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Risk Management

For a single product company operating in just one
company, when considering its pure risks, must be
conscious of lacking the risk diversification advantages
possessed by multiproduct and multinational firms.

Since they have only one product, they cannot afford to
take the same chances as other multiproduct, multinational
companies, where losses temporarily being incurred on
one product or in one country can be carried by the rest
of its operations.

Sometimes though, it may be forced to adopt fairly risky
policies. If it is working to very tight profit margins, it may
not be able to afford to do everything it would like to do to
reduce its pure risk. All these factors make a domestic
company may itself indicate a certain preference for risk.

(ii) Family Business - The essential difference between the
joint stock company and the family business is the
performance criteria used to determine the way the
company is managed.

Normally with the joint stock company, the management,
chosen by the shareholders is constantly trying to improve

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