Case study for Manage Risk Assignment

1 Read through this scenario and respond to the activities that follow it. What went wrong? This was the question everyone was asking. After many planning sessions and the evaluation of many alternative options it had been decided that Papa Rondo's winery would enter into the joint venture with the interstate winery to supply wines for the newly emerging Asian markets.

This move was seen as an important one in the value chain opportunities for the future of the business. 'Pre value' was also being achieved by an alliance between Papa's business and the small local wineries. These wineries were now into full grape production but having difficulty in using their full harvest. They would supply the grapes and Papa Rondo would make the wines at his winery.

This was an outcome that benefited everyone. The small growers could sell all their produce and Papa Rondo could take advantage of the Asian market opportunities without having to purchase more land or plant more vines. Likewise the interstate winery could concentrate on what they did best - marketing.

This was certainly an outcome Papa Rondo would never have contemplated without the structure of a sound strategic management process. After all who would have thought that so many competitors could form an alliance where everyone won?

To enable the project to happen Papa Rondo had agreed to purchase and install at his winery, additional grape crushing equipment together with new wine fermentation and storage tanks. Whilst this required Papa to borrow finance it was seen as adding value to Papa's business and a necessary investment in the future of the winery.

Today was the deadline the new storage equipment had to be fully operational for Papa Rondo's winery to take consignment of the grapes from the first local small growers in this strategic alliance. Picking had commenced and the grapes would start arriving early the next morning.

However the reality was that the facilities wouldn't be ready for at least another two weeks. This may not sound a long time but it definitely was a critical one for a perishable product that had to be harvested at the 'perfect moment' to ensure quality wine production. At risk was the whole venture into the Asian market, not to mention the financial commitments of all parties and Papa's reputation within the industry as a reliable supplier. 2

Everything seemed to be going well with the project and then a series of contractor delays and unexpected technical problems brought the project to a halt. When these occurred no one seemed to know what to do about them and no contingency plans had been developed in case such a situation eventuated. In fact no-one even knew who should be responsible for doing what could be done. The outcome was that the situation was made worse by general confusion, inaction, and lack of any coordinated response.

With other major projects currently planned that were critical for the future of the business it was imperative the same or similar disasters didn't occur again. Papa's daughter had arranged for you, an expert in the fields of Project Management and Risk Management to come in today and provide training to the staff in these areas. Central to each phase were risk evaluation and the establishing of contingency plans that could be put in place if various risks threatened the outcome of the project.

Like strategic management Project Management provided a planned and logical framework to operate within that gave maximum control of not only each project, but also each stage in its planning and implementation to the organisation.

In discussing the current crisis everyone agreed they had failed to do any of these things, other than identify the expected overall outcome of the project. Everyone also agreed it was now easy to see why the lack of any effective management of the project had contributed significantly to the current outcome.

The current crisis was unexpectedly overcome through the intervention of another competitive wine company.

When the manager of the neighboring German wine company heard of the crisis affecting Papa Rondo and the small local vineyards, he approached Papa with a proposition that would not only overcome the present crisis but would present significant future opportunities for all concerned.

The manager explained that as his grapevines were not yet fully mature their business had considerable excess crushing, fermentation and storage capacity. He offered the use of these facilities to Papa Rondo and the other small local growers to alleviate the present problems.