Fresenius as a Healthcare Group - Research Paper Example

?Fresenius Fresenius is a healthcare group made up of four business segments. These business segments operate independently from one another and are global companies. Each of them also has a distinct goods and services. For instance, medical care specializes in the provision of products and services meant for patients suffering from chronic kidney failure. This segment has two thousand seven hundred and sixty nine clinics in Latin America, Africa, Asia, Europe and North America. The second segment is Kabi which deals with care of chronically and critically ill patients and infusion therapy. They also provide other services such as enteral nutrition, parental nutrition and ambulatory care. The third segment is the Helios Kliniken that deals with hospital management of patients. It main specialty is the treatment of acute diseases and the medical rehabilitation of such patients. Sixty four hospitals among them five hospitals providing maximum care make up this segment. Nine of these hospitals have partnered with universities for teaching practice. The fourth segment is Vamed whose main specialty is management of health care projects. It helps health care facilities in planning, development and management. It has already completed more than five hundred such projects in fifty countries. The Four segments’ managements are independent of one another. Their headquarters are in different parts of the world. The corporate headquarters for the group and Fresenius Kobi are in Bad Homburg, Germany. Helios and Vamed corporate headquarters are in Vienna, Austria while Medical Care headquarters are in Waltham, Massachusetts. According to the company’s Annual Financial Report for the year ending December 31, 2010 the total assets of the group were valued at 24,088 million British Euros. The company’s revenue for the same period was sixteen billion Euros. The total earnings the company accumulated during this period were six hundred and sixty million Euros. This shows the strong financial capacity the company boosts. Like any other business organization, the business seeks to grow its revenue as well as increase the quality of its products. In order to achieve this, company has to invest to produce higher quality goods and services. It also has to increase its work force as well as offer more training to them. Moreover, the company has to tap into new markets, to reach more customers. The company can also seek to increase consumption of its products in areas where it is present. However, to meet these goals the company faces several constraints. For instance, the company faces numerous legal challenges. The most notable among them is changes in laws and policies governing healthcare programs in some of the countries it operates. As a result, of the financial and property markets crisis, some countries such as the US have had to review their healthcare policies. In the US, government has changed the reimbursement policies. Health insurers have also changed their approach to healthcare. This means that the company has had to change its approach in this market. In its efforts to grow its market, the company has resulted to take over of other companies in the healthcare. The process of takeover is subject to certain laws and regulation. In some cases, this has seen the company spend a lot of financial resources to settle liabilities of these companies. The Annual Report for the year ending December 31, 2010 cites financial risks as other as some challenges the company faces in meeting its growth targets. For example, it cites the financial and market crisis in Euro zone. According to the company this crisis has led to wage adjustments, welfare cuts, tax hikes, which have reduced the purchasing power of people in this zone. This has translated to less consumption of its products and services. This crisis has also affected other markets such as Asia who supply goods to the Euro zone. Consequently the region has experienced slower growth compared to other periods before the crisis. As the world gets out of the financial crisis, countries are implementing different strategies and adopting various policies. Moreover, different economies are reacting in various ways to these policies and strategies. As a result, there have been fluctuations to world currencies resulting from these adjustments. Multinational companies such as Fresenius have encountered challenges in pricing and conversion of currencies. Moreover, the company undertakes most of its purchases in Euro zone while a large portion of its revenue comes from the United States. The company reports are recorded using a standard currency, in this case the Euro. The company does not only face external challenges as it also faces internal ones such as shortage of staff and integration of its financial records. Shortage of staff arises from the competition the company faces for personnel in specialized areas. On the other hand, integration of financial records is a challenge because of the translation of value of their assets in foreign countries. There are several strategies that the company can adopt to solve these challenges. A company can either hedge or invoicing to avoid the risk of currency fluctuation (Dohring, 2008). Invoicing will help the company to transfer the risk to the consumers of its products. On the other hand, it can also use hedging which will totally eliminate the risk. In this case, the company uses a hedging company that provides it with a fixed exchange rate for the period under consideration. According to the company’s annual reports the company uses hedging as the preferred method of preventing the company from transaction risks of the fluctuations. The company can train some of its existing employees in those specialized areas it faces competition with other companies. It can recruit fresh graduates and enroll them for studies in these specialized areas. The other alternative the company has is to raise its remuneration and improve the working environment for these professionals. This will ensure that the company does not lose its staffs to the competitors. In addition, it will attract the competitor’s workers to the organization. The company has chosen to create better working condition for employees. It gives the employees bonuses and other fringe benefits. The company also assists students to train in these areas. Despite, taking these measures the company still faces challenges with translation and transactions with these currencies. In addition, the company has to deal with declining purchasing power of the consumer and changing preferences as consumers look for cheaper alternatives for healthcare. The company also has to deal with the increase in its payroll as workers seek wage increases to deal with the rising cost of living. The company should invoice for all the supplies it provides to the organization outside the EU. This will help it transfer the risk of these fluctuations to these customers. It should only employ the hedging alternative for cases where invoicing is impracticable. This will help it free the massive amounts of financial resources that instruments for hedging and speculative purposes lock into the company. The company should offer different products for different segments of the company. This will ensure that the company’s consumers looking for a cheaper solution do not need to go to other companies for such products. Outsourcing for non core business will help the organization, like other healthcare institutions, cut down the cost of providing healthcare (Elek, n.d.). References Dohring, B. (2008, January 15). Hedging and Invoicing Strategies to Reduce Exchange Rate Exposure: A Euro-Area Perspective. Economic and Financial Affair. Retrieved October 13, 2011, from ec.europa.eu/economy_finance/publications/publication11475_en.pdf Elek, S. (n.d.). Industry Challenges Facing Healthcare Providers, Hospitals, Academic Medical Centers, ACOs and Doctors: PwC. PwC US: Building Relationships, Creating Value. Retrieved October 13, 2011, from http://www.pwc.com/us/en/health-industries/providers/challenges-faced-by-providers.jhtml Fresenius Annual Report 2010 - 30. Financial instruments. (n.d.). Fresenius Annual Report 2010 - Home. Retrieved October 13, 2011, from http://annualreport2010.fresenius.com/reports/fresenius/annual/2010/gb/English/40404020/30_-financial-instruments.html Fresenius Annual Report 2010 - Operating risks. (n.d.). Fresenius Annual Report 2010 - Home. Retrieved October 13, 2011, from http://annualreport2010.fresenius.com/reports/fresenius/annual/2010/gb/English/30503040/operating-risks.html Read More