Share
Explore BrainMass

Starbucks

I have to write a 850 word paper about the coffee company, Starbucks. I have to define the following corporate risk terms and describe their relevance to Starbucks.

a. Organizational risk
b. Business risk
c. Financial risk

In addition to these three, I also have to discuss at least three additional corporate risk terms and their relevance to Starbucks.

Be sure to properly cite your references in your paper.

Solution Preview

Let us define and evaluate each of these risk types one by one. First of all, we will pick financial risks faced by Starbucks. Starbucks can encounter a host of financial risks in its day to day operations, ranging from interest rate risks on debt financing to liquidity risks/working capital risks in day to day operations. Finance is the backbone of running any organization and thus, finacial risks can really put a brake on the growth of an organization such as Starbucks. For example, Starbucks has taken debts to support its operations. Now, changes in the interest rate environment such as rising of interest rate can affect the interest rate obligations of debt capital of the firm. Starbucks ability to raise further debt in the market will be negatively affected by the rising interest rate obligations of the firm.

Similarly, sufficient working capital is a key requirement for the smooth functioning of any organization as large organizations such as Starbucks need sufficient cash for meeting day to day obligations. Many a times, circulation of cash may be negatively affected due to rising accounts receivable, huge cash outflow on capital expenditures and other foreseen as well as unforeseen events. In such a scenario, companies like Starbucks may have to resort to external borrowings or other strategies to infuse cash into the system.

Another type of financial risks is interest rate risks on foreign exchange receivables of the firm. As firm operates in numerous ...

Solution Summary

I have to write a 850 word paper about the coffee company, Starbucks. I have to define the following corporate risk terms and describe their relevance to Starbucks.

$2.19