Research paper; a comparison the business strategy of unilever and procter and gamble in asian market

In the world, two famous corporations in the field of consumer goods, Unilever and P&G,are typical for approaching the market with different strategies that bring differentadvantages, es

THE UNIVERSITY OF DANANG UNIVERSITY OF ECONOMICS

- -RESEARCH PAPER

A COMPARISON THE BUSINESS STRATEGY OF UNILEVER AND

PROCTER&GAMBLE IN ASIAN MARKET

Class: 42K01.5

Hồ Thị Vui Huỳnh Ngọc Toàn FONGSAVANH VILAYPHONE Danang, June,2020

Chapter 1 THEORETICAL BASIS -1

1.1 Multinational company -1

1.2 Characteristics of multinational companies -1

1.3 The purpose of development of multinational companies -1

1.4 International business strategies of multinational companies -2

1.4.1 The International Strategy -2

1.4.2 The Transnational Strategy -3

1.4.3 The Global Strategy -4

1.4.4 The multi-domestic Strategy -4

Chapter 2 UNILEVER'S ASIAN MARKET STRATEGY -6

2.1 General introduction about Unilever -6

2.1.1 General infomation -6

2.1.2 History of formation -6

2.1.3 Mission, vision, business goals -7

2.1.3.1 Mission -7

2.1.3.2 Vision -8

2.1.3.3 Business goals -8

2.1.4 The organizational structure of Unilever -8

2.1.5 Product -9

2.1.5.1 Food line for processing and eating -9

2.1.5.2 Hygiene and personal care product line -10

2.1.5.3 A line of laundry products for clothing and household utensils -10

2.2 Unilever's Asian Market Strategy -11

2.2.1 Strategy for the product -11

2.2.2 Strategy for the price -13

2.2.3 Strategy for the Promotion -14

2.2.4 Strategy for the place -14

Chapter 3 P&G'S BUSINESS STRATEGY IN ASIAN MARKETS -16

3.1 General introduction about Procter & Gamble -16

3.1.1 History of development -16

3.1.2 Business philosophy - purpose - values - Operating principles -19

3.1.3 Organizational structure, size and branch system -21

3.1.4 Scope of activities -22

3.1.5 Success achieved -23

3.2 P&G's strategy in Asian market -24

3.2.1 Strategy for the product -25

3.2.2 Strategy for the price -26

3.2.3 Strategy for the Place -27

3.2.4 Strategy for the promotion -27

Chapter 4 COMPARE STRATEGY OF P&G AND UNILEVER -29

4.1 Business situation of Unilever and P&G in recent years -29

4.1.1 Unilever -29

4.1.2 P&G -30

4.2 General comments -31

4.3 Compare 2 strategies -33

Conclusion -37

LIST OF PICTU

Picture 2 1 Unilever 1 12

Picture 2 2 Unilever 2 12

Picture 2 3 Unilever 3 13

Picture 2 4 Uniever 4 13

Y Picture 4 1 P&G 1 30

1 Rationale

Nowadays, as globalization is becoming popular and necessary for every country in theworld, multinational companies are also formed quickly with the desire to reach out to theinternational market, creating an increase growth in size and sales Growth isindispensable to maintain for each company, so choosing the strategy to reach out to theinternational market plays an extremely important role for each company The rightstrategy not only helps the company gain profits in the short term but also paves the wayfor long-term development

Markets around the world are different in culture, economy, income level, demographics,etc Understanding different strategies of different companies has become anindispensable experience for each company

In the world, two famous corporations in the field of consumer goods, Unilever and P&G,are typical for approaching the market with different strategies that bring differentadvantages, especially in Asian markets

2 Objects and scope of research

The scope of the study is the operation of Unilever and P&G in typical countries in Asiasuch as Japan, Vietnam, Singapore, The research period is conducted from the timewhen companies penetrate the market and the main ones The book has changed to adapt

to that market

3 Methodology

The paper is studied by methods of data collection and data analysis

The paper consists of 4 chapters:

Chapter 1: Theoritical basic

Chapter 2: UNILEVER'S ASIAN MARKET STRATEGY

Chapter 3: P&G'S BUSINESS STRATEGY IN ASIAN MARKETSChapter 4: COMPARE STRATEGY OF P&G AND UNILEVER

Chapter 1 THEORETICAL BASIS

1.1 Multinational company

Multinational companies are often referred to as MNC (multinational corporation) orMNE (multinational enterprise), which refers to companies producing or providingservices in two countries, which can greatly influence relationships international relationswhen they have a major economic impact on some areas with abundant financialresources, serving public relations and political corridors Multinational companiesoperate and are based in many different countries

Multinational companies play an important role in the process of globalization, a newform of MNE is formed corresponding to the process of globalization - it is a globalconsortium enterprise

