Prostay Ltd: Risk and Value Management Report - Expansion Project

This report presents a risk and value management analysis for Prostay Ltd, a food manufacturing company specializing in canned goods, considering a proposed expansion. The report begins with a project overview, including the company's current operations, location, and the context for expansion. It then addresses the need verification, presenting a letter from the project manager to the board of directors outlining the justification for expansion. The core of the report focuses on identifying and assessing various potential risks associated with the expansion, including legal and compliance issues, operational infrastructure challenges, and risks related to product quality. A risk register is provided, detailing specific risks, their control ratings, and risk scores. The report also includes a disaster recovery plan and discusses environmental and technological hazards, such as extreme weather, climate change, and security breaches. The analysis incorporates strategic fit considerations, benefits and costs, and comparison with other proposals. Financial and time risks are also addressed. The report concludes by emphasizing the need for proactive risk management to ensure the success of the expansion project. The company aims to expand its production facilities and market reach within the European Union. The report also highlights the importance of a robust disaster recovery plan, considering environmental and technological hazards.

Management

Table of Contents
Project Overview.............................................................................................................................3
Need Verification.............................................................................................................................3
Possible Risks..................................................................................................................................5
Risk register.................................................................................................................................6
Disaster recovery plan.....................................................................................................................7
Environmental hazards................................................................................................................7
Extreme weather conditions....................................................................................................7
Climate change........................................................................................................................7
Technological hazards.................................................................................................................8
Security breach........................................................................................................................8
Misuse of assets and finance....................................................................................................8
Reference List..................................................................................................................................8

Project Overview
The Prostay Limited is a business enterprise that produces packaged food, specializing in canned
fish and meat. The primary business of the company is manufacturing canned meat and fish
which is distributed throughout various locations of Europe and the United Kingdom. The
company is located at the Industrial Park of the tricky town of the United Kingdom and has a
small village and three housing estates nearby. The total population living in the nearby areas is
approximately 3000. A river passes by the site boundary of the factory. The river is home to
various kinds of fishes and hence supports the small scale fishing industry of the local area. The
company has been operating in the present location since the last 30 years it is suitable for its
business due to the rail networks and nearby roads that are used by the company for transporting
the finished products as well as the raw materials.
Need Verification
The Board of Directors
Prostay Limited
Date – 03/03/2019
Subject – Verification for extension and expansion of worksite and business
Dear Directors
It has come into notice that our company has been struggling to meet the big increase in the
demand of our products by our customers living in the countries of the European Union.
Consequently, many of the shareholders of the company have come up with the proposal that the
factory should be extended along with the facilities of production for taking the necessary
advantage of the growth in the demand from the consumers which would help the company in
increasing the overall market share and gaining competitive advantage. The extension and
expansion would involve considerable building works of a new factory at various locations of
Europe as well as installation of new machinery and equipment and upgrade of the existing
equipment of the factory. Such an upgrade of the old equipment and machinery and the new
equipment can be imported from the other countries of Europe. Although there has been a

