

Unilever aims to adopt this campaign is to reach many beautiful approaches that are to

make effective products that improve people health and well-health In addition, they

want to change people’s habits through behavior change programmes Another purpose

Unilever hopes to get is to work with partners to develop joint campaigns and achieve

broader reach To accomplish all of these approaches, Unilever organizes many useful

activities:

 In 2002, Swasthya Chetna programme (‘Health Awakening’) has been launched

and run in India to raise the awareness of the importance of handwashing with

soap to prevent diseases

 Similar hygiene promotion activities are also carried out in Bangladesh, Sri

Lanka, Pakistan, Indonesia, Vietnam and South Africa

As a result, the mission of these activities has reached more than 133 million people in

these countries and in 2009, Lifebuoy was voted one of India’s most trusted brands in a

national consumer poll

1b.2 Organizing annual events to promote this campaign

 Global Handwashing day

This is an annual event that was set up in 2008 with the purpose to help promote the

importance of hand washing with soap In 2009, this event was celebrated in more than

80 countries with the co-ordination of 120 million people worldwide Lifebuoy teams in

23 countries and over 50 organizations including governments and NGOs This event

was also very useful for motivating school children to make hand washing pledges

 Brush Day and Night.

This campaign is launched with the co-operation of FDI World Dental Federation and

their support of 40 oral care initiatives It is built around the insight that parents often find

it difficult to get children to brush their teeth This creates good opportunities to call upon

the changes in people’s habit to protect their teeth health

2 ENVIRONMENTAL RESPONSIBILITIES

2.1 Address the wider impacts by working with the customers and suppliers.

Unilever’s laundry brands, Persil, Omo and Surf, have launched a Cleaner Planet Plan to

reduce the impact of laundry on the environment and motivate changes in consumer

behavior It is based on efficient products that enable ‘better laundry habits’

The Plan builds on Unilever’s long-standing work to introduce products that have lower

environmental impact Unilever has been at the forefront of the development of

concentrated liquid detergents and compacted powers Concentration saves energy and

packaging, and reduces greenhouse gas emission by 5-20% per wash, depending on the

product The Cleaner Planet Plan also educates consumers to wash at lower temperatures,

use a full load and use the right dosage of detergent

2.2 Reduce CO2 emission from energy in the manufacturing operations

Since 1995 Unilever has achieved a 41% reduction in CO2 from energy per tonne of

production In 2009 Unilever achieved a reduction of 3% compared to 2008

One example of this action is Unilever’s detergent factory in Hefei, China Straw waste

previously burned by local farmers is now collected and used to generate power This

improves air quality, reduces Co2 emissions and provides farmers with extra income

At Unilever’s Gloucester factory in the UK, where they made Wall’s and Magnum ice

cream, Unilever will reduce CO2 from energy by more than 3,000 tonnes a year through

the installation of a combined heat and power (CHP) plant The 2.4 megawatt plant is

primarily fuelled by natural gas, with heat in the form of hot water and steam produced as

a by-product This heat is re-used in the manufacturing process

2.3 Improve energy efficiency and increase the use of renewable energy in

manufacturing.

Around 50% of the raw materials that Unilever uses for their products come from

agriculture and forestry They buy approximately 12% of the world’s black tea, 6% of its

tomatoes and 3% of its palm oil

Unilever’s goal is to source all their key agricultural materials sustainably Through their

Sustainable Agricultural Programme, Unilever has developed detailed guidelines on what

sustainable agriculture means for their key crops Their guidelines cover criteria such as

reducing fertilizer and pesticide use, conserving water, promoting biodiversity and using

less energy

Palm oil is used in both food and home and personal care products Unilever has

committed to have all their palm oil purchases externally certified as sustainable by 2015

Working with Greenpeace, Unilever has built a global coalition of some 40 companies

and NGOs to combat deforestation in Asia, much of which is caused by unsustainable

agricultural practices in growing oil palms Around two thirds of the coalition’s company

members have now set public targets for purchasing certified sustainable suppliers

In 2009, Unilever purchased GreenPalm certificates covering 185,000 tonnes of palm oil,

accounting for around 15% of their total needs GreenPalm certificates support the

production of sustainable palm oil certified to the standards of the Roundtable on

Sustainable palm Oil Unilever also took action to suspend a major supplier in Indonesia

following evidence of involvement in destructive practices

In 2009 WWF published the 2009 Palm Oil Buyers’ Scorecard-an assessment of the palm

oil purchasing practices of major European companies Unilever was rated among the top

five and was commended for showing real progress on commitments to buy and use

sustainable palm oil

2.4 Encourage customers to use the products with the minimum impact on the

environment.

