FOREIGN TRADE UNIVERSITY
SCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS
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MID-TERM ASSIGNMENT

TOPIC:
CHANGE IN ORGANIZATIONAL
STRUCTURE OF UNILEVER AFTER 2022

Course

:

International Business

Class

:

KDOE307

Group

:

Instructor

:

PhD. Nguyễn Hồng Hạnh

Table of contents
1. Executive Summary
2. Company Overview
2.1. Establishment of Unilever
2.2. Products and Markets
3. Unilever's international business strategy
4. Change in organizational structure of the company through period
4.1 Organizational structure of Unilever before 2022
4.1.1 Vertical structure
4.1.2 Horizontal structure
4.1.3. Integrating mechanism
4.2. Organizational structure of Unilever after 2022
4.2.1 Vertical differentiation
4.2.2. Horizontal differentiation
4.3. Comparison in Unilever’s organizational structure before and after 2022 and further
evaluation
4.3.1 Comparison between 2 periods
4.3.2 Comparison between new organizational structure of Unilever and P&G’s
organizational structure
5. Conclusion
6. Reference

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1. Executive Summary
Organizational structure refers to the formal system of authority, communication, roles, and
responsibilities within an organization. It determines how tasks are coordinated and
controlled and how information flows between different levels and departments. An effective
structure can enable efficient communication and coordination, streamline decision-making,
foster innovation and employee motivation, and improve cost efficiency, all of which are
critical for a company to compete in a global market.
There are three key aspects of organizational structure encompassing vertical differentiation,
horizontal differentiation and integrating mechanism.
Vertical differentiation discusses where the decision-making power is concentrated, whether
at the headquarters, i.e. centralized decision making, or at all levels of the organization, i.e.
decentralized decision making.
Horizontal differentiation indicates how a firm divides into sub-units. At the domestic level,
it includes functional structure and product divisional structure. At the international level,

there can be international division (firms maintain their domestic structure when going
global), worldwide product divisional structure (firms expand their current domestic product
divisions to different geographical areas), worldwide area structure (firms divide the world
into autonomous geographic areas and from then develop product divisions), and global
matrix structure (allows for differentiation along two dimensions - product division and
geographic area).
The purpose of this paper “Change in Unilever’s organizational structure after 2022” is to
analyze the changes made to Unilever’s organizational structures by 2022 by comparing with
those of previous periods, using above mentioned key elements that make up an
organizational structure. This paper aims to identify the benefits and challenges of each
structure, and to provide recommendations to Unilever on how to optimize their
organizational structure to improve performance.

2. Company Overview
2.1. Establishment of Unilever
Unilever was established in 1929 through the merger of two companies, Lever Brothers, a
British soap maker, and Margarine Unie, a Dutch margarine producer (Unilever's Official
Website, unilever.com). The merger was aimed at creating a larger and more diversified
consumer goods company, with a focus on leveraging the strengths of both companies in
different markets and product categories.


Unilever's purpose is “to make sustainable living commonplace.” This corporate statement
emphasizes the importance of sustainability in the daily lives of consumers around the world
through their use of the company’s consumer goods. The company’s corporate vision and
mission statements extend the business purpose to characterize the business, its
manufacturing operations, and its products.
2.2. Products and Markets
Unilever is a multinational consumer goods company with over 400 brand names in over 190
countries (Unilever's Official Website, unilever.com). The company offers a diverse range of

products across 5 brand families. Since 1 July 2022, Unilever's brands operate in five
Business Groups, each fully responsible and accountable for its strategy, growth, and profit
delivery globally:
● Beauty & Wellbeing:
○ Brands you may know: Dove, Sunsilk and Vaseline.
○ €12.3 billion turnover in 2022.
● Personal Care:
○ Brands you may know: Rexona, Dove, Lifebuoy and Axe.
○ €13.6 billion turnover in 2022.
● Home Care:
○ Brands you may know: OMO, Domestos, Cif and Comfort.
○ €12.4 billion turnover in 2022.
● Nutrition:
○ Brands you may know: Hellmann’s, Knorr, The Vegetarian Butcher and
Horlicks.
○ Circa €13.9 billion turnover in 2022.
● Ice Cream:
○ Brands you may know: Wall’s, Ben & Jerry’s and Magnum.
○ Circa €7.9 billion turnover in 2022.
Unilever’s global reach has expanded to more than 190 countries worldwide. The Geographic
footprint of Unilever can be easily found in Europe, Latin America, North America, and Asia
Pacific Africa.
3. Unilever's international business strategy
The choice of a firm's international business strategies has a direct impact on which model of
organizational structure the firm should adopt. Therefore, to analyze Unilever’s
organizational structure, this paper is going to provide an overview on the international
strategy the enterprise is applying.


