The review of the case study would reveal that CoffeeVille is a high quality café located in the Central Business District, Brisbane, Australia. The chief attributes of the café were availability of high quality yet affordable food products as well as beverages and its strict risk management policy. The risk management policy of the café encompassed various areas like work healthy and safety and financial aspects.
The risk management policy of the restaurant rested on its corporate values which encompassed safety, team work, and customer satisfaction and performance excellence. CoffeeVille had a FARM committee which looked after the risks and took appropriate steps of risk management. The risk management strategy of CoffeeVille even encompassed its future subsidiaries like CoffeeVille Lake Entrance. As far as documentation is concerned, it can be pointed out that the company served a large number of stakeholder like customers, suppliers, the management, the employees and government bodies at both the federal as a well as at the state level.
The risk management framework of CoffeeVille was very effective in supporting the process of risk management in the company. The risk management framework in the organisation worked under the supervision of the finance, audit and risk management (FARM) committee. The FARM committee of CoffeeVille worked under the guidance of risk management process as per AS/NZ ISO 31000:2009.
The process consists of eight key elements namely, establishment of the context, risk identification, risk analysis, evaluation of risk, treatment of the risk, monitoring and review followed by communication an consultation. The purpose of the standard is to establish a strong risk management method in all business organisations to minimise risks like fire and employee injuries to the extent possible (Iso.org. 2018). However, it can also be pointed out that the risk management principles of AS/NZ ISO 31000:2009 does not and cannot enforce policies organisations.
Risk management had a great scope in the profession of Ash, the newly appointed manager of Lake Entrance Store, the future subsidiary of the CoffeeVille.. This is evident from the poor risk management standards prevailing at the Lake Entrance which were very slack. The family managing the business did not properly records of employee appointments and did not protect business data with passwords. The restaurant showed slack cash management and there have been thefts. Moreover, the employees did not engage in marketing activities in spite of the fact the multinational restaurants were already eyeing the area.
The Lake Entrance CoffeeVille management did not maintain proper records of employee accidents and did not comply with environmental laws. Thus, it can be risk management would form a very significant role in the job responsibilities of Ash as the manager of the Lake Entrance CoffeeVille, post-acquisition of the latter. He would have to improve the risk management standards of the Lake Entrance in alignment with the owner company, CoffeeVille’s to risk management framework under the stewardship of FARM.
The critical success factors which would attribute the acquisition of the Lake Entrance with with success are the strong financial position of CoffeeVille, The second factor would be the stringent risk management policy of the CoffeeVille which commences under the leadership of finance, audit and risk management (FARM) committee. This is evident from the strict risk management principles of CoffeeVille.
The third success factor strong organisational chain of communication prevailing within the owner firm would provide base to the first two success factors. This strong line of communication was from the detailed meetings between Ash, Paula Kinski, the CEO and among the high level managers which included the FARM committee as well (Angwin and Meadows 2015).
The objective of the risk management strategy of CoffeeVille would be efficient risk management in its new subsidiaries like the Lake Entrance CoffeeVille. This means that the acquiring firm would require to bring about disruptive changes in the modes of operations in the Lake Entrance. Thus, it can be pointed out that the second aim of the risk management strategy of the CoffeeVille would be efficient change management in the Lake Entrance CoffeeVille to ensure successful achievement of the first aim which is risk management.