The biggest part of Unilever’s emission of both CO2 and water occur during consumer

use Many of their products require energy to heat water for cooking, showering or

washing clothes Through the design and formulation of these products, Unilever can

mitigate their impact Taking an example, Persil Small & Mightly laundry detergent not

only uses fewer chemicals and less packaging but also allows the consumer to wash

clothes at low temperatures and on shorter cycles

During 2009 Unilever contributed to a study conducted by tesco and Manchester

University’s Sustainable Consumption Institute This showed that in the UK three

quarters of emissions are directly or indirectly influenced by consumers

In a joint report produced with Coca-Cola, Unilever shared their experience in mapping

impacts across the value chain (from sourcing raw materials through to consumer use and

disposal of products), and in empowering consumers to change behavior

In Mexico, Unilever is collaborating with Walmart on a project called Grupo Transforma

to raise wareness among consumers about environmental protection Activities include

waste collection sites at stores to encourage recycling and a travelling environmental

exhibition ‘La Deta del Planeta’ (‘The Truth of the Planet’)

2.5 Participate in industry coalitions to urge governments to urge governments to

act

Unilever’s work has been recognized by investor rating agencies The Dow Jones

Sustainability World Indexes cite Unilever as food industry leader, for the 11th year

running Unilever has been included in the FTSE4Good Index Series since its inception

in 2001

In 2009, Unilever was the only company recognized as ‘best practice’ by the Natural

Value Initiative’s Ecosystem Services Benchmark, a tool developed with six institutional

investors to help asset managers identify companies that are actively managing the risks

and opportunities related to biodiversity and ecosystems

3 ETHNICAL RESPONSIBILITIES

3.1 Providing superior products which are nor harmful for consumers’ health

Unilever’s aim is to give people a great experience when they use their brands – better

than the competition Unilever is investing in improving product quality and making

stronger functional claims They are also focusing on design, packaging, marketing and

advertising, in order to get their brand benefits across more persuasively

Take Knorr Stockpot bouillon Using a unique jelly

technology that delivers homemade taste and quality,

this product is helping people create a special meal at

home instead of eating out A major success in the UK

where it enabled Knorr to become market leader in

stocks, Stockpot (marketed under different names in

different countries) is also performing well in Belgium,

Greece, Ireland and Poland It helped create the

bouillon category in China and we are now rolling it out

to other markets

Picture7 Liquid margarines of Unilever

Launched in Europe in 2008, Unilever’s light liquid margarines from its Family

Goodness and Heart Health brands are offering consumers a new way to cook lighter

meals Made of a combination of three vegetable oils, and including the important

vitamins A, D and E, they make it easy to cook nutritiously for the whole family And it

hasn’t gone unnoticed by consumers Liquid margarine is the fastest growing segment in

their European spreads and cooking category, and their new light liquid exceeded

expectations, bringing new users to the segment and their brands in both the Netherlands

and Belgium

3.2 Reducing the water use in manufacturing operations

Since 1995, Unilever has reduced by 65% the amount of water they use to make a tone of

product During 2009 they achieved a 5.6% reduction in water use compared to 2008 As

a result, total waste sent from Unilever’s factories for disposal has been cut by 73% per

tonne of production since 1995

This also shows a significant contribution that Unilever has made since 1995 to save

water for society and the future development of human beings This is considered as a

meaningful action that expressed Unilever’s ethnical responsibility

3.3 Designing products that require less water when used by the consumers

It is challenging to develop ways to maintain business growth in the laundry category

while reducing the impact of water use

More water is used in the rinsing than in the cleaning process To tackle this, Unilever’s

Comfort One Rinse fabric conditioner has been formulated so that much less water is

required per wash to rinse the detergent from clothes It has been launched in Vietnam,

