Tag: Textbook

  • Organization in Types of Risk

    Organization in Types of Risk:

    Risk refers to sudden unplanned events which cause major disturbances in the organization and trigger a feeling of fear and threat amongst the employees.

    Organization in Types of Risk; Following are the types of Risk:

    1. Natural Risk
      • Disturbances in the environment and nature lead to natural Risk.
      • Such events are generally beyond the control of human beings.
      • Tornadoes, Earthquakes, Hurricanes, Landslides, Tsunamis, Flood, Drought all result in natural disaster.
    2. Technological Risk
      • Technological Risk arises as a result of the failure in technology. Problems in the overall systems lead to technological Risk.
      • Breakdown of machine, corrupted software and so on give rise to technological Risk.
    3. Confrontation Risk
      • Confrontation crises arise when employees fight amongst themselves. Individuals do not agree with each other and eventually depend on non-productive acts like boycotts, strikes for indefinite periods and so on.
      • In such a type of Risk, employees disobey superiors; give them ultimatums and force them to accept their demands.
      • Internal disputes, ineffective communication and lack of coordination give rise to confrontation Risk.
    4. Risk of Malevolence
      • Organizations face Risk of malevolence when some notorious employees take the help of criminal activities and extreme steps to fulfill their demands.
      • Acts like kidnapping company’s officials, false rumors all lead to Risk of malevolence.
    5. Risk of Organizational Misdeeds
      • Crises of organizational misdeeds arise when management takes certain decisions knowing the harmful consequences of the same towards the stakeholders and external parties.
      • In such cases, superiors ignore the after effects of strategies and implement the same for quick results.

    Organization in Types of Risk; A risk of organizational misdeeds can be further classified into following three types:

    • Risk of Skewed Management Values
      • A risk of Skewed Management Values arises when management supports short-term growth and ignores broader issues.
    1. Risk of Deception
      • Organizations face Risk of deception when management purposely tampers data and information.
      • Management makes fake promises and wrong commitments to the customers. Communicating wrong information about the organization and products lead to Risk of deception.
    2. Risk of Management Misconduct
      • Organizations face Risk of management misconduct when management indulges in deliberate acts of illegality like accepting bribes, passing on confidential information and so on.
    3. Risk due to Workplace Violence
      • Such a type of Risk arises when employees are indulged in violent acts such as beating employees, superiors in the office premises itself.
    4. Risk Due to Rumor’s
      • Spreading false rumors about the organization and brand lead to Risk. Employees must not spread anything which would tarnish the image of their organization.
    5. Bankruptcy
      • A Risk also arises when organizations fail to pay its creditors and other parties.
      • Lack of fund leads to Risk.
    6. Risk Due to Natural Factors
      • Disturbances in environment and nature such as hurricanes, volcanoes, storms, flood; droughts, earthquakes etc. result in Risk.
    7. Sudden Risk
      • As the name suggests, such situations arise all of a sudden and on an extremely short notice.
      • Managers do not get warning signals and such a situation is in most cases beyond any one’s control.
    8. Smoldering Risk
      • Neglecting minor issues, in the beginning, lead to smoldering Risk later.
      • Managers often can foresee Risk but they should not ignore the same and wait for someone else to take action.
      • Warn the employees immediately to avoid such a situation.

    Note: “Reading simple notes Organization in Types of Risk, also know about Risk Management and Risk Management Model“

  • Risk Management Model

    Risk Management Model:

    Risk refer to unplanned events which cause harm to the organization and lead to disturbances and major unrest amongst the employees.

    Risk gives rise to a feeling of fear and threat in the individuals who eventually lose interest and trust in the organization.

    Gonzalez-Herrero and Pratt proposed a Risk Management Model which identified three different stages of Risk management.

    According to Gonzalez-Herrero and Pratt, Risk management includes following three stages:

    • Diagnosis of Risk: The first stage involves detecting the early indicators of Risk. It is for the leaders and managers to sense the warning signals of a Risk and prepare the employees to face the same with courage and determination. Superiors must review the performance of their subordinates from time to time to know what they are up to.

    The role of a manager is not just to sit in closed cabins and shout on his subordinates. He must know what is happening around him. Monitoring the performance of the employee regularly helps the managers to foresee Risk and warn the employees against the negative consequences of the same. One should not ignore the alarming signals of Risk but take necessary actions to prevent it. Take initiative on your own. Don’t wait for others.

