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Strategic risks


Internal

Strategy implementation

A failure to implement our strategic agenda effectively could adversely affect our company and its businesses.
The appropriateness of our strategic agenda is continuously monitored by the Board of Management and the Supervisory Board. Specific attention is paid to areas such as macro-economic developments, general and financial market developments, competitive situation, performance improvement potential, sustainability, geographical spread, emerging markets, political risks, acquisition and divestment opportunities. Risks are minimized as we operate in attractive industries, have global leading positions and have the right management team in place to deliver on our ambitious targets.

Identification of major transforming technologies

We may not be able to identify major transforming technologies.
We continuously aim for sustainable growth of our businesses through research and development, production and sale of new products and regularly add new businesses and technologies through selective alliances, ventures, or acquisitions. We have a global approach to innovation and are committed to sustainability at all levels. On a percentage basis, our R&D spend – 2.3 percent of revenue – is consistent with industry practices. This, given our large size, in general means that we have more to work with on an absolute basis than our peers.

Integration of acquisitions

We may not be successful in integrating acquired businesses and not reach the full synergy effects.
Our company continues to participate in industry consolidation. We place a strong focus on integration of acquisitions as this is critical to achieve the expected results. AkzoNobel’s policies and directives are implemented without delay in newly acquired businesses. We are committed to delivering €340 million on ICI synergies faster, with 100 percent realized by 2010. In 2008 we redesigned all corporate departments and all Deco regional and functional teams are in place – 95 percent of targeted management has been retained.

External

Adaptation to economic downturn

Not adapting our company timely and adequately to deepening of the global economic downturn could have a harmful impact on our business and results of operations.
One of the principal uncertainties facing our company is the extent of the economic downturn currently being experienced in many markets around the world and how this will affect our businesses and results of operations and timing of that impact. We are closely monitoring general and financial market developments and keep in close touch with our partners in the value chain. We have started a rigorous drive to further reduce our cost base at both corporate and business level. We are driving margin management programs across our company, improving pricing and procurement. For planning and budgeting we apply various scenarios to be best prepared for further changes in economic conditions.

International operations

Because AkzoNobel conducts international operations, we are exposed to a variety of risks, many of them beyond our control, which could adversely affect the business.
We spread our activities geographically and serve many sectors to benefit from opportunities and reduce the risk of instability. Unfavorable political, social or economic developments and developments in laws, regulations and standards could adversely affect our company’s businesses and results of operations. Political, economic and legislative conditions are carefully monitored. The Board of Management decides on the countries where AkzoNobel conducts its business.

Stakeholder support

Failure to get support of our stakeholders for our strategy and its execution could adversely affect our company and its businesses.
We endeavor to define and implement a clear strategy and continuously seek dialog with stakeholders. As an organization we are committed to helping our customers make their business a success, providing competitive returns to our shareholders, creating an attractive working environment for our people and conducting all our activities in the most socially responsible manner.

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