1

PREPARED BY :MOHD RADZUAN B ABDUL GANI 2009397809MOHD KHAIRUL AZUAN BIN TALIB 2009910797SITI NUR KHALIDA BT MD KHAIRUDIN 2009384695WAN IZZATI BT WAN AHMAD 2009578111WAN MOHD HAFIDZ B WAN HAMIDNUDIN 2009553387

MAF 680CASE 3 :

JOHNSON TURNAROUND

1.Salaries for finance &

accounting are too high

2.Excessive spending on

advertisement & promotional

expenses

3.Account receivables

overdue

4.Poor asset management

5.Some of company retail

outlets persistently

incurring losses

ISSUES

2

6.The company did not invest in

Research & Development(R&

D)

7.Mismanagement of Inventory

8.Many diversified

product9.Opportunities

10.Provision of bad debt 0f 2%

from salesISSUES

33

• Salary reduction

Short-term

• Key Performance Indicators(KPI)- Evaluate performance of each department.

Long-term

1)Salaries for workers are too high

RECOMMENDATIONS

44

2)Excessive spending on advertisement & promotional expenses

Short-term• Internal auditor check in

detailed of advertisement & promotional expenses.

• - If the findings is misappropriation of funds, the IA should inform parent company to take further action.

• - If findings is ineffective allocation of funds, the IA should send reminder letter & the CEO need to discuss with Director of Sales & Marketing.

Long-term• Prepared fixed budget for

advertisement & promotional costs every year.

• - From total sales, the company should allocate 3% for advertisement & promotional expenses.

• Impose effective advertisement (facebook/ blog)

• Introduce a new scheme : “now everyone can sales”)

Recommendations

55

Short-term• Send frequent

(monthly) reminder to debtors

• Negotiate-reschedule the debtor payment

• Debt collection agencies need to collect the overdue account receivables.

Long-term

• Tighten the account receivables policies.

• -Screening procedure(sufficient bank guarantee)

• Aging system• Factoring system

3)Account Receivables OverdueRECOMMENDATIONS

66

4)Poor Asset Management

Short-term• Rent the empty factories to

other party• Dispose and sell unused asset

Long-term• Establish asset management

team to form physical asset management cycle.

77

Short-term

• Close & sold the outlets to other parties

• Rent the outlet to other subsidiaries.

5) Some ofcompany retailoutlets persistently incurringlosses

RECOMMENDATIONS

88

6.The company did not invest in Research and Development(R&D)

9

Set up company’s R&D Department-Product innovation eg. Such as produce noodles in varieties of flavor

LONG TERM STRATEGY

9

7.MISMANAGEMENT OF INVENTORY

10

Short term

•Dispose obsolete raw material

•Sold the inventory at lower price to interested party.

Long

term

•Implement Material Requirement Planning (MRP) by comparing production needs with available balances of inventory.

10

8.MANY DIVERSIFIED PRODUCTS

11

SHORT TERM• Focus on producing products that

gives most profitable to the company, eg. Noodles and Bakery.

• Produce other products based on demand.

LONG TERM• Do promotion to increase the sales.

11

OPPORTUNITIESExternal chances to

improve performance (e.g. make greater

profits) in the environment

Invest in new market : Malaysia, China &

Dubai

12

9.OPPORTUNITIES

12

10.Provision of bad debt

of 2% from sales

2% x (50m/12)=83,333

2% of revenues

2% x (33m/12)=55,000

2% of accounts

receivable

Short-term : Change bad debt policy instead using 2% from sales to 2% from debtors.

13

CONCLUSIONIn order to TURNAROUND Johnson Pte. Ltd. (JPL), the

company should implement short term strategies and

followed by long term strategies to prevent the

company from getting worse from year to year.

1414

THANK

YOU