Analyzing Unilever's International Financial Management Practices

This essay delves into the international financial management strategies employed by Unilever, a multinational retail company, emphasizing the significance of navigating global financial landscapes for growth and sustainability. It explores Unilever's dividend distribution policy, highlighting its commitment to returning excess cash to investors while balancing the need for reinvestment in the business. The analysis includes an examination of the Efficient Market Hypothesis in the context of Unilever's stock price management and its efforts to maintain stability for investors. Furthermore, the essay addresses the challenges Unilever faces in the international market, such as competition, regulatory differences, and economic factors like Brexit, and discusses methods for appraising projects, including economic, market, and financial analysis. The report underscores the importance of international financial management for multinational corporations like Unilever, enabling them to raise funds, manage risks, and expand operations across borders.

International
Financial
Management
Assessment 1

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Discuss the significance of the international financial management of Unilever........................3
Challenges faced by Unilever in the International Market..........................................................4
Dividend Distribution Policy of Unilever....................................................................................4
Efficient Market Hypothesis theory of Unilever.........................................................................5
Methods of the appraising project concerning Unilever..............................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
International financial management typically means the trade of products and services across
numerous countries by the medium of the exchange of foreign currency. It helps the business
persons of various countries in generating more profit thorough import and export and gaining
more recognition all over the world. This has increased the globalisation and the crisis of the
changing business environment which has led to the elevation of the problems in international
financial management (Chewpreecha, Prabhu and Mukhopadhyay, 2021). This essay consists of
the dividend distribution policies of the company along with the hypothesis theory of the
organisation and how these policies have helped in the development of the firm internationally.
MAIN BODY
Discuss the significance of the international financial management of Unilever.
It can be defined as the planning, organization, control and steering of financial resources
that are available to internationally operating companies. The global monetary framework is a
basic entry that is used by worldwide associations to channel the monetary finances from one
side of the planet to the other. This framework helps the business units to associate with potential
investors universally.
Importance of the International financial management in Unilever
 The fiscal administration system helps in settling diverse monetary debates that might
emerge among the partnerships of various nations. These are taken into consideration by
the global governing bodies such as IMF, World Bank and many more.
 The administration likewise decides the position a country holds in the worldwide
commercial centre.
 It makes it easy for the nations to decide the currency rates and set up their very own
reasonable separation pace of money on the lookout (Harris and O'Brien, 2021).
 This gives experiences to the organizations to decide the expansion rate which is
continuing in an economy and what is the contributing force of general society.
 It helps diverse associations in terms of economic and monetary working at a worldwide
level to keep an equilibrium among them and give the organizations the required funds.

Challenges faced by Unilever in the International Market.
The challenge which the Unilever has faced in the international market is that it has to be
organised in advance of the situation which can arise uncertainly and can affect the policies of
the company. Because numerous countries have different laws and norms which are subjected to
various restrictions on the exchange of products and services (Huang, 2021). As in the case of
Unilever, the growth and the advancement of the technology have formed many new challenges
for the organisation to expand its activities in the international market.
 The brutal competition in the market due to the prices which has been lowered by the
competitive firms.
 The impact of Brexit between the trade agreement of the UK and the countries of Europe.
 The rise of domestic companies with a low price in the market has hiked the competition.
 The differentiation of the products increases the competitiveness between the firms.
With the achievement and expansion of the company, dealing with the demands of interested
parties has become enormously difficult. That being said, the organizations' excessive reliance on
the captivation of leadership and work, as well as the need for a well-considered approach to
progress, have put the company at risk. With Time, the excitement for competition has increased,
especially when it comes to assessing the value of Unilever's product. Most of the competitors in
the market can afford to lower tariffs to gain market share. In addition to price, other competitive
variables include product properties, product quality and reliability, customer service or
products, relative prices, market and sales capacity, and the company's reputation.
Dividend Distribution Policy of Unilever
Dividend policy alludes to the monetary choices that are taken up by the business which are
connected with the payment of dividends to the shareholder. This policy determines a business to
concentrate on the rate at which it will give profits to its investors and different shareholders
(Manoel and da Costa Moraes, 2021). This policy takes into account the evolution of the profits
generated, the company's financial position, the interests and reactions of shareholders, the
company's future growth prospects, etc. Dividend policy is exposed to change as it relies upon
the real benefit acquired by the business. The essential directors need to settle on a basic choice
here as the investors would need a profit from their contributed sum yet the business would
require the benefits to be held in the business.