    • Planning: Once a Risk is being detected, Risk management team must immediately jump into action. Ask the employees not to panic. Devise relevant strategies to avoid an emergency situation. Sit and discuss with the related members to come out with a solution which would work best at the times of Risk. It is essential to take quick decisions. One needs to be alert and most importantly patient. Make sure your facts and figures are correct. Don’t rely on mere guess works and assumptions. It will cost you later.
    • Adjusting to Changes: Employees must adjust well to new situations and changes for the effective functioning of an organization in near future. It is important to analyze the causes which led to a Risk at the workplace. Mistakes should not be repeated and new plans and processes must be incorporated into the system.

    Simple Risk Management Model Chat:

    Risk Management Model Chat

    Structural Functions Systems Theory:

    According to structural functions systems theory, communication plays a pivotal role in Risk management. The correct flow of information across all hierarchies is essential. Transparency must be maintained at all levels. Management must effectively communicate with employees and provide them the necessary information at the times of Risk. Ignoring people does not help, instead, makes situations worse. Superiors must be in regular touch with subordinates. Leaders must take charge and ask the employees to give their best.

    Diffusion of innovation Theory:

    Diffusion of innovation theory proposed by Everett Rogers supports the sharing of information during emergency situations. As the name suggests during Risk each employee should think out of the box and come out with something innovative to overcome tough times. One should be ready with an alternate plan. Once an employee comes up with an innovative idea, he must not keep things to himself. Spread the idea amongst all employees and departments. Effective communication is essential to pass on ideas and information in its desired form.

    Unequal Human Capital Theory:

    An unequal human capital theory was proposed by James. According to unequal human capital theory, inequality amongst employees leads to Risk at the workplace. Discrimination on the grounds of caste, job profile as well as salary lead to frustrated employees who eventually play with the brand name, spread baseless rumors and earn a bad name for the organization.

  • Types of Business

    Types of Business:

    There are three major types of businesses:

    1. Service Business

    A service type of business provides intangible products (products with no physical form). Service type firms offer professional skills, expertise, advice, and other similar products.

    Examples of service businesses are schools, repair shops, hair salons, banks, accounting firms, and law firms.

    1. Merchandising Business

    This type of business buys products at wholesale price and sells the same at retail price. They are known as “buy and sell” businesses. They make the profit by selling the products at prices higher than their purchase costs.

    A merchandising business sells a product without changing its form. Examples are grocery stores, convenience stores, distributors, and other resellers.

    1. Manufacturing Business

    Unlike a merchandising business, a manufacturing business buys products with the intention of using them as materials in making a new product. Thus, there is a transformation of the products purchased.

    A manufacturing business combines raw materials, labor, and factory overhead in its production process. The manufactured goods will then be sold to customers.

    Hybrid Business

    Hybrid businesses are companies that may be classified in more than one type of business. A restaurant, for example, combines ingredients in making a fine meal (manufacturing), sells a cold bottle of wine (merchandising), and fills customer orders (service).

    Nonetheless, these companies may be classified according to their major business interest. In that case, restaurants are more of the service type – they provide dining services.

    Forms Types of Business Organization:

    These are the basic forms of business ownership:

    1. Sole Proprietorship

    A sole proprietorship is a business owned by only one person. It is easy to set-up and is the least costly among all forms of ownership.

    The owner faces unlimited liability; meaning, the creditors of the business may go after the personal assets of the owner if the business cannot pay them.

    The sole proprietorship form is usually adopted by small business entities.

    1. Partnership

    A partnership is a business owned by two or more persons who contribute resources into the entity. The partners divide the profits of the business among themselves.

    In general partnerships, all partners have unlimited liability. In limited partnerships, creditors cannot go after the personal assets of the limited partners.

    1. Corporation

    A corporation is a business organization that has a separate legal personality from its owners. Ownership in a stock corporation is represented by shares of stock.

    The owners (stockholders) enjoy limited liability but have limited involvement in the company’s operations. The board of directors, an elected group of the stockholders, controls the activities of the corporation.

    In addition to those basic forms of business ownership, these are some other types of organizations that are common today:

    Limited Liability Company:

    Limited liability companies (LLCs) in the USA, are hybrid forms of business that have characteristics of both a corporation and a partnership. An LLC is not incorporated; hence, it is not considered a corporation.

    Nonetheless, the owners enjoy limited liability like in a corporation. An LLC may elect to be taxed as a sole proprietorship, a partnership, or a corporation.

    Cooperative:

    A cooperative is a business organization owned by a group of individuals and is operated for their mutual benefit. The persons making up the group are called members. Cooperatives may be incorporated or unincorporated.

    Some examples of cooperatives are water and electricity (utility) cooperatives, cooperative banking, credit unions, and housing cooperatives; This is simple types of business read and understanding, around world many many types of business run.