HOME WORK – Maria Alzetha Bethania (201850467)
7-27. Risk assessment. OK Yen, Ltd. is a Japanese electronics games and
amusements company specialising in pachinko games. Pachinko parlours
are a big industry in Japan, whose 18,000 pachinko parlours in 2012
accounted for a quarter of the country’s civil sector and are thought to
produce Japanese Yen (¥)30 trillion per year in revenue – more than Japan’s
auto industry. Customers who play pachinko buy a supply of pinballs costing
around ¥4 and cash in the balls they win back for prizes equivalent to ¥2.5
each. Although it is illegal to give cash to winners, the customers may go to
nearby shops and sell their prizes for cash. Recently, a new form of
pachinko has been developed that gives very large prizes to winners, but
decreases the chances of winning. Although the number of players has
decreased over the last four years, the gross sales have doubled. Locations
of the stores are not crucial, so OK Yen can located in low rent areas.
Government authorities have recently given much attention to pachinko
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gaming. Operations featuring the game have been associated with the
yacuza, the Japanese criminal organisation. Some people in Japan are
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concerned that pachinko is really addictive gambling. There are complaints
to authorities over children being left to play on busy streets or locked up in
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parked automobiles while their parents go to play pachinko.
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Required:
Following the five step procedure outlined in the chapter, identify the risks
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associated with OK Yen’s business.
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Answer:
1. Identify the essential resources of the business and determine which are
most at risk
- I think, the essential resources from business pachinko are the
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pinballs, the pachinko machine and the prizes. The pinballs are riskier
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than the machine and the prizes because the pinballs play an
important role in this business. The company need to produce much
pinballs to meet the needs of customer who play pachinko because if
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they want to play it, they need to buy the pinballs first that cost
around ¥4. So, the company get the income from the pinballs. For the
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machine, I think it’s less risk because the company doesn’t need
much machine, people can wait for their turn if they want to play the
pachinko. Also for the prizes, people can’t win the prizes if they don’t
succeed play the pachinko. It’s also become useless if there’s only
the machine and prizes because it can be run well if we have the
pinballs.
2. Identify possible liabilities which may arise
- The possible liabilities are from pinballs production. Because the
company need to produce the pinballs in a large amount, they of
course need much money to produce it besides they also need to buy
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pachinko machine to support the business. So, the company might
lend the money from bank, and or issuing bonds to get the money,
etc.
3. Review the risks that have arisen in the past
- I think, in the past, the company who has the main business in
pachinko games need to keep up their pinballs so they will not lose
the pinballs since it’s an important thing in this field. The pinballs are
the company main revenue because people must to buy it if they
want to play pachinko. If someone steal the pinballs from the
warehouse, the company might suffer loss because they might sell it
below the prices that gives from the company. There’s no loss for the
thief to sell the pinballs cheaper because they don’t incur any cost.
4. Consider any additional risks imposed by new objectives or new external
factors
- Since the pachinko game becomes more addictive for some people
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that result in so many issues happened in Japan such as children
being left to play on busy streets or locked up in parked automobiles
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while their parents go to play pachinko, the government authorities
now given much attention to pachinko gaming. It will become risks to
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the company who has the main business in pachinko games and their
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revenue comes from it, because if the issues become more critical,
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the government might issue the regulation regarding to the pachinko
games that might restrict the movement of this business. The impact
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of it is the company profit will reduce or lower than usual.
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5. Seek to anticipate change by considering problems and opportunities on
a continuing basis
- I think, the biggest problem of this business is because the prizes can
be converted into cash. So, the people who play this game is not for
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fun or to entertain them but to make money. That’s why it can
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became addictive gambling and the people perspective can be
negative. Moreover, the company offer to give very large prizes to
winners, people might get attached to it even the possibility to win
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will decrease because of the prizes is greater. It will be better if the
company changed their business operation. For example, the
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company goal is not to make the people make money by playing
pachinko but the people can have fun when playing the game and
they can get the prizes that can be used for them (can’t be sold) if
they win the game. So, the value of the prizes is not about the cash
that they received from selling it but the use of the prizes itself for
them. Money isn’t a good thing to be an offer. Many things happen
because of the money. People can do anything because of the money.
So it will be much better if the company doesn’t use the money as
the prizes (even though to get the money people need to sell the
prizes) because it can’t make the company going concern. People
might complaints to authorities to boycott the pachinko game for
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their concern. So, the company need to think the value that they
have from pachinko game that can be acceptable and not harmful for
many people. The company can create more fun atmosphere of
pachinko game, so if we play pachinko we can get relaxed and having
fun. Nowadays, people can easily feel stressed, so they might seek
for the game that can give the relaxation and much fun to them.
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