Kimberly-Clark Corporation, Research Proposal Example

Introduction

The fundamental motivation behind this report is to give a discriminating examination of the fiscal execution of an association, which for this situation of the Kimberley-Clark Corporation. This report will assess and highlight the fiscal pattern of an organization in a specific industry. The report will further investigate the different performance financial measures of value added of the organization. By conducting an analysis, one can recognize an organization’s budgetary qualities and shortcoming over a certain time.The organization chosen for the financial analysis is Kimberly-Clark Corporation, and for the examination of Harnischfege monetary information has been thought seriously about. Being one of the top organizations inside the business, they have been picked as the fundamental associations for the report. This chapter is providing a clear analysis on the importance of financial performance measures that add value to an organization.

The primary budgetary information have been taken from the organizations are focused around the Income Statement that shows the profit loss and gain, the Cash Flow Statement, Balance Sheet, and other financial measures. To assess the current business sector position and business sector pattern, fiscal reports for 2011, 2012 and 2013 were taken from all the organizations. Keeping in mind the end goal to further upgrade Kimberly-Clark’s fiscal state in the business sector monetary articulations were additionally assessed. This report will additionally take a gander at the pattern between these periods and gauge the organizations’ position for what’s to come. In the wake of analyzing the report, it might be simpler to comprehend organizations needing, quality and regions to give careful consideration where required.In conducting this report, it will answer the set research questions on the weight of financial measures in evaluating an organization’s performance.

Background

In 1872, four businesspeople, Charles Clark,Havilah Babcock, Frank Shattuck, and John Kimberly created the organization called Kimberly-Clark and Company which at first sold fabricated paper merchandise. (Kimberley-Clark 2014) They would inevitably foray out into particular forethought things keeping in mind the end goal to contend in a bigger business with organizations, like Proctor and Gamble. In 1978, Kimberly-Clark presented Huggies disposable diapers and were a moment achievement. In the mid 1990’s, Kimberly-Clark blended with Scott Paper and discovered them in a curious pickle, the merger did not go well, the incorporation of Scott and Kimberly-Clark was a rough one that might prompt disappointment from most Scott workers and particularly Scott’s senior administration. In 2002, Proctor and Gamble discharged a line of high end Pampers disposable diapers that was a substitute for Huggies, as well as caught a huge part of Huggies piece of the pie.

Around 2003, Kimberly-Clark chose to rebuild the way that the organization concentrated on business items. They decided to utilize an arrangement of “develop, maintain and fix”, which part all items into ranges that required development, required to manage a piece of the pie or things that required to be reformulated. (Kimberly-Clark 2014) This framework was an aggregate disappointment and brought about the organization to take a few steps back in a piece of the market in the majority of their territories.Had Kimberly-Clark striven for a more item related divisional structure, it is conceivable that they might not have lost such a large amount of its share of the overall industry in the first place.By running with a divisional structure, they might have had the capacity to unite related items, for instance, infant related, paper items, and individual cleanliness, making the stream of the organization and the divisions much smoother. This might take into account the workers in every division to be more centered on their particular items, have more adaptability in fresher item outline, and to be considered responsible when things do not go as arranged.By seeking after this kind of authoritative procedure where every division is severed unto itself, this takes into account economies of degree through the utilization of joint inputs. This can make unmistakable interrelationships with the utilization of crude materials, physical holdings, and appropriations channels and help advances and additionally impalpable interrelationships as information imparting and individual competencies.

