Internal and External Key Risks – Waterproof Backpack Project
Generally, the availability of enough cash flow poses a lifeline for a business. The Forever Dry company is at a higher risk of encountering unexpected costs hence the ability of the company to reach monthly expenses becomes challenging. Additionally, the financing cost associated risk that might inhibit enough cash flow includes appraisal costs, closing costs, company deposits placed on hold as collateral, and the possibility of costs for points to purchase down rates.
Information Security
Currently, the purchasing power for the backpack, both male and female, is very high. As such, the company tends to depend on its implemented Information technology, especially on policy issues. According to research conducted, it is admitted that almost 93 % of employees admit to the behavioral character of violating the company security policies, hence they act as an internal risk for this new company (Breitner, 2013). Additionally, data privacy might be at risk by the use of outdated IT or cloud-based services.
External Risks
Geopolitical Instability
Geopolitical Instability in almost all parts of the world might affect the company’s business confidence and access to raw materials. Additionally, the geopolitical instability tends to disrupt the company backpack with an inbuilt raincoat. As such, the company is at the risk of investment decisions and product delivery. According to various researches conducted, 70 % of the CEOs interviewed expressed that Geopolitical Instability is an external risk that impacts the growth prospects of the company (Kirkpatrick, 2014).
Environment Risks
The exciting competition within companies contributes to market changes. As such, there is a high possibility for European countries to change the federal laws and ordinances that will affect the business. Additionally, the weather and climatic changes might shut down the company for a certain duration, hence losses on financial position. Research indicates that in 2013, the major weather events cost $120bn of losses globally (Cambridge Centre for Risks Studies, 2014). Based on the research, the climatic change, and extreme weather the company is likely to encounter additional operating costs, performance, and the ability to do business costs.
Mitigations
Avoiding overtrading improves the company’s cash flow. As such, effective debt management and credit control inhibit overtrading and contribute towards the company collecting higher revenue hence the availability of resources to pay suppliers and staff. Additionally, the company can avoid cash flow risks by leasing its assets, injecting new capital, limiting the money taken out, cutting costs, and being more efficient on services (Kroes, 2014).
Mitigating the information security issues, especially on policies and data management requires regular assessment of available information and compliance with the latest technological systems. It, therefore, implies that the company requires a designated security officer (DOS), regular risk assessments, and individual authentication, authorization, and accountability in policy management.
Having qualified internal auditors ensures that the company has the right mix of risk management and governance expertise on issues regarding supply chain management and business disruption policies.
A company complying with the Environmental Laws within the operating country does reduce the measures of the risks that could impose hefty fines on the company. Additionally, taking insurance and policies for the company in case calamities strike in the operating region, funds are likely to be returned hence avoiding the financial risks.
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Production Process and Provide a Layout Plan
The production process of a Forever Dry Waterproof Backpack with a built-in raincoat requires the Cordula Nylon material. The material needs to be of 0.45 thickness. The production process involves a waterproof backpack that is of high mechanical strength for good flexibility, elasticity, and other physical properties. Additionally, the material used advocates for durability. As such, it implies that Forever Dry Backpack keeps the belonging perfect and dry hence very convenient.
The great advantage of using Cordula Nylon is that it is environmentally friendly. The production process tends to embrace the waterproof Technology voltage process. The waterproof backpack production process fits the backpack to avoid any pinholes or gaps in the products. Additionally, the fabric used meets the ISO requirement 811 hence huge possibilities for customer interests and satisfaction. The production process at Waterproof Backpack Project focus on the customer returns benefit. With the continuous production of the product, while tapping the market demand, the possibility of product quality challenges tends to arise. As such, the company has implemented the DMAIC principles whereby the identified problems between the employee and customers either during the production phases or marketing the end product are tackled through investigation and correction to avoid a similar experience in the company’s near future.
Use of Sub-Contract Labor, Parts
The availability of the sub-contract poses a huge benefit for the company because it is a new company. Sub-contractor assists the company officials to have more time to concentrate on new projects and the availability of billing out more hours. Contrarily, a challenging aspect that the management team is likely to face is mandatory monitoring and reviewing of the subcontractor’s work. The sub-contractor is entitled to handle the day-to-day work of engaging in the manufacturing process of the waterproof backpack with a built-in raincoat. As such, the business team oversees the work during the production phase and when the process comes to an end, the team checks for quality and accuracy before distributing the product to the market.
Due to work overload, the subcontract proves to benefit in growing the business of the company. As such, it is advisable to put the contract into writing, the company to take charge of the control quality, recruiting qualified personnel for the job and building a team that is worthy to count on purposefully to realize the company’s growth (Biong, 2013). Additionally, the company is kicking off with limited funds available hence the use of the sub-contract contributes towards no PAYE or the national insurance contribution that requires collected revenue from the company. Hiring sub-contractors is cheaper in paying labor in comparison to hiring a full-time employee. The company is likely to benefit from increased productivity, availability of diverse skills in the organization, the efficiency of the business, and benefits in avoiding the tax (Kujala, 2015).
Conclusively, though subcontracting is highly recommended, research pinpoints that the majority of the sub-contractors pose a negative attitude towards the assigned company because of business culture differences which might contribute to poor motivation and the commitment of the subcontractor’s assigned duties (El-Mashaleh, 2012). To avoid such risks, the company tends to hire subcontracts purposefully for one-off jobs that highly require specialist expertise or a fast turnaround for the company.
Reference list:
- https://www.researchgate.net/publication/316039112_Technology_Readiness_in_Customers’_Perception_and_Acceptance_of_Mobile-Payment_An_Empirical_Study_in_Finland_Germany_USA_and_Japan
- https://www.jbs.cam.ac.uk/faculty-research/centres/risk/publications/
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