Risk Management Strategy And Plan For ChaiCoffee’s Second Store In Melton

Part 1: Planned Business, Goals, and Stakeholders

Risk management involves analyzing information from various sources to ensure that the process is effective and efficient. This information aids in determining the position of the organization and the risks associated with the business. The focus of this essay is to develop a report on risk management and plan for Chai coffee shop.

Chai coffee is our second coffee shop in Queensland. The business is operating under the leadership of our chief executive officer Ms.Kim Jung. Chai coffee will be situated at the new suburb, Melton and is set to start operations. Chai coffee recognizes the busy schedules of the residents and wants to create a convenient environment for meetings and relaxation after a busy work day. Chai coffee shop will provide peaceful and friendly services to the residents near their home. The unique services and products offered will be of high standards compared to other coffee shops in the area. The shop is looking forward to meet all its operating costs by the end of year and maximise on its revenue in three years’ time. The shop is accepting credit facilities.

Business goals

The main objectives of Chai coffee shop is to maximise its revenue, ensure customer satisfaction and minimise on operating costs. Revenue maximization will be attained through increasing the sales of coffee and other snacks at the shop, advertising to attract customers and create awareness about the new coffee shop to the residents of Melton. The first goal is customer satisfaction which entails identifying the needs and wants of the customers. Chai coffee shop has established the need for a stopover relaxation point well designed for the residents who intend to have meetings close to their home and also need to relax before they get home after work, most of the residents of Melton are business owners and are very excited on the news of a new coffee shop opening at their place.

The other goal of Chai coffee shop will be to minimise the operating costs while ensuring quality services to the residents of Melton. This will be done through re-evaluating our suppliers cost and reducing unnecessary expenses such as reducing office parties which are sponsored by the business and also by ensuring the number of employees is matched with tasks available to avoid high number of employees when there is less task to be performed.

External environment

Chai coffee shop is prepared to embrace the external environment factors which are likely to impact on the business operations. These factors include the Political, Social, economic and   technological environment. The political factors entail politics of Melton and influence on the businesses as well as on government laws and taxation rates. Chai coffee shop has already obtained the necessary licences of operation and installed machines for taxation purposes on our products.

Part 2: Risk Assessment

The technological environment will involve the ability to ensure up to date technological systems in handling our operations. The coffee shop will be installed with accounting software for generating day to day reports, Cctv cameras for security purposes and automated door systems. The economic factors influence the operation of businesses and that’s why Chai coffee shop has established measures to ensure we stay in business in case of down turn in the economy. When people are unemployed, income rate tend to be low and the demand reduces meaning that sales will be affected and customers will reduce, as a result the demand and supply determines how the business will be affected in the free market based on the interest rates established by the government.

The social factors include the attitude, values, culture and lifestyle of the people. Chai coffee shop will be prepared to receive customers from all age groups, ethnicity and gender with different tastes and preferences. It is very essential to tailor our products to meet the different preferences in order to increase our revenue.

 The culture of our shop at Brisbane is to treat customers with respect and ensure customer complaints and reviews are adhered to, the same culture will be adhered to at Chai coffee shop and quality services will be offered to embrace the culture and values of the people of Melton.

Stake holders

The stake holders of the chai coffee shop include customers, employees, the investors, government, suppliers and the community of Melton. Customers have an impact on the quality of services and products they receive from the sellers. Employees are stakeholders since they will expect to get their salaries and wages from the coffee shop and their presence is of great value to the business. Investors include the board of directors who have invested capital into the business; they too expect a share of profit from chai coffee shop. Government will also expect revenue from the business through the tax imposed on the products and services. Suppliers as well rely on the revenue collected from the business and are directly involved through the supply of raw products for the business, they expect payment for the supplies thus if the business fails it will affect their revenue too. The community of Melton is the one of the external stakeholders of the Chai coffee shop. The establishment of the shop will create job opportunities to the community, impact on their health and also they will benefit through our business corporate responsibility.

Part 3: Risk Management Plan

This entails the process of identifying, evaluating and estimating the risks involved in a situation, comparing the risks to a standard while determining the acceptance level of the risk. The first step of conducting risk assessment of Chai coffee shop is to establish the risk context, which involves the procedures of carrying out the risk management in accordance with the established standards of the coffee shops. This will involve: determining the budget processes by the finance department, how is the money being handled, determining the safety of the employees and the shop, do we have fire extinguishers and safety equipment at our shop and how is customer management conducted in our shop.

The other step will be to establish the scope of Chai coffee shop by addressing the areas of business and the different types of hazards that exist. This step involves obtaining information about the risks from the internal and external stakeholders of chai coffee shop: Internal stakeholders are the employees, investors and the management. External stakeholders are the customers, community of Melton and the suppliers of Chai coffee shop.

