Study On The Risk Management Of Small-micro Manufacturing Business

China is a strong country in manufacturing where small-micro business is theimportant foundation of the real economy. It can be said that small-micromanufacturing businesses play an irreplaceable role in supporting the local and eventhe holistic economic development, increasing employment and maintaining socialharmony and stability. Recently, Subprime mortgage crisis and European debt crisishave brought a series of influences on small-micro manufacturing businesses in China,such as the reducing orders, the increasing price of raw material, the appreciation ofthe RMB, the lack, weak and turnover of current assets, financing difficulties, laborshortage and worker retention, etc. How to effectively identify, evaluate and preventthese risks is a hot issue which is the popular concern of the business circles andacademic fields, and which needs resolved. In views of this, based on the reviewsrelated to enterprise risk management and manufacturing enterprise risk management,and the definition of small-micro manufacturing business, according to the riskcharacteristics of small-micro manufacturing businesses, this paper forms theconceptual framework of risk identification, and then comprehensively uses theknowledge of mathematical statistics, correlation methods of structural equationmodeling and decision tree analysis to identify and analyze the risks, and put forwardrisk preventions. This paper has made the following main results:(1) Using Exploratory Factor Analysis, we put forward the potential risk factorsof small-micro manufacturing businesses from four dimensions, including operationfactor, owner factor, human resource factor and marketing factor, and the first threefactors (14independent variables) of which belongs to business internal environment,and the last one (5independent variables) is the external environment. At the same time,the indicators for assessing risk include the financial factor (2independent variables)and the production factor (2independent variables).(2) We use Structural Equation Modeling to validate the conceptual framework.It concludes that there is mutual influence relationship between risk factors, and somerisk factors based on other risk factors may influence the consequences of risks. Theoriginal conceptual model assumes that every factor effects independently on thedependent variable, but we introduce five relation paths: owner factorâ†'humanresource factor, owner factorâ†'operation factor, operation factorâ†'marketing factor, operation factorâ†'human resource factor, human resource factorâ†'marketing factorinto the revised model.(3) We use Decision Tree Analysis to analyze the key risk factor in small-micromanufacturing businesses, and find that the main variables of small-micromanufacturing businesses in high-risk are ability to learn> paymentcycle> communication with customers, but in metal business, the main variables ofthat are payment cycle> difficulty to recruiting labors> ability to learn. It can beseen that owner factor and marketing factor are very important to small-micromanufacturing businesses. These results provide an effective reference to riskprevention.(4) Based on the main factors that affect the risk of small-micro manufacturingbusinesses, according to the risk characteristics of small-micro manufacturingbusinesses, measures for risk prevention are put forward from the enterprise level andthe government level.The above-mentioned researches further deepen and improve the related theorieson risk management of small-micro manufacturing businesses, and provide theoreticalguidance and decision-making for small-micro manufacturing businesses whenmeeting challenges and guarding against risks.