MAT010&Business&&&Risk&Strategy&–&Class&Test&&&Assignment&2020& Background&Information&on&Morgans& Morgans!is!an!independent!coffee!company!that!imports!and!roasts!coffee!beans.!It’s!based!in! Cardiff,!established!nearly!twenty!years!ago!by!John!Morgans!and!Philip!Turner.!!John!and!Philip! each!own!40%!of!the!company’s!shares,!with!the!remaining!20%!being!owned!by!John’s!wife!Alice! (Alice!is!also!Philip’s!sister).!The!company!owns!the!building!in!which!it’s!based!and!paid!off!the!loan! it!had!to!purchase!it!many!years!ago.! John!is!Chief!Executive!Officer!and!Philip,!a!chartered!accountant,!the!Chief!Financial!Officer.!They,! together!with!David!(the!Chief!Operating!Officer),!Jenny!(the!Chief!Communications!Officer),!and! Helen!(Chief!Human!Resources!Officer)!run!the!company!on!a!daily!basis.!All!five!(John,!Philip,!David,! Jenny!and!Helen)!form!the!Board!of!Directors!of!Morgans;!John!is!also!Chairman!of!the!Board!of! Directors.!! Morgans!has!always!been!proud!of!its!core!value!–!treating!people!with!respect!–!and!its!business! has!been!driven!through!that,!whether!it’s!in!recruitment!and!management!of!the!staff,!or!in!the! way!in!which!relationships!are!built!and!managed!with!coffee!growers!in!countries!around!the!world.! Helen!(Chief!Human!Resources!Officer)!regularly!meets!with!staff!representatives!to!gauge!how!they! feel!about!Morgans,!while!Jenny!(the!Chief!Communications!Officer)!works!closely!with! organisations!representing!coffee!growers!to!ensure,!as!best!as!can!be!expected,!Morgans!is! adopting!best!practice!in!its!sourcing!of!coffee!beans.! Morgans!sells!its!coffee!across!the!UK!through!a!range!of!retail!outlets!–!mainly!supermarkets,!but! some!independent!coffee!shops!stock!their!coffee!too.!Coffee!can!also!be!purchased!online,!direct! from!Morgans.!John!Morgans!says!around!80%!of!its!sales!by!value!are!through!stores!with!the! remaining!20%!from!online!sales;!online!sales!are!growing,!and!he!expects!the!split!between!stores! and!online!to!move!to!75%!/!25%!in!the!year!ahead.!He!anticipates!further!growth!in!the!years! following!that.!! Helen!and!Jenny!met!recently,!and!both!commented!how!the!environment!in!which!Morgans! operates!is!changing.!Staff!are!now!beginning!to!ask!about!greenhouse!gas!emissions!resulting!from! coffee!sourcing,!and!also!those!through!shipping!coffee!to!customers!(the!likes!of!you!and!me,!and! also!companies!that!buy!Morgan’s!coffee).!The!extent!of!deforestation!around!the!world!to!support! coffee!production!is!also!of!concern!to!staff,!as!is!the!degree!to!which!Morgans!is!using!renewable! energy!sources!–!some!staff!feel!that!Morgans!could!be!doing!a!lot!more!to!ensure!its!energy! sources!are!green.! Jenny!(the!Chief!Communications!Officer)!talked!of!how!she!noticed!an!increase!in!discussions!on! social!media!among!people!about!the!carbon!cost!of!coffee!production.!Many!are!tagging!Morgans! in!posts!and!some!are!asking!searching!questions!when!Morgans!makes!statements!about!its!core! value!–!treating!people!with!respect!–!when!various!media!articles!have!pointed!to!worker! exploitation!in!the!farms!where!coffee!beans!are!grown.!! She!also!noted!that!increased!activism!around!climate!change!is!increasing!awareness!about!the! food!supply!chain,!and!that!included!attributes!of!coffee!production.! ! Both!Jenny!and!Helen!brought!these!matters!to!the!attention!of!the!Board,!and!a!meeting!was!called! to!discuss!the!impact.!The!meeting!showed!that!the!Board!members!have!differing!views!on!how! these!issues!should!be!approached.! John!Morgans,!as!coZfounder!of!the!company,!wants!to!engage!as!best!as!possible!with!the! environmental!concerns!of!staff!and!customers.!He!also!knows!that!the!coffee!market!is!becoming! increasingly!competitive,!and!that!scrutiny!all!coffee!companies’!operations!is!increasing!at!the!same! time.!He!also!recognises!there!is!potential!for!Morgans!to!use!its!success!to!date,!and!the!money!it! has,!to!establish!Morgans!as!being!a!‘better’!company!than!others!in!the!environmental!arena!–! although!he!is!not!clear!on!what!that!may!mean,!and!needs!advice.!He!notes!that,!with!an!excellent! trading!history,!the!company!could!obtain!a!loan!to!support!any!significant!investment!it!needed!to! make!–!he!wonders!if,!to!compete!with!some!of!the!larger!coffee!companies,!Morgans!has!to!grow! significantly.!! Philip!(the!Chief!Financial!Officer),!meanwhile,!is!conscious!of!growing!geoZpolitical!risk!and!wants!to! avoid!any!substantial!investments,!preferring!Morgans!to!hold!on!to!the!money!in!the!bank!so!it!can! deal!with!any!problems!that!could!arise!from!any!number!of!sources,!including!major!moves!in!