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3 Issue 2: Failure in planning strategic plan ........................................ 3 Recommendation .......................................................................... 3 Issue 3: Internal controls problems. ................................................. 4 Recommendation .......................................................................... 4 Issue 4: Financial problems .............................................................. 4 Recommendation .......................................................................... 4 Conclusion .......................................................................................... 5
INTRODUCTION
Excel Pountry & Meat Sdn Bhd (EPM) which is small & medium sized enterprise (SME) was a subsidiary of PCK Holding and located in Kluang, Johor. EPM was established in 1998 with initial capital of RM 3.6 million and main business is to carry on chicken farming and supply of whole chickens to various outlets in Malaysia. Starting with 20 employees, EPM now had more than 200 employees and become amongst top 5 chicken suppliers in the mid-tier producers in the country as the company also one of the members of Livestock Farmers Associations of Malaysia (FLFAM). The chart below shows the organizational chart and the person responsibility to each department. PCK HOLDING
EN KASSIM
The company was able to maintain its operation and make profit to in the poultry and meat industry since strong chicken consumption in domestic market as Malaysia recording one of the worlds highest per capita consumption rates in the world for chicken. The domestic market was further intensified by popular home-grown fast food chains and the surge of quick-service-restaurants and also traditional Malaysian delicacies such as Satay Ayam and Rendang Ayam have causes business in these local chains reported to be doing well. En Selamat, a Certified Public Accountant had been the General Manager since 2005 and he has established good promotional strategies closely managed function units. As a result, the company maintains to make profits as the demands from the superstores continues and was spread to a different market segment such as hospitals and hotels. However, in the year 2008, the company having loss in operation which indicated that the company facing problems in term of lack on the important considerations for proper running of business operations in term of management, accounting record procedure, internal control, conflict of interest and human resource that potentially harm the image and financial performance. 2
Recommendation
As a solution, the B.O.D. should review En. Selamat based on professional judgement and his expertise. The BOD needs to ensure that the candidate which appointed as General Manager has a qualification and have expertise in management and marketing functions as the General Manager also have to expose in day-to-day business operation. He also needs to be skilled and leading the employees he supervise and make sound decisions for the company. Therefore, it is up to B.O.D to make decision to whether to keep En. Selamat as General Manager or choose another an appropriate candidate with a qualification and enough expertise to prevent the company from continuously incur more problems.
Recommendation
The management should implement strategic management accounting to overcome financial problems that the company has faced. Company should analysis how resources been used and performance of the company in internal and external factors. Company should pay attention to internal and external factors (competitors, legal and political implication) which have affecting the organization. The company can do SWAT, PEST, Value Chain or BPR analysis in order to seek important sights into potential critical success factor and competitive advantage. In this case, the company can take advantages in political implication by taking governments initiative.
Recommendation
The company should improve the internal control by hiring internal auditor to make continuously improvement in the company to overcome those problems. The internal auditors can give more valuable advice on how to maintained the accounting systems, inventory, procedure and policy and also tasks that company should do in order to make company run smoothly and reduce the chance to employees to make frauds and commit conflict of interest. For example to reduce conflict of interest, the company should implement Policy for prevention and management of conflicts of interest so that the employees know what conflict of interest is and how to manage it.
Recommendation
EPM should take steps by using substitute feed compare of using commercial chicken feed. Nowadays, among farmers all over the Asian countries, they already use alternative feed and be able to reduce 30% of the cost of the production. They are able to reduce cost by plant fast growing trees which are maize tree, fodder trees and mulberry tree. These plants are cheap, fast growing and easy to plant which mean that EPM can reduce the uses of commercial feeds by 30% which mean that the cost of production can be reduced. 4
Conclusion
As a conclusion, there are many ways to improve the performance and overcome the problems facing by EPM. Although the main reason of increasing cost of production which led the company incurred losses for the 2 consecutive years, the EPM also need to improve the management and internal control of the company. The cases of conflict of interest of En Selamat should be avoid as well as weak of internal control that lead to accounting problem and fraud. The EPM management should ensure that the issues which lead to financial loss need to take more attention and more focus on how to deal it and overcome those problems With the identifiable issues and suggestion of recommendation, I think it would help the company back on track and having the clean management system in the organization in order to achieve its vision and mission of the company. ,