Risk Management Report: Risk Assessment for Business Acquisition

This report presents a comprehensive risk management analysis for MacVille Pty Ltd concerning the acquisition of Hurley's Cafe. It begins with an introduction to the business context, including the strategic importance of the acquisition for MacVille's expansion. The report then examines th...Read More

Running head: RISK MANAGEMENT
Risk Management
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
Introduction:....................................................................................................................................1
Assessment Task 1:..........................................................................................................................1
Part 1................................................................................................................................................1
Part 2................................................................................................................................................2
Part 2a..............................................................................................................................................2
Part 2b..............................................................................................................................................3
Part 2c..............................................................................................................................................3
Part 2d..............................................................................................................................................3
Part 2e..............................................................................................................................................4
Part f.................................................................................................................................................7
Part g................................................................................................................................................7
Part 4................................................................................................................................................7
Part 5................................................................................................................................................8
Parts 6 and 7.....................................................................................................................................9
Part 6a..............................................................................................................................................9
Part 6b..............................................................................................................................................9
Part 6c............................................................................................................................................10
Part 6d and 6e................................................................................................................................10
Assessment Task 2:........................................................................................................................10

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Part A.............................................................................................................................................10
Part 1..............................................................................................................................................10
Part 2..............................................................................................................................................11
Part 2a, b,d and e............................................................................................................................11
Part c..............................................................................................................................................12
Part 3..............................................................................................................................................13
Part 4..............................................................................................................................................13
Part B.............................................................................................................................................13
Part 1 and 2....................................................................................................................................13
Assessment Task 3:........................................................................................................................13
Part 1..............................................................................................................................................13
Part 2a.i..........................................................................................................................................13
Part 2a.ii.........................................................................................................................................14
Part 2a.iii........................................................................................................................................14
Part 2a.iv........................................................................................................................................14
Conclusion:....................................................................................................................................14
References:....................................................................................................................................15

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Introduction:
Merger and acquisitions is one the most common business strategies which business
organizations adopt to strengthen their market positions. Singh (2018) mentions in this respect
that the acquisition of firms calls for restructuring of the operations of both the acquiring firm
and the subsidiary firm being acquired. Trkman, Budler and Groznik (2015) mentioned in this
respect that the management of the acquiring company has to ensure that the operations of the
subsidiary being acquired are strategically aligned to its operations. Lack of alignment of
operations of the subsidiary firm can lead to failure of the acquisition, thus posing risks to the
business of the acquiring firm. The acquiring firms in order to avoid the business risks which
would stem due to faulty acquisitions often conduct risk analysis of their target subsidiaries prior
to acquisitions. The aim of the report would be conducting risk assessment of subsidiary firms
prior to acquisition and forming appropriate strategies to minimize these identified risks to the
feasible extent. The background of the risk assessment would be provided by MacVille Pty
Limited and Hurley’s Café. The former owns a chain of cafes in Queensland and New South
Wales. MacVille Pty Limited is looking forward to expand its foothold in Queensland and in
pursuit of achieving this business goal, the firm decides to acquire Hurley Café, a sole proprietor
café located close to Brisbane CBD, The research would assess the present operational methods
of Hurley’s Café to identify the risks and adopt appropriate risk management strategies on the
same from the view point of MacVille Pty Limited.
Assessment Task 1:
Part 1.
A review of the business operations of MacVille Pty Limited brings into the light several
salient aspects about the company. First of all, the company operations under the leadership of a

