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A Decade of Organizational Change at Unilever

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A DECADE OF ORGANIZATIONAL CHANGE AT UNILEVER
7 November 2012
• Originally founded in 1872, and incorporated in 1929, Unilever was facing a difficult time when upon their discovery that the organizational architechture and strategy they were employing was not benefiting the company.

• The company was under a decentralized structure for generations. o Managers looking for a change o The decision was to go global

• It was mid-1990 and initial changes were made with minmal results. o Managers tried again and rebuilt the company from the inside out o Between 1990-1996 Unilever introduced the concept based on regional business groups o The groups and divisions coordinated activities in the regions

• It is now the year 2000 a slight change was apparent; however, the company was still behind their competitors. Again, management decides change is warranted o Unilever decides change the number of brands form 1600 to 400 o Reduce the number of manufacturing plants from 380 to 280 o Management wants all of this completed by the year 2004

• It is extremely difficult to change. The process is compounded when you are a multinational business trying to reshape your thumbprint. That in itself can take years Unilever managed to change and they no doubt are yet continuing to perfect that change. As we can only get better.

A DECADE OF ORGANIZATIONAL CHANGE AT UNILEVER

Change while yet simple to say is one of the most difficult processes to perform. It takes proper timing if known, and having the best tools to make it happen. When you are a large multinational firm, the task will have challenges. While it took some effort to complete, Unilever, historically one of manufacturings’ oldest multinational firms was facing a reoganizational change that reshaped them for the challenges of the 21st century.
Orginally incorporated in 1929, Unilever’s beginnings were in 1872 when two Dutch firms began commercially producing margarine. Unilever has operated for decades with an organizational structure that had apparently been working for them. A decentralized structure had been in place for generations. There were suttle indicators that this may be a good time to consider a new strategy for the company.
Unilever realized that by the mid-1990s that the decentralized structure had cost the company profits and that they were behind their competition. Management decided on an organizational change in an effort to move the company in a positive direction. Unilever decided it wanted to try to go global.
It was evident that the decentralized structure was failing Unilever; however, the process had been with the company for so many generations it appeared they didn’t quite know how to move forward. There was a false start where they tried to pull out of the market slump; and, they were still behind the competition. By this time about five years had lapsed. What they failed to understand was that a complete rebuilding of the organzational architechture, as they were trying to do include everything from the inside out and it will take some time. This included the formal organizational structure, control systems and incentives, processes, organizational culture, and people.
The move toward globalization was presenting a challenge to Unilever managers; however, the competition was ahead and Unilever was trying to improve their position in the market. They had to get better leverage for themselves.
Slowly the process of rebuilding Unilever’s Organizational Architechture in the Global Realm begins to take place. Between mid-1990-1996, Unilever introduced a new structure based on regional business groups that included a number of divisions that focused on specific products. The groups and divisions coordinated activities in the regions and helped to drive down costs.
Even though Unilever implimented changes it was the now the year 2000 and the company was still behind its competition. There is still room for more changes. This time, the decision was to trim down a sizable number of brands from 1600 to 400 and reduce the number of manufacturing plants from 380 to 280 all of this to be done by attrition by the year 2004.
When they created the divisions, they created two global divisions, a product division, a food division, and a home personal care division. Within each division are a number of regional business groups that does the developing, marketing etc. Unilever has divisions in Europe, North America, Latin America, and Asia.
To conclude, while over a decade, Unilever took patience and due diligence to pefect a business system that was best suited to change their Organizational Architechture, and one would like to think that they are ever evovling in their processes. This will keep them positioned as they forge the challenges of the 21st century…...

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