Performance and Risk Strategy

Assignment 1 (21/02/2013)

MNV Ngwana 201004317

TO: Board of Directors
Date: 21 February 2013
From: MNV Ngwana
Subject: Risk and Risk Management of Bulldog Trailers

1.1 Bulldog Trailers are currently dominating the market for off-road trailers with a share of 34%. Although they are the current leaders in the Market, management should be aware of competitor risks that the company could be facing in the near future due to the rising of input costs. The company’s profitability is at stake as the company does not want to pass the increases on local customers. Since 60% of Bulldog’s sales are generated locally this percentage may drop if their customers diverge to their closest rivals in the market if the price increase is imposed on them.
Bulldog is currently using the Just-In-Time inventory system in order to minimise inventory holding. One of the biggest challenges of using the JIT system is responding to the periods of high product demand. Because production begins with customer orders, if orders outpace production, customers may have to wait for products. As raw materials are ordered from suppliers only when they are needed to fulfill an order, any delays that the manufacturer experiences are passed along to the customer.
Due to the recent load shedding that Bulldog Trailers Ltd has been experiencing from Eskom, their production levels have drastically dropped. There is a possibility that they would have a product risk that may result in a possible loss of sales or have the need to compensate customers for poor quality products. The electronic data interchange system used to track purchase orders may be disrupted when the load shedding occurs and may cause the company to lose track of the orders made.
Bulldog Trailers Ltd exports some of its trailers to the USA and the invoice is in US dollars, Bulldog Trailers