Fblt092 Risk Management : Business Assessment Answers
In recent times, unusually heavy rains have caused the river to overflow its banks. This flooded your site and caused a large leak from your chemical storage tanks into the river. In the summer of 2016, an explosion in the plant spread toxic fumes to the surrounding residential areas and the fishing village. This has had serious health consequences (including a dramatic increase in respiratory diseases) on the local population for which your organisation is currently facing legal actions from various individuals and interest groups. As a result of these incidents, a section of the local community has been quite vocal in their objection to your continued presence at the site. However, because you employ approximately 300 workers the majority of whom come from the local community, there is still some tolerance of your business among a sizeable majority of the locals. Whilst the local administration and planning authorities want your plant to relocate, they cannot enforce the move through the planning laws as the plant’s site carries some immunity. They are also very much aware of your company’s contribution to the local economy as a major employer.
In addition to the environmental and planning issues, your company has been unable to achieve its annual sales targets in the last two years due mainly to increased competition from suppliers from Eastern Europe and Asia. This has been of great concern to the shareholders of your company who are worried about the value of their investments.
You are required to carry out the following tasks:
- Profile the risks to your organisation given the above scenario and prepare a quantitativeassessment of the risks using an appropriate risk register for the following strategic categories of risk:
i Political
- Economic
- Social
- Technological
- Legal
- Environmental
- Competitive
- Prepare a disaster recovery plan against some possible hazards to your company’s operations. The plan must include 2 environmental hazardsand 2 technological hazards. The format of your report should include a profile of the hazards as well as the contingency plan and the disaster response for each hazard.
- Provide a detailed value chain analysis of your company’s business with a view to improving your performance in the market.
Answer:
Introduction
Risk management and value chain analysis is very essential for successful operational management within a business. The current report demonstrates and identifies the risk and value at both project and strategic level. The systems and tools are developed and applied to the management of value and risk. Contingency and disaster recovery plan have also been justified and developed. The current report profiles the risk registers them and identifies the hazards as well. A contingency plan has been prepared in response to the strategy along with the business specific value chain. The non-value adding activities have also been provided along with the recommendations for further development and better mitigation of risks.
Profiling risks
|
Political risks |
Major political risk lies in the fact that local political power can legally sue AutoTyres ltd for polluting the river and being prime cause for the respiratory disease within the village. The political powers can also cause threatening unions for the manufacturing organization thus causing the organization to close down. Other political risks that will involve include local administration and planning authorities to relocate the plant for the village safety (Ahi 2013). |
|
Environmental risks |
River Crange passing beside the factory is the habitat for several of the small fish and supports the local small-scale fishing industry. However due to recent heavy rains, the river has flooded the banks and the leak from the chemical storage tanks polluted the river. Further the explosion in the summer of 2016 has caused spreading of toxic fumes to surrounding fishing village and residential areas causing serious health consequences. According to Beske (2014), the respiratory disease has increased as well due to air pollution. |
|
Social risks |
A large section of the village population has been against the manufacturing unit operation of AutoTyres Ltd and has raised voices against the organization operation. However due to 300 workers being employed at AutoTyres Ltd. belongs to the local community, the business has been tolerated by the locals. |
|
Technological risks |
Less technological safety has been provided to the plant and therefore it faces issues like explosion and flood destroying the chemical storage facility (Chiu 2016). |
|
Economical risks |
Since the organization provided major employment to village people, it contributes to the local economy. Further if the local villagers stop working at the unit, the organization might face serious issues of closure of the unit. |
|
Legal risks |
The site carries some immunity that prevents any serious law enforcement. Further the unit is also facing serious legal actions from various interested groups and local community. |
|
Competitive risks |
AutoTyres Ltd has not achieved the annual sales target within last two years. This happened due to the increased competition from various suppliers of Asia and Europe. Therefore, the investors are also worried regarding the return on investment. |
Table 1: Risk profile for AutoTyres Ltd.
