Report Title: Financial Management of Unilever

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Table of Contents
Introduction......................................................................................................................................1
Key Functions of Financial Management based on Unilever..........................................................1
Financial Planning................................................................................................................1
Financial Controlling............................................................................................................2
Financial Reporting..............................................................................................................2
Financial Decision Making...................................................................................................3
Conclusion.......................................................................................................................................4
References........................................................................................................................................4
Introduction

Financial management refers to the process of planning, organizing, controlling, and monitoring
the financial resources of an organisation to achieve its goals and objectives (Brigham & E.F.,
2016). Effective financial management is essential for any organisation. It provides clarity
regarding financial health, including their financial strengths, weaknesses, and areas of
improvement. This enables them to make informed decisions about allocating resources and
managing financial risks. It also involves implementing financial strategies and monitoring the
organisation's financial performance to ensure that it remains on track (Gorton & M., 1999).
Overall, financial management is needed for the success of any organisation, ensuring its
financial resources are used effectively and efficiently in order to sustain in the longer run.

Key Functions of Financial Management based on Unilever

Financial management involves various functions and other related activities that are needed to
effectively manage organisation’s financial resources (Lakada et al., 2017). Four of the major
functions managed by Unilever are given below-

1. Financial Planning: Financial planning is one of the critical functions of financial

management. It involves forecasting the organisation's financial needs and developing a
comprehensive plan to ensure proper uses of financial resources to achieve its goals and
objectives. This includes budgeting, financial forecasting, and cash flow management
(Camfferman et al., 2003).
Unilever assesses their current financial situation, analyzes financial data and trends, and
develops a financial plan based on the findings. In financial planning, Unilever prepares a
document where they set goals and objectives to measure and achieve their financial
performances. They also define steps to those goals, capital structure, financial policies etc.
Such planning helps them for acquisition of best sources of funds for running their operations

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 and for handling those finances, they prepare policies accordingly. They try to meet short-
term and long-term financial requirements within time such as investments on supplies and
equipment, managing payments, improving productive capacity, preparing budget etc. With
the help of financial planning, they identify financial risks and take necessary steps to
mitigate those uncertainties. Thus, they try to expand their market by ensuring a balance
between inflow and outflow of funds. In this way, they ensure survival of the company by
maintaining profitability and stability and have been successful so far.
2. Financial Controlling: Financial controlling is another important function of financial
management. It refers to establishing procedures and systems in order to ensure efficient and
effective uses of financial resources (Stern et al., 1998). This includes managing costs,
monitoring financial performance, and enforcing financial policies and procedures. Financial
controlling is an ongoing process that requires regular monitoring and evaluation to ensure
that financial policies and procedures are effective and efficient, and to identify areas for
improvement (Higgins et al., 2009).
Through financial controlling, Unilever strictly monitors their fund movement. By analyzing
their operational activities and scenarios, they establish financial control policies through
forecasting and making projections so that they can identify any loophole easily and on time
and to ensure achievement of goals and objectives. They also oversee efficient utilization and
protection of assets by showcasing behavior in favor of shareholders’ interests and properly
updating of information and data. Besides, through financial controlling, they can identify
and detect any loophole in financial reports and statements, balance sheets, budgets etc. It
helps in prevention of any fraudulent activity by taking necessary measures in the
organization. Thus doing so, Unilever has achieved operational efficiency and increased
profitability through improved financial performance, mitigating risks and uncertainties,
creating long-term value for stakeholders, avoiding frauds etc.
3. Financial Reporting: Another key function of financial management is financial reporting.
It refers to accounting process of preparing and presenting financial information to
stakeholders such as investors, creditors, and other regulatory authorities (Calza et al., 1997).
This includes preparing financial statements, reports, and disclosures, and ensuring
compliance with financial reporting standards and regulations. Financial reporting is done
monthly, quarterly, half yearly and at the end of the fiscal year of a company. The financial

