Executive summary:

Unilever is the one of the well-known FMCG Company in the world. In the present research study it is identified that firm is facing cost related problem in its business. In order to solve this problem firm can adopt two approaches business process reengineering and financial modeling or cost monitoring approach. Firm face cost related problem because of inflation factor and consistent fluctuation in the oil prices. By following mentioned approaches firm can reduce and control cost in its business.

 

Introduction:

Unilever is the one of the well-known company in the fast moving consumer goods sector. It is the UK based company and today operates its business across the globe. In the current research study, the operational objectives of the business firm are given and operation management of the firm is explained in detail. Apart from this, techniques to control costs the business is also explained in detail in the report. At end of the report, recommendation section is prepared and finally conclusion section is given.

 

Operational objectives:

The operational objective of the Unilever is to control costs its business. It is very important to control costs the business because keep on offering its products at the lowest price to the customers. In case cost elevate then Unilever observes low profit in its business. Thus, cost control is the major operational objective of the business firm and in this regard it needs to adopt a cost control strategy in its business. There are already number of steps that firm took in its business to control costs, but still also firm face cost control related problem in its business (Laasch and Pinkse, 2020).

Operation management:

Unilever is operating at large scale and it has a large supplier base in its business. The firm maintains control on cost in its business, but due to many reasons cost elevate in the business. Reasons are increasing in fuel price due to elevations in the fuel price cost of logistics, increased in the business and raw material cost also increased which directly lead to elevations in the production cost in the business (Freudenreich, Lüdeke-Freund and Schaltegger, 2020).

 

Technique to control cost in operation management:

Business process reengineering: It is the approach that is used by the large size firms to control costs the business. Under this approach business operations are analyzed in proper manner and very deeply. In this way, an activity where higher cost is incurred is identified. Moreover, short route also identifies through which business activities can be performed in short duration and cost can be minimized. In respect to this varied technique are used like transportation problem approach that is commonly used technique in the operational management by using which transportation cost is minimized in the business (Pieroni, McAloone and Pigosso, 2019).

Financial modeling or cost estimation: It is another important technique that is used for the cost control in the business. In this technique first of all projections are made based on the past data. In this regard, some assumptions are made in the business and accordingly projections are made. Assumptions are made in respect to the future demand and market conditions and accordingly estimations are made about the cost of the business (Ponte, 2019).

Issues in international operations:

Unilever is facing cost related issues in its business. Due to this reason business firm is forced to elevate its product price in the business. If it did not increase the price of its products then it earns less profit in its product line. This is the issue that the firm has consistently faced in its business (Sinulingga, 2019).

 

Recommendation:

On the basis of the above discussion, it is recommended that business firm must follow both approaches in its business, namely business process reengineering and financial modeling or cost estimation. There are reasons behind recommending both these approaches to the business firm. Business process reengineering method cannot be used in the business on a daily basis because it is a time consuming process (da Silva Lopes, Casson and Jones, 2019).

 

Conclusion:

On the basis of the above discussion, it is concluded that it is very important for the firms to control costs the business. Unilever is facing cost related issues in its business. There are two options for the firm either it can increase the price of its products or can control or reduce costs in the business. If the firm increase price of the product then rivals can shift to the rivals. Thus, in every condition Unilever will need to adopt a cost control strategy in its business. In this regard firm can adopt business process reengineering and financial modeling or cost monitoring approach in its business. Both approaches are recommended to the business firm.

 

REFERENCES

Books and Journals

da Silva Lopes, T., Casson, M.. and Jones, G. 2019. Organizational innovation in the multinational enterprise: Internalization theory and business history. Journal of International Business Studies. 50(8).1338-1358.

Freudenreich, B., Lüdeke-Freund, F..andSchaltegger, S. 2020. A stakeholder theory perspective on business models: Value creation for sustainability. Journal of Business Ethics. 166(1).3-18.

Laasch, O..andPinkse, J. 2020. Explaining the leopards’ spots: Responsibility-embedding in business model artefacts across spaces of institutional complexity. Long Range Planning. 53(4). 101891.

Pieroni, M. P., McAloon, T. C..andPigosso, D. C. 2019. Business model innovation for circular economy and sustainability: A review of approaches. Journal of Cleaner Production. 215. 198-216.