(Source: Created by the Author)
Risk register
|
Risk priority |
Risk associated |
Mitigation techniques |
|
1 |
Competitive risks |
Discovering the contenders are, what they are putting forth and what their Unique Selling Point (USP) is. This will distinguish the ranges that need to contend in, and additionally give a stage to differentiating the products of AutoTyres Ltd. Selling into a more noteworthy number of business sectors can expand client base and spread the risk. Giving better customer service by being more responsive to their requirements and desires is another strategy. If attainable, considering offering minimal effort additional items, for example, enhanced credit terms, rebates or unwaveringness plans is another technique that DeuaSeat Ltd needs to apply (Costantino 2016). |
|
2 |
Economical risks |
Working in a quick moving business sector requires noteworthy adaptability. An arrangement that doesn't consider will more likely than not be knocked off base. Arrangements needs to rather be worked to cover a scope of situations for AutoTyres Ltd. Basic to this is the capacity for CFOs to be able to rapidly model and test situations and have certainty that the subsequent results of knowledge are reliable. Driver-based modeling is well for some organizations, yet there is extension for development. For instance, it is vital that models incorporate contribution from many individuals. As would be possible to give a total and exact sign of how the business will respond to various economic situations for AutoTyres Ltd. Information from deals, promoting, HR and whatever is left of the association should be consolidated with money related information while the correct innovation must be set up so knowledge can be drawn from this data. |
|
3 |
Technological risks |
AutoTyres Ltd. should adopt better smoke control system and the stack height of the manufacturing unit should be increased to prevent the smoke and fumes to pollute the atmosphere. According to Gereffi (2016), electronic precipitator and other devices should be used for checking the pollutant level. Further the containers and chemical storage tanks should be built much stronger to anticipate the floods and other accidents. |
|
4 |
Legal risks |
AutoTyres ltd. should follow the environmental standards for the manufacturing units and follow legal guidelines as much as possible for managing the legal risks. |
|
5 |
Political risks |
Any kind of political influence must be avoided and the organization should not encourage political involvement within the manufacturing unit. Further formation of labor union must also be discouraged within the unit. |
|
6 |
Environmental risks |
AutoTyres should ensure that the pollutants are not entered into the river stream and the air pollution is prevented through adopting adequate pollution control mechanisms (Govindan 2014). |
|
7 |
Social risks |
The villagers should be allowed to work at the factory with more recruitments as well as any issues within the villagers regarding the manufacturing unit must be discussed through a public meeting. Further AutoTyres Ltd should also start corporate social responsibility programs. |
Table 2: Risk register for AutoTyres Ltd.
(Source: Created by the Author)
Hazard identification and profiling, contingency plan and response strategy
Environmental hazards
Water pollution
Water contamination is one of the hazards for AutoTyres Ltd. It is typically caused by the emissions into the river Crange. It can be averted through distinguishing modern units that are the greatest polluters of waterway water. If NEQS with respect to wastewater were entirely authorized, these businesses would need to decrease and treat their waste water before transfer. A standard subjective and quantitative checking of crisp water assets additionally should be finished (Grant 2016). Appropriate sterile landfill destinations should be developed alongside examination of the ground water quality. The refusal needs to be thrown into garbage and waste cans. Guests who toss trash into pools, lakes, lakes, and even along the shorelines dirty recreational destinations once a day. This contaminates the water as well as blemishes the magnificence of the site. Discard undesirable paints or oils should be finished. They should not to be thrown into channels or sewers. According to Irvine (2015), leading epidemiological investigation in the regions near defiled water bodies will evaluate the impacts of contaminated water on the strength of shoppers should be finished by AutoTyres Ltd.
Air pollution
AutoTyres Ltd can utilize various air contamination control innovations, for example, Electrostatic precipitators and pack houses or channels for PM control, low NOx burners, arranged ignition, fuel gas distribution, and both particular and non-specific synergist diminishment to decrease outflows from burning. Granulated Activated Carbon beds decrease contamination also for Toxic or Hazardous air poisons and Volatile natural mixes (Johnson 2013).