When entering any new international market, multinational firms usually need to identify

which international business strategy it may apply. Commonly, the Bartlett and Ghoshal
model is used to identify international business strategies of a firm, which access 2 factors
when including pressure for local responsiveness and pressure for cost reduction on a foreign
firm. International business strategy includes objectives, measures and means to globalize
business, which assist firms to compete successfully in the international market.
According to the Bartlett and Ghoshal model, international business strategies are divided
into 4 types based on the level of pressure for cost reduction and pressure for local
responsiveness, which include: International Strategy, Global standardization strategy,
Multidomestic strategy and Transnational Strategy.

Figure 1: The Bartlett and Ghoshal matrix
In a broad view, Unilever has adopted both Multidomestic strategy and Transnational
strategy:
➢ Multidomestic Strategy: A multidomestic strategy is characterized by a high level
local responsiveness. In this approach, companies adapt their products, marketing strategies,
and operations to meet the specific needs and preferences of each local market.
Decision-making is often decentralized, giving subsidiaries or regional offices autonomy to
tailor their strategies to local conditions. The focus is on customization and adaptation to
local market dynamics, with less emphasis on global integration.
➢ Transnational Strategy: A transnational strategy seeks to achieve a balance between
global integration and local responsiveness. It recognizes the importance of standardizing
certain aspects of operations for efficiency and economies of scale, while also adapting to


local market conditions. In a transnational strategy, companies aim to leverage global
resources, knowledge, and coordination while allowing for customization and flexibility in
different markets. Decision-making can be centralized to some extent, ensuring consistent
strategic direction and coordination across regions.
Since the first days of internationalization, Unilever has adopted the multidomestic strategy
by customizing its products upon different markets. For example, for popular Lipton tea, in

the U.S market, Unilever used black tea why it used green tea for the Japanese market.
(Claudio U. Ciborra, 2021) This strategy helps the company to deal better with local demand
and adapt faster with changing taste and preferences of local consumers. However, there are
still several drawbacks to this strategy as it may significantly increase the R&D, production
and marketing costs. Firms using such a strategy are also unable to exploit the experience
curve, the economy of scale, which leads to high duplication of effort and inefficiency.
Therefore, nowadays, Unilever is more defined as following the transnational strategy due to
its diversity in product portfolio. Specifically, product lines like chemical products require
high standardization and little modification. In contrast, other product lines such as packaged
food demand more changes to suit local taste. This diversity contributes to adaptation of
Transnational strategy as there is both high pressure for local responsiveness and the need to
standardize products to cut costs. Additionally, Unilever also organizes its operation using a
transnational strategy. While the R&D function is synced and shared globally, other activities
including marketing, sales, distribution, and advertising are regionally responsive and
decentralized to suit particular markets. Therefore, Unilever is able to benefit from reduced
costs paired with a differentiation owing to transnational strategy.
4. Change in organizational structure of the company through periods
4.1 Organizational structure of Unilever before 2022
4.1.1 Vertical structure
Since establishment, Unilever has undergone several organizational structure adjustments.
Between 1950 and 1980, it had a decentralized organization. Decentralization provided the
company with advantages because it allowed them to adapt to local consumer demand. They
hired managers who were local to the area so that the company would have a thorough
understanding of the local market. Local managers were in charge of everything, including
marketing, sales, and distribution.
However, due to decentralization, Unilever lacks a unified corporate culture and vision. It
also resulted in product duplication, which leads to excessive expenses. Furthermore, they


placed less emphasis on globalization and were unable to develop worldwide brands.