Indonesia and brazil, and is expected to be rolled out to more countries during 2010

4 MANAGEMENT RESPONSIBILITES

4.1 Good treatment policies for CEOs (annual bonus)

Around 70% of the Executive Director’s annual bonus opportunity is based on Unilever’s

business results and around 30% is based on individual business and leadership,

including corporate social responsibility, targets

For 2009 the target bonus for the Chief Executive Officer was 113% of salary and the

maximum would have been 200% of salary The target bonus opportunity for the Chief

Financial Officer was 93% of salary and the maximum would have been 160% of salary

Aggressive business targets mean that maximum levels are only payable for exceptional

performance

The annual bonus awards for 2009 reflect Unilever’s strong results for 2009 given the

challenging trading environment and were on average 118.5% of salary for the Executive

team The 2009 performance measures were: trading contribution, underlying sales

growth and individual business and leadership targets

4.2 Financial policies for individuals (fee levels)

The fee levels remained unchanged over 2009, with the exception of the fee level for the

Vice-Chairman which was increased to reflect the responsibilities and time commitment

required of the role The Vice-Chairman is also the Senior Independent Director and is

currently also the Chairman of the Remuneration Committee and Chairman of the

Nomination Committee The fee levels are therefore:

Table 9.Fee levels of Unilever in 2009

a) Covers fees received from both NV in Euros and PLC in Sterling including fees for

intercontinental travel if applicable.

€0.16 shares and PLC shares are ordinary 31⁄9p shares.

Table 11 Non-Executive Directors’ interests in share capital

The table shows the interests in NV and PLC ordinary shares of Non-Executive Directors

and their connected persons as at 31 December 2009 The only change between 31

December 2009 and 1 March 2010 was that Paul Walsh purchased 1,000 PLC ordinary

shares on 4 February 2010 and Charles Golden purchased 1,000 NV New York shares on

22 February 2010

5 PUBLIC RELATIONS AND CORPORATE IMAGE

5.1 Lifebuoy demonstrates its effectiveness

Lifebuoy is one of Unilever’s fastest growing brands in the personal care category

During 2009, the brand was relaunched, starting in India, with a campaign that promotes

good hygiene practices, especially to mothers and children The products were

reformulated with new active ingredients, improved fragrances and a distinctive new

shape

Picture 8

Lifebuoy’s campaign

To demonstrate its genuine health benefits, Lifebuoy conducted the biggest clinical trial

in Unilever’s home and personal care history, involving 2,000 families in Mumbai Half

the families were supplied with soap along with regular education about the importance

of washing hands with soap on key occasions during the day The other half continued

with their normal hygiene practice, acting as a control group At the end of the trial, the

significantly fewer days off school than children in the control group The study confirms

the potential to change consumer behavior, improve basic health through hygiene and

grow our brands’ market share

5.2 Diversity in gender, color, creed, age and style of Unilever employees

Unilever’s eight executive directors are drawn from six nationalities Their top 200

leaders represent over 40 nationalities 29% of their managers worldwide are women,

50% of their graduate trainees are women and they now have women on the boards of

Unilever companies in the developed world and in countries such as Brazil, China,

Ghana, Indonesia, Nigeria and Pakistan But it’s not enough Not if Unilever group are to

reach the levels of sustained growth they want to achieve in the future They need a more

diverse workforce not only to help them understand their consumers’ needs and desires

better and give them a greater creative and competitive advantage, but also to make them

more resilient and more responsive and adaptive to change

While diversity is much more than gender, women leaders will be critical to achieving

this more inclusive approach Women have different ways of achieving results They have

an approach to leadership that, though not exclusive to women, is crucial to managing a

more diverse workforce It is about being intuitive, being good at multi-tasking and

sensitive to people’s needs and emotions, being comfortable with ambiguity, adaptable

and responsive to change, having a flexible approach to leadership, that is responsive to

the needs of the individual being led In fact, the very qualities that are needed to

transform today’s organizations into the more flexible, matrix-managed organizations

which they must become

So for Unilever diversity is not only about social responsibility and building trust It is

crucially interconnected with their ability to lead and manage a successful, multinational,

multicultural, consumer goods business in the twenty-first century

V HOW ECONOMIC SYSTEMS ATTEMPT TO ALLOCATE AND

MAKE EFFECTIVE USE OF RESOURCES

1 VIETNAM ECONOMIC SYSTEM

Picture 9 Vietnam economic system

Economy is a foundation for the politicalstability and development of a country

Each country has their own economicsystem to manage their sources Vietnam

is not out of trend Vietnam’s economicsystem is divided into two main kinds accompanied with two stage of Vietnam: before

renovation reform (Doi Moi 1986) and after renovation (after 1986)

