Module: Financial Performance Management

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Table of Contents
Introduction.................................................................................................................................................3
General Information About the Chosen Companies....................................................................................3
Current Ratio...............................................................................................................................................5
Explain the reasons why company Johnson & Johnson is a competitor of company Unilever.....................7
Kaplan and Norton’s Balanced Scorecard....................................................................................................8
Strengths of the Balanced Scorecard (BSC)..................................................................................................8
Critique and Weakness of the Balanced Scorecard (BSC)............................................................................9
Improvements to the Balanced Scorecard (BSC)..........................................................................................9
Development of Balanced Scorecard for Unilever.....................................................................................10
Integrated Report......................................................................................................................................11
Conclusion.................................................................................................................................................13
Reference..................................................................................................................................................15
Introduction

Organizations assess, analyze, and manage their financial results using a comprehensive
strategy called financial performance administration (FPM). It includes a variety of procedures
and actions meant to guarantee the successful accomplishment of a company's financial goals
and the best possible use of its resources. Financial preparation, forecasting, budgeting,
reporting, and analysis are all integrated as part of FPM to help decision-makers gain
an understanding of the organization's financial health. According to the (Aras el at.,2010)
financial performance management's main objective is to improve a company's financial
performance by coordinating its plans, objectives, and operations with related financial
measures and targets. Organizations can evaluate their financial performance and pinpoint
areas for growth and improvement by regularly monitoring key performance indicators (KPIs)
like revenue growth, profitability, cash flow, and return on investment. The core of FPM is
budgeting and financial planning. Setting financial goals, developing budgets, and assigning
resources to various departments and projects within the corporation are all part of this process.
Making decisions based on anticipated market circumstances and trends and future financial
results requires forecasting, which is essential (Albertini, 2013). The emergence of specialized
software solutions that automate and streamline financial planning, budgeting, forecasting, and
reporting has substantially facilitated FPM operations thanks to technological advancements.
These tools improve the precision and effectiveness of financial performance management by
enabling firms to collect, analyze, and show financial data in real-time. In conclusion, the
practice of financial administration, which offers a framework for evaluating, measuring, and
managing financial success, is an important component of organizational management.

General Information About the Chosen Companies

Great! Let's examine Unilever and Johnson & Johnson further. Johnson & Johnson is a large,
international healthcare organization, whereas Unilever is a multinational consumer goods firm.
Both businesses can be contrasted based on financial parameters and operational activity while
operating in distinct industries. This report I have selected Unilever company and as a
competitor I selected Johnson and Johanson company.
According to the (Ullah, 2021) worldwide manufacturer of consumer goods, Unilever has its
corporate offices in Rotterdam, the Netherlands, and London, the United Kingdom. It was
established in 1930 as a result of the union of the Dutch Margarine Unie and the British soap
manufacturer Lever Brothers. With operations in more than 190 nations, Unilever is one of the
biggest fast-moving consumer products firms in the world. Unilever has a substantial global
footprint and has manufacturing and distribution networks all over the world. The company sells
its goods through a variety of channels, including direct sales, e-commerce sites, supermarkets,
and retail locations. In each market where it competes, the corporation faces rivalry from other
international consumer products companies as well as from local and regional rivals. Unilever
has a dispersed organizational structure and operates through a number of subsidiaries. With
Unilever PLC listed on the London Stock Exchange and Unilever N.V. listed on the Euronext
Amsterdam, it has a dual-listed company structure. The company's operations are split into
three primary groups: Foods & Refreshment, Home Care, and Beauty & Personal Care. While,
a worldwide firm called Johnson & Johnson focuses on the creation, production, and marketing
of many different healthcare goods. Its headquarters are in New Brunswick, New Jersey, and it
was established in 1886.Some general information about two organization. All of Johnson &
Johnson's products are guaranteed to be safe, high-quality, and innovative. For the purpose of
introducing fresh and enhanced healthcare solutions to the market, the company places a high
priority on research and development. Initiatives related to corporate social responsibility and
sustainability are also given priority. It is important to note that Johnson & Johnson has recently
dealt with legal issues with certain of their products, including claims about the security of
talcum powder and specific medical devices. Although there have been lawsuits and
settlements related to these incidents, it is crucial to remember that the business is still in
operation and continues to provide a vast array of reliable healthcare items.

Unilever

Industry: Consumer Products

Country: Worldwide

Products: Unilever is well-known for its extensive line of consumer goods, which includes food
and drink, cleaning supplies, and cosmetics and personal care items.
Johnson & Johnson

Industry: Healthcare

Country: Worldwide

Products: Various healthcare sectors, including pharmaceuticals, medical equipment, and

consumer health goods, are served by Johnson & Johnson (Lakada el at., 2021).

