Risk Management Strategies Of MacVille Café: A Case Study Analysis

The Stringent Documentation and Business Operation of the MacVille Café

The business scenario of MacVille provided ample evidence of the stringent documentation and business operation of the operation. The case study mentioned that the MacVille had been expanding its business in Central Business District in Queensland and was looking forward to establish new branches in areas like Toowoomba in Brisbane. One can point out that this successful operation of business would not have been possible without stringent adherence to laws and documentation. The café followed a proprietary limited which means it was registered with the Department of Industry, Innovation and Science and held the Australian Company Number or CAN issued top it by the latter. Further, as per business laws of the land, the CAN should appear on the documents like accounting statement, invoices, business letterhead and even written advertisements of the company. This again points out that the café company maintained stringent documentation where the ACN appeared
(business.gov.au 2018). The case study mentioned a stringent risk management policy which ran down the entire organisational pyramid of the MacVille. This means the company followed the Safe Work laws coined by the WorkCover Authority of New South Wales (safework.nsw.gov.au 2018). This documentation policy of the MacVille was also evident from the stringent risk management methods of the company which also encompassed future subsidiaries. The visit of Ash, a senior manager and a member of the risk management committee of the MacVille at the Hurley’s Café prior to takeover of the latter and his subsequent reporting to the higher management suffices the stringent documentation procedure (Bromiley et al. 2015). 

The risk management framework of the MacVille Café clearly showed that the café adhered to the risk management standards laid down in AS/NZ ISO 31000:2009. The risk management principles of the body are not binding on the companies and do not apply to any specific organisation. The ISO standards provide guidance regarding risk management which business organisations can adopt to minimise risks. The risk management framework of MacVille was helmed by the apex management with the FARM and spread down the hierarchy (finance.gov.au 2018). Thus, the company followed AS/NZ ISO 31000:2009 in its risk management policies. 

The scope risk management role of the managers at the MacVille Café encompassed a number of areas. The managers of the stores of MacVille were empowered to visit the premises of future subsidiaries in order to assess the actual risk management procedures they had in place. They could gain access to the actual operations and speak to the owners of the subsidiaries. This was proven by visit Ash paid to the Hurley’s Café at their actual premises. He even visited Mr Ron Longford, the owner of the café who was also the councillor. Ash then held meetings in presence of Ms Paula Kinski with the risk management committee to report the actual risk management policies in practice at the Hurley (Burns 2016). Thus, the scope of risk management responsibilities of the managers at the MacVille comprised of visiting the premises of the future subsidiaries, assessing the actual risk management practices in place and reporting to the apex management on teleconference. 

Risk Management Framework of MacVille Café and Adherence to AS/NZ ISO 31000:2009

The analysis of the case study of MacVille throw light on critical success factors, goals or objectives of the scope of risk management functions of managers.

The first critical success factor of the risk management strategy of the MacVille Café lied in its strong communication polices. The communication policies of the café involved the apex management, the middle level management and lower level management. The communication involved meeting and conferences between employees of different designations (Lasserre 2017). This was evident from the teleconferences which took place between Paula Kinski and Ash post visit of the latter to the Hurley’s Café.

The second critical factor of risk management strategy of the MacVille Café was its strategy itself which encompassed apex managers, middle level managers and lower level employees. The risk management strategy at the chain of café owned by the MacVille encompassed all levels. The directors were responsible for determining the risks which the café would be encountering and directing the subordinates about codes of conduct they should follow during risky situations (Lam 2014).  The directors estimated the impact of the risks on the organisation and ways to control them. The senior management formed policies of risk management policies which the subordinates were expected to follow. The lower level employees participate in the risk management process by executing the instructions of their superiors and bringing into notice of the senior managers, any risk they identify.

The third critical factor responsible for the success of the risk management strategies of the MacVille Café was its stakeholders’ accountability. The firm considers the impact its business decisions would have on its stakeholders and makes strategies accordingly. This is evident once again from the visit of Ash to the Hurley Café. The aim of the visit was to meet the present owner and employees of the café to assess the actual risk management practice prevailing in the café. This was followed by teleconference with the apex management including the CEO. It was evident that this meeting would lead to decision making regarding the risk management strategy post acquisition which eventually benefit the stakeholders like employees, management, customers and the investors.

