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Hot Pot House Restaurant Risk Management Essay

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Hot Pot House will primarily focuses on its target market, the regional student population and the working class subway users, through direct selling via its premises. Aside from this, a substantial percentage of the resources will be dedicated to advertising to ensure that potential customers are made aware of the existence of our business. Our strategy is to expand service and product delivery capabilities. This will enable us take care of the requests of customers which current industry players are at the moment unable to address. To this end a variety of risks have to be countered and this have been briefly summarized.

Risk analysis

Demand risk

Like with any other start up company, Hot Pot House has to establish strategies for dealing with fluctuations in demand. One of the measures taken is to reinvest some of the profits made in the high seasons to the emergency fund such that the company is able to remain afloat on its own during when faced with tough conditions.

Credit risk

At some point, Hot Pot House has to provide credit facilities to deserving clients. Unfortunately and like with any other business establishments, there is the possibility that some of these creditors may end up defaulting on the payments. As such the company has to make contingencies to ensure that such losses are adequately taken care of. This is definitely a risk that the company has to take in order to establish and maintain a loyal customer base.

Financial market risk

Businesses, particularly those dealing with consumer products, are subject to constant financial market fluctuations. Hot Pot House definitely has to contend with increases in taxation rates, a rise in interest rates on acquired loans and oscillating exchange rates for products that have to be imported from other countries. A constant review of the business plan and analysis of the financial records will help ensure that such fluctuations are appropriately dealt with.

Liquidity risk

With the ups and downs that plague businesses, there is the possibility of the company not being in a position of settling debts and as such subject itself to auctions and other liquidation procedures. The main risk incurred here is having both the liquid and illiquid assets undervalued resulting in even more loses for the company. Measures are being taken to ensure that proper and regular valuation of products is being carried out in case of any eventualities.

Technical risk

The food industry is very tricky particularly when trying to analysis the product performance. On paper and in theory, it is easy to come to the conclusion that customers will be willing to take to the products on offer. However, because of competition and market flooding there is a very big likelihood of the Hot Pot House restaurant not performing very well in its given locality resulting in losses for the company. To avoid this, a proper analysis of localities and market performance is underway to select the place where the restaurant will perform at optimum levels.

Operational risk

Failure of the equipment such as coffee makers used in Hot Pot House restaurant could result in poor service delivery and even lesser customer satisfaction. In order to avoid such inconveniences and embarrassments, the company has invested in the top of class equipment and even installed back-up power systems to deal with the random power outages in the region.

Legal risk

The management of Hot Pot House has signed various contracts with different entities including suppliers and state offices. It is therefore the obligation of the company to fulfill its end of the agreements irrespective of the fact that the other parties may not honor their roles in the signing. Proper legal measures have been taken to ensure that all loopholes pertaining to contracts and other official agreements have been sealed to avoid any clashes.

Personnel risk

Since Hot Pot House runs mainly on human expertise, it subject to the underpinnings associated to the weakness of the human persona. Dishonesty being a key human characteristic could see the company succumbing to huge loses as a result of fraudulent deals and document alteration. To avoid this, proper methods of company record analysis have been established such that all the profits made can properly and genuinely be accounted for. Another risk associated with humans is the physical weaknesses associated to mortality. The loss of a key company head could lead to a slow down in company operations. In order to avoid such risks and inconveniences, the company has taken measures to ensure that no single individual holds exclusive knowledge and expertise to a given company operations element.

Competitor and industry specific risk

Hot Pot House is under stiff competition from other restaurants and as such has to constantly review its strategies to ensure that it always stays on top. There are also industry specific risks that the company has to contend with including the perishability of cooked foods. Since some given ready-made meals can not be reused, the company has to make sure that the amount that ends up in the garbage is well compensated.

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IvyPanda. "Hot Pot House Restaurant Risk Management." June 25, 2020. https://ivypanda.com/essays/hot-pot-house-restaurant-risk-management/.

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IvyPanda. 2020. "Hot Pot House Restaurant Risk Management." June 25, 2020. https://ivypanda.com/essays/hot-pot-house-restaurant-risk-management/.

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IvyPanda. (2020) 'Hot Pot House Restaurant Risk Management'. 25 June.

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