Why did Unilever’s decentralized structure make sense in the 1960s and 1970s?
Why did Unilever’s decentralized structure make sense in the 1960s and 1970s? Why did this structure start to create problems for the company in the 1980s?
The decentralized structure made sense mainly because it at first focused on localization. This structure, therefore, allowed for the local managers to match the tastes and preferences of locals to the organization’s products and marketing strategy. The structure also made it possible for Unilever to alter its sales and distribution strategies to ensure that they fit with its retail system. The main reason why the structure started being problematic in the 1980s was that when it came to manufacturing, there was a lot of duplication. The company lacked a scale economy and the structure that was needed was one of the high costs. These challenges made the company fall behind when it came to its ability to provide its markets with new products.
What was Unilever trying to do when it introduced a new structure based on business groups in the mid-1990s? Why do you think that this structure failed to cure Unilever’s ills?
When Unilever introduced a new structure that was based on business groups back in the mid-1990s, the company hoped that it would cut down in the costs attributed to the companies operations as well as introduce new products to its market. This structure failed to cure Unilever’s ills because it made it hard for managers to match the tastes and preferences of the locals to their marketing strategies and the products that it offered.
In the 2000s, Unilever switched to a structure based on global product divisions. What do you think is the underlying logic for this shift? Does the structure make sense given the nature of competition in the detergents and food businesses?
By shifting to a structure based on global product divisions, Uniliver managed to consolidate both its products and their manufacturing plants. The underlying logic for this shift, in my opinion, was the company’s desire to specialize in certain products and endure their production at a more accurate rate. This way the company could improve on the availability of its products, ensure flexibility in its production processes while ensuring that create global brands and minimize operating costs. Given the completion in the detergents and food business, I think that this structure made a lot of sense. This is because most consumers of such products focus on acquiring products from recognized brands. By coming up with global product divisions, the organization made its brand popular and increase its ability to compete in the industry.