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All Star Company’s Risk Management Report

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Updated: Jun 17th, 2021

Business risks may have a negative influence on the welfare of an organization, and it is extremely important to develop strategies that would help to minimize it. The most serious threats to business in Peru include economic, political, and social risks. Furthermore, environmental challenges may also be regarded as a threat to international business. Risk management involves a lot of practices that may be used to increase the company’s prospects of success. During the preparatory stage, it is important to define the types of the identified risks connected to the ways of how they can be addressed. To begin with, economic risks that exist in Peru are connected to the fall in prices of natural resources and inequality between social classes. Such risks exist in connection to a great number of factors. The strategy to mitigate them may involve increasing taxes for wealthy people, promotion of health and education among vulnerable social groups, and establishing special funds for poor people. There are also environmental risks represented by deforestation and pollution (The World Factbook, 2017).

There is no doubt that these problems may affect business, and this is why it is necessary to monitor the information about the buildings that will be demolished and to avoid locating the plants in recently deforested areas. Environmental issues are connected to additional financial expenses; because of this, it may be necessary to sell the products at a higher price and contribute to the development of new technologies, allowing businesses to produce goods without imposing risks on the environment. As for the risks connected to the political situation in the country, it is known that the government tends to accept ideas proposed by the business leaders of the country. Such a situation may turn out to be disadvantageous for All-Star Company as there are a lot of business competitors that possess greater power and may manipulate the market and encourage the government to tighten the reins and control smaller businesses in a stricter way. Due to that, the company needs to develop a strategy that allows it to outshine all the competitors.

This business risk can be mitigated with the help of new advertising techniques, changing the package design to make it more attractive for the customers, and decreasing the price of the product. As for social and cultural risks, there are certain issues connected to educational inequality and corruption. These risks are extremely difficult to be mitigated as they depend not upon the performance of the particular company but the policy orientation of the government. To decrease the influence of corruption in All-Star Company, it may be necessary to create a special committee responsible for the development and implementation of the strategy, allowing it to recognize and curtail abuses within the company. Furthermore, the company may collaborate with various charity organizations to promote education and equality. Additionally, such measures could help to increase the popularity of the products produced by the company among people holding different positions in society. Also, such measures would allow for the improvement of the public image of the company and encourage people to associate it with justice and other social values.

The next step in developing a proper strategy is prioritizing the identified risks. As it has been made clear from preliminary analysis, many measures can be taken to mitigate the identified risks for the company and secure its financial success and an appropriate marketplace situation. The problem is that some of the possible measures (such as increasing and decreasing the prices) contradict each other, and this is why it is impossible to develop a strategy that would help to address all these challenges at once. Due to that, it is necessary to define the most urgent risks for the company and start working on a particular problem. To begin with, it would be important to start with addressing political risks such as competition with larger-scale enterprises as the ignorance of such risk may cause a significant drop in sales (Petrecolla, Greco, Romero, & Vila-Martanez, 2015).

Also, it is necessary to address this risk in the first instance because a proper strategy will allow for an increase in the popularity of the brand and, as a consequence, increase the company’s profits. Then it will be possible to spend this money on addressing additional risks. As for the second risk in order of importance, it is necessary to address environmental issues that may influence the company’s activity. The financial resources gained with the help of popularizing the brand among people can be used to attract skilled specialists and researchers whose assistance will help to introduce newer practices, helping to decrease the negative impact of the production process on the environmental situation in the country. After that, it will be necessary to pay attention to risks connected to the social and cultural situations in the country, such as corruption level, which is very high in Peru. After that, the attention has to be paid to economic risks, such as a decrease in prices of the primary sources of the country’s income.

To continue, during the development of the strategy, it is extremely important to review the situation connected to different culturally and territorially based factors, such as legal standards and cross-cultural differences. This step is necessary as the factors connected to the particular region may cause the strategy to fail or significantly decrease its positive outcomes. Nevertheless, there are also legal standards that remain one of the reasons to develop these strategies. As for the environment, there are Peruvian laws that oblige manufacturers to use only the equipment that decreases environmental risks. Furthermore, the Peruvian government supports the principle of fair competition between the companies, and this is why there are certain restrictions concerning advertising. For instance, the government is supposed to protect citizens from abusive advertising (Shaver & An, 2014). Because of this, it may be necessary to rely on the effectiveness of the message conveyed with the help of advertisement instead of trying to increase advertisement frequency. To continue, it may be necessary to analyze cross-cultural differences in connection to the decision-making process. It may help to develop a marketing campaign with an account of images that attract Peruvians the most.

The strategy aimed at mitigating the most important risks connected to the political life of the country should include a set of measures that will help All-Star Company become more popular among customers and be able to compete with larger companies. These measures may include decreasing the prices of the products to attract more customers, including those with lower income levels. To continue, it may be important to create a new packaging design that would make the product different from others. Also, it is necessary to develop a successful advertising campaign to make common people more aware of the product and its advantages. When implementing the strategy, it is necessary to refer to legal principles concerning advertising and avoid using ways to promote the product that may be regarded as obtrusive or offensive. Besides, it is important to consider cross-cultural differences while developing the campaign. To do that, the company may need to analyze the images regarded as positive or negative in Peruvian culture.

To address environmental risks, it is necessary to attract specialists who will help to implement the measures, thereby decreasing the negative impact on the environment. What is more, it is important to act by Peruvian laws. The attitude toward nature may be different in many countries, and it may be helpful to introduce employees from other countries to social conventions accepted in Peru.

Social and cultural risks, such as corruption, may be mitigated with the help of a special committee established within the company to control the situation regarding corruption. Although the cases of corruption are a serious violation, the dismissal procedures should be performed by the current laws of Peru. Furthermore, it is important to create a common code of practice to tackle corruption in the organization; thus, all the employees of different nationalities will have to follow the same strategy.

Economical risks for the company are connected to the decrease in prices of the items that are the primary sources of the country’s income. To influence the situation, the company can try to improve the product quality to encourage other countries in the region to purchase the goods. When implementing this strategy, it is essential to improve the quality so that the product will meet all the requirements that exist in the region. Furthermore, the company may need to research other countries’ markets to ensure that product design does not contradict customers’ expectations that are unique to their culture.


Petrecolla, D., Greco, E. M., Romero, C., & Vila-Martanez, J. P. (2015). Economic structure and competition policy application in Latin American countries. Northampton, MA: Edward Elgar Publishing.

Shaver, M. A., & An, S. (2014). The global advertising regulation handbook. New York, NY: Routledge.

(2017). Web.

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