Technological hazards
Explosion
There is a high probability that AutoTyres Ltd fire extinguishers had expired quite a long time ago, eye washers had vanished and primary roof fans had stopped to work as well. Peng (2014) stated that to pass consistence prerequisites, broad on location testing of all physical and innovation parts of synthetic plants and storerooms needs to be performed by outside qualified gatherings simply like outsider inspectors and bookkeepers are utilized to audit corporate monetary explanations. As wellbeing labels can be effortlessly altered, very physical testing of each gadget and manual stock compromise likewise should be finished with a specific end goal to guarantee legitimate usefulness.
Flooding
AutoTyres Ltd needs to introduce better flood warning systems, modify their storage tanks and reservoirs flood proof. The facility plinth level should be high above flood levels. The climate change needs to be tackled as well. Flood defenses should be increased with protection of wetlands and encouragement of planting trees. Water storage areas needs to be constructed as well to prevent the flooding (Savino 2015).
Business specific value chain
The pre-production or data sources period of the tire value chain comprises of the prerequisites for production. The production prerequisites for tire are pre-production administrations (plan and designing), and crude materials and segments. The production segment of the tire value chain fabricates completed items prepared to convey and pitch to discount and retail clients. The tire business is isolated into 1) automobile tire, 2) heavy duty vehicle tire, 3) aircraft tire, and 4) tire care products. The business includes foundations occupied with assembling automobile tires. According to Schaltegger (2014), incorporated into this industry are foundations fundamentally occupied with assembling universally useful healing facility, lab, and rubber manufacturer (e.g., tires for two wheelers, four wheelers and heavy-duty vehicles). The tire might be made on a stock or custom premise and might be collected or unassembled (i.e., knockdown). The production part of the tire value chain makes completed items prepared to disseminate and pitch to discount and retail clients. Lead-time and stock control are significant subjects in the production and get together segment of the tire value chain. A significant number of the real innovation and process advancements being received in tire fabricating – mechanized numeric controls (CNC), endeavor asset arranging (ERP), and "Six Sigma" prepare innovations– are the way to oversee lead-time and inventories (Trkman 2016). Production area choices are additionally influencing, and being influenced by, lead-time and stock contemplations. Firms that create standard items and seek after cost administration have broadly accepted outsourcing. Notwithstanding real late patterns, seaward outsourcing may soon be supplanted by re-shoring and close shoring techniques. As universal transportation, costs are rising, the estimation of the Yuan––the Chinese currency––is acknowledging against the dollar and hence the companies are outsourcing in China. The control over assembling exercises is not just major in the customization of top of the line items; however, it is additionally vital in cultivating item advancement. Especially in projects where item development is inserted underway procedures, the underestimation of operations may extremely influence firms' advancement abilities. This is likely the case in the tire business, where item advancement regularly emerges from cozy connections between mechanical engineers, gifted laborers, and specific providers.
Non value adding activities
Buying groups are a rising marvel in the tire business that merits unique consideration since they are influencing how tires is advertised, purchased and sold. The three biggest buying groups are Honda Motors, Fiat Chryslar and For Motors. Buying groups started as aggregators of privately possessed retail purchaser automobile stores who might arrange select or favored acquiring concurrences with makers for their non-contending individuals. After some time, buying groups included vehicle tires, aircraft tires and heavy-duty vehicle tires to their part offerings, which mirrored the patterns in super store retail outlets like Wallmart and Kmart. As per Turker (2014), buying groups today offer gathering acquiring, as well as extra administrations, including publicizing, store showcases, deals and financing support. Some buying groups have built up their own brands to offer to their individuals.