scenario of objection from a significant section of the community living nearby our factory
location regarding the extension and expansion of our factory facilities and production activities,
since they were adversely impacted why the incidence of explosion and flooding which
happened recently, the advantages and benefits of such expansion would outweigh the risks and
disadvantages.
Since a certain level of success has already been achieved by your company, as it has been
operating for the last 30 years, it is now the time for expanding into new markets. Careful
understanding of the pitfalls and other aspects regarding growth would be required prior to the
expansion of the business (Kumar et al., 2012). As mentioned earlier, in spite of some drawbacks
and disadvantages, the benefits of growth and expansion of the business would help the company
in taking the right decisions which would further help in gaining a competitive advantage and
sustainability in the long-term (Peterson, Arregle, and Martin, 2012).
First of all, expanding the business would help the company in reaching out new customers and
new markets. Even though our company is equipped with a well mined base of customers, we
have the big opportunity of adding new customers by the means of expansion (Hens, 2012). The
old customer base would be retained, and sidewise an appeal would be made towards a new set
of customers would be interested in our products and services. Secondly, another great benefit of
expansion into new markets would be the economies of scale because when our business would
grow, the suppliers and vendors would be more incentivized for providing us with discounts
since we would be ordering in huge quantities (Bianchi, 2011). Usually, the more we order from
suppliers the bigger discount we would get from them. This implies that they would be paying
less for getting more of the supplies that we need from the suppliers which ultimately means that
more about the finance of the company would move towards making it more profitable.
The other two big advantages of expansion of a business are establishment of multiple streams of
revenue and branding opportunities (Shenkar, Luo and Chi, 2014). Expanding our existing
business would typically provide us with the opportunity of offering a wide range of services and
products to our customers (Jonsson and Foss, 2011). As such, we would be able to diversify our
revenue stream that means we need not rely upon one single product or service. Finally,
expanding our business into new and emerging markets would also provide us with the
opportunity provider brand recognition (Rugman, Verbeke and Nguyen, 2011). The more market

our business would be spread into, the more people would know about our products and services,
and subsequently our brand image and recognition wood expand is well.
As mentioned earlier, the benefits of expansion of the business easily outweigh the drawbacks
and challenges and hence, extending the worksite an expanding our business into newer markets
of the European region would benefit the company in the long run. The majority of our
shareholders are in the favour of such expansion and hence in order to satisfy the interest of
shareholders and ensure the benefit of our company, I would suggest the expansion decision
should be incorporated.
ABC
The Project Manager
Prostay Limited
Possible Risks
There are various risks of expansion of a business into new markets.
The first and the foremost risk of expansion is related to legal and law related compliances. Due
to various factors such as customer demands, ethical responsibility and agency oversight,
business companies usually tend to take little amount of risk in the context of operations
compliance (Pfohl, Gallus and Thomas, 2011). The companies which are smaller in scale and are
in the growth stage usually take greater level of risks with compliance related to employees.
The second most common factor of risk seen during expansion of businesses is related to the
under development of operational infrastructure for business. Most of the growing businesses are
so much emphasized up on the capability of producing, only a minimum amount of effort is
spent on building the infrastructure of operations of the company for sustaining the growth over
a period of time (Wilkins, 2016). The infrastructure of any company is referred as systems which
is considered to be the second most important factor of any organization (Cavusgil, et. Al.,
2014). The systems include communication channels, planning, work procedures, decision
making, performance management, information processing, measures and objectives, policies

and rules, and much more. The other common risks related to expansion of business include the
inability of capturing key information and declining quality of the products and services.
Need Verification report
Strategic fit
The strategic fit for the project implies the implementation of the appropriate strategy with
regard to the expansion of the project and the feasibilities involved in such a strategy. It is
imperative that there are risks involved in the project expansion which may lead to the thwarting
of the strategy for the project.
Benefits and costs
The new factory would have the state of the art facilities as far as the concept of modernization is
concerned. It would meet the needs of the market in the desired manner as far as the European
Union is concerned with regard to the addressing of the needs of the people. It also involves the
refurbishment and overhauling of the existing equipment. However, the inclement weather off
late would lead to the resistance for the building of the new factory at the site as far as expansion
is concerned as it has affected the local population to a considerable extent. The recent incidents
pertaining to explosion would also pose huge risks to the installation of the factory. As a result, it
is imperative that the factory expansion at the said area would affect the local population to a
huge level.
Comparison with other proposals
There are various proposals made by the shareholders of the company. One of the most notable
proposals is the building of a factory in Eastern Europe as far as the addressing of the demands
of the respective market is concerned. In this regard, the market research and analysis of the
respective area of Eastern Europe needs to be carried out in a proper and appropriate manner
thereby implying the viability for the factory with new equipment to be installed accordingly. As
a result, it would be determined and indentified which area would be beneficial for the
installation of the factory with new equipment.
Justification