|
Stakeholders |
Internal/External |
Role in the process |
Stake in the process |
|
Management of CoffeeVille |
Internal |
Forms important decisions both in terms of short term and long term decisions like acquisitions of new firms and forming risk management strategies. |
Profit |
|
Managers |
Internal |
1. Heads the different departments and act as bridges between the apex managers and wer level employees. 2. Forms the department specific business strategies. 3. The communicates with lower level employees and trains them. 4. Manages tough business situations like customer complaints |
Carrier growth, promotion and salary |
|
Investors |
Internal |
Invest in the capital of the firm. |
Dividends |
|
Customers |
External |
Purchase products and generates revenue. |
High quality products and services |
|
Government |
External |
Makes laws and policies for industries to function. |
Taxes |
|
Lower level employees |
Internal |
Executes the strategies formed by the apex management |
Salary and career growth. |
|
Suppliers |
External |
Provides the restaurant with raw materials at economic rates |
Timely payments |
The following are the political, economic, social and technological factors influencing the economy of Australia.The country of Australia is politically stable which promotes business expansion of restaurants. The first political factor effecting the industries in Australia is that the government both at the central and state level acts a policy and law maker. The business organisations in the country have to comply with the laws in order to operate in the market. For example, the employers employing the human resources in Australia have to comply with the Safe Work Act 1999 (Safeworkaustralia.gov.au. 2018).
Similarly, the organisations have to adhere to the policies laid down by local government bodies like the Lake Entrance Council (Eastgippsland.vic.gov.au. 2018). Similarly, the government imposes laws pertaining to important areas like Environment Protection and Biodiversity Conservation Act 1999. The act necessitates the body corporates to form policies to operate in ways by causing less harm to nature.
The second area where political factor comes into play is that bilateral relationships which the Government of Australia have with other countries. The strong foreign relationship of Australia enables the business organisations like restaurants based in Australia obtain raw materials from different countries across the world. This access to raw materials from other nations lead to production of superior products (Australia.gov.au. 2018). The above discussion apparently shows that political factors are only drivers of businesses. However, it can be pointed out that political factors like terrorism in reality are the greatest threats to industries (Bhaduri 2018).
Economic:
The first economic factor which impact the industries in Australia, including the restaurant businesses is change in the international currency rates.
Graph showing USD vs AUD
The graph above compares between the exchange rates of AUD against an international currency namely USD. The graph shows that the value of AUD is waning against USD which means that if Australian businesses acquire resources from the American market, they require to pay higher prices.
The second important economic factor which comes into play in the Australian market is a rising per capita income of Australia which means that Australians have more disposable income to afford entertainment like visiting restaurants and cafes. This would mean more revenue generation for the restaurant businesses in Australia.
Graph showing per capita income of Australia
The third important factor which comes into play while operating in the market of Australia is the network of banks and financial institutions Buch and Goldberg (2015) point out that network of banks and financial institutions play significant role in flow of financial resources within the economy. It can also be pointed out that these economic factors boost the development of businesses like restaurants.
Social:
The first social factor which would lead to growth of Australian businesses is the rise in population. This is because rise in population means rise in demand for goods and services in the market boosts the productivity and revenue generation in business organisations, thus boosting the business generation of the latter.
Population of Australia
The graph above shows that the population of Australia is increasing both due to increase in resident population as well as due to immigration. It can be pointed out that this meeting of resident Australians and immigrants would have positive effect on industries like restaurants due to amalgamation of resident Australian culture with the foreign culture. This is because these industries heavily come under the impact of culture (Hussain, Konar and Ali 2016). This amalgamation of cultures in Australia would create demand for new types of dishes in the restaurants, thus encouraging the latter to bring about innovation in their food offerings. This would boost both customer satisfaction as well as revenue generation in the restaurant industry.
Technology:
Australia is highly developed in technology and collaborates with foreign countries to gain more technological capital (Australia.gov.au. 2018). Winch and Leiringer (2016) mentioned that technology plays a very important role in development of infrastructure like roads and bridges which forms the basis of all other industries. Moreover, risk management like application of modern safety instruments are dependent on modern technology.
Sookhak et al. (2017) further points out that modern technological applications like cloud computing enables the business organisation retain and manage large body of data. This means that business can channelize more knowledge to take more appropriate business decisions. However, Chang and Ramachandran (2016) point out that modern technology also paves ways for data thefts which causes huge losses to companies.