Therefore, the company's structure was altered in 1990 to one based on business units. The
organization grew more centralized. Regional executives made the decisions, while local
managers had no authority to adjust them to fit local markets. They streamlined their
processes in order to get the products to market as soon as possible. This system also failed
since there was no cooperation between the headquarters, regional, and national groupings.
Their main issue was finding a correct balance between centralization and decentralization.
Therefore, after a few more times of modification in organizational structure, in 2005,
Unilever announced the program “One Unilever” which divided the company leader team
based on both product and regions (Unilever, n.d.). Accordingly, there were 4 people leading
4 product divisions, namely Food, Personal care, Home care and Refreshments; and there
were 8 regional managers who were in charge of separate areas.
With this new structure, Unilever experienced both centralization and decentralization.
Specifically, leaders of 4 product divisions helped to ensure the uniformity in product, taking
advantage of an unified worldwide brand and reducing the duplication in production process,
which illustrated the centralization of the company. Meanwhile, decentralization appeared in
the fact that 8 regional leads also have authority to make decisions relating to many aspects of
the business so that they could best adapt the global products to local areas, which improve
leadership and accountability for Unilever’s top executives. Besides, purchasing
Transnational strategy also points out Unilever’s strive to balance between centralization and
decentralization.
Such an organizational structure which is called “matrix” that will be discussed later in this
paper has been maintained until recently.
4.1.2 Horizontal
structure a, Domestic
level


Figure 2: Unilever’s Organizational Structure at domestic level before 2022
Unilever's horizontal organizational structure at the domestic level refers to how the company
organizes its operations in the homeland and domestic market. At this point, Unilever

typically organized its operations into various functional departments which were responsible
for their specific areas of expertise and provided support to the various divisions or business
units operating within the country. (Changellenge, Unilever: Towards a new organization)
Here are some of the common functional departments encompassed within Unilever's
organizational structure:
➢ Marketing: The marketing department is responsible for developing and
implementing marketing strategies to promote Unilever's products and brands in the
domestic market. This includes market research, brand management, advertising, and
customer engagement activities.
➢ Finance: The finance department handles financial planning, budgeting, accounting,
and reporting within the domestic market. It ensures proper financial controls,
manages investments, and supports decision-making by providing financial analysis
and insights.
➢ Supply Chain: The supply chain department oversees the flow of goods and services
from suppliers to customers within the domestic market. It manages logistics,
procurement, production planning, inventory management, and distribution to ensure
efficient and timely delivery of products.
➢ Research and Development (R&D): The R&D department focuses on innovation and
product development within the domestic market. It conducts research, experiments,
and tests to create new products, improve existing ones, and stay ahead of consumer
preferences and market trends.
➢ Human Resources (HR): The HR department manages various aspects related to
human capital within the domestic market. This includes recruitment, employee


training and development, performance management, compensation and benefits,
employee relations, and ensuring compliance with labor laws and regulations.
➢ Operations: The operations department is responsible for overseeing the day-to-day
operations and processes within the domestic market. It ensures operational
efficiency, quality control, productivity, and continuous improvement across different

functions and business units.
➢ Legal and Compliance: The legal and compliance department handles legal matters,
regulatory compliance, and risk management within the domestic market. It ensures
Unilever's operations adhere to local laws and regulations, protects the company's
intellectual property, and manages legal contracts and disputes.
➢ Corporate Affairs: The corporate affairs department focuses on managing the
company's reputation, stakeholder relations, and public affairs within the domestic
market. It handles external communications, government relations, corporate social
responsibility initiatives, and sustainability efforts.
These functional departments work together collaboratively, combining their expertise and
resources to drive Unilever's operations, strategies, and success within the domestic market.
However, it's important to note that the specific departments and their names may vary across
different regions and markets, as Unilever adapts its organizational structure to local contexts
and needs. Moreover, within each functional department, there may be further levels of
management, including department heads or managers overseeing specific functions. For
example, there may be a marketing manager responsible for developing and implementing
marketing strategies for Unilever's brands in the domestic market.
b, International level
As Unilever implements transnational international business strategy, they have also
developed an organizational structure that suits the strategy. Unilever employs a hybrid
structure that incorporates elements of both vertical and horizontal structures, commonly
known as a "Global Matrix" structure. Unilever's global matrix organizational structure is
designed to balance global coordination and local responsiveness. It combines elements of
both vertical and horizontal structures, allowing for effective collaboration and
communication across different functions, geographies, and product categories.
At the core of Unilever's global matrix structure are two key dimensions: product categories
and geographic regions. Unilever organizes its operations into different product categories,
such as personal care, home care, and foods and refreshments. Each product category is



