Answer 1:
MacVille Pty Limited was a café chain based in Queensland and having its outlets in Queensland and Sydney, Australia. The café chain offering high quality coffee and gourmet food in café style environment. The café was looking forward to acquire Hurley’s Café in Toowoomba. One can infer from the strong business of MacVille that the company has complied with all the documents pertaining to café business like food licenses.
The company employed human resources and was running successfully for more than a year. This means it complied with acts like FairWork Act pertaining to labour use and environment (fairwork.gov.au 2018). The high productivity of the café proved that it’s was able to deal with risks like financial ,risks efficiently which was evident from the stringent risk management policy of the company. The risk management framework and the decision framework of the company also pointed out the well-structured hierarchical structure which prevailed within the organisation (Lasserre, 2017).
Answer 2a:
The purpose of the risk management framework of MacVille is to prevent or at least minimise the risks which the business can face. The risk though included but were not limited to financial risks, environmental risks and market risks. MacVille Pty Limited had a very stringent risk management framework which worked under the strict vigilance of the apex management by the name of MacVille Risk Management Framework. The company strictly complied with the risk management framework prescribed by the ISO 31000:2009 (iso.org, 2018). The company applied the framework in the generic risk management guidelines laid down by the risk management standards.
The outline of the risk management framework of MacVille Pty Limited consisted of identifying the risks and intimating the senior management, if required about them. The senior management then took decision regarding dealing with the risks. The risk management outline of the company embraced all employees across departments, locations and hierarchies (Bromiley et al, 2015).
Answer 2b:
The scope of the risk management of MacVille Proprietary Limited covered wide areas right from policy making to business planning and budgeting. The case mentions that MacVille Café sent the manager of the Toowoomba Café to meet the owner and staffs of the new café it was eyeing to acquire, namely Hurley’s Café. The aim of the MacVille was to investigate the actual working culture particularly risk management framework at the Hurley’s Café. This shows that the scope of the risk management at the MacVille Café was not restricted to its present outlets but also business firms it aims to takeover in the near future (Burns, 2016).
Answer 2c:
The first critical success factor of risk management framework of MacVille Pty Limited consisted of the support of the apex management. The risk management policies of the restaurant was overseen by the apex management. The second critical factor which led to the success of the risk management policies was involvement of the staffs across departments and hierarchies. This led to more effective and prompt execution of the risk management strategies as per the instruction of the top managers. The third critical factor responsible for the success of the risk management procedure of the MacVille was its investigation into the safety parameters of the firms it aimed to acquire in the future (McNeil, Frey & Embrechts, 2015).
The fourth critical success factor backing the risk management framework of the restaurant was its strong communication network connecting the employees both up and down the hierarchy. This was evident from the teleconferences which took place between the new manager of the Toowoomba stores, Ash, the senior management and finance, audit and risk management committee or FARM. The goals of the risk management plan of the MacVille Café was to recognise and minimise the risks to the extent possible (Olson & Wu, 2015).
Answer 2d:
|
Stakeholder |
Internal/external |
Role in process |
Stake in process |
|
Management of the MacVille Cafe |
Internal |
Forms policies and strategies |
Crucial |
|
Employees of the MacVille |
Internal |
Executes policies and strategies |
Crucial |
|
Management of the Hurley’s Cafe |
External(from the angle of MacVille) |
Forms policies and strategies |
Crucial |
|
Employees of Hurley’s Cafe |
External before acquisition and internal post acquisition. |
Execute plans and policies |
Crucial |
|
Managers |
Internal |
Supervise juniors and communicates orders up and down the hierarchy |
key |
|
Government(including Toowoomba Council) |
External |
Forms laws |
Key stakeholder |
|
Customers |
External |
Purchases products and services, thus forming basis of revenue generation |
Important |
Answer 2e:
PEST:
The PEST analysis of the market of Australia shows that the country is political stable and has bilateral connections with various other countries. The government forms laws like the fair Work Act which governs the operations of the various industries. These factors promote expansion of industries like tourism. The economy of Australia is financially stable and has immense natural resources. The economy of Australia is experiencing high GDP which means that the people of Australia have more disposable income to afford expensive food and beverages in restaurants.
