Risk Management of Domino’s Pizza Enterprise Ltd

According to Wideman (1992), project risk management is the systematic application of all strategies, approaches, processes, and principles of identifying uncertainties that are involved in executing specific projects of the program. Domino’s Pizza Enterprises Ltd (Domino’s) has a plan that entails two projects, i.e., use of mobile app online ordering and use of drones to deliver products to customers. The program is subject to uncertainties such as the risk of company’s solvency, time and financial risks, infrastructure, change in Australian technology, organizational culture risks, sickness of one of the projects team member, termination of essential employs and political upheavals. A qualitative approach will be used to ensure to identify and analyze the risks. A periodic scan of the internal and the external business environment will be used to determine the threat. Therefore, a strategic concept and organizational concept deem necessary for the scanning process. The risk mitigation process shall be reviewed as per the risk specification and description included in the risk register. Stakeholders also will be assigned to address the risk outcomes and the risk mitigation process. The risk mitigation management shall oversee the whole process of developing strategies for mitigating the risks.

Introduction

Project risk management is the systematic application of all the approaches, processes and principles to asses and identify uncertainties of given sets of projects and then planning to implement suitable responses to the risks (Wideman, 1992). Programs and projects are usually subject to those sets of events which when they occur influences the achievement of the set strategic goals and objectives. The plan for Domino’s Pizza Enterprises Ltd (Domino’s), which is the largest pizza chain in Australia, is also subject to uncertain events or factors which have a direct impact on the general performance of the organization (Dominos, 2018).  A risk management plan is developed for the company to ensure that levels of uncertainty and risk are conclusively identified and then adequately managed in a more sophisticated and structured manner. An effective risk management plan ensures that any potential threat to the delivery of outputs, i.e., time, cost, level of resourcing and quality and the actual realization of benefits/outcomes by the business is managed appropriately.

Domino’s Pizza Enterprises Ltd runs some projects, but the current program has two related plans (Dominos, 2018). The first project deals with the use of a mobile app to perform online ordering of the company’s products. The second project involves the use of drones to deliver the ordered products to potential customers by the company.  Since the plans are in their initiation stage, a qualitative risk management methodology deem necessary. Perhaps the qualitative approach will require the identification of potential uncertainties surrounding the projects, analyzing the risks, developing preventive measures, and then implementing those prevention measures.

Therefore, Various stakeholders such as the customers, the marketing team, the production team, accountants, the technicians, i.e., mechanical engineers, IT experts, business partners, and the company’s investors are needed. Significant outcomes are determined upon consultation with stakeholders. One of the results is based on the price of the project which some stakeholders feel it will be costly to buy the drones. Other stakeholders support the mobile app technology since they believe it will be fast and swift in ordering the company’s products. Also, other stakeholders feel that it will take a lot of time to ensure that the drones and the mobile app are operational.

Therefore, I will conduct periodic reviews of the project and also schedule events into the mainstream project plan to address uncertainties promptly. I will assign the relevant amount of time to all the procedures ranging from identification of risk factors to risk mitigation strategies to keep time and ensure that the whole program management process is controlled. For an effective planning and control process, the following actions recorded in the Gantt chart deem necessary.

Program’s Gantt Chart

Activities

The Gant Chart

Risk Assessment

Establishing the Context

            The Strategic Context: As a leading pizza production company in Australia, Domino’s Pizza Enterprises Ltd interacts with both the external and internal business environment in which it operates. The internal business environment involves all those controllable factors that originate from the organization itself and have a direct influence on the day to day running of the organization. Therefore, Domino’s internal environment includes its organization structure, corporate culture, resources such as money and time and also the stakeholders involved in the actual running of the business. The external environment, on the other hand, includes the uncontrollable variables that affect the business. These external variables include the demographics of the Australian government, political stability, the economic orientation of the country and also technology.

