Danone's risk management analysis

Résumé du document

I chose the Danone SA Company because it is one of the biggest French established companies, and it is important to study the business model of a company as successful as Danone's. It is a food company, and I think that it is very exposed to different risks due to the nature of the products they sell and their life cycle. The products can deeply impact the health of the customers. We saw the example of Danone's water in under developed countries. This factor adds a new dimension to the risk management policy of the group that indeed becomes more complex. The Danone Company is a global player of the food industry. It is present in several countries around the world. All those factors add new risks, thereby threatening the Company. The nature of its products, the regulations in the different countries, the production of the trademarks, different other activities that are generated by Danone are more and more risks, which once reunited form a terrible machine that has to be studied and destroyed day after day.

Extraits

[...] The decisions implemented are made on an international basis but most of the time they go beyond regulations. security audits on industrial sites of the Group (excluding Numico) were conducted by independent bodies which have given a score of 1 to 5 for each industrial site audited. The average of the sites was 4.19 in 2006 (against 4.00 in 2005) reflect the improved security since the establishment of this system of prevention. In late 2007, taking into account the separate audits performed by Numico on its own sites, the average of all sites of the Group amounted to In addition, at 31 December 2007, the Group has 33 sites classified as level allowing them to obtain certification RHP (Highly Protected Risk). [...]

[...] The plan is of course already set up. A repercussion will have to be made on the products, now the question is on which products? I propose to higher the price of best seller, products that are sold because of their image like the “Activia” from Danone. The impact on sales is quasi immediate and that is one of the reason responsible for the actual results of the Company. Concerning suppliers the company should prospect around the world to get the better prices but above all to avoid the risks of not getting the products, the quantity they need when they want it. [...]

[...] It is also number 2 on the baby food's market, the cereals' and biscuits' market. Here is the Group presence worldwide Danone is an interesting multinational company that operates in developed countries such as Europe, U.S, Canada, etc, and developing countries like Brazil. But it also operates in third world countries and emerging countries of the South East were partnerships, joint ventures, mergers and acquisition are they key to succeed. They are using an expansion technique that helped them gain market shares in new countries and therefore take the leading position out there. [...]

[...] Special Hazards: potentially significant, they require a centralized processing as the responsibility of the Group's corporate officers, acts of fraud, as well as various risks (withdrawal of products, credit risk, environmental risk) are covered in terms of available capacity on contracts on the basis of scenarios for probable losses of intensity. Risks traditional common, these risks, which require local management, including coverage of vehicle fleets, guarantees transport of goods, industrial accidents (in countries where they are covered by private insurance) and insurance country-specific. These assurances are negotiated and managed in accordance with local regulations and practices, within the framework of guidelines and data controlled by the Group. [...]

[...] That is why a crisis communication should be established and users compensated for that. Not too much maybe since it is clear that more than 90% of them will never buy a Danone's products again at least if they pay attention. Concerning the regulation issues with trademarks and patents notably and especially in emerging countries the group must invest to protects its properties. If the Group fails to protect its intellectual property rights, the revenues could be affected and the growth slow down. [...]