Multinational Corporation: of Unilever - Case Study Example

Running Head: MULTI NATIONAL CORPORATION – UNILEVER Multinational Corporation – Unilever Submitted by XXXXXXX Number: XXXXXXX XXXXXXXX University of XXXXXXXXX Introduction: The 21st century has brought about a number of challenges for the numerous multinational companies around the world. This paper aims at discussing the challenges faced by a world famous company, Unilever. The paper will provide a brief introduction to company following which the challenges faced by the company will be discussed. The paper will also discuss the response of the company to these challenges and how Unilever has been able to overcome the issues in hand. Unilever has grown over the years and has built a brand image for itself and is now recognized worldwide. A brief discussion of the case of Proter and Gamble has also been included. This helps in providing a comparison between the two companies and how each of them differ from the other. About Unilever: Unilever was started way back in 1930 as a result of a merger between the Lever Brothers and Margarine Unie. The company has grown over the years and currently the company employs as many as 163,000 people around over 100 countries worldwide. The company has a worldwide turnover of almost €39.8 billion (Unilever, 2010). The company has spread the reach of its products to almost over 170 countries across the world and a number of these countries not only sell the products but also manufacture them. Almost 75% of the sales of the company are from the 25 top brands that the company has as a part of their portfolio. Unilever has been recognized to be the global leaders in the foods sector and it includes various foods like savoury, dressings, tea, ice creams, and also spreads. The company has also been recognized to be leaders in the Mass Skin Care and Deodorants and has also created a mark in the Home and personal care sectors (Unilever, 2010). The company spends a lot of money on the research and development and has been noted to have spent as much as €891 million in 2009. Unilever has worked towards building its manufacturing units across over 264 sites worldwide and the company aims at ‘for improved performance on safety, efficiency, quality and environmental impacts, working to global Unilever standards and management systems’ (Unilever, 2010). Unilever has also been actively participating in the community and has invested as much as €89 million in the community projects for the financial year 2009 – 2010. Unilever has been able to develop a company with loads of innovativeness and dedication and has been able to get recognized as a global company with a very strong brand portfolio and with excellent relationship with the retailers. The company has also been able to reach the economies of scale which in turn has been a major benefit for the company as it helps in the costs management. Unilever has been able to become the word leaders in a number of products and sectors. The company faces major competition from P&G, Kraft and Nestle. About Procter and Gamble: P&G is recognized to be one of the leaders of global consumer goods and was founded in 1837 in Cincinnati by William Procter. The company has over 250 brands and is spread across over 130 countries. P&G’s major focus is on the Fabric and home care products and provides as much as 30% of P&G’s turnover worldwide and about 37% of the profits of the company. The company currently bases all of its business on the home products. The company has expanded its reach and is well known across the globe (Science - in - the -box, 2010). P&G’s Sustainable Development: Unlike Unilever, P&G has developed a strong and focused set of strategies which include a) Environmental Protection, b) Economic Development and c) Social responsibility. The company works on product innovation and ensures that all products are developed based on consumer understanding and science. The main aim is to ensure that consumers get the best. A major focus of the company is to work ethically and provide the customers with a good range of products for the daily use. P&G has been able to keep up to its commitmentand social responsibility. The company focuses on gaining a holistic end to end view from the manufacturing to finished products and also ensures to keep the employees engaged and interactive in the decision making. There is a high level of focus on the social responsibility and a number of steps have been taken to build the social responsibility by the corporate are many and very effective overall. Challenges Faced by Unilever: In the current times, Unilever has been faced with a number of issues that relate the company and its customers. The company has been noted a number of issues from the side of the customer as well. With the growing issue and awareness of the global warming and the importance that is given to reduction of waste and saving planet Earth, the companies are faced with a number of issues. There are a number of organizations which work towards building a better world and work towards stopping the multinational corporations from spoiling our world. One of the best examples of these includes the issue that has been brought up by Greenpeace