Mitigating the Potential Impact of Crises: AcQuire Technology Solutions Report

Executive summary

AcQuire Technology Solutions, which is an Australian-based organisation, operates in the global market within the IT industry where it offers various technology solutions to its consumers inform of services and product innovations. Mr. Warren Cook, the company’s CEO, is worried that the company may suffer again from global financial crises, having not yet recovered from the 2008 global financial crisis (GFC).

His concern is that the crisis may result in losses for the company and herald a situation where it cannot sustain its employees coupled with its finances. Mr. Warren Cook has an interest in development of employment and financial sustainability strategies that will cushion the company from experiencing loss in case another global financial crisis occurs.

This video business case report develops solution to the issues faced by acQuire Technology Solutions based on four decision criteria, viz. corporate governance, risks management, employees’ motivation, and market share expansion. Analysis of these aspects reveals possible solutions that the company may apply in order to mitigate any effects that a crisis may generate in the near future.

Four alternatives are suggested, viz. employing experts in risk forecasting to help in the development of financial risks resilience measures, develop sound corporate governance strategies, create contingency fund for motivation of employees to enhance their productivity in the event of occurrence a global financial crisis, and expand into East-Asian markets.

The most favourable alternatives include developing sound corporate governance strategies and creating contingency fund for motivation of employees to enhance their productivity should a global financial crisis reoccur.

These alternatives should constitute acQuire Technology Solutions’ policy, which the report argues that it requires bureaucratic framework for implementation in a bid to enhance compliance. The report starts with an introduction of issues and causes before discussing the same and giving alternatives. It then concludes by giving solutions and justifying the implementation of the suggested alternatives.

Introduction

Issues

The CEO of acQuire Technology Solutions, Mr. Warren Cook, cites concerns of the inability of the company to withstand impacts of future global financial crisis (GFC) similar to that of 2008. The occurrence of such a crisis would create a sustainability problem, especially with regard to employees’ retention and financial performance.

In a bid to mitigate these issues, the main challenge of the company entails the need to develop strategies to deal with the possibility of encountering losses should another global financial crisis occur in the future.

Causes

Mr. Warren indentifies sustainability concerns as the major cause leading to the emergence of issues facing the organisation. The economic status of the company determines its financial sustainability.

This aspect calls for Mr. Warren Cook and his managerial team to develop a sustainable cash flow for the organisation in a bid to counter any outcomes of a financial crisis, hence the need to design strategies for motivation and retention of employees.

Decision criteria

Practices for risks management

Financial sustainability of an organisation during a financial crisis requires the existence of sound strategies of mitigation of risks. Organisations overcome financial crises by calling into action appropriate risk management practice if they have awareness of likely risks, which can threaten their operations. Such risks include operational risks and systematic risks.

Operational include “risks resulting from breakdowns in internal procedures, people, and systems”.¹ For acQuire Technology Solutions, breakdown of people and financial system underscores a mega risk that the organisation might encounter during a global financial crisis.

Corporate governance

Corporate governance describes the approaches deployed by an organisation’s executive arm to direct, monitor, and control the organisation. In a bid to accomplish this task, executives make use of “a combination of risk-model information and hierarchical control structures”².

In the formulation of risk models, governance provides the avenues through which critical information that gets into the hands of the executive team is made accurately, completely, and timely. This aspect permits crucial decision-making. Hence, providing amicable grounds on which control strategies are developed, instructions, and directions formulated and then executed effectively and systematically.³

Employees’ motivation

One of the treasured sources of success of acQuire Technology Solutions is its dedicated employees. During a global financial crisis, the aim of an organisation is to retain and increase its productivity levels at minimal costs. At acQuire Technology Solutions, productivity depends on the effectiveness of employees in performing their duties.

Motivation aids in boosting employees’ initiation, persistence in overcoming job related stress, and self-direction in a bid to attain organisational goals coupled with objectives⁴. In the effort to motivate employees, creation of contingency fund to boost staff morale during a financial crisis becomes important.⁵

Increase market share

Market share encompasses a determinant for sales volume made by an organisation. High volumes are important since organisations with large economies of scale have the ability to break even while selling its products and services at low prices. Low prices for products and service are particularly important to consumers during times of financial hardships such as GFC.

