CXZ Company as a manufactures aircraft are inherently more risky than others

manufactures company. Business risks which arising from the nature of CXZ
company can be divide into 6 types which are strategy risk, product risk, commodity
price risk, product reputation risk, operational risk, and contractual inadequacy risk.
1. Strategic Risk
The risks arising from the possible consequences of the strategic decision
taken by the CXZ board of directors or top management. CXZ is developing
the next generation of passenger aircraft which name as CXLiner, which
require huge finance support on the Research and Development (R&D). CXZ
currently has about $ 4 billion of loans from various banks and last year made
a loss of $2.3 billion, and high R&D cost on development environmentally
friendly fuel, improve the facilities dual loading on the airport gates, use new
Zitnim which will effect CXZ occur a negative cash flow. This sign CXZ
require find other sources of finance or cash to invest on the new product and
R&D. The negative cash flow, means CXZ unable to cover the operations
solely from running the business.
2. Product Risk
Currently CXZ does have orders from 25 aircraft from the HDS Company.
However, on the testing stages the CXLiner will be delivered late. HDS might
not confident to the new development of CXLiner , because unable receive on
schedule. This also will affect the perception of other buyers, there might not
to purchase the CXLiner, because there might think operation CXLiner are in
trouble, so CXZ unable delivered on time to HDS. This affect the demand of
new aircraft and the volume of sales CXLiner.

3. Commodity Price Risk

The new aircraft CXLiner require use on new alloys to decrease the
maintenance cost. The new alloys (Zitnim) on has one supplir worldwide, this
means the bargaining power of supplier is very high. The supplier of Zitnim
which has power to increases the price it. CXZ that rely on the use of ZItnim
could be exposed to high risks from the Zitnim price changes.
4. Product Reputation Risk
CXZs aircraft which has a good reputation that reliable with low maintenance
cost. Although the CXLiner is yet to fly or be granted airworthiness
certificates, but the new aircraft are still rely on the public judgments. This is
risky to CXZ to gain the customers satisfaction who fly in the new aircraft.
5. Operational Risk
Operational Risk which refers to potential losses that might arise in business
operation. It can be also defined as the risk of losses resulting from inadequate
or failed internal processes. Use new alloys (Zitnim) which require training to
employee or change on the internal process such as system, or machine. Fail
on use the new alloys will affect the operation of CXLiner.
6. Contractual Inadequacy Risk
Contractual Inadequacy risk may arise where a business transactions without
adequate consideration of what may happen if thing do not go according to
plan. 25 aircraft that ordered by HDS which currently on testing stage and
which predicted will be delivered late, and CXZ should responsible of it. CXZ
should responsible on it.