Global Immersion- Prague Company Overview

Global Immersion- Prague Company Overview History of Czech Republic Team 6 Brief History of the Czech Republic: The Czech Republic’s origins are roo...
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Global Immersion- Prague Company Overview

History of Czech Republic Team 6

Brief History of the Czech Republic: The Czech Republic’s origins are rooted in the Austro-Hungarian Empire. After World War I, Czechoslovakia, which includes the modern day Czech Republic and Slovakia, broke away and formed a sovereign nation. Czechoslovakia experienced a temporary separation during World War II when the Czech part of the country was occupied by Nazi Germany. The two parts were brought back together after the war and fell under communist control. From 1968 to 1989, Czechoslovakia underwent a period of repression known as “normalization.” In 1989, Czechoslovakia moved towards a market economy and democracy during the nonviolent “Velvet Revolution.” In 1993, the Czech Republic and Slovakia peacefully separated from each other. Eleven years later, the Czech Republic joined the European Union. Today, the Czech Republic has about 10.2 million people and a GDP of $285.7 billion. (1)

Global Immersion- Prague Company Overview

SWOT Analysis of the Czech Republic: Strengths: ● Strong industrial base ● High foreign direct investment (FDI) ● 91 % of those aged 25-64 completed at least ● ● ● ● ●

secondary higher education (EU average is 75%) Roads and public transportation Many incentives in place for industrial and technological business development Skilled, educated, 98% literate workforce EU membership Proximity to Western Europe

Weaknesses: ●







Opportunities: In our MBA curriculum we have been able to cover a lot of global business discussions but especially our discussion in the global perspective class regarding European Union has led us to vital knowledge about historical business opportunities in the Czech. ● As business students we realize the opportunity of delving into manufacturing/trading of products that comply with the stringent requirements by the EU. ● In this way not only can we trade with them but also with the entire world because EU has the epitome of international standards in goods and services. ● Also, EU and especially Czech Republic has a huge customer base which has relatively higher purchasing power than some of the emerging economies, which can make it a favorable market for certain type of products. ● We also need to realize that there is high shortage of working class labor due to the aging population. However the country is low on Gini index and that makes is a favorable place to invest in.

Corruption limits economic growth - it interrupts the flow of information and resources. Corruption occurs within law enforcement and judicial system. There are also reports of corruption in the legislative and executive branches of the government - which results in unnecessary political interventions. Human trafficking is an issue. Construction and manufacturing have been worsening in 3Q12 due to weakness in EuroZone (recession) and a decrease in domestic demand. (2) Falling household consumption is leading to a decline in the Czech’ economy, which is worse than expected. People are saving on everything, including necessities, such as food. “The extremely weak consumer demand is the biggest blow for the economy, said Michal Kozub” (3) Czech Republic has an export driven economy - which is inherently volatile. Low birth rate/aging population will not help in the future. (4)

Threats: ● ● ●

Aging Population: The median age of the population in Czech Republic is 41.1 years. Low Birth Rate: The population growth rate for 2012 is -0.134%. Civil War: The Anti-Roma demonstrations and riots between Czech Locals and Roma community could lead to a civil war.

Global Immersion- Prague Company Overview

Questions for Mr. Steve Butler, Senior Economic Officer, US Embassy: 1. Do you think that the Czech Republic will adopt the euro in the next 5-10 years? How do you think the Czech Republic’s economy and overall business environment will change if it adopts the euro? 2. In your opinion, what weaknesses does the Czech Republic’s economy face and how does the government or industry plan on alleviating the issue? 3. How do you see Czech people having interaction with the Americans either as students or visitors in the coming decades? Currently there is very low rate of Americans visiting Czech and vice versa. 4. What is the biggest threat in your view that could affect trade relations between US and Czech in the coming years? 5. Unemployment rates seem to be rising. Do you see this trend continuing into the future? Why or why not? If so, how long? 6. People here have been spending less on both luxury goods and necessities since the recession hit, but they haven’t stopped. What, if anything, will be done to stimulate the economy here in the near future? References 1 CIA World Factbook. . 2 http://reports.seenews.com/reports/erste-group-short-note-czech-republic-3q12-gdpweakness-almost-everywhere-dec-7-2012-321260 3 http://praguemonitor.com/2012/11/16/weak-household-spending-blame-economicrecession-analysts-say 4 http://czecheconomy.blogspot.com/2011/08/eastern-european-growth-comingrapidly.html 5 http://www.deloitte.com/view/en_CZ/cz/industries/publicsector/baabeb3df01fb110VgnVCM100000ba42f00aRCRD.htm 6 http://www.novinite.com/view_news.php?id=132659 7 http://www.kpmg.com/CZ/cs/IssuesAndInsights/ArticlesPublications/Factsheets/Docume nts/KPMG-Investment-in-the-CR-2012.pdf

