BUS203 Business Law
Case study
BUS203 Business Law
EXECUTIVE SUMMARY
Any business faces high risks arising from the external environment, and the hospitality is no
exception. In the case of Kondalilla Eco Resort, the resort locates in the rainforest which face
high risks of injuries for guests. The PESTLE analysis is applied to conduct the analysis of
external elements have impact on the business, and the Risk Management Framework (RMF)
is adopted to assess the risk and provide the solution.
BUS203 Business Law
I.
INTRODUCTION
In the business world, law is the vital element which refers to the set of legal obligation to
protect the right of person, companies, organization, as well as promote the high standard of
trustworthiness and transparency. Law has the strong influence on the business’ s operation
which dictate how the business should operate to comply with the regulation. For example,
Australian alcohol law set 18 years old is the legal drinking age, and thus any business firms
sell alcohol for people aged below 18 years old will be in threat of fine. In addition, within the
fast pace changing environment, law is constantly changing, firms need to always aware of
new regulations. To manage the legal compliance effectively, the Risk Management
Framework (RMF) is commonly adopted which scan the surrounding business environment
and identify potential risks. In this report, the critical analysis of external environment
provided, and application of Risk Management Framework (RMF) in managing these potential
risks identified in RMF in the Kondalilla Eco Resort, will be provided.
II.
FINDINGS
The importance of PESTLE analysis in the business of Kondalilla Eco Resort
Kondalilla Eco Resort is the family-owned eco resort located on 20 acres of Sunshine Coast
Hinterland rainforest. The rainforest is 1.5 hours driving from the north of Brisbane city which
is the ideal place for guests to capture the nature experience, enjoy the authentic retreat and
stay away from the busy city life at the weekend. Kondalilla Eco Resort has 21 rooms with
outdoor pool, BBQ area, restaurant, and yoga class. In addition, the resort is within the walking
distance to Kondalilla Falls National Park that is a large natural rainforest reserve. Although
Kondalilla Eco Resort has the breathtaking view and bring great experience of the nature and
wildlife to customers, there are various potential risks to the business and customers. Firstly,
the resort locates in the rainforest that is 4 kilometers away from the city center, thus it is not
well-connected with the necessary infrastructure, such as hospital, ambulance service, police
station, and firefighter station. Secondly, as set on the rainforest, the business activities, and
guests’ safety at Kondalilla Eco Resort are strongly affected by the weather. Thirdly, other
external elements, such as political, economic, socio-cultural, and technological element also
have impact on the business. According to KARA (2018), the operation of hospitality firms
includes complex operating area that involve high risks of disruption the business activities,
and causing damage to guests, and PESTLE analysis would help to foresee these issues.
Therefore, conducting the PESTLE analysis would help Kondalilla Eco Resort to conduct the
BUS203 Business Law
risk assessment for their business operation, and from that to have strategies to avoid, or
mitigate.
PESTLE analysis
First and foremost, Kondalilla Eco Resort is established as the hospitality firm, and thus the
resort is subject to section 104 of the Competition and Consumer Act 2010. It is stated that
hospitality firms have a duty of care of making safety standards for consumer goods and
product related services to their guests. The requirements of the duty of care include:
 the manner in which such services are provided (including, but not limited to, the
method of provision)
 the skills or qualifications of those who provide such services
 the materials used in providing such services; - the testing of such services
 the form and content of warnings, instructions, or other information about such services.
In the case of Kondalilla Eco Resort, the resort locates in the rainforest with activities of hiking,
etc, maintaining high standard of safety for guests is vital. In addition, the resort should also
place the warning sign around the resort to provide fall and other injuries that could happen.
The second regulation that Kondalilla Eco Resort is subject to is the Food Act 2006. According
to Habiballah et al (2018), food catering service faces high risks of food contamination, food
allergy, etc, conducting the risk assessment of food safety is important in handling and solving
the issue. As Kondalilla Eco Resort has their own restaurant, it is important to comply with the
requirement of the Food Act 2006 in terms of catering and serving foods and beverage. These
includes:
 standards for food safety and hygiene
 fit-out of food premises
 labelling, composition and advertising of food
In terms of the issues that could arise during the operation of the resort, the most common issue
is the impact of weather, especially during February which the amount of precipitation could
reach over 245 mm with thunderstorm, etc. This would have strong impact on the safety for
guests as the resort’s location is surrounded by the rainforest, thus falling is easily happened.
In addition, when operating the food & beverage business, issue of guests’ food allergy is
significantly common, while the resort locates far away from the hospital, and thus it needs to
be considered for establishing the medical room in the resort for first aid application. In
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addition, one of the most severe issues for the resort is the risk of bushfire. According to Lisa
(2020), there was over a third of rainforest in New South Wale is affected by the bushfires.
