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Assess the extent to which Unilever may benefit from its takeover of Dermalogica - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2
Question 1
Assess the extent to which Unilever may benefit from its takeover of Dermalogica. A takeover occurs when one business acquires a majority shareholding of another bu... show full transcript
Worked Solution & Example Answer:Assess the extent to which Unilever may benefit from its takeover of Dermalogica - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2
Step 1
Benefits for Unilever
Answer
Dermalogica is an established brand with a well-known reputation and developed global distribution links. This acquisition could enhance Unilever's market share in the health and beauty products sector. Furthermore, Unilever may benefit from economies of scale, such as bulk purchasing of ingredients like aloe vera, as well as utilizing the expertise of Dermalogica's management and their knowledge of the skincare market. This could potentially lower Unilever’s unit costs.
Step 2
Possible Counterbalance
Answer
While the reported cost of £500 million for the takeover may initially impact profits, potential drawbacks could arise from the integration process. For example, Dermalogica's employees may experience dissatisfaction due to changes post-takeover, affecting productivity. Dermalogica's niche focus on skincare professionals requires careful handling to preserve its established brand identity.
Step 3
Potential Judgement
Answer
This takeover could help Unilever achieve its goal of increasing the share of personal care goods to 66%, capitalizing on Dermalogica's established presence in over 80 countries. Success will depend on Unilever's ability to maintain Dermalogica’s unique brand strengths and business practices, ensuring no detrimental effects to its brand image within the skincare professional community.