As a way in maintaining their market share, they improve on their financial added value forKimberly-Clark Corporation, as they have become an American purchaser merchandise titan, which produces items in 37 nations, and after that offers these items in excess of 175 nations far and wide. As indicated by the fiscal reports, about 25% of the world’s populace buys the organization’s items consistently. (Kimberly-Clark 2013) The organization partitions its operations into four wide sections: Personal Care, K-C Professional, Consumer Tissue, and Health Care. The organization earns very nearly 45.2% of its incomes through its Personal Care business. The Consumer Tissue section, then again, helps 31.4% of the organization’s topline. The organization’s K-C Professional classification creates 15.7% of aggregate incomes, while Health Care helps just 7.7%. (Kimberly-Clark 2013) The Personal Care business, which recorded working edges of about 18% in the most recent quarter, heads all different portions with regards to productivity. While the organization’s Health Care portion is the most modest regarding incomes, it has enlisted the strongest development throughout the most recent three years. Incomes from this fragment expanded at a normal yearly rate of 3.5% in the most recent three years. Conversely, different portions enlisted a normal income development rate of 2.2% throughout the same time allotment. Kimberly-Clark’s Consumer Tissue business recorded the most reduced development in yearly incomes of 0.7% in the course of the most recent three years. This has been a reason for concern since the section helps in excess of 30% of theorganization’s general incomesneeded to perform at a larger amount. Using financial performance measures helps assess the problem of the company.

Problem Statement

In order for the company to gain an insight into what their future financial situations will be like, it is best to evaluate the organization’s performance by the financial value added performance measures. The essential fiscal destination of a firm is the augmentation of its shareholders’ quality. An issue confronted by the shareholders of a firm is that it is troublesome to focus the impact of administration choices on the future offer returns of the firm. Besides, it may be important to actualize certain observing expenses to guarantee that the administrationis centered on attaining this goal. A firm might, in this manner, profit from having the capacity to distinguish those monetary execution measures that can connect the budgetary execution of the firm to it isimpart returns.

Actualizing such a monetary execution measure in the valuation and prize frameworks of a firm ought to guarantee that the administrationis adjusted to the target of shareholder quality boost, and remunerated for attaining it. A substantial number of conventional fiscal execution measures have been produced. These measures are frequently scrutinized for barring a company’s expense of capital, and are viewed as wrong to be utilized when assessing quality creation.Besides, it is contended that these measures are focused around bookkeeping data, which could be bended by Generally Accepted Accounting Practice (GAAP). It is imperative that financial managers look to at the financial metrics in helping to see how far the company has developed in their business strategy, and what they need to adjust for the business environment.

Purpose

The research seeks to understand the decisions of financial added value measures that are a standout amongst the most basic difficulties confronting associations. Execution estimation frameworks play a key part in creating key arrangements, assessing the accomplishment of authoritative destinations, and remunerating administrators. The estimation of fiscal execution in terms of bookkeeping-based proportions has been seen as insufficient, as firms started concentrating on shareholder esteem as the essential long haul-destination of the association. Consequently, esteem-based measurements were contrived that expressly consolidate the expense of capital into execution computations. Within this research, the accompanying value based measures are talked about, by concentrating on their estimation rationale: the budgetary quality included (EVA), the money stream rate of return (CFROI), the shareholder quality included (SVA), the financial edge (EM) and the money stream quality included (CVA).

Chapter 2 will provide a literature review, in which will help in highlighting the limitations to research. What more needs to be added on the finance research, is to financial value added measures for evaluating an organization’s performance.The rising emphasis on the organization’s financial performance basedmeasures, are considered as the best measurements for added value to the organization. Studies exploring the relationship between these measures and offer returns likewise give clashing effects. As a consequence of the apparent restrictions of conventional measures, quality based fiscal execution measures were produced. The real distinction between the customary and quality based measures is that the financial value based measures incorporate an association’s expense of capital in their estimation. They likewise endeavor to evacuate a portion of the bookkeeping coming about because of GAAP. Defenders of financial value based measures, show these measures as a significant change over the customary monetary execution measures, and report large amounts of connection between the measures and offer returns. Various studies holding conflicting effects have been distributed. On the premise of these clashing effects, it is not clear whether the quality based measures can outflank the conventional monetary execution measures in clarifying offer returns.