overseen by a global executive or leadership team responsible for setting the overall strategic
direction and coordinating activities related to that category on a global scale.
Simultaneously, Unilever also divides its operations into geographic regions or markets.
These regions can be continental, such as Europe, Asia, or North America, or they can be
further divided into specific countries or clusters of countries. Within each region, there are
regional leaders who are responsible for overseeing operations, adapting strategies to local
market conditions, and driving performance in their respective regions. Decision-making in
Unilever's matrix structure is a combination of both top-down and bottom-up approaches.
Strategic decisions are typically made at the higher levels of management, such as the CEO,
executive directors, and divisional leaders. These decisions set the overall direction and goals
for the organization.
Overall, Unilever's global matrix organizational structure enables the company to leverage its
global scale and resources while maintaining a local market focus. It combines the strengths
of both vertical and horizontal structures to promote collaboration, integration, and efficiency
across different functions and regions, driving Unilever's success in the global market.
The global matrix organizational structure employed by Unilever offers several advantages
that contribute to the company's success in managing its global operations. Here are some
key advantages:
➢ Enhanced Collaboration: The global matrix structure promotes collaboration and
cross-functional integration. By bringing together employees from different
functions and regions, Unilever fosters a culture of collaboration, knowledge
sharing, and innovation. This allows for the exchange of ideas, best practices, and
expertise across departments, facilitating better decision-making and problemsolving.
➢ Flexibility and Adaptability: Unilever operates in diverse markets with varying
customer preferences and local dynamics. The global matrix structure enables the
company to be flexible and adaptable to local market needs. It allows for regional
teams to have autonomy and make decisions that are aligned with local
requirements, while also benefiting from the global scale and resources provided by
the centralized functions.
➢ Global Scale and Efficiency: Unilever's global matrix structure leverages the

company's global scale and resources effectively. It allows for centralized functions,
such as research and development, finance, and supply chain, to provide support and
expertise to the various product categories and geographic regions. This centralized


coordination ensures efficiency in resource allocation, procurement, and knowledge
sharing, leading to cost savings and optimized operations.
➢ Customer Focus: The global matrix structure enables Unilever to maintain a
customer-centric approach. With dedicated regional teams responsible for specific
markets, the company can tailor its products, marketing strategies, and customer
experiences to meet the unique needs and preferences of local consumers. This
customer focus allows Unilever to stay competitive and relevant in different markets
globally.
➢ Knowledge Transfer and Talent Development: The global matrix structure
facilitates knowledge transfer and talent development across different functions and
regions. Employees have the opportunity to work on cross-functional projects,
collaborate with diverse teams, and gain exposure to different markets. This
promotes professional growth, knowledge sharing, and the development of a diverse
skill set within the organization.
However, managing a global matrix structure can present challenges as followings:
➢ Creating complexity and ambiguity in roles and responsibilities: Employees may
face challenges in reporting lines, as they have to navigate dual reporting to both
functional and regional managers. This can lead to confusion and a lack of clarity in
decision-making processes.
➢ Slower decision-making due to the need for coordination and consensus across
different functions and regions. This may hinder agility and responsiveness to
market changes.
➢ Requiring effective communication and coordination mechanisms to overcome
potential conflicts or power struggles between functional and regional teams.
Without proper management, conflicts may arise, impacting collaboration and

hindering organizational effectiveness.
➢ Demands strong leadership and management skills to navigate the complexities and
dynamics of the organization.
4.1.3. Integrating mechanism
Integrating system is a tool for firms, especially MNCs, to coordinate between subunits and
ensure the flow of information. Integration mechanisms have a direct impact on effectiveness


of knowledge transfer in these organizations (López-Sáez et al., 2021). When the company is
large and involves a huge amount of tasks to delegate, it needs to determine upon which
mechanism will play a key role. The integrating system is evaluated based on 2 dimensions:
formal system and informal system.
Formal integrating system:
Firstly, the formal system indicates the way company members officially discuss work and
collaborate with each other. The higher the need for cooperation is, the more complex the
integrating mechanisms get. Formal system is categorized into 5 types that increase in
complexity and demand for cooperation, namely centralization, direct contact, liaison roles,
teams and matrix structure.
In the case of Unilever, the company is believed to be pursuing the model of Team and
Matrix structure in the formal integrating system. This is reasonable as Unilever’s
organizational structure has both product divisional structure and geographic area structure,
even when they have shifted more focus to divisional structure recently. Therefore, only
matrix formal integrating systems, in which all roles are viewed as integrating roles, is able to
solve the complexity of communication among subunits across borders.
However, matrix structures can become mired in a bureaucratic tangle that produces as many
issues as it solves. Matrix systems, if not adequately managed, can become bureaucratic,
inflexible, and conflict-ridden, rather than the hoped-for cooperation. For such a system to
function, it must be somewhat adaptable and supported by informal integrating processes.
(Wisdom Jobs, n.d.)
Informal integrating system: Knowledge network