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 statements typically include the income statement, balance sheet, and cash flow statement,
which provide information about the organization's financial performance, financial position,
and cash flow (Tarasovich & B.E., 2012).
Through financial reporting, Unilever assesses its financial health and monitors financial
performances by measuring the parameters stated on those reports and statements. Financial
reports help them gain trust of their stakeholders by providing right and accurate information
to them. Right information facilitates them to take proper and improved decisions regarding
organizational necessities. Through financial reports, they identify their revenues, expenses,
assets on hand, liabilities and take actions accordingly. Doing so, they identify running
business trends and this helps them identify business opportunities and mitigate potential
risks and uncertainties. Besides, they have become able to enhance their credibility and
reputation through building trust with their stakeholders.
4. Financial Decision Making: Financial decision making is a significant function or element
of financial management. It involves making decisions about allocating financial resources
and managing financial risks in order to attain the organisation's goals and objectives.
Financial decision making includes the evaluation of investment opportunities, managing
financial risks, and determining the appropriate mix of debt and equity financing (Vaivio &
J., 1999).
For making appropriate financial decisions, Unilever assesses and analyzes their financial
data and market trends, financial performances, financial position, financial uncertainties etc.
and thus develops strategies to optimize performances and operational activities. In this
regard, they also consider and abide by the ethical and social responsibility issues so that they
can better serve their stakeholders’ and the society’s values and purposes. They take
decisions regarding investments, financing, dividend and for other financial activities.
Through making of proper decisions, they are being able to use better sources of funds at
lesser costs, to identify how company can be benefitted through proper investments by
getting higher returns on them, how efficiency they can use their resources to optimize the
performances, to reduce risks etc. In this way, they have achieved a great financial position
across the globe which will facilitate them to sustain in the longer run in the global market.

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Conclusion

Financial management is an essential aspect for organisations to achieve their financial goals and
objectives in a sustainable and responsible manner (Shaikat & M.D., 2020). From the above
discussion, we can say that Unilever is managing their financial operations and activities in an
efficient manner. But there lies scopes for improvement always in every case of matters. Here
some recommendations have been mentioned below-

 They should consider and analyze the risky investments in terms of long-term perspective to
effectively manage the assets by reducing the risks.
 Besides, investors must control the financial performances for avoiding highly risky
decisions that might create undesirable outcomes and lead towards failure.

References

Brigham, E.F., 2016. Financial management: Theory and practice. Cengage Learning Canada
Inc. Fabozzi, F.J. and Peterson, P.P., 2003. Financial management and analysis (Vol. 132). John
Wiley & Sons.

Calza, F. and Passaro, R., 1997. EDI network and logistics management at Unilever‐
Sagit. Supply Chain Management: An International Journal.

Camfferman, K. and Zeff, S., 2003. ‘The apotheosis of holding company accounting’: Unilever's
financial reporting innovations from the 1920s to the 1940s. Accounting, Business & Financial
History, 13(2), pp.171-206.

Gorton, M., 1999. Use of financial management techniques in the UK--based small and medium
sized enterprises: Empirical research findings. Journal of financial management &
analysis, 12(1), p.56.

Higgins, R.C., Koski, J.L. and Mitton, T., 2009. Analysis for financial management.

Lakada, M.N., Lapian, S.J. and Tumiwa, J.R., 2017. Analyzing the financial statement using
horizontal–vertical analysis to evaluating the company financial performance period 2012-2016
(Case Study at PT. Unilever IndonesiaTbk). Jurnal EMBA: Jurnal Riset Ekonomi, Manajemen,
Bisnis dan Akuntansi, 5(3).

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Shaikat, M.D., 2020. A case study on the financial outlook of Unilever in terms of stock
valuation.

Stern, J., Stewart, B. and Chew, D., 1998. The EVA financial management system. Available at
SSRN 6704.

Tarasovich, B.E., 2012. Unilever: The Financial Implications of Outsourcing Information

Technology Services in a Global Organization. In SAGE Business Cases. Institute of
Management Accountants.

Vaivio, J., 1999. Exploring anon-financial'management accounting change. Management

Accounting Research, 10(4), pp.409-437.