2.8 MEUR - Gorenje - Gorenje Group

Risk management in the Home Appliances
Division (HA)
Business risk management –
Home Appliances Division
Global financial crisis with its
consequences represents key risk
to our business.
Business risks are classified as risks associated with the
ability or provision of generating short-term and longterm
operating revenue, control of business processes
and maintenance of asset value.
The following important kinds of business risks were
defined in the Gorenje Group: external risks, sales risks,
purchase risks, product risks, development risks, human
resources risks, property loss risks.
� External risks are mainly associated with the
changes in macroeconomic conditions of operation
in individual key markets. Due to the current
global financial crisis, and consequently increasing
unemployment, increases in the prices of basic raw
materials and intermediate goods and the versatility
and complexity of business activities, the exposure
to the risks mentioned is still substantially increasing.
The management of the Gorenje Group has
assessed that the exposure to such risks is very
high in individual markets.
� Sales risks are associated with competition in the
sale of products and services in individual markets and
The Management Board of the company Gorenje, d.d.
include risks of appropriate marketing strategy (brand
name, price and functional competition of products,
design etc.), risk of increasing negotiating power of
major industrial customers and trade chains, and risk
of quality of after-sales services. The Management
Board of the Gorenje Group has assessed that
the exposure to such risks is very high.
� Unpredictability in the raw materials markets and
the movement of the US dollar exchange rates still
represent the main impact on purchasing risks. . In
addition to extraordinary events (weather catastrophes,
the Arab uprising, the catastrophic earthquake
in Japan), restrictive conditions of the debt crisis in
the EU countries, unstable financial markets and the
fear of a new recession have significantly increased
risks of unpredictable movements in the raw materials
markets. By means of market analyses and trends,
the purchasing department decides, in co-operation
with the suppliers, on the best starting points for
forward purchases of stock-exchange metals for adequate
periods. In the field of sheet steel that is not
traded on the Stock Exchange, we take advantage of
the possibility of agreements reached with strategic
partners in the long term (up to one year, by price
indexing models). In conditions of increased volatility
and risks, such activities reduced the exposure
of Gorenje to the raw materials markets. Long-term
partnerships have remained the strategic advantage
of purchasing, but exclusively on competitive bases.
The development of supply sources in the LCC markets
has continued and these are mostly US dollar
areas by which natural hedging of sales in US dollars
ANNUAL REPORT 2011
has been provided. In spite of the expected growth
in the global economy and prices of raw materials
in the world stock exchanges, the Management
Board of the Gorenje Group has assessed that
the exposure to purchase risks has increased.
� Product risks have been focused on the control of
risks that may lead to incorrect operation of appliances
in the market and, finally, to a mass failure or
product liability of the producer. Risks are limited by
suitable development systems and quality assurance
in scope of production, sales and after-sales
processes, and additionally by the insurance of
product liability. A quality management system in
accordance with the requirements of SIST EN ISO
9001/2000 and the system of accredited methods
under ISO 17025, and the six sigma quality management
system have been established. Through the
use of Businesses Intelligence information tools, the
time to detection of any possible complete breakdowns
has been shortened. Thus, costs arising from
serial failures have been limited. A set of tests in the
development and production process was extended
also by HALT/HASS tests and new capacities in
test laboratories. The Management Board of the
Gorenje Group has assessed that the exposure
to product risks is moderate with respect to
the measures for risks protection.
� Risks associated with the achievement of the
planned economics of investments, successful activation
of investments in the development of new
product generations, and successful introduction
of new technologies are of key importance among
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