Global Immersion- Prague Company Overview

2N Telecommunications Team 7 Company Background 2N Telecommunication is a leading European manufacturer of telecommunication equipment. The company serves customers in 120 countries focusing on SME, LME and Operator Solutions. The company’s main line of business is intercoms but it also includes floor annunciators, IP audio systems with software, wireless routers, universal mobile telecommunications systems (UMTS), GSM gateways, SIM card managers, number portability solutions, business telephone systems, machine to machine (M2M) systems, mobility extensions, some accessories (including antennas, splitters, energy banks etc.) Major 2N Competitors in Czech Republic 2N Telecommunications is one of 3 major players in the Telecommunications industry in Czech Republic, 2N Telekomunikace, Telesysco and Weco Travel.

Major Competitors

Company Staff

Sales Staff

% of Export Sales

Sales Turnover

2N TELEKOMUNIKACE

200

50

80%

50,000.00 €

Telesysco

NA

NA

NA

NA

Wesco Travel

100

NA

NA

50,000.00 €

Commend Intl*

400

NA

NA

NA

*Commend Intl Not Headquartered in Czech Republic 2N’s Global Presence 2N has sales and markets its products globally; however they have a relatively small global footprint, with sales offices in the Czech Republic, Argentina, and the US. Within the telecom industry there are a wide array of products and countless companies that manufacture them. 2N’s core business is their intercom systems. While competition is considerably smaller in this sector, there are still numerous competitors. Commend International was founded in Salzburg Austria, and has a competing intercom system. Its intercom products can be found in anything from hospitals, to airports and elevators. Recently released

Global Immersion- Prague Company Overview

products also integrate video into the intercom systems. (Commend Website) Videx is an Italian based company founded in 1986, and exports intercom systems over 40 countries. Another growing sector that 2N focuses on is M2M, or machine to machine communication devices. These devices are most often seen attached to electricity and gas meters in homes and businesses, and connect to cellular network to transmit data to utility companies. Huawei, a large Chinese telecom equipment manufacture has recently and aggressively entered the European M2M market. This announcement in September of 2012 will have a significant impact on the industry. Huawei has a track record in China, of making low cost telecom devices on a massive scale, and is currently eyeing the US smartphone market as well. In the M2M market Huawei currently enjoys a 40% market share, and growth worldwide of the M2M market is projected to grow 20% - 30% annually. This represents a significant threat to 2N. While the market is growing fast, behemoths like Huawei threaten to come in and utilize their existing infrastructure and capital to force smaller companies out of the market.

2N Telecommunications SWOT

Strength  

Weakness

Wide variety of products catering to



Relatively small global footprint

businesses of different scales



Lacks presence in fastest growing

Strong business partnerships

markets

Opportunities 

2N’s products have a potential to sell

Threats 

globally

Europe focus: European sovereign debt crises



Competitors that have much bigger scale in the global market

Global Immersion- Prague Company Overview

Appendix Exhibit 1: Overview of IT and Telecommunication market Czech Republic (CIA Fact Book) Telephones - mobile cellular : 13 Million (2011) Telephone- main line: 2.289 Million (2011) Internet Hosts: 4.148 Million (2012) Internet User: 6.681 Million (2009)

Exhibit 2: Sales in Telecommunications in the Czech Republic CZK million 2008

2009

2010

Total

144,655

137,639

128,773

from own production

139,607

132,696

123,577

national enterprises

9,463

9,755

9,413

foreign affiliates

135,192

127,885

119,361

Small (0-49 employees)

9,640

10,620

9,758

Medium (50-249 employees)

5,198

5,354

5,565

Large (250+ employees)

129,817

121,666

113,451

Wireless telecommunications activities

62,374

59,321

55,378

Wired telecommunications activities

79,482

74,825

69,789

Other telecommunications activities

2,799

3,494

3,607

Ownership of enterprises

Size class of enterprises

Industry (CZ-NACE Group)

Global Immersion- Prague Company Overview

Exhibit 3: Sales in telecommunications CZK billion

8,8%

8,6%

as a percentage of total business services sales*

8,1%

7,7%

7,8%

7,2%

135

138

145

145

138

129

2005

2006

2007

2008

2009

2010

Exhibit 4: Composition of sales in Telecommunications by Industry

Wireless telecommunications activities Wired telecommunications activities Other telecommunications activities 2010

43%

2005

54%

37%

62%

Exhibit 5: Composition of sales in Telecommunications by size class of enterprises

0–49 employees

50-249 employees

2010

8%

88%

2005

6% 7%

87%

250+ employees

Global Immersion- Prague Company Overview

Exhibit 6: Czech Republic Mobile Sector Growth Forecast

Bibliography: 1. 2. 3. 4. 5. 6. 7.

