Decision Making Enterprise Risk Management – MacVille Cafe Case Study

Risk Management Framework of MacVille Cafe

Discuss About The Decision Making Enterprise Risk Management.

The documents of MacVille Proprietary Limited would reveal that the café company is based in Queensland, Australia. The documentation of the firm would show that the coffee restaurant is planning to expand and looking forward to expand its business within Queensland. The management of the MacVille is looking forward to take over and rebrand the Hurley’s Café in Toowoomba. It can be inferred from this acquisition of the Hurley’s Café by the MacVille that the balance sheet of the latter would these acquisitions as a part of its assets. The café has been operating successfully in Queensland which infers it follows the laws laid down by the Government of Australia and Government of Queensland. It can be inferred from the present state of the company that it complies with the laws like licensing laid down by the Food Authority of Australia (foodauthority.nsw.gov.au, 2018). The company has experienced growth which provides evidence of its high employee productivity. This in turn points out to the fact that the cafe outlets run by the firm experience low rate of workplace related accidents which in turn points out to the highly efficient management strategies of the firm. The risk management strategy of the company is carried out under the supervision of senior management. The MacVille has a committee of high level official called the Finance, Audit and Risk Management (FARM) which ensured appropriate risk management and documents. The company complied with laws like Fair Work Act as well which is evident from its stringent internal risk management and risk management analysis of even its to be subsidiaries like the Hurley’s Café exemplified in the given case study.

The risk management framework of the MacVille Café shows that the apex management of the company lays great emphasis on management and mitigation of risk, if total prevention is not feasible. The risk management framework of the firm was in line with the risk management framework laid down by AS/NZS ISO 31000:2009. The AS/NZS ISO 31000:2009 provides generic guidelines and principles for the companies to follow while operating. However, the principles and guide lines of AS/NZS ISO 31000:2009 are not legally binding on the companies. However, following its guidelines enable business organisations to manage their risks more effectively and avoid losses they incur due to those accidents (iso.org, 2018). As far as the MacVille is concerned, the stringent risk management of the firm shows that it complies with ISO 31000:2009. This is substantiated by the strict risk management policies of the firm which also encompasses its subsidiaries (Sadgrove, 2016).

Role of Senior Management in Risk Management

The scope of the risk management of Hurley included its present and future operations. The risk management of the MacVille accept risks as parts of its restaurant operations and includes their management in their core strategies. The apex management proactively engages in managing the risks. The objectives of the company is to manage risks at all operational and business levels. The risk management of the MacVille consisted of identifying risks at all levels followed by an evaluation the impacts the risks can have on the organisation. The next step of risk management consists of controlling the risks identified in the first step which is succeeded by taking appropriate risk management steps. The directors played a very important role in determining the risk types and judged whether the risk is profitable for the business organisation or not. They dictated the standards codes of behaviour which were expected from employees with respect to risk management and mitigation. The major decisions regarding risk management were standardised and required management approval. The risk approach of MacVille was audited yearly to ensure high performance (Chance and Brooks 2015). The senior managers play significant role in implementing the risk management policies formed by the apex management. The senior management of the MacVille Pty Limited has entrusted the senior managers with the responsibility of identifying the areas which can prove to sources of potential risks.  The store managers along with the senior managers are entrusted with the responsibilities of assessment and monitoring the internal risk management. The also entrusted with the responsibilities of presenting annual reports to the apex management on the risk management within the company.

The employees of the MacVille Café are entrusted with important role in risk management. The employees are supposed to gain knowledge on risk management policy of the company and clarify any ambiguity they have with their superiors (Hopkin 2017). They are responsible for identifying any risks and attract the attention of superiors regarding the same. It is also their responsibility to provide advise the senior management on the same. They should also cooperate during commencement of risk management reviews and risk audits.

The MacVille had several critical factors as far as risk management is concerned. The first critical success factor of the risk management policies of the café lies in its strong communication which encompasses the entire organisation traversing across its geographically distributed cafes. An analysis of the case study clearly shows that it is financially rich which enabled it to install advancement communication facilities. The Finance, Audit and Risk Management or FARM committee holds meetings with the assistant managers and managers of the company once they visit the premises of the future subsidiaries. This is evident by the teleconference which takes place between Ash and the FARM committee after the former visited the premises of the Hurley Café, the future subsidiary of the MacVille according to the case study provided (Chance and Brooks 2015).

Role of Employees in Risk Management

The second success factor of the MacVille is its strong risk management strategies which rested on the strong communication channel of the firm. The risk management framework of the company was helmed by the FARM committee which gained information about the risks. The committee after that formed strategies to manage the risks in a high level meeting attended by the directors and the CEO. This involvement of the apex managers rendered the risk management strategies the force it required to be accepted across all hierarchies.

