Case study:
last half-The company’s CFO, David Rose (Mrs Rose-Gardner’s older son), has a different view. He said, “For what it is worth, I can understand where the investors are coming from. We are no longer a “local” business. A lot has changed since Nan started this business on her kitchen table, and Uncle Sam was the only truck driver. Today, we have operations across Australia, employ more than 2,000 people – and I am not even counting the 3,000+ contractors on our books. I believe there was a recent ruling whereby businesses like ours have a lot more responsibility of looking after our employees, especially our sub-contractors. When Melissa is back, I’m sure she will be able to shed some light on this. Plus, we should endeavour to go beyond the mandatory requirements. Wouldn’t it be great if our peers recognise us as the pioneers in corporate governance and sustainability practices? After all, we consume a crazy amount of fuel every year: and with climate change being a pressing political topic – the last thing we want is to be boycotted. These investors will own 12% of our company and probably secure a seat at the board table. So, we should be careful about making any throwaway comments. Although we might be a private company, it is impossible to hide when you are this big. The business media and journalists are aware of our operations and ownership structure. In the world of social media and Twitter, information travels much faster than we can imagine”. Mrs White concurs with David’s views. She said, “I want to continue looking after our loyal customers and faithful employees who have supported us all these years. We already do a lot for the community, and it would be great to consolidate all the information about our various programs in one easily accessible location. But I am not sure about preparing these fancy reports which no one is ever going to read. Surely, we can put our money to better use?”. Towards the end of your meeting, Alice said, “Honestly, we are just testing the waters with these private investors. We want an accurate company valuation and want to see what’s it like to work with a private equity group. Even though we will go ahead with this equity sale, Focus’s ultimate goal is to be an ASX listed company by the end of next year”
REQUIREMENTS
You are required to write a report to Focus’s board summarising your views on corporate governance, sustainability and risk management practices. In your report, you must address the following three areas:
1. Identify and discuss four good corporate governance practices that you consider to be relevant to this company. Describe how these would be beneficial for a large private company such as Focus Logistics as it transitions into an ASX listed entity. (15 marks) (1,000 to 1,100 words)
2. Summarise the significance, benefits and challenges of producing a sustainability report for Focus Logistics, especially for a business within the logistics industry. Identify the key elements that should be included in such a report in this industry. (10 marks) (600 – 660 words)
3. Summarise the key risks for Focus logistics and explain what benefits there would be in minimising risk. Provide clear and succinct advice on what actions the company should take to minimise risk. (7 marks) (400 – 440 words)
Within the answers to the above three questions, you should refer to:
1. The views of the four people you have recently met (Mrs White, Mrs RoseGardener, David and Jacob).
2. Recent news releases relating to best practice corporate governance, sustainability and risk management practices.
