Strategic Analysis assignment for Knorran SBU of Unilever
Task: How to critically analyse Knorran SBU of Unilever using Strategic Analysis assignment strategies and techniques
The Strategic Analysis assignment is based on the implementation of a strategy that is considered to be a difficult task in the aspect of strategic management of the Unilever Company. The Unilever company is one of the world's topmost manufacturers of consumer products which includes personal, healthcare, and food products. The research work is carried out in the year 2021 with the report of the last 5 years. The Strategic Analysis assignment of Knorr is analysed for the last 5 years. Unilever has high competition with the companies like Nestle and Kraft. In the year 1999, Unilever company has adopted a strategy of "Path to Growth" which is based on "capital efficiency, brand focus and operating costs".
Unilever Company was founded on 2 September 1929 through the merger of Margarine Uni and British soap maker Lever Brothers. In the late 20th century the company has spread in the international market with diversified products categorised in the producer of oils and fats. The deep roots in the culture and markets have put unparalleled inheritance with a confident future growth. Knorr is considered to be one of the biggest brands of Unilever globally.
Strategic Analysis assignment Research Analysis
The mission statement for this Strategic Analysis assignment is to provide several guidelines made to the specific management and workforce that are made to works and implemented the strategy. The main mission is to explain Unilever's business strategy which helps to think globally and able to use the strategy of “think global and act global”.
The outlined research question easily defines the main focus of interest regarding the limits of study made on the Strategic Analysis assignment. The investigation carried on regarding the strategic implication for the growth of the company in the food industry.
• Which are the options of internal growth does Knorr have and implication of growth in food industry
• What does the strategic positioning imply in the market
• To understand the consumer behaviour and purchase pattern of the market
• To make an emotional connection with the direct millennials
• To make recommendation with the purchase intent market share
Knorr is an SBU of Unilever where the problem of growth, positioning, and branding will be evaluated. In the year 2000 Unilever has brought out the billion Best foods within the attractive food products domain. Knorr always needs a specific position for a balance that exists between perception and strategy made within one of the products.
Figure 1: Knorr: Leading dry packet soup in the UK 2013-2019
The above statistic shows us the ranking of using most Knorr dry packet soup products present in Great Britain. It is estimated that one million people are using Knorr instant soup. Dry soups are usually having a shelf life of 12-24 months which are highly protective. Therefore, a complex production process is required to be developed to make the recyclable packs that are present within the capabilities of the factory. The recycling solution will help bring the technical packaging innovation. It will bring sustainable solution to the company and have the opportunity to change consumer attitudes (Höglund et al. 2021).
Theories and Concepts explored on this Strategic Analysis assignment
The product concept of Knorr is considered to be "Soup lollipop" which is launched under "Unilever's Knorr brand". It also implies that companies already present in the market usually diverge from the existing "ideal microeconomic models" (Fithry et al. 2021). The main use of neo-classic theory explains the existence of one set of theories with other sets of variables.
1. External Analysis
The analysis of external factors of threats and opportunities can contribute to strengthening the position of Knorr in the market. The opportunities available in the market can lead to the several trends available in the consumption section which are favourable for food in general and Knorr in a specific way. Consumers usually have a busy schedule and have less time to prepare food. The knowledge required for preparing the recipe of Knorr food items is negligible. Therefore this situation puts into an open market where large volume and value is required for "convenient food solutions" (Dmitrievna, 2021). Knorr must also find some external strategies to defeat the external threats as the food market for Knorr is like to be growing. Therefore Knorr has to put some strategy to take the market shares as much as possible from the other players present in the market. It can be done through the launching of new products or the strategy of re-launching the existing products with new styles. The white label products of the retail can offer goods quality with cheap prices. [Referred to Appendix 2]
2. PESTLE Analysis
Knorr is considered to be Unilever owned brand that is established in more than 80 countries. There are few changes made in the regulatory environment by the government which will put Knorr to a severe financial impact on the business carried out by Knorr. The changes made in the "tax environment" also affects the financial performance of the company (Raja, 2021). The "Organization for Economic Cooperation and Development's Base Erosion and various Profits shifting project" has put the company's legal aspects into problems in different countries as per research findings collected during this Strategic Analysis assignment’s research.
Price control and foreign exchange can impact the growth of Knorr's business. There is also a major risk through the impact of Brexit on Knorr's business in the UK. It has an adverse effect on the import and export of raw materials. It can also affect the price of the final product and have an adverse effect on the jobs after Brexit (Wang and Wang, 2020). Unilever is the parent company of Knorr and could result in the underperformance of Knorr Company and the position of the brand.
Knorr is considered to be an international brand and made products in soups, sauce and recipe kits. The ad campaign of Knorr has put some couples to the advertisement which created emotional connections with the millennials. The result of the campaign also created a rise in brand appeal and put the purchase rate also high. It also engages a higher younger demographics which is very vital for Knorr's business (Formicola et al. 2018).
