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Environmental Analysis GraceKennedy Foods is responsible for distributing the Grace brand, and other brands owned by the Grace Group of Companies to over 40 countries. The following strengths, weaknesses, opportunities and threats have been ascertained from GraceKennedy’s annual reports, Victoria Mutual Wealth Management 2012 GK Stock Report and various other credible sources including the Jamaica Observer. Internal Environment Strengths           

Experienced business units (Operating for over 90 years and partnerships with multiple subsidiaries) Monetary assistance provided (Publicly traded company, relatively easy access to capital) Reduced labour costs Existing distribution and sales networks Diversified operating segments Wide market reach (US, UK, Asia, Africa, Canada, Caribbean) Positive brand image (Possibly the most dominant brand in Jamaica and the Caribbean) In-house manufacturing and distribution operations (Able to monitor quality and consistency) Culture of innovation, particularly in food division Succession Planning

Weaknesses         

Future debt rating High loan rates are possible Investments in research and development Future profitability Small business units Brand portfolio Tax structure Weak operating segments such as Grace Foods UK High priced products compared to substitutes available in the market

GraceKennedy’s competitors include other food manufacturers such as Nestle, PepsiCo, General Mills and Kraft Foods. These companies have wide reaching financial strengths and are globally recognized and offer premium quality food brands. Also with strong R&D, innovation, strong supply chain networks and brand loyalty/market position, GraceKennedy’s competitors are firm market leaders. However, GK Foods likely response to its competitor’s strengths would be to build its brand loyalty in a niche market starting with Caribbean nationals residing in the United States who are already familiar with the grace brand.

External Environment Opportunities      

New acquisitions of properties and business Growth rates and profitability Income level is at a constant increase Growing demand Distribution centre has the potential to enable business expansion because of reduced costs, time for turnaround and increased capacity Addition of new products in new markets (such as Canada, Mexico, Eastern Europe, Latin America) expand brand reach, potential sales

 Threats       

Tax changes- whenever there is a change in tax, Gracekennedy have to structure their business policies and decision according which may reduce business profits. Rising cost of raw materials. External business risks Increased commodity prices (e.g.. Oil, wheat, soy, spices) Price competition from low cost producers Systematic supply chain problems. International growth of food brands

GraceKennedy Group CEO Don Wehby in an interview with the Jamaica Observer, said “the conglomerate intends to earn a half of its profit from outside of Jamaica,” and aims to be a global consumer group by 2020 by forming strategic alliances with international partners. The company has committed to manufacturing its goods in Jamaica to allow better monitoring of consistency and quality. Other Competitive Advantages and Competencies of Grace Foods:      

They adopt best practices from top performing companies (Benchmarking) Standardized specifications of the commodities needed. They form commodity purchasing contracts directly with lower tier suppliers. They implement efficiencies in packaging and design based of perceived convenience to consumers They create the right solutions that the consumer needs at the right price Acquisition of established brand and distributor, Iberia Food Inc., to handle all distribution in North American Market

Risk Assessment & Management

Risk is inevitable in all business activities. It is impossible to predict and or eliminate all risks when developing business strategies. Nevertheless, how effectively these risks are managed is a key success factor especially when operating in the global market where risks and mitigating solutions are vastly diversified. It is therefore important that all events, risks or opportunities, are properly identified, measured and managed in order to minimise losses and maximise value and shareholders wealth.

