Every business faces threats from various risk factors it might encounter.  Value Drugs is no exception.  A list of considerations the company has addressed include:

>  Competitive Response.   There is little chance that major pharmaceutical companies will decide to slash prices based on the expansion. Value Drugs poses no real threat to the market share held by each of the primary manufacturers in the industry.  As such no competitive response is expected from these major players that would negatively impact their position in the industry.  Similarly, the smaller, independent manufacturers are unlikely to respond significantly in price, because they are already operating toward the lower end of their potential profit margin.  

However, it is likely that independent competitors will at least take a look at some of the innovative techniques the company will implement.  For example, there is a likelihood that the company’s emphasis on quality as a non-brand name may catch the attention of some competitors.  If successful, these competitors might seek to capitalize on the company’s emphasis on quality and change their labels and their promotional techniques to take advantage of this successful marketing strategy.

>  Cycles.   Since the cough syrup business is especially seasonal (with winter being the period of greatest sales), there is the risk that Value Drugs will not be able to meet it’s obligation to it’s creditors and employees in the slower periods of summer due to revenue difficulties.  There is a similar risk, though less serious, as a result of the seasonal variation in usage of stomach-relief medication that tends to peak in the summer months.

>  Growing pains.   While the company has had experience in managing personnel in the pharmaceutical industry, there is a substantial likelihood that the company will grow extremely quickly, and will require the employment of additional personnel.  This growth will bring with it a series of operational and managerial issues ranging from accounting and legal choices to marketing options, organizational structure and personnel questions.