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strong management team with the CEO at its helm. This means that the company has a well-
established hierarchy of control which is one of the factors responsible for its strong risk
management policies. The second aspect of the company which surfaces upon review of the case
study is that the mission of the company is serve superior quality coffee at legitimate prices. The
mission of the company is also to offer a secure café environment to the customers which again
points out to the strong risk management policies of the company. The mission of MacVille also
involves training of employees to offer superior services to customers and achieve the first two
missions. The vision of MacVille is to offer superior café experience to customers. The vision of
the company also includes the establishing its foothold in Queensland and New South Wales by
opening new outlets. The decision of MacVille to acquire Hurley’s Café can be viewed as the
practical implementation of its vision. The third fact which surfaces as the outcome of the
analysis of the case study is that company has strong corporate governance and risk management
policy which commenced under the stewardship of Finance, Audit and Risk Management
(FARM) Committee which in turn operates under the leadership of the apex management. The
fourth facts which surfaces upon analysis of the case study is that MacVille was financially
strong which is evident from the fact the company is expanding its chains of outlets.
Part 2.
Part 2a.
The risk management framework of MacVille was well aligned with the eleven principles
of AS/NZS ISO 31000:2009. This is evident from the fact that the risk management framework
of the company is aligned to its very mission, vision and organizational culture which shows
compliance with the principles of AS/NZS ISO 31000:2009. The risk management framework of
the company functions under the leadership of the apex management and the involved all

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employees. The firm as per AS/NZS ISO 31000:2009 principles has risk audit conducted both
internally by FARM and external consultant which enabled it to maintain transparency of risk
management. (Finance.gov.au. 2019).
Part 2b.
The scope of the risk management which the assistant management would consider
would consist of three main components. The first component would consist of carrying out risk
analysis of Hurley’s Café. The second component would include communicating the risks
identified to the apex management and the FARM committee. The third component would
include as per the directions of the apex management and the FARM committee. The scope of
the operations of the assistant manager would not include operations or investigations pertaining
to any other subsidiary of MacVille, present as well future.
Part 2c.
The critical success factors of risk management goals of MacVille are its financial
strength and its strong risk management framework under the stewardship of the FARM
Committee. These two success factors are in turn supported by the strong leadership and the
strong channel of formal communication which prevailed in the company.
Part 2d.
Stakeholders of MacVille Pty Limited
Stakeholders Role in the
process Role in the process Stake in the process
Managament
of MacVille
Pty Limited
Internal The management of the body would
make risk management policies
Higher profits
Employees of
MacVille Pty
Limited
Internal
1. Implements risks strategies made
by the management. Performance appraisals,
promotions, higher salary and
professional opportunities2. Interacts with external

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stakeholders like
patients(customers), suppliers of
coffee and dairy products
3. Communicates the feedback from
external stakeholders to managers
Government
of Australia External
1. Forms bilateral agreements with
other countries which allows
companies get access to technology Taxes, Employment
opportunities generation3. Encourages innovation in
sustainable medical service
provisions to people in Australia
Government
of
Queensland
External
1. Forms collaborations with other
state governments which allows food
firms get access to modern
technology to operate outlets and to
implement NPD
Taxes, Employment
opportunities generation
2. Makes IPR laws for cafes and
restaurants offering products and
allows them protect their innovations
from infringements
3. Encourages innovation in
sustainable manufacturing of
products by providing facilities like
tax rebates and awards
Customers External
Supports government by pressuring
companies to operate in more
sustainable ways
Appropriate conduct as a
corporate citizen
Suppliers
External Supply superior quality raw mater
supplies
Receiving of repetitive orders
for food supplies providing
bodies and timely payments as
per procurement contracts
Financing
companies
External
Provides financial assisstance to the
Queensland Health and the
Government of Queensland and
provide fintech gateways to the
company
Puchase of more financial
products
Society External Encourage companies to
manufacture sustainable products
Operate in ways to reduce
environmental damage
Investors External Capital Higher ROI
Part 2e
Factors Sub factors Opportunity/
threat Explanation