http://www.2n.cz/en/company/ https://www.cia.gov/library/publications/the-world-factbook/geos/ez.html http://www.czso.cz/csu/csu.nsf/enginformace/cpru031312.doc http://www.telecomengine.com/article/huawei-launches-m2m-business-europe http://www.videx.it/Profilo.asp http://www.commendusa.com/en/company/portrait/about-commend/about.html 2NCorporatePresentation:http://www.2n.cz/download/3/9/6/5/2n_corporate_presentation _en.pdf 8. http://www.2n.cz/en/

Global Immersion- Prague Company Overview

GE Money Team 2 Our team hopes this serves as a good review or debrief of the banking industry and the environment that GE Money faces as they develop and grow their business into the future.

As many of us witnessed through the financial crisis of the late 2000s, banks live and die (literally) off the economic health of the societies in which they operate. The industry continues to see consolidation coming from banks that are struggling. This consolidation is projected to continue into the next few years as banks adjust to tighter regulations and lower demand for loans. This tough environment has shined the light on GE Capital and allowed it to recognize where it stands to gain and where it needs to adjust.

GE Capital has inherited the capability to more quickly assimilate and remove non-core business assets, and also acquire smaller organizations for strategic growth from the parent company. This is shown by their ability to spin on many small regional units over the last couple years, including home mortgage financing in India (Research, 2013)(the industry hit hardest by the 2008 housing burst). They also continue to utilize the practice of diversification by recently acquiring a part of MetLife to get into the online banking market (Gayatri Rath, 212). These activities play on the history of GE to grow and develop itself into a long term resilient player in the industry.

The other key characteristics needed to survive in this industry are strong marketing capabilities, good risk management and efficient operations (Hoovers, 2013). The branding and marketing capabilities of GE, as well as risk management seem to be historically very strong. Our team has found it difficult to determine if GE Money has an advantage over the competition in any of these areas, but do find them to be very important in the current market conditions. Because they are such a large diversified organization, the competition may have an operational efficiency advantage.

There seems to be great opportunity for GE Money to make a splash in international markets with the long lived brand. Throughout European countries they have broken into different segments of the banking industry. For instance, in Czech Republic it touts a strong small and medium size business clientele, while Norway is dominated by consumer spending. (GE Capital Europe| Consumer Financing, 2013) Due to market differences, cultural differences and ability to appeal to the customer, they have seen success in varying degrees in varying banking segments. The opportunity seems large when considering the capability to penetrate individual banking segments. Our team looks forward to hearing how GE Money is looking to expand their business in Czech Republic as well as the rest of Europe on a

Global Immersion- Prague Company Overview

country by country basis (Visa Europe, GE Money Bank cooperate on contactless payments for the Czech Republic, 2013).

As a reference we have provided information for the 2010-2011(2012 is preliminary or unavailable) for GE Capital, CitiGroup, Deutsche Bank, and HSBC. You will also find three pages of GE’s annual report that discuss GE Capital here, http://www.ge.com/ar2011/pdf/GE_AR11_EntireReport.pdf, see pages 4547. This is all followed by a few questions based on our research that should serve you well in trying to gain insights into the goals and performance of GE Capital during the visit.

Bibliography GE Capital Europe| Consumer Financing. (2013). Retrieved from GE Capital Europe: http://www.gecapital.eu/en/our_solutions/consumer_finance.html Visa Europe, GE Money Bank cooperate on contactless payments for the Czech Republic. (2013, February 4). Retrieved from http://contactlessintelligence.com: http://contactlessintelligence.com/2013/02/04/visa-europe-ge-money-bank-cooperate-oncontactless-payments-for-the-czech-republic/ Gayatri Rath, D. A. (212). GE Capital Agrees To Sell Its India Mortgage Loan Business to Magma FinCorp. New Delhi: GE Capital. Hoovers. (2013). General Electric Capital Corporation. Hoovers. Research, Z. E. (2013, January 15). GE Acquires MetLife Business. Retrieved from Yahoo Finance: http://finance.yahoo.com/news/ge-acquires-metlife-business-214351771.html

Financial Information GE Capital (*4)

CitiGroup(*1)

2010 2011 2010 2011 Annual Sales (in M's) $ 46,422 $ 45,730 $ 111,465 $ 102,587 Annual Profit (in M's) $ 3,158 $ 6,549 $ 10,602 $ 11,067 Profit Margin 6.80% 14.32% 9.51% 10.79% Assets (in M's) $ 565,337 $ 552,514 $ 1,913,902 $ 1,873,878 # of Employees 287,000 301,000 260,000 266,000 Operations worldwide (over 100 countries) worldwide (over 160 countries) Commercial Lending and Deposits, Loans, IB, Lines of Business Leasing, Consumer, Real Estate, Energy and Aviation Financial Services