Significance of the study to Leadership

Everybody from the Accounting Department to the Shareholder must transparent the conventional bookkeeping model. Managers have to break their dependence on profit and perceive how to measure true execution. When they are able to take a gander at “worth”, they will have a significantly more thorough method for measuring execution inside an association. The Finance and Accounting Department can assume a lead part in making this conversion over to esteem-creation. The primary goal is to build values instead of income. Offer costs are the consequence of reducing future expected money streams, not income. What a Manager does with money decides esteem. The restricted assets of the association must be conveyed in a way that expands esteem. This obliges that choices be made focused around producing comes back from assets contributed that are higher than the expense of capital. Quality Based Management is the formal project for dealing with the association around these standards. Quality Based Management will incorporate methods for measuring worth, for example, Cash Flow, Return on Investment, Economic Value Added, and Residual Cash Flow. Each of the three of these methodologies to measuring worth leave from the conventional bookkeeping model. Looking into the research helps in adding to the studies as to date on evaluating these performance measures as a well in adding financial value, and helping to assist in accounting and financial metrics for the future.

Nature of the Study

The design of this research proposal, will based on qualitative research methods. The qualitative approach will be based on using case studies and research that has already been conducted on the research questions. These case studies help in providing historical and literary information on the importance of the topic, and provides a better understanding of the information provided. The research will be designed to not only include past case studies on organizations, but also to include international studies, and research conducted on the use of financial performance measures.The methods that will be primarily used, are to formulate a theory in which tests the importance of financial added metrics, which help in the organization’s performance. The literature and research available will provide a more structured and in-depth analysis in which will give support to the perceived result. In looking at the quantitative analysis, the research will look at observations at other organizations, specifically of Kimberly-Clark and Harnischfeger organizations financial data,which depicts their financial performance using the financial statements. Breaking down the information into a more structured financial analysis will provide a clearer picture into the answering the main research question.

Research Questions

In order to get an accurate assessment of research, and a perspective, a series of questions of the research proposal needs to be asked and adequately answered for correct results. The variables of the proposal will be the independent variables of financial metrics, and organizations. The importance of financial statements is to assess the performance of the organization throughout the year.In testing the financial value added metrics, it helps in bring in a better analysis.The main question of the research is, does financial valued measures help in evaluating the performance of the organization?Subsequent questions that will be used in helping to provide a stronger support for the question includes:

• The most important financial value to the organization?
• Will the value added measure help in future growth of an organization
• Does Economic Value Added (EVA) the right approach in measuring the value created in the organization.

Summary

The outcomes of this study will demonstrate that the financial value added measures are substantial in evaluating an organization’s performance. Conventional bookkeeping and budgetary capacities need to invest a great deal more of a chance on genuine monetary administration. This can envelop numerous things that are quality-driven. Case in point, utilizing another choice model project for capital financing choices can help guarantee that speculations wind up making quality. The budgetary capacity ought to be ready to lead the route on worth-creation by turning into a key fixate on the most proficient method to expand values. This can prompt Value Based Management (VBM), a formal project for dealing with the association regarding financial execution. There need another method for measuring quality-creation. Luckily, lately there has been a burgeoning of estimation projects for VBM. This research will include, Economic Value Added (EVA), Cash Flow Return on Investment (CFROI), and Residual Cash Flow (RCF). It is critical to note that since quality-based measurements is a generally new field, new conclusions and thoughts are still expected. Likewise, since this is an advancing field it is vital for all associations to not put their whole stress on one estimation framework. The most judicious methodology to measuring quality (like capital planning) is to utilize a blend of measurements when assessing value added.

References

Erasmus, Petrus Daniel. (2008). Evaluating value based financial performance measures. SUNScholar Research Repository. Retrieved from http://hdl.handle.net/10019.1/1407

Kimberly-Clark Corporation. (2013). Hoovers. Retrieved from http://cobrands.hoovers.com.ezproxy.apollolibrary.com/company/Kimberly-Clark_Corporation/rfxhji-1-1njhy8.html

Kimberly-Clark Annual Report. (2013). Kimberly-Clark Corporation. Retrieved from http://www.kimberly-clark.com/investors/financial_information/annualreports.aspx?print=true

Venanzi, D. (2012). Financial Performance Measures and Value Creation: The State of the Art, Springer Briefs in Business. DOI: 10.1007/978-88-470-2451-9_2