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Overview of activities, risk factors
2.7 Risk factors
DANONE
REGISTRATION DOCUMENT 2015
30
Operational risks specific to Danone's activity and organization
RISK IDENTIFICATION
RISK MONITORING AND MANAGEMENT
Concentration of purchases of certain products
and services with a limited number of suppliers
Danone depends on a limited number of outside suppliers for
(i) the delivery of certain goods in particular raw materials
(for example the ferments used in the Fresh Dairy Products
Division or powdered milk for the Early Life Nutrition Division
in some Asian countries), and (ii) certain services (in particular
sub-contracted services or information technology services).
If some of these suppliers were not able to provide Danone with
the quantities and qualities of products or goods that it needs
under the conditions set forth, or if the suppliers were not
able to provide services in the required time period, Danone's
activities and results could be materially adversely affected.
In order to limit this risk, Danone selects and thenmonitors and
supervises its key suppliers. It also prepares and implements
procedures designed to secure its supplies and services as well
as business continuity plans designating alternative suppliers.
Danone's position in certain markets
Danone ismarketleader insomeof itsmarkets.Asaconsequence,
the Company may be accused by third parties of abusing a
dominant position in these markets and/or of engaging in
anti-competitive practices. More generally, competition law
provisions apply to Danone's companies in the vast majority
of countries where Danone does business. Actual or alleged
violations of competition law could affect Danone's reputation,
and possibly result in investigations by competition authorities
in countries where Danone is present, legal proceedings or even
criminal and/or significant financial penalties. This could have
an adverse effect on Danone's activities and results.
In its Compliance department, Danone has put together a spe-
cialized team of competition law experts who are responsible
for developing and deploying a competition law policy for the
Group's entities. Meanwhile, the Company has developed an
international network of competition law specialists within the
legal function to monitor this risk.
Danone also pays close attention to this matter and seeks to
limit the corresponding risk, mainly by communicating and
promoting the Business Conduct Principles and Code of Conduct
dedicated to the sales functions, and Danone has integrated
these rules and best practices into its Danone Way approach
in order to ensure that they are communicated and followed.
Further information is available in sections 5.1
Danone social,
societal and environmental approach
, 5.2
Information concerning
Danone's social, societal and environmental performance in
compliance with the Grenelle II law
, and 6.4
Internal control and
risk management.
Innovation and consumer taste
Danone's activities are subject to trends in the tastes and pre-
ferences of consumers. If Danone cannot predict, identify, and
interpret trends in the tastes and dietary habits of consumers,
its sales and results could be adversely affected.
Danone has developed a broad portfolio of product lines that
allows it to offer a wide variety of products to respond to different
consumption needs and situations. In addition Danone strives
to foster ongoing dialogue with its consumers by adapting to
new ways of communications and consumer patterns.