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 business model. Meanwhile, it will point out some risks Unilever has not managing enough. Next, the essay will assess some risk management strategies Unilever has taken to mitigate or avoid the risks. Finally, it will recommend the company some more risk management strategies in order to help it mitigate or prevent risks.
Analysis of Unilever’s Business Model
Business Model
A business model, strictly speaking, is the organization's core logic for creating value (Jane & Susan, 2000). After over 80 years’ development, Unilever has become one of the largest suppliers of consumer products in the world. Its strong portfolio of foods, home and personal care brands is trusted by consumers the world over. Unilever’s top 13 brands account for total sales of over EUR23 billion and top 25 brands represent nearly 75% of the sales (Unilever Annual Report, 2009). Unilever is a well-operated company, and its business model is mapped out as follows:
Key Partners
Suppliers
Contractors
Distributors
Key Activities
Research
Design
Production
Sale
Value Proposition
Produce innovative and good-quality personal and household care goods for consumers and try to make people feel good and comfortable every day; Produce and sell nutritious foods,
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 business model. Meanwhile, it will point out some risks Unilever has not managing enough. Next, the essay will assess some risk management strategies Unilever has taken to mitigate or avoid the risks. Finally, it will recommend the company some more risk management strategies in order to help it mitigate or prevent risks.
Analysis of Unilever’s Business Model
Business Model
A business model, strictly speaking, is the organization's core logic for creating value (Jane & Susan, 2000). After over 80 years’ development, Unilever has become one of the largest suppliers of consumer products in the world. Its strong portfolio of foods, home and personal care brands is trusted by consumers the world over. Unilever’s top 13 brands account for total sales of over EUR23 billion and top 25 brands represent nearly 75% of the sales (Unilever Annual Report, 2009). Unilever is a well-operated company, and its business model is mapped out as follows:
Key Partners
Suppliers
Contractors
Distributors
Key Activities
Research
Design
Production
Sale
Value Proposition
Produce innovative and good-quality personal and household care goods for consumers and try to make people feel good and comfortable every day; Produce and sell nutritious foods,
References: Ballou, B. & Heitger, D. L.2005. A building-block approach for implementation COSO: Enterprise risk management-integrated framework. Management Accounting Quarterly, 6(2):1-10. Geert Bouckaert and John Halligan, 2008, Managing performance: international comparisons. Routledge, 2008, pp221-225. Ian Brown, Adam Steen, and Julie Foreman. 2009. Risk Management in Corporate Governance. A Review and Proposal Corporate Governance: An International Review, 2009, 17(5):546-558. Jane Linder, Susan Cantrell, 2000, Changing Business Models: Surveying the Landscape, Business Publisher: Accenture, Pages: 1-15 Michel C., Dan G. and Robert M., 2001, Risk Management, McGraw-Hill. Michael R. Czinkota, Ilkka A. Ronkainen, 2007, International marketing, Cengage Learning, 2007, p417-422. Mike Walker. 2006. Managing international risk. International Business Briefings. The Institute of Risk Management. 2006. P 5-6. Unilever Annual Report, 2009, Unilever Annual Report, from: http://annualreport09.unilever.com/downloads/Unilever_AR09.pdf (Accessed on May, 25, 2011)