•Answers these questions: Imagine you\'re assessing a local suburban Pizzeria Gr
ID: 354886 • Letter: #
Question
•Answers these questions: Imagine you're assessing a local suburban Pizzeria
Growth Risk Assessment
1.Why should we grow
2.How will we grow
3.How much should we grow
4.How much growth can we afford
5.Do we have enough (and the right kind-skills and talent) people
6.Do our hiring and training processes position us to grow successfully (do we have these processes?)
7.Do we have adequate controls?
Financial
Operational/Quality
Risk Management
8.Because there will be risks…how will growth create risks to our
–Culture
–Customer Service/Experience
–Supply Chain-materials sourcing, pricing, and supply chain partners
–Cash flow
–Distribution and delivery
–Financial “cushion”
10.How do we mitigate/manage our risks
11.Do we have sufficient operational insight/data to understand and manage when/where risk occurs
12.Who can help us understand, measure and monitor our risks
13.Do we need to grow at a gradual pace?
Explanation / Answer
1) The growth for the pizeria will be needed to pay off the debts or to be suatainable in long term. In addition there could be reasons like , to remain compettitive enough in the market. The growth could be organic or inorganic, to enable reaching out to more geographies/ increasing customer segments; gain competitive advantage.
2) For evaluating growth there are two factors to look at. Whether the focus is to grow the top line i.e. the revenues or the bottomline i.e. profit margins. If the focus is to grow the top line then, the pizerria should look at increasing the price or inreasing the salexs volume. The focus on increasing the sales volume would come by either offering to a wider customer segment; or reaching out to larger number of people within the existing customer segment which can be focussed on by sales/ distribution strategy. Secondly if the the revenues remaian the same then the bottomline grows by reducing / controlling the cost. The cost will be controlled by understanding the operating cost elements i.e. Raw material ( sourcing and utilisation); labor utilisation and overheads/ maintainence costs.
3) The organic growth as listed above/ or inorganic growth by acquisitions etc. depends on the current market value and the funds available along with the risk taking ability of the firm.
4) The affordability of the growth would be a function of the factors listed above. The higher risk and disposable funds coupled with the impact/ returns expected the firm can go for investments in other firms/ choose to grow organically in a conservative fashion if the case is viceversa.
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