Unilever Limited Transforming the finance

function

ROLE OF FINANCE DEPARTMENT

Financial Management means planning, organizing, directing and

controlling the financial activities such as procurement and utilization

of funds of the enterprise.

SCOPE: •Investment decisions includes investment in fixed assets (called as

capital budgeting)

•Financial decisions - They relate to the raising of finance from various

resources which will depend upon decision on type of source, period of

financing, cost of financing and the returns thereby.

•Dividend decision - The finance manager has to take decision with

regards to the net profit distribution.

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INTERFACE OF FINANCE FUNCTION WITH OTHER FUNCTIONAL AREAS

Financial Management and Economics Financial management also uses the economic equations like money value

discount factor, economic order quantity etc.

Financial Management and Accounting Accounting records includes the financial information of the business concern.

Financial Management and Mathematics EOQ, discount factor, time value of money, PV of money, ko, capital structure

theories, dividend theories, etc are used as mathematical and statistical tools and

techniques in the field of financial management.

Financial Management and Human Resource Allocates the finance to the HRD as wages, salary, remuneration, commission, etc

Financial Management and Marketing Finance department is responsible to allocate the adequate finance to the

marketing department. 3

OBJECTIVES OF FINANCIAL MANAGEMENT

Goal Objective Advantages Disadvantages

Profit

maximizati

on

Large profits

1. Easy to calculate profits.

2. Easy to determine the link

between financial decisions and

profits.

1. Emphasizes the short-term. 2. Ignores risk or uncertainty. 3. Ignores the timing of returns. 4. Requires immediate resources.

Wealth

maximizati

on

Highest share price of common stock

1. Emphasizes the long term.

2. Recognizes risk or uncertainty.

3. Recognizes the timing of

returns.

4. Considers stockholders`

return.

1. Offers no clear relationship

between financial decisions and

stock price.

2. Can lead to management

anxiety and frustration.

3. Can promote aggressive

and creative accounting

practices. 4

Finance Journey: Finance Transformation

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CFO of your own OpCo

Dotted Line to CFO

“Beancounters”

9000 Finance people

Focus on Transactions

Transactions at every site

One Global Finance Function

Solid Line to CFO

Partners in Value Creation

5500 Finance people

Focus on Decision Support

Shared Services / Outsourced

CFO OF UNILEVER-Jean- Marc Huët

•CFOs are expected to play four

diverse and challenging roles:

steward, operator, strategist and

catalyst.

•CORE ELEMENTS •Trusting the numbers

•Providing insight

•Getting your house in order

•Funding organizational strategy

•Developing business strategy

•Communicating to the external

marketplace.

At Unilever he is responsible for Financial Reporting, Finance in the

Regions, Tax, Treasury, Pensions, Mergers & Acquisitions,

Investor Relations and Information Management.

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REFERENCE

•http://www.unilever.com/careers/careerchoices/finance/ Accessed @

23/10/2012 17:30

•http://www.journalofaccountancy.com/Issues/2009/Sep/20091501.htm

Accessed @ 23/10/2012 17:45

•http://www.business-standard.com/india/news/the-21st-century-

cfo/387187/ Accessed @ 24/10/2012, 10 am

•http://worldacademyonline.com/article/24/338/profit_maximization_vs__sto

ckholder_wealth_maximization.html Accessed on 24 Oct at 4pm

•http://www.ey.com/GL/en/Issues/Managing-finance/CFO_overview

Accessed on 24 Oct at 4 30pm

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