Running head: DISCUSSION 1

Discussion

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DISCUSSION 2

As demonstrated in the case study, STIA is presently exposed to a number of risks. One

of the risks facing the company is competition risk. In particular, the company is facing

increased competition from Chinese producers who are introducing cheap laminate and wooden

flows, thus lowering market prices. Another risk STIA is exposed to is economic risk. For

instance, the economic and financial crisis of 2008-09 significantly affected Italy, which is the

company major foreign market. As a result, the economic crisis resulted in a highly volatile

market characterized by inconsistent demand. Another type of risk STIA is exposed to in

political risk. For instance, while STIA relies on imports from other countries such as Romania,

Russia and Ukraine, any political crisis in these countries exposes the country to great

inconveniences. For example, the political crisis in Ukraine exposed the company to raw

material shortages and unexpected price increases.

The are various ways through which STIA can mitigate some of these risks. In reference

to competition risk the company can focus on increasing its competitive advantage over the rival

companies. This could be by focusing on the firm’s core values and product quality. Besides, as

competition puts a downward pressure on prices, STIA can respond to this through cost

reduction measures to enable it to compete more effectively (Reuvid,2010). Another approach

could be to considering the option of diversification to reduce competition. In terms of the

political risk, STIA could consider creating links with multiple countries from where it can

import its raw materials form. Creating many alternatives in the event either of the countries is

unable to supply raw materials as needed. While the economic risk the company is exposed to

cannot be mitigated, STIA can mitigate the resulting effects such as declining demand by way of

increased marketing and promotional activities.

DISCUSSION 3

Reference

Reuvid, J. (2010). Managing business risk: a practical guide to protecting your business. Kogan

Page Publishers.