Manage Risk – Cheap Research Essays

Manage Risk
Assessment Task 2 – Case Studies

Select two of the following case studies and complete the following three Risk forms for each of the two chosen case studies.
1. Complete a Risk Register (Appendix A)
2. Complete a Risk Treatment Schedule and Plan (Appendix B)
3. Risk Action Plan (Appendix C)

Case Study 1 – Big Department Stores Decline in Popularity
Note: Imagine that you are the CEO of the second largest, national retail department store chain in Australia. Your objective is to successfully open and operate a new department store in a major shopping centre in your city. In the ‘olden’ days of retailing, about 20 or 30 years ago, developers wouldn’t have launched a major shopping centre without signing David Jones, Myer or Grace Bros as anchor tenant.
Traditional department stores were a major consumer draw, the sun around which the prosperity of the shopping centre revolved. It built on consumer brand loyalty developed over decades of family shopping expeditions. But how times change. In the 21st century, shopping is a ‘retail experience’ and many regional centres are thriving without any of the Big Three on board, particularly in the outer suburbs. Some say this is symptomatic of the decline in traditional department store retailing. The necessary critical mass, depth of product and wow! factor is achieved through mixing the new big names – nimble niche retailers such as Harvey Norman, Freedom Furniture, Dick Smith Powerhouse, and Rebel Sport.

Crucial, too, is food and the discount department stores, Target, K-Mart and Big W. Some centres have up to three supermarkets – Safeway, Bi-Lo, Coles, Woolworths and Franklins – plus restaurants, cafes and pubs.Then there are the cinemas – up to 10 in the suburbs. They are the hub of entertainment and food precincts where families can blow a bit of money and have a good time, typically in areas without much infrastructure.
So with all this going on, who needs a traditional department store? They seem to be the dinosaurs of the modern retail age. Statistics also point to terminal decline for traditional department stores, which last year claimed just 8 per cent of non-food retail spending, compared with 27 per cent in 1974, according JHD Advisors’ senior economist’ Bob Schwartz. Conversely, the market share of discount department stores surged from 2 per cent of non-food retail in 1974 to 11.5 per cent last year.Its growth that is certain to continue with Coles Myer chief executive, John Fletcher, set to convert up to 10 Myer Grace Bros (MGB) stores into Target or Kmart outlets or close them outright. Just last week, Coles Myer said it would close two Grace Bros stores – at Tamworth and Nowra, both in NSW – by the end of June. Myer Grace Bros (MGB) managing director, Dawn Robertson, says the stores are at the end of their leases and considered ‘too small to be sustainable’.She also flags upgrades to stores in Perth, Chermside in Queensland, Highpoint in Melbourne and Burwood and Erina in NSW. Yet, despite all the evidence, retail experts are optimistic about traditional department stores, a future they see focused on Australian CBDs and affluent middle-distance suburbia. ‘I’m actually reasonably confident in the sector. I believe there’s some hope’, says KPMG associate director Justin Ganly. ‘For example, DJs is very cleverly pitched at the 30-plus female on a relatively high income. They’ve done their research and said, ‘This is the market we want.’ And like MGB, it appears they will do it largely through fashion, which offers good margins and draws people into the store, where they may purchase other things.For evidence, look no further than the latest television advertising campaigns for David Jones and MGB.

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They are about clothes, designers and not much else. Certainly, there is no mention of the Foodchain concept in the David Jones advertisements. An attempt to cash in on the high-end food boom, Foodchain has cost about $10 million so far through the closure of stores in Port Melbourne and Parramatta. Four Foodchain stores remain in operation. ‘If you go into a DJs store now, it’s almost a collection of boutique stores – Morrissey, Collette Dinniganetc,’ Ganly says. ‘The margins are solid and they won’t discount.’David Jones’ managing director says top brands and exclusivity are at the core of a long-term strategy to differentiate its product offerings and avoid discounting. ‘Approximately 65 per cent of our men’s, women’s and kidswear are exclusive to DJs’.‘This differentiation has allowed us to maintain price points in key categories in the past year in the midst of high levels of discounting throughout the industry.’ He is, of course, referring to MGB, which is finding discounting an impossible habit to break. By March 21, MGB had already launched a My New Season Sale offering 20 per cent off men’s and women’s winter clothing.
Further discounting, up to 30 per cent, followed last week across MGB’s entire range. However, MGB is getting its act together in other areas, says Ganly. ‘I think levels of service in MGB stores have improved out of sight’, he says. ‘Gift wrapping has reappeared and it doesn’t appear to be too much of a problem. A year back, there was no way known you were going to get that.’ Also assisting MGB has been the fresh focus of Coles Myer stablemate, Target, which at one point was selling the same brands and products as its big brother.The move has been positive for both, with Target increasing profit 71 per cent from a low base to $68.3 million in the six months to January 26.‘Now they are more clearly positioning themselves. I think people are re-establishing in their mind that Target is where you go to buy Target-branded goods, which takes pressure off MGB.’ Similarly, the Target or Kmart store conversions in areas not suited to MGB will allow MGB to focus on developing business in core middle-class outlets.

