Risk Management Framework of MacVille - Report
Added on - 28 May 2020
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Running head: RISK MANAGEMENT WHILE ACQUISITIONSRisk Management While AcquisitionName of the Student:Name of the University:Author Note:
RISK MANAGEMENT WHILE ACQUISITIONS1Task 1:Answer 1:MacVille Pty Limited was a café chain based in Queensland and having its outlets inQueensland and Sydney, Australia. The café chain offering high quality coffee and gourmet foodin café style environment. The café was looking forward to acquire Hurley’s Café inToowoomba. One can infer from the strong business of MacVille that the company has compliedwith all the documents pertaining to café business like food licenses. The company employedhuman resources and was running successfully for more than a year. This means it complied withacts like FairWork Act pertaining to labour use and environment (fairwork.gov.au 2018). Thehigh productivity of the café proved that it’s was able to deal with risks like financial ,risksefficiently which was evident from the stringent risk management policy of the company. Therisk management framework and the decision framework of the company also pointed out thewell-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 leastminimise the risks which the business can face. The risk though included but were not limited tofinancial risks, environmental risks and market risks. MacVille Pty Limited had a very stringentrisk management framework which worked under the strict vigilance of the apex management bythe name of MacVille Risk Management Framework. The company strictly complied with therisk management framework prescribed by the ISO 31000:2009 (iso.org, 2018). The companyapplied the framework in the generic risk management guidelines laid down by the riskmanagement standards.
RISK MANAGEMENT WHILE ACQUISITIONS2The outline of the risk management framework of MacVille Pty Limited consisted ofidentifying the risks and intimating the senior management, if required about them. The seniormanagement then took decision regarding dealing with the risks. The risk management outline ofthe company embraced all employees across departments, locations and hierarchies (Bromiley etal, 2015).Answer 2b:The scope of the risk management of MacVille Proprietary Limited covered wide areasright from policy making to business planning and budgeting. The case mentions that MacVilleCafé sent the manager of the Toowoomba Café to meet the owner and staffs of the new café itwas eyeing to acquire, namely Hurley’s Café. The aim of the MacVille was to investigate theactual working culture particularly risk management framework at the Hurley’s Café. This showsthat the scope of the risk management at the MacVille Café was not restricted to its presentoutlets 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 Limitedconsisted of the support of the apex management. The risk management policies of the restaurantwas overseen by the apex management. The second critical factor which led to the success of therisk management policies was involvement of the staffs across departments and hierarchies. Thisled to more effective and prompt execution of the risk management strategies as per theinstruction of the top managers. The third critical factor responsible for the success of the riskmanagement procedure of the MacVille was its investigation into the safety parameters of thefirms it aimed to acquire in the future (McNeil, Frey & Embrechts, 2015). The fourth criticalsuccess factor backing the risk management framework of the restaurant was its strong
RISK MANAGEMENT WHILE ACQUISITIONS3communication network connecting the employees both up and down the hierarchy. This wasevident from the teleconferences which took place between the new manager of the Toowoombastores, Ash, the senior management and finance, audit and risk management committee orFARM. The goals of the risk management plan of the MacVille Café was to recognise andminimise the risks to the extent possible (Olson & Wu, 2015).Answer 2d:StakeholderInternal/externalRole in processStake in processManagement of theMacVille CafeInternalForms policies andstrategiesCrucialEmployees of theMacVilleInternalExecutes policiesand strategiesCrucialManagement of theHurley’s CafeExternal(from theangle of MacVille)Forms policies andstrategiesCrucialEmployees of Hurley’sCafeExternal beforeacquisition andinternalpostacquisition.Execute plans andpoliciesCrucialManagersInternalSupervise juniorsand communicatesorders up andkey
RISK MANAGEMENT WHILE ACQUISITIONS4downthehierarchyGovernment(includingToowoomba Council)ExternalForms lawsKey stakeholderCustomersExternalPurchasesproductsandservices,thusforming basis ofrevenue generationImportantAnswer 2e:PEST:The PEST analysis of the market of Australia shows that the country is political stableand has bilateral connections with various other countries. The government forms laws like thefair Work Act which governs the operations of the various industries. These factors promoteexpansion of industries like tourism. The economy of Australia is financially stable and hasimmense natural resources. The economy of Australia is experiencing high GDP which meansthat the people of Australia have more disposable income to afford expensive food and beveragesin restaurants. Moreover, Australia is one of the most visited countries in the world which meansthat the country has a booming tourism sector (Brustbauer, 2016). This inflow of foreign touristsis prospering the restaurant because they are having more customer visits which is boosting theirrevenue generation. A crucial social factor which is affecting the industries in Australia is
RISK MANAGEMENT WHILE ACQUISITIONS5growing awareness and concern in the society of Australia regarding growing risk factors andaccidents in the industrial sectors including restaurant. The Australian society is today puttingethical and moral pressure on the business organisations to adopt risk management policies toensure employee safety. This is backed by the work health and safety laws enacted by thegovernment of Australia. The technological factors which are affecting the market of Australia isabundance of technological knowhow and innovation. The technological strength of Australia isreflected by the advanced risk management policies which are now being adopted in the riskprone industries like restaurants (Gatzert & Martin, 2015). The increasing use of ecommerce inthe Australian market to purchase products like food also points out to the technological prowessof the country. The same is exemplified by the use of internet and telecommunication to holdmeetings in the Australian companies (Ashs holds several meeting with the risk managementteam) also provide testimony to this technological strength.SWOT of MacVille Cafe:Strengths:1.Financially strong.2.Present in multiple markets likeQueensland and Sydney.3.Strong risk management policies.4.Strong communication betweenmanagers enforce accurate decisionmaking.Weaknesses:1.The prospective subsidiaries of theMacVille Café often do not followrisk management which would add tothe risks of the restaurant postacquisition.Opportunities:1.Enforcements of stringent riskmanagement policies on subsidiaries.2.Expansion into marketsThreats:1.Unethicalactivitiesamongsubsidiaries ultimately would increaserisk management expenditure postacquisition.