The essay is to employ the different staretegies that Nyaradzo FuneralServices (NFS) can

implement inoder to reduce or effectively manage risk using the 5 forces model by Michael
Porter. Risk refers to the possibility of a loss or other adverse event that has the potential to
interfere with an organisations ability to fullfill its mandate and for which an insurance claim
maybe submitted. Risk management is the identification of assessment and prioritization of
risks followed by coordinated and economical application of resources to minimize, monitor
and control the probability of unfortunate events (ISO 31000). NFSs goal is not only to help
the customer experience excellent service, but also to offer funeral services that exceed
customer expectations. The Porters model illustrates how the competitive landscape in an
industry is impacted by the 5 prominent forces. These forces are supplier power, threat of
new entrance, buying power, threat of surbodinates and rivalry. These forces are the ones that
deal with risk that NFS is facing. The different ways of managing risk are accept, avoid,
transfer and reduce.
Accepting
The strategy of accepting is adopted when it is more economic to do so or when there is no
alternative to the option to reduce, transfer or remove (McCarthy and Flynn, 2004).
Accepting the risk is a business decision that is reflective on the level of acceptable risk level
or the willingness of NFS to assume risk. NFS decides to accept a risk of threat of new
entrance into the industry and accept competition or rivalry. Competition in the industry has
increased. It therefore comes down to gaining a competitive advantage over the other
companies in the industry such as Moonlight Funeral Services, First Funeral Services and
Doves Funeral Services. Quick MBA (2010) postulates that firms can obtain a competitive
advantage by one or more of the following 4 ways: changing prices, improving product
differentiation, creatively using channels of distribution and exploiting relationships with
suppliers. Thus NFS accepted the risk of competition and threat of new entrance by charging
their policies at an affordable prices as compared to its rivals.
Moreso, NFS accepted threat of new entrance into the industry. By accepting these new
entrance, risk is managed when NFS differentiates its services by the provision of transport
(bus or kombi), provision of tents and lowering device at gravesite and chairs, video filming
and photography, mobile toilets, catering services and water bowsers. Thus threat of new
entrance as a risk is managed by services differentiation from the new entrants.

Avoid
Avoiding the risk means that the condition causing the problem is eliminated. For instance,
risk associated with a particular supplier might be avoided if another supplier is used. Thus
the suppliers of wool or cloth, paper and wood used to manufacture the caskets may
overcharge their prices or reduce the quality of the raw materials, NFS can also switch the
suppliers as a way of dealing with supplier power and manage risk that is brought by the
supplier. Depending on what power the supplier chooses to exert, NFS have to reflect this
through product prices, product quality and quantity available. Too much disruptions in any
of these areas may even mean that NFS is no longer able to stay in business. NFS may need
to end operations or shifts to another industry to avoid being dictated by the whims of a
supplier.
Moreso, NFS can also manage risk of threat of substitutes i.e. those individuals who offer or
sells coffins. Thus NFS manages risk by offering more and improved services to its
customers. That will allow NFS to have a wider customer base.
Transfer
Transfering of risk implies shifting the risk to another part. Risk transfer is the strategy
adopted to move a risk onto nother entity, business or organisation (Wilkinson, 2003). Risk
transfer is a voluntary arrangement between 2 parties, the insurance company assumes strictly
defined financial risks from the policy holder. The commonest way to transfer risk is by
means of insurance. For instance, the insurance company pays to replace it. NFS may transfer
the actual risk or financial consequenses of a loss to another party. Mostly examples of risk
transfer actually involve sharing the risk with another party. For example, NFS have premises
and motor vehicles which they have insured with the registered organisation, that will enable
it to manage risk as the risk is transferred to an insurance agent in case the one of the motor
vehicles had been involved in an accident.
Mitigating
Mitigating risk means reducing risks by implementing controls or other counter measures that
have an influence on the identified risk. While it maybe cost restrictive to reduce all risks,
certainly based on the level of acceptable risk, the remaining should be mitigated. A form of
risk reduction is risk diversification. Due to threats of new entrance into the industry,
Nyaradzo Funeral Servives can diversify its services thus through the use of the 6-pack

services to its customers. Wilkinson (2003) postulates that diversification is the strategy
adopted by those who do not want to put all their eggs in one basket.
For example, if NFS is launching its 6-pack service and some of its agents and salesman have
to explain to the customers, there is risk that they can not have adequate information about
the new package. As a result they will make fewer sales and NFS will make less revenue as
anticipated. Thus a mitigation strategy for this situation is to provide training to the agents.
By training these agents and salesman, the new service pack will have more information
about their service. The impact of the risk would have been reduced.
.

References
McCarthy, M.P. and Flynn, T.P. (2004) Risk from the CEO and Board Perspective, McGraw Hill, New
York.
Wilkinson, S. (2003) Risk Control, printed and published by Witherby and Company Limited,
London.