Финансовая среда предпринимательства, предпринимательские риски. Учебное пособие

Buyers (customers)

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The next serious group is competitors

Thes can be: - Individual, group of individuals or business that competes in any field (area) with others, has it’s own specific interests in a particular field of activity and carries it out in accordance with these interests, - Business which competes with a company that delivers certain goods and services to the market, offering customers identical or similar products. If buyers regard the competitor’s product as a close (similar) substitute, it means the marketing strategy of competitors can damage the company’s position in the market, - Other entities which affect our ability to sell products and generate income.

The riskology highlights, also four following groups of competitors: Desires-competitors, Goal specific competitors, Commodity-specific competitors, Brand competitors

For example, you have a desire to get from one point to another, but you have not yet decided how to do it: this is desire competitors - Desires that buyers probably will want to satisfy

Further, you decide to go by car, not by ship, not by plane, only by car: this is goal specific competitor – these are the main methods of satisfying a previously expressed demand

Then you have to decide what type of machine you choose. This is commodity specific competitor.

These are all other varieties of the same goods that can satisfy the specific wishes of the customer

And finally you have to choose the car brand it is brand competitors. Goods of different manufacturers that are able to satisfy the definitive desire of buyers.

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Competitors

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And at last the final factor of microenvironment of bus iness are Contact audiences: We can see the following definition of riskology:

Any group which shows a potential or real interest in the activities of the business and can affect the ability to get income from the sale of finished goods (services) in the process of economic (business) activity

If we are talking about types of impacts – we should highlight Charity audiences, potential audiences and unwanted audiences.

If we are talking about specific features of the group, we should highlight - By content: Financial groups, Media, General public, Contact audiences of government bodies, Integral audiences.

We have completed the description of the last factor of Microenvironment of business and then proceed to the description of the factors of macroenvironment.

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Basic theories of entrepreneurial (business) risks

Two components in the structure of entrepreneurial (business) income:

Classical risk theory

Risk was considered as a possible damage r that can occur due to economic impound

Neoclassical risk theory

Real profit will always be better than the profit of the same expected size, but associated with possible instabilities

Basic theories of entrepreneurial (business) risks

Fig. 2.1

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Serious additions to the neoclassical theory of risk were by made J.Keynes.

We can see its main postulates on the slide.

The recognition of the existence of business propensity to

“gamble” or “fun factor” “To get bigger profit, entrepreneur usually takes bigger risk”

J. Keynes

The recognition of business propensity to

“gamble” or “fun factor”

“To get bigger profit, business usually takes bigger risk”

Fig. 2.2

History of attitude to economic risk in Russia:

1920’s– elements of new economic policy with the resolution of economic risk – or legislative framework for economic risk.

Period of strictly centralized planning and management –

”the risk is recognized as alien and unnecessary

Mistakes in the calculation of possible negative consequences of economic decisions

The impossibility of quantitative and qualitative rating of the degree of economic risk

1970’s-80’s – up to the present time the study of problems of technological risk and emergence of riskology.

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Let us further consider basic concepts of business risks:

As seen from the slide Riskology highlights the two basic concepts of business risks.

Risk awarenessit is realization of the need to get rid of the uncertainty by taking one out of a few good decisions

Decision making is choosing a way out of uncertain situation after the qualitative and quantitative risk analysis using specific methods of assessment.

Basic concepts of entrepreneurial (business) risks

Risk awarenessit is realization of the need to get rid of the uncertainty by taking one out of a few good decisions

Decision making is choosing a way out of uncertain situation after the qualitative and quantitative risk analysis using specific methods of assessment

Fig. 2.3

A detailed explanation of these concepts allowed us to define business risk.

Rickology gives such a definition: activity of economic entities, connected to overcoming uncertainty in the situation of unavoidable choice.

Riskology highlights several functions of business risks.

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Protective function has two aspects:

Historical and genetic aspect – search for risk protection in the form of creating insurance funds

Social and legal aspect – the need to ensure (provide) right to risk by law

Regulatory function also has two aspects:

Negative aspect-making decisions with unreasonable risk is a destabilizing factor in economic (business) practice

Positive aspect – risk is a kind of a catalyst in taking innovative and investment decisions (venture firms)

The next function is innovative:

Stimulates the search for innovative solutions to economic problems

And finally there is the analytic function:

Requires to analyze all possible alternatives and selection of the most costeffective and less risky solutions.

Conclusion:

Considering the functions of business risk it should be remembered that risk not only leads to losses, but can also be a source of possible profit.

Therefore, the main task of a risk manager is not risk aversion, but search for a risk management method.

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Functions of business (entrepreneurial) risk

Analytical:

Requires to analyze all possible alternatives and selecti I on of the most costeffective and less risky solutions

Fig. 2.4

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