Deutsche Bank (*2) 2010 $ $

HSBC (*3)

2011

55,344 $ 65,601 3,061 $ 5,351 5.53% 8.16% $ 2,525,341 $ 2,795,163 102,062 100,996 worldwide (70 countries) Corporate and Investment Brokerage, Wealth Banking, Corporate Management, and any other Investments, as well as financial service you can think Private Clients and Asset of Management

2010 $ $

2011

98,918 $ 105,804 13,159 $ 16,797 13.30% 15.88% $ 2,454,689 $ 2,555,579 307,000 298,000 worldwide (over 80 countries) Consumer and Commercial Banking, Credit Cards, Private Banking, IB, and Leasing

Global Immersion- Prague Company Overview

Sources: *1, http://subscriber.hoovers.com.ezaccess.libraries.psu.edu/H/company360/financialHistory.html?companyId=58365000000000, retrieved 2.13.13 http://subscriber.hoovers.com.ezaccess.libraries.psu.edu/H/company360/fulldescription.html?companyId=58365000000000, retrieved 2.13.13 *2, http://subscriber.hoovers.com.ezaccess.libraries.psu.edu/H/company360/financialHistory.html?companyId=40833000000000, retrieved 2.13.13 http://subscriber.hoovers.com.ezaccess.libraries.psu.edu/H/company360/fulldescription.html?companyId=40833000000000, retrieved 2.13.13 *3, http://subscriber.hoovers.com.ezaccess.libraries.psu.edu/H/company360/fulldescription.html?companyId=41790000000000, retrieved 2.13.13 http://subscriber.hoovers.com.ezaccess.libraries.psu.edu/H/company360/financialHistory.html?companyId=41790000000000, retrieved 2.13.13 *4, 2011 GE Annual Report, Page 45, http://subscriber.hoovers.com.ezaccess.libraries.psu.edu/H/company360/financialHistory.html?companyId=10634000000000, retrieved 2.13.13 These numbers are for GE at the parent level, we were unable to find employee count or specific operations for this division

Questions for the Visit

1. Is GE Money prepared or seeking to take advantage of expected consolidation within the US and European banking industries? 2. GE Money recently teamed with Visa to provide contactless purchasing in Europe (5), is this a key strategic move to keep and acquire the consumer base that makes up GE Money revenue? 3. Is the recent acquisition of GE Money Housing Finance by Magma a move to exit the home loan business due to focusing on core competencies, or something else? 4. What are the next major investments GE Capital plans to guard against identity theft, and guarantee security to customers in an increasingly connected world? 5. Because demand for loans are low, and underwriting criteria is very strict, what are the major geographies for growth potential? 6. How many staff do you have to handle risk management/mitigation due to operating in such a highly regulated industry? 7. How do you handle marketing across European countries, is each budget managed separately, or do you contract as a larger group to reach more customers? 8. Have you or your competitors received subsidies that have created competitive advantages? 9. How have exchange rate fluctuations, especially caused by the recent economic instability, impacted the organization? 10. How does management and strategy of GE Money differ from country to country in Europe? 11. Why hasn’t Czech Republic completely accepted the Euro as the primary currency, and how does that impact GE Money?

Global Immersion- Prague Company Overview

Prague Public Transportation System Team 1

Firm Data Prague public transportation consists of the metro, trams, and buses. Approximately 40% of people choose the Prague subway as their primary mode of public transportation. The metro is only 40 years old and provides fast, efficient and clean service to approximately 600 M people per year. The city is continuing to add new stations. Trams provide service throughout the day and serve approximately 300 M people per year. Additionally, trams provide overnight transportation services when the metro closes for the evening. The buses are used to provide transportation services to the outskirts of the city. The total income of DP Praha, which owns the public transportation system, is 16.3 M CZK, 70% of which comes from the government. Sale of tickets provides only 26% of the total revenue. European Commission Laws mandate that the government significantly subsidize public transportation. The metro has approximately 10,743 employees. Total assets are 70.5 M CZK, out of which 93.3% are fixed assets (owning the real estate, underground subways, property, trains, and buses) and 6.2% are current assets (cash).(1)(2) Competition Instead of public transportation there are alternatives such as tour companies, taxis, private cars, and bicycles. Visitors can leverage tour companies or taxis to navigate the city. While these options offer greater flexibility, they are considerably more expensive. A 3-day metro pass costs just over 310 CZK. For local residents, cars are expensive and present new issues (parking, taxes, gasoline, etc.). Bicycles offer locals cheaper and more efficient transportation; however, Prague’s infrastructure is not set up to handle large volumes of bicyclists. (3)(4) SWOT Strength Government subsidized = cheaper Newer infrastructure Energy efficient equipment

Weakness Dependent on government funding Limited access and schedule Lower disposable income = less travel

Opportunity New metro lines (e.g. airport to city) Extension beyond boarders (buses) Alternative fuel sources

Threats City accessible by foot Flooding to underground metro Terrorism/security

Thoughtful Questions for Firm -

What is the biggest challenge facing the current system? If the government would have to cut back on funding, how would that affect your business model since the price of transportation is extremely subsidized? How reliable are the metros and how often are they repaired? Are there plans to convert to alternative fuel sources?

