Organizational Change: Unilever’s Case
In the beginning of 2000 the organization came up with a €5 billion five-year growth strategy whose goal was an important improvement in the company’s performance. This plan was named Path to Growth’ Strategy (PGS). The activity meant wide-ranging restructuring of operations and businesses. This move received a mixed reaction from the analysts and observers, as many questioned the huge organization’s ability to carry out the divestment successfully. (ICMR, 2004)
To accomplish the PGS Unilever focused on:
- Change the present organizational structure
- Concentrate on leading brands
- Sustain these principal brands with well-organized research and development and focused marketing plan
- Downsize the supply chain
- Shorten business processes
- reorganize and remove under-performing businesses and brands
Unilever’s new structure was planned to focus on Unilever’s two major divisions, and Home and Beauty Products. Numerous divestments were made which included European bakery supplies business, and French culinary business Benedicta, Bestfoods Baking and its subsidiaries, Elizabeth Arden and Unilever Cosmetics in addition to its Dutch refinery and industrial cleaning businesses just to name a few. (ICMR, 2004)
From these changes the organization expected cost savings of €1.5 billion by 2004 and global procurement would lead to additional savings of €1.6 billion by 2003. In addition 25,000 workers were laid off. The focus of the restructuring was global but it was concentrated in the US and Europe. It was believed at that time that annual cost savings would be a billion Euros. The major cost cutting took place in the foods segment as the home and personal care sections were already much more organized. (ICMR, 2004)
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