Business Risks Case

Business Risks

1. What must TCC do to succeed in this business? What business processes are keys to succeeding and what happens when one of these processes fails?

-Anticipate demand-can't be short on a hit

-Need enough inventory in Oct/Nov

-Integrated supply chain-don't run out of parts

-R&D very important

-Need to develop big hits from small portfolio/marketing and focus groups.

-High quality products-product recall could be really bad.

-Outsourcing decisions

-Good cycles for revenue and expenses

-Timely transportation/shipping and cost effective

-Manage relationship/shelf space with national retailers

2. How does TCC differ from other competitors in its business? Does this place it at a greater or lesser risk of failure?

-Smaller portfolio-less diversified

-LINEX software-niche market

-Small portfolio may be better in that you can pay more attention to each product.

-Managing both hard/soft and then digital may be harder-risks differ

-Overseas production may increase risk of failure

-Pricing might be tough

-May want to have less inventory given size

Audit Risks

1. Does it appear TCC's management acts with integrity? Why or why not?

-Movie toy thing-amortize costs over time, but recognize revenue right away.

3rd Qtr of year-4th qtr for company.

-CFO reversed allowance for bad debt, also booked the entry and originally recorded the allowance.

-Increased bonus pool

-Removed inventory reserve

-$10,000 payment to transport union

2. What are TCC's management's incentives to misstate the financial statements? Do they have opportunities to act on these incentives?