The Dividend Distribution Policy of Unilever will guarantee that it returns cash from
operations that is more than its instant and predictable necessities back to the investors over the
long term. An interim dividend is considered for presentation by the Board members which is
dependent on the productivity and the performance of the organization during the year and the
last profit depends on the exhibition for the entire year (Melgarejo Duran and Stephen, 2021).
Unilever has to struggle to get a constant flow of dividends for the shareholders that is in
their best long term interest. Profit will be pronounced out of the current year's Profit After Tax
of the Company. In certain conditions including yet not restricted to misfortune later assessment
in a specific monetary year, the Board may consider using held profit for the statement of profits,
liable to relevant lawful arrangements. The factors which the company Unilever considers is
Liquidity position and the flow of cash, Capital expenditure, Restructuring activities, Interim
dividend, changes in the regulatory requirements and many more.
Efficient Market Hypothesis theory of Unilever.
Market effectiveness indicates how the cost adequately reflects all available knowledge. The
Effective Markets Hypothesis (EMH) contends that markets are dynamic and do not take up
room for generating additional income from investment because the whole thing is reasonably
priced. This means that even if you can influence the market return via passive index investing,
you have little desire to beat the market up (Ní Chasaide, 2021). It is a hypothesis that stock
prices imitate all facts and constant dominant generation is impossible. According to EMH, the
shares onboard are constantly swapped at their fair price, making it impossible for traders to buy
undervalued stocks or advertise stocks at excessive cost. As a result, it must be inconceivable to
outperform the general trading centre by specialized inventory selection or the timing of the
market, and the best way for a financial professional to get higher returns is to buy riskier assets.
The Unilever market study is an important component for various potential stakeholders in
the company to make various decisions related to business. The management of Unilever tries to
keep the price of its stock at a less volatile price as investors need a guarantee of returns. EMH
can help business owners with this.

Methods of the appraising project concerning Unilever.
1. Economic Appraisal: The highlighted challenge factors consist of the demand for raw
materials, the level of capacity utilization, the expected sales, the expected costs and the
likely profits. It is stated that Unilever typically needs to keep a clear eye on a volume of
income that governs various financial variables such as sales, purchases, fees (Oliveira
and Juca, 2021). The festering incomes of marginalized people in some developed
countries, including the United States, may reduce the capacity of the market for
abundant consumer products, including those advertised through Unilever. One US dollar
could increase the exchange rate by making it more expensive for Unilever.
2. Market analysis: Before production starts, the entrepreneur wants to expect the possible
marketplace for the product. Unilever assumes who the possible consumer for the product
will be and where and when the goods could be sold. This is because there is no cost to
the manufacturer to produce unless it is sold. Indeed, the capacity of the market is the
determinant of the likely profitability of an entrepreneurial career.
3. Financial Analysis: It is the most effective financial analysis that enables an
entrepreneur to bring together the work of one system, another system, and another raw
material to combine them to provide items. The level of activity of Unilever, expressed as
skill utilization, wants to be properly described in the marketing strategy (Taran, Simga-
Mugan and Mironiuc, 2021). However, Unilever sometimes does not achieve the
intended potential due to numerous deals such as unexpected shortage of raw materials,
the sudden interruption of power supply, inability to penetrate the market mechanism etc.
CONCLUSION
From the above essay, it can be summarised that there is a major differentiation in the
domestic and international financial markets. International funding helps MNCs raise the funds
they need to grow and survive in an international marketplace. The report takes into account the
business of Unilever, a multinational retail company. The company's dividend policy has been
highlighted with the same importance as shareholder wealth. It also demonstrated how a
competent manager can increase the success of an organization. Further, the challenges faced by
the organisation in the international monetary market is discussed. Moreover, the projects are
used in the appraisal of the projects.

REFERENCES
Books and Journals
Chewpreecha, U., Prabhu, V.S. and Mukhopadhyay, K., 2021. Impact of Electronics System and
Design Manufacturing and IT Policy in Selected Regions. In Economy-Wide Assessment
of Regional Policies in India (pp. 155-191). Palgrave Macmillan, Cham.
Harris, J. and O'Brien, W., 2021. US Multinationals’ Alternatives to Repatriation
Taxes. Available at SSRN 3493922.
Huang, Q., 2021. Financial Constraints and Risk Aversion: A Tax-based Theory of Rising
Industrial Concentration. Available at SSRN 3907016.
Manoel, A.A.S. and da Costa Moraes, M.B., 2021. The impact of internationalization degree on
cash levels: Evidence from Latin America. International Business Review. p.101949.
Melgarejo Duran, M.A. and Stephen, S.A., 2021. Internationalization and cash holdings before
and after the 2008 financial crisis: an empirical investigation of Latin American
firms. Macroeconomics and Finance in Emerging Market Economies. pp.1-18.
Ní Chasaide, N., 2021. Ireland’s tax games: the challenge of tackling corporate tax
avoidance. Community Development Journal. 56(1). pp.39-58.
Oliveira, E.C. and Juca, M.N., 2021. Multinational Dividend Policies: A Systematic Literature
Review to Future. International Journal of Economics & Business Administration
(IJEBA). 9(1). pp.442-465.
Taran, A., Simga-Mugan, C. and Mironiuc, M., 2021. Country-segment disclosure of foreign
operations from Central and Eastern Europe: Country-level determinants and value
relevance. Journal of Multinational Financial Management. 62. p.100718.