about Unilever. Greenpeace is an independent global campaigning organization which works towards changing the attitude and the behavior of the companies and mainly works towards the conservation of the environment. The organization does this by working towards addressing one of the major issues of the world, i.e. climate change. The organization also works towards defending the oceans by challenging the destructive fishing, protecting the ancient forests, working towards the elimination of all destructive items like nuclear weapons, hazardous chemicals, and others which are being produced by countries around the world. The organization also works towards the social responsible farming which in turn helps in the reduction of the harmful engineered organisms. Greenpeace set up a campaign against Unilever for almost two years. The main intension of the campaign was to get the company to retreat all of the mercury dumping into the hill station of Kodaikanal in India. The company was accused of double standards and was noted for the negligent behavior in India. The Indian subsidiary of the company, Hindustan Lever, has been noted to dump several amounts of highly toxic mercury into the tourist resorts. The company has also been noted to dump the toxic mercury in other areas of Pambar Shola in Tamil Nadu in South India, which has led to a lot of contamination in these areas. The main concern has been the impact of the toxic wastes on the people residing within these areas. Greenpeace explains, ‘Mercury is a neurotoxin; it affects the nervous system. Long- term exposure (usually work-related) of inhaled vapors is generally more dangerous than a one-time short exposure. Symptoms may occur within weeks but usually develop insidiously over a period of years. Neurologic symptoms include tremors, headaches, short- term memory loss, uncoordination, weakness, loss of appetite, altered sense of taste and smell, numbness and tingling in the hands and feet, insomnia, and excessive sweating. Psychiatric effects are also seen after long-term exposure’ (Green Peace, 2003). The impact of the toxic wastes has been very high on the residents of these areas and there was a need to find a quick solution for this issue (Green Peace, 2003). The impact of the toxic wastes on the ex employees of the company was surveyed by Dr Mohan Isaac and the survey indicated number of symptoms of the mercury exposure and this also called for a thorough investigation into the matter and the possibility of health issues (Green Peace, 2003). The Greenpeace organization also took some strong steps like the ‘Return to Sender’ campaign and worked with the Tamil Nadu government to clear out the dump site from the broken thermometers and the elemental mercury. The organization also managed to ‘return to sender’ a consignment with almost 1416 drums (Green Peace, 2003). These contained almost 228.623 tonnes of glass cullets, 17.53 tonnes of the glass cullets that has been returned from the scrap yard, almost 91 bottles of mercury, which weighed as much as 3073.3kgs, 11.7 tonnes of semi finished products, 28 tonnes of the sludge from the effluent treatment plants and also almost 1416kgs of the finished goods (Green Peace, 2003). As explained by one of the campaigners, ‘The return of this toxic waste to the country of origin is unprecedented and will send a strong signal to multi-national corporations that third world communities are no longer prepared to be the dumping ground for obsolete toxic technologies and waste’ (Green Peace, 2003). Greenpeace also explains that, ‘The controversial Hindustan Lever factory was exported to India in 1983 after it was shut down in Watertown, New York. The factory imported all its mercury, primarily from the United States, and exported all products to the U.S. based Faichney Medical Company. Since March 2001, HLL has been forced to suspend its operations’ (Green Peace, 2003). The organization has taken a number of steps to ensure that Unilever’s unethical behavior is stopped and the nature is not destroyed. A number of other organizations and corporate news like corporate watch also highlighted this issue and brought out the fact that the company claims to focus on the safety of the operations and the environment in all the places it operates, however this was not seen to happen in India. The report from Corporate Watch also brought out that Unilever’s policy clearly states, ‘exercise the same concern for the environment wherever (it) operate(s), ensure the safety of its products and operations for the environment and provide whatever information and advice is necessary on the safe use and disposal of (its) products’ (Corporate Watch, 2010). However the company did not seen to offer any protection to the employees working in the Indian subsidiary although a number of the employees were clearly affected by the exposure to mercury. The website also brings out the ill – effects of mercury and highlights, ‘Mercury is highly poisonous and exposure to even the small amount through air, water or skin, exerts severe effects on the central nervous system (brain) and kidneys. Foetuses and young children are particularly vulnerable to poisoning by mercury’ (Corporate Watch, 2010). Unilever’s