Organizational Context: Domino’s Pizza Enterprises Ltd has got a variety of core values ranging from fair treatment of customers, production of best products, free interaction and share of information, to the promotion of employees from within the organization (Dominos, 2018). The organization’s strategic goals focus on increasing profitability, increasing digital marketing activities and enriching of customer service.

Therefore, the external and internal risks based on both the strategic and organizational context include;

External Risk

They are those external factors that Domino’s Pizza Enterprises Ltd is unable to predict and control. They include;

1. Most important vendor going bankrupt

2. Economic upheavals in Australia

3. Wars

4. Increase crime cases

5. Population change

6. Political upheavals

7. Technology change and levels of technology in Australia

8. Competitive pressure

9. Risk of EU regulations

10. The risk of trademarks and copyright problems

11. The risk of market dominance

Internal Risks

These are those factors that originate within Domino’s Pizza Enterprises Ltd, and the company can easily predict their origin and effectively control them. These factors include;

1. The company resources regarding money and time

2. Organizational culture

3. The company’s financial solvency

4. The company’s ability to have the mobile apps conclusively established

5. The capacity of the company to purchase the drones for swift pizza delivery

6. The sickness of one of the most important stakeholders

7. Termination of key employees affecting the project

8. Infrastructure problems such as availability of servers, IT support and control software

9. Availability of skilled labor for the project implementation

10. Literacy level regarding digitization of team members

Identification and Risk Register

Identification of Residual risks

Although there are some identified external and internal risks affecting the program, there are specific risks and threats which have a direct influence on the two programs. These variables include;

External Factors

1. Technological change in Australia

2. Competitive pressure

3. Trademarks and copyright issues

4. Economic upheavals

Internal Factors

1. Infrastructure problems such as availability of servers, IT support and control software

2. Literacy level regarding digitization of team members

3. Organizational culture

4. The company’s financial solvency

5. Time and monetary resource risk

The Risk Register

The following risk register for the two projects includes the nine identified risks. There was no incident of transferred liability, and thus there was no need of alerting any stakeholders concerning the intent. (Appendix 1- Risk Register)

Risk Analysis and Evaluation

Risk Analysis

            Technological Change in Australia: According to Donnelly (2018) technology is the backbone of all developments in programs or projects. The two projects require equipment of high technology. For instance, necessary software is necessary to ensure the mobile app functions effectively. Also, high technology is utilized in constructing, running and maintaining of the drones. High technology thus comes as a benefit to the program while low technology advances in Australia is a threat to the efficiency of the program.

            Competitive Pressure: High competition in the pizza industry is a real threat to the success of the project. More advertising and brand positioning is required as far as the projects are concerned that the time in planning for the program is extended. Also, high cost is incurred in ensuring the company is well positioned in the market.

Trademarks and Copyright Issues: The mobile app and the process of acquiring the drones is subject to copyright and trademark regulations. A lot of time is likely to be wasted in obtaining licenses.

Economic Upheavals: An instability in the economic status of Australia is a real threat to the program. The more the government experiences harsh economic conditions, the higher the price of commodities rise. Since the company needs to buy the drones, the general costs of the program will increase.

Infrastructure: The program requires supporting infrastructures such as servers, IT support, and the control software. Therefore, infrastructure can both be a threat to the program or a benefit. Availability of these infrastructures ensures the swift running of the program, and hence it is a benefit. Unavailability of these elements delays the projects reduces the quality of the whole program and increase the cost of the entire program, and hence it is a threat to the program.

Literacy Levels of the Team Members: This risk is both a threat and a benefit to the program. The more digitized and literate the team members are, the more likely the projects will be successful, and hence the quality of the projects is guaranteed. On the other hand, the more illiterate the members are, the more likely the projects might fail. More time will be spent on training the ignorant members, and also costs will be incurred in organizing these training forums. Therefore, illiterate members will affect the general outcome of the project regarding quality and hence it is a threat to the program.

