Financial and Legal Issues for Business - Coursework Example

FINANCIAL AND LEGAL ISSUES FOR BUSINESS Introduction My business idea is to start a bakery. Food is one of the basic needs in our lives; therefore, a bakery is likely to prosper since food is the basic need for human life (Girard, 2011). It will be an outlet that makes and sells cakes, pies, bread and pastries. It will sell beverage drinks to people or customers who wish to consume my products from the outlet. The bakery will also provide special services for occasions such as weddings, anniversaries, business and birthday parties. The bakery will offer outside deliveries to customers who want our products delivered to them at work or at home. Operational Risks and Legislation Operational risks are types of risks that an organization or company incurs during its operations. They are associated with both administrative and operational procedures. There are several risks that can affect the bakery’s operations. Legislation governing these risks is also available. Operations within the bakery can lead to safety and health problems (Kenett, 2011). Everyday operations pose a risk to employees and customers. An employee can become ill when working within the premises of the organization. Health risks and safety issues constitute the main operational risks in bakeries. Fire, accidents, slippage and burns are the main safety risks. Fire perils are frequent. The bakery should have a fire extinguisher and first aid kits. Fat, flour and ovens are the main sources of fire perils in bakeries. Cuts can occur when packing some of the products such as bread. Employees can get burnt when handling the oven or heaters. Slippage is common in bakeries. A slippery floor or split fat can lead to slippages. Health risks are common in bakeries. Employees within the bakery can get asthma and breathing problems such as bronchitis associated with dust from flour. Bakeries make use of chemicals which can lead to operational risks since they pose some health problems. The chemicals can produce bad odour. Ammonia is one of the chemicals used in bakeries and can be harmful if people are exposed to them for significant periods of time (Girard, 2011). Heat produced by ovens can cause skin diseases incase no precautions are taken when using them. Noise is another operational risk. The bakery may use equipments that are noisy and cause noise pollution. The operational risks listed above can be disastrous and can ruin the reputation of the business. The bakery, however, has to comply with legislations that regulate its operations. A system that is automated has to be installed in order to reduce dust. The bakery is listed as a small scale factory. It has to comply with the factory act that requires noise to be as low as 70 decibels (Loader, 2011). Employees should wear noise protective gear and work in shifts of at least four hours. Employees should wear masks and protective gear to protect them when handling chemicals. The bakery is also required to have an effective aeration system. It should have fire fighting equipments. Employees should be properly trained to avoid unnecessary accidents. The bakery should be insured. This will cover any operational risks that may occur. Employees too should be insured. The bakery has to comply with the occupational safety and health act that ensures employees work in a safe environment. The bakery should ensure that it has controlled all the hazards. Financial Risks Financial risks are related to the financial systems and structures within an organization. They are associated with the daily business transactions that a company or business undertakes (Malz, 2011). The bakery as a business organization faces financial risks. The bakery may fail if it is unable to meet its financial requirements. The bakery requires equipments for its operations. The equipments may break down and this may pose a financial risk since they will have to be repaired or replaced. Loss of property is another financial risk that the bakery faces. Liability costs are also financial risks the bakery encounters. Products from the bakery may cause harm to the public and damage costs will be incurred. The bakery may also violate some environmental rules and regulations. Monitoring and tracking performance is vital as it ensures that a business is effectively run. Benchmarking is one of the methods the bakery can rely on in monitoring and tracking performance. It involves comparing the performance of the bakery against its main competitors (Cascio, 2012). Analyzing variance is the second method of monitoring. It is used to monitor revenues, budgets and costs against the main estimates. Analyzing trends is the last method of monitoring in the bakery. It involves analyzing performance of the bakery over a certain period of time. Market and competitor risks and legislation Market risks refer to outside risks that a business encounters. These are risks that a company has little or no control over and include natural disasters, policies, legislations and worldwide monetary crisis (Aaker, 2009). The bakery faces competitor risks such as losses as a result of turn down in competition. Fluctuation of prices is one of the market risks that the bakery faces. The bakery has to purchase products such as flour, sugar and fat for baking. Fluctuating prices may pose market risks to the company. Policies and legislation such as an increase in taxes are market risks. The bakery has to conform to competition laws that require business organizations to engage in good behaviors as they compete. HR Risks and Legislation A shortage in skills in the bakery is one of the HR risks that the bakery can face. The bakery may employ members of staff who are not qualified and lack adequate skills required for performing the origination’s operations. Lack of ethics is another HR risk that can ruin the reputation of the business. Unethical behavior can turn away customers. Employees should, thus, abide by a code of conduct. Lack of compliance with regulations and policies is a HR risk that can lead to conflict with authorities (Stevens, 2005). Currently, the cost of labor is constantly increasing due to the effect of labor unions. The company may be forced to increase the costs of labor. If the company fails to comply with increased labor cost requirement, the management may face increased employee turnover, which is detrimental to the success of the company. The bakery should ensure that employees comply with legislations such as the factory act and the bribery act. Employees should be trained on issues of compliance. The bakery should also have a culture that encourages good behavior. Employees should be skilled and properly trained to avert other risks. Solutions The risks above have a negative impact on the business. It is, thus, necessary to curb them. Insurance is one of the solutions. The bakery should be insured against potential risks. The insurance should also cover employees. The bakery should train its employees to avoid HR risks (Cascio, 2012). Employees should be vetted before employment in order to promote professionalism. The bakery should also comply with all rules and regulation such as safety rules. It should also comply with health regulations. The bakery should promote a culture that respects its competitors to avoid losses due to competitor risks. People handling dangerous equipments in the bakery should be fitted with protective gear. Critical Success Factors and Risks Associated The bakery will require certain conditions that are essential. Leadership is one of the factors essential for success. Good leadership will propel the bakery to success. The bakery should have goals and a vision. The goals should be specific, realistic and attainable within a given time (Howell, 2009). Communication is vital as it promotes coordination in the business. Employees should be given specific roles. This will promote responsibility and successful. Employees should work together as a team. This is a success factor because all the employees will be working to achieve one common goal. The bakery should have a proper communication system that ensures information is shared effectively. The main risks associated to these success factors are HR risks. Leadership can create risks when there is a leadership vacancy and lack of a succession plan. Summary and Recommendation Risk analysis is important for an organization or business. Starting a bakery is a viable business idea in the contemporary economy. The bakery should take into consideration risks that can arise during the period of business operation. It is important to survey other bakeries, analyze their style of operations, and hire professional employees that can enable them compete effectively with their competitors. The bakery should seek legal advice to understand laws that manage their operations. It should also come up with a market analysis report and a business plan. This will help in countering risks such as HR risks, operational and financial risks (Aaker, 2009). The bakery should seek services from consultants on the best insurance companies and their policies. It needs to be insured against possible risks. The bakery should promote a good culture among its employees. This will help in creating success and promoting the welfare of the bakery. References Aaker, D. 2009. Strategic Market Management: Global Perspectives. Michigan: Michigan University Press. Cascio, W. 2012. Short Introduction to Strategic Human Resource Management. New York: McGraw Hill. Girard, S. 2011. A Crash Course in Starting a Business. Massachusetts: McGraw Hill. Howell, M. 2009. Critical Success Factors Simplified. Oxford: Oxford University Press. Kenett, R. 2011. Operational Risk Management. Chicago: University of Chicago Press. Loader, D. 2011. Operations Risk: Managing a key Component of Operational risks. New York: New York University Press. Malz,A. 2011. Financial Risk Management. Cambridge: Cambridge University Press. Stevens, J. 2005. Managing Risk: The Human Resources Contribution. New York: Routledge. Read More