On this Strategic Analysis assignment it is also identified that misuse of data can create damage to the name of the brand. The cyber-attack will also impact the financial performance of the company. The role of digitization has become a normal factor for consumers and suppliers which will be needed better IT systems (Nogueira, 2020). The company is also improving the work made on "blockchain technologies" for better production in the supply chain.
There are different types of national and international laws as per the product, trademark, and privacy. Financial damage can be incurred by the company if the laws and rules are favourable and can cause damage to the brand. This type of program usually helps companies to close the loopholes which are related to "global taxation". A brand like Knorr may also face the threat of "inadequate legal protection to intellectual property rights".
Environmental factors: Knorr brand uses different strategies for the protection of the environment. All the use of plastic that creates a negative perception in the face of the consumer and other stakeholders. Various governments over the world are banning plastics and also plans restricts its basic use through imposing taxes.
3. Porter’s Five Forces
The Porter’s value chain model of Knorr has a rigid framework and provides equal importance to all the activities. Therefore an effective Value chain analysis does not require the same scrutiny level.
Figure 2: Five forces of Competition
(Source: Karatzas and Löfflath, 2001)
Competitive Rivalry: Competition is considered to be a major force in “Unilever’s industry environment”. There are many companies which are operating in the “consumer goods industry”. All the firms present in the market are usually aggressive and added with intensity of competition. A high level of competition is carried with the section of Unilever’s five forces analysis.
The role of bargaining power Customer’s/Buyers on this Strategic Analysis assignment: The business of Knorr and the industry environment generally depends with the feedback of consumers. The main influence of the buyer’s on the business performance creates a strong force of bargaining powers of customers. It creates low switching costs and high quality of information.
Bargaining Power of Suppliers: Suppliers also impacts the Unilever’s industry environment through the specific level if supply provided to the firms. Knorr has the large suppliers like the international companies where it supplies paper and oil. The external factor also creates a moderate intensity force present with the “consumer goods industry environment”.
Threats of Substitutes: The substitutes available in the market can also reduce the Knorr’s revenues and the strength of the firms. The basic low switching cost also enables customers to use different substitutes products present in the market. Threat of New Entrants: Knorr also competes with some of the established firms present in the “consumer goods market”. The adaptation of “low switching cost also enable new entrants to impose a strong force against companies like Knorr. Knorr takes high advantage due to the economies of scale and able to support competitive pricing and more company efficiencies.
4. Internal Analysis
To strengthen the position of Knorr in the market will have to match the perception of the consumers and build internal strengths to overcome all types of weaknesses. Therefore the utilisation of external opportunities present in the industry has to discover new strategies to overcome all the “external threats” (Tsourvakas and Yfantidou, 2018). Knorr has the advantage of good branding with the support of Unilever to recognise the product worldwide. It has a wide segment of 14 dried food items which includes dried pasta meals and soups and dried spices with a similar range of products. The awareness of the progress of other competitors present in the market will help Knorr to gain an advantage in the market. Knorr has a weakness of not using any kind of promotional tools like sticker, coin cart. They do not have any kind of catalogue of their products.
Figure 3: SWOT Analysis
(Source: Tsenzharik et al. 2020)
Three level of Strategic Analysis
The strategic impact is analysed which covers both the internal and external aspects. The transformation of retail trade from new entrants to potential competitive players increased in the industry. There are many sets of retail tools used by private label brands like Signum and Diva to leverage the position to relate with existing competitors like Knorr. Unilever is considered to be a higher quality brand producer where motivation is more vital than a premium price (Mazarr et al. 2021). This report shows that the Knorr are using prescriptive strategy with the applicability of top down strategic planning which changes the food industry. This Strategic Analysis assignment concludes the food industry to transform into an open future and brings out new products and business models.
5. Product Strategy
The brand of Unilever has started the ready to cook soups which has a higher demand and growth opportunity in the market. Knorr has started to add different products to its lists which include "cup soups, meals mixes, and soupy noodles" (Katare and Anute, 2021). The product launch in several countries has been successful due to the ranges of continental flavour present in most of the ranges. The company also focuses on the South Asian region and captures most of the loyal customers with the help of spice mixes like "Pav Bhaji, Sambhar Masalas”. (knorr.in, 2022)[Referred to Appendix 1]
6. Pricing Strategy
There is tough competition present in the food industry where rival companies such as Yippee and Maggie are present in the region of the South Asian market. Due to the high competition in the market, the company has to keep the price low which helps to create a mass field difference. A soup packet ranges from 10 to 15 for a single cup which is a reasonable price and helped Knorr to penetrate the market with a lower price strategy and beat the competitors (Dmitrievna, 2021).
7. Positioning Strategy
Knorr is doing business across 80 countries around the globe and comes directly under the umbrella of "Unilever's FMCG section". Unilever has already a large distribution channel where Knorr delivers its products in the market. Knorr directly comes under a huge set network of Hindustan Unilever where supplies are made to 6.3 million retail outlets. The main positioning strategy of Knorr is to reach every set of the segment of the market that involves rural and urban sections (Trinh, 2018). The online distribution channel is also provided with the help of Amazon, Flipkart, Big basket, etc.