Global Immersion- Prague Company Overview

-

When Prague is experiencing heavy rains and floods take the metro out of service, what effect on profits does that have on the overall business? Are there more buses added to the mix when the metros are out of service?

Appendix materials and information sources Exhibit 1

Source: DPP.cz (DP Praha Revenue 2011 and 2010) Exhibit 2

Source: DPP.cz (DP Praha Balance Sheet Year-end 2011)

Global Immersion- Prague Company Overview

References 1. My Czech Republic (http://www.myczechrepublic.com/prague/transportation.html) 2. DP CZ (http://www.dpp.cz/en/urban-mass-transit-museum/) 3. Bicycling Prague (http://www.bikecityguide.org/blog/2013/01/cycling-in-prague-anuphill-struggle) 4. Living in the Czech Republic (http://www.howto.co.uk/property/property-in-easterneurope/living_in_the_czech_republic/)

Blazek Glass Team 8 Company Information & Background: Blazek glass is a specialty manufacturer of glass files, grinding tools, crystals, crystal products and anti-reflection glasses based in Poděbrady, Czech Republic. It started as a small firm in 1933 by Josef Blazek in NovýBor and later moved to Poděbrady. The company was nationalized following the war. The fall of communism in the 90's gave control of Blazek glass, back to the Blazek family. One of Blazek's granddaughters Ms. LenkaBlažková – Zdobinská runs the company now. Blazek holds a patent in several countries for a type of glass nail file. It had revenues over 5 Million in 2008 and 2009, and employs around 65 people in its unit at Poděbrady.

Blazek is the world's leading producer of glass nail files. It can be custom made to order, embedded with expensive crystals, engraved with logos and other fancy materials. Other major product segment is the crystal segment. Bohemian crystals, as they are called due to the predominance of glassware and crystals in the bohemian kingdom are known for their quality and craftsmanship. Blazek manufactures and supplies crystals and products embedded with crystals. Blazek supplies its products to various parts of the world and also runs a store in Poděbrady. Among the company’s 37 export markets, the U.S. stands out as particularly important. Blazek glass co. still makes its products the traditional way and is very conscious about quality. The various processes involved in making a product like painting, edging, engraving, cutting and grinding are done manually with good precision and strict quality controls.

Czech Republic, being the center of bohemian culture, has so many manufacturers of bohemian glass and crystal products throughout the country. Since the formation of European Union, there have been some constraints in glass manufacturing, due to the amount of lead involved in the

Global Immersion- Prague Company Overview

process. Even though the amount of lead in the glass is not harmful for humans, the workers in glass processing are affected by it. European Union has since established stricter control over the amount of lead used and advising the use of lead-alternates. Low cost products from other regions of the world like the English bead glass and competition from within European Union countries like Germany, Slovakia, France has driven several Czech glass manufacturers out of business.

Blazek is strong enough to survive and be competitive in this elite glassware market. Its major competitors include Moser, Sklarny Bohemia, Crystalex and Kavalier. All these companies are larger producers of glassware and crystal related products. Moser, Crystalex and Kavalier, in addition to manufacturing, also sell their products either through large, company owned showrooms or through distributor showrooms. In terms of product diversity, all these major players have many more products in their portfolio compared to Blazek. The key differentiator for Blazek will be its glass files and grinding tools, which are targeted at the beauty industry. Sources: 1

1.http://www.blazek-glass.com/blazek-glass/history.html 2. http://ec.europa.eu/enterprise/sectors/metals-minerals/files/finalreport_glass_141008_en.pdf 1 3.http://www.kavalier.cz/en/ 4. http://www.crystalex.cz/ 5. http://www.crystal-bohemia.com/ 6.http://www.moser-glass.com/en/ 7. www.blazek-glass.com 1

Questions 1. How did you deal with the 2008 economic crisis? What were the measures taken? 2. 95% of the products are exported. How is your logistics handled? What are the significant issues? 3. As part of EU, there are more regulations in place now in every industry. What are the changes you have to make to align with EU regulations? 4. Your company was run by the government for a long time. When you took over in 1992, what were the changes to be implemented and how did employees react? 5. Do you have expansion plans? What direction are you looking at?

