Business Risk Flashcards
International expansion
Company plans to expand its operation internationally
Negative consequences
Entering new markets involves challenges such as unfamiliar regulatory environments, cultural differences, and increased operational complexities.
These factors can lead to unforeseen costs, compliance issues, and potential failure to establish a foothold in the new market, thereby affecting profitability
International expansion
Company plans to expand its operation internationally
Business context
Expanding internationally requires substantial investment and strategic planning. Without thorough market research and adaptation to local preferences, company may risk overextending its resources and diluting its brand strength
Loan finance
Company has secured significant loan financing to support its expansion
Negative
Increased debt levels elevate financial risk, including the burden of interest payments and adhere to loan covenants. Failure to meet these obligations can lead to financial distress or loss of lender confidence
Loan finance
Company has secured significant loan financing to support its expansion
Business context
The obligation to maintain an interest cover ratio of 3 or higher, as stipulated by the loan convenant, add pressure on the company to generate sufficient earnings. Non-compliance with this covenant could result in penalties or loan recall, jeopardizing the company’s financial stability
Cyber attack
The company has experienced a cyber attack compromising customer data
Ne
Data breaches can lead to regulatory fines, loss of customer confidence, and potential legal actions from affected parties. the financial and reputational damage can have long-term adverse effects on the company market’s position
Cyber attack
The company has experienced a cyber attack compromising customer data
Bu
As an online retailer, safeguarding customer data is highly important.
Any lapse in cybersecurity measures not only affects compliance with data protection regulations but also impacts customer retention and acquisition.
Damage to operations due to warehouse fire
a recent fire at Co.’s warehouse has caused significant damage to inventory and property.
ne
the destruction of inventory can lead to immediate financial losses and disrupt the supply chain, affecting the company’s ability to fulfill customer orders. This disruption may result in lost sales, customer dissatisfaction, and potential long-term damage to the company’s reputation.
Damage to operations due to warehouse fire
a recent fire at Co.’s warehouse has caused significant damage to inventory and property.
3
as an online grocery retailer, co relies heavily on efficient warehouse operations to meet customer demands promptly. Any operational hiccup, like a warehouse fire, can severely impact the company’s market position and customer loyalty
Legal case
Co. is facing legal case related to alleged breach of contract
2
legal disputes can result in significant financial penalties, legal costs, and diversion of management’s attention from core business activities.
Additionally, unfavourable publicity from legal issues can tarnish the company’s reputation and weaken customer trust
Legal case
Co. is facing legal case related to alleged breach of contract
3
In the competitive online retail industry, maintaining a positive public image is crucial. Prolonged legal battles can undermine stakeholder confidence and disrupt strategic initiatives
Investment in Luxury Pet Supplie Company (niche market)
2
this diversification into a niche market may divert management’s attention from core operations. additionally, the luxury pet supplies market may not align with the company’s existing customer base, leading to potential financial losses if the venture does not perform as expected
Investment in Luxury Pet Supplie Company (niche market)
3
management may struggle to manage the increased complexity of overseeing multiple business segments. a strong focus on ensuring the success of the new luxury pet supplies venture may result in insufficient attention being paid to the core grocery business, risking a decline in operational performance and profitability in its primary market
Eco-Friendly Delivery Vans (invest banyak tapi tak function, causes delay)
2
While environmentally beneficial, the initial investment in eco-friendly vehicles is substantial. the company face challenges such as higher upfront costs, limited availability of charging infrastructure, and potential operational disruptions during the transition period.
Eco-Friendly Delivery Vans (invest banyak tapi tak function, causes delay)
3
Adopting sustainable practice is commendable; however, W must ensure the financial and operational implications do not outweigh the environmental benefits. a poorly managed transition could strain financial resources and affect service quality.