Secondly, the informal integrating system also plays a key part in information transfer among
subunits inside a company. Informal integrating system is a knowledge network supported by
organizational culture that encourages teamwork and cross-unit cooperation. A knowledge
network is a network built on informal interactions between managers within an organization
and rather than formal organizational structure.
Unilever, as well as some other multinational companies that acquire factors of matrix
organization and have high need for integration, usually try to build its culture to support the
informal integrating network. The indication of a good informal integrating culture can be
seen in the firm's culture of collaboration and supporting technology.


In terms of Unilever’s collaboration culture, according to Culture 500 Ranking,
“collaboration” is the feature that is both the most discussed and ranked the highest by
Unilever’s employees. (MIT Sloan Management Review, n.d.). Furthermore, Unilever also
has stated: “In 2021, we introduced a set of global principles to guide how we can make best
use of our office spaces while giving our people flexibility and choice, which include
spending at least 40% of our time in the office to collaborate and connect with each other.”
Although these numbers do not emphasize teamwork between managers from different units,
these data still show Unilever’s encouragement towards knowledge sharing. This firm also
organizes large amounts of internal meetings, conferences and other knowledge sharing
systems equipped with modern technology to ensure the consistent flow of information.
4.2. Organizational structure of Unilever after 2022
On 25th January 2022, Unilever disclosed changes to its organizational structure that will
make the company's operations simpler and more category-focused. Analysts have
hypothesized that increasing pressure to accelerate expansion and innovation may have
contributed to Unilever's statement as an external pressure. These pressures have increased
recently since Trian Fund Management, an activist investment group led by Nelson Peltz has
started to target the company. After Unilever's failed $68 billion offer to purchase the
consumer health division of pharmaceutical behemoth GlaxoSmithKline PLC (GSK), Peltz
consolidated a stake of the firm in mid-January. Following the news of the hedge fund's

purchase of its shares, Unilever stock rose, possibly signaling increased investor interest in
significant changes at the company.
Is this the signal of divestitures to come? Analysts see investor requests for Unilever to
increase sales growth and concentrate on innovation as a sign that the business may sell
slower-growing units. The corporation appears to be well-positioned for this approach going
forward thanks to the reorganization plan. Particularly, the separation of ice cream into its
own division from nutrition—which will include ingredient lines, brands for healthy snacks,
and items for functional nutrition—indicates that Unilever may eventually sell off its ice
cream business. Compared to its Personal Care and Beauty & Wellbeing, the company's food
brands have a history of growing more slowly. According to a slight drop in share price after
the release, investors’ reaction to Unilever's restructuring news was muted. The new divisions
will all be headed by Unilever veterans despite the company's business reorganization and the
shift of some top executives. Investors can be doubtful of the restructuring plan's overall
effectiveness if new faces are not generating fresh strategies for expansion and innovation
(Investopedia, n.d.).
4.2.1 Vertical differentiation


Previously, the company operated following a matrix structure, so the management team
consisted of executives and presidents who took the lead on product segments to regional
segments. However, when the company announced changes to its structure in 2022, Unilever
minimized its lead team by focusing mainly on product division. The new organization model
will result in a reduction in senior management roles of around 15% and more junior
management roles by 5%, equivalent to around 1,500 roles globally (Unilever, n.d.). This
means decision-making power belongs to fewer people, especially, regional managers will
have less authority to make decisions. Therefore, it can be indicated that Unilever still
follows a mixed decentralization and centralization but there will be an increasing trend
towards centralization.
4.2.2. Horizontal differentiation
The business will reorganize around five distinct Business Groups instead of its present

matrix structure: Beauty & Wellbeing, Personal Care, Home Care, Nutrition, and Ice Cream.
Each of these entities will be “fully responsible and accountable for their strategy, growth,
and profit delivery globally”, said the company in a statement. In the announcement, Unilever
CEO Alan Jope said that with five category-focused Business Groups, the company will be
able to be “more responsive to consumer and channel trends, with crystal-clear accountability
for delivery.” He also emphasized that the company's growth remains the top priority and
these adjustments will support the pursuit of this (Unilever, n.d.).
At the domestic level, this structure is known as a functional structure, dividing the company
into focal areas. The five Business Groups, which encompass key brands and product areas,
are the main emphasis.
At the international level, Unilever has moved its former horizontal structure from matrix
structure to a more suitable one which is Worldwide product divisional structure. However
the new structure has its own advantages and drawbacks.


