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Principles of Economics/PPF
The PPF
The Production possibilities curve or frontier (PPF) is a
graphical means of depicting the concept of diminishing returns and
opportunity costs. The basic quandary here is how to use a limited
(hence, scarce) set of resources to satisfy infinite wants by as much as
possible.
A single PPF curve is for an unchanging set of resources. If the
resources change, so does the PPF. Insufficient resources for a second
product mean a vertical/horizontal curve; insufficient resources for a
single product means a curve that lies on the origin (these are trivial
cases).
A two-dimensional PPF works with two products, each of them
taking an axis (which one doesn't matter). The curve, or frontier, is
formed from all the possible combinations of resources that produce the
most products. The definition of most products is indeterminate due to
the subjective value associated with both; hence, the curve of points. All
points along the curve are productively efficient, but depending on
society's goals, only one point will be allocatively efficient.
All points outside of the curve are unattainable (because they
require more resources than are available) without trade with an
external producer (such as is the case with international trade). All
points within the curve are attainable but productively inefficient.

The Basic Frontier

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For smaller entities such as individuals, the PPF curve will be

almost exactly a straight line (at least for the majority of goods), which
will reflect the budget constraints. However, for large entities that make
a noticeable difference on the quantity of resources available,
diminishing returns become apparent. Here is the PPF curve for such an
entity. Note that at high values of either good, much of the other good
must be sacrificed for a bit more of that one good.

Shifts in the Frontier

When a change in the economy causes more or less of a good to
be produced when others are held constant, that is considered a shift in
the one good's production possibility. The positive version shifts the
frontier outward along the axis the good is placed at, so here an increase
in good 1's production possibility stretches the PPF along the x axis. It is
possible for that to actually increase production of good 2, depending on
how society apportions its resources.

Growth in the Frontier

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General economic growth increases all of the available goods (both

in this case). The growth does not have to be proportionate, nor even
hold the same shape, as this graph demonstrates.

Flattening of the PPF

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When a technological advance makes it relatively easier to

exchange between two goods, a flattening of the PPF occurs as is
demonstrated in the graph. When a firm takes a smaller percentage of
industry market share, its PPF also flattens because its actions have a
less significant effect on the total resource/good supply to the point that
it has to exert fewer and fewer sacrifices of one good to obtain the next
unit of the other good. It should also be easy to imagine situations when
the opposite is true.

Production-possibility frontier
In economics, a production-possibility frontier (PPF), sometimes
called a production-possibility curve or product transformation curve, is
a graph that shows the different rates of production of two goods and/or
services that an economy can produce efficiently during a specified
period of time with a limited quantity of productive resources, or factors
of production. The PPF shows the maximum amount of one commodity
that can be obtained for any specified production level of the other
commodity (or composite of all other commodities), given the society's
technology and the amount of factors of production available.
Though they are normally drawn as concave (bulging out) from the
origin, PPFs can also be represented as linear (straight) or bulging in
toward the origin, depending on a number of factors. A PPF can be used
to represent a number of economic concepts, such as scarcity of
resources (i.e., the fundamental economic problem all societies face),
opportunity cost (or marginal rate of transformation), productive
efficiency, allocative efficiency, and economies of scale. In addition, an
outward shift of the PPF results from growth of the availability of inputs
such as physical capital or labor, or technological progress in our
knowledge of how to transform inputs into outputs. Such a shift allows
economic growth of an economy already operating at full capacity (on
the PPF), which means that more of both outputs can be produced
during the specified period of time without reducing the output of either
good. Conversely, the PPF will shift inward if the labor force shrinks, the
supply of raw materials is depleted, or a natural disaster decreases the
stock of physical capital. However, most economic contractions reflect
not that less can be produced, but that the economy has started
operating below the frontier—typically both labor and physical capital

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are underemployed. The combination represented by the point on the

PPF where an economy operates shows the priorities or choices of the
economy, such as the choice between producing relatively more capital
goods and relatively fewer consumer goods, or vice versa.

