Seatwork

Identify the risks in the following cases and how should management respond to such risks. In arriving at the best response, identify the consequences of each options (positive/negative).

1.A wholesaler conducts a credit risk analysis on its current customers. The firm decides to stop extending 90 day invoice terms to several customers it views as a high risk. Such customers are asked to pay upfront for new orders.

2.A small business is planning to open in a new location. They chose a location that has a significant foot traffic with no other cafes and restaurants in the neighborhood.

3.Mr. A has been a farmer for 2 decades now with corn as his main agricultural product. He is planning to enter into an early contract for some of their anticipated crop to deliver corn at a fixed price.

4.A fast food restaurant in a small city receives food deliveries twice a week. There are no other means of procuring needed materials/supplies other than this.