A Report On Risk Management And Leadership Strategies For Australian Engineering Works Private Limited

Tools Used to Identify the Root Cause of Challenges Faced by AEW

The paper will be assisting the senior management team of Australian Engineering Works Private Limited (AEW) as they are facing serious challenges from the emergence of new suppliers and emergence of new business organizations as a result the consumers of this industry now have more options, some of the consumers are opting for better products from the new organization. The other challenge faced by the senior management team of AEW is the risks coming from the senior employees as they were joining the new players of the same industry (Furterer, 2016). AEW has been facing a decrease in net profit due to the discussed challenges. This paper will be finding the root cause of this issue with the help of specific tools such as the histogram, pareto chart, fish bone diagram, scatter plot diagram, why technique, Chart title diagram, check sheet, control activity diagram and stratification table. Each of the above discussed tools have their own signification in understanding the impact of the different types of risks faced by this business organization (Brioso, 2015). The problem identification unit is followed by the risk management plan consisting of the risk registers stating the impact of each of the discussed risk associated with the organization. It is followed by the qualitative risk analysis and risk response plan where the contingency plan will be discussed briefly (Orzen & Bell, 2016). The monitoring of the risk is also mentioned in the paper.

 The various leadership qualities which can have their impact in the working environment of AEW will be stated in the paper in a descriptive manner such as the charismatic leaders, transformational; leaders, interactional leaders, servant leaders, transactional leaders and Laissez Faire style leaders (Ansah, Sorooshian & Mustafa, 2016). The appropriate leadership style required to mitigate the risks found in AEW will be also mentioned in the paper. Thus, from this unit of the paper we understand the importance of the risks which are being faced by AEW (Kliem, 2015). The paper will also highlight the root causes of the risks with the help of tools such as Pareto chart, Scatter Plat diagram, Chart Title, 5 Why technique, Fish one diagram, stratification and check sheet

 A list of project management tools will be used to find the root cause of the issues faced by Australian Engineering Works Private Limited.

The histogram helps in understanding how each of the risk are examined with the help of the variables of the risks and the interval between each of the risks The distribution of the risks is also identified in the histogram (Özdemir, 2016). The arrival time and frequency of the risks faced by AEW are considered in this tool. Apart from finding the main risk from a series of risk it also highlights the importance of mitigating the other significant risks.

Plan of Risk Management

The pareto chart is also defined as a type of histogram used to understand the impact of a specific risk among a series of risks. The pareto chart diagram helps in understanding the impact of each of the risks and the ultimate conclusion for these adverse situation (Cleophas & Zwinderman, 2015). The threats from the market competition is the most vital threat according to the pareto chart and it is followed by the other threats like employee retention and threats from the emergence of new suppliers. The frequency of the challenge is stated in the diagram.

The check sheet diagram helps in understanding the 4 defects which are the main cause behind the decrease in net profitability along with the importance which has to be given to each of them based on marks out of 5 (Douglas, 2018). The defects which are the most vital will be presented in the table. The check sheet helps in understanding that the market competition and the threat coming from the new suppliers are the most essential risks which has to be mitigated as soon as possible.

The impact of controlling the four different categories of risks are considered while created the control activity diagram. The time taken by the risks are also mentioned in the diagram. The limits of the risks are also mentioned in the diagram (Koehler, 2017). The threat from the consumer opting for new options are considered in this diagram.

The fishbone diagram helps in understanding the root causes behind the failure of the organization. Each impact associated with the cause are stated in the paper. The issue of senior employee retention has been selected are analysed using the concepts of the fishbone diagram. Each probable reasons behind the senior employees joining new players are examined and diagram is created accordingly.  

The scatter plot diagram helps in understanding the increasing impact of the four reasons behind the downfall of AEW. The impact of each of the risks may be different from each time. Two variable are plotted in the X-axis (Visveshwar et al., 2017). According to the given scatter plot diagram it can be said that the threats coming from the clients of this organization opting for new substitute products and the emergence of the new similar organization are the twi main risks of AEW.

The chart title of this assignment helps in understanding the different impact of the four discussed risks such as the market competition, threat from substitute products, inefficient employee turnover and ineffective business strategy. The threat from the substitute products have maximum impact on the profitability (Akpolat, 2017). From the chart title we can understand that the tough market competition and the threats coming from the consumers using alternative products are the main risks associated with AEW.

Leadership Strategies to Mitigate Risks

The stratification pyramid helps in understanding the importance of the risks which have maximum impact on the business loss suffered by this business organization, it was found that the lack of innovative powers is the primary reason behind the failure. Lack of business strategies and no efficient recruitment procedure can be the other two reasons (Tupa, Simota, & Steiner, 2017). The lack of innovative products and the inefficient business strategies are the two main cause behind the downfall of AEW. The stratification pyramid also helps us understanding that business organizations must have professional recruitment system and appraisal process so that the resources of the company can be utilised for longer period of time.

The 5 Why technique is defined as the type of technique which are used for investigation purposes. According to this investigation technique it can be said that the problems for which the net profitability of AEW has decreased can be identified with the help of the 5 questions. This tools can be very much useful to analyse the problems faced by business organizations (Matthews, Yousefi & Kuncheva (2018). The probable questions which can be useful to understand the root cause of the problem are as follows:

Ø What is the existing market position of AEW among the similar organization? Ø Which stakeholders are responsible for the business loss? Ø What is the root causes of the risks faced by AEW? Ø What are the impact of each of the risks? Ø Why is the not providing the career prospects to the employees?

