Risks Facing Multinational Consumer Goods Industry: Unilever Analysis

This report provides a comprehensive analysis of the risks facing multinational consumer goods companies, using Unilever as a case study. It identifies ten key risks, including market risks, cyber theft risks, supply chain risks, natural disasters, legal risks, economic risks, fire and explosion risks, goodwill risks, capital risks, and technological risks. The report employs a risk register and risk mapping to assess the likelihood and impact of these risks, detailing monitoring activities and risk response strategies. It highlights the importance of a strong risk monitoring strategy, emphasizing the need for effective communication and collaboration across all levels of management and employees to mitigate potential detrimental impacts on organizational operations and revenue generation. The analysis underscores the dynamic and multifaceted nature of risk management in the global consumer goods market.

Running head: RISKS FACING MULTINATIONAL CONSUMER GOODS INDUSTRY
Risks Facing Multinational Consumer Goods Industry
Name of the Student
Name of the University
Author note

1
RISKS FACING MULTINATIONAL CONSUMER GOODS INDUSTRY
Introduction:
Risks are indispensable parts of the global business operations and are present in every industry in varying degrees. Sadgrove
(2016) defines risk as a loss of financial nature directly or indirectly which have detrimental effects on the business generation.
Business organisations face several risks while operating the market. Factors like change in customers’ preferences cause loss of
customers which directly hits the revenue generation, thus causing revenue risks. Factors like change in government policies like
increase in corporate tax rates can result in loss of revenue due to increase in expenditure, thus, once again culminating to revenue
risks. However, it can be pointed out that government policies indirectly cause revenue risks. The aim of the report is to study ten
everyday risks companies face by taking consumer industry as its background. The study in order to conduct a more specific analysis,
Unilever would be taken as the example. The tools used to conduct the risk analysis would be risk register and risk mapping.
Risk register:
Risk register is a tool which business organisations use to manage and monitor everyday risks. Smith (2016) points out that
risks which business organisations like Unilever face originate due to macroeconomic factors like political and economic factors.
Mangla, Kumar and Barua (2015) point out that irrespective of the sources, have to be managed effectively in order to minimise their
detrimental impacts on the organisational operations and revenue generations. The following risk register would take into
consideration ten risks which consumer companies can face with Unilever as the example. The ten risks which Unilever faces in the

2
RISKS FACING MULTINATIONAL CONSUMER GOODS INDUSTRY
international market are market risks, cyber theft risks, supply chain risks, natural disasters, legal risks or legislation changes,
economic risks, fire and explosion risks, goodwill risks, capital risks and technological risks. (Attached)
Details of monitoring activities:
The management should form a strong risk monitoring strategy. The first step or risk reporting that would be completed would
consist of reporting of any risk by staffs irrespective of ranks. The lower rank staff would report risks immediately to their managers.
The managers should report the same to the apex management. The risk management would start with the apex managers making
decisions and then communicating the strategies to departmental heads. The departmental heads should then breakdown the strategy
among their subordinates. Thus, the risk monitoring would be completed under the leadership of the apex managers and support of
subordinate employees. The frequency of monitoring would depend on the severity of the risks. While factors leading to minor risks
are monitored annually, factors leading very severe risks are monitored monthly, the managers of each department under the
leadership of the senior managers would be responsible for monitoring risks pertaining to their respective departments.

3
RISKS FACING MULTINATIONAL CONSUMER GOODS INDUSTRY
Risk register of Unilever
Ris
k
no
Docume
nt
control
informa
tion
Risk
identifie
r
Risk
Categor
y
Risk
Descrip
tion
Likeliho
od of
risks
Impact of the
risks
Risk
respon
se
catego
ry
Owner of
risk
Risk
response
action
Owner of
Risk
response
action
Due date
for the
action to
be
complete
d
1 Profit
and Loss
stateme
nt,
balance
sheets
Falling
profits in
spite of
strong
marketi
ng
strategie
s
Market
risks
1.
Market
risks
can
originat
e due to
introdu
ction of
new
product
s by
existing
competi
tors
and/or
entry of
new
firms
with
similar
product
s.
2.
Market
risk can
be the
Very
high
conside
ring the
intense
interna
tional
and
local
competi
tion the
MNC
faces.
1. Fall in
revenue and
losing of
consumers.
(short term
impact)
2. Losing
investors, and
supply chains
due to falling
capacity to give
positive ROI.
(medium term)
3. Goodwill risk
and losing of
global market
position (long
term loss)
Strateg
ic
decisio
ns,
marke
ting
strategi
es
Finance
department,
Marketing
department
Strengthen
ing
marketing
of
products,
introducin
g new and
innovative
products
with less
competitor
s
Marketing
departmen
t
2 years

