Governance, Ethics and Sustainability

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Assessment 2 Information

Subject Code: MBA402

Subject Name: Governance, Ethics and Sustainability

Assessment Title: Risk Assessment

Assessment Type: Risk Report

Choose an item.: 2,000 Words (+/-10%)

Weighting: 30 %

Total Marks: 30

Submission: Via Turnitin

Due Date: Week 10

Your Task

You are required to read the following journal article article:

1. How Risky is Your Company? HBR. May-June 1999 https://hbr.org/1999/05/how-risky-is-your-company

Ensure you click on the ‘Read More’ link to view the Risk Exposure Calculator.

You are also required to read the case study below about fictional company Property Millionaires

You must then prepare a risk assessment report on Property Millionaires

Assessment Instructions

You must then prepare a risk assessment report on Property Millionaires using the Risk Exposure Calculator and specifically address:

A. Pressure points due to growth

i) pressure for performance

ii) rate of expansion

iii) inexperience of key employees

B. Pressure points due to culture i) rewards for entrepreneurial risk taking

ii) executive resistance to bad news

iii) level of internal competition

C. Pressure points due to information management

i) transaction complexity and velocity

ii) gaps in diagnostic performance

iii) degree of decentralised decision making

You will be required to include a minimum of 15 references in your Risk Assessment Report at least 5 of which must come from academic journals or textbooks.

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Assessment Case Study

Background Property Millionaires is a company that offers ordinary people a range of real estate investment seminars and ongoing mentoring services. The philosophy at Property Millionaires is that anybody can become a property millionaire if they have the right mind set, education, and support. The company was established three years ago by successful real estate developer George Kirzner. He has grown Property Millionaires into a medium sized business employing over 100 staff with offices in Sydney, Melbourne, Brisbane, and Adelaide. One year ago the company’s seminar sales increased dramatically and now its operations are expanding faster than the company’s capacity to hire and induct new staff. George considers this to be a great problem to have and continues to hold the staff accountable for delivering strong financial performance. But the company’s regional managers are not as thrilled as George with the organisation’s surge in growth. The rapidly increasing need for more consultants has forced the company to lower their employment standards, hiring many new people with little to no previous experience in sales.

Business Model Property Millionaires generates leads by advertising free introductory seminars that explain how real estate investment can be used as a vehicle for achieving an early retirement. Seminar attendees are contacted after the introductory seminar by a consultant who invites them to a free face-to-face consultation. At this meeting the consultant attempts to sell the potential new client a real estate seminar priced at $10,000. The consultants are managed by regional managers in each city. The regional managers report to a senior management team that includes George as the company CEO. Consultants Consultants are given aggressive sales targets that are set by the senior management team with little or no input from either the consultants themselves or the regional managers. They are paid solely on a commission basis, that is, they earn a percentage of the $10,000 seminar fee for each client that they sign up. Each month the consultants are ranked by the regional managers according to their sales performance. The highest performing consultants are treated like royalty and given special treatment by the regional managers. Because the consultants are pitted against each other like this, the company culture is highly competitive to the point of ruthlessness

Regional Managers Regional managers act without a sense of the larger corporate strategy. There are no well-defined information channels for sharing information either between themselves or with senior management. The regional managers have also surrounded themselves with “yes” men and women, and do not hear much, if any, bad news. They tend to leave the consultants alone because they do not understand the sometimes complex language of the consultation process. Managers have limited access to performance data and spend much of their time trying to resolve flare ups or unanticipated emergencies. From the information they can access they tend to focus solely on seminar sales figures and their monthly performance reports to senior management are often late or not submitted at all.

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Senior Management Team A high percentage of Property Millionaire’s business is based on new seminars. The seminars are developed by George and the senior management team: a creative, risk taking group of real estate business people. In this regard they do not act like a team but are given a great deal of autonomy and so develop seminar content independently of each other, only returning to the group once they have created something of substantial value. There is an increasing frequency in the failure of new seminars.

Client Satisfaction Client complaints are on the rise. Clients say they feel well respected and serviced by their consultants until they sign up for a seminar. At this point their consultant seems to lose interest in them and often fails to return their phone calls. Risk Exposure Calculator Be sure to include the Risk Exposure Calculator in your assessment answer.

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Important Study Information

Academic Integrity Policy KBS values academic integrity. All students must understand the meaning and consequences of cheating, plagiarism and other academic offences under the Academic Integrity and Conduct Policy. What is academic integrity and misconduct? What are the penalties for academic misconduct? What are the late penalties? How can I appeal my grade? Click here for answers to these questions: http://www.kbs.edu.au/current-students/student-policies/.

Word Limits for Written Assessments Submissions that exceed the word limit by more than 10% will cease to be marked from the point at which that limit is exceeded.

Study Assistance Students may seek study assistance from their local Academic Learning Advisor or refer to the resources on the MyKBS Academic Success Centre page. Click here for this information.

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Assessment Marking Guide

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