Indicators Efficiency

An example PPF with illustrative points marked

Main articles: Productive efficiency and Allocative efficiency
A PPF shows all possible combinations of two goods that can be
produced simultaneously during a given period of time, ceteris paribus.
Commonly, it takes the form of the curve on the right. For an economy
to increase the quantity of one good produced, production of the other
good must be sacrificed. Here, butter production must be sacrificed in
order to produce more guns. PPFs represent how much of the latter must
be sacrificed for a given increase in production of the former.
Such a two-good world is a theoretical simplification, necessary for
graphical analysis. If one good is of primary interest, all others can be
represented as a composite good. In addition, the model can be
generalised to the n-good case using mathematics.
Assuming that the supply of the economy's factors of production
does not increase, making more butter requires that resources be

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redirected from making "guns" to making "butter". If production is

efficient, the economy can choose between combinations (i.e. points) on
the PPF: B if guns are to be prioritised, C if more butter is needed, D if an
intermediate mix is required, and so forth.
Hence, all points on the curve are points of maximum productive
efficiency (i.e., no more output can be achieved from the given inputs);
all points inside the frontier (such as A) are feasible but productively
inefficient; all points outside the curve (such as X) are infeasible with the
given resources and thus unattainable in the short run. A point on the
curve satisfies allocative efficiency, also called Pareto efficiency, if, for
given preferences and distribution of income, no movement along the
curve or redistribution of income there could raise utility of someone
without lowering the utility of someone else.

Opportunity Cost

Increasing butter from A to B carries little opportunity cost, but for

C to D the cost is great.

Main article: Opportunity cost

If there is no increase in productive resources, increasing
production of a first good entails decreasing production of a second,
because resources must be transferred to the first and away from the
second. Points along the curve describe the trade-off between the
goods. The sacrifice in the production of the second good is called the
opportunity cost (because increasing production of the first good entails

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losing the opportunity to produce some amount of the second).

Opportunity cost is measured in the number of units of the second good
forgone for one or more units of the first good.
In the context of a PPF, opportunity cost is directly related to the
shape of the curve (see below). Unless a straight-line PPF is used,
opportunity cost will vary depending on the start and end point. In the
diagram on the right, producing 10 more packets of butter, at a low level
of butter production, costs the opportunity of 5 guns (as with a
movement from A to B). At point C, the economy is already close to its
maximum potiential butter output. To produce 10 more packets of
butter, 50 guns must be sacrificed (as with a movement from C to D).
The ratio of opportunity costs is determined by the marginal rate of
transformation.

Marginal Rate of Transformation

Marginal rate of transformation increases when the transition is

made from AA to BB.
The slope of the production-possibility frontier (PPF) at any given
point is called the marginal rate of transformation (MRT). It
describes numerically the rate at which output of one good can be
transformed (by re-allocation of production resources) into output of the
other. It is also called the (marginal) "opportunity cost" of a commodity,
that is, it is the opportunity cost of X in terms of Y at the margin. It

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measures how much of good Y is given up for one more unit of good X or
vice versa. Since the shape of a PPF is commonly drawn as concave from
the origin to represent increasing opportunity cost with increased output
of a good. Thus, MRT increases in absolute size as one moves from the
top left of the PPF to the bottom right of the PPF.
The marginal rate of transformation can be expressed in terms of
either commodity. The marginal opportunity costs of guns in terms of
butter is simply the reciprocal of the marginal opportunity cost of butter
in terms of guns. If, for example, the (absolute) slope at point BB in the
diagram is equal to 2, then, in order to produce one more packet of
butter, the production of 2 guns must be sacrificed. If at AA, the
marginal opportunity cost of butter in terms of guns is equal to 0.25,
then, the sacrifice of one gun could produce four packets of butter, and
the opportunity cost of guns in terms of butter is 4.