The third success factor of the MacVille which is exemplified in the mentioned case study is the method of acquisition which the company followed. The management of MacVille before acquiring the Hurley appointed Ash, its assistant manager to conduct an investigation into the risk management strategies. This shows that the company does not limit its strategies to its present organisation but also includes its future subsidiaries (Grace et al. 2015).

The goal of MacVille Proprietary Limited was to offer high quality coffee and gourmet food to the customers. The company at its outlets also provided the customers with superior quality services (Glendon Clarke and McKenna 2016). The business also aimed to flourish across Queensland and New South Wales in Australia by either opening new outlets or acquiring existing cafes. The values of the company took customer value creation, safety, team work and performance boosting with its ambit.

The important stakeholders of the MacVille Café can be divided into two groups, namely internal stakeholders and external. The internal stakeholders of MacVille Café are the management, the managers and the employees. The external stakeholders of the café consist of investors, the customers, the government, the financial institutions, the society and its subsidiaries (Hopkin 2017). The competitors like the other café including the multinational café chains operating in Queensland would also be considered as important stakeholders. The subsidiaries of the MacVille, though not clearly mentioned would also form important part of its stakeholders. Since, the risk management of the Hurley’s Cafe would impact the café post acquisition, it would be regarded as an important stakeholder as shown in appendix below.

Stakeholder	Internal/external	Role in process	Stake in process
Management of the MacVille	Internal	1. Takes business decisions and forms strategies including risk management strategies. 2. Carries out appraisals of employees. 3. Provides final approval for the business plan executions. 4. Forms link between the government and the company. 5. Interacts with the stakeholders like the government through representatives like managers.	High
Managers	Internal	1. Forms link between the apex management and lower level employees. 2. Leads their respective teams in risk management. 3. Forms strategies in risk management strategies pertaining to their respective departments.	High
Employees	Internal	Executes plans formed by the management and middle level managers	Medium
Government	External	1. Forms laws and policies 2. Provides facilities to business organisations	High
Investors	External	Invests in the capital of the company	High
Suppliers	External	Provides raw materials to the café firm	Medium
Customers	External	Purchases goods and generates revenue	High
Subsidiaries	External	Gives access to their resources and boosts production.	High
Competitors	External	Can impact the company with their decisions	Low

The PEST analysis of the market of Australia is utmost important for the following acquisition by the management of Macville. The analysis has been shown below;

1. Political- Australia has strict laws regarding the utilization of water. This implies the excessive amount of water being treated by the organization. The Federal Government of Australia has ensured the implementation of stricter rules to utilize water in a sustainable way (Bromiley et al. 2015). The management of the company thus has to stay careful and be aware of the latest rules to prevent any kinds of wastage and attract unnecessary problems for the company. The failure to abide by the rules set out by the Government can lead them to unnecessary trouble.
2. Social-The changing preferences and the choices of the customers of the company have been mainly because of the health concerns. Health concerns has now transformed into one of the most key aspects that determines the level of success and the sustainability of the organization. The following health needs to be dealt in a proper way so that the organization can attract a large number of people in the café (Brustbauer 2016). Fresh Bakery products are required in order to refresh the minds of the customers after the two hour ride. The use of this particular strategy will help the consumers that are loyal to the company to use the products, as the location of the plant will be near to the store where the customers will be visiting.
3. Economical- The global recession that is recently ongoing is one of the important economic factors of the Toowooamba Cafe. The following factor has the capability to reduce the profit earning of the store. The exchange rate of the local currency along with the taxation levels and the economic condition present in the various markets also create an impact on the café.
4. Technological- The broadband network of the federal government has been rolling out at the Toowomba. This allows the business to be effective and efficient in terms of video conferencing and teleconferencing. As said by, Brustbauer (2016) the utilization of the technology of the brand of the following café can help to monitor the communication much more easily and efficiently. It also helps to conduct regular or monthly meetings which help in the solving of complex problems. The broadband technology can also help in the implementation of Wi-Fi in their store that helps in the providence of free internet services to the customers which helps in the increase of revenue. 

STRENGTH	WEAKNESSESS
Ø Easy Accessibility Ø Development of New Food	Ø Distributional problems Ø False registers Ø Absence of injury policies Ø Absence of other kind of policies
OPPORTUNITIES	THREATS
Ø Opening new branches Ø Government Aid and helps	Ø presence of able competitors Ø Enquiry from large MNC’s

Strength: The following café has planned to open a store in the corner of two different streets which are always jostling. This will surely provide them with a lot of customers as it will be easily accessible to all of the different customers for its convenient location (Bromiley et al. 2015). Apart from this the preparation of unique and different kinds of food items are equally profitable for the organization. Among this the most important is the development of the rice wraps which is claimed to be much healthier and tastier than the products of all the other competitors in the market. The absence of such kind of products in the lines of the other companies provides a clear competitive advantage to the organization.

