UU-MBA710: Kerry Group Financial and Strategic Management Report

This report provides an analysis of the financial and strategic management of Kerry Group, focusing on its interim performance. It examines various financial management aspects, including pricing strategies, poor management practices, operational risks, tax information issues, liquidity challenges, foreign exchange risks, and accounting estimates. The report also delves into strategic management issues such as market dynamics, portfolio management, leadership challenges, human rights concerns, food security, environmental issues, governance problems, and issues related to business acquisitions and geopolitical market factors. The analysis is based on the company's interim reports and relevant research materials, providing a comprehensive overview of the challenges and opportunities faced by Kerry Group in its operations and strategic planning. The report aims to evaluate the strategic and financial issues that this public company faces in its business operations.

Running Head: FINANCE AND STRATEGIC MANAGEMENT
FINANCE AND STRATEGIC MANAGEMENT
Name of the Student
Name of the University
Author Note

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Introduction
The paper will focus on the Interim performance of Kerry Group Company which is
situated in Ireland. The strategic and financial management activity of the business will be
discussed in this paper. The issues related to strategic and financial management of the group
has also discussed in this paper. The main objective of this paper is to evaluate the strategic
and financial issues the public related company is facing in its business.
Background of the Company
Kerry Group is a type of food industry that is headquartered in Ireland. It is a public
company that is traded on London Stock Exchange & Euronext Dublin. The main products of
the company is all type of food ingredients, flavours, snacks, cooked meats, juices, dairy
product and sausages. It is a global trading company and is considered as one of the leading
food processor company in the European leader. The company was owned by three
shareholders, they are Diary Disposal Company, Erie Casein Company & Federation of
cooperatives of farmers.
Financial Management
Financial Management is all the financial activities of an organisation, starting from
planning to controlling of the financial activities. This involves all the activities to manage
the financial resources of the company. From its Interim Management Report, it is found that
the Kerry Group has continued in expanding the growth of the business. The company is
focused on doing unique & leading business in the developed markets. The performance of
the group has been increased by 10.7% in the financial year 2019 (Kerrygroup.com, 2020).
This reflects a good growth in the operating leverage of the business. The business is able to
compete with the challenges in the market, the consumers are demanding more and hence, the

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business is able to change its business model. The interim dividend of the company has also
been increased at 11.9 % as compared to the FY 2018.
Issues in Financial Management
 Problem in pricing- The Company uses pricing model to determine the price of the
raw material, tis pricing can negatively depend on the price of the raw materials. The
price of raw materials moves up and down. The pricing model has been used to deal
with the fluctuation in raw materials. This price fluctuation is due to continuous
change of market environment of the business. Hence, the company face difficulty in
building its purchasing strategy. The company has issues related to shortage of raw
material resources (Eng & Vichitsarawong, 2017). This will affect their consumption
rates. Hence, this public sector company faces problem in fixing the price of their raw
materials for the production process. The company is facing financial problems due to
this pricing strategy.
 Poor management- Kerry group has continued the business acquisitions &divestitures
in order to expand the business. The company is facing issues in anticipating the
benefits that could be benefited from these companies. They are unable to accurately
evaluate the transactions related to shareholders value. This has resulted in poor
management of the business transactions. Inaccurate evaluation results in over
estimation of the expected financial results. The company faces poor planning of the
financial transactions.
 Operational risk- Kerry group faces issues in their business operations. This will
affect the business profitability margin. The company is facing this type of financial
issues for to fluctuation of input costs. Energy, commodities and labours. This is due
to many factors like demand & supply and changes in financial regulations
(Kerrygroup.com, 2020). The current inflation rate of the environment & high level of

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competition has affect the profitability margin of the group. This has resulted in issues
in the financial resources and negatively affected the financial activities of the group.
Operational risk is also related to health and safety risk that the company is facing the
issues. They are unable to properly make organisational compliance for these type of
health and security risk.
 Failure in efficient tax information- The Kerry group has expanded its business all
across the global. Hence, they are exposed to a very complex tax environment. The
company is dealing with change in various tax audits and has to transfer their pricing
judgements to the business (Albrecht, Kim & Lee, 2020). This has resulted in issues
related to the tax liability of the business. They are unable to gather accurate &
appropriate tax information. This affects their tax liabilities and the financial
compliance of the business. The company is facing many such tax consequences in
the business. The company is facing issues in meeting its targeted revenue margin and
this is considered as the most threatened issue for the business.
 Issues in meeting the liquidity requirements- The Company is unable to meet its
business debt. They are unable to meet the debts that is related to long-term maturity
of the business loans. The cash is not properly managed in the business operations.
This indicates that the company has a poor liquidity position. They are unable to
borrow more loans or debts for the business. Since, the financial position is related to
company’s liquidity position and borrowing facilities, this means that the company is
facing issues in effective management of the financial resources.
 Issues in foreign exchange- The global expansion of the business has also resulted in
various financial risks like foreign exchanges risks, risk in interest rate and
counterparty risk (Pandey, 2017). This type of global risk has affected the liquidity
position of the business. Hence the treasury portion of the business is affected. Other

