Assignment on Business Risk (pdf)
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Added on 2021-04-21
Assignment on Business Risk (pdf)
Added on 2021-04-21
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Running head: BUSINESS RISKBusiness RiskName of the Student:Name of the University:Author Note:
1BUSINESS RISKRisk can be defined as the situation where an individual or a business organization isa position where it is liable to lose or gain something which is of value to it (McNeil, Freyand Embrechts 2015). Therefore, risk forms an important aspect of the various companies aswell as business organizations. Risk in business can be defined as the situation in which acompany or business organization experience a loss in profit margin rather than the expectedhike or experiences a situation in which the strategies implemented by it backfires (Glendon,Clarke and McKenna 2016). Therefore, it can be said that risk is a common aspect faced byalmost all the major companies as well as business organizations by the world. This essayintends to shed light on the process of risk faced by a company or business organization. Thisessay intends to study the process of risk in business through the pharmaceutical companyTeva Pharmaceutical Industries Ltd.Teva Pharmaceutical Industries Ltd. is an Israeli company which was founded inthe year 1901 by Chaim Salomon, Yitschak Elstein and Moshe Levin (Tevapharm.com2018). The company Teva is the 485th largest company in the world and the 25th largestpharmaceutical company in the world with an annual turnover of more than $32.4 billion asper a 2017 statistics (Forbes.com 2018). The company had its humble beginning in the year1901 when it used to take the assistance of camels to deliver its products to the customers(Tevapharm.com 2018). However, in the recent times, the company has evolved as one of thelargest pharmaceutical companies of the world. The company specializes in the manufactureof various pharmaceutical drugs, the chief among them being the generic drugs(Tevapharm.com 2018). Some of the financial details of the company are provided by thebelow given figure-
2BUSINESS RISKFigure 1: Financial statistics of Teva Pharmaceutical Industries Ltd.Source: Factset, Bloomberg, S&P Cap IQ; Forbes.The company Teva provides its services in various diverse countries of the world likeNorth America, South America and various European countries with its headquarter beinglocated in Israel (Tevapharm.com 2018). The company is one of the largest manufacturers ofthe generic drugs and provides cheap drugs and other useful services to the customers fromvarious parts of the world. The company operates on a global scale and therefore issusceptible to the same kinds of international risks as are the other major pharmaceuticalcompanies of the world.Globalization has opened up many new opportunities and unheard of possibilities for thevarious major companies of the world. However, with the process of globalization entailsvarious kinds of international risks which, on the one hand, can lead to the overall growth aswell as the development of the company or the business organization concerned and on theother hand, it can also lead to extensive loss for the company or the business organizationconcerned (Verbano and Venturini 2013). There are various kinds of international riskswhich a company or a business organization needs to deal with. The major kinds of
3BUSINESS RISKinternational risks which a company or business organization needs to deal with are listedbelow-Strategic RisksFinancial RisksReputational RisksCompliance RisksOperational Risks OthersStrategic risks can be defined as the risk which a company or a business organizationfaces on the basis of the strategies which it decides to follow for the overall growth as well asthe development of itself (Frigo and Anderson 2012). It is to be noted that the concept ofstrategic risk is often confused with operational risks (McNeil, Frey and Embrechts 2015).However, the primary difference between the two lies in the fact that good operationaldenotes doing the right things, whereas good strategy denotes doing the things which areright (Frigo and Anderson 2012). It is often seen that the various companies or businessorganizations set too high strategic objectives for themselves and thus fail to achieve thegoals set by them (Hopkin 2017). The pharmaceutical company Teva has recently decided tofollow the path of globalization and expand its business in different countries of the worldlike North America, South America, Europe and other parts of the world in a bid to increaseits annual profit and also to reach out to a larger customer base (Tevapharm.com 2018). Thecompany in a bid to outrival its competitors also provides generic drugs to the customersalong with the traditional kinds of drugs sold by it (Tevapharm.com 2018). The company inorder to lower the cost of production of the drugs manufactured by it takes the help of thelatest technologies as well as innovations. The company in a bid to expand its customer basealso provides cheap drugs to the customers in comparison to its rivals. These are some of the
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