Shape
The production-possibility frontier can be constructed from the
contract curve in an Edgeworth production box diagram of factor intensity.
The example used above (which demonstrates increasing opportunity
costs, with a curve concave from the origin) is the most common form of
PPF. It represents a disparity in the factor intensities and technologies of
the two production sectors. That is, as an economy specializes more and
more into one product (e.g., moving from point B to point D), the
opportunity cost of producing that product increases, because we are
using more and more resources that are less efficient in producing it.
With increasing production of butter, workers from the gun industry will
move to it. At first, the least qualified (or most general) gun workers will
be transferred into making more butter, and moving these workers has
little impact on the opportunity cost of increasing butter production: the
loss in gun production will be small. But the cost of producing successive
units of butter will increase as resources that are more and more
specialised in gun production are moved into the butter industry.
If opportunity costs are constant, a straight-line (linear) PPF is
produced. This case reflects a situation where resources are not
specialised and can be substituted for each other with no added cost.
Products requiring similar resources (bread and pastry, for instance) will
have an almost straight PPF, hence almost constant opportunity costs.

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More specifically, with constant returns to scale, there are two

opportunities for a linear PPF: firstly, if there was only one factor of
production to consider, or secondly, if the factor intensity ratios in the two
sectors were constant at all points on the production-possibilities curve.
With varying returns to scale, however, it may not be entirely linear in
either case.
With economies of scale, the PPF would appear bowed in ("inverted")
toward the origin, with opportunity costs falling as more is produced of
each respective product. Here greater specialization in producing
successive units of a good drives down its opportunity cost (say from
mass production methods or specialization of labor).

Position

An unbiased expansion in a PPF

The two main determinants of the position of the PPF at any given
time are the state of technology and management expertise (which are

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reflected in the available production functions) and the available

quantities and productivity of factors of production. Only points on or
within a PPF are actually possible to achieve in the short run. In the long
run, if technology improves or if the productivity or supply of factors of
production increases, the economy's capacity to produce both goods
increases, i.e., economic growth occurs. This increase is shown by a shift
of the production-possibility frontier to the right (outward). Conversely, a
natural, military or ecological disaster might move the PPF to the left
(inward), reflecting a reduction in an economy's total productive
capacity.[1] Thus all points on or within the curve are part of the
production set, i.e., combinations of goods that the economy could
potentially produce.
If the two production goods depicted are capital investment (to
increase future production possibilities) or current consumption goods,
the PPF can represent, how the higher investment this year, the more
the PPF would shift out in following years. It can also represent how a
technological progress that more favors production possibilities of one
good, say Guns, shifts the PPF outwards more along the Gun axis,
"biasing" production possibilities in that direction. Similarly, if one good
makes relatively more use of say capital and if capital grows faster than
other factors, growth possibilities might be biased in favor of the capital-
intensive good.

SCARCITY
Scarcity is the fundamental economic problem of having
seemingly unlimited human needs and wants, in a world of limited
resources. It states that society has insufficient productive resources to
fulfill all human wants and needs. Alternatively, scarcity implies that not
all of society's goals can be pursued at the same time; trade-offs are
made of one good against others. In an influential 1932 essay, Lionel
Robbins defined economics as "the science which studies human
behavior as a relationship between ends and scarce means which have
alternative uses."
In biology, scarcity can refer to the uncommonness or rarity of
certain species. Such species are often protected by local, national or
international law in order to prevent.

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Scarcity in Economics
Goods (and services) that are scarce are called economic goods (or
simply goods if their scarcity is presumed). Other goods are called free
goods if they are desired but in such abundance that they are not scarce,
such as air and seawater. Too much of something freely available can
informally be referred to as a bad, but then its absence can be classified
as a good, thus, a mown lawn, clean air, etc.
Economists study (among other things) how societies perform the
allocation of these resources — along with how societies often fail to
attain optimality and are instead inefficient.
For example, fruits such as strawberries are scarce on occasion
because they grow only at certain times of the year. When the supply of
strawberries is lower, they are scarce, or not always available. If enough
people want strawberries when none are available, then the demand
increases. And this demand is high not because the price is high but
because the supply is low.
Certain goods are likely to remain inherently scarce by definition or
by design; examples include land and positional goods such as awards
generated by honor systems, fame, and membership of elites. These things
are said to derive all or most of their value from their scarcity. Even in a
theoretical post scarcity society, certain goods, such as desirable land and
original art pieces, would most likely remain scarce. But these may be
seen as examples of artificial scarcity, reflecting societal institutions.
That is, the resource cost of giving someone the title of "knight of the
realm" is much less than the value that individuals attach to that title.

