Sample Essay
Words 1,320
This is an essay discussing major business restructuring and divestment of Unilever. In 1999 Unilever unveiled plans for major restructuring, specifically a divestment strategy to either to sell or discontinue 100 of its 380 manufacturing units and the laying off of 10% of its 250,000 employees in a period of 5 years. The restructuring plan involved the reduction of its brand portfolio from 1,600 brands to focus on its top 400 brands.
In 1999 Unilever unveiled plans for major restructuring, specifically a divestment strategy to either to sell or discontinue 100 of its 380 manufacturing units and the laying off of 10% of its 250,000 employees in a period of 5 years. The restructuring plan involved the reduction of its brand portfolio from 1,600 brands to focus on its top 400 brands. This announcement initially was not well-received by the investors as they believed that this was an indication of its inability to manage its brand. As a result its market capitalization suffered and decreased by about £20 billion by January 2000. (ICMR, 2004)
There were several reasons behind the decision to restructure the organization:
- The failure of the organization to meet its targets in 1999, this was attributed the slow growth of its top-selling brands. The organizations previous brand strategy was not focused.
- Unilever had failed to strengthen its major brands in the 1990s because a large part of their investments were made in acquisitions and business restructuring.
- 1200 of the 1600 brands contributed only 8% to the organization’s sales.
- There was a significant decrease in the market share of the company as its competitors started to eat away at Unilever’s market share.
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