Kyoko OGURA

Julian PETRESCU

Zhanfu YU

Alan ZELLER

Making of StrategyINSEAD, April 2009

“Painting Dubai yellow”

The Unilever Lipton plant in Dubai

Agenda

• Unilever and Lipton introduction

• 1998: The Decision of the Dubai Plant (Our guess)

• 2004: The Dubai plant expansion (Our guess)

• Factory level product innovation (From interview)

• New Decision making process (From interview)

• Interesting findings

Unilever & Lipton

•Lipton and UnileverUnilever: global giant established in 1930

400+ brands!

F&B, Home & Personal care

13 billion $ brands

Lipton: 1890’s in Glasgow

Together since 1929, complete acquisition in 1972

•Tea producers worldwide•Unilever (Lipton)

•Tata Tea (Tetley)

•Twining

•Dilmah

Unilever & Lipton… in Dubai

Until 1998 production for Arabia sourced from the UK

New location in Jebel Ali between tea growing areas and large

tea markets

Site originally envisaged to supply to local markets only

1998-2004: Steady growth, focus on systems, quality, high

efficienciesGlobal footprint

1998：The Decision of Dubai plant (Guess)

Trigger

Framing

Alternatives

Selection

•Low share of revenue/profit contribution from AMET due to

consistently low investment

• “Oil wealth” posed as an attractive development tide to ride

•Executive Committee of the Board raised the initiative to

emphasis more on AMET market

•Business Group Presidents were called up. Jeff Fraser (head

of Central Asia & Middle East) took lead

• Jeff led internal team to investigate alternatives; actively talk

with other Business Group Presidents

•Jeff led the internal communication with Director of food

category, Financial Director and Strategy Director

•Final approval by the Executive Committee

To be confirmed during the new round of interview

2004: Plant Expansion Decision – Our Guess

Trigger

Framing

Alternatives

Selection

•Deteriorating Performance

•One Unilever

•Innovation, Rationalization and Concentration

•UEx (Executive Team) meeting

•Short listing target brand & market

•Lipton

•Omo

•Do Nothing

•Competitive Landscape

•Emotional Attachment

According to the plan manager, the extension was pre-planned. To be

confirmed during the new round of interview

Product Innovation

Trigger

Framing

Alternatives

Selection

•Competitor introduces foil tea bag

•Altug: “Our (better) product is not as well

packaged, so…”

•Do nothing

•Ask for permission

•Invent

•Respond to defend Lipton’s true quality in the

marketplace: create a similar product in 8 weeks!

Decision Making

Trigger

Framing

Alternatives

Selection

•New CEO

•Low competitiveness

•Slow decision => no innovation, late adaptation

•1600 brands: Most decisions traditionally made by

the Marketing Department at local level

•Too many brains

•Continue customized and local brands

•Focus on innovation

•Decision making at head office level

•Create powerful regional clusters

•Focus on USD 1bn global brands

Interesting findings

Marketing

Vs

Production

Central, reg

ional, or

local

authority

Strategy

Vs

Production

Based on our online research and interview with the factory Manager.

• Traditionally, Marketing

is the key decision-

maker in FMCG

companies

•In this case, the

factory has significant

autonomy to adapt

higher decisions to

local conditions

•Plant management

is not involved at all

in the strategy

process and has a

production focus

•Surprised to notice

that most decisions

are made at an

intermediary level

(Singapore)