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A Five Forces analysis of Unilever shows competition and consumers have the biggest impact on the firm, based on external factors in the consumer goods industry environment.
Public Domain Unilever effectively competes in the global consumer goods market.
To ensure long-term success, the company must address the issues related to these forces. However, as shown in this Five Forces analysis, such external factors lead to variations in the intensities of the five forces impacting the business.
The following are the intensities of the five forces in affecting Unilever: Competitive rivalry or competition strong force Bargaining power of buyers or customers strong force Bargaining power of suppliers moderate force Threat of substitutes or substitution weak force Threat of new entrants or new entry weak force Recommendations.
The bargaining power of suppliers is also important, but has limited impact on the company. The threats of substitutes and new entry have minimal effect on Unilever and the consumer goods industry environment.
In this regard, strategic action must prioritize competition and the bargaining power of customers. A recommendation is for Unilever to further build its competitive advantage through product innovation.
For example, the company can increase its investment to produce better and more competitive variants of its current personal care and home care products. It is also recommended that the company must enhance its customer relations to attract and retain more consumers.
The company has the strengths needed to strategically address these issues Read: Strengths, Weaknesses, Opportunities, Threats. This section of the Five Forces analysis identifies the external factors that present the impact of firms on each other. The strong force of competitive rivalry against Unilever is based on the following external factors and their intensities: High number of firms strong force High aggressiveness of firms strong force Low switching costs strong force There are many firms operating in the consumer goods industry.
This external factor imposes a strong force on Unilever. In addition, these firms are generally aggressive, further adding to the intensity of competition. Unilever also experiences tough competition because of low switching costs. For example, it is easy for consumers to switch from one firm to another.
The influence of buyers on business performance is considered in this section of the Five Forces analysis. Unilever must address the following external factors that lead to the strong force of the bargaining power of customers: This external factor contributes to the strong intensity of the bargaining power of buyers.
In addition, consumers have access to high quality of information about consumer goods, making it even easier for them to decide when transferring from Unilever to other providers. For example, buyers can compare products based on online information.
However, the low switching costs and high quality of information outweigh this third external factor in the industry environment. This section of the Five Forces analysis presents the influence of suppliers on companies.
The following are the external factors that contribute to the moderate force of the bargaining power of suppliers on Unilever: Moderate size of individual suppliers moderate force Moderate population of suppliers moderate force Moderate overall supply moderate force While Unilever has large suppliers like foreign firms that supply paper and oil, the average supplier is moderate in size.
This external factor imposes a moderate intensity force on the consumer goods industry environment. In addition, the moderate population of suppliers enables them to impose significant but limited influence on firms like Unilever. Similarly, the moderate level of the overall supply adds to such significant but limited influence of suppliers.
Other firms in the industry are similarly affected. As shown in this section of the Five Forces analysis of Unilever, the bargaining power of suppliers is a significant but moderate consideration in the consumer goods industry environment.
The impact of substitution is determined in this section of the Five Forces analysis. This external factor imposes a strong force on the company and the consumer goods industry environment. However, the overall impact of substitution is weakened because of the low availability of substitutes.
In relation, most substitutes have low performance with minimal or insignificant cost difference when compared to consumer goods readily available in the market.ph-vs.com is tracked by us since July, Over the time it has been ranked as high as in the world, while most of its traffic comes from France, where it reached as high as 26 position.
ph-vs.com is tracked by us since April, Over the time it has been ranked as high as 33 in the world, while most of its traffic comes from USA, where it reached as high as 11 position. This article features SWOT analysis of all brands which have been analysed on Marketing As and when more SWOT analysis articles are published, this page will be updated.
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