Productive Efficiency

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An example PPF: points B, C and D are all productively efficient,

but an economy at A would not be.

Productive efficiency can also be illustrated by the intersection

MC=A(T)C.
Productive efficiency (also known as technical efficiency) occurs
when the economy is utilizing all of its resources efficiently, producing
most output from least input. The concept is illustrated on a production
possibility frontier (PPF) where all points on the curve are points of
maximum productive efficiency (i.e., no more output can be achieved
from the given inputs). An equilibrium may be productively efficient
without being allocatively efficient i.e. it may result in a distribution of
goods where social welfare is not maximized.
This takes place when production of one good is achieved at the
lowest cost possible, given the production of the other good(s).
Equivalently, it is when the highest possible output of one good is
produced, given the production level of the other good(s). In long-run

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equilibrium for perfectly competitive markets, this is where average cost

is at the base on the average (total) cost curve i.e. where MC=A(T)C.
Productive efficiency requires that all firms operate using best-
practice technological and managerial processes. By improving these
processes, an economy or business can extend its production possibility
frontier outward and increase efficiency further.
Due to the nature of monopolistic companies, they will choose to
produce at profit maximizing levels (where MC=MR). They may not be
productively efficient, because of X-inefficiency, whereby companies
operating in a monopoly have less of an incentive to maximize profits
due to lack of competition. However, due to economies of scale it can
become possible for monopolistic companies to produce at MC=MR with
a lower price to the consumer than perfectly competitive companies
producing at MC=A(T)C.

INPUT-OUTPUT
A generic term for a tangible good or an intangible service that is
the end result of the production/resource transformation process. This
notion of output, which also goes by the alias product, usually surfaces
in the context of analyzing the short-run production of a firm. The short-
run relation between a variable input and output is of particular interest
because it reveals the law of diminishing marginal returns. This law
indicates that additional quantities of a variable input, when added to a
fixed input, have decreasing marginal products, or marginal returns.

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INPUT-OUTPUT MODEL
In economics, an input-output model uses a matrix
representation of a nation's (or a region's) economy to predict the effect
of changes in one industry on others and by consumers, government,
and foreign suppliers on the economy.
While most uses of the input-output analysis focuses on the matrix
set of inter industry exchanges, the actual focus of the analysis from the
perspective of most national statistical agencies, which produce the
tables, is the benchmarking of gross domestic product. Input-output
tables therefore are an instrumental part of national accounts. As
suggested above, the core input-output table reports only intermediate
goods and services that are exchanged among industries. But an array
of row vectors, typically aligned below this matrix, record non-industrial
inputs by industry like payments for labor; indirect business taxes;
dividends, interest, and rents; capital consumption allowances
(depreciation); other property-type income (like profits); and purchases
from foreign suppliers (imports). At a national level, although excluding
the imports, when summed this is called "gross product originating" or
"gross domestic product by industry." Another array of column vectors is
called "final demand" or "gross product product consumed." This
displays columns of spending by households, governments, changes in
industry stocks, and industries on investment, as well as net exports.
(See also Gross domestic product.) In any case, by employing the results
of an economic census which asks for the sales, payrolls, and
material/equipment/service input of each establishment, statistical
agencies back into estimates of industry-level profits and investments
using the input-output matrix as a sort of double-accounting framework.

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PRACTICAL STUDY
UNILEVER PAKISTAN (PVT) LIMITED

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INTRODUCTION & HISTORY

By far the largest consumer products company in Pakistan,
Unilever Pakistan Limited (UPL) is a part of the consumer products giant
Unilever. UPL was established some fifty years ago in the then newly
created Pakistan. The town of Rahim Yar Khan was the site chosen for
setting up a vegetable oil factory in 1948 and that is where the first UPL
manufacturing facility developed.

MISSION
Unilever's mission is to add vitality to life. We meet everyday
needs for nutrition, hygiene, and personal care with brands that help
people feel good, look good and get more out of life.

COREVALUES
Demonstrating a
Impeccable Integrity passion for winning
We are honest, transparent We deliver what we
and ethical in our dealing promise.
at all times.