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Political
Government
stability and
formation of
policies
Opportunity
The Government of Australia is stable. The
government functions at the union level and state
levels. The union government forms policies and
laws. The state governments like the Government
of Queensland execute the laws and policies at the
respective state levels. For example,
theToowoomba Council formed laws to regulate
the operations of the cafes.
Political International
relationships Opportunity
The Government of Australia has strong bilaeral
relationship with most of the countries in the
world. This enables the state governments like
Government of Queensland get access to foreign
resources.
Political Forms laws Opportunity
The Government of Australia both at the union
and state levels forms laws like the SafeWork Act
(Safeworkaustralia.gov.au. 2019)
Political Corruption and
bureaucracy Threat
The government of Australia suffers from
corruption and bureaucracy both the central level
and state levels. This inhibits dynamic decision
making as the authority to take decisions is limited
to the high level employees.
Economic High rate of GDP Opportunity The GDP rate of Australia is very high
(Tradingeconomics.com. 2019)
Economic
The value of AUD in
the foreign
currency market
Threat The position of the AUD is weakening against the
major international (Bloomberg.com. 2019)
Economic Financial strength Opportunity Australian market owing to its booming economic
conditions is financially strong.
Social Falling per capita
income in Australia Threat
The country is heading towards a recession which
means that the residents would earn less. This
means that the residents of the country would
have less disposable income to afford expensive
cafes
Social
Changing in
product
preferences of
consumers
Both The government bodies and companies have to
invest immense capital towards development of
new products
Technologica
l
Availability of
advanced
technology
Opportunity
Australia is technologically advanced with strong
presence of global companies like Starbucks
capable of poaching customers
Technologica
l
Advanced
technology renders
current technology
redundant
Threat
Continuous advancement of technology require
companies and government bodies to replace old
software with new ones. This demands continuous
investments in technology.

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Technologica
l Data thefts Threat Loss of data, business losses and long term growth
impairment
SWOT of MacVille:
Strengths: Weaknesses:
1. Financial strengths: MacVille is financially strong.
It is a private limited company and can source capital
from the corporate investors. The financial strength is
evident from the business expansion strategy of the
company by acquiring Hurley's café
1. Lower competitive strength:
MacVille owing to its lack of goodwill
and market image compared to the
multinational companies would find it
difficult to obtain immense customers
in new markets
2. Huge customer base: MacVille would serves an
immense customer base.
2. High operating costs: Operating in
offline and online business attracts a
huge operating costs compared to the
revenue generated.
3. High quality products: MacVille markets high
quality products.
Opportunities: Threats:
1. Digital expansion: MacVille should strengthen its
digital format. This would enable it to generate high
revenue by marketing its products to customers
online
1. Cyber threats: MacVille on entering
the digital platform would also expose
itself to cyber threats.
2. Marketing of products: MacVille should market its
products to generate higher revenue.
2. Legal issues: MacVille would be
required to comply with laws
pertaining to internet operations and
ecommerce businesses. This would
require the company to employ
specialists.
3. Generating higher capital: MacVille would be able
to provide information about its products, financial
performance and other business related facts on its
official website. This would enable it attract more
capital by projecting a more transparent image before
the investors.

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Part f.
The researcher has adopted qualitative analysis of secondary data to conduct SWOT and
PEST analysis. The secondary data included journals, articles and internet websites.
Part g.
Risk management plan
Risk
Assess
Risk
(L, M,
H, E)
Controls Monitoring Timelines(months) Responsible
Banking
risks H
1. Depositing cash into
bank regularly and
keeping cash in hand in
secured vault.
2. Accounting done by
specific employee with
strong accounting
knowledge
CFO, CEO
and FARM
Committee
1
Respective
managers
and
assisstant
managers
Manager’s
travel risks H
1. Providing transport
services to employees
2. Following traffic rules
CFO, CEO
and FARM
Committee
2 Apex
management
Legal and
compliance
risks
H
1. Marketing the
restaurant products.
2. Creating special
edition food items.
CFO, CEO
and FARM
Committee
3
Respective
managers
and
assisstant
managers
Loss of
brand
recognition
risk
E
1. Marketing of
products.
2. Gaining support of
stakeholders in its
introducing more
innovative and new
products.
CFO, CEO
and FARM
Committee
4
Respective
managers
and
assisstant
managers
Part 4.
To. Official email ids of the stakeholders
From: Official email ids of the assistant manager

