MAC3702 ASSIGNMENT SEMESTER 1 OF
2022 new update
QUESTION 1
(a)
RISKS WAYS OF MITIGATION
Strategic risk arising from These are normally beyond the
the external environment control of management such as
effects whether or not the patents will be
renewed. These are usually difficult
to mitigate as they emanate from
external circumstances but they can
be mimimised through
diversification.
Compliance risk resulting from This can be mitigated through
non - compliance with education of all organizational
legislation regulations. This members on any legislation affecting
arises from the fact that the their work and also incorporating
food industry is highly legislative requirement in the code of
regulated and legislated. conduct.
Market risk resulting from Improvements on product quality and
strong competition between product differentiation can place the
grocery stores. entity in a competitive space.
Aggressive marketing strategies can
be implemented in order to have a
competitive edge.
Market risk resulting from the Can be mitigated through cost
likelihood of the effect on containment which can then allow the
future food pricing and the entity to charge reasonable prices.
expected result of creating a The pricing problem can also be
high demand for non – original mitigated through the production of
similar products. exclusive products that can have a
competitive advantage.
Operational risk resulting from This can be mitigated through
risk of loss from a failure of constant review of the adequacy of
internal business and control internal controls and putting in place
processes. compliance controls.
For example failures in
research controls can result
in wrong products being
introduced.
Business risk resulting from The entity can guard against
the possibility of products this risk through insurance and
failure considering the the
saturated South introduction of stringent internal
controls.
MAC3702 ASSIGNMENT SEMESTER 1 OF
2022 new update
, MAC3702 ASSIGNMENT SEMESTER 1 OF
2022 new update
African retail
market and
contractual
inadequacy risk.
Economic risk arising from This can be mitigated by establishing
the depressed economy operations in different economies so
considering the high that a collapse of the economy of one
inflation, increasing country will not collapse the
unemployment and organization.
decrease in disposable
incomes.
Financial risk as business Debt should be obtained which
failure might result in failure to matches the expected cash inflows
meet interest payments and and the extent of debt should be
debt repayments. This risk also reasonable. The entity should
arises from the intended negotiate favourable terms in terms of
funding of the new interest and capital repayments.
manufacturing machine which
is likely to be made from a loan
or a lease.
Technological risk as the Proper training of employees can be
new machine might take done prior to full scale use of the
time for the employees to machine and the entity can even enlist
efficiently use it. The new the services of the machine suppliers
machine might even fail to in the initial phase of use.
meet expectations.
Political risk considering that This is uncontrollable but the entity
most of the food industry should always be on the lookout and
inputs are produced by the they should establish sound working
agricultural industry and there relationships with available
is currently uncertainty over suppliers.
how politicians wish to
implement the expropriation of
land without compensation.
Risk of bad debts as shown by Debtors should be carefully screened
the liquidation of a debtor prior to offering debt. Debtors should
which exposed the entity to a be followed up to prevent the
loss of R1.8 million. situation that arose.
MAC3702 ASSIGNMENT SEMESTER 1 OF
2022 new update
2022 new update
QUESTION 1
(a)
RISKS WAYS OF MITIGATION
Strategic risk arising from These are normally beyond the
the external environment control of management such as
effects whether or not the patents will be
renewed. These are usually difficult
to mitigate as they emanate from
external circumstances but they can
be mimimised through
diversification.
Compliance risk resulting from This can be mitigated through
non - compliance with education of all organizational
legislation regulations. This members on any legislation affecting
arises from the fact that the their work and also incorporating
food industry is highly legislative requirement in the code of
regulated and legislated. conduct.
Market risk resulting from Improvements on product quality and
strong competition between product differentiation can place the
grocery stores. entity in a competitive space.
Aggressive marketing strategies can
be implemented in order to have a
competitive edge.
Market risk resulting from the Can be mitigated through cost
likelihood of the effect on containment which can then allow the
future food pricing and the entity to charge reasonable prices.
expected result of creating a The pricing problem can also be
high demand for non – original mitigated through the production of
similar products. exclusive products that can have a
competitive advantage.
Operational risk resulting from This can be mitigated through
risk of loss from a failure of constant review of the adequacy of
internal business and control internal controls and putting in place
processes. compliance controls.
For example failures in
research controls can result
in wrong products being
introduced.
Business risk resulting from The entity can guard against
the possibility of products this risk through insurance and
failure considering the the
saturated South introduction of stringent internal
controls.
MAC3702 ASSIGNMENT SEMESTER 1 OF
2022 new update
, MAC3702 ASSIGNMENT SEMESTER 1 OF
2022 new update
African retail
market and
contractual
inadequacy risk.
Economic risk arising from This can be mitigated by establishing
the depressed economy operations in different economies so
considering the high that a collapse of the economy of one
inflation, increasing country will not collapse the
unemployment and organization.
decrease in disposable
incomes.
Financial risk as business Debt should be obtained which
failure might result in failure to matches the expected cash inflows
meet interest payments and and the extent of debt should be
debt repayments. This risk also reasonable. The entity should
arises from the intended negotiate favourable terms in terms of
funding of the new interest and capital repayments.
manufacturing machine which
is likely to be made from a loan
or a lease.
Technological risk as the Proper training of employees can be
new machine might take done prior to full scale use of the
time for the employees to machine and the entity can even enlist
efficiently use it. The new the services of the machine suppliers
machine might even fail to in the initial phase of use.
meet expectations.
Political risk considering that This is uncontrollable but the entity
most of the food industry should always be on the lookout and
inputs are produced by the they should establish sound working
agricultural industry and there relationships with available
is currently uncertainty over suppliers.
how politicians wish to
implement the expropriation of
land without compensation.
Risk of bad debts as shown by Debtors should be carefully screened
the liquidation of a debtor prior to offering debt. Debtors should
which exposed the entity to a be followed up to prevent the
loss of R1.8 million. situation that arose.
MAC3702 ASSIGNMENT SEMESTER 1 OF
2022 new update