Wowing our consumer

and customer Bringing out the best in
We win the hearts and all of us
minds of our consumer We are empowered
and customer. Leaders, who are inspired
by new challenges and
have a bias for action.

Living an enterprise culture

We believe in trust, truth and
outstanding team work. We
value a creative and fun
environment. Making a better world
We care about and actively
contribute to community in
which we live.

NOW A FORCE TO BE RECKONED WITH

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Today, Unilever Pakistan is a force to reckon with. Its contribution

to Pakistan's economic development cannot be overestimated. Now
operating six factories at different locations around the country, the
company contributes a significant proportion of the country's taxes.
It employs a large number of local managers and workers. It
provides a pool of well-trained and highly motivated manpower to other
segments and has introduced new and innovative technologies into the
country.

BRANDS
UPL enjoys a leading position in most of its core Home and
Personal Care and Foods categories, e.g. Personal Wash, Personal Care,
Laundry, Beverages (Tea) and Ice Cream. The company operates
through 4 regional offices, as well as 4 wholly owned and 6 third party
manufacturing sites across Pakistan.
1. Food brands
2. Personal care brands
3. Home care brands

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COMPANY INFORMATION
Board of Directors
Ehsan Ali Malik - Chairman & Chief Executive
Mr. Imran Hussain - Executive Director / CFO
Mr. M. Qayser Alam - Executive Director
Mr. Noeman Shirazi - Executive Director
Ms. Shazia Syed - Executive Director
Mr. Zaffar A. Khan - Non- Executive Director
Mr. Khalid Rafi - Non- Executive Director

UNILEVER’S STRATEGY
To fulfill our commitments, we have a strategy in place supported
by company-wide governance and management structures.

OUR VALUES
Over 100 years ago, our founders not only created some of the
world's first consumer brands, but also built businesses with strong
values and a mission to act on social issues.
We continue to build on this heritage. A commitment to
sustainable development and responsible business practice is embedded
in our Vitality Mission and Corporate Purpose.
Sustainable development is about meeting the needs of society
today without compromising the ability of future generations to survive
and prosper. This has become the overarching goal for governments and
responsible businesses worldwide.

PPF OF UNILEVER

PRODUCTION POSSIBILITY FRONTIER (PPF)

Unilever can produce two or more outputs or can produce output in
two or more periods, a production possibility frontier can describe the
possible combinations of output that can be attained for a given set of
inputs.

FOOD SCARCITY

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TRENDS, CHALLENGES, SOLUTIONS

Food scarcity is set to define food production in the coming
decades, putting food security issues at the top of the global agenda.
The demand for food is growing, due in particular to two factors:
population and income growth. However, supply growth is likely to lag,
because of, for example, slowing agricultural yields, limited land
availability and the increasing demand for biofuels, all of which leads to
competition for available land. Also, in recent months, the phenomenon
of land-grabbing – the buying-up of agricultural land by foreign investors
– has intensified, and this is likely to exacerbate supply concerns.
It is clear that, if there is to be enough food to feed the growing
population, agricultural production has to increase.
Consumption patterns also need to change: the reduction of meat
intake, for example, is to be encouraged. These political and social
issues can lead to business opportunities in the domain of fertilisers,
biotechnology and irrigation. In parallel, conventional intensive farming
methods, which can cause environmental damage, should motivate the
move towards more sustainable agricultural systems.
While the concept of ‘sustainable agriculture’ can be viewed from a
number of perspectives, there is consensus that it should represent an
agricultural system which, productive and efficient, also safeguards the
environment. While there is no single solution to ensure food security in
a sustainable manner, a combination of sustainable farming practices
has to be employed to increase food supplies while at the same time
protecting the natural resources on which they depend.

WHAT EXACTLY IS FOOD SCARCITY?

DEFINING FOOD SCARCITY

• The world’s population is set to almost double between now and 2050,
which will inevitably place considerable pressure on food supplies.
Concurrently, more affluent societies and the shift towards increased
meat consumption are placing increased stress on agricultural
production.
• The ability to supply food is being hampered by a number of factors.
Current agricultural land is facing degradation (due to industrial
pollution) and, therefore, decreased yields. Potential farmland for

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expanding agricultural production is increasingly being restricted due to

competing land uses such as biofuel production, urbanisation and, in the
longer term, climate change. The inefficiency of agricultural distribution
systems is further compounding the supply-side issues.

