Risk Management Essay For MacVille Café: Expansion To Toowoomba.

When the formula is applied to these variables, the resulting figure is called the theoretical fair value of the option.

In accounting and economics, fair value is a rational and unbiased estimate of the potential market price of a good, service, or asset. It takes into account such objective factors as: acquisition/production/distribution costs, replacement costs, or costs of close substitutes.

1. a) Increase in Australian interest rates

An increase in Australian interest rates would increase the cost of the borrowings for the new branches in China.

1. b) Depreciation of the Australian Dollar (AUD) against the Chinese Renminbi (CNY)

1. c) An increase in capital requirements for Bank’s in China An increase in capital requirements for banks in China will increase the levels of capital that ANZ must have on hand to cover its Chinese branches.

3.Why does the RBA use inflation targeting as a method to control inflation?

Reduces uncertainty for wage and price setters. Wage and price setters have a reliable gauge as to what inflation will be in the next period. (gives reliable expectations of future inflation).

4.Why does an increase in debt funding increase both the cost of equity and cost of debt?

Fair Value in Accounting and Economics

1. Scope:

At present, I am working as Assistant manager of their flag ship store in Queen Street, Brisbane MacVille Pty. Ltd. P. Kinski given me the responsibility to assess the risk associated with the acquisition of the new café that is Hurley’s Café in Toowoomba. For that I went to Toowoomba and met John and Ron their and discussed the problems relating to Hurley’s and found the ways to resolve those issues.

1. Goals:

As a member of the finance, audit and risk management (FARM) committee, aim to follow the MacVille Risk Management Policy. To satisfy MacVille aims, to deliver our valued customer the very best café- going experience.

1. Analysis:

To identify thoroughly risks and examining the external environment surrounding an organisation, I have included the PEST Political, Economic, Social and Technological factors affecting the business. As well as I did the SWOT analysis that is identifying the Strengths, Weakness, Opportunity and Threats attached with this takeover:

Political: proposed laws that may affect the organisation

Due to the Federal Government legislation about efficient water usage for industries, current by- law has fines of up to $50000 for excessive water breaches.

Economic:

Opportunities for opening more cafes in the surrounding shop centre like Wilson ton, Clifford gardens and K- Mart plaza

Social:

Toowoomba was a place for retirees, opportunity for population growing

Technological:

Due to Federal Government’s National Broadband network in Toowoomba, allow efficient and effective video streaming and teleconferencing.

Strengths:

Strengths are key elements that allow organisation advantage over its competitors.

Due to corner location, store is easily accessible for local customer and highly visible for tourists.

Weaknesses:

Weaknesses are the limitations faces by the business in achieving its objectives.

Due to long drive location, it’s quite difficult to attend weekly managers meeting at Brisbane as well as training sessions.

Opportunities:

Opportunities are the conditions of the environment in which the business operate which could benefit the organisation if acted upon.

More opportunities for opening more cafes in the surrounding shopping centres like Wilson ton Clifford gardens and K- mart plaza.

Threats:

Threats are barriers that prevent business from achieving its objectives.

Same staff members completed the cash register and often $4000 was kept on the premises overnight in the cash register, there was not always time to do the banking.

Research:

The strategic context in which MacVille will achieve its mission and vision is through both internal and external research. This may be in the form of:

Inflation Targeting as a Method to Control Inflation

Past records

Primary data collection techniques:

It includes interviews with current employees, current supervisor James. During site visit, I have an interview with focus group, site observation including questionnaire with customer.

Engaging with customer and customer research

Secondary data collection techniques:

It can be sourced from existing survey results, databases and statistical research organizations, published reports, case studies and published texts.

By sharing information weekly with FARM committee at head office concerning the marketing, finance and store management functions that for investigation.

1. James Mansfield

There is lack of internal controls in particular with handling cash, monitoring and recording the ins and outs of financial concerns of the store.

2. Ron Lanford

Ron Lanford gave some insights on external environment (by-laws, government legislation, economic, expansion options, competition, technology plans).

Key problems identified in the report were as follows:

Lack of internal control, particularly over cash handling, monitoring and recording.

Extract from MacVille NSW problems with acquiring and re-branding existing stores

The long drive from Toowoomba to Brisbane would make attending the weekly managers meeting difficult considering many meetings did not finish until into the evening after refreshments.

Summary:

Internal controls of MacVille Café in Toowoomba as well as the corporate governance arrangements have created policies related to risk management intended to:

1. Human Resource risk in MacVille

There is no specific person authorised for deliveries, there is high possibility of theft of goods.

2. Financial operations risk

The same person doing the cash register, balancing, writing bank deposit form, and do the banking as well which has a high risk of cash theft.

3. WHS- Work Health Safety

The manager has a potential chance to be involved in accident due to very long hours of driving in going Toowoomba, it will require total of 4 hours travel in going back and forth.

4. Supply chain:

Chance of losing customer because pastry products delivered by the supplier are always delivered late and so products are not sold on time.

5. Overall compliance issues

High possibility of non- compliance of Governments law concerning efficient water usage that will cost $50000 fines for excessive water beaches. Café have the existing water usage that will cost $50000 fines for excessive water breaches. Café have the existing water use 41500 L a week.

MEETING MINUTES

Meeting Objective(s):

To mitigate the risk involved.

To make an action plan for the risk evaluated.

 The expansion of business

Agenda, Decisions, Issues

4. Action Items

Action                                                                                                  Responsible          Due date                          

Next Meeting

Summary Notes

The identified risks from the case study presented are the following:

• Banking Risk: Theft of cash left on the premises and Day to day handling of cash.
• Manager’s Travel Risk: Physical injury due to accident as the meetings continue after 3 PM and it is risky for managers to travel after 3pm.  
• By-law Compliance Risk: Over usage of water and installation of water treatment plant.
• Employees WHS: The manager has a potential chance to be involved in accident due to very long hours of driving in going Toowoomba.

The above table outlines a plan for communicating the key message about my risk management policy.

1. The expansion of business.
2. The assessment of the risk involved in the takeover
3. Action plans to mitigate those risk involved in the takeover.
4. Persons responsible to access the implementation of risk management plan.