Moreover, Australia is one of the most visited countries in the world which means that the country has a booming tourism sector (Brustbauer, 2016). This inflow of foreign tourists is prospering the restaurant because they are having more customer visits which is boosting their revenue generation. A crucial social factor which is affecting the industries in Australia is growing awareness and concern in the society of Australia regarding growing risk factors and accidents in the industrial sectors including restaurant. The Australian society is today putting ethical and moral pressure on the business organisations to adopt risk management policies to ensure employee safety.
This is backed by the work health and safety laws enacted by the government of Australia. The technological factors which are affecting the market of Australia is abundance of technological knowhow and innovation. The technological strength of Australia is reflected by the advanced risk management policies which are now being adopted in the risk prone industries like restaurants (Gatzert & Martin, 2015). The increasing use of ecommerce in the Australian market to purchase products like food also points out to the technological prowess of the country. The same is exemplified by the use of internet and telecommunication to hold meetings in the Australian companies (Ashs holds several meeting with the risk management team) also provide testimony to this technological strength.
SWOT of MacVille Cafe:
|
Strengths: 1. Financially strong. 2. Present in multiple markets like Queensland and Sydney. 3. Strong risk management policies. 4. Strong communication between managers enforce accurate decision making. |
Weaknesses: 1. The prospective subsidiaries of the MacVille Café often do not follow risk management which would add to the risks of the restaurant post acquisition. |
|
Opportunities: 1. Enforcements of stringent risk management policies on subsidiaries. 2. Expansion into markets |
Threats: 1. Unethical activities among subsidiaries ultimately would increase risk management expenditure post acquisition. |
Answer 2f:
The researcher would use secondary sources of resources to gain information on the SWOT and PEST analysis. For example, the information about Fair Work Act have been obtained from the official website of Government of Australia.
Answer 2g:
|
S.L.No. |
Risks |
Risk analysis |
|
1. |
Financial risks |
The management of the Hurley’s Café did not handle cash responsibly and deposit cash in bank. There have been reports of thefts. Accounting entry was not carried out properly. |
|
2 |
Environmental risks |
Wastage of water. |
|
3 |
Legal risks |
There was no written agreement between the café and the employees which would leave scope for future conflicts. The Toowoomba Council would be bringing in laws to curb wastage of water which would lead to increase in expenditure. |
|
4 |
Data theft risks |
Data could be entered by any member which exposed the café to data risks |
|
5 |
Market risks |
Entry of new restaurants into the Toowoomba region including multinational restaurant chain. |
Answer 4:
To: email ids of stakeholders
From: email id of company
Cc: CEO’s email id
Subject: Identification of risks in case of acquisition of M/s Hurley’s Café
Dear Sir/Ma’am,
This is in reference with the acquisition of M/s Hurley’s Café which is under consideration. Please find attached the list of risks recognised and the analysis of the same. We would be very grateful if you help us in identification further risks.
Regards,
…. (Name and designation of sender manager)
Attachment: Risk analysis chart.
Answer 5:
To..(email id of CEO)
From…(email id of the sending manager)
Subject: Request for meeting for review of risk management of the Hurley’s Café
Dear Madam,
Please find attached the risk analysis report of the Hurley’s Café which we are aiming to takeover. It is an earnest request to your good self to go through the same and provide your valuable feedback regarding the same.
Regards,
…..(name and designation of the sending manager)
Attachment: Risk analysis chart.
Answer 6a:
The critical success factors of the takeover of the Hurley’s Café would be its customer base and its strategic position. The risk factors would be the poor risk management standards which are followed in the café by the owner of the Hurley’s Café and the employees.
Answer 6b.
The risk management process of MacVille was very stringent and was under the supervision of the apex management. The directors and senior managers intervened immediately and found out ways to deal with the risk. The risk management measures were monitored from time to time to point out their effectiveness in managing the risks (Sweeting, 2017).
Answer 6c:
The important stakeholders like the Toowoomba Council would be communicated about the risks identified through emails and letters from the office of the CEO. They would through the emails and letters would be requested to express concern about additional risks they would identify during the course the takeover of the Hurley’s Café (Hoyt & Liebenberg, 2015).