Global Immersion- Prague Company Overview

Jablotron Team 3 Company Data: Jablotron s.r.o. is a private company that was established in 1990. Initially begun to commission industrial applications involving computer technology, the company turned to developing and manufacturing its own products in the electronic security market due to higher growth potential. The product range grew to meet the demands of the expanding Czech security market and in 2008, Jablotron Ltd. was divided – and Jablotron Alarms Company was spun off and established.

The Jablotron Group, with all its subsidiaries, has 10,000 m2 of facility space and 250 employees at its disposal. Jablotron Group’s annual sales figures reached 1 billion CZK, mainly due to thriving exports to practically the whole world. Jablotron’s headquarters are located on Pod Skalkou Street, Jablonec Czech Republic and there are subsidiary companies in Taiwan and Slovakia to promote the global marketing of Jablotron products. Jablotron’s major lines of business include house alarms, car products relating to vehicle security and accessories, automation in the home, baby care, and a training support staff.

Competitors and Industry One of their subsidiary companies is in Taiwan and they compete against Samsung there. The market trends indicate positive growth rate for the industry as a whole while the Czech's industrial output has been lower than 2012 and 2011 where economy sharply rose after the global recession.

In the United States since 2008 Semiconductor are down 30%, Industrial automation down 15%, Vehicle Production down 33%, Consumer Technology down 6%, Electronic Security industry down 0.2%, Network Video up 25%, Analog Video down 7%. Going forward for the future in the United States Video Surveillance will be 43% of the total physical security systems market, Fire 20%, Intrusion 11.2%, 2% growth for security products as a whole. Europe is expecting a -4.8% decline in overall revenues attributed to the sale of security products.

The world security services market exceeded $174 billion in 2010, reports MarketLine. Market growth is expected to accelerate to exceed a yearly rate of 4.5% between 2010 and 2015 to reach almost $220 billion. The security services industry refers to the electronic, managed and outsourced personnel security solutions.

Global Immersion- Prague Company Overview

The global security equipment market is expected to record yearly growth in excess of 7% through 2014 to reach $95 billion, says Freedonia. Emerging markets are set to record the strongest growth, across Africa, South America, Asia and Eastern Europe. Electronic security products represented 60% of the overall security equipment market three years ago, and are expected to grow to account for a larger market share in coming years.

Strengths: Jablotron is always ahead of most of competitors to bringing technically new solutions to the market. Furthermore, Jablotron has set up overseas subsidiaries, which drive global revenue growth. Apart from its innovation and globalization, Jablotron has nearly faultless (0.05%) large goods movement with new warehouse. The advantages of new warehouse include not only its size and advanced technological equipment, but also easier accessibility for means of transport.

Weakness: Jablotron is expanding market based on a network of loyal wholesalers. Expanding this market mainly takes the form of organized training sessions for existing and new installer companies. However, the customer type is too limited, and such training sessions are time-consuming and expensive.

Opportunities: Since Jablotron’s inception, the company has prided itself on being flexible and innovative, with a development team that consistently brings new security technology to market before its competitors. This ability to innovate has been a hallmark of the Jablotron brand since its founding in 1990, and because Jablotron is a smaller firm, its ability to provide personalized customer service will serve it well in the future.

Threats: Jablotron’s primary threats come by way of its biggest competitors in the electronics security system market, primarily larger, global companies such as ADT, Andrew’s International, Diebold, and the biggest competitor in Western Europe, Infratech B.V. Through name-recognition alone, these firms may have an advantage over Jablotron. In addition, the feeble economic recovery has left many people to cut non-essential costs, which may mean that as long as the economy is weak there may be fewer consumers willing to spend on high-tech security systems.

Global Immersion- Prague Company Overview

Questions: 1) Where do you see the future technology going in the Alarm Industry? 2) With security systems becoming more complex because of the threat of overriding the system, how do you go about testing the systems to make sure they are secure enough? 3) You made worldwide headlines in 2005 with the Jablotron GDP-02, otherwise known as an unportable cell phone for the elderly. How much demand are you currently seeing for a product like this, and where do you see the industry heading? 4) You have subsidiaries based in Slovakia and Taiwan. What sort of future expansion, if any, do you see Jablotron trying to reach? The US? EMEA? Other? 5) What is the biggest challenge to expand business into global markets? 6) Do you have plans to generate new businesses through direct sales besides wholesaler? 7) Why Taiwan? Do you have manufacturing facilities there? Or is it advanced for innovations in this field? 8) What percentages of your revenues are from exports? 9) Where are your production facilities? 10) How has the economic recovery impacted Jablotron’s business? 11) What is your marketing approach like? What is your strategy for finding new customers?

