You are required to write a report to a corporate board summarising your views on corporate
governance, sustainability and risk management practices.
From Monday of Week 9 at 9 am, you will have access to a case study on MyKBS under the
assessments tab. This document will have all the necessary case facts and the specific questions
which you are required to answer for this assessment.
This assessment examines two learning objectives:
• LO4: Analyse the role of the board in the assessment of strategy and risk and the way in which
this expertise can be better utilised.
• LO5: Analyse the sustainability initiatives practised within organisations and determine their
effectiveness in meeting corporate and ethical objectives.
• You are required to prepare a report and submit it via Turnitin via MyKBS.
• You should adhere to KBS’s referencing and Academic integrity requirements.
• Please refer to the assessment marking guide to assist you in completing all the assessment criteria.
Page 2 Kaplan Business School Assessment Outline
Important Study Information
Word Limits for Written Assessments
Submissions that exceed the word limit by more than 10% will cease to be marked from the point
at which that limit is exceeded.
You have been engaged by Focus Logistics Pty Ltd (Focus) as an independent consultant.
They are seeking your advice on several corporate governance, sustainability and risk
management issues. You have just returned from a board meeting with Jennifer White
(company’s founder and the current Chair), Alice Rose-Gardner (CEO), Jacob Gardner
(COO) and David Rose (CFO). You have gathered the following information about this
Mrs White established Focus Logistics in 1965 in Horsham, Victoria, providing state-wide
logistics services to local businesses. The community supported Focus because of Mrs
White’s slogan “Go Local”. The company grew steadily for the next 30 years and expanded
its operations into VIC, NSW, and TAS.
Mrs White retired from day-to-day operations in 1997 and assumed the role of board’s
Chair. Mrs White’s daughter Alice took on the company reins and, since then, has
completely transformed the business. Focus now has 19% of the total market share and is
Australia’s fifth-largest private logistics company. Focus has grown from 28 customers in
1970 to 650 customers in 1997 to more than 11,500 customers today (including a few ASX
Current plans: expansion
Now, Focus needs additional capital to fund its expansion plans. The senior management
team has prepared a very impressive prospectus highlighting all of Focus’s recent
achievements and a business forecast for the next ten years. Mrs Rose-Gardener has met
with several potential investors and private equity groups over the last six months
However, these investors are concerned that Focus doesn’t have the proper operation and
governance structure to justify the additional funding and expansion plans.
Investors note that even though Focus is a large company, the business is still run like a
family-owned business with limited management oversight and a lack of operational
controls and reporting. In addition, the various management positions, especially the
executive positions, are held by family members and close friends. This points to be a lack
of appropriate performance reviews and necessary succession planning. The investors
also highlighted that Focus lacks board committees.
The board unanimously agrees that since they own most of the company, there is no need
to spend any money on non-value adding reporting like a sustainability report. The board
acknowledges that the company might benefit from some regular reporting and
performance reviews. Still, it is concerned about the impact of reporting on the family
members – after all, trust and patience are the most important traits of a family-run
business. Plus, it is the board’s view that there is a reason why such reporting is optional
and not mandatory.
Mrs Rose-Gardner has already notified would-be investors that Mrs White will soon retire
from the board, and that Mrs Rose-Gardner intends to self-nominate as the next Chair.
She believes that the board will benefit immensely if the Chair and the CEO is the same
person – that’s because this person will have a lot of knowledge about the company’s
operations and, therefore, will be able to question and oversee the management more
Potential investors are also apprehensive about the lack of sustainability reporting by this
company. Focus’s carbon footprint is enormous – their B-Double trucks alone consume
almost two million litres of diesel a year. Along with its own fleet of trucks, the company
also employs hundreds of sub-contractors, whose fuel consumption is unknown. Mrs
Rose-Gardner is aware that all national banks oppose supporting a business that does not
have a sustainability plan and target.
Potential investors have expressed further concern at the lack of risk management
initiatives at Focus. Recently, Focus has taken on a lot of debt (using their Victorian fleet
as security), and therefore the board must constantly monitor Focus’s exposure to financial
risk. The investors acknowledge that even though Focus’s operations were not affected by
COVID-19 (because the business is classified as an essential service), Focus needs to
prioritise operational risk management and urgently draft a business continuity plan.
Mrs White completely dismissed the investor’s views on operational risk. She stated,
“Trucks are the backbone of Australia and will continue to work round-the-clock – as they
have done for the last 55 years. I cannot think of a simpler business – buy a truck, get
someone to drive it, and a few days later – the customer settles the account. Involving
lawyers and consultants in expensive suits will make matters unnecessarily complicated”.
The company’s COO, Jacob Gardner (Mrs Rose’s 26 year-old son), is genuinely
concerned about what these potential investors are demanding. He stated,
“Corporate governance always slows down the board’s decision-making process and
makes running a company unnecessarily complicated, hindering innovation and creativity.
For example, I want to add autonomous vehicles to our fleet. Any formal governance
structure might delay such adaptation.
Provided we aren’t in trouble with the tax office and the corporate watchdog, the board’s
key priority remains maximising shareholder returns. Therefore, we shouldn’t be worried
about compliance issues, which are unlikely to get audited. And even if we do get audited,
it is better to pay a small fine instead of investing thousands, possibly millions, of dollars in
meaningless and endless compliance and “tick-the-box” exercises.
A family-run business should always focus on performance and not so much on
conformance. We have to stop this madness”.
Jacob is confident that Focus’s legal counsel, Melissa Wright (Jacob’s childhood friend and
a current law student), will concur with his views. Unfortunately, Melissa was unable to
attend the meeting because she is on extended personal leave.
The company’s CFO, David Rose (Mrs Rose-Gardner’s older son), has a different view. He
“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”.
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
(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 Rose-
Gardener, David and Jacob).
2. Recent news releases relating to best practice corporate governance, sustainability
and risk management practices.