SWOT of CoffeeVille:
|
Strengths: 1. Financially strong. 2. Presence in multiple locations. 3. Formidable risk management strategies. 4. A very clearly laid out hierarchical structure. 5. Market analysis before taking over a subsidiary. 6. Strong communication and conferencing among middle and high level management prior to taking any business decision. 7. Technologically strong. |
Weakness: 1. The future subsidiaries may not follow high level of operations. 2. The lack of risk management in subsidiaries would lead to increase in increase in expenditure post acquisition. |
|
Opportunities: 1. Can expand into new areas by acquiring more subsidiaries. 2. Integrated marketing of goods and services. 3. Offering new products. 4. The firm should expand overseas. |
Threats: 1. Multinational chains of restaurants. 2. Weak subsidiaries. |
The method applied to conduct the research on SWOT and PEST consists of secondary data acquisition by consulting a large number of books, articles, newspapers as well as digital sources. The study of appropriate relevant government websites enabled collecting information on legislations, laws and standards. The information on risk management was acquired from several books and journals.
Summary of the scenario:
The case study explores the risk management scenario prevailing in Lake Entrance CoffeeVille, a future subsidiary of the CoffeeVille,. a chain of high quality coffee and gourmet food based in Australia. The then management of the subsidiary restaurant maintained a very poor standard of risk management. CoffeeVille sent its manager Ash to conduct a risk analysis of the risk scenario. The following are the risks Ash recognised which CoffeeVille had to consider right from its initial phase after acquiring the Lake Entrance CoffeeVille:
|
Risks |
Description |
|
1. Financial risks |
Lack of proper accounting procedure and lack of depositing of cash in the bank. |
|
2. Human resource risks |
Lack of formal employment agreement between the management of Lake Entrance CoffeeVille and employees. |
|
3. WHS risks |
The restaurant did not comply with WHS risks. |
|
4. Marketing risks |
Lack of marketing initiatives inspite of mounting competition from newly entering chains of restaurants |
The CoffeeVille family takes this opportunity to express your since support which the firm has always enjoyed. It would be worthwhile to mention that M/s CoffeeVille has decided to acquire and rebrand the Lake Entrance Café as Lake Entrance CoffeeVille under its umbrella. The company in to proceed with this decision decided to carry on a risk analysis of the subsidiary café in place. Please find attached a list of risks identified for your kind perusal. Your input towards the identified risks and future contribution towards future risk management procedures would be highly appreciated.
It is a kind request to your good self to allow me have the fortune of obtaining an appointment with your good self. Please find attached the risk report for the review and further action. The aim of the meeting whose opportunity I am seeking here would be discussing the risks identified in the course of risk assessment of Lake Entrance CoffeeVille and future risk assessments. I would be highly obliged if my plea is accepted.
The risk assessment of the risk scenario of Lake Entrance CoffeeVille uncovers the four risks namely, financial risks, human resouirce risks, WHS risks and marketing risks. The critical success factors of the analysis were strong support from the apex management of CoffeVille as well as FARM committee and the cooperation of the staff of the Lake Entrance CoffeeVille. The goal of the risk analysis would identifying risks which exist at the Lake Entrance CoffeeVille to facilitate taking of proper risk management decisions of the café post acquisition.
The risk management process of CoffeeVille functioned under the guidance of FARM under leadership of the CEO. The risk management process involved employees of all ranks who were responsible for reporting any new risk to the management. The apex management was responsible for taking the decisions regarding risk management which would be enforceable across the organisation.
CoffeeVille can communicate with the stakeholders using emails and teleconferencing on risk management.The support of the CEO would be obtained.The CEO would be asked for additional risks.
