Situation Analysis and Problem Statement: Bcc Ltd Corporation

Running head: SITUATION ANALYSIS AND PROBLEM STATEMENT: BCC LTD CORPORATION

Situation Analysis and Problem Statement: BCC LTD Corporation

University of Phoenix / Dallas

May 30, 2006

MBA-560 Enterprise Risk

Situation Analysis and Problem Statement

Risk management is the most important part of any organization to face the risks that might arise when a new project started. It should be a first concern when the decision is being made. Risk management is the practice of looking at the exposure to risk and deciding how to best handle that exposure. The idea behind risk management is to decide if the benefit outweighs the risk. This process will help you to identify risks that might normally be overlooked so when things come up, they do not surprise you by having a plan in place on how to solve them.

Risk management would help to identify and then manage threats that could severely impact or bring down the organization. “This could be done by reviewing operations of the organization, identifying potential threats to the organization and the likelihood of their occurrence, and then taking appropriate actions to address the most likely threats” (McNamara, C., 1999).

Situation Background (Step 1)

BCC LTD is a large multinational conglomerate providing goods and services to an international customer base through a number of diverse and unrelated businesses. I have been selected by the Vice-President of Legal Compliance to be the new Director of Risk Management for BCC’s United States operations. The DRM has the task to analyze, evaluate and resolve 3 problems that BCC’s subordinates are currently in. In addition to the above the DRM has to come up with a contingency plan to assure that dilemmas’ of the legal nature do not happen again.

Environmental regulations play an important role in risk management. Alumina Inc. a $4 billion aluminum maker was reported to be in violation of environmental discharge norms in a routine EPA compliance evaluation inspection 5 years ago. The PHA concentration in test samples was above the prescribed limit. Kelly Bates, a local resident, threatens to mar Alumina’s good compliance record. Kelly Bates has accused Alumina Inc. of repeatedly contaminating the waters of Lake Dira with carcinogenic effluents, and has alleged that consumption of the contaminated water is the proximate cause of her daughter’s leukemia. Bates also alleges that her daughter’s disease may be as old as Alumina’s first instance of environmental law violation.

Contract creation and management is another area that the DRM has to keep an eye on. BCC’s subordinate Span Systems is a custom e-banking software developer out of California. Span Systems is leading its biggest and most prestigious banking software project with Citizen-Schwarz AG, a large German bank. The 1 year contract between the two companies is worth $6 million. Currently, Span’s deliverables in the last couple of months have been behind schedule and of low quality with major bugs being detected in the user testing stage. Loen Ther, the IT Outsourcing Director for C-S, has sent a letter to Span asking for the immediate transfer of all unfinished codes and asserted the rescission of the contract by his company.

FastServe Inc. is a $25 million, 350-person strong company involved in the direct marketing of branded sports apparel. FS opened up two online marketing and distribution channels which moved 10% of the workforce to manage the online distribution. Soon after the web site went live, technology began to cause problems for the company. Yes there were many hits from the target market, but the downloading process to place an order was very cumbersome, thus turning potential buyers into dissatisfied customers. Shortly after, the company decided to move out of the online distribution business. The decision was made to downsize but keep only a few key people in other capacities.

Issue Identification

With every situation that goes on in a company there are always underlying issues that could be devastating to the livelihood of a company. The allegations by Bates have to be dealt with in a fashion that does dot cause too much loss and damage to the Alumina family. Dealing with contracts is not an easy task. Laws change from state to state and one has to be aware of what those changes are to complete a full contract. There is a big underlying question that must be answered; how does Span make the $6 million contract work for both parties involved? A reputation is at stake. FastServe has the complicated of finding out a way to lay off its