Case Summary: A Decade of Organizational Change at Unilever
Unilever, one of the world’s oldest multinational corporations, generates annual revenues in excess of $50 billion and a wide range of branded products in virtually every country. Furthermore, Unilever was organized on a decentralized basis, in which subsidiary companies in each major national market were responsible for the production, marketing, sales and distribution in that market. However, by the mid-1990s, this decentralized structure was increasingly out of step with a rapidly changing competitive environment. In addition, Unilever found out that it was falling behind competitors in the race to bring new products to the market, so in the mid-1990s, they began to change this in 1996 by introducing a new structure based on regional business groups. Each of these groups included a number of divisions that focused on a specific category of production. Furthermore, they coordinated activities of national subsidiaries within their region to drive down operating costs and speed up the process of developing and introducing new products. However, by 2000, Unilever found out that it was still lagging behind its competitors, so the company embarked upon reorganization, which was to cut the number of brands that Unilever sold from 1,600 to just 400 that could be marketed on a regional or global scale. Unilever also established a new organization based on two global product divisions, a food division and a home personal care division. Within each division there are a number of regional business groups that focus on developing, manufacturing, and marketing on either food or personal care products within a given region.
Case Discussion Questions
1. Why did Unilever’s decentralized organizational structure make sense from the 1950s through the 1970s?