Top 5 Risks Facing Firm A
1.Identify the top risks facing Firm A – based on the information available, please list 5 key risks challenging Firm A, covering both IT and non-IT. The traditional telecom industry which company A has seen a revolutionary shift in the demand for more content based services as opposed to infrastructure based commodity. The following states the key risks that the company faces (Nekrasova, Leventsov, & Axionova, 2016) First, the company risks a stiff competition in the industry from within the service providers and the consumers of the telecom products. This competitions poses a great threat to the existence of the company as it has potential to derail progress at the company (Purdy, 2010). Second, the arrival of new and trendy technologies with focus to multimedia content and mobile based application has poses a great risk as the a large customer base is shifting the demand from the traditional telecom to a more software and mobile application based. This means telecom must share revenue generated from the traffic from such applications and multimedia contents. Third, government regulation in foreign sovereignty has made regulations regarding how their citizen’s data should be processed. This has posed a great risks for company A to expand to different parts of the globe as it has seemed extremely difficult t customize the business operations to suite individual country’s needs (Shen, Wu, & Zhang, 2010). The fourth key risk is the failure of the company to set up processes and plan to aid in Mergers and acquisitions which has potential to improve the company’s competitive advantage as.Last but not the least, the increase in the changing the demands of the customer base of the makes the Telecom sector risk loosing share of their capital. Today is would a stupid thing to offer unlimited text messaging to the customers who prefer using apps such as Whatsapp, viber to communicate via instant messaging.For each of the top key risks, articulate your rationale for listing it. Also explain how it would impact the company in the next 3 years.
2.In order to pinpoint the risks identified above, the following rationale was used to arrive at the conclusion. Focus is made to the individual risk identified before. First, competition is one of the main caused of business failure as arrival of new players in the industry means customer loyalty will start shifting to the new player especially if the new player comes with promising business model and products (Arena, Arnaboldi, & Azzone, 2010). The companies indecisiveness in tackling the increasing competition by differentiating its product from the rest of the player makes it one of the top risks the company faces. If this is left unchecked, in a period of three years, the customer base will definitely shift and this will lead to low turn over ratio for the company. Second, the growing demand for more multimedia and mobile based contents has been a threat to the existence of the company as it no longer appeal to the critical mass especially the younger generation. Much traffic has been devoted to mobile apps, games and multimedia content leaving the traditional telecoms risk losing their relevance to general populations. This will in three years’ time make the company have to engage in a revenue sharing models with the content creators for it to survive. Third, security and privacy is a global issues which has attracted International community attentions. Strict regulations such as the Europe’s GDPR have been enacted to put in practices which must be adhered to while processing user data. Such regulations will be bottleneck for the company in its attempts to expand to International market. It is therefore a major risk for the expansion strategy the company might have (Fredriksen-Goldsen et al., 2012). Fourth, the inert nature in which the company is reacting the Merger and acquisitions currently being witnessed in the industry is a key risk to note. These new merger if continues to happen in a scale of three years will form a force to reckon with. Collectively, the new merger may gain competitive advantages and outdo the company in its core business area (Fredriksen-Goldsen et al., 2012). Last but not the least, the change in consumer preference has led to reduction in profit by the Telecom industry as majority of the consumer base shifts from the traditional methods of communication to a more Internet based system. This in the next three years will be the norm as more consumer get onboard using this new tools such as WhatsApp as opposed to sms.
3.For each of the top key risks, please propose a set of KRIs. Please note that a key risk could be mapped to multiple KRIs. Also, keep in mind that a KRI needs to be measurable. Therefore, you need to explain how you plan to collect the data (i.e., source of data, method of data aggregation, if applicable) so that a KRI dashboard can be presented to Senior Management on a quarterly basis.
|
Risk |
KRIs |
KRI source data |
Aggregation |
|
Stiff competition |
Decline in Sales volume turnover |
The sales and marketing reports |
Average number of sales in a financial year is declining |
|
New emerging technologies |
Traffic increase towards the mobile based applications |
The data usage volumes |
Average quantity of data usage in the mobile based application increasing with time |
|
More data traffic towards the multimedia content |
Data usage volumes |
The amount of data consumed by multimedia content such as video sky rocketing over the year |
|
|
Number of new subscriber to cable connections declining |
Subscriber database |
The age of new content subscriber increasing and generally cable subscriber declining over the year |
|
|
Government regulations |
Decrease in acceptance rates in new jurisdictions |
The foreign market reports |
The number of potential new regions to open branches reduces as more regulations get enacted |
|
Merger and acquisition |
Increase in the number of merger and acquisition happening in the industry |
The competition report |
The average number of merger successfully done in a yearly will double with time |
|
Changing consumer needs |
Increase reduction in customer subscriptions to the telecom services |
Subscriber report |
The total number of consumer subscription per year |
4.For each of the top key risks you have identified in Step 1, please propose a plan to address it. Based on the lecture notes, you should know that there are 4 basic approaches for responding to a risk. If your proposed approach is not going to mitigate the risk, then you should build a strong case explaining why you are not going to mitigate it.
|
Risk |
Control Method |
Control |
|
Competition from new player |
Deterrence |
Providing appealing pricing for the products to deter potential new player in the industry |
|
New technologies |
Corrective |
Collaborate with the content creators in a bid to find a suitable business model that makes the company’s prosucts and services more appealing |
|
Government regulation |
Corrective |
Have a working securing and privacy frameworks which meets most regulators demands to enhance compliance |
|
Merger and Acquisition |
Corrective |
Set up clear policies and procedure to facilitate acquisition of other companies and formation of mergers |
|
Changing consumer needs |
Corrective |
Redesign the company’s product catalog to include more consumer facing products |
References
Arena, M., Arnaboldi, M., & Azzone, G. (2010). The organizational dynamics of enterprise risk management. Accounting, Organizations and Society, 35(7), 659–675.
Fredriksen-Goldsen, K. I., Emlet, C. A., Kim, H.-J., Muraco, A., Erosheva, E. A., Goldsen, J., & Hoy-Ellis, C. P. (2012). The physical and mental health of lesbian, gay male, and bisexual (LGB) older adults: The role of key health indicators and risk and protective factors. The Gerontologist, 53(4), 664–675.
Nekrasova, T., Leventsov, V., & Axionova, E. (2016). Evaluating the efficiency of investments in mobile telecommunication systems development. In Internet of Things, Smart Spaces, and Next Generation Networks and Systems (pp. 741–751). Springer.
Purdy, G. (2010). ISO 31000: 2009—setting a new standard for risk management. Risk Analysis: An International Journal, 30(6), 881–886.
Shen, L., Wu, Y., & Zhang, X. (2010). Key assessment indicators for the sustainability of infrastructure projects. Journal of Construction Engineering and Management, 137(6), 441–451.
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