Risk Management Strategies For International Expansion: A Case Study On Macville Cafes

Risk Management Framework

The Macville has chain of cafes across Australia mainly in the Central Business Districts of Brisbane, Queensland, Sydney and NSW. The identification of the different risks that are indulged with the undertakings of the organizations helps in the proper management of the business concern.  The different strategies that were applied and the manner in which the manager of the business communicated the different risks with the stakeholders and the CEO is the major concern for undertaking the report. The assessment of specific risk factors that might be faced by the organization while undertaking its expansion in the international markets helped the same in formulating the strategies. The report will focus on different managerial approaches that might be undertaken by the business while making the business expansion.  

The risk management framework that is confirmed by the organization is dependent on the establishment if sound communication strategies for the assessed risks and thereby facilitate the modifications in the systems.  The strategies that are designed by the organization helped to mitigate the issues that the business might face while undertaking the specific activities. The policies and regulations that are created by the business relating to staff satisfactions will be helping the organization to build on the enterprise. On the other hand, the different internal and external audits on risk assessment helped the organization to create different strategies for avoiding varied unfortunate circumstances related to lower staff turnover and productivity of the business. The monthly reporting systems of the organization helped the same to keep their strategies updated with the situation of the organization in the market.

The risk management framework, which is created by the business, will be helping the same to assess the levels of risk while considering the current expansion through acquisition of the new store. Evaluation of the monthly budget and reporting systems will be helping the management of the business to assess the risks and thereby bring forth changes in the methods of the business.

The scope of the risk management strategies that are undertaken by the business is limited to the identification of the different levels of changes in the systems of the business. The assessment of risk will be dependent on the evaluation of the market and the different preferences of the consumers.

The success factors of the risk assessment will be dependent on the identification of the levels of risk that might be faced by the organization while undertaking the expansion.  The critical success factors are dependent on the efficiency of the assessment that are undertaken by the evaluators of the risk management systems that are imposed by the organization. The evaluation will be helping the risk management systems of the business to undertake the smooth functioning of the business while operating in the markets.

SWOT analysis

PEST analysis of the organizational expansion

The analysis of the risks that the organization might face while undertaking the expansion of the operations helped the same in  making important assumptions and formulating strategies for the proper functioning of the business.  The risks that are recognized by the organization while undertaking the expansion are Banking risk, Travel risk, By-law compliance risk and Brand recognition risk. The enumeration of the different risk factors helped the business in conducting a safe processing of the business operations.

Stakeholders

Dear Sir/Madam,

It is to bring to your notice that the MacVille is willing to expand its business through an acquisition. In this regards the team of risk assessors has put forward different risks that the organization might encounter while undertaking the activities. The risks that might be encountered by the business while undertaking the expansion are Banking risk, Travel risk, By-law compliance risk and Brand recognition risk. However, we request you all to come up with any other risks that we might face while undertaking the expansion of the business through the acquisition. The organization requests its stakeholders to contribute to the establishment of the organization and thereby contribute to the goals of expansion of the business.

Thanking you

Yours sincerely,

Manager at MacVille 

To the CEO

MacVille Limited,

Dear Sir,

The following email has been sent to the stakeholders of the organization asking them to extend their contribution in identifying the different risks which our organization might face while undertaking the expansion. Here the message is being forwarded to you for evaluation.   

Dear Sir/Madam,

It is to bring to your notice that the MacVille is  willing to expand through the Lakes Entrance store. In this regards the team of risk assessors of the organization has put forward different risks that the organization might encounter while undertaking the activities. The risks that might be encountered by the organization while undertaking the expansion are Banking risk, Travel risk, By-law compliance risk and Brand recognition risk. However, we request you all to come up with any other risks that we might face while undertaking the expansion of the business. The organization requests its stakeholders to contribute to the establishment of the organization and thereby contribute to the goals of expansion of the business.

Thanking you  

Yours sincerely,

Manager at MacVille 

• The assessment of the risks that might be faced by the organization while undertaking the expansion
• The risks being communicated to the stakeholders via email and thereby asked for their assistance
• Forwarded the email to the CEO of the organization for further evaluation and thereby undertake complete communication   

The Macville Company is highly famous in the Australian market because of providing high quality coffee with customer satisfaction. The company has chain of cafes across Australia mainly in the Central Business Districts of Brisbane, Queensland, Sydney and NSW. It can be seen that the company operates in the major cities of Australia. The mission of the Macville Company is to serve competitively priced and high quality coffee as well as maintaining a good image by keeping focus on the food safety and the comfortable cafe style environment. The vision and values of the company are also intertwined with the mission statement of the Macville Company and set their values primarily on the Customer satisfaction, safety and performance excellence. In this regards, the strategic directions of the company is stapled with the mission and vision statement of the company by putting emphasis on the improvement of the quality of food and creating high performance in organisational activities. As a matter of fact, it is important for Macville to maintain proper management in order to protect the employees and the customers from possible risks. Recently the Macville Company is going to expand its business operation by purchasing and rebranding the existing Hurley’s Cafe at Toowoomba in Brisbane. Therefore, it requires proper understanding of the risk factors and at the same time implementing risk management plan is essential for business operations of the Company further.