The importance of Risk Management Framework (RMF) in the business of Kondalilla
Eco Resort
Following the guideline of the ISO31000: Risk management framework, the framework is
adopted to help business firms avoid, and mitigate risks involved in the business activities. The
framework provides the principle, and step in assessing risks, including risk identification, risk
analysis, risk evaluation and risk treatment. The mechanism of the risk management framework
is to assess the likelihood, consequence, and compute level of risk, and based on that to have
suitable solution to deal with. In the case of Kondalilla Eco Resort, there are various risks that
could damage to guests’ safety, and thus having the plan of resolving the issue is important to
mitigate the risk when it arises to avoid as much as possible damage to customers.
Application of Risk Management Framework (RMF) in the identified issues
The Risk Management Framework (RMF) includes four steps, which are risk identification,
risk analysis, risk evaluation and risk treatment (Castro et al, 2008). The identified risks are
guests’ injuries due to weather, guests’ food allergy, and bushfire. The assessment of these
risks is shown in the risk matrix adopted from Gjerald & Lyngstad (2015), are shown below:
SEVERITY
LIKELIHOOD
1
1
2
3
LOW
LOW
MEDIUM
–1–
–2–
–3–
BUS203 Business Law
2
LOW
MEDIUM
HIGH
–2–
–4–
–6–
guests’ injuries due
bushfire
to weather
3
MEDIUM
HIGH
HIGH
–3–
–6–
–9–
guests’ food allergy
From the risk matrix, these risks are assessed. In terms of the guests’ injuries due to weather,
its likelihood is low, and its severity is medium. In terms of the guests’ food allergy, its
likelihood is medium, and its severity is medium. In terms of the bushfire, its likelihood is low,
and its severity is high. The treatment for the issue of guests’ injuries due to weather is avoiding
and mitigating strategy in which cautious sign will be placed during the resort, as well as
instruction of safety is communicated to guests when they check-in into the resort. The
treatment for the issue of guests’ food allergy is avoiding and mitigating strategy in which the
menu will include all ingredient for dishes, as well as first-aid kit is equipped at the resort in
the case of emergency. The treatment for the issue of bushfire is transferring strategy in which
the resort would corporate with the medical evacuation service in the area, and in case of
bushfire or any disaster, the medical evacuation service will approach the resort for the
evacuation plan.
III.
CONCLUSION
The report has provided the justification for the importance of PESTLE analysis and adoption
of Risk Management Framework (RMF) and conduct the analysis of legal obligation and
potential risk for the resort. In addition, risk management strategy is also provided for the
identified risks. The main risks involved in the business operation of the resort are guests’
injuries due to weather, guests’ food allergy, and bushfire. The risk management strategy for
these issues are provided based on the assessment of likelihood and severity which suggest the
BUS203 Business Law
avoiding and mitigating strategy for the issue guests’ injuries due to weather, guests’ food
allergy, and the transferring strategy for the issue of bushfire.
IV.
REFERENCE:
Castro, L., Gulías, V., Abalde, C., & Santiago Jorge, J. (2008). Managing the Risks of Risk
Management. Journal Of Decision Systems, 17(4), 501-521. doi: 10.3166/jds.17.501-521
Food Act 2006
Gjerald, O., & Lyngstad, H. (2015). Service risk perceptions and risk management strategies
in business-to-business tourism partnerships. Tourism Management Perspectives, 13, 7-17.
doi: 10.1016/j.tmp.2014.10.002
Habiballah, M., Al-Shakhsheer, F., Al-Sabi, S., & Masadeh, M. (2018). Food Safety Training:
A Study of Food Handlers Working in Hotels in the North of Jordan. European Scientific
Journal, ESJ, 14(26), 127. doi: 10.19044/esj.2018.v14n26p127
KARA, E. (2018). A Contemporary Approach For Strategic Management in Tourism Sector:
PESTEL Analysis on The City Muğla, Turkey. Journal Of Business Research - Turk, 10(2),
598-608. doi: 10.20491/isarder.2018.446
ISO31000: Risk management guidelines. (2020). Retrieved 18 March 2022, from
https://www.iso.org/obp/ui/#iso:std:iso:31000:ed-2:v1:en
Lisa, C. (2020). More than a third of NSW rainforests found to have been hit by Australian
bushfires.
The
Guardian.
Retrieved
from
https://www.theguardian.com/australia-
news/2020/jun/07/more-than-a-third-of-nsw-rainforests-found-to-have-been-hit-byaustralian-bushfires
Section 104 of the Competition and Consumer Act 2010