Sample interview questions: How do you assess the financial risks associated with changes in the company’s distribution channels?
Sample answer:
Assessing Financial Risks Associated with Changes in Distribution Channels
1. Market Analysis:
- Evaluate the potential impact of channel shifts on customer demand, market share, and competition.
- Conduct market research to understand consumer preferences, trends, and demographics affected by the changes.
2. Operational Impacts:
- Analyze the impact on inventory levels, warehousing costs, logistics expenses, and order fulfillment processes.
- Assess potential disruptions to supply chain and lead times, including risks related to inventory shortages and backlogs.
3. Financial Modeling:
- Develop financial models to simulate the effects of channel changes on revenue, expenses, and profitability.
- Consider scenarios such as gradual or rapid shifts, changes in pricing strategy, and increased competition.
4. Revenue Recognition:
- Review the impact on revenue recognition policies and timing as different distribution channels may have varying contractual terms and payment s… Read full answer