Heblon – the Organisation Under Scanner

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The table below summarizes the comparison between these two companies:

Aspects

Heblon

Décor

Company Structure

Proprietary limited; family-owned

Public limited

Risk Attitude

Risk averse

Risk seeker

Restriction on deforestation

Enhancement on product development and design function.

- Substitute raw materials from wood to other material

Has been using other kinds of materials.

- ie: use of plastics, metal such as wrought iron, bamboo, softwood

Changing consumer behaviour

Emphasis on product development and design function.

- Take into account the consumers’ needs and preferences in designing products.

Keeping track on trends of consumer’s preferences.

- Market research

- Communications

Concerns with consumers’ leisure.

- Restaurants in its stores

- Selling online

Technology development

Labour intensive due to individual craftsmanship.

- Improve productivity

Automated production process.

Emphasis on do-it-yourself (DIY) concept

- Design product that are easily assembled

Distribution channel

More intensive marketing and sales campaign.

- Multiple and independent retailers

Widely accessible and effective marketing channel.

- i.e.: online advertisement, catalogue/newsletter

- Comparison with ERM Framework

The actions taken by Heblon are based on silo-based approach because they addressed the issues from the view of each functional department. This may hinder the identification of risks in holistic view or at the organizational level, resulting in difficulties to construct an integrated strategy.

Therefore, we are comparing those strategies executed by Heblon with the Enterprise Risk Management (ERM) framework initiated by the Committee of Sponsoring Organization. ERM refers to a process that is influenced by an entity’s board of directors, management and other personnel, applied in the setting of strategy and across the entity which is designed to identify potential event that might affect the organization, to manage risk to be within its risk appetite as well as providing reasonable assurance regarding the achievement of the company’s objectives (Collier, 2009). The diagram below illustrates how the ERM framework works:

[pic 1]

Figure 1: The ERM Framework

It is observed that there was lack of communication across different functional departments in Heblon. The management seemed to formulate strategy according to each department rather than communicating the issues across different department, causing lack of integration. Besides, there was no evidence of continuous risk management carried out by Heblon. This refers to monitoring the actions taken in order to evaluate their effectiveness and to take corrective action when necessary.

HOLISTIC APPROACHES TO RISK MANAGEMENT PROCESSES

- SIMULATE Structure

We can actually learn something by going through what Heblon did when they faced the risks. Even though, Heblon had four actions, but it seems that the four actions did not solve the risks very well. In this case study, a strategy called SIMULATE structure is given to help the managers of Heblon to get a better view of the risks.

According to the case study, S means structure the problem and decision situation. As the first step, the company need to make sure what problem situations they are facing now. Andthen, the managers need to identify the main elements of their problems. They need to ensure what elements make the problem become to a risk to the business. M means measure and assess the risk and uncertainties. By measuring the risks, the company can understand how the risks effect their business. U means understand the mechanics and interrelationships within the problems. The company needs to understand why the problem becomes to a risk, what reasons cause it, and the future effects if the problem is not solved. L means learn from the processes employed in analyzing the problem and find possible solutions. In my point of view, the problems should bring some new thought to the company and make them think about more solutions. A representsanalyzing and evaluating the problem, the company should think about the possible solutions and their future outcomes in the risk. After the first six steps, the company would be able to take a decision about how to solve the problems. The least step is experience. It is necessary for the managers to develop their own experience of the company and decision-makers which should be based on the decision process and decision taken.

- KISSAF Model

By go through the SIMULATE structure, it seems that the Heblon just did the S, I and M part, and this is why Heblon cannot address the key risks and did not find correct solutions for theirs risks. In addition, it is necessary for Heblon to develop a picture the decision situation that it faces. To produce a KISSAF model can help Heblon to solve the problem. KISSAF means, keep it simple, strategic and focused. and this model should be built base on a key-word guideline which will be explained on the next part.

The first key is "simple". When the development of models of the risk situation becomes too