Conclusion:
It can be concluded that AutoTyres Ltd. should not throw waste products into river Crange. Leading epidemiological investigation in the regions near defiled water bodies will evaluate the impacts of contaminated water on the strength of shoppers should be finished by AutoTyres Ltd. AutoTyres Ltd can utilize various air contamination control innovations, for example, Electrostatic precipitators and pack houses or channels for PM control, low NOx burners, arranged ignition, fuel gas distribution, and both particular and non-specific synergist diminishment to decrease outflows from burning. As wellbeing labels can be effortlessly altered, real physical testing of each gadget and manual stock compromise likewise should be finished with a specific end goal to guarantee legitimate usefulness. The production part of the tire value chain makes completed items prepared to disseminate and pitch to discount and retail clients. Lead-time and stock control are significant subjects in the production and get together segment of the tire value chain.
Recommendations:
AutoTyres Ltd. should adopt a standard subjective and quantitative checking of crisp water assets alongside appropriate sterile landfill destinations. AutoTyres Ltd can utilize various air contamination control innovations, for example, Electrostatic precipitators and pack houses or channels for PM control, low NOx burners, arranged ignition, fuel gas distribution, and both particular and non-specific synergist diminishment to decrease outflows from burning. Further, they should also use prevention against flooding through introduction of flood warning systems and monitor the facility for prevention of explosion.
References:
Ahi, P., and Searcy, C., 2013. A comparative literature analysis of definitions for green and sustainable supply chain management. Journal of Cleaner Production, 52(2), pp. 329-341.
Beske, P., Land, A., and Seuring, S., 2014. Sustainable supply chain management practices and dynamic capabilities in the food industry: A critical analysis of the literature. International Journal of Production Economics, 152(3), pp. 131-143.
Chiu, C. H., and Choi, T. M., 2016. Supply chain risk analysis with mean-variance models: a technical review. Annals of Operations Research, 240(2), pp. 489-507.
Christopher, M., 2016. Logistics and supply chain management. Pearson UK.
Costantino, N., Pellegrino, R., and Tauro, D., 2016. Commodity Price Volatility mitigation in Supply Chain Risk Management: Real options to assess the value of flexibility-driven strategies. In Industrial Engineering and Engineering Management (IEEM), 2016 IEEE International Conference on, 7(3), pp. 129-133.
Gereffi, G., and Fernandez-Stark, K., 2016. Global value chain analysis: a primer.
Govindan, K., Kaliyan, M., Kannan, D., and Haq, A. N., 2014. Barriers analysis for green supply chain management implementation in Indian industries using analytic hierarchy process. International Journal of Production Economics, 147(4), pp. 555-568.
Grant, R. M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley and Sons.
Irvine, R. M., 2015. A conceptual study of value chain analysis as a tool for assessing a veterinary surveillance system for poultry in Great Britain. Agricultural Systems, 135(7), pp. 143-158.
Johnson, G., Whittington, R., Scholes, K., Angwin, D., and Regnér, P., 2013. Exploring strategy text & cases (Vol. 10). Pearson.
Monczka, R. M., Handfield, R. B., Giunipero, L. C., and Patterson, J. L., 2015. Purchasing and supply chain management. Cengage Learning.
Peng, M., Peng, Y., and Chen, H., 2014. Post-seismic supply chain risk management: A system dynamics disruption analysis approach for inventory and logistics planning. Computers & Operations Research, 42(6), pp. 14-24.
Savino, M. M., Manzini, R., and Mazza, A., 2015. Environmental and economic assessment of fresh fruit supply chain through value chain analysis. A case study in chestnuts industry. Production Planning & Control, 26(1), pp. 1-18.
Schaltegger, S., and Burritt, R., 2014. Measuring and managing sustainability performance of supply chains: Review and sustainability supply chain management framework. Supply Chain Management: An International Journal, 19(3), pp. 232-241.
Trkman, P., Oliveira, M. P. V. D., and McCormack, K., 2016. Value-oriented supply chain risk management: you get what you expect. Industrial Management & Data Systems, 116(5), pp. 1061-1083.
Turker, D., and Altuntas, C., 2014. Sustainable supply chain management in the fast fashion industry: An analysis of corporate reports. European Management Journal, 32(5), pp. 837-849.
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