Summary (SWOT)

The non-financial value-drivers identified from the external and internal analysis in the above section has been summarized in the SWOT- analysis below:

Figure 3.1: SWOT-Analysis

Strengths:

From the company introduction it is apparent that Falck is a company built on a very solid foundation. The financial capacity of the owners, the experienced and dedicated management team and the very strong and well integrated business model are the key reasons why Falck have enjoyed national as well as international success in the past. Falck has developed its business based on the original values of the company and focused on the core business areas.

The result is evident from the industry analysis which places Falck in a very favorable position within attractive industries. Furthermore, Falck`s business is characterized by low operating risks and in Denmark Falck has been working with the public authorities for

Strengths

 Financial capacity

 Management

 Business model

 Favorable market position in attractive industries

 Low operational risk (Contracts, Prepayments, Non-cyclical products)

 Attractive customer portfolio

 Extensive experience and operational know-how

Weaknesses

 Dependence on other industries within training (offshore, maritime and windmill)

 Dependence on employees

Opportunities

 Growing markets outside home market

 Ageing population

 Changing demand patterns for safety services

 Increased demand for security services in response to increased terror threat and natural disasters

 Partnering with pension and insurance companies

 Operating in highly regulated and technologically advanced industries

Threats

 Public sector insourcing

 Exposure to lawsuits

 Competition authorities

 Labor market trends and strength of Trade Union

 Oil prices

 Extreme weather in Nordic Region

 Competition within growth markets and local markets

 Doing business on common values in different cultures

 Danish market for emergency and assistance is saturated

decades and through that relationship, built a strong brand name and image within the general population. Falck has gained invaluable experience and know-how in the operating

conditions of the industries and significant strength in terms of an effective cost management which altogether help increase the entry barriers to new providers. The experience gained within operations in Denmark has been put to use in overseas markets where great networks and strong platforms for further growth have been established. The overseas operations have been taking place for a number of years and Falck has gained valuable experience in working across borders. This has also strengthened the profile internationally and made Falck capable of expanding even further.

Weaknesses:

Within the training business Falck is to a very high degree dependent on trends within other industries, especially the offshore industry plays a huge part in the success of the training business. Since the training business is also very capital intensive and continuously requires major investments, it is vital for Falck to spread the risk in this business and not be dependent on one industry. Another weakness is Falck`s dependence on employees, due to Falck

generally operating with contracts, strikes and labor shortages could result in breaches of these and compromise the brand name and values that Falck represents.

Opportunities:

In the near future significant factors provide great opportunities for Falck. The biggest factor is probably the growing markets outside of Denmark within healthcare, emergency and training. The extremely fragmented European ambulance market is opening up, public expenditure on healthcare is increasing rapidly in Eastern European countries and high levels of growth in GDP and healthcare expenditure is also seen in the BRIC countries. Falck is already present in the Brazilian market, but it is Falck`s ambition to be established in the other BRIC countries as well, and there is huge potential for growth within these. With the large acquisitions across the Atlantic Falck is also ready to reap the benefits of growing markets in Latin America, and in the US it is Falck`s objective to establish a nationwide emergency service as well as taking advantage of the demographical changes with an ageing population. In the longer run Falck also has a great opportunity of providing other services through the already established international networks.

Threats:

Falck`s largest challenge ahead lies within the incorporation of the newly acquired companies into the Falck business model and corps spirit. There are many threats associated with

operating across cultures: bureaucracy, political climate, corruption, managerial reluctance, to mention but a few. If Falck fails to incorporate the companies, it could become a very costly affair or an even worse scenario: a corruption scandal or similar would damage the Falck image significantly.

Other immediate threats include public decisions to insource activities, which have had consequences for Falck in the past. With rising costs of outsourcing ambulance and

healthcare services, the public authorities have to consider alternatives to Falck`s service and a decision to insource activities could mean serious loss of revenue to Falck. Also trends within the labor market pose a significant threat to Falck; the strong trade union will continually push for wage increases and other improvements for workers using industrial action as threat. Heightened demands for specialized skills are also likely to increase overall staff costs in the future. Historically Falck has been very dependent on revenue and earnings from the Danish market. In the past years this dependence has decreased, although 65 % of revenues still originate from this market. This situation makes Falck vulnerable to dramatic changes: the loss of an ambulance contract within a region would result in substantially lower revenues for the entire group at least until the next round of negotiations. The large

dependence on the Danish market has probably played a key part in the formation of the internationalization strategy as has the fact that both the emergency- and the assistance businesses are very close to saturation in Denmark. It is still a threat to Falck though, that the two major business areas, within Falck`s home market have little or no potential to grow.

Lastly there is a significant threat of new competitors emerging within the growth markets that Falck are operating in. In the long run it is expected that supernormal profits will have disappeared due to competitive pressure. The increased competition with DAH in Denmark within roadside assistance will also push margins as will local operators in local markets.