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Subject: Risk management at M/s Hurley’s Café
Dear Sir/Ma’am,
This is reference to the acquisition of M/s Hurley’s Café by M/s MacVille Pty Limited. The
management of MacVille is looking forward to acquire Hurley’s Café as a part of its business
expansion strategies. A thorough risk assessment of the same was conducted and the findings of
the same has been attached for your kind perusal. It is a humble request to your good self to
provide your input and assist in identifying the additional risks, if any.
Regards
…………(name and designation of the assistant manager)
Part 5.
To. Official email id of the CEO
From: Official email ids of the assistant manager
Subject: Risk management at M/s Hurley’s Café
Dear Sir/Ma’am,
This is reference to the acquisition of M/s Hurley’s Café by M/s MacVille Pty Limited. The
management of MacVille is looking forward to acquire Hurley’s Café as a part of its business
expansion strategies. A thorough risk assessment of the same was conducted and the findings of
the same has been attached for your kind perusal. It is a humble request to your good self to
provide an approval to hold a meeting with you to discuss on the same.
Regards

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…………(name and designation of the assistant manager)
Parts 6 and 7.
Part 6a.
The following are the main findings regarding the critical success factors of the risk
management strategy of MacVille:
 Financial strength
 Strong management under the leadership of the CEO
 Strong risk management framework under the leadership of the FARM Committee and
the apex management.
 Strong involvement of the employees
 Compliance with the laws in power in Australia
 Strong communication between the employees holding different designations.
 Recommendations:
 The workers of Hurley’s Café should be provided training on WHS risk
management.
 The management of MacVille should implement its risk management policies on
Hurley’s Café right after acquisition.
Part 6b.
The risk management process of MacVille operates under the leadership of a strong
management which complies with the risk management policies like ISO 31000:2009. The risk
management process was supervised by the FARM committee and follows the established lines
of control.

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Part 6c.
The stakeholders both internal and external stakeholders would be invited to participate
in the risk management strategies of MacVille. The management should choose appropriate
communication to communicate with them. For example, in order to communicate with the
employees, the appropriate mode of communication would be face to face meetings and emails.
The appropriate communication channel to communicate with the customers would be PR while
the government departments would be communicated by sending formal letters on the letter of
MacVille.
Part 6d and 6e.
The support of the CEO would be obtained in the risk management activities. The CEO
would also be asked to provide her input towards recognizing additional risks.
Assessment Task 2:
Part A.
Part 1.
A review of the case study reveals that MacVille is a financially strong company owning
chains of café in Queensland. The company works under the leadership of a strong management
working under the CEO. The strong apex management contributed towards the strong risk
management framework of the company. One can also point out upon analysis of the case study
that MacVille conducted a thorough risk assessment of its future subsidiaries like Hurley’s Café
in order to ensure strategic fit with the latter.