The goals of the risk management strategy of the MacVille Café was to identify risks as indispensable component of business and the applying appropriate steps to manage risks. The first goal was to identify the risks on the basis of their influences on the business and communicating to the other members of the organisation starting with the apex management. The second objective of the policy was to adopt measures to eradicate or at least minimise the risks (Burns 2016). The objective of the risk management strategy was to ensure benefit of all the stakeholders like investors and customers. 

Stakeholder	Internal/external	Role in process	Stake in process
Management (CEO and directors)	Internal	1. Makes strategies for the all the areas of business for the company to function. 2. Act as points of communication between the company and the key stakeholders like governments and political parties. 3. Appraise the senior managers. 4. Act as apex body within the company during situations like conflicts between employees.	Profits, career growth, recognition in the industry
Middle level managers	Internal	1. Executes orders of the senior management. 2. Leads organisational groups like departments and work teams assigned to them. 3. Forms communication link between higher management and lower level employees. 4. Appraise employees reporting to them. 5. Represent the MacVille before stakeholders like shareholders and customers. 6. Motivate, train and mentor employees reporting to them.	Higher salary, career growth, facilities like paid holidays and goodwill within the industry
Lower level employees	Internal	1. Execute the instructions of the superiors. 2. Represents company before customers and suppliers. 3. Obtain important information regarding areas like risks and inform the same to the managers.	Salary, career growth and incentives.
Government	External	1. Forms laws and policies pertaining to areas like risks. 2. Provide facilities like land at low costs for business organisations to set of operational units. 3. Provides guidance in areas like corporate social responsibilities.	Taxes, employment generation
Customers	External	1. Buy goods and services. 2. Generate revenue for the business organisation in return of products. 3. Provide feedback regarding products which form base of future marketing strategies. 4. Form base of brand value companies and their products enjoy	Superior products(goods and services), superior aftersales services, authentic advices and environment friendly operations
Suppliers	External	1. Supplies raw materials to the company 2. Ensures continuous production of goods and services. 3. Helps the companies to abide by laws like environmental laws by providing environment friendly materials.	1. Continuous orders for raw materials. 2. Timely payments for suppliers. 3. Placement of bulk orders in advance.
Investors	External (external investors) and internal (High officials holding shares of the company)	1. Provides capital by investing in the shares of the company.	High ROI, dividends and interests
Society	External	Provides customers, investors, suppliers base to companies	High quality products and environment friendly operations.
Financial institutions	External	1. Provides funds in form of loans to companies. 2. Provides financial liquidity including digital financial transactions. 3. Allows companies to invest in securities	1. More business generation by selling more products to companies. 2. References about both individual customers and business customers who can open account with them, thus generate business.

Australia is a politically stable economy with bilateral ties with various countries like China and the EU countries. The government makes laws like registration of companies which business organisations have to follow. For the business organisations including restaurants have to abide by environmental laws like the Environment Protection and Biodiversity Conservation Act 1999 or the EPBC Act. Similarly, the government (environment.gov.au 2018). The business organisations including the restaurants can expand overseas and can obtain raw materials from other countries by taking advantage of the bilateral ties of the Government of Australia. The government provides framework like taxation framework which help small businesses to get rebate on taxes. For example, the small and medium sized companies have to pay 27.5 percent tax while large companies have to pay 30 percent (ato.gov.au 2018). The local government bodies like the Toowoomba Council also provides facilities like broadband internet connection which helps business organisations (tr.qld.gov.au 2018).

Scope of Risk Management Role of Managers at MacVille Café

The graph above shows that the country of Australia has a very high GDP. This rising GDP means that people in the country has more disposable income to afford dining at restaurant chains like the MacVille. .  

The graph above shows the currency exchange trend of AUD against three other international currencies namely, USD in black, SGD in orange and EU in blue. The graph clearly shows that AUD is strong even though its value shows decline, it recovers fast.

These two graph hold great importance for restaurant chains like the MacVille and their souricng of raw materials. The strong position of AUD in the global market means that the Australian restaurants can acquire raw materials from foreign markets like, the United States, Europe (EU) and Singapore. However, the growing economic development of Australia is also attracting foreign restaurant chains selling similar products as the MacVille. The management of the Australian chains of restaurants must form strategies to deal with these foreign restaurant chains (Alviniussen and Jankensgard 2015). The next economic factor which boosts the expanding chains of Australian restaurants like the MacVille is presence of financial and ecommerce companies in the country. The multinational banks provide funds and also allow the restaurants indulge in foreign transactions while importing raw materials. The developed ecommerce network enable restaurants to make and receive payments online. Moreover. Australia has developed a strong network of road, water and air transport which enables movement of perishable raw materials meant for the restaurants fast. All these factors have bolstered the business of restaurants like the MacVille.

