Risk Management Strategies for MacVille Cafe's Acquisition Plan

This report analyzes the risk management strategies employed by MacVille Pty Limited, a cafe chain, in its planned acquisition of Hurley’s Cafe. The report begins by assessing MacVille's existing risk management framework, which adheres to ISO 31000:2009 standards, and its application across vari...Read More

Running head: RISK MANAGEMENT WHILE ACQUISITIONS
Risk Management While Acquisition
Name of the Student:
Name of the University:
Author Note:

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RISK MANAGEMENT WHILE ACQUISITIONS
Task 1:
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.

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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

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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
key

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orders up and
down the
hierarchy
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

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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
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.

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making.
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

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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,

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RISK MANAGEMENT WHILE ACQUISITIONS
…. (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

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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:
a. The risk management standards of the Hurley’s Café is not up to the risk management
standards of the Hurley’s Café.
b. The management of the Hurley’s Café should be made aware about the risk management
measures which they need to adopt.
It can be recommended that the management of MacVille Café should place moral and
ethical pressure on the management of the Hurley’s Café.

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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
High high

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RISK MANAGEMENT WHILE ACQUISITIONS
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
High Severe
5 Market risks Entry of new
restaurants into the
Toowoomba region
including multinational
restaurant chain.
High Medium

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RISK MANAGEMENT WHILE ACQUISITIONS
Answer 2c:
Impact
High Medium High High
Medium Low Medium High
Low Low Low Medium
Low Medium High
Likelihood
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.

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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.

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RISK MANAGEMENT WHILE ACQUISITIONS
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.

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RISK MANAGEMENT WHILE ACQUISITIONS
Answer 3:
Ris
k
Assess risk
(score) Controls Monitoring
Action
priorit
y
(1–5)
Timelin
es Responsible
Financial
risks
1. Accounts
should be
handled
by
professio
nal
accounta
nts.
2. Cash
should be
deposited
in the
bank on
regular
basis.
Accounts
managers
1 6 months Accounts
managers
Environment
al risks
1. The
dishwasher
should
Directors 1 12
months
Directors

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RISK MANAGEMENT WHILE ACQUISITIONS
Ris
k
Assess risk
(score) Controls Monitoring
Action
priorit
y
(1–5)
Timelin
es Responsible
checked in
terms of
water flow.
2. A bigger
filter should
be installed.
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.
Technologic
al manager
1 3 months Technologic
al manager

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RISK MANAGEMENT WHILE ACQUISITIONS
Ris
k
Assess risk
(score) Controls Monitoring
Action
priorit
y
(1–5)
Timelin
es Responsible
2. The data
should be
protected by
password.
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:

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RISK MANAGEMENT WHILE ACQUISITIONS
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:
 The company should maintain a manufacturing set up for the Hurley cafe post
acquisition;
 The company ought to manufacture warehouse to store the products and serve them at
any time to the customers whenever any demand has been posted;
 Required promotions are to be taken by the company for all their good products.
All these steps will help the company to make its products available to customers post
acquisition of Hurley and boost the goodwill.

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RISK MANAGEMENT WHILE ACQUISITIONS
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.

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RISK MANAGEMENT WHILE ACQUISITIONS
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.

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References:
31000:2009, I. (2018). ISO 31000:2009 - Risk management -- Principles and guidelines.
Retrieved from https://www.iso.org/standard/43170.html
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.