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CO3:Differentiate risk among components including strategic, hazard, financial, and operations
We learned of multiple perspectives on the meaning and application of strategic risk. An example of a strategic risk event occurred on March 17, 2000, when a ten-minute fire at a Royal Philips Electronics semiconductor plant in Albuquerque, New Mexico, “touched off a corporate crisis that shifted the balance of power between two of Europe’s biggest electronics companies…” (Wall Street Journal, January 29, 2001). This occurred because, besides directly destroying several thousand chips for mobile phones, the fire contaminated the clean room environment in the semiconductor plant, effectively shutting it down for weeks. At the time, both Nokia and Ericsson were sourcing microchips from the Philips plant. However, while Nokia was able to quickly shift production to other Philips plants and some Japanese and American suppliers, Ericsson was trapped by its sole source dependence on the Philips plant (Strategic Risk from Supply Chain Disruptions, Hopp, et al.) Using perspectives from Ch. 4, how do you think these two companies viewed strategic risk, before the fire?