4
RISKS FACING MULTINATIONAL CONSUMER GOODS INDUSTRY
outcom
e of
introdu
ction of
low
priced
variants
by local
compan
ies.
For
exampl
e,
strong
competi
tors like
P&G
introdu
ce more
innovati
ve
consum
er
brands
which
poach
consum
ers
from
Unileve
r
2 Profit
and loss
stateme
Rising
cost to
acquire
Supply
chain
risks
Supplier
s supply
goods
Mediu
m
1. Increased
cost of
materials.
High
Procuremen
t
department
Restructuri
ng supply
chain
Procureme
nt
departmen 1 year

5
RISKS FACING MULTINATIONAL CONSUMER GOODS INDUSTRY
nts,
suppliers
invoices,
Inventor
y
registers
raw
material
s, falling
quality
paramet
ers of
raw
material
s
procure
d
which
do not
meet
the
quality
standar
d
parame
ters of
Unileve
r.
Execessi
ve
transpo
rt cost
2. High cost of
manufacturing
3. Interruption
in the
manufacturing
costs.
4. Lower
degree of
economies of
scale.
5. Higher levels
of materials
wastage
al head tal head
3
Unjustifi
ed loss
of
capital,
Unjsutifi
ed loss
of data,
Unexplai
nable
alter of
informa
tion
Employe
es,
custome
rs or any
other
stakehol
der
Cyber
theft
risks
Cyber-
attacks
lead to
loss of
custom
er and
financia
l data of
extrem
e
busines
s
significa
nce.
Loss of
custom
er data
and
financia
Increasi
ng at a
fast rate
1. Loss of
sensitive
business data.
2. Loss of
financial
resources.
3.
Unauthorized
access to the
business
strategy
information of
the company.
4. R1 High
Apex
managemen
t and all the
department
al heads
1.
Tightening
of security.
2.
Allocating
new email
ids and
passwords
to each
employees
.
3.
Mandating
subordinat
es to
obtain
approval of
superiors
to accede
Apex
manageme
nt and all
the
departmen
tal heads
2 years

6
RISKS FACING MULTINATIONAL CONSUMER GOODS INDUSTRY
l
resourc
es
online
lead to
R1
to specific
informatio
n.
4. Making
it
compulsor
y for all
employees
to
exchange
official
informatio
n
exclusively
on the
formally
laid path of
informatio
n sharing.
5.
Employees
holding
assistant
managers
and
beyond
should lock
their
systems
using a
four layer
password
security.
4 Cannot Employe Natural Natural Rarely Depends on Immed Government Evacuation Governme Cannot

7
RISKS FACING MULTINATIONAL CONSUMER GOODS INDUSTRY
be
docume
nted
es,
custome
rs or any
other
stakehol
der disasters
disaster
s lead
to loss
of
resourc
es,
invento
ry and
assets
the seriousness
and intensity
of the
calamities iate
, security
personnel
etc
nt, security
personnel
etc
be
specified
5
Govern
ment
and legal
websites
Apex
manage
ment
Change
in
legislati
ons
Change
in laws
require
compan
ies to
comply
with the
new
laws
Mediu
m
Requires
Unilever to
adapt the
relevant areas
of operations
as per the laws
Immed
iate
Apex
managemen
t and all the
department
al heads
Complianc
e
Apex
manageme
nt and all
the
departmen
tal heads
Cannot
be
specified
6 Financial
stateme
nts
Apex
manage
ment,
finance
departm
ent, CFO
Economi
c risks
1.
Change
in
interna
tional
currenc
y
exchang
e rates
2.
Change
in taxes.
3.
Adverse
econom
ic
Mediu
m
Requires
Unilever to
adapt the
relevant areas
of operations
as per the laws
Immed
iate or
within
the
date of
enforc
ement
specifi
ed
specifi
ed
Apex
managemen
t and all the
department
al heads
Complianc
e
Apex
manageme
nt and
finance
departmen
t
Immediat
e or
within the
date of
enforcem
ent
specified
specified