The social factors of Australia encourage restaurant business to thrive and expand. Released on June 2018, the report of Australian Bureau of Statistic clearly shows the population of Australia was 24770000 as on December 2017. This means that the restaurants can get access to a large consumer population which they can serve and generate revenue (Ferreira, Loiola and Gondim 2017). 

The table (figure 4) above shows that Australia besides its resident population, is also home to a large overseas migrant population from different countries. This means the consumer base in Australia has varied tastes and preferences owing to their diverse cultural backgrounds. This is a opportunities to restaurants like the MacVille because it can bring about innovation in its product offerings and earn huge revenue by serving this diverse consumer base.

Australia owing to its vast resources and strong economy has succeeded in bring about high level of technological advancements. The country has renounced universities which educate professional in different technological fields like hospitality technology and food technology (rmit.edu.au 2018). The country is developed as far as IT and communication is concerned which provide boosts to other industries like the restaurant industry (Alviniussen and Jankensgard 2015).

Strengths: 1. Financially strong. 2. Stringent risk management strategies. 3. Strong organisational structure 4. Strong communication between hierarchies.	Weaknesses: 1. The subsidiaries do not follow its stringent management strategies. 2. The manufacturing facilities are limited within main city.
Opportunities: 1. Expand into new areas. 2. Offer more varied product line. 3. Can acquire more subsidiaries.	Threats: 1. Threats from international and local restaurants. 2. The low level of risk management among the subsidiaries may attract huge expenditure post acquisition.

The researcher used secondary research to execute the research about the MacVille and its future subsidiary, the Hurley’s Café. The research also included consultation of several books and journals. The official websites of organisation like the Australian Bureau of Statistics also provided substantial information to carry out the PEST analysis of Australia which in turn paved way for the SWOT analysis of the MacVille.

Risk	Scenario
Risk 1: Banking risks	1. The management of the Hurley kept no record of the cash transactions and any employee could record financial transactions. 2. There have been thefts of cash. 3. Cash was not deposited into bank on time and there was no cash vault
Risk 2: Manager’s travel risks	1. The way is blocked by trucks. 2. Prone to accidents and physical injury
Risk 3: Legal and compliance risks	1. Loss of brand reputation due to inefficient business management 2. Fines and penal charges due to wastage of resources like water.
Risk 4: Loss of brand recognition risk	1. The staff at the Hurley’s did not wear MacVille’s uniform 2. The Hurley’s staffs may try to alter or distort signature processes of customer service of the MacVille, thus hampering its brand value.

Critical Success Factors of the Risk Management Strategy of MacVille Café

The findings of the risk management practices in place at the Hurley’s Café should be 1submitted to the management of the MacVille Café. 

To:  (email id of the stakeholders)

From: Official email id of the sender

Subject: Risk identification and analysis in the event of acquisition of the Hurley’s Café

Dear Sir/Madam,

We, at the MacVille Café shall hold ourselves privileged to inform you that we M/s MacVille Café in order to expand our business have voted to acquire the Hurley’s Café. We have carried out a risk assessment of the same and hereby attach the same. It is our kind request to your good selves to peruse the risks already identified and bring to our notice any additional risks that you may feel of significance influential power.

We here at the MacVille family convey our sincere regards to all our stakeholders for the relentless support we receive.

Regards,

……(Name and designation of the concerned manager)

Attachment: Risk analysis report. 

To: the CEO’s official id

From:  (name and designation of the person)

Subject: Request for an appointment to discuss on the risk management in the event of acquisition of the Hurley’s Café

Dear Ma’am,

This is with regard to the acquisition of the Hurley’s Café which was voted for at the board meeting dated….. A thorough risk analysis of the same has been carried out and a copy of the same has been attached for your due consideration. I hereby request you for appointment to discuss the risks already identified and on the further processes of risk management which may fit necessary.

Regards,

…… (Name and designation of the concerned manager)

Attachment: Risk analysis report. 

The findings of the risk assessment shows that the critical goals of the acquisition of the Hurley’s Café would profit the business of the MacVille. The goal of the MacVille should be strengthening the risk management practices of the Hurley’s right after its acquisition. 