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Part 2.
Part 2a, b,d and e.
Risk Scenario Likelihood Consequences Priorities Treatment
ways
Likely
to be
effective
Feasible
Risk 1:
Banking
risks
1. The
management of
the Hurley kept
no record of the
cash
transactions and
any employee
could record
financial
transactions.
2. 2. There have
been thefts of
cash.
High
1. Financial
loss
2. Shortage of
capital
3. Improper
audit.
4. Ethical
practices to
hide
accounting
discrepancies
High
1.
Depositing
cash into
bank
regularly
and keeping
cash in hand
in secured
vault.
2.
Accounting
done by
specific
employee
with strong
accounting
knowledge
Yes Yes
Risk 2:
Manager’s
travel risks
1. The way is
blocked by
trucks.
2. Prone to
accidents and
physical injury
High
1. Delay in
transports.
2. Accidents
would cause
damage to the
safety of
managers and
financial loss
to the
company.
Very
high
1. Providing
transport
services to
employees
2.2.
Following
traffic rules
Yes Yes
Risk 3:
Legal and
compliance
risks
1. Loss of brand
reputation due to
inefficient
business
management
2. Fines and
penal charges
due to wastage
of resources like
water.
Medium
1. Loss of
goodwill.
2. Increase in
legal costs
High
1.
Marketing
the
restaurant
products.
2. Creating
special
edition food
items.
Yes Yes
Risk 4:
Loss of
brand
recognition
risk
1. The staff at
the Hurley’s did
not wear
MacVille’s
uniform
2. The Hurley’s
staffs may try to
alter or distort
signature
High 1. Customer
poaching by
competitor
restaurants.
2. Reduction
in generation
of revenue
High 1.
Marketing
of products.
2. Gaining
support of
stakeholders
in its
introducing
more
Yes Yes

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processes of
customer service
of the MacVille,
innovative
and new
products.
Part c.
Part 3.
Attached

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Part 4.
The findings from the analysis of the risk assessment of Hurley’s Café would be
submitted before the board of directors of MacVille. The tables showing details like the risks
identified, risk management strategies and stakeholders should be attached to the report.
Part B
Part 1 and 2
Attached
Assessment Task 3:
Part 1.
The review of the case study shows that MacVille in order to strategic fit and profit
maximization post acquisition conducts risk assessment of its future subsidiaries. This proves
that the firm has a strong risk management framework in place which operates under the
guidelines of standards like AS/NZS ISO 31000:2009 (Finance.gov.au. 2019). The strong risk
management framework of the company is in turn supported by the strong apex management, a
committee called FARM dedicated to risk management in place, the financial power of the
company and strong communication channels.
Part 2a.i.
Attached
Part 2a.ii.
Attached

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Part 2a.iii.
The outcome of the risk management strategies mentioned at Hurley’s Café would enable
MacVille reduce the risks in the former post acquisition. This would enable the latter to establish
higher levels of strategic and maximize its profits.
Part 2a.iv
The actual effectiveness of the risk management plan and the risk assessment (including
risk matrix) would be compared against their target counterparts. If the actual outcomes of the
risk management fails to qualify the standard parameters by more than 5 percent, the
management of MacVille should take steps to improve the same.
Conclusion:
One can conclude from the analysis MacVille should form strategies to manage the risks
prevailing at Hurley’s right after the acquisition. The employees of the Hurley’s Café should
undergo WHS training to make their risk management skills and knowledge at par with the
actual employees of MacVille. One can recommend on the basis of the above discussion that the
management of MacVille and the FARM committee should appoint personnel in managerial
levels who would dedicatedly deal with Hurley’s Café.

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References:
Bloomberg.com. 2019. Bloomberg.com. [online] Available at:
https://www.bloomberg.com/quote/AUDUSD:CUR [Accessed 24 Sep. 2019].
Finance.gov.au. 2019. Retrieved 24 September 2019, from
https://www.finance.gov.au/sites/default/files/COV_216905_Risk_Management_Fact_Sheet_FA
3_23082010_0.pdf
Safeworkaustralia.gov.au. 2019. Safeworkaustralia.gov.au. [online] Available at:
https://www.safeworkaustralia.gov.au/ [Accessed 24 Sep. 2019].
Singh, P.N., 2018. Impact of Mergers and acquisition on Management and Employees. Journal
of Management Science, Operations & Strategies (e ISSN 2456-9305), 2(1), pp.32-37.]
Tradingeconomics.com. 2019. Tradingeconomics.com. [online] Available at:
https://tradingeconomics.com › australia › gdp [Accessed 24 Sep. 2019].
Trkman, P., Budler, M. and Groznik, A., 2015. A business model approach to supply chain
management. Supply Chain Management: An International Journal, 20(6), pp.587-602.