Let's now examine the financial data for the two businesses. Please note that the following
financial information is provided for illustrative purposes only and may not accurately reflect
Unilever and Johnson & Johnson's current financial situation.

Current Ratio

Unilever

 Sales: $50 billion

 Total Assets: $60.07 billion
 Overall Profitability: Net Profit Margin of 10%
 Leverage: Debt-to-Equity Ratio of 0.5
 Valuation: Price-to-Earnings (P/E) Ratio of 20

Figure 1: Unilever Revenue

Johnson & Johnson

Sales: $70 billion

Total Assets: $81.9 billion
Overall Profitability: Net Profit Margin of 15%
Leverage: Debt-to-Equity Ratio of 0.6
Valuation: Price-to-Earnings (P/E) Ratio of 18

Figure 2: Johnson & Johnson Revenue Change

Let's now examine the financial results of Johnson & Johnson and Unilever using a variety of
ratios. We'll talk about valuation ratios, leverage, profitability, working capital cycle, and liquidity.

Liquidity Ratios: Evaluates the company's capacity to meet immediate obligations. Better
liquidity is indicated by a greater ratio. While comparable to the current ratio, current assets do
not include inventory. It offers a liquidity measurement that is more cautious.
Working Capital Cycle Ratios: calculates the typical time it takes to turn inventory into sales.
calculates the typical time it takes to get payments from consumers. calculates the typical time it
takes to pay suppliers.

Profitability Ratios: Determines the amount of sales money that is left over after subtracting
the cost of the goods sold. Shows how profitable the company's core operations are. Evaluates
the effectiveness of the company in making a profit from its assets (JOhNSON el at., 2012).

Leverage Ratios: Evaluates the ratio of a company's total debt to its stockholders' equity. It
shows how much debt financing there is in comparison to equity financing.

Valuation Ratios: EPS is calculated by comparing the stock price to the company's EPS. It aids
in determining market expectations and the company's valuation.

Explain the reasons why company Johnson & Johnson is a competitor of

company Unilever.

In some sectors of their respective industries, Johnson & Johnson and Unilever are seen as
rivals. In the consumer goods industry, particularly in the area of personal care and hygiene
products, Johnson & Johnson and Unilever both have a presence. While Johnson & Johnson
also sells personal care items like Johnson's infant products, Neutrogena skincare, and
Listerine mouthwash, Unilever is better known for its extensive lineup of personal care brands
like Dove, Axe, and Sunsilk (Bintara, 2020). The two businesses compete as a result of the
overlap in product areas. Both Johnson & Johnson and Unilever are well-known internationally
and have operations in many different nations. In different parts of the world, they battle for
market share and client loyalty. Prescription medications and medical devices are the main
focus of Johnson & Johnson's pharmaceutical section, which may not be directly related to
Unilever's core business. But there is some rivalry between them in the market for consumer
health items. Tylenol, Motrin, and Benadryl are examples of over-the-counter drugs offered by
Johnson & Johnson that compete with Unilever's medical brands like Tums and Calpol (Fu el
at., 2019). It's crucial to remember that while Johnson & Johnson and Unilever might compete in
some areas, they also have different goals and work in different sectors of the economy. While
Unilever primarily concentrates on consumer goods, Johnson & Johnson has a more varied
business including pharmaceuticals and medical devices. Depending on the particular product
categories and localities involved, the level of competition between them may vary.

Kaplan and Norton’s Balanced Scorecard

Robert Kaplan and David Norton created the Balanced Scorecard (BSC) framework, which is a
widely used performance evaluation and strategic management tool. Although the BSC has
been enthusiastically embraced and praised, it is also the target of criticism and has
encountered difficulties lately. The BSC will be examined critically, along with any possibility for
age, and changes will be suggested. We will also create a balanced scorecard for Unilever that
takes into consideration its strategy and goals.

Strengths of the Balanced Scorecard (BSC)

Through the use of both financial and non-financial measurements, the BSC offers a balanced
view of organizational performance. It incorporates customer, internal process, and learning and
growth views in addition to typical financial measurements. This aids firms in concentrating on
sustainability and long-term success. Organizations can match their performance metrics with
strategic goals thanks to the BSC (Hasan and Chyi 2017). The BSC assists in ensuring that the
organization's operations and efforts are in line with its overall strategy by selecting and
measuring key performance indicators (KPIs) that are directly related to the strategic goals. The
BSC promotes interaction and cooperation between various organizational levels and functions.
It offers a consistent vocabulary and framework for talking about performance, which makes it
easier to coordinate and comprehend the strategic aims.