References: http://www.securityinfowatch.com/blog/10474827/security-industry-stats-from-ims-research http://www.reportlinker.com/ci02408/Security-Services.html http://www.reportlinker.com/ci02059/Security-Systems.html http://www.jablotron.com/en/Section/profile/company+profile/ www.jablotron.com

Global Immersion- Prague Company Overview

Skoda Volkswagen Team 9

Skoda Auto is an automobile manufacturer with its headquarters in Mlada Boleslav, Czech Republic. Once a state owned car maker, Skoda became a wholly owned subsidiary of Volkswagen in 2000 and has been portraying rapid growth in the recent years. It was founded in 1895 as Laurin and Clement. The company makes six core models -- Fabia (available in hatchback and combi), Octavia (in liftback and combi), Superb (luxury sedan and wagon), Yeti, Praktik, and Roomster (hatchback and compact SUV variations). Skoda serves Eurasian, South American, African and Australian markets with manufacturing facilities in China, Czech Republic, India, Kazakhstan, Russia, Slovakia and Ukraine. It produced a record 939,200 units in 2012 with revenue of 12.22 Billion USD and a net income of 863.41 Million USD. The 2012 sales figures were up 6.8% following the impressive 15% growth in 2011 and are projected to be one of the main drivers of revenues for the parent VW group. It has around 25,821 employees in all its sites. Some of its main competitors are Daimler, Peugeot and Adam Opel. Very recently, Volkswagen (VW) AG and its Czech subsidiary Skoda Auto have launched a joint marketing plan with VW to take the lead on producing top-tier cars for middle- to upper-class buyers, while Skoda will target the more budget-conscious consumers, thus covering both the segments without cannibalization effects. Skoda is a subdivision of Volkswagen that competes almost exclusively in the European auto market. While Volkswagen holds the largest market share of passenger vehicles in Europe, its three biggest competitors are PSA Group (Peugeot), Renault, and General Motors. PSA Group is a French manufacturer that sells vehicles under the Peugeot and Citroen brand names. The company employees just over 200,000 workers worldwide and had annual sales of $78 Billion in 2012. PSA Group’s -1.8% profit margins was substantially lower than the 5.4% market average. Renault is another French manufacturer that had sales of $55 Billion in 2012 and net profit margins of 3.8%. Renault employees 125,000 worldwide and sells vehicles under the brand names Renault, Dacia, and Renault Samsung Motors. Skoda’s third biggest competitor is American based General Motors. While GM imports a small number of vehicles with American brand names (i.e. Cadillac, Chevrolet, etc.), most European sales come under its Opel and Vauxhall brands. Worldwide sales for GM totaled $150 billion in 2012 at margins of 2.95%. SWOT Analysis Strengths Skoda has a strong record of increasing sales and has a market stake in multiple global economies (including Eurasia, South American, Africa, Australia, China, Czech Republic, India, Kazakhstan, Russia, Slovakia and the Ukraine). Skoda’s role within VW is growing, as they will begin producing a higher level vehicle soon. Skoda is very good at manufacturing and is increasing efficiency, producing more cars currently than ever before.

Global Immersion- Prague Company Overview

Weaknesses Skoda is still relatively small in the world of auto manufacturers. When comparing their financials with the financials of their closest competitors, you see some vast differences. Skoda posts 2012 revenue of 12.22 Billion USD, compared to Peugeot at 78 Billion USD, Renault at 55 Billion USD, and GM at 150 Billion USD. Because of their small size, they will probably always have to operate under VW in order to remain viable. Opportunities Because Skoda sells its own model of cars, as well as manufacturing VW car models, they are able to see and use VW technology. In some cases, Skoda models are beating comparable VW models in road tests, which could translate to increases in revenues (if sales increase because of improved technology). Threats The largest threat for Skoda VW (outside of already discussed competition) is the currency of the Czech Republic, the koruna. As the koruna rises in value compared to the euro, production becomes more expensive. Because of these increased costs, it is becoming less viable for VW to continue to use Skoda for manufacturing. Skoda also had to increase the pay for its workers because of pay discrepancies with VW, so when orders are not coming, they have to lay off employees. This is a major challenge that Skoda will face in the coming years amidst all of the economic uncertainty.

Questions 1. 2. 3. 4. 5. 6.

Can you please tell us about the economic advantage of using rail freight transport system over road haulage for movement of goods between factories? What are the key areas of focus in research and innovation for Skoda? *Fuel efficiency or alternate fuelling (Electricity and natural gas etc.) in cars? Do you have an R & D department in the Czech Republic? What are the universities that you hire your engineering talent from? How do you see the EU’s initiatives to boost the car manufacturing industry helping Skoda? Which are the upcoming markets in EU that Skoda wishes to target?

