Chicken Run Case

GROUP : TARZENCHICKEN

GROUP MEMBERS :-
MOHD SOBRE BIN ISMAIL
KHAIRUL ANUAR BIN JAMALUL NASIR
MOHD SYAFFIQ BIN SYED KALI MARICAR
AHMAD DINIE BIN MOHD MOHSIN
MOHD SAYUTI BIN TOKIMAN
MOHD ABDUL HALIM BIN SALANI
AHMAD QAYYUMUL IHSAN BIN JOHARI
Small & Medium Enterprise
Full time employees not exceeding 150 people
Annual sales turnover not exceeding RM25 million
Small enterprise:
Full time employees 5 > 50 people
Sales turnover RM250,000 > RM 10 million
Medium enterprise:
Full time employees 51>150 people
Sales turnover RM 10 million > RM 25 million
Excel Poultry & Meat
1998
SME
Employees 20

Currently
Large enterprise
More than 200 employees
Sales turnover 74.9 million
Ceiling price mechanism
Price

SS

e
P0

P1 Ceiling price

Shortage DD
Quantity
Q1 Q0 Q2
Way to deal the shortage problem
Import the goods
Shortage can be eliminated
Supply at same price
Quota
Impose quota for each person
First came first serve
LEADERSHIP
Definition
 process of social influence in which one person can enlist the aid
and support of others in the accomplishment of a common task.
 ultimately about creating a way for people to contribute to
making something extraordinary happen. (Alan Keith of
Genentech)
 the ability to successfully integrate and maximize available
resources within the internal and external environment for the
attainment of organizational or societal goals. (Ken "SKC"
Ogbonnia)
Leadership Styles
Authoritarian
• Leaders tell their employees
what they want done and how
they want it accomplished,
without getting the advice of
their followers
• Appropriate conditions to use
it is:
 Employer have all the
information to solve the
problem.
 Lacks of time.
 Employees are well
motivated.
Participative
• Leader including one or more
employees in the decision
making process (determining
what to do and how to do it).
• The leader maintains the final
decision making authority.
• Appropriate conditions to use
it is:
 This is normally used when
employer have part of the
information, and employees
have other parts.
 Employ knowledgeable and
skillful employees.
 Using this style is of mutual
benefit — it allows them to
become part of the team
and allows to make better
decisions.
Delegation
• The leader allows the
employees to make the
decisions. However, the
leader is still responsible for
the decisions that are made.
• Appropriate conditions to use
it is:
 Employees are able to
analyze the situation and
determine what needs to be
done and how to do it.
 Trust and confidence
towards employees
Value and Ethic as leader
Integrity
Responsibility
Credibility
Independence
Issues
 En. Selamat do not have value
an ethic as leader:-
 Independent.
 Director was reluctant to
take any actions against
Encik Selamat since he is
very well connected and had
good reputation in the
previous company.
Recommendation
 Must have value and ethic
when become as leader:-
 Independent.
 BOD must straight in their
decision.
 As a leader, he should act
with profound sense of
integrity and fairness.
 Encik Selamat must uphold
this value in his daily
decisions and actions.
Issue Recommendation

 En Selamat use delegation He should monitor or use

style with high trust to En combination leadership style.
Kassim
Organizational Part
Organizational Chart
B.O.D

En. Selamat
General
Manager

En. Kassim
Finance
Manager

Ms. Choy Pn. Azura

Credit Accounts
Controller Executive
Duties of Director
 Establish vision, mission and values
 Determine the company vision and mission to guide and set plan for its current operations
and future development.

 Set strategy and structure

 Review and evaluate present and future opportunities, threats and risks in the external
environment and current and future strengths and weaknesses relating to the company.
 Determine the business strategies and plans and ensure that the company's organisational
structure are capable and appropriate for implementing the chosen strategies.

 Delegate authority to management

 Monitor and evaluate the implementation of policies, strategies and business plans.

 Exercise accountability to shareholders and be responsible to relevant

stakeholders
 Understand and take into account the interests of shareholders and relevant stakeholders.
 Monitor relations with shareholders and relevant stakeholders by gathering and
evaluation of appropriate information.
Duties of General Manager
 Primarily responsible for guiding employees in achieving the goals
of the organization.
 Ensure that all processes and practices are working in a proper
manner.
 They need to hire well-experienced and efficient managers for
handling the operations of individual practices in a company.
 They need to train, guide, assist and monitor that managers.
 Conduct presentations to the higher management pertaining to
business, marketing, and advertising strategies, and all other
necessary aspects of the company processes.
 Communicating with clients and attracting new projects to the
company.
 Ensure that every individual department is giving their best
possible outputs, and recommending any new policies that are
likely beneficial to the organization.
Duties of Credit Controller
 Manage the book of debtors accounts
(to be familiar with all companies – the needs are and how to deal with
late payments on each of them).
 Ensure payment of outstanding invoices via email, letters, and
telephone
 Ensure that the company don’t exceed the credit limit before give them
credit sales.
 Keep a record of all information and communication with the
customer
(this is important when there are payment problems and the account
becomes legal, these records are needed for court proceedings).
 They will reconcile accounts and do the same for the month end for the
whole debtor ledger.
 They report to management on outstanding issues and inform them
early of potential debtors problems.
 They may deal with liquidators and ask for bad debts to written off.
 Conflict of Interest

A potential conflict exists when there is a

possibility that an individual’s outside
financial
interests could directly and significantly affect
the individual’s professional actions or
decisions.
Where can a Conflict of Interest occur?