However, will shopping centre owners, who for so long saw traditional department stores as their star attraction, allow this to happen? ‘Maybe five years ago an owner would have reacted with horror to the conversion of a MGB into a Target, but times have changed’, Ganly says. General Property Trust’s (GPT) retail general manager, Mark Fookes, says the conversion must be researched to ensure shoppers will embrace the change. But when done properly, it can be a win-win situation for everyone.GPT was involved in a successful conversion at Greensborough, Melbourne, five years ago, when an under-performing Myer was converted into two stores – Target and Target Home.‘It has been a big success for the centre, drawing more traffic and doing a better job as anchor’, Fookes says. ‘However, it depends on the centre. You must look at what the customer wants and what is going to perform in a particular centre.’
Traditional department stores will work in some areas but not in others. Fookes says the future is positive for traditional department stores provided they are properly located and marketed. ‘Any regular department store can be successful provided it is well-positioned in the marketplace. For example, our Charlestown (Newcastle) Grace Bros is GPT’s strongest performing fashion outlet on a dollar per square metre basis. ‘He says that while, ‘We’re becoming less reliant on department stores as specialists and mini-majors increase in popularity’ the mix of retailers is the most crucial element. And it’s a mix that, in an increasing number of cases, need not involve a traditional department store. Besides, they have other things to worry about, such as the very traditional bottom line.
Case Study 2 – CJ Plumbing Supplies
CJ Plumbing Supplies is Brisbane’s biggest name in plumbing supplies for bathrooms, kitchens and laundries. Founded in 1867 as a building supplies company, CJ’s as it is widely known, has grown into a public company. With 5 stores located throughout Brisbane, and over 100 years’ experience in the plumbing industry, great importance has been placed on fostering strong partnership-style relationships with their customers, suppliers, distributors, joint venture partners, home builders and industry associates. CJ Plumbing Supplies motto is, ‘Here to give all the help the client needs’.
Recently, the board approved a proposed company vision to, ‘Become the leading preferred supplier of plumbing supplies to the building and home trades in Queensland’. Despite this, customer complaints are frequently ignored, mainly due to poor staff customer service training and a culture of ‘Do it yourself’ that prevails throughout the building industry. Poor customer relationship management processes and a culture of mistrust between employees and CJ’s, has negatively affected the growth of the business. Up until about one-year ago, the number of new homes being built experienced phenomenal growth throughout Queensland and particularly in the southeast. Recently however, the seasonally adjusted trend for new home approvals has fallen. In fact, March 2003 was the seventh consecutive monthly fall, due in part to the uncertainty of global economy. Last month, a court case established a new legal precedent for building suppliers. One of CJ’s main competitors had to pay a home owner several hundred thousand dollars in damages for faulty gas piping that lead to a fire that destroyed a house. This trend in home owners seeking litigation against building suppliers is widely expected by all in the industry to continue to rise. Due to the soft new home building market, CJ’s company directors have decided that CJ’s should diversify into a second, unrelated business – a financial credit union. This is to spread the business risk through diversifying CJ’s outside of the building industry in case the industry collapses unexpectedly. CJ’s customer sales and marketing policy is, ‘Love you, no matter what’.
Although the human element to gaining attention and relationships is essential, CJ Plumbing Supplies look past customer relationships that, over time, are more problematic than productive. CJ’s have frequently held on to clients for years that chronically move with the speed of erosion when it comes to paying their accounts. By the same token, CJ’s have held on to sub-par employees in the hope that their performance would improve over time. Their presence is doing CJ’s business more harm than good. CJ’s are partly to blame however; they lack good human resource management practices.