Global Immersion- Prague Company Overview

IBM Global Services Team 4

Financial Metrics and Competitor Analysis: In fiscal year 2011, IBM substantially outperformed its key competitors in just about every category. The company’s total sales revenue was $106.9 billion with $60.9 billion coming from its Global Services. This figure was substantially higher than that of both Accenture and HP Enterprise Services. IBM’s net income margin was also 72% higher than Accenture’s, which shows that it is running a more profitable business. Additionally, we have included the types of services that each company offers: IBM – Business Services (Strategic Consulting, Systems integration) and Technology Services (BPO, Infrastructure, Maintenance, Outsourcing, Software Integration, Systems Management) Accenture – Management Consulting, Technology, BPO HP Enterprise Services – Cloud Computing, Systems Integration, Network & Systems Operations, BPO

IBM Global Services 2011 Revenue (Bil) $60.16 ($106.9) Net Income $15.85 Net Income Margin 14.8% Market Cap $227.10 Share Price $200.98 P/E Ratio 14.49 Total Assets $119.20 Employees 433000

Accenture $29.78 $2.55 8.6% $41.69 $74.16 20.28 $16.66 257000

HP Enterprise Services $12.64 ($120.36) -$12.65 -10.5% $32.80 $16.79 -2.6 $108.77 139500

Global Immersion- Prague Company Overview

SWOT Analysis:



Strengths Strong R&D investments Strategic Acquisitions to increase scope of services Leads market in profit and size

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Opportunities Continued R&D and acquisitions Further entrance into emerging markets

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Weaknesses End-to-end solutions do not appeal to all Integration is made difficult as a result of the variety of solutions/services offered

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Threats Subject to global and local instability Highly competitive market



Questions: 1. How does the market in Prague differ from that in the U.S.? 2. IBM is entering emerging markets like Prague- what is the biggest opportunity the company sees in Prague? 3. What has the revenue growth been in Prague in the past few years? 4. Are IBM’s customers in Prague different than those in US? If yes, what are the differences and how does that influence IBM’s business strategies? 5. Who are IBM's main competitors in Prague? 6. IBM has just launched a new power systems server. Does the server help to improve its competitiveness in Prague?

Global Immersion- Prague Company Overview

Avast Software Team 5 Avast Software a.s. is located at Prague with 169 employees. Its parent company is Avast Software B.V. Avast is one among some of the prominent software companies coming out of Eastern European block (like Skype, Kaspersky). Avast makes FREE antivirus software for Windows, Mac, and Android. The free security software solutions are dependable, fast, use few resources, and often outperform the competitors’ paid-for products. Avast operates on a ‘freemium’ business strategy. Referrals from existing Avast user community help maximize the “free” user base. Most of the users use the free version of the security software and few who purchase the product (with additional features) generate all of the revenue for the company. Revenues ($M) Income ($M) Market (%)

Share

Avast Software 90.64 55.48

McAfee 2,060 184.1

AVG 272.4 100.43

Kaspersky Labs 538.8 29.34

17.5%

4.4%

8.8%

5.9%

Avast competes in the antivirus industry against Avira, AVG Technologies, Bit defender, FSecure, Frisk, Kaspersky, McAfee, Symantec and Trend Micro. Avast offers the following three products:1. Avast! Free Antivirus 7.0 — freeware for personal, non-commercial use only 2. Avast! Pro Antivirus 7.0 — shareware for both personal and commercial use 3. Avast! Internet Security 7.0 — shareware for both personal and commercial use SWOT analysis: Strengths 1. Free, simple, easy to use, competitive product. 2. Received $100M funding from Summit Partners. 3. Market Leader with 177 M users (more than 17.5% of market share).

Weaknesses 1. Lower Credibility 2. Low Conversion ratio; i.e. free users to paid, so limited revenue base. 3. Weak Brand Equity

Opportunities 1. Bundle products with high volume products such as Office etc. 2. Different pricing models for changing customer base

Threats 1. Competitors spend big bucks on traditional sales and marketing channels 2. Sole reliance on word of mouth publicity may slow down growth.

Global Immersion- Prague Company Overview

Questions: 1. On what revenue streams will the company focus on in the future? Is the ‘freemium’ model the only way Avast is looking to capture more market? 2. How does the company plan to counter competitors who are spending more money on traditional channels of sales and advertising? 3. Does the company plan to remain specialists in antivirus only or does it plan to leverage its huge customer base to foray into other software? 4. What is the company strategy to increase the conversion ratio of free users to paid users?

Sources: 1. http://en.wikipedia.org/wiki/Avast! 2. www.avast.com 3. www.hoovers.com 4. http://www.opswat.com/about/media/reports/antivirus-december-2012