Alternatives and their evaluation

Alternative 1: Employ experts in risks forecasting to help in development of financial risks resilience measures

Advantages: Through the creation of risks awareness, which may expose acQuire Technology Solutions to financial sustainability risks, forecasting encompasses a proactive solution to seal possible loopholes of anticipated future losses.

Forecasting of the acQuire Technology Solutions’ financial performance in its markets can help in mitigating a wide-scale collapse of the organisation’s consumer markets. This goal can be achieved by signalling the organisation to innovate consumer friendly services and products in terms of price as a global financial crisis hits organisations operating in the industry of acQuire Technology Solutions.

Disadvantage: acQuire Technology Solutions operates in technologically driven market consumption patterns. Forecasts are accurate or inaccurate. In the event that a global financial crisis fails to occur, the forecasted risks do not also occur.

Therefore, acQuire Technology Solutions will be left struggling in placing innovate cheap services and products meant to help meet the needs of the consumers struggling to meet their household budgets. Competitors, who might not have developed such measures, would become even more competitive by selling more superior, but affordable services and products in the market share for acQuire Technology Solutions.

Alternative 2: Develop sound corporate governance strategies

Advantage: In ensuring adequate financial reserves for use in overcoming the increased costs of doing business during a financial crisis, this solution helps in putting in place strategies for preventing loss of organisational funds. The solution will involve thorough auditing to prevent misconducts such as hi-tech fraud.

Disadvantage: Employees, especially those in the accounting and financial departments, may interpret increased surveillance in the manner of doing their work as an intention to look for excuses and reasons to relieve them of their duties. Hence, this solution creates fear for engaging in business relationships, which may have been otherwise increased the profitability at acQuire Technology Solutions.

Alternative 3: Create contingency fund for motivation of employees to enhance their productivity in the event of occurrence a global financial crisis

Advantages: The Company will have a way through which to mitigate the effects of a crisis for its employees for some time upon the occurrence of a global financial crisis. In case the crisis does not happen, the management can apply the funds to other functions depending on the company’s needs at the time

Disadvantages: This option is short-term in nature. The management may need to formulate backup strategies.

Alternative 4: Expand into East-Asian countries

Advantage: East-Asian countries are emerging economy nations with high consumption levels akin to their high population. With more than 1.5 billion people living in this region, expanding the company operations to the area will improve the company’s market share in the global scene.

Targeting these markets can help in building the necessary market share and thus enable an organisation to take advantage of economies of scale during GFC. This advantage is especially important where the organisation dominates high consumption markets such as those in East-Asian countries.

Disadvantage: The main concern of the acQuire Technology Solutions entails the development of financial sustainability during GFC. Expanding into new markets involves heavy expenditure of an organisation’s financial resources without guarantee on positive response of the market. It also takes a lot of time to build a brand in a new market.

Conclusion

In the selection of the most appropriate alternative, the main challenge entails choosing between alternative for enhancement of financial and employment sustainability. This aspect is important considering that Mr. Warren Cook indentifies the two elements to constitute the major issues affecting his organisation in case a GFC occurs.

Any alternative that offers a mechanism for increasing financial repositories for an organisation when financial hardships are anticipated in the future sounds satisfactory for enhancing financial sustainability. Alternative 1 provides a possible mechanism of enhancing financial performance of the organisation should a crisis occur.

However, in the event of non-occurrence of GFC, the solution may force the acQuire Technology Solutions to collapse due to reduction in the market share and possible associations with production of cheap and inferior services and products. Therefore, given that forecasting of a crisis is highly unpredictable⁶, alternative 2 is most preferable.

Unlike most other organisations, acQuire Technology Solutions is value-oriented as opposed to adopting an orientation on profit basis⁷. Any company seeking to create employment sustainability should create a situation where employees are happier, thus leading to low employee turnover. Hence, less spending in recruitment and training⁸.

Alternative 4 is important where positive reception of acQuire Technology Solutions in the new market is guaranteed. Unfortunately, the organisation remains susceptible to risks of loss of financial resources associated with implementation of poor growth strategies through market share expansion.