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type of issues is related to forecasting of the future cash flow, issues related to
hedging and irregular fluctuation of the global interest rate.
 Accounting estimates- The group has done accounting estimates of some of the
financial elements while reporting its financial statements. Determination of goodwill
and intangible assets are recorded by simply doing an estimation of the future cash
flows of the business. This estimate may change according to the change in economic
conditions of the company. The future forecast cash flow depends on the value of the
asset (Grafova et al., 2017). Hence, this resulted in improper accounting process.
Many of the business stakeholders and shareholders face problems while performing
the company’s financial statement. Hence, the amount of account estimates affects the
exact amount of the elements. Estimation is also done for fixed assets like property,
plant & equipment, financial instruments and provisions. Therefore, the shareholders
and stakeholders finds difficulty in effectively using the financial statements. This
affects the share price of the company. The rate of return was also adjusted in the
business report (Smieliauskas et al., 2018). It has been found that there were slight
reduction in the rate of return that has been made by the shareholders, but still
adjustment were done in FY 2015 report and average return on equity was simply
written according to the estimation.
Strategic Management
Strategic Management of the Kerry group involves building of organisational
objectives with respect to their competitive environment. The internal organisation is
analysed to evaluate the strategies. The management of the company ensures that the business
activities is done according to the strategies.
Issues related to Strategic Management

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 Market Dynamics- This is the most important issue the company is currently facing.
Market dynamics is continuously changing. The demand for nutritious products is
very high. Business is facing issue in determining the exact amount of food
ingredients according to the manufacturing and expiry date (Engert, Rauter &
Baumgartner, 2016). Due to more demand of the products, the company is making
product innovations. This results in volatility in the business strategy in order to
compete with the competitors. They have implemented some of the new services in
the business like e-commerce facilities, food service at the customer door location
(Kerrygroup.com, 2020). This newly implemented business strategy is affecting its
excellence in the product line. This indicates that the market landscape was quiet
challenging for the business. This affects the overall supply chain process of the
business.
 Issues related to effective portfolio management- The Company is operating globally
and has diverse range of portfolio in the global market. They are effected by various
factors of global market (Thakur & Workman, 2016). This includes, the economic
constraints of the market, competition with respect to advance technology and
demographic actions. Hence, business face difficult in managing uts diverse range of
portfolios. They are finding issues in effectively planning their business according to
the market dynamics. This strategic risk has affected the future growth of the
business.
 Issues related to leadership- Kerry group is continuously doing investment in its
infrastructure and business process. They are working with diverse range of people in
the organisation (Plastun, Drofa & Klyushnik, 2019). The leaders are not doing
effective leadership in promoting a good practices for these employees. The leaders
are not properly managing the human resource of the organisation. The organisational

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policies is not effective for the workers. Inadequate training and development affects
the profitability of the business.
 Issues related to protection of human rights- The organisational policy related to
human rights is not sufficient for the commitment of human resource in the business.
The employees and supply chain partners are strictly prohibited in the company
decision-making process. This is against the human rights of the business. The
business is also involved in not protecting the rights of their shareholders. They donot
provide any voting rights to their shareholders (Lin et al., 2018). The interest of
shareholders and employees are not protected. This affected the business
performance.
 Issues related to food security- The Company is very much conscious to the climate
change. Issues is related to organisational policies and regulations related to climate
change. The business transitions is affected by the environmental effect. Meeting the
requirements according to the consumers demand affects the environment. The
business is facing issues in food production under such circumstances. The capacity
of local environment structure affects the entire community. Company is also facing
issues in importing the food to other parts of the world. This is because, the company
while performing the business in outside countries, then they faces issues in the
foreign exchange policies and political constraints of the other countries. Hence, food
access to other region is a major issue of this country. This affects the business
performance.
 Environmental issues- The business is facing environmental issue due to its business.
The manufacturing process is affecting the natural environment. The company is
using plastics that is affecting the consumers and the customers and also the natural
environment (Krajewski, 2018). Therefore, the strategy of plastic packaging is

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affecting the business. It is harmful for the customers. Plastics cannot be reused and
recycled. Hence, it is affecting the business performance.
 Governance issue- strategic management issue is also related to governance issue of
the company strategy. There is ineffective information transfer among the different
departments. The information is not properly transferred to the business. This affects
the business performance. The board of directors communicated the strategy plan for
related to business investments and targets. But, the information is inconsistent within
the business operations. The business is unable to timely reach their information to
each and every department. This affects the business operations and hence affects the
overall performance of the business.
 Issues related to business acquisition- Kerry group has undergone acquisition in order
to expand their business. This is the core element for the business growth. This risks
is related to integration of the business with the acquisition activity. Business is facing
issues in effectively managing its business activity. Business is not able to integrate
the acquisition in timely manner. Hence, it affects the strategic development of the
group.
 Issues related to geopolitical market- The Company is exposed to various economic
and political aspects of the country. This is because, it is exposed to developing
markets that is globally situated Sun, H. (2019). There is a chance of political and
economic volatility in these countries. Hence, the global constraints will affect the
business process.
Conclusion
Therefore, it can be concluded from the interim management report that Kerry group
that Kerry group is performing well in the financial year. But, still the business is facing
various strategic and financial issues. Strategic issues is mainly related to the market

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dynamics. Market dynamics is continuously changing. The demand for nutritious products is
very high. Business is facing issue in determining the exact amount of food ingredients
according to the manufacturing and expiry date. Due to more demand of the products, the
company is making product innovations. This results in volatility in the business strategy in
order to compete with the competitors. The Company is exposed to various economic and
political aspects of the country. This is because, it is exposed to developing markets that is
globally situated. There is a chance of political and economic volatility in these countries.
Hence, the global constraints will affect the business process. Financial issues is mainly
related to liquidity requirements of the business. They are unable to meet the debts that is
related to long-term maturity of the business loans. The cash is not properly managed in the
business operations. This indicates that the company has a poor liquidity position. The global
expansion of the business has also resulted in various financial risks like foreign exchanges
risks, risk in interest rate and counterparty risk. This type of global risk has affected the
liquidity position of the business. Hence the treasury portion of the business is affected.

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