The MacVille’s risk management process stands on ist strong financial power, able management and continuous formal communication line which runs along the entire company. The risk management process of the café works under the strict supervision of the apex management and a special FARM committee. The process gains involvement of employees across hierarchies and seeks to recognise and deal with risks efficiently. 

The stakeholders like the customers and the investors should be intimated aboyt the risk management process of the MacVille using officials. They should also be sent a risk management brochure along with the relevant acts and legislations which the company follows. This would make the aware about the matter and aid in further decision making. The brochure should be sent both in digital and hardcopy format. The stakeholders like customers would be able view and download it from the official website of the café. 

The support of the CEO would be obtained on the ongoing risk management process and management any future risks identified. 

The following the points which have surfaced after discussion with the CEO:

• The MacVille follows strict risk management process.
• The Hurley’s Café does not follow strict risk management strategy.
• It can be recommended that the management of the MacVille should impose its risk management strategies promptly after acquiring the Hurley’s Café.
• It can be recommended that the report should be forward to the management and relevant official(s) concerned.  

A review of the simulated business of the MacVille Café and its acquisition revealed that the organisation followed a very stringent risk management. The risk management strategies of the company functioned under a strong apex management, the CEO and a special committee of high officials. The risk management process involved employees across departments and hierarchies. However, the same did not apply for the Hurley’s Café, the future subsidiary of the MacVille. 

Risk	Scenario	Likelihood	Consequences	Treatment ways
Risk 1: Banking risks	1. The management of the Hurley kept no record of the cash transactions and any employee could record financial transactions. 2. There have been thefts of cash.	High	1. Financial loss 2. Shortage of capital 3. Improper audit. 4. Ethical practices to hide accounting discrepancies	1. Depositing cash into bank regularly and keeping cash in hand in secured vault. 2. Accounting done by specific employee with strong accounting knowledge
Risk 2: Manager’s travel risks	1. The way is blocked by trucks. 2. Prone to accidents and physical injury	High	1. Delay in transports. 2. Accidents would cause damage to the safety of managers and financial loss to the company.	1. Providing transport services to employees 2. Following traffic rules
Risk 3: Legal and compliance risks	1. Loss of brand reputation due to inefficient business management 2. Fines and penal charges due to wastage of resources like water.	Medium	1. Loss of goodwill. 2. Increase in legal costs	1. Marketing the restaurant products. 2. Creating special edition food items.
Risk 4: Loss of brand recognition risk	1. The staff at the Hurley’s did not wear MacVille’s uniform 2. The Hurley’s staffs may try to alter or distort signature processes of customer service of the MacVille, thus hampering its brand value.	High	1. Customer poaching by competitor restaurants. 2.  Reduction in generation of revenue	1. Marketing of products. 2. Gaining support of stakeholders in its introducing more innovative and new products.

Goals of the Risk Management Strategy of MacVille Café

The above measures would be of high priority and would effective in the management of the risks post acquisition of the Hurley’s Café. They would be feasible taking into consideration the able risk management framework of the MacVille and its financial power. The risks of Hurley largely refers to macroeconomic risk under market environment of Australia. For example, non-compliance with the safety laws and improper accounting might attract government actions. Again, lack of proper marketing activities would lead to the Hurley losing its customers to its competitors. Wastage of scare natural resources like water would cause environmental risks these macroeconomic risks are beyond the control of the restaurant. The restaurant can however, take appropriate steps to minimise them but cannot prevent actions. For example, by abiding laws it can prevent government actions under the present situations but cannot stop the government from probing into its operations by forming laws. Thus, in the macroeconomic environment, the organisations can take steps to lower the risk but cannot prevent them totally. 

Risk	Assess risk (score)	Controls	Monitoring	Action priority (1–5)	Timelines	Responsible
Risk 1: Banking risks	1	1. Depositing cash into bank regularly and keeping cash in hand in secured vault. 2. Accounting done by specific employee with strong accounting knowledge	Reduction of financial loss	1	1 year	Departmental heads
Risk 2: Manager’s travel risks	1	1. Providing transport services to employees 2. Following traffic rules	Reduction of travel risks	1	6 months	Departmental heads
Risk 3: Legal and compliance risks	3	1. Marketing the restaurant products. 2. Creating special edition food items.	Higher competitive strength	2	1 year	Departmental heads
Risk 4: Loss of brand recognition risk	3	1. Marketing of products. 2. Gaining support of stakeholders in its introducing more innovative and new products.	Higher brand value.	3	2 years	Departmental heads

