MBA402 - Focus Logistics: Governance, Risks, and Sustainability

This case study provides an analysis of Focus Logistics Pty Ltd, focusing on corporate governance practices, sustainability reporting, and associated risks within the logistics industry. It examines the company's responsibility towards society and the environment, its relationship with customers, the impact of biased management, and the importance of disclosure and transparency. The study highlights the significance of sustainability reporting, including its benefits and challenges, and identifies key elements for inclusion in a logistics industry sustainability report. Furthermore, it explores various risks associated with the logistics business, such as driver shortages, fuel price fluctuations, government regulations, and transportation delays, and emphasizes the importance of effective risk management strategies. The case study underscores the need for Focus Logistics to adopt robust corporate governance practices, embrace sustainability reporting, and proactively manage risks to ensure long-term success and stakeholder satisfaction.

MBA402 Assessment 3 Case
Study

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Corporate Governance:................................................................................................................3
Sustainability Reporting:.............................................................................................................5
Associated Risks & their Management:......................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................1

INTRODUCTION
Corporate governance practices and policies may vary from industry to industry and the
operations and method of operations are different in each and every industry. Significance and
benefits of sustainability reporting includes enhanced credibility of the organisations towards the
stakeholders and the customers are more attracted towards the companies complying such
reporting. Every business needs to identify and assess the risks pertaining to it and formulate &
implement measures to manage them so as to operate effectively and efficiently.
MAIN BODY
Corporate Governance:
Focus Logistics Pty Ltd is seeking advice on the good corporate governance practices in its
respective industry of logistics (Ali, Liu and Su, 2018). Therefore, some of the good corporate
governance practices relevant for Focus Logistics Pty Ltd can be discussed as follows –
a. Responsibility towards the society and the environment – Working and operating in the
environment, around the environment and within the society exerts a moral responsibility on
the organisations to be responsible towards the environment as well as the society. Any harm
caused to the environment and to the society shall be corrected and compensated by the
organization as a part of its corporate governance (Corporate Governance. 2022). Logistics
companies naturally, are responsible for the emissions from its vehicles of transportation
which causes harm to the surroundings in which it operates along with the people living in its
area of operations.
The given data and information suggests that the investors are deeply concerned about
the enormous carbon footprints due to the operations of Focus Logistics. This can be proven
by the fact that almost 2 million litres of diesel per annum is consumed alone by the B-
Double trucks and on top of that the fuel consumption by its own fleet of trucks along with
the hundreds of sub-contractors is unknown. Such is the adverse effect of the trucks operated
for the working of Focus Logistics.
What is more concerning being that Mrs. White is completely ignorant of such a serious
issue and is stuck on the fact that it has been their age old practice and is simpler? But David
Rose shows serious concern towards the issue and aspire to be the pioneer for others in the
area of corporate governance,

b. Relationship with customers – The ultimate objective of any business is to bring the
customers and retain them. Such retention is possible when the business is imparting a value
for its services to the customers and imparting customer satisfaction. The customer and
business needs to be in a partnership to allow both the parties to thrive in their respective
fields. Such a partnership can be established only by the sense of trust among the customers.
Now, creation of value for services by the businesses is an art is achieved by knowledge,
experience and expertise. The more the business is in the field and is efficient the more will it
be knowledgeable, experienced and expert.
From the given information it can be seen that it was established in 1965 which shows it
is an old company thus has been in the industry for a very long time and thus has a very rich
experience, knowledge and expertise which can be proven by the fact that it has shown a
fantastic steady growth for the next 30 years and even expanded in other locations namely –
Victoria, New South Wales and Tasmania.
By 1997, Alice took over the company and then the company never looked backwards
and showed a tremendous growth in customer base from 28 customers in the year 1970
which increased to 650 customers in the year 1997 to an enormous base of 11,500 customers
in the current times.
c. Unbiased management personnel – Biased working approach by the top level management
like founder, chairperson, chief executive officer, chief financial officer, chief operating
officer, etc. leads to abnormalities in the working of the organisation and objectives and goals
will not align to the collective benefit of all the stakeholders i.e., someone’s interest in the
organisation will be hampered (Qu and et.al., 2018). It is a must that all the personnel of the
organisation shall work in one direction towards the achievement of common goal to achieve
collective benefit.
The top level management composition of Focus Logistics Pty Ltd mostly comprises of
family members and close friends and in addition, those personnel are of the different view
regarding various issues of corporate governance, sustainability reporting, etc.
This causes another serious concern among the investors that there is a lack of control on
the operations and reporting of the company and the review of management are biased of the
reviews of performances with a clear absence of board committees in the company (Kolev
and et.al., 2019).