Figure 3: Balanced Scorecard

Critique and Weakness of the Balanced Scorecard (BSC)

The BSC is frequently criticized for historically emphasizing financial measures as a gauge of
organizational effectiveness. Some claim that a company's strategy, customer value, and
operational excellence cannot be fully captured by financial indicators alone (Quesado el at.,
2018). The BSC needs to take non-financial variables into account more thoroughly. The BSC
is a general framework that might not entirely take into account the unique strategic needs and
goals of each firm. Some claim that businesses should modify their scorecard to reflect the
particular dynamics of their industry, competitive positioning, and value drivers. The BSC's
efficacy might be constrained by a one-size-fits-all strategy. The traditional BSC has a
propensity to ignore external considerations like market trends, customer preferences, and the
competitive landscape in favor of internal KPIs and benchmarks. The BSC should embrace a
deeper grasp of the external environment and integrate it into the performance monitoring
system if it is to be really strategic. The BSC has drawn flak for primarily serving as a static
measurement tool as opposed to a dynamic management system. Critics contend that it need to
be more closely related to initiatives for continuous improvement and give firms the ability to
modify and adapt their strategy in light of ongoing performance assessments.

Improvements to the Balanced Scorecard (BSC)

The business strategy and vision should be closely correlated with the BSC. This requires
stating the strategic goals in plain terms and utilizing the scorecard as a tool to monitor progress
toward achieving those goals. The BSC ought to showcase the distinctive value proposition and
competitive advantages of the business. The BSC might be broadened to include important
market dynamics, consumer feedback, and industry trends to answer the issue of its weak
attention on external elements. This would enable proactive decision-making and offer a more
comprehensive view of performance (Giannopoulos el at., 2013). The BSC should concentrate
more focus on non-financial indicators that assess customer happiness, employee engagement,
innovation, and sustainability, even though financial metrics are still vital. This balanced strategy
guarantees a thorough assessment of performance. The BSC ought to develop into a dynamic
management structure that promotes ongoing education, criticism, and development.
Development of Balanced Scorecard for Unilever

We must take into account the strategy and vision of Unilever while creating a balanced
scorecard for the business. The goals of each pillar of the BSC can be built upon Unilever's
Sustainable Living Plan, which focuses on sustainable growth, responsible sourcing, and social
impact. The following metrics and goals may be included in the scorecard:

 Financial Perspective: Boost sales of eco-friendly brands and goods. Boost revenue

and cost effectiveness. For the company's shareholders, this goal focuses on
maximizing return on investment. Return on assets (ROA) or return on equity (ROE)
measures how effectively assets or shareholder stock are used to generate profits.
 Customer Perspective: Increase consumer loyalty and happiness by offering high-
quality, environmentally friendly products. Gain market share in important categories and
areas. Delivering goods and services that meet or exceed client expectations is the goal
of this mission. Increasing Unilever's market share in its target markets is the main
emphasis of this strategy.
 Internal Process Perspective: The focus of the internal process perspective is on the
effectiveness and efficiency of Unilever's internal processes. Improve supply chain
efficiency to lessen its negative effects on the environment. Promote product
development and innovation that is in line with sustainability objectives. This goal is to
streamline the supply chain to guarantee prompt delivery and lower the price of keeping
inventory.
 Learning and Growth Perspective: Encourage a culture of social responsibility and
sustainability. Develop your skills and abilities to support sustainable practices and
innovation. Fostering a positive workplace culture and high employee engagement are
the main goals of this purpose. Employee training hours per employee, attrition rates, or
employee satisfaction surveys (Chaker el at., 2017). Within the organization, this
mission seeks to promote innovation and efficient knowledge sharing. Amount of money
invested in R&D, the number of new patents, or the number of staff recommendations
that were put into practice.

The balanced scorecard offers a thorough view of the performance of the company across
many dimensions by monitoring these metrics and coordinating them with Unilever's strategy
and vision. It helps Unilever to analyze financial performance, increase consumer value, and
promote continuous improvement while also assessing its progress toward its sustainability
goals

Integrated Report

An integrated perspective of the success of a business, its tactics, and value creation across
time is provided by the Integrated Reporting (IR) framework, which combines financial and non-
financial information in a comprehensive report. A reporting methodology called integrated
reporting tries to give a more all-encompassing and thorough perspective of how well a
business creates value and performs. By fusing financial data with non-financial elements
including environmental, social, and governance (ESG) issues, it goes beyond typical financial
reporting. Helping stakeholders comprehend how an organization's strategy, governance,
performance, and prospects create value throughout the short, medium, and long term is the
aim of integrated reporting. Let's talk about how Unilever can implement integrated reporting
and its advantages and disadvantages.

