Starbucks Risk Management Essay

1133 Words Apr 23rd, 2013 5 Pages
Starbucks Risk Management
FIN 415
March 25, 2013

Starbucks Risk Management
In this documentation Team B will discuss different risk management benefits and techniques, and how companies use these benefits and techniques to further their financial goals and prevent future losses. There are two distinct risk management benefits categories: hard and soft. Hard risk management benefits are contingencies, decisions, control, and statistics. Hard benefits support the strategic business planning and effective use of the company resources. While soft risk management benefits are effective communication and a greater sense of morals and responsibility between management and his or her staff. The risk management techniques used in this
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In contrast, shareholder wealth maximization is a long term goal which is more complete and considers wealth in the long term, risk, and timing of return and stockholder’s return. Risk factors are present on the financial conditions and results of operations for Starbucks Corporation. New factors will emerge from time to time which might not be possible to predict the impact of these on the business. As the company state on their Annual Report for the fiscal year of 2012 that operating results have been in the past and will continue to be subject to a number of factors, many of which are largely outside control. Under these are: lower customer traffic or average value per transaction, increased competition, customers trading down to lower priced products, price increase necessary to cover costs of new products and/or higher input costs, decline in general consumer demand for specialty coffee products, adverse impacts resulting from negative publicity regarding business practices or the health effect of consuming such products, commodity costs for fluid milk and high-quality Arabica coffee, labor costs – increased health care costs and workers’ compensation insurance costs, adverse outcomes of litigations, construction costs associated with new store opening and remodeling of existing stores, delays in store openings for outside reasons and deterioration on credit ratings which limits the availability of financing and increase cost of

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