Business Individual
relationships relationships

.
Individual relationships
Example : En. Selamat & En. Azman

Recommendations:-
1) Research clients, employees, and companies
thoroughly before doing business with them.

2) Create and communicate a code of ethics that

includes guidance on client and any other
relationship of that nature.
Internal Control
System
Sales & Cash Collection
Issue
Marketing department continued to supply the
product even the credit limit of Cold Gold Sdn Bhd
had gone into its limit.
Recommendation
Should perform well in sales activities…
HOW??????????
(1) Sales
Order
Entry

(4) Cash Revenue (2)

Collections Cycle Shipping

(3)
Billing
Sales Order Entry
orders (1) Take
Customer Order

Rejected
Orders

(2)
Approve
Credit

Acknowledgement
Approve orders

(3) Check
Inventory
Availability
Process of Sales Order Entry
(1) Taking Customer (2) Credit (3) Checking
Orders Approval Inventory Availability

• Receive order in • Credit sales should • Determine if there is

many ways. be approved before sufficient inventory
they are processed. available to fill the
• sales order contains order.
information about • Checking and verify
item numbers, the account. • If sufficient, the
quantities and prices. sales order is
• Order exceeds the completed.
customers credit
limit, it require •If not sufficient, the
specific authorization department of
by credit manager. production will be
informed about the
shortage.
Issue
Weakness in cash collection.
- Because of customers selection.
- Depends on relationship rather than business matter.
Recommendation
Provide sales discount for early payment.
Provide good term of payment.
Should find potential clients which are profitable.
- Find new market, export to others countries.
Issue on Cash Collection
The statement of customer account is not tie up with
the clients records.
Two possibilities:-
Account receivable not being maintain properly.
Theft on cash collections.
Recommendation
Maintaining of Account Receivables.
Errors in maintaining customer accounts can lead to
the loss of future sales and may indicate possible theft
of cash.
Procedure to maintaining the customer accounts:-
Validity checks on the customer and invoice numbers.
Closed-loop verification-ensure that proper account is
being credited.
A field check-only numeric values are entered for
payments amount.
It also important to reconcile the subsidiary accounts
receivables with the general but the reconciliation
should be done by another person. It is because:-
Its easier to catch someone mistake.
Identify irregularities.
Process of Cash Collections
Payments Deposits
Cash
Customer Collection Bank
s
Cash Statements
Receipts

Objective of Cash Collections Function:- to safeguard customers remitances.

Recommendation
Cash Collections
Segregation of duties is the most effective control
procedure for reducing theft.
The duties should be segregated:-
Handling cash or checks and posting remittances to
customer accounts.
Handling cash or checks and authorizing credit memos.
Issuing credit memos and maintaining customers
accounts.
Ms Choy as WHISTLE
BLOWER???
Who is whistle blower?
person who reveals any wrongdoings or malpractices
that are taking place within an organization
Whistle blower
significant means of detecting fraud and corruption
and should be part of an overall control framework.
‘keep things to ourselves’ or it ‘not being in our nature
to do that’.
may file complaints that reasonably believes evidences
a violation of a law, rule or regulation.
What shows whistle blowing act??
Ms Choy had approached BOD.

For what????

The “deal” between En. Selamat and

one of the Cold Gold Sdn Bhd’s
directors.
En. Selamat is the best friend of major customer.
Allow customer to be supplied without concerning on
their outstanding balance.
The BOD refuse to take any action
Business relationships
Example : BOD & En. Selamat

Recommendations:-
1) Maintain professionalism in the office
Employers should promote open communication with
their employees but not to the extent that the workers treat
them as bosom-buddies. While it will be helpful to remain
approachable, employers and supervisors should know
where to draw the line.
Remember that a sense of authority is the most important
thing in managing a business.
Recommendations:- (Continued):-
2) Make sure to hire people, especially board of directors and
key employees, based on their skills and dedication.
When hiring board of directors, make sure they are not part
of any rival company or own a business that competes with
the firm where they serve as key employees and decision-
maker.

3) Avoid Conflict of Interest

S 132(2) of CA 1965 : “…shall not make improper use of company
information to gain directly or indirectly advantage for
himslef”
Conclusion
The company financial result become worse as there
are increase in cost of chicken production
Find other alternative to feed the chicken ex:
Use chicken shit as their side income
The company ignore the importance of collection
system that resulted in high outstanding balance.
Most of the decision made by En Selamat had
incurred cost to the company.
Conclusion (continued..)
Use his power to give benefit not only to himself but
other people that well connected to him.
Involve in conflict of interest.
En Selamat mostly responsible on the problem faced
by company.