Alternative 3 is more appropriate. It emphasises on the significance of setting aside financial resources for boosting organisational needs during a crisis including motivation and programs for enhancing retention of employees in a bid to enhance employees’ sustainability, which is a major issue at acQuire Technology Solutions.

This aspect implies that alternative 2 and 3 are best suited in enhancing both financial and employment sustainability at the company as discussed above.

Implementation

Corporate governance covers all aspects of organisational control coupled with control of interests that organisations serve. It addresses issues related to finance, regulations, and ownership systems. Considering this important function of corporate governance, its implementation requires bureaucratic framework for implementation of organisational policy.

Bureaucracy enhances compliance. The focus of implementing the framework this way is to ensure precision in its capacity to keep in check the possibility of acQuire Technology Solutions losing its financial resources through its employees’ fraudulent activities.

This aspect is particularly important since “a financial crisis owes much to corporate governance and regulatory failures within an organisation.”⁹ In the implementation of corporate governance, the need to mitigate conflict of interests and organisational control arises. This element is especially important where employees own an organisation as in the case of acQuire Technology Solutions

Mitigation of conflicts of interests requires enactments of various customs, laws, processes, and policies that have enormous repercussions of afflicting the manner of controlling acQuire Technology Solutions. This aspect ensures accountability of people engaged in running the business at acQuire Technology Solutions. Successful implementation of corporate governance leads to the implementation of alternative 3.

By sealing loopholes for losing organisational funds, more financial resources become available for use in the contingency fund kitty. Through successful implementation of corporate governance, this kitty becomes also secure and its availability during a crisis is assured.

On successful implementation of corporate governance in preparation for challenges of financial crises, acQuire Technology Solutions acquires a long-term solution for enhancing its financial sustainability and mechanisms of enhancing employment sustainability even in the future.

Bibliography

Andreas, Antony. “The credit crisis and operational risk- implications for practitioners and regulators.” Journal of Operational Risk 5, no. 2 (2010): 123-135.

Bluhm, Overbeck, and Charles Wagner. An Introduction to Credit Risk Modelling. New Jersey: Chapman, 2002.

Brigo, Pallavicini, and Reymond Torresetti. Credit Models and the Crisis: A Journey into CDOs, Copulas, Correlations, and dynamic Models. New York: Wiley, 2010.

Caroselli, Marlene. Leadership Skills for Managers. New York: McGraw Hill, 2000.

Clarke, Thomas, and Marie Rama. Fundamentals of Corporate Governance. London: Sage, 2008.

Denis, Diane, and John McConnell. “International Corporate Governance.” Journal of Financial and Quantitative Analysis38, no. 1 (2003):1-36.

Erskine, Annah. “Human Capital Management.” Management Services1, no.1 (2012): 12-13.

Kouzes, James, and Barry Posner. The Leadership Challenge. San Francisco: Jossey Bass, 2008.

Sveiby, Keith. “The Intangible Asset Monitor.” Journal of Human Resource Casting and Accounting 2, no.1 (2007): 67-71.

Footnotes

¹Antony Andreas, “The credit crisis and operational risk- implications for practitioners and regulators,” Journal of Operational Risk 5, no. 2 (2010): 124.

²Pallavicini Brigo and Reymond Torresetti, Credit Models and the Crisis: A Journey into CDOs, Copulas, Correlations, and dynamic Models (New York: Wiley and Sons, 2010), 45.

³Thomas Clarke and Marie Rama, Fundamentals of Corporate Governance, (London: Sage, 2008), 78.

⁴Keith Sveiby, “The intangible asset monitor,” Journal of Human Resource Casting and Accounting 2, no. 1 (2007): 69.

⁵Annah Erskine, “Human Capital Management,” Management Services 1, no. 1 (2012): 12.

⁶Overbeck Bluhm and Charles Wagner, An introduction to credit risk modelling (New Jersey: Chapman, 2002), 83.

⁷Marlene Caroselli, Leadership Skills for Managers (New York: McGraw Hill, 2000), 63.

⁸James Kouzes and Barry Posner, The Leadership Challenge (San Francisco: Jossey Bass, 2008), 61.

⁹Diane Denis, and John McConnell, “International Corporate Governance,” Journal of Financial and Quantitative Analysis 38, no. 1 (2003): 21.