1.2 Characteristics of multinational companies

Centralized ownership: affiliates, subsidiaries, and agents around the world are owned bythe parent company, even though they have specific daily activities that are not exactlythe same

1.3 The purpose of development of multinational companies

First, there is the need to internationalize manufacturing and markets to avoid traderestrictions, quotas, import duties in countries of purchase, use of raw materials, cheaplabor, and exploitation of local potential Second, it is the need to use the competitivenessand comparative advantages of the host country, making the transfer of high-techindustries

Third, seek higher profits and risk dispersion As well as avoiding the instability caused

monopoly of technology or production know-how in an industry that does not want to betransferred is also a reason to expand the locality for production Besides, costoptimization and market expansion are also the goals of MNC The operation of MNCs,because it is carried out in an international environment, issues such as input markets,output markets, transportation and distribution, capital mobilization, payment havecertain risks The common risks of MNCs fall into the following two groups: - Risks inbuying and selling goods such as: tariffs, transportation, insurance, supply-demand cycles,other macro policies - Risks in transition finance such as risks when local governmentpolicies change, risks of exchange rates, inflation, foreign exchange management policies,taxes, debt crisis

1.4 International business strategies of multinational companies

1.4.1 The International Strategy

The product is manufactured in the domestic market and sold to other countries withminimum adjustments according to local requirements Each Strategic Business Unit hasthe right to actively apply this strategy This strategy is less under pressure to reduce costsand the pressure of local requirements (because production is primarily localized) But it

is highly sensitive to exchange rate and political risks

Features of the international strategy:

 Exploiting comparative advantage, domestic position to turn into a competitiveadvantage

 Entering into skills-deficient markets of MNC Value is created by moving thecore of competition from the country to abroad, where competitors are not able

to develop, respond, and maintain in a similar fashion when expanding markets.foreign school

 Centralizing product development functions such as R&D in the country,producing products according to domestic market demand standards

 Establish production and marketing divisions in key regions and countrieswhere they do international business

 Headquarters headquarters strictly control marketing strategies and products,local adaptation is limited

 International activities ranked second after the market in the country

Limitations:

 May miss opportunities in local market

 Not specifically grasping the needs of other localities

 Not a long-term strategy

1.4.2 The Transnational Strategy

The strategy that MNC seeks to achieve global efficiency and respond locally, sharing thecommon mission of MNC but taking action that varies according to local requirements(standardizing where possible, adapting where required) Selecting an optimal locationcannot guarantee that the quality and cost of the inputs there will also be optimal Transfer

of experience can be a core resource of competitive advantage, but experience cannot betransferred automatically

Features of the Transnational strategy:

 Competitive advantage can be developed in any of MNC's operating units

 Try to achieve low cost based on regional economy, economies of scale, effectivelearning as well as production differentiated products for customers in differentareas, encourage opening up in places where developing operational skills inglobal operations

 The product and skills line can be transferred between units in MNC, collectivepromote the development of skills in global learning institutions

 The value created by innovation reinforces and exchanges ideas, products and

Limitation: Implementing this strategy has many difficulties because local responseincreases cos

Two trends need to be avoided: focus the company's operations too large on a centrallocation, or because it wants to increase the level of local adaptability that distributes thecompany's operations across too many different locations

1.4.3 The Global Strategy

MNC expands overseas markets based on standardization and competitive costs; Value iscreated based on product design for the global market and the most effective productionand marketing The scale of production and distribution of products has been improved,facilitating development investment and reducing costs very positively; but difficult tomeet local needs

 Not trying to meet local - Suitable for industrial products

 Strategic objectives The strategy is to pursue a global low-cost strategy to supportthe "aggressive pricing" in the world some of the most favorable positions on theglobal scale (outsource)

 Decentralized decision at headquarters

Limited: inappropriate in markets that need high adaptation

1.4.4 The multi-domestic Strategy

Strategic decisions and activities disaggregated by business unit of each country Thisstrategy has a high customer base but limits the exploitation of economic scale, learningand coordinating information

Features of the Mutil-domestic Strategy:

 Focusing on competition in each market

 Make a profit by offering customers a product that meets the tastes of differentnational markets, resulting in increased product value in the local national marketand pushing up product prices

 High local decentralization (proximity to location and culture)

 Value created by empowering local administrators to adapt to local economic andlegal economic environment

 Suitable when available many branches in countries and the pressure to reducecosts is not large - Suitable for consumer products