Pest Analysis

The political context involves by laws that are regulating the operation of the Chai coffee shop in Melton. The local councillor Ron Langford has agreed to offer assistance on the politics of operating business in Melton.

Economic elements include the business environment of Melton which includes demand of the products offered at Chai coffee shop and the spending patterns of the people of Melton.

Social context entails the interaction between the employees and the community, the attitude and values of the employees of Chai coffee shop and the culture of the people of Melton.

Technological context involves the advanced technology that we intend to employ in the shop as we do away with the old.

Swot analysis

The second step is establishing the context which involves determining the Swot analysis of Chai coffee shop (Lim & Kim 2014, pg 615).

The team will establish the risk management controls by educating employees on health and safety in case of fire, ensure we have installed the current technology at chai coffee shop, and assess the business climate in Melton while ensuring the attitudes of the employees match with the values of our customers.

Establishing the critical success factors of Chai coffee shop is very critical on the performance of the business (Zadakbar, Khan &Imtiaz 2014, p 713).Our critical factors entail acquiring the customer relationship management software to serve our customers better and new accounting software which will assist in budgeting and forecasting cash flows for our coffee shop. The initial stage of the process of managing risks is identifying the risk of Chai coffee shop; this is done by the stakeholders through assessing the work procedures of the coffee shops, asking questions and observation. Employees and customers were given questionnaires to fill while the management identified the risks through observation and evaluating the work procedures.

Consultation with Stakeholders

The risks identified from the shop by the employees and management include;

The risk assessment table assisted us in identifying the major areas of concern and working on them to ensure risk avoidance (Hansson 2018,pg 2415).The second step was analysing the risks of Chai coffee shop identified in step one; this involves determining the likelihood of risk occurrence by designing a template with the impact of risk occurrence and  the likelihood of the risk happening.

The risk of running out of space in the new shop

Likelihood of risk happening

According to the table if the risk is not controlled depending on the large number of customers we intend to receive in Melton it is most likely that customers might find the shop congested and leave or go to another place which might lead to loss of customers and result to a negative impact in the long run. The space of our coffee shop can be controlled by reorganizing the shop to create more space for customers.

Risk evaluation plan

The final part of risk assessment plan involves the selection and implementation of treatments by determining the necessary action treatment, one of the risks of chai coffee shop is running out of shop space, training new employees and software vendor identification (Aven 2018, p. 2415).The risk treatment for new space is treat the risk by rearranging the shop to create room for a larger space, for the training new employees will involve tolerating the risk by ensuring the new employees are trained and also learn from the already experienced employees and the risk of technology on software is by tolerating the risk by installing a current software.

The risk management plan for chai coffee shop entails identifying the trigger for limited space, new work for force and software installation which is the new coffee shop.

Risk action plan

Description of the risk: To alter the space of the new Chai coffee shop

Strategy for implementation and monitoring the plan

This involves developing a treatment plan whose purpose is avoiding, reducing, transferring or accepting the risk. The team of Chai coffee shop will have to explain to the employees and the management the importance of controlling the risk, which will involve redesigning and arranging our coffee shop to accommodate more people (Mitchell 2004, p. 25). We will then stick to the plan and collaborate with the supervisor James Mansfield in executing the plan after receiving the approval from the chief executive officer.

Risk Management and Its Importance for ChaiCoffee

Monitoring of the plan involves regular checks to control the risk for instance Are the seats comfortable enough and occupying small space? Risk management processes assist in creating a good working environment and also maximise on business opportunities while reducing the risks.For better and effective plan, the team will ensure that the information we communicate with the staff is accurate and precise to avoid misunderstandings. The information concerning the risks will be confidential and directed to the target audience with regular checks and monitoring in order to determine the need for any changes. For a successful risk management plan, we will have to determine effective actions in order to understand what works well and what does not work.

Risk evaluation will also be done after every six months to assess the progress of the business (Thompson 2000, p. 28). Evaluation will be done by weighing the merits and demerits of the risk controls, determining the measures, examine on the capabilities of the employees whether they are able to use the measures, consider the negative impact of the risk if not controlled, consider changes in the work place and be on the watch out in order to notice any risk related situations. At chai coffee house risk evaluation will conducted thoroughly and reports on the results of the evaluation will be generated for the management.

Conclusion

Risk assessment process plays a significant role in acquiring a new business since it assists in identification and ways of managing the risks for easier achievement of the organization goals. Organizations that conduct risk assessment from time to time attain good results and improve on their performance.

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