Unilever Case Study

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Ref.No.: FM0001

Unilever Limited: Transforming the Finance ‘Function’
“Top performing businesses have top performing finance functions, but few finance functions are top performing.” – Scott Parker, Head of Financial Management, KPMG LLP (UK)

In an era of globalisation, increasing economic pressures and stringent regulatory norms, the role of finance function is becoming much broader than ever before. With changing times the role of finance manager is becoming concentrated, moreover, Chief Financial Officer (CFO) has become the strategic business partner to CEO and is playing a leading role in company’s decision-making process. In this context, the finance function is all the more important especially in conglomerate and multinational companies. Unilever Ltd. is one such company that has a highly diversified portfolio and wide financial operations.

Role of Finance Function – Interface of Finance Function with other Functional Areas In the rapidly changing business world, many CEOs are realising that achieving organisational objectives becomes impossible without the active support of finance function. It is obvious that finance function is one of the driving forces of an organisation. Irrespective of a firm’s size and scale, finance forms basis for all economic activities. As it is a scarce resource, optimum utilisation of finance is necessary and any mismanagement of such resources can prove disastrous for the company. The success of an organisation depends on how well it manages its financial resources. The optimum utilisation of finance or financial resources can be possible only by effective finance function. Even the best of the companies and CFOs go out of business, if they fail to utilise the funds effectively or implement improper financial management policies. All other functions such as marketing, production, human resources and accounting are interlinked and inter-connected through a common This case study was written by Mora Sowjanya (Research Associate), IBSCDC under the guidance of D. Satish (Professor of Finance), IBS, Hyderabad. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources. © 2009, IBSCDC. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.

Unilever Limited: Transforming the Finance ‘Function’

link i.e., ‘finance’ function. Depending on the nature of the business, it becomes the core or supporting function, but every organisation needs to focus on building sound finance function. Basically, the larger the company, the lower the cost of its finance functions as a percentage of revenues. According to a survey conducted by the McKinsey Global 2009, respondents in companies with annual revenues upward of $1 billion are more likely to estimate the cost of their finance function as less than 1% than those at smaller companies.1 This indicates that in big companies once, the finance function establishes its capacity to perform, its size does not change or grow majorly as revenue changes. The duties and responsibilities of a finance manager vary with specific titles, which include treasurer, cash manager or controller, etc. The treasurer focuses on the organisation’s financial goals, objectives and involves in financial decision-making. Managing corporate assets and liabilities, planning the finances, budgeting capital, managing the investment portfolios and formulating credit policy are the key responsibilities of a treasurer. In short, treasurer’s functions deal with external financing matters. On the other hand, controller is concerned with internal issues and handles accounting and audit work. Financial and cost accounting, taxes, budgeting and controlling functions come under controller supervision. The CFO supervises all the...
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