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Unilever’s Sustainable Competitive Advantage:
Analysing Resources and Capabilities
This essay examines how the multinational conglomerate Unilever is able to generate
sustainable competitive advantage. In order to do that I will implement two strategic
management models: the resource based view (RBV) and the knowledge based view
(KBV).
By using these models I am able to analyse how Unilever overcomes and manages the
challenges and risks it has to face and how it is thus able to generate and sustain its
competitive advantage.
Brief Introduction to Unilever
Unilever is a multinational company founded in the 1920’s through the merger of a British
soap manufacturer and a Dutch margarine producer (Unilever – Our History, 2013). Today
it is among the top suppliers of fast-moving consumer goods (FMCG) worldwide with a
portfolio consisting of some of the world’s most famous brands in food & beverages,
personal care and home care. Everyday around 2 billion consumers in 190 countries use a
Unilever product.
Unilever mainly operates in Europe, Asia and the Americas. The company’s headquarters
are in Rotterdam and London, but it is known for its locally strongly integrated head
offices in over 100 countries with worldwide approximately 173'000 employees.
Unilever’s main competitors are Procter & Gamble (P&G) and Nestl.
Regardless of the demanding economic situation in 2012 Unilever recorded positive
growth across all categories and could improve its underlying sales growth to 6.9%,
generating revenue of €51.3 billion. Especially emerging markets reported an expanding
growth in sales (Unilever – Annual Report, 2012; Unilever – Sustainable Living Plan,
2012).
The Resource Based View of Unilever
The resource based view understands companies as an accumulation of tangible and
intangible resources that create capabilities and competitive advantage. The theory
assumes that no two firms are the same as they have different sets of experience,
knowledge, skills and have different organizational cultures. The use of those resources
and capabilities determines how efficiently a firm completes functional tasks (Montgomery
& Collins, 2008; Grant, 2005). Barney classifies resources as diverse and not perfectly
mobile across firms. He further defines resources as being Valuable, Rare, In-imitable and
Non-substitutable. These traits make up his VRIN-framework, with which resources are
measurable (Barney, 2001 & 2004).
Unilever has of course numerous resources, but I will concentrate on those that are
essential to the four key capabilities that ensure Unilever sustainable competitive
advantage giving them a pole position especially in emerging markets:
(1) Its ability to innovate
(2) Its consumer understanding and service
(3) Its brand portfolio and,
