The political environment can impact business organizations in many ways. It could add a risk factor and lead to a major loss. GEA’s share price performed encouragingly over the course of 2014 in a market environment dominated by strong economic and political factors. GEA is looking to serve markets with limited project risk profile with a maximum project duration of 1-2 years. The 1-2 year is a very short interval as this gives GEA an opportunity to be prepared for substantial changes in the general environment, such as a sudden escalations of a financial crises like the one in Greece as well as the situation in Ukraine. Such crises can result in companies dealing with currency fluctuations on cash management, possibility of inflation,
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The food industry offers a stable consumer spending during economic good and tough times as many see it as affordable. In 2014 GEA’s strongest growth region was Western Europe followed by North America. In terms of countries, USA had the strongest sales followed by China. Due to increase in sales in USA and China sale transactions in various currencies increases exposure to fluctuations in the foreign currency rate which could result in lower revenues and expenses derived from sales in foreign currencies. Majority of GEA’s products are manufactured in Germany as well as Western Europe due to the majority of research and development programs taking place in such areas. One of GEA’s main focus is to ensure long-term price stability and reliability form their main suppliers as this will reduce the risk of price fluctuations with regard to the obtaining of raw materials and semifinished products. One area of concern for GEA is the fact that revenue was down in the Middle East, Latin America, and Africa regions as of 2014. These regions provide great potential for profit, but also more risk from various factors such as political risks, poor corporate governance system, less liquidity and the difficulty of raising capital. The emerging markets in such regions can produce substantial returns however GEA must assess the risks prior …show more content…
Robust research and development capabilities contributing to substantial amount of total revenue
4. Diversified global footprint including GEA Food Solutions, GEA Farm Technologies, GEA Heat Exchangers, GEA Mechanical Equipment,
GEA Process Engineering, GEA Refrigeration Technologies
One of the largest suppliers to the food processing industry and a wide range of process industries
W
1. Unfunded pension obligations impacting the cost structure
2. Legal disputes with a few companies with the claim amount in millions
3. Comparatively smaller growth rate in Latin America and African countries
-brand portfolio
-competitive market
-future profitability
-future debt rating
-productivity
-small business units
-cost structure
O
1. Growing global energy demand
Acquisitions to enhance competitiveness and making brand more sturdy
Horizontal expansion into process automation
The benefits of investing in emerging markets
T
Threats against GEA include intense competition with more marketing by competitors, foreign currency risks with frequent fluctuation, increasing compliance cost.
Porters 5
The food industry offers a stable consumer spending during economic good and tough times as many see it as affordable. In 2014 GEA’s strongest growth region was Western Europe followed by North America. In terms of countries, USA had the strongest sales followed by China. Due to increase in sales in USA and China sale transactions in various currencies increases exposure to fluctuations in the foreign currency rate which could result in lower revenues and expenses derived from sales in foreign currencies. Majority of GEA’s products are manufactured in Germany as well as Western Europe due to the majority of research and development programs taking place in such areas. One of GEA’s main focus is to ensure long-term price stability and reliability form their main suppliers as this will reduce the risk of price fluctuations with regard to the obtaining of raw materials and semifinished products. One area of concern for GEA is the fact that revenue was down in the Middle East, Latin America, and Africa regions as of 2014. These regions provide great potential for profit, but also more risk from various factors such as political risks, poor corporate governance system, less liquidity and the difficulty of raising capital. The emerging markets in such regions can produce substantial returns however GEA must assess the risks prior …show more content…
Robust research and development capabilities contributing to substantial amount of total revenue
4. Diversified global footprint including GEA Food Solutions, GEA Farm Technologies, GEA Heat Exchangers, GEA Mechanical Equipment,
GEA Process Engineering, GEA Refrigeration Technologies
One of the largest suppliers to the food processing industry and a wide range of process industries
W
1. Unfunded pension obligations impacting the cost structure
2. Legal disputes with a few companies with the claim amount in millions
3. Comparatively smaller growth rate in Latin America and African countries
-brand portfolio
-competitive market
-future profitability
-future debt rating
-productivity
-small business units
-cost structure
O
1. Growing global energy demand
Acquisitions to enhance competitiveness and making brand more sturdy
Horizontal expansion into process automation
The benefits of investing in emerging markets
T
Threats against GEA include intense competition with more marketing by competitors, foreign currency risks with frequent fluctuation, increasing compliance cost.
Porters 5