1) During this time period, a decentralized structure made sense in the 1960s and 1970s because it increased localization by allowing local managers to equalize product offerings. The company had an advantage of localization theory as their main source of strength. It also allowed sales to vary by developing marketing strategies based on local “taste” and preferences. This opportunity gave the company an advantage because product offerings, distribution and marketing strategies can be altered in each market in order to meet these local taste and preferences. Therefore, it permitted each subsidiary the chance to cater to local needs. Due to the competitive environment and pressure to reduce prices, this structure worked well only for few years. This structure created problems in the 1980s due to the company’s localization strategy as many products were being duplicated during manufacturing. More issues included the lack of scale of economies and high operating costs. Many competitors could’ve used this to their advantage; however, Unilever suffered and fell behind their rivals when trying to introduce new products into the market.
2) During the mid 1990s, the company introduced a new strategy known as regional business groups. The company decided to create a division among their products. For example, their created a division for detergents and a division for ice cream, and so on. The company hoped to decrease their high operating costs and introduce new products into the market; however, the structure failed Unilever to cure the company’s ills because managers weren’t allowed to match product offerings or develop specific marketing strategies based on local tastes and preferences. Even though the company changed from localization to transnational structure, the competitors still had the “upper hand” in this industry.
3) Based on this shift in 2000s, Unilever tried to lower their operating costs while improving its product availability, suppleness to its consumers, and enhancing their brand image. I believe the company should increase their local responsiveness in this competitive environment. If the company shift to a centralized transnational strategy, it can reduce operation costs and increase efficiency and communication. Unilever’s goal to cut back their brands from 1600 to 400 (C-28), they’ll be able to focus more on their global and/or regional brands while increasing their local standards. Due to the products manufactured such as food and personal care products, Unilever should consider global product division since these products require a high level of local responsiveness. Using the regional business groups, each global product division can respond back to local needs based a region.