Organizational Culture: Culture is defined by stakeholders such as the employee’s way of life, values, ethics, and behavior (Elsmore, 2017). Therefore, culture is both a benefit and a threat to the program, i.e., the more corporate, supporting, and hardworking the members are; the more likely the plan will succeed. More time and costs will be saved in the case of a team that has a positive culture and positive belief in hard work. On the other hand, if the team has many political dynamics, and it is not built on a solid ground of teamwork and hard work, the program’s outcomes will be affected regarding time and also cost.

Financial Solvency, Time and Monetary Risks: Solvency, perhaps is the ability of Dominos company to meet its long-term financial obligations. If the company is solvent, then it will be able to purchase the drones and also pay for the installation of the mobile app, and hence the program will be successful. If the company is insolvent, then it will be unable to pay for the drones and the installation services. Consequently, the whole program will be delayed, and the objectives of the program will not be achieved. Also, the more time is allocated to ensure the success of the program. The more likely the plan will succeed. If little time is associated with each project, then the program will not attain its objectives.

Risk Evaluation

The identified risks affecting the two projects are evaluated to determine the likelihood of being realized, and the impact or the seriousness associated with the occurrence of each risk as follows;

Likelihood Scale

Likelihood

Seriousness

Low

Medium

High

EXTREME

Low

Technological change in Australia

Competitive Pressure

Financial Solvency

Medium

The sickness of one of the team members

Trademarks and copyright issues

Economic Upheavals

The literacy level of the Team members

High

Time & Monetary resources

Organizational Culture

Infrastructure

Discussion On the Selected Classification Rating

            Catastrophic: Infrastructure issues, financial solvency, and the literacy level of the team members affect the most objectives of the program. Perhaps, there is no objective that will be achieved without the three risks being effectively mitigated. Literacy levels and infrastructure affects the quality of the projects outcomes, time and cost.

            Major: Competitive pressure, economic upheavals and organizational culture also affect most objectives such as the timely completion of the program, minimizing costs and even quality. Perhaps the aim of quality is severally affected by the three risks.

            Moderate:

 Trademarks and copyright issues, and time and monetary resources risk affect only some of the primary objectives of the program. For instance, trademarks and copyright problems will delay the projects thus only affecting the goal of timely completing the project. These moderate risks can be easily avoided by the prior planning of all legislation in the case of trademarks and copyright issues and also by scheduling the work in progress.

            Minor: Sickness of one of the team members is a minor issue since it can be easily remedied by recruiting and training another staff. Also, another personnel can be assigned the duty of the sick person alongside his/her roles assigned initially.

            Negligible: Change in technology in Australia is a small issue that has a less significant impact on current projects. For instance, it requires decades for the change of technology issue to impact the whole economy of Australia hence there is no likely direct impact of the problem to the outcomes of the program for the next decade after implementation of the program.

Risk Mitigation

Risk Mitigation Action Table

Grade

Type of Risk

Mitigating Action

Type of Action

Stakeholders involved

Budgetary Implications

D

Technological change in Australia

N/A

Preventive

IT manager & Steering Committee

None

A

Trademarks and copyright issues

Prior search for licenses & product copyright

Preventive

Senior Manager

Licensing Fee

B

Time & Monetary Issues

Scheduling & effective Accounting

Preventive

Team Member

None

D

Competitive Pressure

N/A

Contingency

Project Team Member

None

N

Economic upheavals

N/A

Contingency

Finance Manager

None

C

Literacy level

In progress Training of Members

Contingency

Team member

Training Fee

A

Financial solvency

Comprehensive Company Auditing

Contingency

Chief Accountant

Auditing fee

B

Infrastructure

In progress Auditing of the project

Contingency

Project Manager & Sponsors

Auditing & Accounting fee

D

Organizational culture

N/A

Contingency

External Stakeholders

None

Risk Mitigation Analysis and Discussion

            Grade A: Trademark and copyright issues, and the company’s financial solvency is Graded as “A” risk. The risks are urgent, compulsory and mandatory, and hence need to be mitigated before the program starts. Comprehensive auditing is essential to ascertain if the company can pay for the mobile app installation and purchase of the drones. Also, it is mandatory and a requirement by the law for the company to ensure it has all the documents and copyrights of the software used for mobile app installation and also the copyright of the machines purchased.

