Chapter 3 Flashcards
Reward
Smth given in recognition of effort or return for smth achieved
Opportunity
A time or event that makes it possible to do smth
Factors creating opportunities for an enterprise
Changing needs or wants for a product (increase or decrease in income, taste in fashion, pop size and structure)
Developments in tech (making others outdated)
Changes in ability to meet needs or wants (failure to competition)
Changes in gov policies (availability of grants and subsidies or taxes and laws)
Risk
The chance of gaining or losing smith as a result of an action taken
Different risks
Financial risks- insufficient finance or unexpected costs
Economic risks- changes income customer tastes
Health and safety and environmental risks
Human rescource risks- having the right no. of skills and enough people
Production risks- access to the right material or if a machine breaks down
Stages of risk management
- Identify the risks
- Analyse the consequence of each risk
- Is the risk worth taking
—-> no- stop the project
—-> yes- 4. Plan how to manage the risk
5. Monitor and review
Stages of risk management
(1)
Identify the risk
PEST OR SWOT
PEST analysis
Identifying external factors that can impact the enterprise:
Political- stability, taxes, legaal controls for comp., health and safety employment
Social- edu., customer demographics, cultural issues, lifestyle issues, attitudes to work, taste and fashion
Economic- inflation, interest rates, eco growth, unemployment rates and policies
Technological- advances in tech, role of internet, spending on tech
SWOT analysis
Identifies current internal strengths and weaknesses and potential external opportunities and threats:
Strengths- internal features the enterprise is good at and can control ( develops new products, good rep, good location)
Weaknesses- internal features the enterprise has control but need to improve ( lack of cash, low production capacity, poor quality products)
Opportunities- external changes that the enterprise can’t control which they benefit from (eco growth, pop increase)
Threats- external chandlers or events that can’t be controlled which could be a potential risk ( increase in comp, changes in legal controls
Internal factors
Products
Prices
Costs
Profit
Performance
Quality
People
Skills
Rep
Processes
External factors
Markets
Fashion
Seasonality
Trends
Comp
Econ
Pop
Politics
Society
Culture
Tech
Environment
Media
Stages of risk management
(2)
Analyse the consequences of the risk
What are the chances of it happening?
What are the potential consequences for the project if it did happen?
Stages of risk management
(3)
Decide whether the risk is worth it
Stages of risk management
(4)
Plan to manage the risk
MITIGATE- try to reduce by changing what u do
ACCEPT- be prepared or set money aside in the budget for any negative effects of risk
TRANSFER- place responsibility on someone else
ELIMINATE- the hazard don’t do it,
Reducing the risk
Detailed research- market research, financial projections, cash flow forecasts, PEST and SWOT
als for advice from formal or informal sources
Careful planning by business plan or action plan
Spreading the risk
Attitudes to risk
Risk- averse- avoid any possibility or risk
Risk-keen - willing to accept a level of risk
Risk-reducer - limit the likelihood and amount of possible risk
Legal obligation:
Employment- employment contracts state the terms of the jobs, reduce disagreement. Min wage laws, laws against worker being unfairly treated ( race, gender, physical disability)
Production- health and safety laws set min standards= safe working conditions
Marketing and selling- laws exists to protect customers against misleading g promotions
Finance- laws and guidelines to ensure correct documents are used and stakeholder interests are protected
Ethics
Moral values and principles that govern a persons behavior or the conducting of an activity
Ethical considerations
Min wage is not living wage so how much to pay
Should child labor be used
Should fair trade products be used or sold
Paying a fair price to suppliers might lower the enterprise profits
What should the enterprise do with any profit made
Advantages of ethnical considerations
Better reputation, attract customers
Good employers, able to attract and retain employees
Supplier may willing to offer better terms and they are receive ing a fair price
Lender more willing to offer help and support
Being ethnical can provide a unique selling point (USP) and may used to promotional tool
Enterprise could gain support from fair trade movement
Disadvantages of ethnically considerations
Increase cost purchasing raw materials can force the enterprise to charge higher
Could be difficult for the enterprise to source materials and products