WHY IS FOOD DEMAND INCREASING?

According to the UN, the global population, growing by about 75 million
every year, has increased nearly fourfold in the past 100 years, is
projected to reach 9.2 billion by 2050. The largest population increases
are projected to occur in Asia (particularly in China, India and Southeast
Asia), which is expected to account for approximately 60% of the world’s
population by 2050. Population growth is also projected to occur mostly
in urban areas; by 2030, 60% of the world‘s population is expected to
live in urban areas, compared to current levels of 50%. Alongside
growing populations, the rising incomes of a large proportion of the
world’s population also needs to be recognised. As populations become
more affluent, the consumption of food per capita increases, as does the
uptake in global calorie consumption per capita. This is also correlated
with higher meat intake. Global meat consumption is expected to grow
by 2% annually until 2015, especially in the developing countries, where
eating meat is seen as a sign of wealth and prosperity.

IS FOOD SUPPLY SLOWING DOWN?

A number of factors have also been identified that directly result in
decreased future food availability/supply: limited land availability, the
growth of agriculture-based biofuels (which compete with the land used
for food crops), inefficient food distribution systems and the potential
impact of climate change on
agriculture.

GLOBAL IMPACT OF FOOD SCARCITY

• In recent years, decreased food availability has resulted in an increase
in global food price inflation, exacerbating malnutrition across
developing countries.
• In a bid to ensure the security of food supplies, significant
environmental stresses

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are being placed on agricultural ecosystems. The impact of widespread

deforestation and excessive water extraction are a growing cause for
concern

PRODUCTIVE EFFICIENCY
Informance International, a leader in manufacturing business and
enterprise manufacturing intelligence solutions, announced March 8 that
Unilever, one of the world's largest consumer packaged goods
companies, has chosen to expand the deployment of the Informance
software solution across all of its plants in the Americas. The deployment
is part of Unilever's Total Productive Maintenance program (TPM) aimed
at enhancing manufacturing performance in efficiency and quality across
the region.
The move toward a standardized approach to drive and sustain
manufacturing operations performance is the next chapter in the long-
time relationship between Unilever and Informance. Unilever's expansion
into additional plants, including those in the ice cream business, brings
to 21 the number of plants utilizing this technology and includes
Informance's software-as-a-service (SaaS) hosted solution. The system
and software allows manufacturers to leverage real-time performance
intelligence in order to assess improvement opportunities, align plant
tactics with corporate strategies, and exercise the most efficient use of
the information to sustain the effects of operational excellence activities.
Consumer goods manufacturers are constantly looking at
improving efficiencies across their supply chains. Global manufacturers
report that simple OEE tools are not adequate to drive the improvement
agenda, and leading manufacturers look to solutions that deliver facts,
pervasive visibility, and maximum knowledge transfer, along with real-
time data to drive their efficiency and optimization plans.
Informance is already a leading provider of Manufacturing
Intelligence solutions, leading the market in offering Enterprise
Manufacturing Intelligence (EMI) Software as A Services (SaaS)
subscription solutions. "This on-site hosted model has enormous benefits
for Unilever for deploying on a regional scale," said John Oskin, executive
vice president of Informance. "Informance Advisory Services, coupled
with a quick deployment model, will enable us to accelerate the impact
on their operations."