SWOT Analysis

There are four risks that the Macville Company has to deal with in order to retain its business activities in the competitive market of Australia. The possible risks are as follows:

• Banking risk- It can be argued that theft of money is considered to be a high risk in business. In this regards, to protect the money it is important for the company to keep a check on the daily business transactions. In case of the Macville Company this will be a detrimental factor in order to continue its business. Ethical factors are also lingered with this issue.
• Travel risk- There are a number of physical injuries can be happened in course of doing jobs. Death while working can fosters a negative image of the Macville Company.
• By-law compliance risk- Australia has an intense competitive market and the coffee industry can be identified one of the mostly competitive. Market fluctuations and the loss of reputation or brand imagery will lead towards devastation to the business of Macville Company. Violation of business laws is also included in this regard.
• Brand recognition risk- In the intense competitive market in Australia, the Macville Company has to put focus on its recognition. Besides setting up effective plan it is also imperative to maintain proper environment inside the outlets. Not wearing MacVille uniforms indicates lack of organisational efficiency and awkward for the customers. Moreover, the quality of food and services has to be maintained to continue business effectively.

Based on the understanding regarding the intensity of the risk factors it can be argued that a series of necessary measures have to be implemented in order to mitigate the organisational risks in Macville Company. The first treatment can be identified as the business rules and regulations for the Macville Company employees. In other words, to keep the organisational activities flawless the Macville management has to implement some code of conducts that the staff are compelled to follow. The next treatment is referred as the measures regarding brand recognition. Both the marketing and the organisation tools are required in order to build strong brand recognition.

For identifying the risks and implementing an effective plan, the management must have proper risk management strategies. It can be estimated that the first step will be identifying the risks and then taking a deep investigation on the degree of risks. Based on this understanding it will be beneficial for the company to prioritize the risks and conduct risk mitigating strategies in this regard.

This section is primarily focus on one of the risk factors that are mentioned above. In this context, loss of brand reputation will be the chosen risk factor that needs to be fixed in the top priority. The reason behind choosing brand reputation is that the Macville Company is suffering with the issue of brand reputation in a intense manner and as a result of that face huge loss in business. Therefore, the company management realises that this problem has to be resolve in a priority basis.

In this regards, some brand reputation tools has to be introduced to help the Macville Company adapt with the change in the market.

For reclaiming its brand reputation, it is important for the Macville Company to make a good impression at first. Based on the customer behaviour, it can be argued that good impression can be of any type. However, promotion is the best strategy to impress the customers at first.

It is important for the MacVille Company to have faith on their products. Without having confidence in inner-self it cannot be possible for the company to resettle its reputation once again. Therefore, the MacVille management has to build up a strong value and promotional strategy.

The MacVille Company can set up a better communication inside the organisational operations. It will enable to share the need and problem regarding a particular brand and the employees can also take responsibilities for that.

For regaining the lost reputation the MacVille Company has to pay attention to the brand conversation and interaction. This understanding will help the company in perceiving a clear image of the strength and weaknesses regarding the particular product. 

An action plan was submitted to the management of the organization six months ago and the strategies were formulated henceforth. The strategies that the organizational management formed have helped the same in undertaking the proper functioning of the business as per the objectives.  However, the plan that was formed by the management team of the organization has helped the same in bringing forth improvements in the systems of the business. The risks that was found initially were Banking risk, Travel risk, By-law compliance risk and Brand recognition risk for which the organization formulated different strategies. The equal distribution of the risk undertakings among the different departments and the care for creating the value out of the risks has helped in the successful implementation of the plan on the processes. The processes of the organization have encountered change through the strategy of lowering the burden of accumulated risk. On the other hand, the implementation of the strategies to manage the risks that are faced by the business has helped in undertaking the smooth processing of the business operations.

Implementation of different policies and procedures helped the business enterprise in maintaining the congruency between the strategies and the basic development intentions of the organization. It has helped the business in bringing forth modifications in the systems of the business as per the change in the current operations.  Alternatively, monthly business planning and budgeting helped the organization in presuming the different risk conditions through which the organization might make use of the expansion. The external audits have helped the organization in maintaining the smooth functioning of the processes as per the objectives of the business. The internal and the external audits of the organization has helped the management with the knowledge of the core capabilities and contingencies of the organization while undertaking the expansion.  The FARM committee helped the organization in balancing the functions of the business while operating in the international markets.  

The outcome of the activities that were planned by the organization as per the risk assessment reports are being discussed in this section. it helps in the proper identification of the applicability of the strategies and the manner in which it helped the organization in making its progress. The financial controller of the organization took out some $ 5000 from the company’s bank account for the insurance cover. The teleconferencing system, which was planned by the organization, was not installed in the past 6 months. A water tank was being erected by the organization; however, the pipelines still do not connect the tank, which could have helped the organization with the frequent supply of water. The board of directors of the organization came out with a policy of the conservation of the water that is utilized for the processes used by the organization. However, there are no specific strategies written for the conservation of the water.   

Identification of the risk factors that might be faced by the organization while expanding has helped the same in formulating strategies for growth of the business. Travelling the long distance for the external auditors has created an impact on the proper performance of the business. The policies and regulations that are formulated by the Board of directors of the organization seemed theoretical which has affected the functioning of the organization. The organization has failed to apply the theories on the practical field, which has affected the functioning of the organization as per the goals of its expansion in the international markets.  

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