8
RISKS FACING MULTINATIONAL CONSUMER GOODS INDUSTRY
changes
4.
Emerge
nce of
econom
ic
policies
resultin
g from
R5.
5.
Scarcity
of raw
material
s.
6.
Increas
e in
policies
of
financia
l
instituti
ons
7 Risk
register
Apex
manage
ment,
security
officer
and any
other
employe
e
Fire,
explosio
ns
Loss of
material
s, loss
of
equipm
ent,
injury of
employ
ees, loss
of
Mediu
m
Unilever loses
productivity,
employees,
resources
Immed
iate or
within
the
date of
enforc
ement
specifi
ed
specifi
Apex
managemen
t and all the
department
al heads
Risk
manageme
nt
strategies
Apex
manageme
nt and
finance
departmen
t
2 years

9
RISKS FACING MULTINATIONAL CONSUMER GOODS INDUSTRY
produc
tivity,
casualty
in case
of large
scale
explosio
ns ed
8
Financial
stateme
nts
Apex
manage
ment
and top
manager
s
includin
g CFO
Goodwil
l risks
1. Loss
of
custom
ers
2. Loss
of
investor
s
3. Loss
of
supplier
s
4. Loss
of
market
position
Mediu
m
Unilever loses
productivity,
employees,
suppliers,
patents and
assets
Immed
iate
Apex
managemen
t and all the
department
al heads
Risk
manageme
nt
strategies
Apex
manageme
nt and
finance
departmen
t 3 years
9
Financial
stateme
nts
Apex
manage
ment
and top
manager
s
includin
g CFO
Capital
risks
Weaken
ing of
capital
base
due to
lower
generati
on of
capital
Mediu
m
Unilever loses
productivity,
employees,
suppliers,
patents and
assets
Immed
iate
Apex
managemen
t and all the
department
al heads
Strengthen
ing
marketing
of
products,
introducin
g new and
innovative
products
with less
Apex
manageme
nt and
finance
departmen
t 4 years

10
RISKS FACING MULTINATIONAL CONSUMER GOODS INDUSTRY
competitor
s to boost
revenue
generation
and
strengthen
goodwill
10
Financial
stateme
nts
Apex
manage
ment
and top
manager
s
includin
g CFO,
R&D
head
Technol
ogical
risks
Modern
technol
ogy
leaves
previou
s
technol
ogy
versions
redund
ant
Mediu
m
Requires
Unilever to
carry on
continuous
research on
product
technology,
operation,
ecommerce
technology etc
Immed
iate
Apex
managemen
t and all the
department
al heads
Requires
Unilever to
carry on
continuous
research
on product
technology
,
operation,
ecommerc
e
technology
etc
Technologc
ial officer 3 years
Risk map:
The risk map is a tool which maps the different types of risks a business organisations face using coloured blocks. The risks
identified for assessment are mapped according to severity so that the management of the concerned organisation can take steps to
mitigate or at least reduce their impacts. The following risk map would analysed the ten risks identified in the case of Unilever on the
basis of severity.

11
RISKS FACING MULTINATIONAL CONSUMER GOODS INDUSTRY
likelih
ood
Insignific
ant Minor Modera
te Major Critical
Rare low low low medium High (4)
Unlikel
y Low(7) Low Mediu
m(7)
Medium
(2) high (7)
Possibl
e low (3) mediu
m
Mediu
m (2) high(1)(9) high (1)
Likely medium
(5)
Mediu
m(9)
high (1)
(6) high (4) extreme(3)
(10)
Almost
certain
Medium
(9)
mediu
m (6)
high (5)
(10)
Extreme(
6)(1)
extreme
(4)(8)
Risk 1. Market risks:
The first risk which the risk register recognises in case of Unilever is market risk. Wales, Wiklund and McKelvie (2015) in this
respect point out that market risks stem due to increased competition either from existing competitors or from newly entering firms.
As far as Unilever is concerned, the main competition which the British Dutch multinational company faces is from its main
international competitors like P&G. These strong can create market risks by introducing more innovative products. This means that
Unilever has to cede a portion of its consumer base and in other words, revenue to these strong competitors. Gordon and Perrey (2015)
adds to the opinion of the previous authors by pointing out that with increased profitability of fast moving consumer goods product
market in both developed and emerging markets, several local firms have also entered the market. This fact is perfectly applicable for
Unilever because the main markets of the company comprise of developed markets of North America, Europe and Australia as well as
emerging markets of South Asia which comprise India and China. It can be pointed out that both these two sets of market are