Unilever

What is your assessment of the Path to Growth Strategy as a strategic plan ? Is it appropriate for industry and firm conditions ? Why or why not

Path to Growth Strategy was aimed to increase the market position of the company and to increase its growth rate , which was becoming sluggish in recent times . Based on firm conditions the strategy was very appropriate . There were too many brands and the focus of the company was too vague , and as a result the major brands were suffering . In addition the company needed to be

market leader in more product segments , to maintain its market position . Industry wise too the strategy was fairly good . There was a maxim existing which focused on acquisition of leading brands rather than creating new ones and then compete with all other brands . Divesting was also one of the very popular strategies for companies wishing to re-strategize their businesses . The strategy should have worked very well considering all these factors

However , for any company looking to make a drastic increase in its position , there is another factor that should be taken into account - consumer behavior modeling . While this is not a new factor , and in a way Unilever did try to look for businesses satisfying its consumers , there was precious little done to look for consumer trends in the larger picture . That is to say the strategy was reactive instead of being proactive . The Health and Wellness segment could be a case in example While the company did look for the trend of people being more health conscious and brought SlimFast to cash on the opportunity , it did not forecast the way people would be tackling their diet issues . Hence what would have been an excellent strategy , failed to produce any results

The focus of the company towards only sales targets was one of the root causes of the problem . The strategies did ensure initial growth but sustained growth became a problem as did dynamic nature of the newer markets . Hence , while The Path to Growth Strategy cannot be termed as a failure , it cannot be termed as a success either

Evaluate each of the three major acquisitions prod in the case using the 3 tests of an acquisition

SlimFast -

The Attractiveness test - The industry in which SlimFast operated was of chief interest to Unilever , because health foods was an area where the consumers were chiefly interested in . In addition the company was the market leader in US having a market share of 45 as against its nearest competitor who had a market share of 25

The Cost of Entry Test - The cost paid for buying SlimFast was 2 .3 billion dollars in cash , which was approximately 17 .7 times its earning (based on the EBITDA of the year previous to the acquisition year . It was way over the risk margin of 12 times , which means that the company may have may too much for the acquisition . While the decision could be justified (as was done by the...