Figure 3: Unilever’s Organizational Structure at the International level after
2022 Advantages:
One of the primary advantages of a worldwide product divisional structure is its support for
innovation and product development. Each Business Group at Unilever runs practically
independently and is in charge of its own expansion, as we emphasized, which can lead to
greater product specialization and differentiation. This indicates that staff members who work
for each Business Group are more motivated to embrace their positions as a result of being
able to more clearly understand how their efforts affect the wider organization (Unilever,
n.d.).
The structure can also encourage positive competition among divisions of an organization,
particularly when compared to geographically-based structures (Nibusiness info). Divisional
managers can work more closely with their teams and foster tighter-knit groups. This can also
lead to improved cross-functional collaboration.
Moreover, by creating a clear responsibility for each product unit manager, the structure can
incentivize and motivate employees to work together towards meeting clear goals and

objectives specific to their division, which provides a greater accountability and the decision
making process can be quicker.
In addition, divisional managers are responsible for allocating resources and implementing
strategies related to their division's product line. This gives them greater control over budgets
and helps ensure that resources are being properly allocated and utilized.
Disadvantages:


The absence of regional support for Unilever's strategy is one of the drawbacks. The
organizational structure of the corporation has certain geographical components, but its
primary emphasis is on its Business Groups and the brands and products that are included in
them. Accordingly, depending on how each Business Group decides to run its operations,
there may be limited support for market-specific activities (Unilever, n.d.).
The second disadvantage of product divisional structure is that if some divisions are granted
considerable autonomy by the central firm, which could ultimately result in control loss.
Additionally, instead of the company's overall aims, each division pursues its own objectives
(Nasrudin, A. (2022)).
In addition, because each division of the organization operates as its own unit, there is likely
to be more bureaucracy, including additional meetings and reporting structures. This can slow
decision-making and hamper progress, particularly if there are disagreements between
divisions. (way2benefits.com. (n.d.)). Furthermore, the duplications in operation can also lead
to the extra cost when the firm buys from the same suppliers, for instance. (Nasrudin, A.
(2022)).
4.3. Comparison in Unilever’s organizational structure before and after 2022 and
further evaluation
4.3.1 Comparison between two periods
Unilever has recently announced a series of modifications to its organizational structure, with
the aim of streamlining operations and enhancing a more focused approach to its various
product categories. The new structure seems to be simpler and more category-focused in
comparison to that in the previous period. These changes are intended to simplify the

company's internal processes, foster greater efficiency, and enable Unilever to better meet the
evolving needs and preferences of its diverse consumer base. By reconfiguring the
organizational structure, Unilever seeks to create a more seamless and agile framework that
aligns closely with the specific requirements and dynamics of each product category,
allowing for more targeted strategies and optimized resource allocation. Through this
restructuring effort, Unilever aims to strengthen its market position, drive innovation, and
ultimately deliver enhanced value and satisfaction to its customers across the globe. We can
take a more in-depth look at the changes in organizational structure of Unilever between the 2
periods:
Report lines: In a matrix structure, employees report to both functional managers and project
leaders. Meanwhile, in a worldwide product divisional structure, employees report to


managers within their specific product division (Consumer Health, Pharmaceutical, Medical
Devices). Therefore, Unilever’s system can be more efficient and simpler to function.
Flexibility: The 2 kinds of structure provide flexibility in different sections. The matrix
structure is highly flexible, allowing for quick adaptation to changing business requirements
depending on the project requirements. On the other hand, when Unilever changed to the
worldwide product divisional structure, the firm possessed more flexibility within the product
division, but only within the constraints of the division's mandate.
Decision making process: Before the change, Unilever’s structure can be time-consuming
and cumbersome in the decision making process. With the new adaption of the product
divisional structure, Unilever’s decision making process is now more efficient and also
provides streamlining decision-making power to a select few within the division.
4.3.2 Comparison between the new organizational structure of Unilever and firms in
the same industry
In comparison to other firms in the industry, particularly Procter & Gamble (P&G), it can be
inferred that Unilever and P&G have exhibited different, or even contrasting orientations in
their organizational structure.
Firstly, the most remarkable contrast between these two firms is their shift in organizational