The board is of the view that there is no requirement of making sustainability report
decided unanimously considering it a non-value adding activity. And is also of the view that
reporting on the work of family members is not morally correct though supporting the regular
reporting and review of performance. Such views and methods of board and management is
leading to the down grading of the quality of the operations of the company which shall be
duly considered by the investors (Huang, Lu and Wee, 2020).
d. Disclosure and transparency – It is a good corporate governance practice to follow the
appropriate and applicable disclosures applicable to the logistics business. Such disclosure
and transparency focusses mainly on the four areas of the company namely – structure of
shareholding, annual reports disclosure to be of optimum quality, related party transactions
disclosure to be of optimum quality and sound channels of communication.
As it can be seen that Focus Logistics’ top management mainly comprises of family
members and close friends therefore, quality of disclosure of related party transactions is
compromised and disclosures in various types of report is being ignored by the management
claiming them not to be mandatory and of non-value adding nature.
Such a behaviour of the management is not appropriate as the stakeholders will make a
negative image of the company as it is not fully disclosing all the relevant information useful
to the potential investors and operations of the company are also not transparent as Jacob
Gardner is of the view that the decision making process of the board is hindered by such
corporate governance and also makes it complicated leading to lesser creativity and
innovation (Boiral and Heras-Saizarbitoria, 2020).
Also, he is of the view that since there are no tax troubles so there is no need to be worried
about compliance issues and in case of any levy of penalty or fine it can pay so instead of
following the complex procedure of such reporting and governances.
Sustainability Reporting:
Devising and following sustainable strategy leads to saving of costs to the company and
resultantly, to the customers by reduced prices for the products and services. Such sustainable
reporting leads to motivation of the employees as they know that their efforts are not going in
vain and they are a part of the tangible difference brought by the company for the society at
large. Reporting on various issues allows the company to emphasis on the areas which were

otherwise neglected by the company or overlooked by considering as not necessary (Why report?
2022). This way the company knows what’s working for the company and what is not. Such a
reporting is also a kind of compliance and more compliance the company is able to fulfil more
responsible it will appear to its stakeholders. The stakeholders and investors will be more
confident towards the company which is duly reporting externally as well as internally.
Now as everything has its advantages and disadvantages, sustainability reporting has some
challenges also. It is a time consuming process and requires lot of transitions among the
company and its employees and patience too. Also, the implementation needs to be monitored
that whether the implemented processes are working as they should and shall be corrected if not.
Reporting of sustainability obviously requires additional expenses to be incurred by the company
on the surveys and collection of data to be disclosed in the report and the additional work force
to be employed in relation to such collection of data, processing of data and analysis of data.
There are a lot of changes to be done in the business model to implement the reporting of
sustainability along with other reporting and this will make the business model and hard to
communicate to the personnel and make them understand it. The sustainability reports cannot be
compared universally as different sustainability issues apply to different companies and thus the
reports formed cannot be compared on the basis that certain information does not apply to the
company or certain information is unavailable or the company is not legally allowed to provide a
certain information.
Key elements to be included in the sustainability report of the logistics industry are –
 Stakeholders’ Decision Making – One of the most important element to be considered in a
sustainability report is to enable the stakeholders an effective decision making. The contents
of the sustainability report shall be such that the stakeholders can make a wise decision.
Focus Logistics’ sustainability report shall also be such that the stakeholders and investors
can determine the line of actions regarding the company.
 Appropriate Base – The sustainability report shall be made on the basis of an appropriate
base, rules, regulations, framework, etc. Such adherence of frameworks and rules supports
the effectiveness of the report thus formed (Hossain, 2018). Also, the users of the report will
be more satisfied with the performance of the company if an appropriate base is used for the
preparation of such report. Global Reporting Index (GRI), Sustainability Accounting