Anwer 6d and 6e:
The support of the CEO would be obtained in the process of risk management and to identify further risks.
Answer 7:
The following is the summary of discussion with the CEO in the risk management of the Hurley’s Café:
It can be recommended that the management of MacVille Café should place moral and ethical pressure on the management of the Hurley’s Café.
Task 2:
Part A:
Answer 1:
The review of MacVille simulated business shows that the café is financially strong and established itself in the Queensland and Sydney. The values of the cafe stood on benefits of the customers, employees, high standard of risk management and corporate governance. The café followed legislations and laws like the FairWork Act (fairwork.gov.au, 2018).
Answer 2a and 2b:
|
S.L.No. |
Risks |
Risk analysis |
Likelihood |
Consequences |
|
1. |
Financial risks |
The management of the Hurley’s Café did not handle cash responsibly and deposit cash in bank. There have been reports of thefts. Accounting entry was not carried out properly. |
High |
Severe |
|
2 |
Environmental risks |
Wastage of water. |
High |
medium |
|
3 |
Legal risks |
There was no written agreement between the café and the employees which would leave scope for future conflicts. The Toowoomba Council would be bringing in laws to curb wastage of water which would lead to increase in expenditure. |
High |
high |
|
4 |
Data theft risks |
Data could be entered by any member which exposed the café to data risks |
High |
Severe |
|
5 |
Market risks |
Entry of new restaurants into the Toowoomba region including multinational restaurant chain. |
High |
Medium |
The numerical value for the market risks can be measured in terms of business losses however, the risks in terms of environmental risks and data theft risks, the loss would be so huge that they cannot be perceived in terms of money.
Answer 2d:
|
S.L.No. |
Risks |
Risk analysis |
Suitable treatments |
|
1. |
Financial risks |
The management of the Hurley’s Café did not handle cash responsibly and deposit cash in bank. There have been reports of thefts. Accounting entry was not carried out properly. |
1. Accounts should be handled by professional accountants. 2. Cash should be deposited in the bank on regular basis. |
|
2 |
Environmental risks |
Wastage of water. |
1. The dishwasher should checked in terms of water flow. 2. A bigger filter should be installed. |
|
3 |
Legal risks |
There was no written agreement between the café and the employees which would leave scope for future conflicts. The Toowoomba Council would be bringing in laws to curb wastage of water which would lead to increase in expenditure. |
1. Written agreements should be maintained with every employee. 2. Wastage of resources should be curbed. |
|
4 |
Data theft risks |
Data could be entered by any member which exposed the café to data risks |
1. Access to data should be restricted. 2. The data should be protected by password. |
|
5 |
Market risks |
Entry of new restaurants into the Toowoomba region including multinational restaurant chain. |
1. Aggressive promotion of Hurley’s Café. 2. New product development. |
Answer 2e(i):
The risk identification and assessment would likely be effective because it explores the different types of risks the Hurley’s Café was facing due to inefficient management. The risk management recognises risks like financial risks and market risks. This would enable the management of the MacVille Café take appropriate steps once the acquisition is finalised.
Answer 2e(ii):
The risk management steps would be feasible for the MacVille Café because it would be backed by the financial power of the café once the acquisition in finalised.
Answer 3:
|
Risk |
Assess risk |
Controls |
Monitoring |
Action priority |
Timelines |
Responsible |
|
Financial risks |
1. Accounts should be handled by professional accountants. 2. Cash should be deposited in the bank on regular basis. |
Accounts managers |
1 |
6 months |
Accounts managers |
|
|
Environmental risks |
1. The dishwasher should checked in terms of water flow. 2. A bigger filter should be installed. |
Directors |
1 |
12 months |
Directors |
|
|
Legal risks |
1. Written agreements should be maintained with every employee. 2. Wastage of resources should be curbed. |
Finance manager and legal department |
2 |
3 months |
Finance manager and legal department |
|
|
Data theft risks |
1. Access to data should be restricted. 2. The data should be protected by password. |
Technological manager |
1 |
3 months |
Technological manager |
|
|
Market risks |
1. Aggressive promotion of Hurley’s Café. 2. New product development. |
Marketing department |
3 |
12 months |
Marketing department |
Answer 4:
The risk analysis report would be submitted to the board of directors and the CEO.