Critical Success Factors of Risk Management Policies at MacVille Cafe

Weakness: The delivery of the bakery products from the central stores to other small stores located in Australia is a much difficult job for the organization and it makes the delivery of the organizational products very much impractical in nature. The absence of any written or printed policies and procedures in the lines of the company is one of the most vulnerable spot for the organization as because it confuses the employees (Bromiley et al. 2015). There are also no such established injury policies for the employees which can definitely be said as one of the main weaknesses of the organization. More concentration on the manufacturing process rather than the concentration on the use of the latest technologies is one of the main problems for the management of the organization. The absence of concentration on the technologies is devastating as because this can lead to the loss of data through hacking. The company also fails to deliver effective sales and marketing promotion technique. The registrar also makes a number of different mistakes in the maintenance of the register which also one of the main kinds of problems for the business to succeed. However one of the most important weakness of the mentioned organization is the wastage of water which leads to incurring of more than $6000 monthly. The financial risks of the organization can also not be overlooked as it is one of the most important weaknesses of the management of the organization.

Opportunities: The presence of varied opportunities in the surrounding places to open new café is a great idea for increasing the revenue of the organization. Apart from this the area around Toowomba is generating new business opportunities as because the number of retirees is increasing day by day. The Government of Toowomba are also allowing to open more and more roadside cafes which is one of the additional sources of help for the organizations dealing in the café business.

Threats: The increase in the number of similar stores in the area is one of the main threats possessed by the industry. However there have been rumors that a large brand of Coffee chain store is enquiring about opening a new branch in the mentioned area. The rumor if proves to be truth can cause a serious threat to the organization.

S.L Number	RISKS	RISK ANALYSIS
1.	Financial Risks	The management of Hurley’s Café failed to manage cash responsibly and also failed to deposit cash in the bank. Apart from this there have been also reports of thefts. Apart from this the accounting entry was also not carried out properly..
2.	Environmental Risks	Wastage of water.
3.	Legal Risks	There was no written agreement between the café and the employees which would leave the scope for different kinds of future conflicts. The Toowomba council will also bring strict laws to curb the wastage of water and also the curb in the different kinds of expenditure.
4.	Data Theft Risks	As mentioned earlier the data can be easily accessible by any of the members which exposes the company to different kinds of data risks.
5.	Market Risks	The opening of new restaurants in the Toowomba region including a large multinational firm.

Email to Stakeholders

To: Email Id’s of Stakeholders

From: Email Id of the Company

Cc: CEO of the Company

Goals and Values of MacVille Cafe

Subject: (Identification of Risks in case of Acquisition of M/s Hurley’s Café)

Dear Sir/Ma’am

The following letter is a reference with the acquisition of the M/s Hurley’s Café which is under consideration. The risks involved in such an acquisition have been attached with the following report. It is a kind request to go through the report and find the attached risk and take a decision by considering the necessary elements. It is also requested to find out more risks if there is some present to help us take the right decision for the business.

Regards,

Name and designation of the Sender/ Manager

Attachment: Risk Analysis Chart

Email to CEO

To: Email ID of the CEO of the Company

From: Email Id of the sender/Manager

Subject: (Request for the meeting for review of Risk Management of the Hurley’s Cafe)

Dear Madam,

It is a request to you to kindly go through the attached Risk Analysis Report of the Hurley’s Café which we are willing to take over. Your expert and efficient feedback regarding such an action is necessary to either go ahead with the plan or to discontinue with it.

(Name and Designation of the sending Manager)

 Attachment: Risk Analysis Chart

Critical Success Factors

The critical success factors for the takeover of the Hurley’s Café will be the customer base of the organization and the unique products of the organization. Apart from this, the strategic position of the organization. The risk factors on the other hand will be the poor management of the risk standards and the poor management of the financial risks.

Monitoring of the Risk

The risk management process of MacVille is much stringent and strict in nature. It is controlled by the supervisors of the management. The directors and the senior managers in charge of the total takeover intervened and found out a number of different risks that made them effective from time to time to manage the risks in an efficient manner.

It will be the task of the management of Macville to ensure the proper communication of the different kinds of risks that will be identified by the Emails and different kinds of letters from the office of the CEO. The request will be communicated through the different kinds of such letters and online interactions to express different kinds of concerns about the additional risks that would be identified during the course of the takeover of Hurley’s Café. The Toowomba Council must be considered an important stakeholder in this regards as it will be directly involve4d in the implementation of different processes in the organization.

