CASE PREPARATION CHART

Student Name

LOO LIAN VEE

Student ID

1112700203

Submission
date

4th May 2016

Case title

KRS: Survival of a small scale cleaning company

Section

AC 02

ASSESSMENT

To be filled by facilitator

Compone
nts
Completen
ess of case
chart

Submissio
n
TOTAL

Scores

Scores
1 mark

2 marks

3 marks

4 marks

Case
chart is
incompl
ete

Some of
the case
chart
requireme
nts are
met
satisfactor
ily.

Most of
the case
chart
requireme
nts are
met
satisfactor
ily.

All case
chart
requiremen
ts is met
satisfactoril
y.

N/A

N/A

N/A

On-time
submissi
on

Synopsis
This case is about a bumiputeras small and medium size scale business which
provided cleaning services as its core activity and also other activity such as
lawn care and maintenance job. The business was founded by Ali in 1994 with
the name of Key Rank Services (KRS) and invested by Nasir after operated for
15 years.
The company currently facing some issues such as in term of financial
resources and manpower. To solve the manpower issues, company have to
incur high cost to avoid problems occur and maintain operations efficiency.
Regarding to the financial issue, assume that there is still no solution as not
mentioned in case study. In the profit and loss account, expenses and cost of
sales keep increasing, profit keep decreasing, throughout these three years.
Since now there are some issues in the company, and furthermore regarding to
companys going concern, Ali is in dilemma to sustain and improve KRS
business operation.

Case analysis

STAGE 1
Issues
Explain the main issues underlying the case. Place extra attention on the what,
why and when.

Companys financial resources are quite crucial, this what makes the
company having difficulty in allocating personnel cost. Larger part of the
funding are from credit facilities which lead to hinger interest expense in the
end.

Another major issue is manpower, hard to attract and recruit local people,
hard to recruit foreign worker free from visa and legal issues and need to
incur high cost for the necessary legal documents and procedures.

KRS cleaning crew wages comprise almost two third of the entire operating
expenses. It also included those part time crews hired at a higher hourly
charge. For other expenses such as accomodation provided to crews will
charged more on company if they choosed to rent outside.

Going concern issue arise as there are several times that Ali worries if KRS
fails to pay his three staffs if he cant secure any good future contract. Since
going concern issue is part of all issues, Ali unable to determine priority
either to improve by solving current issues or create new business activities
to boost business operating revenue.

Key players
Based on the issues identified above, determine the key players involved, their
position/roles and the main decision that they have to make.
Num
.
1.

Who?

Position/roles

Main decision

Ali

Founder and Boss of KRS

To decide whether to
improve
on
current
business
activities
or
thinking on creating new
business activities.

2.

Rita

Finance Executive

To
determine
other
capital funding methods.

3.

Salman

Assistant Finance
Executive

Survey
and
compare
alternative product prices
from other suppliers for
more bargaining power.
Sell those sorted rubbish
to appropriate company.
Restructure
personnel
plan
and
benefits
especially for local crews.

4.

Lokman

Administrative Executive

To determine whether to
repair those rusty tools or
ignore and keep it for
future use
Advertise job vaccancy
with
attractive
offer
which
priority
on
recruiting local people as
permanent crew.
Monitor and control the
operating cost of each
project strictly to reflect
efficiency of crews.

STAGE 2

PART I: Decisions
For each decision that need to be made by each key player, identify the criteria
that should be considered and the decision alternatives that are available
Key
player

Ali

N
o.

Main decision

Decision criteria

1.

To decide whether to
improve on current
business activities or
thinking on creating
new
business
activities.

Issues
Financial status
Profit
Going concern

Alternatives

Improve on current
business
Create new business
activities

Issues: Company current issues related to financial and manpower.

Financial status: Tightness level of financial depend on which
alternatives that Ali going to pursue.
Profit: Amount of profit generated from business
Going concern: Ability of company to survive in long term

Key
player
N
o.

1.

Rita

Main decision

To determine other
capital
funding
methods.

Decision criteria

Alternatives

Capital source
Liabilities
Interest
Profit

Search for alternative

funding method such
as from investors.
Continue sourcing from
credit facilities.

