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We cannot control the national economy, but we can control how we respond to macro-opportunities
and challenges.
Changes in consumer eating habits
Changes in consumer eating habits such as a decline in consuming
food away from home, declining portion sizes, or shifts in non-customer
restaurant preferences could reduce demand for our products. If consumer
eating habits change, we may be required to modify product lines at
high implementation costs. We remain close to our customers’
requirements arising from changes in consumer eating habits,
however, compliance may be costly and time consuming.
Environmental, health and safety compliance
Compliance is non-negotiable. Non-compliance results in lawsuits,
investigations and reputational damage. We face a broad range of international,
national and local laws and regulations governing issues such as discharges
to air, soil and water; hazardous substances; contamination exposures;
employee health and safety; and fleet safety. The cost of compliance
is significant, and although we are committed to ensuring we
remain compliant, the risk is ongoing.
Reputational damage from adverse publicity
Good reputation is critical particularly in selling our own
brand products. Any event that damages our reputation such
as adverse publicity about the quality, safety or integrity of our
products could quickly affect our results. Instances of food-borne
illnesses or food tampering or other health concerns, even those
unrelated to our products, can result in negative publicity about the
foodservice industry and dramatically reduce our sales.
Product liability claims
As a reseller of food products, we may be exposed to liability
claims should our products cause injury or illness. We have
insurance to cover product liability claims. We generally seek
contractual indemnification and insurance coverage from suppliers,
but this indemnification is limited. The impact if we do not have
adequate cover for a liability related to defective products
could be significant.
Horeca – to market
High depedency on technology
To effectively serve our customers requires that our IT systems
are able to manage significant aspects of our business. These
include purchases, orders, warehouse management, efficiently
loading trucks, storage space optimisation and e-commerce.
IT disruptions can negatively impact our customer service,
decrease volumes and result in increased costs and lower
returns. We have invested and continue to invest in technology
security initiatives, business continuity and disaster recovery plans.
Cyber security
We rely upon IT networks and systems to process, transmit
and store electronic transactions in virtually all of our
business processes. This gives rise to cyber security risks
such as security breach, espionage, system disruption, online
platform hijacking or unauthorised access to information. We
have implemented measures to prevent security breaches
and cyber incidents; however a breach of this nature could
still result in significant negative business
disruption and/or reputational damage.
Innovation
Growth through organic expansion
and acquisition
Bidcorp may selectively pursue opportunities to supplement
organic growth with strategic acquisitions. Any such
acquisition or joint venture may change the scale of
Bidcorp’s business and operations and may expose it to new
geographic, political, social, operating, financial, legal, regulatory
and contractual risks.
Succession planning
Bidcorp’s ability to operate or expand effectively depends
largely on the experience, skills and performance of its senior
management team and technically skilled employees. Any
senior management departures or unavailability (due to death,
injury, illness or other reasons) or technically skilled worker
shortages could adversely affect Bidcorp’s operational efficiency.
Strategy
Brexit
Generally business sentiment to Brexit appears to be more
cautious than consumer sentiment, however, the longer-term
implications are unknown. Foodservice market impact is
unseen currently, however, some food inflation would benefit
but consumer confidence may inhibit demand. Increased
tourism and “staycations” will most likely boost demand.
Economic, political or social instability
Bidcorp is a geographically diverse entity exposed to the
changes or instability affecting the global economic, political or
social environment in the various regions which could affect an
investment in Bidcorp. Continued instability in South Africa
could lead to increased borrowing costs and a diminished ability
to raise capital from the international debt markets.
Macro-economic shifts
1
Sourcing and procurement
2
Warehousing and distribution
3
Sales and service
4
Innovation
5
Horeco - to market
Strategy
Macro economic shifts
1
Sourcing and procurement
2
Warehousing and distribution
3
Sales and service
4
Innovation
5
Horeco - to market
Strategy
Macro economic shifts
2
Warehousing and distribution
3
Sales and service
4
Innovation
5
Horeco - to market
Strategy
Macro economic shifts
1
Sourcing and procurement
2
Warehousing and distribution
3
Sales and service
4
Innovation
5
Horeco - to market
Strategy
Macro economic shifts
Group overview
Bidcorp Limited Annual integrated report 2016 |
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