Analysis of Unilever’s Risks and Risk Management Strategies

Analysis of Unilever’s Risks and Risk Management Strategies Introduction With the rapid development of modern economy, companies are always exposed to risks which are penetrating to all walks of life and not only exist in the products market, but also exist in financial market (Ballou, 2005). It is undoubtedly that risks jeopardize the company’s development in that they may increase the cost of a company’s operation and make it harder for a company to make a crucial decision. Accordingly, it is essential to know risks and find out risk management strategies. This essay will firstly map out Unilever’s business model and have a brief analysis on it. Following this, it will illustrate specifically risks Unilever is exposed to in light of the†¦show more content†¦Meanwhile, customers purchasing ability was greatly undermined and turned to buy those inexpensive but substantial products rather than those top-grade products. Customers’ reactions affect Unilever’s turnover, profit and cash flow. Next, more and more comp anies are targeting the market of consumer goods due to the attraction of billions of consumers. Thus, the market of consumer goods is just like a piece of pie and is shared by more and more competitors. Therefore, the whole market is uncertain and Unilever has to be well prepared for the fight against the economic uncertainties and the industrial fierce competition. Financial Instability The interest rate risk is a risk brought to the value or the cash flow or profitability of a company when the change of the interest rate occurs. To clarify it more specifically, the floating interest rate exposes the company to the risk of the increased interest cost and the increased borrowing afterwards; while the fixed interest rate makes the company subject to the risk of the loss of the fair value. Meanwhile, as a multinational company whose business activities are operated in more than 180 countries, Unilever is exposed to the risk of the fluctuation of the exchange rate during the process of the change of currencies and the actual value of the currency may be decreased due to such fluctuation (Unilever Annual Report, 2009). Provided that Unilever does not handle the issue of interest rate and exchange rate well,Show MoreRelatedMarketing Plan For Ice Cream Brands1458 Words   |  6 PagesRefreshment segment includes sales of tea bags and other beverage, ice cream, nutrition supply and weight management products. Some of the popular ice cream brands are Cornetto, Wall’s and Ben Jerry’s. Famous beverage brands include Lipton and PG Tips. Nutrition and weight management products include Slim-Fast and Annapurna. Refreshment segment accounts for 19% of turnover, declined by 3.7% due to exchange rate movement. 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