Standards Board (SASB), etc. are some of the global sustainability reporting frameworks
applicable and followed by the companies around the world (Thomas, 2019).
 Standardisation, Benchmarking and related progress – A report will obviously contain
various surveys and analysis of varied aspects of the entity and result of such surveys and
analysis will be then compared from various relevant standards and benchmarks. Thus, it
allows to determine whether the standards and benchmarks were efficiently met by the entity
and if not met then what were the reasons for such deficiencies.
Associated Risks & their Management:
Such risks may generate from various sources like natural calamities, errors of management,
technological issues, legal liabilities, financial uncertainties, etc. (Dumay and Hossain, 2019).
Managing of the risk will lead to safeguarding of entity from the potential threats on it and the
adverse impact they could have on the organisational objectives and goals (Amarasena, Haag and
Peres, 2019). Various risks associated with logistics business of Focus Logistics are as follows:
 Shortage of drivers and their retention – One of the major risk associated with the
logistics business is shortage of drivers and if the drivers are available, then their retention in
the business. It can be said that demand for drivers is way more than the availability of the
drivers and number of drivers leaving the jobs is very high.
 Fuel prices – The most crucial risk associated with such logistics business is increase in the
fuel prices which leads to respective increase in the transportation costs. And cutting of
transportation costs is the main focus of any logistics business therefore, increase in fuel
prices will naturally hinder the objective of controlling the transportation costs.
 Government regulations – Government has formulated and implemented various laws and
regulations to control the activities of the entities which are affecting the environment
adversely and thus, compliance of those laws and regulations leads to incurring of more costs
than the benefits it may be enjoying from such compliances.
 Delay in transportation and theft – Another risk associated with the logistics business is
delay in the transportation of goods to the destination and thus failing to fulfil its
commitment on time and thus risking its objective of customer satisfaction. Also, theft of the
goods in transit is a risk which the company shall consider and implement security measures
or insurance policies for such theft.

Now minimizing the above risk will be obviously beneficial to the company as the company
will be able to retain its drivers and thus effectively addressing the issue of shortage of drivers
(Howlett, Leong and Sahu, 2022). Management of business more efficiently to earn more profits
and thus mitigating the risk of increase in transportation costs due increase in fuel prices.
Employing an able work force for the tackling of government regulations will allow the company
to focus on its core business activity. And implementing appropriate security measures to avoid
theft of the goods in transit and planning the transportation in such a way to avoid an unexpected
delay if any will also be very beneficial to the entity.
CONCLUSION
Thus, referring to the above concluded report it can be said that Focus Logistics needs to
implement various changes in its operations and management to avoid the risks of environmental
hazards, losing its customer bases and also losing its investors due to various arears in which it is
not ready to bring the change like corporate governance and sustainability reporting.

REFERENCES
Books and Journals
Ali, S., Liu, B. and Su, J. J., 2018. Does corporate governance quality affect default risk? The
role of growth opportunities and stock liquidity. International Review of Economics &
Finance. 58. pp.422-448.
Amarasena, N., Haag, D. and Peres, K. G., 2019. A scoping review of caries risk management
protocols in Australia and New Zealand. Australian Dental Journal. 64(1). pp.19-26.
Boiral, O. and Heras-Saizarbitoria, I., 2020. Sustainability reporting assurance: Creating
stakeholder accountability through hyperreality? Journal of Cleaner Production. 243.
p.118596.
Dumay, J. and Hossain, M. A., 2019. Sustainability risk disclosure practices of listed companies
in Australia. Australian Accounting Review. 29(2). pp.343-359.
Hossain, M. M., 2018. Sustainability reporting by Australian local government authorities. Local
Government Studies. 44(4). pp.577-600.
Howlett, M., Leong, C. and Sahu, S., 2022. Managing internal policy risk: Australia, the UK and
the US compared. Policy Design and Practice. 5(2). pp.152-163.
Huang, P., Lu, Y. and Wee, M., 2020. Corporate governance analysts and firm value: Australian
evidence. Pacific-Basin Finance Journal. 63. p.101430.
Kolev, K. D. and et.al., 2019. Board committees in corporate governance: a cross‐disciplinary
review and agenda for the future. Journal of Management Studies. 56(6). pp.1138-1193.
Qu, X. and et.al., 2018. Executive stock option vesting conditions, corporate governance and
CEO attributes: Evidence from Australia. Accounting & Finance. 58(2). pp.503-533.
Thomas, E. A., 2019. How Useful Is the Global Reporting Initiative (GRI) Reporting Framework
to Identify the Non-Financial Value of Corporate Social Performance (CSP)?
In Responsible business in uncertain times and for a sustainable future (pp. 37-87).
Springer, Cham.
Online
Corporate Governance. 2022. [Online]. Available through: < https://www.logwin-
logistics.com/company/investors/governance.html>
Why report? 2022. [Online]. Available through: < https://www.globalreporting.org/how-to-use-
the-gri-standards/>
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