Currency Risk Exposure in Business

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TABLE OF CONTENTS

INTRODUCTION 2-3

CURRENCY RISK EXPOSURE WITHIN THE BUSINESS ENVIRONMENT 4

COMPANY MANAGEMENT OF CURRENCY RISK EXPOSURE 5

PRIMARY ALTERNATIVES IN MANAGING CURRENCY RISKS 6-8

RECOMMENDATIONS AND BENEFITS 9

CONCLUSION 10

REFERENCES 11

INTRODUCTON

Unilever was founded in 1929 when two major companies, Margarine Unie and Lever Sunlight merged. From its genesis Unilever adopted a dual company structure i.e. having two headquarters, one in London (Unilever PLC) and the other in Rotterdam (Unilever NV) which shared a common board of directors with a citizen from each headquarters as the Chief Executive Officer (CEO) of the organization. By 1930 the United Africa Company (UAC), a company that had a very strong position in Western Africa in export-import trade merged with Unilever. The two parent companies owned factories and trading subsidiaries in Asia and Africa. Unilever in the early years from 1909 to 1933 built and also purchased factories in Japan, Argentina, Brazil, Thailand, Indonesia and India. Between 1945 and 1980 they expanded their activities in mostly Western Europe and the product line in those early years were margarine and soap products until Unilever began to diversify into new areas in the market into the food sector - frozen foods, transport, chemicals and printing. However, Unilever’s food sector remained predominantly a Western European company. (Elshof, 2005)

Unilever have also extended its reach to the Caribbean and this also originated back to 1929 when two predecessor companies Trinidad Manufacturing and Refining, and West Indian Oil Industries were established in Trinidad, West Indies to produce crude, soaps and fats using local coconut oil. Unilever acquired these two companies in 1948 which merged to form Lever Brothers West Indies Limited (LBWI) in 1964. The company is located in Champs Fleurs, Trinidad where the factory built in 1960 still operates today. In 2004 Lever Brothers West Indies became Unilever Caribbean Limited in undertaking the rebranding of Unilever to adopt a single corporate identity worldwide. Unilever Caribbean Limited is publicly traded on the Trinidad and Tobago Stock Exchange. Private Shareholders own 49% and Unilever PLC 51% shareholding. Unilever Caribbean Limited holds responsibility for 17 export markets in the Southern Caribbean. The sales outside of Trinidad and Tobago accounts for roughly 50% of the total sales for Unilever Caribbean Limited within the Caribbean region. (Unilever, 2012) The company board of directors is chaired by Gary Voss who oversees the strategic direction, while the day to day operations are managed by a Management Committee led by the Managing Director, Roxane DeFreitas. (Philip, 2011)

Unilever has 400 brands spanning 14 categories of home, personal care and food products; no other company touches so many people’s lives in so many different ways. Their brands portfolio has made them the leaders in every field they work. (Unilever, 2012) The Company manufactures some products at its facilities as well as imports personal care and food products from other Unilever sites across the global. Unilever Caribbean Limited has a range of products under the categories of food, home care, personal care, nutrition and health, hygiene and beauty. Some of the brands in personal care: Ponds, Sunsilk and Suave; Food products: Hellman’s mayonnaise, Wishbone salad dressings and ice cream – Ben and Jerry’s and Breyer’s. (Philip, 2011) The company continues to command a strong...
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