Recall the four ways that risk can be addressed in a business environment, including avoidance, acceptance, sharing, and reduction. For each company, identify how the risks that are provided can be addressed by one of the four options.

a. McDonald's:

- Customers might not want to buy roast beef products.

- Lawsuits might be brought upon the company should spoiled food be served.

- Franchised locations might not follow specified guidelines.

- Food preparation might differ from location to location.

b. Nike:

- Individuals might be injured from the production or sale of its sporting equipment.

- Employees at plants in underdeveloped countries might not be working under conditions acceptable to the customers of Nike products.

- Nike's alliance agreements with athletes expose the company to negative publicity when the athlete is involved in unacceptable conduct on or off of the field.

- Nike is unsure whether company recreation centers (batting cages, basketball courts, and so forth) would be successful ventures.

c. The Home Depot:

- The strategy of building stores close to each other could reduce the growth rate of sales per store from year-to-year, which is a critical performance measure in the retail industry.

- Each store is very large, containing a significant amount of inventory; hence, loss due to natural disaster or theft could be material.

- Customer volume at stores might not be high enough to cover facilities and inventory holding costs.

- With 40,000 to 50,000 different products in a store, stock outs can easily occur.