Question $1$: Case Study $[40]$

Please read the case study below and answer the questions that follow:

Enhancing Stability and Success: The Imperative of Risk Management in Thembi's Spaza

Shop

In the bustling world of commerce, the heartbeat of small businesses, like Thembi's Spaza

Shop, forms the vital rhythm of local communities. These small wholesalers, while embodying

entrepreneurial spirit and resourcefulness, face an array of challenges, particularly in risk

management, that can significantly impact their sustainability and success.

Thembi's Spaza Shop, nestled in the heart of Umlazi stands as a quintessential example of a

small$-$scale wholesaler catering to the daily needs of the community. As much as these

businesses are pillars of local economies, they often operate on slender margins and are

vulnerable to various risks that could disrupt their operations.

Understanding Risk in Small Wholesale Businesses

In the context of Thembi's Spaza Shop, risk extends beyond financial uncertainties. It

encompasses a spectrum of challenges$$ranging from inventory management, customer

fluctuations, supplier reliability, to unexpected external factors such as changing consumer

trends and economic fluctuations. Each factor can significantly affect the business's stability

and profitability.

Inventory management, for instance, is a pivotal aspect for a wholesaler like Thembi's Spaza

Shop. Overstocking may tie up capital and lead to obsolescence, while understocking might

result in lost sales and dissatisfied customers. Furthermore, depending heavily on certain

suppliers can pose risks due to potential supplier issues or interruption. Supply chain is a

constant challenge as well as political unrests and violence.

The success of small wholesalers like Thembi's Spaza Shop not only lies in offering quality

products but also in how they navigate and manage risks. Embracing a comprehensive risk

management strategy not only ensures stability and resilience but also paves the way for

sustained growth and success in the dynamic business landscape.

As Thembi's Spaza Shop continues to serve the community, an astute approach to risk

management will solidify its standing as a reliable and indispensable part of the local business

ecosystem.

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$1\mathrm{.}1$ Based on the article about risk management in small wholesale businesses like

Thembi's Spaza Shop, discuss key risk factors that such businesses commonly face.

Elaborate on the potential impact of these risks on the business operations and explain

how a robust risk management strategy can mitigate these challenges.