structure horizontally. Unilever recently announced a transition towards a structure organized
solely around business units. This shift signifies a move away from their previous matrix
structure and highlights a focus on streamlining operations and enhancing category-specific
strategies. By adopting a business unit approach, Unilever aims to foster greater
accountability and specialization within each product category, allowing for more efficient
decision-making and resource allocation. On the other hand, P&G has implemented the
Global Matrix structure within their organization since 2020. The Global Matrix structure
combines elements of both functional and divisional structures, aiming to balance global
coordination and local responsiveness. This organizational approach enables P&G to leverage
global scale and resources while accommodating the specific needs of regional markets. It
facilitates cross-functional collaboration, knowledge sharing, and efficient coordination
across different functions and regions.
These divergent approaches to organizational structure reflect the strategic priorities and
evolving business contexts of Unilever and P&G. Each approach is tailored to address the
unique challenges and opportunities faced by the respective companies in their pursuit of
sustainable growth and competitive advantage.


Second, Unilever has a relatively more decentralized organizational structure than P&G.
Unilever has a federative structure with regional managers having significant autonomy to
make decisions that are best suited to their markets. This allows Unilever to be more agile
and responsive to local market dynamics and consumer preferences. In contrast, P&G has a
firmly centralized command-and-control structure, with decision-making being more topdown. This makes P&G less flexible but enables it to have tighter control over its operations
and products.
In addition, the two companies have a slightly different mix of functions in their
organizational structures. For instance, P&G has focused more on its research and
development, with its R&D centers being responsible for creating new products and
technologies. Unilever, on the other hand, has a more diversified product line and has more
functions including IT, human resources, and supply chain management. (Week, M. (2007).
Procter vs Unilever)

Besides, another comparison to notice is the analogy and the divergence of Unilever and J&J
(Johnson and Johnson), another multinational corporation in the same field of consumer
goods. After the change in 2022, Unilever shares the same organizational structure with J&J,
which is the worldwide product divisional structure. This structure provides J&J with the
flexibility to tailor its operations to the specific needs of each product division, ensuring
faster product development and organizational growth within each product segment. In spite
of having the same structure, Unilever also enhances their system in terms of local control,
the agility in responding to regional preferences, and customizing the products based on local
consumer demand. (ULLAH, N. (2021). A Comparative Analysis between Unilever and
Johnson & Johnsons).
5. Conclusion
This paper examines Unilever's organizational structure and its evolution in response to its
international business strategies. With the flexible implementation of both multidomestic
strategy and transnational strategy, the organizational structure has shifted from a global
matrix structure and now to a world-wide product divisional structure. The new structure
focuses on product division and reduces management roles, increasing centralization and
decision-making power. Unilever encourages an informal knowledge network and a culture
of collaboration to promote teamwork and cross-unit cooperation.
The global matrix structure combines product categories and geographic regions to promote
collaboration, flexibility, global scale, customer focus, and talent development. However, it
can create complexity and ambiguity in roles, slower decision-making, potential conflicts,
and requires strong leadership and management skills. The new product divisional structure is
designed to enhance efficiency and agility by aligning closely with the specific requirements


of each product category. While it has benefits of supporting innovation and improving
communication and coordination between divisions, there are also potential drawbacks such
as limited regional support and slower decision-making.
Unilever's organizational structure reflects its commitment to balancing global integration
and local responsiveness, promoting collaboration and teamwork, and enhancing efficiency

and agility. The company encourages an informal knowledge network and a culture of
collaboration to promote teamwork and cross-unit cooperation. Unilever's new structure
simplifies operations and focuses on categories, increasing centralization and decisionmaking power, and promoting efficiency and agility. However, potential drawbacks include
limited regional support and slower decision-making. Overall, Unilever's organizational
structure aims to balance the advantages of global integration and local responsiveness while
promoting collaboration and enhancing efficiency and agility.
During the research process, we have limited insights into the internal structure of Unilever
and there may be some gaps in our understanding. Therefore, we would greatly appreciate
any contributions and feedback on this paper from PhD Nguyen Hong Hanh.

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