8. Promotional strategy
Knorr uses aggressive market strategies to promote products. The launching of various new products in the market also made some improvements in the existing product through the feedback of the consumers (Arora and Agarwal, 2018). Different promotional platforms include various TV commercials, social media campaigns, and different leaflets, billboards, etc. The commercial ad shown creates a bonding with the customers with the help of paid actors.
Strategic Analysis assignment Result Examination
The Knorr Company under Unilever also uses the VRIO analysis for the development of competitive strategies which are usually based on the "core strengths and resources". This framework will automatically help to gain a great set of competitive advantages over other competitors present in the market.
9. VRIO Analysis
Table 1: VRIO Analysis
(Source: Created by the researcher)
There are different sets of competencies that are valuable to help the company to neutralize all the threats expected to come from the external and internal environment. Unilever Company has succeeded in engaging with different types of social responsibility actions and helping to transform them into transparent (Singh, 2020).
There are set of competencies that are rare in nature and can be developed only through a handful of companies in this industry. It helps them to build a competitive advantage for Unilever which has already a global presence. Knorr will be able to create an expanded consumer base that will earn revenue in a different set of regions (Shaikat, 2020).
The inimitable competencies will help in adding some competitive advantage for the long-term sustainability of an organization like Unilever. The competing companies present in the market will be difficult for them to imitate and costly to match up the resources (Sumarti, 2020). There is always an inimitable resource for a company that gains a high set of quality and leads to repeat purchases.
The resources developed by Knorr and Unilever are unique in nature and cannot be used by the competing players easily in the same industry. Therefore all these resources do not exist with any type of substitutes and cannot be copied by other companies (Goyal, 2020). Therefore Unilever can enjoy additional financial strength for its brand strength.
Sustainable competitive advantage
Knorr can achieve sustainable competitive advantage through the implementation of the Sustainable Living Plan. The products of Unilever are also achieving the product market share growth for the purpose of the increased amount of profit. Knorr has the advantage of flexible pricing techniques and also expertise in the distribution channel to reach every store around the globe. Competitive advantage is considered to be the key to a business's success. It pushes the business to focus on more sales and higher profit margins. Customer satisfaction plays a vital role to compete with other players in the market. Unilever must use more renewable energy for the transition of operations around the globe.
10. SAFE Analysis
Suitability: The remanufacturing of product also explains to be a “cost effective and environment friendly option for setting up a new product. Customers also relies on the remanufactured products which are present with the same range as compared to the original product. Knorr is also showcasing some of the latest additions made to the Econx portfolio.
Acceptability: Knorr has joined with leading organisation with WWF to launch its first global sustainable campaign. It accepts the awareness made with different sustainable food choices which will change the way consumers eat.
Feasibility: A feasible research work done on this Strategic Analysis assignmentcontains a detailed amount of analysis to work with the proposed project. The development of new soup project will be launched at a reasonable price in the market. The feasible research work will identify the success of the product and helps to expand in the market(Lessard, 2021).
Key Performance Indicators (KPI)
Knorr has more appealing to the Millennials globally with a 10% increase across the global market. There is a great uplift for the Knorr brand where it states the message of “Flavour can help you form a relationship". The ad campaign has given a rise 15% more among the Millennials which is the result of a direct campaign. There is an uplift with the main sample with a 1% rise in the previous year as compared to a 1.25% rise in this year (Shetty and Shreenidhi, 2018).
Figure 3: KPI of Knorr
(Source:Trepcea and Maria-Cristina, 2017)
The marketing strategy used by Knorr provides an in-depth analysis of demographic and geographic data. The main suggestion is to utilize a proper "analytics system" to identify the most effective strategies to reach current customers. It will help the company to gain the maximum return on investment made by the clients. The use of the Home furnishing Market will be made the industry experts offer some of the intimate understanding of Knorr’s brand. The proper way of assessing the market potential will develop the brand image much stronger. It will make a strong long-term relationship for the client with testing advertising, customers, and huge audience response made to the media. The main purpose of Knorr marketing brings out the mission, goals, and visions of our direct clients.
From this Strategic Analysis assignment findings it is clear that Knorr has the support of Unilever which has a brand and the company targets in providing a higher quality of food and beverages using healthy ingredients. There is no use of preservatives and real ingredients are included which makes the company more consumer-oriented than profit-oriented. Although the tough competition present in the market, Knorr has sustained its position in the market through implementing effective and efficient strategies. Knorr has already earned the trust of the consumers with its easy to cook and delightful tastes of its products. Consumers are easily attached to the information provided by the brand companies and develop a relationship that brings added value to the product. The development of the new product will also lure some health-conscious consumers through the offer of healthy cashew nut soup.
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Appendix 1: Porter’s Strategy
Source:(Tsenzharik et al. 2020)