Limitations: high costs

Chapter 2 UNILEVER'S ASIAN MARKET STRATEGY

2.1 General introduction about Unilever

2.1.1 General infomation

Unilever is a global corporation founded in the 1930s of England and the Netherlands that

is world-renowned in the field of manufacturing and fast-moving consumer productsincluding home and personal hygiene products, eat, tea and tea drinks Typical Unileverbrands are widely consumed and accepted globally such as Lipton, Knorr, Cornetto, Omo,Lux, Vim, Lifebouy, Dove, Close-Up, Sunsilk, Clear, Pond's, Hazeline, Vaseline, withsales of over millions of dollars for each brand has proved Unilever is one of the mostsuccessful companies in the world in the field of consumer healthcare business (PersonelCare) Along with Proctol & Gambel (P&G), Unilever currently dominate the world onthese products

Some basic information of Unilever

Founded: Merged Lever Brothers and Margarine Unie in 1930

Headquarters: London and Rotterdam

Industry: Manufacturing (Household Appliance, Food, Personal Care)

himself a small soap factory He then focused on marketing his products, therebyincreasing production by 20 to 450 tons per week At that time, his workshop had twostrategic products: Lever’s pure Honey and Sunlight By March 1888, he decided toexpand the factory to an area of over 23 hectares In 1890, Lever decided to expand themarket beyond Britain's borders with the first overseas markets being Australia, Canada,Germany, and Switzerland In 1906, the company acquired Vinolia, a soap-makingcompany In 1910, the Company acquired Hudson’s - a major detergent manufacturer inthe UK From 1910-1915, Lever bought three more British soap-making companies, one

of which was Pears, one of Unilever's rivals

By 1911, the Lever brothers had a huge market share, and one out of every three soapbars was Lever

After World War I, the company continued to expand into Africa

Until January 1930, a merger of Margarine onion (Netherlands) and Lever Brothers(England) created an Anglo-Dutch alliance with the new name Unilever

To avoid double taxation of the two countries, the company has split into Unilever PClbased in the UK and Unilever NV based in the Netherlands

2.1.3 Mission, vision, business goals

2.1.3.1 Mission

Activity to create a fresher future every day Unilever's mission is to make everyone feelcomfortable, improve their beauty and get rid of life's worries with products that are goodfor them and those around them And they achieve this by creating and producingproducts that are affordable, suitable for all walks of life and society around the world.Inspire people through daily actions through our products to make a big difference to theworld Grow your company with a great caliber but still care about the surroundingenvironment

 Short-term goals: For each period, the company will have its own short-term goalsdepending on business strategies, market activities and the influence of the globaleconomy.

2.1.4 The organizational structure of Unilever

Unilever's structure is a combination of senior leaders including executives, executive directors, company executives, departments and employees The departmentswill undertake their own functions, operating independently However, there is still aconnection between departments to create flexibility in business activities

non-Functional departments:

 Materials supply department: finding and supplying raw materials to serve theincreasingly complete production activities

 Accounting Department: is responsible for managing the entire capital and assets

of the company, organizing the inspection and implementation of economic andfinancial policies, timely statistics, and the exact situation of assets and capitalsources to help The director regularly checks the company's business operations

 Planning Department: making plans for the company to help the implementationprocess be more convenient, avoiding mistakes in the implementation process.

 Human Resources Department: Managing staff, recruiting personnel

 Marketing Department: Managing product image management

Currently Unilever is trading in 3 main product lines including:

2.1.5.1 Food line for processing and eating

 Wall’s ice cream: Includes purely flavored diet products The product is suitablefor all audiences, with the convenient ability to help the brand be chosen by manypeople in the current balanced diet

 Knorr: Knorr is one of the largest and most favorite brands in Unilever in Vietnammarket With the spice products used in Vietnamese dishes, it brings an attractiveflavor, suitable for the diets of Vietnamese people

 Lipton: Lipton is one of the leading beverage brands in the world and in VietnamLipton is loved by tea bags to suit the taste of all ages With convenient featureswhen stored in bags and reasonable price Lipton has become a major beveragebrand in Vietnam

 Unilever food solutions: This is a brand used for high-class cooking byprofessional chefs with high expertise With specific spices, brand standards aregradually becoming an indispensable choice for chefs in the world

 Lux, Vaseline, Hazeline: known for its shower gel, soap, and facial cleanser with acharming aroma, suitable for many ages.

 Dove, Sunsilk, Clear: Famous in the Vietnamese market for hair care productsfrom shampoos, conditioners to professional hair warmers

 Lifebouy: Soap firm is used almost at home in Vietnam

 Closeup, P / s: With the main product is toothpaste with compatibility suitable forall ages this is a brand that many people choose to use on the oral hygiene market

 AX: brand of perfume products, hair gel for men

 Rxonae: A popular deodorant brand worldwide

 Pond’s: owns the skin care products trusted by many women because of its qualityand reasonable price compared to cosmetic lines from other brands

2.1.5.3 A line of laundry products for clothing and household utensils

 Omo, Viso Surf: These are cleaning brands that dominate the market in Vietnamtoday With quality, easy-to-use laundry soap products, Unilever is trusted bymany customers