Response: In response to the allegations from Greenpeace Unilever had submitted a number of responses. The company was mainly accused of “Unilever refuses to take full responsibility for clean up and compensation. Mercury poisoning scandal in Kodaikanal, India continues; Unilever refuses to take full responsibility for clean up and compensation” (Unilever - A Summary of Stakeholder Concerns and Our Response, 2010). Unilever’s response to this has been steady saying that the company has not used the back of the factory as a dump site for the broken thermometer glass as well as the mercury. The company focuses on the fact that it was incorrect and that the company followed all the ethical laws and did not in any way contaminate the environment. Unilever also to a great extent brought out that the soil in Kodaikanal was not infected or affected by the company and only a few spots within the factory premises was affected and needed remediation. Apart from this Unilever posed that no other part of the city was impacted by the industrial waste and the borken glass and mercury from production of the thermometers. This was all as a response to the questions that had been brought up by the stakeholders. Unilever also responded saying that it had sought the permission from the Tamilnadu Pollution Control Board for the remediation of the area of land within the factory premesis and that in early June 2002, the company intended to redem the land to high standards and intended to bring the land up to a residential standard which was referred to as ‘Dutch Standard’ (Unilever - A Summary of Stakeholder Concerns and Our Response, 2010). The Tamilnadu Pollution Control Board gave Hindustan Unilever the permission to start the remediation and in July 2008, the company had started work on the pre – remediation. The remediation project is expected to be completed by November 2010. Unilever also brought out that in a third party study, it was clear that the health of the employees were in no way affected by the mercury exposure and the working environment was absolutely safe. The company also emphasises on the fact that the company always considers the environment within which it functions and that the company’s code of conduct was to ensure that there was responsible behaviour in all the places of operations. The company also focused its view that all operations were based on continous improvements and that all efforts were to ensure that all operations were based on the interest of all and that Unilever ensures a safe and healthy work environment for all employees. There has been a number of steps that have been taken by the company since the issue has arised about the mercury therometers and the illegal dumping. Hindustan Lever Limited now Hindustand Unilever has stopped the manufacturing operations in the factory in March 2001. The company has also ensured to get a complete site assessment and the risk assessment for the site. However all the reports for all assessments clearly show that there was no adverse effects on both the environment as well as the health of people. The only affected area was the soil in a few parts of the factory which needed to be remediated. The company has also ensured that the materials that use mercury had been sent back to USA for proper recycling and disposal. The company has also gained approval from the Tamilnade Pollution Control Board and have started work on the soil remediation. The company’s work on the soil remediation is expected to take as much as 28 months to complete remediate the soil within the factory premises. The Hounarable Madras High Court also appointed an expert committee which was to assess the health of the ex employees and also check if the claims of the mercury affects was true. This report was submitted in December 2007 and there was no evidence in the report that the ex employees have faced health issues due to the exposure to mercury within the factory (HUL, 2010). In a report by Jayaraman, 2001, there is also evidence that the company has been using its people for exhuming the wastes including mercury which was found within the factory premises from the unlined pits (Jayaraman, 2001). Jayaram also explaines, ‘Worker testimonies and video footage available with Greenpeace confirm that the wastes were exhumed by workers without appropriate protective gear. The companys response does not indicate whether there were any independent witnesses present to supervise the operations. Neither does it appear that the Company sought the permission or presence of the Tamilnadu Pollution Control Board for the operations’ (Jayaraman, 2001). However to this there has been a response from Unilever which states that, post the suspension of the factory and the manufacturing processes, the employees has been used to work towards the housekeeping of the company and also towards the material balancing of the company. The company also claims that the customs authorities had been notified about the removal of the non mercury glass from the soil within the factory premsis which had been buried in the 80s (Unilever - Kodaikanal India, 2010). Comparison of Unilever and P&G: The two companies are major players in the market. Unilever has lead its name to be