Personnel Risks Sourcing Risks Financial Risks Product Organizational Challenges  Summary Retail Operations  To a significant extent, the success of the PUMA Group is due to the dedicated commitment and performance of its employees. To ensure lasting success, the company has developed external and internal training measures, employee participation programs, and  attractive remuneration systems with to the goal of building  up, developing, and motivating top talent to remain with the  company on a long-term basis.  instability. Risks can also arise as a result of an over-dependency on individual suppliers. For the avoidance and containment of such sourcing risks, PUMA has developed very good relationships with a number of manufacturers in different countries and  sourcing regions.  Most suppliers’ production facilities are in the industrializing  countries of Asia. Business activities with these countries create diverse risks for the PUMA Group. For example, risks may arise through exchange rate fluctuations or changes in customs levies and duties, trade restrictions, natural disasters and political  Financial risks may arise for PUMA primarily through currency effects. The majority of PUMA products are sourced in Asia in US$. Parts of the necessary US$ currency, however, can only be  raised through sales in the US$ region. PUMA approaches this risk in accordance with an internal guideline through the use of  primary and derivative financial instruments (hedging). PUMA products must satisfy the functional, aesthetic and  high-quality expectations of buyers. Extensive laboratory tests and collaboration with PUMA athletes on product design and development ensure that the products satisfy the highest quality requirements. To this end, the external manufacturers work  according to technical, material, and design specifications. As a risk prevention measure, PUMA has established a global  sourcing organization responsible for all requirements of product  manufacturing. The international expansion of the company’s retail operations ensures consistent presentation of the product lines and allows the company to capture a higher gross profit margin. However, the extension of the value chain involves investment risks. An increase in retail shops, for example, may be associated with long-term rental commitments and investments which could  increase the share of fixed costs. In periods of declining sales, these fixed costs would burden profitability. PUMA approaches these risks through careful selection of retail locations,  recruitment of staff with extensive experience in the retail  business, daily sales reporting, and extensive controlling. caused by the growth of the Group. Through strategic planning, continuous optimization of business processes and investments  in information technology, PUMA can continue to grow  organizationally while tapping into new potential for efficiency and international communications.  The virtual organizational structure built up over the years drives global orientation and ongoing decentralization. However, it is associated with increased coordination requirements for coping with technical, logistical and personnel challenges. An added  factor is the growing complexity within the organization structure  PUMA’s risk management enables it to fulfill the legal  requirements concerning control and transparency in company operations. Management believes that in the overall assessment  of the risk situation the risks are limited and confinable and do not represent a hazard to the going concern of the PUMA Group.  Foreword | Mission |  Management Report  | Share | Marketing | Consolidated Financial Statements - IFRS - | Report of Supervisory Board | Board of Management 35