Grade B: Infrastructure,

Time, and Monetary Issues are graded as type ‘B’ risks since the suggested mitigation actions to reduce their likelihood and seriousness can be implemented during project execution.  Infrastructure such as servers and control software requires in-progress auditing thus not so urgent as the type ‘A’ risks.

Grade C:

Literacy level of the team members requires an in-progress training of employees. Although it is essential for the general outcome of the program, it is however not compulsory, and the project can do without it hence classified as grade ‘C’ risk.

Grade D and N: These two categories of risks are not applicable, and their mitigation or failure for reduction has no direct impact on the outcomes of the project. Technological change in Australia and competitive pressure are grade ‘D’ risks while Economic upheavals are type ‘C’ risk respectively.

Risk Monitoring

Risk (Grade)

Review Frequency

Involved

Stakeholder

Monitoring Frequency

Updating Frequency

Reporting(Steering committee, sponsor & senior manager)

Technological change in Australia

N/A

Steering Committee

Monthly

Monthly

N/A

Trademarks and copyright issues

Once

Senior Manager

Once

Once

Once

Time & Monetary Issues

Monthly

Project Team

Monthly

Monthly

Monthly

Competitive Pressure

N/A

Project Team

N/A

N/A

N/A

Economic upheavals

After two months

Steering committee

After two months

Monthly

Monthly

Literacy level

Monthly

Project Manager

Monthly

Monthly

Monthly

Financial solvency

Once

Sponsors

Once

Once

Once

Infrastructure

Weekly

Project Team

Weekly

Weekly

Weekly

Organizational Culture

N/A

Project Team

N/A

N/A

N/A

Roles and Responsibilities

            Steering Committee: Oversees mitigation action for economic upheavals and the risk of technological change in Australia.

            Project Manager: Controls and directs the whole team for the effectiveness of each project.

            Project Team: Works as a team to ensure risks are adequately mitigated, and each project’s objectives achieved.

            Government:

Provides licenses inform of copyrights and trademarks for the purchase of the drones and the online mobile app software.

            Other Stakeholders: Assist in analyzing the organizational culture through surveys and interviews for the effectiveness of the program.

Sponsors: Provides monetary support in the installation of the mobile app software and the purchase of the drones.

Assessing Program Risk Management Outcomes

Stakeholders Affected

Type of Stakeholder

Stakeholder

The extent of the Risk Effect

Internal/Primary

Steering Committee

High

Internal/Primary

Project Team

High

Internal/Primary

Project Manager

High

External/Secondary

Government

Low

External/Secondary

Creditors

Medium

Internal/Primary

Sponsors

Medium

Presentation

            (Appendix 2)

Meeting Agenda to Address the Risk Outcomes

Call to order

1. Roll Call

2. Approval of Previous Minutes

Steering Committee

Project team

3. Steering and Project team Report

Risk Mitigation Plans

Possible outcomes

Remedies to the Risks

4. Special Orders

Addressing Risk Outcomes

5. New business of the house

Future Remedy and Risk outcomes handling approaches

References

Dominos, (2018). Retrieved October 6, 2018, from https://www.dominos.com.au/inside-dominos/corporate

Dominos, (2018). Investors. Retrieved October 6, 2018, from http://dominosinvestors.com.au/annualreport2017/

Donnelly, A. (2018). CytoTECHnology: The benefits of technology in teaching. Cancer Cytopathology.

Elsmore, P. (2017). Organizational Culture: Organisational Change?: Organisational Change?. Routledge.

Wideman, R. M. (Ed.). (1992). Project and program risk management: a guide to managing project risks and opportunities. Project Management Institute.

Appendix 1

Risk Register

Appendix 2

                     Presentation