Table 1: Application of 5 Why technique on the case study

(Source: Created by the author)

3 Plan of Risk Management 

Serial Number	Reason behind risk occurrence	Description of risk	Risk impact	Contingency
1	Senior management employee	New suppliers coming to the market	High	New business strategies must be incorporated.
2	In efficient production team	New option for consumers	Moderate	The current trends have to understood by the production team.
03	Senior management team	Market competition	High	SWOT analysis can be useful to understand the current market condition.
04	Better career prospects in the other organizations	Senior employees are joining new players	Moderate	Maintain good employee turnover.

Table 2: Risk Register of AEW

(Source: Created by the author)

Identification of risk

Qualitative Risk Analysis

Risk Plan Response

Risk Monitor

Category

Risk Id

Risk

Risk Event

Probability (P)

Impact (I)

Risk Score (PI)

Risk Rank

Potential Response

Cost Implication

Risk Owner

Date Raised

Date Closed

Status

High

Medium

Low

High

Medium

Low

0.25

0.5

0.75

2.5

5

7.5

Financial

Risk 1

Competition in the market

Business direction

¤

¤

1.25

3

Improve corporate strategy

$400

New organizations

10.01.2019

20.01.2019

Organizational

Risk 2

Employees are joining new players

Change in management structure

¤

¤

2.5

2

Professional appraisal process

$300

Management team

20.1.2019

10.03.2019

Financial

Risk 3

New option for consumers

Material Pricing

¤

¤

3.75

1

Improve the range of products and product quality

$800

Senior management

1.1.2019

25.2.2019

Technical

Risk 4

New suppliers coming to the market

Management of resources/ project budget

¤

¤

0.625

4

SRM Technique

$3,000

Management

10.10.2018

28.11.2018

Work in progress

Work under plan

Risk	Risk Ownership	Strategy	Connection
New suppliers coming to the market	The new suppliers	The business management techniques can be successfully used to minimised the risk coming from the new suppliers (Shokri, Waring & Nabhani, 2016).	The business practices with the external stakeholders must be revised according to market conditions.
Competition due to the new players	New players	Business reach should be increased and fresh marketing strategies should be implemented (Holmemo, Rolfsen & Ingvaldsen, 2018).	Business trends should be understood by the engineers of the organization.
New option for clients	Consumers	Customer engagement procedure should be adopted by this business organization	Security of products and services should be maintained.
Employees joining new players	Senior staffs	Professional appraisal procedure	Bonus and incentive schemes for employees at all level.

Table 3: Risk responses

(Source: Created by the author)

Risks	Explanation of implementation plan
Risk from employee joining new players	Efficient recruitment procedure and the formal appraisal policy would have saved the senior most staffs of AEW to join the new players in the market.
New option for clients	Advanced customer engagement procedure would have minimised the issue coming from the clients as they were considering products from the new organizations.
Tough competition in the market	The requirements and needs of the consumers should be understood in order to deal with the problem. External environmental analysis tools such as PESTEL and SWOT analysis would have made this organization understand their market position.
New supplier coming to the market	CRM technique can be hugely beneficial to deal with the threats coming from the emergence of the new suppliers with enhanced bargain powers.

Table 4: Implementation of risk response

(Source: Created by the author)

Each of the discussed risks associated with AEW should be carefully monitored so that the contingency plans which are described above can be successfully implemented (Mayer, et al., 2016). Along with the effort from the management team the role of the project managers with different categories of leadership style may be significant to deal with the risks.

The diffident categories of leadership qualities which can play their role in dealing with the different types of risks which are being faced in AEW are interactional leader, charismatic leader, transformational leaders, servant leader, transactional leaders and Laissez Faire Style leaders.

Allowing the distributors of AEW to take business decisions to deal with the suppliers of this organization could have avoided the threat coming the emergence of new suppliers (Hillson, & Murray-Webster, 2017).

The incorporation of a feedback platform could have been useful in the working organization of AEW to understand why the consumers are opting for new products and why is a threat if new players comes in the same market (Frankel & PGCMS, 2018). Motivating each employee regardless of their experience would also have contributed the retention of senior employees.

Conclusion

The impact of the servant leaders would have helped to deal with the issue of senior employee retention as these servant leaders asks for loyalty from the other employees so that continuous learning process is endured (Yahaya & Ebrahim, 2016). These leaders can be used to maintain god relationship with the new suppliers also so that threat can also be significantly minimized if there were servant leaders in AEW.

The transformational leaders could have solved the threats coming from the customers who are opting for new products and also the issue of senior employee retention (Arnold et al., 2015). Decentralization is practiced by the transformational leaders which could have also useful to deal with the threats coming from the new organizations.   

The interactional leaders could have played their role to deal with each of the risks associated with AEW which are causing business losses. The entire project environment of AEW can be changed and turned into a better business corporation which will be free from all these kinds of risks with the help of the transformational leaders.

The issue of threat coming from the market competition can be purposefully solved with the help of the leadership capability of the charismatic leaders as they are generally full of confidence and have a charismatic self-confidence to deal with every adverse business condition (Kesting et al., 2016). According to this category of leadership style the senior employee would have felt secured about their career prospects in AEW. Persuasiveness is the most important criteria of the charismatic leaders.

Based upon all these different categories of leadership style it can be said that the interactional leaders can be mostly effective to deal with all the existing and also the probable future risks associated with Australian Engineering Works Private Limited. The interactional leaders could have played a significant role in understanding the business condition when new supplier and new business organizations stated to shave their share from the net profitability of AEW. Shared responsibility of the senior management team of AEW and the senior staffs of this organization could have been possible with the help of project managers having the qualities of an interactional leaders. Interactional personality is the most significant capability of the interactional leaders by which they can influence the behaviors of any one they talk to. The situational influences on the employees can be better understood with the help of this category of leaders. The different categories of influences which have a lasting effect on the leaders can be found in the interactional leaders. The problems of AEW which are identified in this paper in this report can be mitigated with the help of the interactional leaders.

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