With the information above, do you have a dissenting opinion which is the greatest risk potential for a business and why?

#1 equals the least risk, to #10 equals the strategy presenting the greatest risk potential for a business:

Backward integration
Divestiture
Forward integration
Horizontal integration
Liquidation
Market development
Market penetration
Product development
Related diversification
Retrenchment
Unrelated diversification

Liquidation seems the greatest risk potential for a business. Reasoning, retrenchment and liquidation could potentially lead to risking a poor reputation in public opinion and the financial system after experiencing bankruptcy proceedings. Future investors may consider the entrepreneur a credit risk.

With the information above, do you have a dissenting opinion which is the greatest risk potential for a business and why?

Expert Solution

Many of the points presented above are the generally conceived notions about greatest potential business risks and are true in many cases. However, there are many cases where horizontal integration or acquiring of a smaller loss making business in the same market could be potentially catastrophic for any firm, as the case with Air India (Read about Air India and Indian Airlines Merger for details). These mergers could put a lot of stressed assets on the books for any company and thus would lead to loss of investors confidence and losses in the short term, even if they manage to pull the company out of financial stress.

All the best!!

keosha answered 2 years ago

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