Old World Toy Story, Inc., is a medium-sized toy manufacturer and wholesaler. Most of their toys are made on-site out of wood and/or metal, requiring large purchases of raw wood and steel. The toy industry is highly competitive and sales are not only subject to fads, but also very sensitive to the overall economic state of the U.S. and Europe. U.S. sales make up about 40% of revenues, the rest come from Europe. Compared to other industries, there is an unusually high rate of failure for Toy Storys sales customers (retail toy outlets). To finance their credit terms to these customers, Toy Story has secured a line of credit with their local bank at PRIME + 4%. Currently, they have taken down (used) 90% of their limit.

1. Identify and describe 5 risks that Toy Story faces (Step #1). Map these risks onto the firm, as we did in class, and you did in the homework (Step #2).
2. For each risk, suggest one way that they could reduce their risk exposure. If you do not believe that a particular risk can be mitigated, explain why you believe this is so.