Benefits of Integrated Reporting at Unilever: Integrated Reporting incorporates non-financial

and prospective data, going beyond conventional financial reporting. As a result, Unilever is
better able to explain to investors how the firm creates value and what its strategy, risks, and
opportunities are. IR makes it possible to evaluate a company's performance more thoroughly
by taking both financial and non-financial elements into account. Integrated reports allow
businesses to express their success in terms of several capitals, such as financial,
manufactured, intellectual, human, social, and natural capitals, according to (Eccles et al.,2014).
The ability to create value and the long-term viability of a company's operations are both
evaluated by investors with the aid of this thorough information. Investors are given access to a
wider variety of information through IR, enabling them to make better educated investment
decisions. Investors can assess Unilever's resource management, risk management
procedures, and alignment with sustainability goals by looking at non-financial metrics including
environmental impact, social responsibility, and corporate governance included in the integrated
report. According to IIRC (International Integrated Reporting Council), the adoption of integrated
reporting encourages a multi-stakeholder perspective, fosters a long-term focus, and makes it
easier to integrate financial and non-financial issues. Unilever uses integrated reporting to
balance the interests of diverse stakeholders. IR encourages openness and accountability by
releasing pertinent information about the company's effects on society, the environment, and
governance. The ability to better comprehend Unilever's sustainable practices and how it
manages limited resources for long-term performance allows stakeholders, including investors,
clients, employees, and communities. According to (Zadek, 2014), integrated reports give
businesses the ability to explain how they create value beyond financial returns and interact
meaningfully with stakeholders. The report addresses the worries and expectations of many
stakeholders while fostering trust and fostering connections.

Figure 4: Integrated Reporting

Challenges of Integrated Reporting at Unilever: Access to accurate and trustworthy data,

including both financial and non-financial information, is necessary for integrated reporting.
Given the complexity and diversity of Unilever's activities, gathering, interpreting, and confirming
such data can be a substantial task (De el at., 2014). There are currently no uniform standards
or procedures for integrated reporting. Comparing Unilever's performance and value generation
to that of its competitors or industry benchmarks may become challenging as a result. For the
efficient deployment of integrated reporting, standardization and comparability across industries
and businesses are essential. A holistic picture of a company's performance, including
information about the future, is what integrated reporting strives to deliver. A holistic picture of a
company's performance, including information about the future, is what integrated reporting
strives to deliver. Unilever must, however, strike a balance between disseminating essential
information and safeguarding confidential or commercially sensitive information. Finding the
right information to release while preserving the company's competitive position is the difficulty
at hand. Integrated reporting, in sum, provides Unilever with a number of advantages, including
as the provision of thorough information, improved decision-making, and increased stakeholder
engagement (Frias‐Aceituno el aat., 2014). Unilever's integrated report enables investors to
comprehend the company's use of limited resources for long-term sustainable development and
balances the interests of diverse stakeholders by combining financial and non-financial data.
For integrated reporting to be successfully adopted, however, issues with data accessibility,
standards, and protecting confidentiality must be resolved.

Conclusion

In assessing a company's financial health, efficiency, and effectiveness, financial performance

management is essential. Companies can evaluate their liquidity, working capital management,
profitability, leverage, and valuation by looking at different financial ratios and metrics. The
ability of the organization to meet immediate responsibilities, make a profit, control risks, and
add value for stakeholders is better understood thanks to this research. When comparing the
financial results of Johnson & Johnson and Unilever, it's crucial to take the industry and national
contexts into account. Johnson & Johnson, which operates in the healthcare sector, and
Unilever, which operates in the consumer products sector, have different business models and
dynamics. As a result, it is advised to compare their financial measures and performance with
care because industry-specific benchmarks and expectations may differ (Helmold and Samara
2019). A comprehensive perspective of a company's financial and non-financial performance,
strategy, and value generation is also provided via integrated reporting. By including forward-
looking data and non-financial indicators, it gets beyond the drawbacks of conventional financial
reporting. Investors may have a better knowledge of Unilever's long-term sustainability
practices, resource management, and stakeholder involvement if the company adopts
integrated reporting. Adoption of integrated reporting is difficult due to issues with data
availability and quality, standardization, and striking a balance between transparency and
confidentiality. To ensure accurate and dependable reporting while preserving competitive
advantages, Unilever must address these issues (Nandakumar el at., 2011). In general, for
businesses like Unilever to effectively convey their value proposition, sustainability initiatives,
and stakeholder alignment, integrated reporting and good financial performance management
are essential. Companies can better understand their financial performance, make educated
decisions, and satisfy the changing expectations of investors and stakeholders by embracing
integrated reporting and applying a broad set of financial statistics.
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