Final answer:
Fiona aims to reduce the perceived economic & social risk by providing product samples to potential customers, which may increase trust and decrease reluctance to purchase in a new market. Economic risks involve uncontrollable occurrences affecting livelihoods, whereas social risks often relate to the broader impacts of trade and production on society and the environment.
Step-by-step explanation:
Fiona, by asking her product manager for samples to give to potential customers in Madrid, Her new European market, is striving to reduce the degree of economic & social risk associated with product use. Economic risks are those occurrences over which individuals have very little control, like natural disasters, wars, or massive unemployment, where the livelihoods of individuals and their families are at stake. Social risks, on the other hand, can often relate to the social and economic impacts such as those seen in trade practices and global production networks, which may involve worker safety, human rights, and environmental impacts.
Fiona's approach could foster trust and give consumers in a new market the opportunity to experience the product without financial risk, potentially reducing their perceived risk and reluctance to purchase. Initiatives from organizations like the World Economic Forum encourage women to take control of sustainable small operations to boost local economies with social entrepreneur firms such as Fairtrasa leading the way in promoting regenerative agriculture and offering training to increase income and restore ecological balance. Meanwhile, trade practices and global production processes expose the inherent risks such as environmental damage, public health issues, and social inequality. Therefore, analyzing risks has become an integral part of sustainable business practices.
To mitigate these risks, political decisions and trade agreements can include provisions focusing on transitioning to sustainable practices and offering protective measures, such as environmental standards. Meanwhile, businesses are faced with tradeoffs regarding production costs, environmental externalities, and social costs. The inclusion of social and environmental costs in a product's price could lead to higher prices and change consumer behavior, potentially decreasing product sales and affecting production volume. Therefore, businesses like Fiona's must carefully navigate economic and social risks to ensure sustainable operations and market expansion.