Macroeconomy and Industry

Bechtle AG sells IT products in eleven Western European countries and offers IT services in Germany, Austria, and Switzerland. Though the business greatly depends on the domestic market, the development of the European economy as a whole has a decisive effect on Bechtle’s growth, as the presence in various European markets accounts for a proportion of about one third of the revenues.

In the fiscal year 2008, the global economy was greatly affected by the crisis in the financial markets. For 2009, economic forecasts predict a deterioration of the economic development. Thus, the outlook for the company’s key market and the investment affinity in the industry is further clouded by risks for Bechtle’s earnings, assets, and financial position.

Bechtle AG operates in a highly competitive and technologically short-lived market. Both the IT trading segment and the IT service segment are characterised by competition in terms of pricing, product quality, and service quality. Thus, Bechtle could be confronted with mounting price and margin pressure, weakening demand, and slower growth. The IT market is still undergoing a period of consolidation, which may culminate in several stronger competitors and changed market shares. The company’s earnings position mainly depends on the effectiveness and, most importantly, on the efficiency with which Bechtle succeeds in fulfilling customers’ growing need for smarter IT solutions.

Concentration on growth-intensive business fields reduces dependence on economic trends

Among other things, Bechtle counters these market risks by strengthening business areas with above-average growth potential, such as managed services. This business field not only offers excellent growth perspectives, it also reduces Bechtle’s dependence on economic trends by means of longer contract terms. By strengthening the service offer in this field, Bechtle is actually in- vesting in the future, laying the foundations for growth even in times of weak or halting economic development.

Another measure Bechtle is taking to counter the general economic risk is to strengthen the public clients division, which is of great significance especially in economically difficult times.

To further reinforce the market position of Bechtle AG in Europe, the company continually enters new country markets in the IT e-commerce segment. The establishment of new trading companies requires concerted efforts in the field of sales, which may not always be successful. The revenues and earnings could be impaired by start-up costs for the establishment and personnel as well as investments in country-specific sales and marketing activities. Moreover, there is a risk that the selected measures could later be found to lack sustainability or fail to gain the expected market acceptance. Bechtle AG limits this risk by means of extensive market and competition analyses before entering the market, central management of all e-commerce companies, and successive know-how transfer from previous market launches.