Stakeholders of MacVille Cafe

The support of the CEO would be obtained by the process of Risk Management and by the identification of further kind of risks.

Summary

The following is the summary after the discussion with the CEO in the Risk Management and to identify the different kind of risks in this regard.

• As mentioned earlier the risk management standard of Hurley’s Café is not at all up to the standard of the market
• There is a need for the adoption of quality risk management standards which would improve the performance of the organization and save it from any kinds of risks both internally and externally
• Moral and ethical pressures must be implemented over the employees by the management of MacVille to improve the organizational performance

1. Probability of Risk Occurring

RISKS	RISK OCCURENCE
Ø Risks related to handling of Cash	Ø Post-acquisition by Macville, the risk of cash handling is  considerably low because of the safety procedures that are being followed by the company with respect to cash.
Ø Risks related to written policy	Ø The presence of an effective written organizational policy is important because the risks regarding the occurrence of the risks while the acquisition easily diminishes.
Ø Risks related to handle business with more professionalism	Ø The occurrence of risk is significantly low, as the organization handles the queries in a professional manner and with the best possible strategies
Ø Risks related to promotional Strategy	Ø The risk of the promotional strategy is low, as the company will use the strategies in an efficient way

The risks with respect to cash handling may take place when the management exercises less control over the employees that are present in the organization. Apart from this, the written policy risk may take place within the management that is present in the organization and is not focused on the organizational development. These kinds of risks can also occur at the time when the management of the organization does not have any kind of leadership strategies that are effective to control the employees. Professionalism risks in the business takes place when the management cannot control the quality of the employees. The main types of the organizational demands increase the main ideas of the different types of the organization.

1. Risk Matrices by the prioritization of the treatment of the identified risks

The risk matrices are one of the most effective tools to evaluate the different kinds of risk. The first task of the organization will involve a low profit level and the area of severity will be medium. The risks that are related to the written policy of the organization has low probability and high severity area. The professionalism risk has a medium probability and similarly the severity area will be medium. The risks related to professionalism on the other hand will have higher level of probability as well as the severity area.

1. Options for the Treatment of the risks

RISKS	RISK TREATMENT PROCESS
Risks related to the Handling of Cash	Hiring of a large number of employees with commerce background
Providing cash access to a limited number of employees in  the organization
Risks related to written policy	Implementing policy that are effective
Employees need to be guided according to the policies
Risks related to handling business with more professionalism	A professional needs to be hired so that the strategies can be implemented properly
Providing training and grooming to all the employees to deal easily with organizational work
Risks related to promotional strategy	Effective media line needs to be selected so that customers can be attracted
Use of coupons and discounts will result in maximum attraction of the customers

According to, Bessis (2015) the priority, consequences along with the reports likelihood can be identified through polices and processes along with the monthly reports in an easy manner. This is inclusive of the audit report that are external in nature of the café and the practices and poolicies of MacVille Private Limited. The absence of expert and experienced workforce in the ranks of the company is a major disadvantage for the organization. The risk mitigation strategies must be implemented by the management of the company in such a case as it will help in the proper management of the organization.

Risk	Assess risk (score)	Controls	Monitoring	Action priority (1–5)	Timelines	Responsible
	Financial risks	1. Accounts should be handled by professional accountants. 2. Cash should be deposited in the bank on regular basis.	Accounts managers	1	6 months	Accounts managers
	Environmental risks	1. The dishwasher should checked in terms of water flow. 2. A bigger filter should be installed.	Directors	1	12 months	Directors
	Legal risks	1. Written agreements should be maintained with every employee. 2. Wastage of resources should be curbed.	Finance manager and legal department	2	3 months	Finance manager and legal department
	Data theft risks	1. Access to data should be restricted. 2. The data should be protected by password.	Technological manager	1	3 months	Technological manager
	Market risks	1. Aggressive promotion of Hurley’s Café. 2. New product development.	Marketing department	3	12 months	Marketing department

The Macville Café is a café based in Queensland, Australia and has its second branch only in Sydney, Australia. The café offers unique food namely, gourmets, rice grasp and many more as such. It operates under a management and has been seeking to expand its footprint in Toowomba by the acquisition of Hurley’s Café. However a detailed risk analysis found out that Macville followed a strict managerial policy, but unfortunately its counterpart Hurley’s followed a much slack policy. The management of MacVille private Limited must incur a huge amount of capital to deliver and implement a strict management policy for the new acquisition.

The risk Management Plan has encompassed different kinds of risks starting from that of financial risks to market as well as different kinds of data theft risks (Bessis 2015). This risk requires a much detailed attention and analysis to ensure full success.

Not Acceptable

Alarm

Acceptable

Risk Matrices

Source: (As Created by the Author)

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