Risk Management Strategies for CoffeeVille and Its Subsidiaries Report

This report provides a comprehensive analysis of CoffeeVille's risk management practices, focusing on its operations and the acquisition of a subsidiary, Lake Entrance CoffeeVille. The report examines the existing risk management framework, its effectiveness, and the challenges faced by the new subsidiary. It includes a PEST and SWOT analysis of CoffeeVille, identifying political, economic, social, and technological factors influencing the business, alongside its strengths, weaknesses, opportunities, and threats. The report also outlines specific risks, such as financial, human resource, and marketing risks, and suggests strategies for mitigation. Furthermore, it includes stakeholder analysis and a sample communication to a stakeholder. The report is based on secondary data and case study analysis, offering insights into effective risk management within the context of a growing business.

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

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Task 1.
Answer 1:
The review of the case study would reveal that CoffeeVille is a high quality café located
in the Central Business District, Brisbane, Australia. The chief attributes of the café were
availability of high quality yet affordable food products as well as beverages and its strict risk
management policy. The risk management policy of the café encompassed various areas like
work healthy and safety and financial aspects. The risk management policy of the restaurant
rested on its corporate values which encompassed safety, team work, and customer satisfaction
and performance excellence. CoffeeVille had a FARM committee which looked after the risks
and took appropriate steps of risk management. The risk management strategy of CoffeeVille
even encompassed its future subsidiaries like CoffeeVille Lake Entrance. As far as
documentation is concerned, it can be pointed out that the company served a large number of
stakeholder like customers, suppliers, the management, the employees and government bodies at
both the federal as a well as at the state level.
Answer 2.
Part a.
The risk management framework of CoffeeVille was very effective in supporting the
process of risk management in the company. The risk management framework in the
organisation worked under the supervision of the finance, audit and risk management (FARM)
committee. The FARM committee of CoffeeVille worked under the guidance of risk
management process as per AS/NZ ISO 31000:2009. The process consists of eight key elements
namely, establishment of the context, risk identification, risk analysis, evaluation of risk,

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treatment of the risk, monitoring and review followed by communication an consultation. The
purpose of the standard is to establish a strong risk management method in all business
organisations to minimise risks like fire and employee injuries to the extent possible (Iso.org.
2018). However, it can also be pointed out that the risk management principles of AS/NZ ISO
31000:2009 does not and cannot enforce policies organisations.
Part b.
Risk management had a great scope in the profession of Ash, the newly appointed
manager of Lake Entrance Store, the future subsidiary of the CoffeeVille.. This is evident from
the poor risk management standards prevailing at the Lake Entrance which were very slack. The
family managing the business did not properly records of employee appointments and did not
protect business data with passwords. The restaurant showed slack cash management and there
have been thefts. Moreover, the employees did not engage in marketing activities in spite of the
fact the multinational restaurants were already eyeing the area. The Lake Entrance CoffeeVille
management did not maintain proper records of employee accidents and did not comply with
environmental laws. Thus, it can be risk management would form a very significant role in the
job responsibilities of Ash as the manager of the Lake Entrance CoffeeVille, post-acquisition of
the latter. He would have to improve the risk management standards of the Lake Entrance in
alignment with the owner company, CoffeeVille’s to risk management framework under the
stewardship of FARM.
Part c.
The critical success factors which would attribute the acquisition of the Lake Entrance
with with success are the strong financial position of CoffeeVille, The second factor would be
the stringent risk management policy of the CoffeeVille which commences under the leadership

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of finance, audit and risk management (FARM) committee. This is evident from the strict risk
management principles of CoffeeVille. The third success factor strong organisational chain of
communication prevailing within the owner firm would provide base to the first two success
factors. This strong line of communication was from the detailed meetings between Ash, Paula
Kinski, the CEO and among the high level managers which included the FARM committee as
well (Angwin and Meadows 2015).
The objective of the risk management strategy of CoffeeVille would be efficient risk
management in its new subsidiaries like the Lake Entrance CoffeeVille. This means that the
acquiring firm would require to bring about disruptive changes in the modes of operations in the
Lake Entrance. Thus, it can be pointed out that the second aim of the risk management strategy
of the CoffeeVille would be efficient change management in the Lake Entrance CoffeeVille to
ensure successful achievement of the first aim which is risk management.
Part d.
Stakeholders Internal/External Role in the process Stake in the process
Management of
CoffeeVille
Internal Forms important
decisions both in
terms of short term
and long term
decisions like
acquisitions of new
firms and forming
risk management
Profit

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strategies.
Managers Internal 1. Heads the different
departments and act
as bridges between
the apex managers
and wer level
employees.
2. Forms the
department specific
business strategies.
3. The communicates
with lower level
employees and trains
them.
4. Manages tough
business situations
like customer
complaints
Carrier growth,
promotion and salary
Investors Internal Invest in the capital
of the firm.
Dividends
Customers External Purchase products
and generates
revenue.
High quality products
and services

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Government External Makes laws and
policies for industries
to function.
Taxes
Lower level
employees
Internal Executes the
strategies formed by
the apex management
Salary and career
growth.
Suppliers External Provides the
restaurant with raw
materials at economic
rates
Timely payments
Answer 3. ‘
The following are the political, economic, social and technological factors influencing the
economy of Australia.
Political:
The country of Australia is politically stable which promotes business expansion of
restaurants. The first political factor effecting the industries in Australia is that the government
both at the central and state level acts a policy and law maker. The business organisations in the
country have to comply with the laws in order to operate in the market. For example, the
employers employing the human resources in Australia have to comply with the Safe Work Act
1999 (Safeworkaustralia.gov.au. 2018). Similarly, the organisations have to adhere to the
policies laid down by local government bodies like the Lake Entrance Council
(Eastgippsland.vic.gov.au. 2018). Similarly, the government imposes laws pertaining to

