Importance of Corporate Governance, Sustainability Reporting and Risk Management in Focus Logistics Pty Ltd

MBA402 Assessment 3 Case
Study

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Corporate Governance:................................................................................................................3
Sustainability Reporting:.............................................................................................................5
Risk Management & Key Risks:.................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................1
APPENDIX......................................................................................................................................2

INTRODUCTION
Corporate governance is the governance or control and direction of the corporate which is
exercised by the board of directors over the company. Such board of directors are elected by the
shareholders along with the appointment of the auditors of the company thus ensuring that an
appropriate structure of the corporate governance is put in place to be able to address the issues
of the shareholders leading to an optimum corporate governance. Now, along with corporate
governance, risk management and sustainability report is also essential for an efficient working
of the company which will involve identifying the risks, how will the company get affected by
the risk, looking for solutions and measures to address the risk, implementing the solutions and
monitor their success.
MAIN BODY
Corporate Governance:
For a logistics company like Focus Logistics Pty Ltd setting up of corporate governance is
very essential unlike the views of the company’s COO, Jacob Gardner who thinks that
implementation of corporate governance will slow down the processes and make them more
complicated (Adnan, Hay and van Staden, 2018). Now, to support such an argument following
are some of the good practices of corporate governance which the company shall follow to be
able to be answerable to the management and stakeholders at large-
a) Relationship of trust with customers – For any business whether small or big, listed or
unlisted, relationships with their customers is the most important aspect of the operations
of the business. This involves building of sense of trust among the customers by
providing variety of goods and services to the customers as per their requirements so that
the customers are satisfied and both the customers and business work as the best partners
of each other.
Jacob Gardner of Focus Logistics Pty Ltd is of the view that as they do not fall in
the tax complications therefore, their main objective is maximization of the shareholders’
returns and thus there is no need to adhere to compliance issues and the company can pay
small fines and penalties if legally required rather than following such tedious methods to
follow the compliances.
Such a view is irrational and not following the good corporate governance
practices and thus will lead to degradation of the company’s image in the market as the

company is now growing and has the objective of getting listed on the ASX because after
listing the company will be more accountable and responsible to the public at large and
shall keep the betterment of stakeholders on priority.
b) Value creation by logistics – Every business needs to create value for its customers in
the field in which it is operating. Thereby achieving its objective of building good
relationship with the customers and developing a sense of trust and partnership with each
other. Naturally, value creation comes from experience and knowledge gained first hand
by working in the industry. Such knowledge and experience will lead to gaining expertise
over time and achieve the targets of market share and market stability in the long run.
For the Focus Logistics Pty Ltd, it can be seen that, it was established in 1965 by
Mrs. White and had a slogan of ‘go local’ which attracted the customers and community
at large and supported the company to grow and develop in the community (Kovermann
and Velte, 2019). It is said that for the next 30 years, company showed a steady growth
and also expanded its operations in multiple locations.
After Alice took over, the company grew by leaps and bounds i.e., accounting for
19% of market share in total resultantly, being the Australia’s fifth, largest company in
logistics. Also, customer base increased from 28 to 650 in the year 1997 as compared to
the year 1970 and currently operating at the customer base level of 11,500 customers
along with some listed companies as well. Also, effective financial disclosures are
necessary as the potential investors are of the view that the Focus Logistics cannot avail
further funding as it does not possess proper structure of governance and operations to
support such funding and expansions.
c) Related party transactions – All the related party transactions are to be disclosed and
approved by the board of directors of the company and shall be kept at minimum to be
transparent in its transactions and operations. In the case of Focus Logistics Pty Ltd, it
can be observed that the business is still run like a family business with most of the
management positions being occupied by the family and close friends. Such an issue is a
concern for the investors as they are of the view that there is limited control on the
operations and the reporting along with biased management reviews of the performances
and also the board committees are lacking. Such biasedness can be seen in the decision of