Show internal business risk, Financial Management

Assignment Help:

Internal business risk associated with the operational efficiency of the firm. The operational efficiency differs from company to company. The efficiency of operation is reflected on the company's achievement of its pre-set goals and the fulfillment of the promises to its investors.

(i) Fluctuations in the Sales: The sales level has to be maintained. It is common in Business to lose customers abruptly because of competition. Loss of customers will lead to a loss in operational income.

(ii) Research and Development (R&D): Sometimes the product may go out of style or become obsolescent. It is the management, who has to overcome the problem of obsolescence by concentrating on the in-house research and development program. Short sighted cutting of R & D budget would reduce the operational efficiency of any firm.

(iii) Personnel Management: The personnel management of the company also contributes to the operational efficiency of the firm. Frequent strikes and lock outs results in loss of production and high fixed capital cost. The labor productivity also would suffer. The risk of labor management is present in all the firms.

(iv) Fixed Cost: The cost components also generate internal risk if the fixed cost is higher in the cost component. During the period of recession or low demand for product, the company cannot reduce the fixed cost. The same time in the boom period also the fixed factor cannot vary immediately. Thus, the high fixed cost component in a film would become a burden to the firm.

(v) Single Product: The internal business risk is higher in the case of firm producing a single product. The fall in the demand for a single product would be fatal for the firm. Further, some products are more vulnerable to the business cycle while some products resist and grow against the tide. Hence, the company has to diversify the products if it has to face the competition and the business cycle successfully.


Related Discussions:- Show internal business risk

Walter''s model, 3. The following information are related to Sun Ltd. Paid...

3. The following information are related to Sun Ltd. Paid-up equity capital ` 10,00,000 Earnings of the company ` 1,00,000 Dividend paid ` 80,000 Price - Earning rat

Options markets, Options Markets: Man has always been innovative and in...

Options Markets: Man has always been innovative and ingenuous. His determination to improvise and overcome the limitations of various processes has resulted in phenomenal and e

Planning, how to do assignments based on these topics more specifically?

how to do assignments based on these topics more specifically?

Capital structure theory, Capital structure theory: Use the following ...

Capital structure theory: Use the following information to answer the questions: Case I: Capital structure theory ( no tax ) Case II: Capital struct

Explain about invoice discounting, Q. Explain about Invoice discounting? ...

Q. Explain about Invoice discounting? Invoice discounting is a technique which is able to be used to raise finance against receivables. Invoice discounting works as follows:

Difference in effective annual rate or annual rate, Emily Jill Rogers  is p...

Emily Jill Rogers  is planning to buy a house but needs assistance as to how she will finance the purchase. She has supplied you with some information and asked you to help her wit

Calculate the expected return and standard deviation, Benjamin Tang current...

Benjamin Tang currently has holdings in the following three companies:                                                                             E(R)                      σ

Jit inventory control system primary recuirement, What are the primary requ...

What are the primary requirements for a successful JIT inventory control system? For a JIT system to be victorious the supplier must be willing and able to deliver materials im

Treasury inflation-protected securities or tips, Treasury Inflation-P...

Treasury Inflation-Protected Securities (TIPS) are the inflation-indexed bonds, the US Treasury offers. The first offer was made in the year 1997. As the name sug

Define major causes for the current account deficits, The United States has...

The United States has experienced continuous current account deficits as the early 1980s. What do you think are the major causes for the deficits? What would be the results of cont

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd