Overview

Unilever is a multinational consumer goods company headquartered in Rotterdam, Netherlands, and London, United Kingdom. Some of its major brands in the U.S. include Dove, Hellmans, Lipton, and Ben & Jerrys. The company is organized into four main divisions including Foods, Refreshment (beverages and ice cream), Home Care, and Personal Care. Consider the following:

Despite reporting better than expected results for 2015, the Unilever CEO, Paul Polman, warned that the company expected tougher market conditions in 2016. Speaking in mid-January 2016, Polman pointed to the volatility in the stock market in January 2016 as evidence of the tougher market conditions.

Polman stated that Unilever would be rolling out a zero-based budgeting initiative across the entire company. This initiative was expected to save approximately 1bn (about $1.09 billion in US dollars) per year by 2018. Unilever was seeking steady improvement in its operating margin and strong cash flow.

Answer the following: What is zero-based budgeting? What is operating margin? How would zero-based budgeting help Unilever increase its operating margin? How would zero-based budgeting impact Unilevers cash flows? What benefits does zero-based budgeting potentially hold for Unilever? What disadvantages? Put yourself in the position of a brand manager for Unilever. Imagine that your brand has been performing well over the past three years. How would you feel about the zero-based budgeting initiative? How c