GraceKennedy Risk Management Framework (RMF) was designed and implemented to reflect the Group’s aspiration to pursue Company-Wide Risk Management. It provides the basis for the identification, assessment, management, monitoring and reporting of risk on a continuous basis. Elements of the RMF include: 

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A Risk Policy that governs the management of the Risk Management Framework and outlines the risk management responsibilities of the GraceKennedy Board of Directors, Audit Committee and Management The Risk Assessment Reporting Standard that identifies the mandatory requirements relating to risk assessment and mitigation The Risk Assessment Guidelines that outline how all areas of the business must identify, evaluate, manage, monitor, and report on risks on an ongoing basis A GraceKennedy Risk Appetite Statement that defines the boundaries within which the Management, Executive Committee and Board of Directors will pursue the strategic objectives of the Group The requirements for the reporting of material risks to the GraceKennedy Executive Committee, the Business Unit Audit Committees, the Group Audit Committee, and the Board of Directors Various methodologies of providing assurance to the Audit Committee and Board about the maintenance of internal controls; including formal reporting by company executives on topical risk and control issues, control self-assessments and the results of internal and external audit reports

Operational Risk These are risks of loss stemming from inefficient internal processes, people and systems or from external events. For example, fiduciary or disclosure breaches technology failure and environmental risk (Natural disasters, etc). GK Group’s RMF makes provision for the mitigation of operational risks by establishing standards for assessment, management, monitoring, and the provision of assurance that the risk and internal controls frameworks are operating as intended. Each The Company and all its subsidiaries maintain a comprehensive Business Continuity Plan to ensure that in the event that an operational risk arises the business will recover speedily. All employees are held accountable for managing the risk and internal control environment with regular audits by our Internal Audit Department. Employees are also empowered to raise concerns of breaches of policies and procedures through an independent whistleblowing protocol.

Insurance Risk The risk under any one insurance contract is the possibility that the insured event occurs and the uncertainty of the amount of the resulting claim. Factors that increase insurance risk include lack of risk

diversification in terms of type and amount of risk and geographical location. Insurance risk arising from the company is concentrated within Jamaica. However, in the solvency requirements of the insurance regulators, an appropriate reinsurance programme is established to reduce exposures in all classes of GK’s business thus reducing capital exposure by using very highly rated international reinsurers.

Credit Risk The GK Group is exposed to risks that contractual customers, clients or counterparties will cause a financial loss if they fail to honour their contractual obligations. Management therefore carefully manages its exposure to credit risk by structuring the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to a single counterparty.

Liquidity Risk Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial liabilities when they fall due and to replace funds when they are withdrawn. The GK Group undertakes stringent monitoring and reporting of cash flow measurement and projections as part of their liquidity management.

Market Risk Market risk is the risk that the present or future cash flows will fluctuate because of changes in market prices. Market risks mainly arise from changes in foreign currency exchange rates and interest rates. Market risk is monitored by the Research and Treasury departments which carry out extensive research and monitor the price movement of financial assets on the local and international markets. Market risk exposures are measured using sensitivity analysis.

Currency Risk Currency risk is the risk that the present value or future cash flows will fluctuate because of changes in foreign exchange rates. The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar, the Canadian dollar and the UK pound. Foreign exchange risk is managed by monitoring currency positions and by maximising foreign currency earnings and holding foreign currency balances. The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk.

Interest Rate Risk Interest rate risk is the risk that the value or future cash flows will fluctuate because of changes in market interest rates. The GraceKennedy Group manages interest rate risk by maintaining an appropriate

mix of fixed and variable rate instruments and also manages the maturities of interest bearing financial assets and liabilities. References        

http://www.companiesandmarkets.com/Market/Consumer-Goods/CompanyProfile/GraceKennedy-Limited-GKC-Financial-and-Strategic-SWOT-Analysis-Review/RPT1075372 http://www.gracekennedy.com/index.php/what-we-do/food-services/distribution http://www.jamaicaobserver.com/news/GraceKennedy-going-global_10721270 http://www.swotanalysis24.com/swot-g/46101-swot-analysis-grace-kennedy-co-ltd.html https://prezi.com/wtbc8rkzqokq/grace-kennedy/ http://listofcompanies.co.in/gracekennedy-limited/ http://www.jamstockex.com/attachments/2013-04/gracekennedy-limited-2012-annual-reportdoc-18336.pdf http://www.jamstockex.com/attachments/2008-04/gk-annual-report-2007-doc-9251.pdf...