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1.

As a CEO and chairman, it is the prime duty to impress the directors and shareholders of the
company. As I hold the two important positions it is quite easy to impress the board director and
the shareholders and approve the investment decision. The company is directly linked to the
business of course. So having a course additional to the regular service for the purpose of
company use and serving major client will be beneficial. It will minimize the company cost of
hiring course for above purpose. It will also add an asset for the Company that increases the total
asset of the firm. More satisfied client means having more work order that maximizes
profitability and increased EPS of the ultimate owner of the firm that means to the stockholder. It
makes the company to feel rich getting extra facilities to the management. So employees of the
firm will be motivated to the work. That will increase productivity and customer satisfaction of
the company. Because they are the only reason for customer satisfaction, if employees arent
satisfied they will not properly handle the customer. For service oriented business it is too much
important. By adding any value to the company make a difference among competitor by creating
specialty that means extra company image is seems and existing and prospective investors will
be attracted. That will fulfill the target of raising RM400 million financing decision through
share issue. The company decision to raising fund from existing shareholders is difficult and it is
only possible by attracting them to place their fund to their trusted investment project, by
convincing them. Having another course may open a new era of business if so acquire the cruise
liner would definitely add a source of revenue to the business of Monteiro Berhad Company. The
company can offer different types of package programs for their clients like they can tie-up with
international and local airlines with packaged tours for foreign and local tourists.

Side by side having a course will be helpful for new entrant employee of the firm. They can learn
practically their job more sophisticatedly that will benefit the company in the time of delivering
to the customer. Also increase employee performance, they will enjoy their work and such
training activities will motivate them to work for the company attaining company objectives.
Thus will reduce the employee turnover of the company and helps to keep business secret safely.
As part of their motivational tool this course will be helpful, they can enjoy their recreation with
their family as reward of their hard work for the company. Motivated employee will not be
attracted for making any harmful activities and corruption that is detrimental for the company.

The CEO can also persuade the board and stockholders that RM50 million wasnt much high
comparing its package of financing of RM400 million. This course will add more employment
opportunity for the people.

If the Company adds a cruise liner then the company can ensure more business by attracting its
clients. This investment will also increase the companys outlook and image by the decision of
such luxurious cruise liner. Satisfied clients will also looking forward to making more deal with
Monteiro Berhad company which will also facilitate to increase business deals of Monteiro
Berhad Company. Inclusion of the cruise liner will also upgrade Monteiro Berhad Company
from its competitor.
After the worldwide economic recession the economic sector is recovering. Tourism is one of
them if the company catch the opportunity then this cruise liner added a new dimension to their
business since cruising has become a major part of the tourism industry today. Since it is a great
attraction for tourist clients especially who are ocean lovers. So Acquiring the cruise liner would
definitely add a source of revenue to the business of Monteiro Berhad company. The company
can offer different types of package programs for their clients like they can tie-up with
international and local airlines with packaged tours for foreign and local tourists

2. As a shareholder of Monteiro Berhad the decision of purchasing new cruiser for the purpose of
business use and serving client will not add any value to the company. Shareholdings of this
company having 2000 share is not much high. Investors always expect a higher return from their
investments. Managers are the agent of the owner of the company. As a result of getting the
position of CEO and the Chairman of the company he (Datuk Valanian) creates agency problem

to the organization. As a result of adding extra 200 shares costing RM1250 is a risky investment
to me. Because this investment is not done for productive purpose and although the CEO
persuading that it will enhance the business image and profitability but in actual cases it will not
play any significant impact in shareholders dividend or return whatever called. But the
companys total investment is higher than the decision of purchasing the cruise liner. If the rest
of the part of the investment used in productive business activities then the decision of addin
extra investment to the company will be beneficial to the company. As the case mainly focused
on purchasing the cruise the CEO proposals to the board and approving to the board is quite easy
because he holds the both position. As a small investor any oppose from my side will not
postpone the proposals. The overall reasons for not investing additional fund to the company are
Mr. Datuk Valanian holds position of CEO and Chairman illegally as against of country law; the
investment decision wasnt towards the organizational objectives to increase the shareholders
return but creates additional cost of maintaining the cruise and only the management will take
benefit from this action. This business project is too much luxurious because it holds almost 12.5
% of the total finance package.
Without getting handsome dividend from shares is not the ultimate objective of the shareholder
now. If the company can show off itself among its industry it will give the shareholders an
internal respect. The purchase decisions that are said by the CEO to increase the company image
that ultimately increase the profitability of the company may not be true, because in todays
world information is available promptly. This decision will not give any extra advantage than
competitor because of the useless investment decision. In some aspect it seems that by adding
extra cruise added an extra asset of the firm will benefit the shareholders when the company is
going to be liquid but this hypothesis is completely uneconomical.
3. The principal function of any corporate loan manager is to analysis the proposed financing
decisions based on the viability of the project that means whether the proposal is primarily
objective oriented or not. Before making any final decision some important aspects are to be
considered before sanctioning any loan. Aspects are
Profitability of the loan proposals
Objective of the proposals
Functions of the asset purchase decision

Lifetime of the proposals


Contribution to the business
Increased productivity etc.
Considering the loan proposals of buying the cruise violates the above important aspects.. That
will create agency problem in the firm. The CEO is not acting for the betterment of the company
rather own benefit. As a credit manager the purchase decision is made completely for the purpose
of increasing luxuriate habit of the managers current trend Although the CEO attempted to
convince that will increase the business by attracting more clients but the office use and yearly

So in my justification being a corporate loan manager at XHB Bank it is my duty to accept or


reject any request for corporate loan. After analysing the size of the company Monterio Berhad
and their investment amount it seem to be a risky decision to sanction corporate loan to this
company. If loan is given to Monterio Berhad , it can loss other effective loan opportunity which
will pay off much higher interest. Besides, Monterio Berhad is a medium size company for
which adding new cruise liner for company use and impressing clients is a luxurious decision. So
there is a great chance that the company can default to repay the loan or fail to pay the promised
interest on time. As Monterio Berhad is not a large business so it has much volatile profitability
and adding this type of unproductive investment can put the company backward or even can face
any loss. That can be a reasons for Monterio Berhad Company will to not generate enough profit.
With a volatile return from this investment the loan will be more unsecure loan and also a threat
for XHB Bank if we intended to give a loan to this company.
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