The proposed project is to cater the needs of the market in an incredible manner. The
incorporation of the new equipment would help in the productivity in a better manner thereby
leading to the better outcomes. It is to be seen upto what extent the local population is to be
benefitted from the new project.
Financial risks
The risks pertaining to finances would involve the escalation in costs with regard to the
installation of the project in the desired manner. It may involve the lack of fiancés with regard to
the investment in the installation of the factory accordingly.
Time
The management of time would also be a risky factor as far as the installation of the factory is
concerned accordingly. It is to be seen whether the stipulated timeframe would be met with
regard to the project in a proper and appropriate manner.
Risk register
Activity Risk Control rating Risk score
Maintenance of
existing systems
Inadequate IT
system – does not
meet the needs of
the business
Low
20
Maintain
sustainable and
skilled workforce
Inability to provide
adequate skill mix
to deliver services
High
20
Recruitment Non-compliance
with Public Sector
Low
16

Standards in HR
Management &
Ethical codes
Maintenance of
existing systems
Business
interruption due to
failure of IT system
High
16
Maintain
sustainable and
skilled workforce
Inadequately skilled
staff
High
16
Disaster recovery plan
The alternatives with reference to contingency must be taken into consideration as far as the
recovery from disaster is concerned. It implies the following an appropriate procedure pertaining
to evacuation accordingly thereby providing them with the appropriate shelter along with food
and clothing on an emergency basis and addressing the issies cased by calamities on an
immediate basis. It also involves compensation in the ofrm of relief accordingly.
Environmental hazards
Environmental hazards have the potential capability of affecting any business and its operations.
The environmental hazards include climate change, extreme temperatures, fires and floods,
natural disasters like earthquakes, landslides, etc.
Extreme weather conditions
Extreme weather conditions including cool, or hot temperature, strong winds, hail natural
disasters like flood of fire can greatly impact the business. It's important for planning for such
events and it is equally important for understanding the employer obligations towards the
employees and workers of the company in managing the weather conditions. (Wedawatta, et. Al.,

2011) As an employer of the business, one is legally obliged towards providing a safe
environment for the workers and keeping them safe during the extreme weather conditions or
disasters.
Climate change
Climate change has the potential of affecting businesses by changing the patterns of the weather.
Climate change mitigation can be obtained by decreasing the carbon emissions from the normal
operations of factories and companies which can help in minimising the effect of climate change
in the nearby future (Linnenluecke and Griffiths, 2010). Various steps can be taken for limiting
the carbon emissions released by factories and businesses. Reliance upon raw materials should
be decreased and recycled and reusable products should be used in order to minimise the waste.
Water and energy resources should be utilised in the most efficient manner possible. Finally, the
products and services which are to be produced by the business should be eco-friendly. In this
case, the tin cans within which the meat and fish would be packed should be reused and recycled.
Technological hazards
Security breach
Security and information breach within companies is nowadays a very common problem which
has the potential ability of affecting the day to day operations, revenue, profitability an overall
position of a company within a market. The confidential files that contain sensitive data of
employees and the senior employees are usually stored within the database management of the
company. If proper technological prevention is not taken and significant security is not ensured
within the database, the information of the business can be stolen.
In order to mitigate the risk of security breach, is necessary steps can be taken by the company.
The tools, guidelines and methodologies of risk assessment should be refined, disseminated and
developed. In order to prevent technological accidents, risk mitigation actions and frameworks
like plant and process designs, land usage planning and skills training can be used.
In order to mitigate such hazards, should be made regarding not providing normal Access for the
employees of the company and implementing various software tools for managing the assets and
Finance of the company.

Malfunctioning of technology
It involves the impairment of technological functions which may thwart the productivity to a
massive level. As a result, it would lead to damages in the form of low productivity to a massive
level accordingly

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