Question

Eastern Company faces major competition and challenge from a global aluminum market and from foreign manufacturers who regularly "dump" aluminum into western markets at very low prices. Thus there is continuous risk in the business from forces out of the control of internal company and project management. To address the risks inherent in its business, Eastern prepared a risk-based strategic plan. Eastern faces eight risks and has developed eight strategic goals to address them. 1. Risk I. Required electric power will not be available at an affordable price. • Strategy I. Secure economically priced power to reduce the risk of power shortage. 2. Risk 2. Cost increase in aluminum manufacturing will increase faster than margin. • Strategy 2. Secure other resources at reasonable costs to offset the risk of cost escalation. 3. Risk 3. Customers will not be satisfied with Eastern's products. • Strategy 3. Cultivate customer awareness and promote customer satisfac- tion to avoid customer satisfaction risk. 4. Risk 4. Eastern's working environment will prove to be unsafe and the company will experience substantial loss of workforce and finance as a result. • Strategy 4. Create a safe working environment to control the risk of worker injury and associated costs. 5. Risk 5. The Eastern workforce will not grow with the technology available for continuous improvement. • Strategy 5. Build a responsible and knowledgeable workforce to avoid the risk of workforce instability. 6. Risk6. Eastern will not act to improve the technology of manufacturing in time to keep ahead of competitors. • Strategy 6. Improve technology and plant equipment to produce products more efficiently to control productivity risk. 7. Risk 7. Pollution from Eastern facilities will lead to noncompliance with government environmental requirements. • Strategy 7. Improve Eastern's impact on the environment to avoid the cost - ~ of pollution and noncompliance. 8. Risk 8. Increasing waste in the manufacturing process and workforce will lead to uncontrolled costs. • Strategy 8. Reduce waste and non-value-added costs to control the risk of wasted effort. Create another risk that Eastern Company might be facing and develop a strategic goal to address your new risk. Provide background that illustrates why this risk is important and specifically how the strategic goal will address the new risk.

Answer 1

Risk 9. Controlling input costs to keep product prices low in a highly competitive market with foreign players to improve and safeguard market share.

Strategy 9. To control input costs raw material procurement has to be closely monitored and controlled either by identifying more competitive pricing, more viable options such as imports or doing vertical backward integration strategy investing in bauxite mines to cut costs sharply and have control over availability at the same time making it possible to offer very competitive pricing on the products.

As mentionedthe company face smajor competition and challenge in the market and this is obviously currently the biggest risk to its business as inability to compete and maintain sales and profitability may force closure and on the other hand, in less desperate circumstances, definitely impede growth causing the company to stagnate and face constant pressures of cutting costs and controlling input in order to stay afloat. The focus remains on survival not growth and at times the cost cutting can become so extensive where the quality of output starts suffering. All these factors are major risks which can shake the foundations of a company. The backward vertical integration strategy of acquiring mines for the input of raw materials at lower cost and ensuring regular supply though investment intensive can go a long way in not only ensuring survival and profitability but also growth of the organisation. The organisation also has the option of ramping up production with supply of raw materials being under its direct control. This would be the most effective strategy to combat the risk of low prices and rising competition to acquire long term control on inputs.