Before 1986, Vietnam totally supplied command economy that the government owned all

the sources At that time, not only enterprises, banks belonged to the state and Vietnam

was controlled by the only party but this also caused the inequality in the society and

reduced the general development of Vietnam In particular, the inequality was allocated

by policies, laws and even constitutions, which led to easy-going use in national sources

The most visual source is money, in this kind of economic system, people sent money to

banks and all the money were collected to make invested capitals This could be

understood that the state will use the money to lend enterprises without basing on any

essential conditions In contrary, in free market economy, banks lend based on specific

standards that mean the more profit a business can make, the more money they can lend

As a result, by the end of 1960, 100% of industrial establishments, 94% of commercial

establishments and 99% of transportation facilities, which were managed by foreign and

Vietnamese capitalists, were transformed into state owned enterprises (SOEs)

Comparing to the conditions of Vietnam before Innovation reform, After ‘Doi Moi’

Vietnam changed its face as well as improved Vietnamese people’s quality of life

with the aim to apply the free market economic system After 24 years from ‘Doi Moi’,

Vietnam got many achievements especially the number of Gross domestic Products

(GDP) increased from 250USD in 1985-1986 to 520USD in 2004 In general, Vietnamese

people’s lives have improved, the proportion of the poor decreased significantly, traffic

infrastructure has repaired or restored, more and more big projects have been invested

and so on

However, Vietnam has still remained at the mixed economic system but since Doi Moi,

the number of SOEs has reduced remarkably mostly caused by this developmental policy

that required all enterprises must be re-registered or closed Therefore, the total

proportion of SOEs decreased rapidly by 50% from 12,000 in 1991 to 6,000 in 1994

The downward trend has kept going on with 5, 531 SOEs out of 39,762 enterprises in the

whole economy in 2000 ( General Statistical Office_GSO, 2002) For that reason, the

economy is opener and opener for local enterprises to prosper This is shown clearly in

this table

Table 12 Structure of employed population at 15 years of age and above as of annual 1 July by types of ownership and kinds of economic activity

By kind of economic activity

Wholesale and retail trade; repair of motor

vehicles motor cycles and personal and

Scientific activities and technology 0.1 0.1 0.1 0.1 0.1

Real estate renting and business activities 0.3 0.4 0.5 0.5 0.5

Public administration and defence;

Recreational cultural and sporting activities 0.3 0.3 0.3 0.3 0.3

Activities of Party and of membership

organisations

Community social and personal service

activities and private household with

2 ALLOCATION OF RESOURCES OF VIETNAM AND THE IMPACT ON

UNILEVER

Since 1986, after applying innovation reform, the economy of Vietnam has changed

clearly and the methods to manage are more useful Three of the most important fields of

Vietnam to show their improvement in the allocation of resources are labor, land and

capital However, there is also shortage that Vietnam should identify and develop more

and more with their original objective

There is a standard about capital and labor for each size of business including very small,

small and medium enterprise so that the authority or government can base on that to

assess the scale of each enterprise and then they can give a appropriate amount of tax for

that business From 2009 until now, according to Decree 56/2009/ND-CP, the number of

labor and capital which are divided by the size of business and the field of economy are

provisioned as follow:

Table 14 The standard for different size of businesses in different fields

Operating in trade and service and being a foreign enterprise in Vietnam, Unilever

contributed significantly to the development of Vietnam economy and a healthy

competition environment in trading field for domestic enterprises in particular and for all

enterprises in Vietnam in general

2.1 Labor

According to General statistics office, the average of Vietnam population in 2010 is

estimated at 86.93 million people This number increases 1.05% compared to 2009 with

26.01 million people in urban (accounting for 29.9% in total Vietnam population)

increasing 2.04% comparing to 2009 and 60.92 million people in rural (accounting for