The CoffeVille is a restaurant chain offering high quality food products and beverages based in CBD. The restaurant maintained a high standard of risk management which is evident from the appendices provided with the case study.
|
Risks |
Likelihood |
Consequence |
Suitable treatment options |
Priority |
|
1. Financial risks |
High |
Lack of proper accounting procedure and lack of depositing of cash in the bank. |
1. Timely deposit of cash. 2. Installation of vault |
High |
|
2. Human resource risks |
High |
Lack of formal employment agreement between the management of Lake Entrance CoffeeVille and employees. |
1. Proper contracts of employment. 2. Training of employees. 3. Job redesigning. |
Medium |
|
3. WHS risks |
Very high |
The restaurant did not comply with WHS risks. |
1. Installation of CCTV cameras. 2. Risk management training of employees. |
High |
|
4. Marketing risks |
Very high |
Lack of marketing initiatives inspite of mounting competition from newly entering chains of restaurants |
1. Aggressive promotion. 2. Marketing training. |
High |
The risk treatment options would be effective because it would enable all the employees of CoffeeVille and its subsidiaries involve in the risk management process. The risk treatment options would be feasible for CoffeeVille since it is financially strong.
Appendix 3: Risk management action plan:
CoffeeVille is a premium coffee and gourmet food marketing restaurant based in CBD. The coffee chain was expanding into Lake Entrance region to take advantage of the growing market. The firm had a very stringent risk management strategy unlike its future subsidiary Lake Entrance CoffeeVille.
|
Risk |
Assess risk(score) |
Controls |
Monitoring |
Action priority |
Timeline |
Responsible |
|
1. Financial risks |
1 |
1. Timely deposit of cash. 2. Installation of vault |
Bank statement |
High |
6 months |
Finance department |
|
2. Human resource risks |
2 |
1. Proper contracts of employment. 2. Training of employees. 3. Job redesigning. |
Attendance |
High |
6 months |
HR department |
|
3. WHS risks |
1 |
1. Installation of CCTV cameras. 2. Risk management training of employees. |
Number of accidents |
Very high |
6 months |
All the departments |
|
4. Marketing risks |
1 |
1. Aggressive promotion. 2. Marketing training. |
Profit, customer base |
Very high |
6 months |
Marketing and finance department |
References:
Abs.gov.au. (2018). Retrieved from https://www.abs.gov.au/AUSSTATS/[email protected]/mf/3101.0
Angwin, D.N. and Meadows, M., 2015. New integration strategies for post-acquisition management. Long Range Planning, 48(4), pp.235-251.
Australia.gov.au. 2018. Retrieved from https://www.australia.gov.au/about-government/international-relations
Bhaduri, A., 2018. Development or developmental terrorism?. In India Migration Report 2017 (pp. 1-5). Routledge India.
Bloomberg.com. 2018. Retrieved from https://www.bloomberg.com/quote/AUDUSD:CUR
Buch, C.M. and Goldberg, L.S., 2015. International banking and liquidity risk transmission: Lessons from across countries. IMF Economic Review, 63(3), pp.377-410.
Chang, V. and Ramachandran, M., 2016. Towards achieving data security with the cloud computing adoption framework. IEEE Trans. Services Computing, 9(1), pp.138-151.
Eastgippsland.vic.gov.au. 2018. Retrieved from https://www.eastgippsland.vic.gov.au/Plans_and_Projects/Your_Place/Lakes_Entrance_and_District
Hussain, K., Konar, R. and Ali, F., 2016. Measuring service innovation performance through team culture and knowledge sharing behaviour in hotel services: a PLS approach. Procedia-Social and Behavioral Sciences, 224, pp.35-43.
Iso.org. 2018. Retrieved from https://www.iso.org/standard/43170.html
Safeworkaustralia.gov.au. 2018. Retrieved from https://www.safeworkaustralia.gov.au/
Sookhak, M., Gani, A., Khan, M.K. and Buyya, R., 2017. Dynamic remote data auditing for securing big data storage in cloud computing. Information Sciences, 380, pp.101-116.
Tradingeconomics.com. 2018. Retrieved from https://tradingeconomics.com/australia/gdp-per-capita
Winch, G. and Leiringer, R., 2016. Owner project capabilities for infrastructure development: A review and development of the “strong owner” concept. International Journal of Project Management, 34(2), pp.271-281.
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