Unilever has undergone various organizational structure changes since its inception. It initially started with a decentralized structure from 1950- 1980. Decentralization gave the company an advantage as they had the flexibility to change according to local consumer demand. They appointed managers who were local to that place so that the company had a good understanding of local market. The local managers were responsible for everything from marketing, sales and distribution.
But Decentralization led Unilever to not have any common corporate culture or vision. It also led them to duplication of products, resulting in high costs. Moreover, they had less focus on globalization and couldn’t create global brands. In 1990 the company changed its structure based on business groups. The company became more centralized. They streamlined their operations so that they could get the products onto the market quickly. This structure too failed as they were no coordination between head office, regional and national groups.
The decisions were made by regional heads and local managers had no power to change them to suit to local markets. Finding a right balance between centralization and decentralization was their major problem. In 1999, Unilever decided to adopt a “Path to Growth Strategy”. They realized that they had a broad range of products and never had any focus on ones in which they were one among the top in market. So they switched to a structure based on global product divisions. Unilever was split into two separate global units namely Food and HPC headed by two executive directors.
But they still had problems as the company had 2 separate chairmens in different countries which led them to operate as separate entities (Unilever NV and Unilever PLC. ). In 2005 as part of “one Unilever” Programme they scrapped this management structure by naming Patrick Cescau as single chief executive of Unilever. The company started to operate with matrix structure with multiple lines of authority based on product, regional and functional divisions. The company currently has 4 product divisions namely Foods, Personal Care, Home care and Refreshments headed by 4 different people.
They have got 8 leads based on regional splits heading North America, Europe, North Asia, South East Asia and Australasia, South Asia, Latin America, Africa (Central Africa and South Africa) and Russia/North Africa and Middle East. In terms of functional division there is a finance, marketing, R&D and HR departments. This simplified management structure has given all the Unilever top managements greater accountability and better leadership. It has helped them to eliminate duplication, take faster decisions, target on specific products and capture the global and local market.
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