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important areas like Environment Protection and Biodiversity Conservation Act 1999. The act
necessitates the body corporates to form policies to operate in ways by causing less harm to
nature. The second area where political factor comes into play is that bilateral relationships
which the Government of Australia have with other countries. The strong foreign relationship of
Australia enables the business organisations like restaurants based in Australia obtain raw
materials from different countries across the world. This access to raw materials from other
nations lead to production of superior products (Australia.gov.au. 2018). The above discussion
apparently shows that political factors are only drivers of businesses. However, it can be pointed
out that political factors like terrorism in reality are the greatest threats to industries (Bhaduri
2018).
Economic:
The first economic factor which impact the industries in Australia, including the
restaurant businesses is change in the international currency rates.
Figure 1. Graph showing USD vs AUD

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(Source: Bloomberg.com. 2018)
The graph above compares between the exchange rates of AUD against an international
currency namely USD. The graph shows that the value of AUD is waning against USD which
means that if Australian businesses acquire resources from the American market, they require to
pay higher prices.
The second important economic factor which comes into play in the Australian market is
a rising per capita income of Australia which means that Australians have more disposable
income to afford entertainment like visiting restaurants and cafes. This would mean more
revenue generation for the restaurant businesses in Australia.
Figure 2. Graph showing per capita income of Australia
(Source: Tradingeconomics.com. 2018)
The third important factor which comes into play while operating in the market of
Australia is the network of banks and financial institutions Buch and Goldberg (2015) point out

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that network of banks and financial institutions play significant role in flow of financial
resources within the economy. It can also be pointed out that these economic factors boost the
development of businesses like restaurants.
Social:
The first social factor which would lead to growth of Australian businesses is the rise in
population. This is because rise in population means rise in demand for goods and services in the
market boosts the productivity and revenue generation in business organisations, thus boosting
the business generation of the latter.
Figure 3. Population of Australia
(Source: Abs.gov.au. 2018)

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The graph above shows that the population of Australia is increasing both due to increase
in resident population as well as due to immigration. It can be pointed out that this meeting of
resident Australians and immigrants would have positive effect on industries like restaurants due
to amalgamation of resident Australian culture with the foreign culture. This is because these
industries heavily come under the impact of culture (Hussain, Konar and Ali 2016). This
amalgamation of cultures in Australia would create demand for new types of dishes in the
restaurants, thus encouraging the latter to bring about innovation in their food offerings. This
would boost both customer satisfaction as well as revenue generation in the restaurant industry.
Technology:
Australia is highly developed in technology and collaborates with foreign countries to
gain more technological capital (Australia.gov.au. 2018). Winch and Leiringer (2016) mentioned
that technology plays a very important role in development of infrastructure like roads and
bridges which forms the basis of all other industries. Moreover, risk management like application
of modern safety instruments are dependent on modern technology. Sookhak et al. (2017) further
points out that modern technological applications like cloud computing enables the business
organisation retain and manage large body of data. This means that business can channelize more
knowledge to take more appropriate business decisions. However, Chang and Ramachandran
(2016) point out that modern technology also paves ways for data thefts which causes huge
losses to companies.
SWOT of CoffeeVille:
Strengths: Weakness:

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1. Financially strong.
2. Presence in multiple locations.
3. Formidable risk management strategies.
4. A very clearly laid out hierarchical
structure.
5. Market analysis before taking over a
subsidiary.
6. Strong communication and conferencing
among middle and high level management
prior to taking any business decision.
7. Technologically strong.
1. The future subsidiaries may not follow high
level of operations.
2. The lack of risk management in
subsidiaries would lead to increase in increase
in expenditure post acquisition.
Opportunities:
1. Can expand into new areas by acquiring
more subsidiaries.
2. Integrated marketing of goods and services.
3. Offering new products.
4. The firm should expand overseas.
Threats:
1. Multinational chains of restaurants.
2. Weak subsidiaries.
Part f.
The method applied to conduct the research on SWOT and PEST consists of secondary
data acquisition by consulting a large number of books, articles, newspapers as well as digital
sources. The study of appropriate relevant government websites enabled collecting information

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on legislations, laws and standards. The information on risk management was acquired from
several books and journals.
Part g.
Summary of the scenario:
The case study explores the risk management scenario prevailing in Lake Entrance
CoffeeVille, a future subsidiary of the CoffeeVille,. a chain of high quality coffee and gourmet
food based in Australia. The then management of the subsidiary restaurant maintained a very
poor standard of risk management. CoffeeVille sent its manager Ash to conduct a risk analysis of
the risk scenario. The following are the risks Ash recognised which CoffeeVille had to consider
right from its initial phase after acquiring the Lake Entrance CoffeeVille:
Risks Description
1. Financial risks Lack of proper accounting procedure and lack
of depositing of cash in the bank.
2. Human resource risks Lack of formal employment agreement
between the management of Lake Entrance
CoffeeVille and employees.
3. WHS risks The restaurant did not comply with WHS
risks.
4. Marketing risks Lack of marketing initiatives inspite of
mounting competition from newly entering
chains of restaurants