70.1% in total Vietnam population) increasing 0.63% comparing to 2009 This also shows

that the number of people in rural is still approximately three times more than on in

urban, so Vietnam workforce mostly comes from rural

In the developmental policies of Vietnam, the party claimed ‘ human is the most valuable

capital, caring for their happiness is the highest purpose of our system, raising people’s

knowledge and improving great labor resource of Vietnamese people is the essential

factor to succeed industrialization and modernization’ Therefore, in the last few years,

Vietnam has used a good number of labor resource both from Vietnam and overseas in

order to get high growth rate

For many years, it has been said that Vietnam’s labor force is really cheap and this is a

competitive advantage Hence, in the new stage of integration, as the country is facing the

fierce competition from other country, this advantage doesn’t bring about significant

benefit as it was any more In the other words, this fact is gradually showing weaknesses

of Vietnam’s labor force in the process of industrialization and modernization

According to a survey of labor trends in 2006 in Southeast Asia by the Japan External

Trade Organization, the shortage of senior managers and other qualified personnel is

more acute in Vietnam than in any other ASEAN country In fact, a shortage of engineers

and managers, particularly in design and development, is common throughout the region,

in stark contrast to China and India Half of the Japanese companies in Vietnam cannot

find suitably qualified engineers from the local populace and nearly 60% have only

managed to recruit one or two apiece, well under the proportion in other ASEAN nations

Therefore, the quality of labor should be improved not only in skills but also workers’

education Based on that, the Vietnam Ministry of Planning and Investment has a draft

plan for training employees with total investment capital for Viet Nam's human resource

development is estimated at VND2,135 trillion (US$102.6 billion) for the 2011-2020

period

It is said that the capital is mainly based on the State budget, and it will be mobilized

from domestic businesses, organizations and foreign capital sources Under the plan, the

State will issue policies to encourage enterprises of all economic sectors to increase

investment capital in training human resources in accordance with their demands

The State will also encourage economic corporations and large companies to build their

own training facilities or participate jointly with vocational training schools to develop

human resources For human resource training facility projects in economic zones,

industrial parks and processing zones, the Government will offer businesses educational

preferential policies but also investment preferential policies

The Ministry of Industry and Trade will propose that the Government consider corporate

income tax exemptions within nine years for projects on education and training facilities

construction

Besides, the government also ought to assess how to allocate employed people based on

regional points so that they can have an overview about the labor rate between different

and improves strengths of labor in potential regions From the table below, there is a big

gap of workers who work in Urban and Rural

Table 15 Employed population at 15 years of age and above as of annual 1 July by

Data are adjusted from result of Population and Housing Census on 1st April 2009.

There was not a remarkable change in the rate of employed people at 15 years of age

between urban and rural from 2000 to 2009, but it was always true that the number of

rural employed people was more than on in urban

Moreover the state also must distribute labor by ownership which is very essential for our

economic system As the table below, the number of people who work for non-state

sectors is more and more, this makes us see that our economy is going in the correct

direction of the government’s plan

Table 16 Employed population at 15 years of age and above as of annual 1July by types

of ownership and kinds of economic activity (*)

(*) Data are adjusted in accordance with result of Population and Housing Census on 1st April 2009.

Up to now, it is still evaluated that the labor of Vietnam has not yet allocated

conveniently because of uneven rate in allocation for regions and fields in the current

situation of Vietnam

2.2 Land

The total area of Vietnam is 332,000 square km; mountains occupy 75 percent while only

25 percent of the area is arable That means land in Vietnam mostly is forest Besides, all

land including forest land is under the ownership of the entire nation, and people are

allocated land for use Forest land allocation has been paid due attention by the Party and

Government since the 1980s, as stipulated by the Instruction No 29-CT/TW dated 12

November 1983 of the Party Secretariat, the Land Law issued in 1987, 1993, 1998, 2001

and 2004, and the Forest Protection and Development Law issued in 1991 and 2004

Recently, the state also promotes its policy guidelines on forest socialization through the

2003 Land Law, the 2004 Forest Protection and Development Law and the Vietnam

Forestry Development Strategy 2006-2020 The state policies are clearly defined, as