The courthouse can be one of the best places for information about how businesses operate. In addition to all of the filings regarding business licenses and deeds for property purchased in the course of business, companies often head to the courthouse to file a lawsuit when they have a dispute with a customer, a supplier, a competitor, or an employee (Roush, 2004). Hundreds of thousands of business-related lawsuits are being filed in state and local courts each year. For instance, the 1992 Civil Justice Survey of State Courts discovered that there were 762,000 tort, contract, and real property cases around the country. Of those, only 2% went to a jury (Roush, 2004). In 1996, there were an estimated 15,636 tort, contract, and real property trial cases in the 75 largest counties in the country (Roush, 2004). In some states such as New York, there are special courts set up to specifically handle business-related lawsuits that may be too complex for other courts to handle in an effective manner. Out of all these cases filed ever year, there has got to be a great business story or two or a thousand waiting to be written. Some businesses spend a large amount of time in the courtroom. In 2000, retailer Wal – Mart Stores Incorporated was sued 4,851 times, or once nearly every two hours, according to a USA Today account of its legal tactics (Roush, 2004).
In Florida, the case of a leading hurricane shutter company is said to have gone against work timelines thus violating business laws. A 42 year old company based in Hallandale Beach was accused of major delays the o majority of its customers who had paid up front. This was contrary to the state laws which stipulate that any contractor who takes payments upfront should get working with immediacy to avoid penalization as a result of delaying the client or customer. Essentially, it went on record that the company president admitted that the company was unable to meet the client’s needs in time due to the fact that the materials that they had received had been rendered obsolete if not totally defective (Aven & Aven, 2011). Joel Metter who holds the office of the consumer protection advisor went on record when he declared that the company’s license might be revoked due to the fact that the company had flouted the rules and regulations governing contracts.
Some of the ethical considerations which were violated by this company included a lack of fulfilling the terms on the contracts (Aven & Aven, 2011). This was in essence the major driving force behind the legal approach which was taken by the victims.
In businesses there are two types or forms of risks. That is, the non – entrepreneurial risk which is found in fire, pollution or fraud (Sadgrove, 2005 ) and the entrepreneurial risk. In the case of non – entrepreneurial risk businesses cover or protect themselves from these risks by insuring their ventures. Secondly, the entrepreneurial risk happens when a business or company builds a new plant, launches a new product or buys out another business (Miller, 2011). If the company gets its forecasts wrong, it loses money. In essence, risks apply to any management decision that could have good or bad outcome. It follows that most management projects and decisions contain risk (Sadgrove, 2005 ). Risk is also a future event that results from actions taken now. That is why managers should consider different options for any problem, and evaluate the consequences. It is easy to focus on obvious risks, such as workplace accidents. Important though they are, the company must be alert to big or unexpected risks. The company or the business that is not expecting changes is especially prone to suffer the consequences. Any company that wants to be in business has to take the following questions in consideration as it makes decisions in line with its objectives; what are the worst things that could happen to us? How likely are they likely to happen if we take this option? Are we taking the right steps to prevent them? Managing risks is a process this process entails identifying risks and set policies (Miller, 2011). Then it has to take action, and then monitor the risks. In this case, risk management should be done thoroughly. This applies particularly to the task of assessing risk. A company which merely identifies some minor health and safety risks is lulling itself into a false sense of security. Properly used, risk management helps a company to evaluate its strengths and weaknesses. It can help the business to re-engineer itself, and make it more competitive. Risk management is a tool that makes companies and businesses to grow strong. In the case of Rolladen some of these aspects were not considered which ended up bringing down the company’s rating among the consumers.
As a manager or entrepreneur at the Rolladen, there are some aspects which I would put into consideration before taking up the contract. This would be based on the fact that there are four major areas of risk: strategic, operational, financial and compliance. From the analysis, the Rolladen manager did not consider the operational risks. These are those risks which are relating to the organization’s production or operations. The management went ahead and purchased faulty raw materials, which ended up costing the company a law suit (Spedding & Rose, 2007 ). Strategic risks are the big issues which require businesses to think on a grand scale. These risks should be tackled at board levels and require strategic planning. Operational risks require board involvement, but are successfully implemented at lower level. Compliance risks are increasing in importance, as government places greater requirements on reporting and risk management in public companies (Aven & Aven, 2011). And lastly internal financial risks include the loss of profitability, while external ones include an adverse exchange rate that reduces the company exports.
Rolladen was hit by risks which were of several forms. First the leadership failed to be strategic enough with regard to which was the most appropriate avenue to take. This was orchestrated by the fact that Rolladen had ceased a grand opportunity which it needed to spread out and share. However, it took up the whole project singly thus it faced massive and hefty loses. Secondly, the leadership did not spread the risk by diversifying into other ventures, consequently exposing the company to the risk of failure at the moment it began working. The company also incurred operational risks when it acquired faulty materials. Lastly, due to the fact that the company had exposed itself to other forms of risks, it ended up exposing itself to violating the compliance regulations. Eventually this led to breaking of the law that led it to face legal action. It is worth noting that in such ventures, businesses rarely end up with profits and as was the case, Rolladen was faced with similar experiences.
In conclusion, some of the ways the Rolladen would have dealt with the risks would involve the following measures. Avoiding the risks, that is choosing not to accept the risk. Secondly, minimize the risk. This entails reducing or controlling the risk. Through means such as improving monitoring, changing the process, or substituting hazardous chemicals with safer ones. Defining a procedure may also reduce the risk. For example, to reduce fraud a mail order company might have two people opening the day’s mail, and change the rota regularly. Thirdly, spread, this entails diversifying, subcontracting, outsourcing, joint venture hedging or insurance. And lastly accept by deciding that the risk is within agreed tolerances (Sadgrove, 2005 ). It is worth noting that at times as business people, it is never wise to take as many orders as possible. It makes economic sense to want to take many orders as the case was with Rolladen. However, it is very risky when it comes to delivering on quality services. Rolladen took as many orders as it could in terms of deposits and as a consequence, there was immense backlog of work to be done. This did not help the management in any way. On the contrary, the management ended up engaging in legal suits due to the fact that they could not deliver as they were supposed to. It is important for any entrepreneur to consider all basic principles before delving into any task ahead. This is the sure way to cushion the business from any risks that might arise in the future.
References
Aven, E., & Aven, T. (2011). On how to understand and express enterprise risk. International Journal of Business Continuity and Risk Management , 2 (1), 20 – 34.
Crouhy, M., Galai, D., & Mark, R. (2006 ). The essentials of risk management. New York: McGraw-Hill Professional.
Miller, H. E. (2011). Integrating sustainability into business continuity planning. International Journal of Business Continuity and Risk Management , 2 (3), 219 – 232.
Roush, C. (2004). Show me the money: writing business and economics stories for mass communication. New York: Routledge.
Sadgrove, K. (2005 ). The complete guide to business risk manageme. Aldershot: Gower Publishing, Ltd.
Spedding, L. S., & Rose, A. (2007 ). Business Risk Management Handbook: A Sustainable Approach. Burlington: Butterworth-Heinemann.