“Managerial Economics”

“Case Study 10”

“By: Rohit Mahantshetti”
“PES1202202848”

1.

It can be said that small, innovative new companies may be better able to deal with risk and

uncertainty than large, well-established companies. This is because they may think more like

entrepreneurs and be more willing to try new things and take risks. They may also be more

flexible and able to quickly adapt to changes in the market. Also, they might have less

administrative constraints and be able to make decisions faster.

But it's important to remember that established companies also have their own ways of

dealing with risk and uncertainty. They have more money, more experience, and relationships

with customers and suppliers that are already set up.

In the end, it depends on the industry, as well as the company's resources and skills. It's

important for any company, old or new, to have a complete plan for managing risk and

uncertainty and to keep an eye on the environment, adapt, and change as needed. As a

student, it's important to know the pros and cons of both types of firms and how to deal with

risk and uncertainty in any business setting.

We will look at the "Agro Management Development (AMD)" company, a small citrus waste

valorisation business based in southern Italy, to see how uncertainty affects the growth of any

business and how a thorough business plan can help to reduce these risks.

This study of AMD shows how important it is to have a business plan when starting a new

company. The business strategy analysis was a very important first step in figuring out what

wasn't known about resources, markets, rules/institutions, and technology. The study's results
showed that the company was right when it said that picking a reference market would make

the market less uncertain. AMD had a big window of time to get its products out there

because demand was going up in all three industries—nutraceuticals, food, and cosmetics.

So that it could better deal with technological and institutional/regulatory issues, the company

put off big new projects until it had a strong position in the market and a competitive edge.

Even though being careful and conservative may be the best way to reduce risk, the study

found that it could give stakeholders the wrong idea about how complete the business

strategy is, which would make them less excited about the new venture.

The case study says that new businesses can handle uncertainty and risk better than their

older competitors because they know where they want to go better. These businesses may

have a better chance of succeeding if they make a detailed business plan that takes into

account all relevant sources of uncertainty.

Last but not least, the AMD case study shows how important business planning is for

innovative companies to reduce risk. The results suggest that small businesses can improve

their chances of success by making a thorough business plan that takes into account all of the

different kinds of uncertainty they face. The business strategy shouldn't be used as an excuse

to put off doing a thorough risk analysis. Instead, it should be changed to include all relevant

sources of uncertainty.