Part B: Answer 1:
Risk management plan for one key risk: Brand recognition:
There are certain risk management treatments necessary to implement with an intention to deal with the risk of brand recognition among the clients. Therefore, all these risk treatments are to be followed by the company or the cafe to provide good quality pastries to the customers:
The treatments are as follows:
All these steps will help the company to make its products available to customers post acquisition of Hurley and boost the goodwill.
Task 3: Answer 1:
The MacVille Café was a café based in Queensland, Australia having its only second branch in Sydney, also situated in Australia. The café offered coffee and gourmet style food offering. Benefitting customers with its superior food products was at the heart of the business principle of the café. The café operated under a very management and was seeking to expand in Toowoomba by acquiring the Hurley Café. While, MacVille followed a very strict risk management system, its future acquisition, the Hurley Café followed a very slack risk management system (Subramaniam et al. 2015). One can infer that the former would have to invest immense capital to beef up the risk management mechanism of the Hurley’s Café.
Answer 2(a)(i):
The risk management plan encompassed different types of risks starting from financial risks, to markets, data thefts to environmental risks. The risks were recognised after in depth investigation of the business operations of the Hurley’s Café. The risks were analysed on the grounds of impacts they would have on the MacVille if they were passed on to the café.
Answer 2(a)(ii):
The implementation of the risk management plan as per the risk management plan maintained and followed by MacVille was placed under senior managers. For example, the financial risks would be supervised by the accounts department while the market risks would be viewed by the marketing department (Lundqvist, 2015). This supervision of specific risks under appropriate department ensured their effective implementation of the strategies to manage them.
Answer 2(a)(iii):
The outcome of the risk management plan would be efficient management of the risks identified in the table above. For example, as shown in the previous tasks, that two steps can be taken to deal with financial risks. The first step was accounting by experts and regular depositing of cash into bank (Gatzert & Schmit, 2016). This would ensure more efficient financial management and reduction of cash theft. Similarly, using of password and selective access of staff to data would prevent reduction in data theft.
Answer 2(a)(iv):
One can evaluate the risk management strategies which MacVille proposed for its future subsidiary the Hurley’s Café was appropriate.
References:
31000:2009, I. (2018). ISO 31000:2009 – Risk management — Principles and guidelines. Retrieved from
Bromiley, P., McShane, M., Nair, A., & Rustambekov, E. (2015). Enterprise risk management: Review, critique, and research directions. Long range planning, 48(4), 265-276.
Brustbauer, J. (2016). Enterprise risk management in SMEs: Towards a structural model. International Small Business Journal, 34(1), 70-85.
Burns, P. (2016). Entrepreneurship and small business. Palgrave Macmillan Limited.
Gatzert, N., & Martin, M. (2015). Determinants and value of enterprise risk management: empirical evidence from the literature. Risk Management and Insurance Review, 18(1), 29-53.
Gatzert, N., & Schmit, J. (2016). Supporting strategic success through enterprise-wide reputation risk management. The Journal of Risk Finance, 17(1), 26-45.
Hoyt, R. E., & Liebenberg, A. P. (2015). Evidence of the value of enterprise risk management. Journal of Applied Corporate Finance,
Lasserre, P. (2017). Global strategic management. Macmillan International Higher Education.
Lundqvist, S. A. (2015). Why firms implement risk governance–Stepping beyond traditional risk management to enterprise risk management. Journal of Accounting and Public Policy, 34(5), 441-466.
McNeil, A. J., Frey, R., & Embrechts, P. (2015). Quantitative risk management: Concepts, techniques and tools. Princeton university press.
Olson, D. L., & Wu, D. D. (2015). Enterprise risk management(Vol. 3). World Scientific Publishing Company.
Subramaniam, N., Wahyuni, D., Cooper, B. J., Leung, P., & Wines, G. (2015). Integration of carbon risks and opportunities in enterprise risk management systems: evidence from Australian firms. Journal of Cleaner Production, 96, 407-417.
Sweeting, P. (2017). Financial enterprise risk management. Cambridge University Press.
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