Risk Treatment Schedule and Plan Organisation: MacVille Pty Ltd.
The risk in priority order from risk register	Possible treatment option	Preferred option	Risk rating after treatment	Result of cost / benefit analysis Accept Reject	Person responsible for implementation of option	Timetable for implementation	How will this risk and the treatment options be monitored
1	Risk 1: Banking risks	1. Depositing cash into bank regularly and keeping cash in hand in secured vault. 2. Accounting done by specific employee with strong accounting knowledge	1	A	Financial officer	1 year	Reduction of financial loss
3	Risk 2: Manager’s travel risks	1. Providing transport services to employees 2. Following traffic rules	2	B	Respective departmental heads	6 months	Reduced accidents
3	Risk 3: Legal and compliance risks	1. Marketing the restaurant products. 2. Creating special edition food items.	3	A	Legal officer  and marketing officers	1 year	Lower legal expenditure
2	Risk 4: Loss of brand recognition risk	1. Marketing of products. 2. Gaining support of stakeholders in its introducing more innovative and new products.	2	A	Marketing officer	2 years	Higher competitive strength.

The fishbone deals with the loss of brand recognition risk which MacVille might be facing it does not intervene into the the slack working environment of Hurley. The cause of the risk is that while MacVille had a very strict organisational policy and standard modes of operations in all its branches. Hurley did not maintain any specific employee policies. The cause of the risk in the fishbone diagram is Hurley staff not wearing uniform of MacVille or altering its standard processes of food preparation or serving customers. This might affect the service quality, thus having negative effect on the customer satisfaction. The result or outcome of this deteriorating services and lowering customer satisfaction would be brand recognition risk for MacVille. 

The analysis should be submitted to the board of directors and the CEO along with the risk management plan of the Hurley’s Café duly attached.  

The risk identified for discussion would be marketing risk which would lead to decreased brand recognition of the Hurley’s Café and subsequent dwindling of revenue. This is because as per the given case study, the staff of the Hurley did not stress on marketing and Langford, the owner of the café and councillor informed about arrival of international café chains in Toowoomba. This meant that absence of marketing at the Hurley’s would result in losing its customers to these newly emerging competitors (Burns 2016). This would eventually result in loss of revenue and weakening of the brand power of the Hurley’s Café. The report should be submitted to the apex management and concerned managers of the MacVille Café. 

The MacVille Café was a coffee restaurant in Queensland which had a strong business model. The aim of the café was to offer its customers high quality food products and ensure benefit of the stakeholders. The firm was financially very strong and followed a stringent risk management policy. The backbone of the risk management policy was strong communication channel comprising of both teleconferencing and face to face meetings which connected employees across hierarchies and departments. This risk management process worked under strict supervision of the CEO and a special directorial committee dedicated to it (Lasserre 2017). The risk management even expanded towards its future subsidiaries like the Hurley’s Café as shown in the case study. 

The management of the MacVille should plan and implement the risk management policies recognised. 

The initial risk management of the MacVille Café should aim to mitigate the risks which are the outcomes of the slack risk management methods of Hurley’s Café. The risk management plan should take into account employees of all designations right from apex management to the lower most level staffs. The plan should first include recognition of the risks and their possible outcomes. This should be followed by reporting the same to the apex management which would form strategies. The lower level employees should deal with the risks based on the directions of the apex management. The risk management plan should also have provisions for review of the risk management strategies in place and amend the plan from time to time according to the actual situations prevailing. 

The implementation should take place taking into account the time framed indicated and comprise of training of staff members of all levels to enhance the risk management standards at all levels.  The risk implementation should once again take place according to the directions of the apex management. 

The outcomes of the risk management should be reduced risks identified above and reduction in the losses due to those risks. The outcomes should be better risk management within the premises of the Hurley’s Café and reduced risks to the mother company the MacVille’s Café. 

The apex management should evaluate the risk by comparing between the implementation and actual outcome as per the risk matrix (tr.qld.gov.au 2018).  They should gain participation of the stakeholders like investors and employees at all levels of the risk management process. The stakeholders like customers should report any risks like likelihood of fire to the serving staff immediately. The serving staff should report the same to the middle level managers who would take the matter up with the apex management. The risk management body headed by the apex management should set aside contingency funds to deal with the newly recognised risks upon evaluation. This would allow time to time risk evaluation and management of any new risks recognised.  

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