brought down due to not taking initiatives to truly improve the society and has left a lot of wastes in the environment and also has impacted the employees working for the company. P&G on the other hand has worked not only towards improving the products and services as per the needs of the customers but have also contributed huge sums of money, time and efforts in improvement of millions of lives of children across the world (Corporate Watch, 2010, P&G, 2010). The table below provides a brief overview of the two companies. Unilever – ‘Bad Guy’ P&G ‘Good Guy’ Claims to focus ensuring a safe working environment for all people P&G ensures that the company provides a major contribution for the society Claims to correctly dump all the wastes however has a large dump site of mercury wastes in beautiful hill station of India The company has started a very effective and world changing process Does not take the matter seriously, however shows to the world like actions are being taken The company has started a very strong campaign for educating children across the world The company has not only dumped harmful wastes into the environment but has also disturbed the lives of many living around the area It keeps up to its promises and caters to the basic needs of the public Conclusions: The world is changing and people are becoming very aware of their surroundings. Number of aspects of business which were allowed in the 20th century are now not acceptable in the 21st century (Savitz & Weber, 2006). Take the example of Unilever and Hindustan Lever, it was considered to be fine if the company dug up the soil and buried the mercury contained glass or even dumped in the city. However in the current times, people across the world are becoming more aware of the issues of the mercury and its effects on the health. Businesses now need to concentrate on the health and safety of the employees and also ensure that in no ways are the operations of the company causing any negative impact on the environment as a whole (Lawrence & Weber, 2010). It is important to realize that the success of the company does not only rely on the internal aspects of the company or the economic conditions that the company operates in but is also based on the company’s contribution to the society and the corporate social responsibility that the company shows (Castro, 1996). In the case of Unilever, it is clear that there have not been any clear steps that the company has taken. Also to play down the issues that the company has worked in violation of the environmental acts, Unilever has placed more importance on the promotion of the issue of consumerism. As seen in the website of the company, Unilever has paid more attention to the issue of excessive packaging and the management of wastes and has spoken less about the issue of the Kodaikanal issue of dumping (Unilever - Approaches and issues, 2010). This type of promotions by the multinationals clearly is not a healthy behavior. As explained by Corporate Watch, ‘Taking the ecologically destructive effects of consumerism –aggressively promoted by multinationals like Unilever- into account, all efforts of these companies to ‘save the environment’ can only be regarded as greenwash practices’ (Corporate Watch, 2010). It is important for the multinationals to now realize that external elements like the environment, economics and the social challenges need to be considered to ensure that they are successful overall. A successful company is one which follows all the laws and regulations and manages all the aspects of the business equally well. References Castro, B. (1996). Business and Society: A Reader in the History, Sociology, and Ethics of Business . USA: Oxford University Press. Corporate Watch. (2010). Unilever. Retrieved March 29, 2010, from Environmental pollution : http://www.corporatewatch.org.uk/?lid=260#env Corporate Watch. (2010). Unilever. Retrieved April 19, 2010, from http://www.corporatewatch.org.uk/?lid=260#env Green Peace. (2003, April 17). Return to Sender: Unilever ships mercury waste back to USA from India. Retrieved April 2, 2010, from GreenPeace: http://www.greenpeace.org/international/press/releases/return-to-sender-unilever-shi HUL. (2010). Update on Progress of Environmental Issue of Erstwhile Kodaikanal Thermometer Factory in India. Retrieved April 2, 2010, from http://www.hul.co.in/Images/Kodaikanal_Thermometer_India_tcm114-195572.pdf Jayaraman, N. (2001, October 4). Inconsistencies Galore A Timeline on Unilevers Mercury Dumping in India. Retrieved March 29, 2010, from CorpWatch: http://www.fsa.ulaval.ca/personnel/VernaG/EH/F/cause/lectures/unilever_mercure_Inde.htm Lawrence, A., & Weber, J. (2010). Business and Society: Stakeholders, Ethics, Public Policy . McGraw-Hill/Irwin. P&G. (2010). P&G Sustainability . Retrieved April 17, 2010, from P&G and Shiksha: Increasing Access to Education in India: http://www.pg.com/en_US/sustainability/social_responsibility/shiksha.shtml Savitz, A. W., & Weber, K. (2006). The Triple Bottom Line: How Todays Best-Run Companies Are Achieving Economic, Social and Environmental Success -- and How You Can Too. Jossey-Bass. Science - in - the -box. (2010). About P&G. 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