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INPUT AND OUTPUT

Unilever South Africa's direct impacts are those felt by its 3,000
suppliers and their 20,000 employees due to the company's purchases
of goods and services from them; its indirect impacts are those felt by its
suppliers' suppliers owing to the orders they receive; and its induced
impacts incorporate the overall demand for goods and services made by
the employees of ULSA, its suppliers, and its suppliers' suppliers based
on their consumption expenditures out of wages paid.
The analysis shows that, in 2005, ULSA and its employees were directly
or indirectly responsible for generating output of more than R32 billion
(US$ 5 billion) and, in the process, supporting approximately 100,000
jobs throughout the South African economy.
This means that for every job directly based at ULSA, another 22
workers depended upon the company for some part of their livelihood. In
total this represents 0.8% of total South African employment.
The report shows that the majority of these jobs are located in the
retail trade sector of the economy, i.e., the network of distributors,
wholesalers and retailers that ULSA depends on to get its products to the
consumer.
The ongoing modernization of the retail trade sector raises the
potential that the number of traditional retail outlets may diminish over
time, along with the jobs and incomes they support.
Similarly, many of the jobs that are associated with ULSA are
located throughout the company's supply chain, which suggests that
maintaining the competitiveness of South African suppliers is also
essential from the perspective of employment and income generation.
ULSA sources from more than 3,000 suppliers and half of its R4.5
billion (US$ 700 million) purchasing expenditure goes to those in South
Africa.
ULSA is responsible for a number of other important economic
effects as well. The direct, indirect, and induced effects of ULSA
operations on government tax revenues, for example, total some R4
billion (US$ 633 million), equivalent to almost 0.9% of all government
revenue.
The input-output analysis shows that ULSA's contribution to value
added throughout the economy amounted to R12.5 billion in 2005 (US$

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2 billion), or around 0.9% of the country's gross domestic product (GDP).

The GDP multiplier indicates that for every R100 of ULSA sales revenue,
R145 is added to the country's GDP.

Social and environmental impacts of Unilever South Africa

In addition to the economic analysis, the report provides an
overview of some of the broader social and environmental impacts of
ULSA, both in its operations and along its value chain.
As an employer, ULSA pays wages and provides comprehensive
benefits that include medical care (including for HIV/AIDS) and a private
pension scheme.

S.W.O.T ANALYSIS
STRENGTHS
 Unilever Brothers Pakistan Limited is one of the largest
organizations in Pakistan.
 Company has advance technology and well skilled
professionals.
 The target market is educated, professionals and
belongs to premium and middle class.
 Participative management style
 Very good distribution network all over Pakistan, in all
major and small cities.
 Strong finances in past years

WEAKNESSES
 Quality control problem
 Competitor has strong promotional activities.
 Imported brands also available in the market.
 Customers are offered better alternatives by the
competition.

OPPORTUNITIES
 Population expanding at a rapid rate.
 Consumers are becoming more quality conscious
 Customer base is increasing with effective marketing.

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 Baby shampoo is another area where Unilever Brothers

can make huge gains.
 Developing Markets.

THREATS
 Political and Economic factors.
 High rate of competition.
 Local and Foreign competition.

CONCLUSION
In conclusion, Unilever has a host of good brands, some
competitive advantages in the consumer products, a
management that is improving operations costs and represent a
discount to the current market price, however not enough
discount to warrant a purchase at this time. So I will wait to see
management future actions in selling lower margin products and
monitor its price if the market gives me an opportunity to make
a good purchase.
Organisations needs to promote their product or services in
order to establish a foothold, increase market share and
compete, the choice of promotion depends upon various factors
internal as well as external.
A successful product or service means nothing unless the
benefit of such a service can be communicated clearly to the
target market. An organisations promotional strategy can consist
of: Advertising, Public relations, Sales promotion, Personal
selling, Direct Mail.

RECOMMENDATIONS
 Unilever, Pakistan realizes the huge potential of the rural
markets, i.e. 72% of the total population, but has not yet developed
a successful strategy to penetrate this market. The success of
Unilevers Hindustan should be emulated, which has successfully
captured the rural market by two key strategies; firstly, by
developing a strong distribution infrastructure and secondly, by
adapting the packaging and pricing to this market.

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 Unilever should increase the buying of raw materials from local

markets so that it does not have to suffer excessively from
devaluation and continuous increase in tariff rates. This would also
negate the adverse affect on sales volume due to smuggled foreign
product.
 Unilever should introduce a smaller (100 ml) pack of Surf Excel
in order to capture the lower income segment.
 Unilever should enter into WEB Marketing.
 The Legacy Soccer Foundation sponsored mainly by Unilevers,
should be emulated by Unilevers Pakistan in the area of cricket since
it is the most popular sport in Pakistan.

REFERENCES
 www.MBA.net
 www.unilever.com

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