 Comfort: Along with clothes cleaning products, comfort is a brand that includesclothing products with many scents suitable for many families in Vietnam

 Sunlight washing dishes, Sunlight cleaning floors, Cif: Sunlight has become atrusted kitchen cleaning brand that has been trusted for the past 15 years

 Vim: Vim is a cleaning product that cleans bacteria in the toilet with simple andeffective use

With 3 current product lines, Unilever owns more than 400 outstanding brands includingmany famous brands in Vietnam, including OMO, Surf, Lux, Dove, Hazeline, Ponds, P /

S, Close Up, Vim, Cif, Sunsilk, Sunlight,

2.2 Unilever's Asian Market Strategy

From the beginning when penetrating into the Asian market, unilever was oriented tobusiness under the Mutidomestic strategy For a new market with a large customer baseand diverse cultural, consumer habits, Unilever must make product differentiation to meetlocal needs The favorable condition for unilever to implement this strategy is thatcountries in Asia have a large number of people in the same country For example: China(1.3 billion people), India (nearly 1 billion people); Indonesia (200 million people), Inorder to pursue this strategy, the company must build activities in almost every function

to suit each target market

2.2.1 Strategy for the product

In product research and development in Asian markets, Unilever focuses on meeting theneeds and tastes of each country Each country will need different products with differentcharacteristics When the decision to enter a new market is made, unilever will selectexisting products that may be suitable for this market, or research to create a new productbased on market resources and needs Unilever's products are diversified, classified intomany models to meet the diverse needs of customers

To pursue the Mutidomestic strategy, the company had a large number of industries withseparate product segments Products with specific characteristics in the same categorywill make it easy for customers to choose and fit the tastes of customers to changeproducts

Food and beverage group products in Indonesia:

Picture 2 1 Unilever 1Food and beverage products at Phiplipine:

Picture 2 2 Unilever 2Products of personal care group in Vietnam:

Picture 2 3 Unilever 3Products of personal care group in India:

Picture 2 4 Uniever 4Besides the differences in product quality among countries, Unilever also focuses onproduct packaging design according to the tastes of each country

For example, in the Japanese market, eco-friendly products are encouraged to bemanufactured and consumed Products labeled as Green Power are Dove, Lux, Clear,Timotei and Lipton

2.2.2 Strategy for the price

For the price policy, at present, compared to other competitors in the Unilever market,there is a price segment for products that are spread out This makes it easy to reach a

wide range of customers, everyone can access Unilever products as the company'soriginal mission The customer segments that the company wants to target are those withlow and medium income Those who have a basic need for using Unilever products.Having a large market share in 90 countries around the world, Unilever focuses on notonly countries with developed economies in Europe but also poor countries in Asia.Unilever is also taking advantage of the development of a wide range of different productlines to meet the needs and income of millions of people around the world in manydifferent countries.

Unilever is also the first company to introduce small packages of shampoo for poorcustomers In many countries like China, Bangladesh, Pakistan, Sri Lanka Unilever isalso considered as a "local company"

2.2.3 Strategy for the Promotion

In advertising policy, Unilever focuses on exploiting traditional images, imbued with theidentity of each country The advertising style changed from classics, direct productintroduction to metaphor in television ads is a prominent highlight in the ads of Unilever.The advantage of this style is simple, easy to understand and suitable for customers inmany large markets

The ads of Sunsilk, Clear, Dove are now more closely following new marketdevelopments, have a more attractive storyline and not only limited to the introduction ofpure products but have focused more on the impact factors targeting specific customers,

so that customers can remember, identify, distinguish and select its products amongsimilar products in the market

2.2.4 Strategy for the place

With the low price segment of products and based on the demographic situation of theAsian market, Unilever's target customers are those who live in rural areas where there is

a high demand for protective products birth, daily consumer goods In order to bring

products to this group of customers, unilever has built a large dealer network everywhere,from the city to the countryside Accompanied with advertising and branding, thecompany has reached out to a large number of customers and has taken the upper hand ofthis market leader.

Chapter 3 P&G'S BUSINESS STRATEGY IN ASIAN

In 1879, James Norris Gamble, James Gamble’s son organized research and development

of cheap but high quality white soap and exported to areas of central Spain The product

is called Ivory and this name is due to the idea of Harley Procter - son of William Procter.Ivory is associated with clean, pure, gentle and lingering aroma In 1882, P&G used $11,000 to advertise Ivory in the weekly newspaper In 1886, Ivory began to be produced

at the Ivorydale factory

In 1887, P&G started a program of distributing profits to workers based on their capitalcontribution to the company, which was associated with their survival with the success ofthe company This program was proposed by William Cooper Procter By dividing theshares in the company, he thought that they would be less likely to go on strike