Capital source: Increase in capital from other sources

Liabilities: Liabilities such as loan from credit facilities
Interest: Interest from liabilities such as credit facilities
Profit: Amount of profit generated from business

Key
player
N
o.

1.

2.

3.

Salman

Main decision

Decision criteria

Alternatives

Survey and compare

alternative product
prices from other
suppliers for more
bargaining power.
Sell those sorted
rubbish
to
appropriate
company.

Prices
Time
Bargaining power

Survey and compare

Stick to the current
suppliers

Revenue

Sell
Just throw it into
appriopriate bins.

Time
Cost
Operating
expenses
Attractiveness

Restructure it
Remain with current
plan and benefits

Restructure
personnel plan and
benefits especially
for local crews.

Prices: Prices of products from different supplier

Time: Time spend on survey and compare AND restructure personnel pelan and
benefits.
Bargaining power: Company has more options to purchase at lower price.
Revenue: Either increase or decrease in revenue
Cost: Over-time costs for staffs spend extra time on restructure the whole
thhings.
Operating expenses: Increase or decrease in operating expenses depends on
alternative chosen.
Attractiveness: To attract more local people to be permanent crews

Key
player

Lokman

N
o.

Main decision

Decision criteria

Cost
Safety

1.

To
determine
whether to repair
those rusty tools or
ignore and keep it
for future use

Operating cost
Accurateness of
information.

2.

Monitor and control

the operating cost of
each project strictly
to reflect efficiency
and effectiveness.

Alternatives

Repair
Keep it.

Monitor and control

strictly by setting rules
and recording
procedures.
Continue as usual
without any
improvement.

Cost: Cost incurred to repair the tools AND advertising cost.

Safety: Tools safety which will affect the crews.
Operating cost: Increase or decrease in operating costs depends on alternative
chosen.
Penalty: Penalty imposed on crew who disobey rules and act no in accordance
with the procedures and policies set by management.
Accurateness of information: More accurate informations will be reflected to
enhance decision making.

PART II: Evaluations

Evaluate each available alternative based on the decision criteria.
Key
player

Ali

Main
decision

To decide whether to improve on current business

activities or thinking on creating new business activities.

N
o.

Decision criteria
Alternative

Improve on current
business

Create new business

activities

Issues

Able to
solve and
minimize
some
issues

Current
issues not
only
unsolved
but will
increase
more
issues as
new
business
was
created.

Financial
Status
Financial
getting
better and
able to
allocate
more on
other
personnel
cost.

Financial
getting
more
crucial.

Profit

Going
Concern

More profit
generated
as less
expenses
incurred by
overcome
issues in
company

Going
concern is
not longer
an issue
anymore
to the
company.

Since
issues are
unsolved
and
increasing,
profit
maybe
drastically
decreasing
and will
affect
companys
going
concern.

Company
might end
up closing
1 or more
business
activities.

Preferred alternative & predicted outcomes:

Ali should improve on its current business at first. Main reason is to solve and
minimize those existing issues especially regarding to manpower and crucial
financial resources. If company can recruit more local people, company able to
save RM10000 per head for more foreign workers necessary legal documents
and procedures. This will lead to betterment in financial status and generated
more profit for the company. Althought maybe company will increase salaries,
wages and boneses for local crews, but it wont be as much as the amount of
foreign worker legal costs per head.

Key
player

Rita

Main
decision

To determine other capital funding methods.

N
o.

Decision criteria
Alternative

Search for
alternative funding
method such as
from investors.

Continue sourcing
from credit facilities.

Capital
source

Liabilities

Interest

Profit

Such as
investor

Liabilities
not
increasing
anymore
as more
funds
available
from other
sources.

Interest
will
decrease.

Profit will
increasing
in future
years.

Credit
Facilities

Liablities
increasing

Increase
drastically
in interest.

Profit drop
drastically

Preferred alternative & predicted outcomes:

Rita shall pursue other capital funding methods such as promote to 3 rd
party who willing to invest in Alis company. If there are some investors
willing to invest, liabilities more likely not increasing since there are
funds available from other sources. Interest payable still exist based on
old liablilities but soon in future years, profit will increase and liabilities
will decrease.

Key
player
Main
decision
N
o.

Salman
Survey and compare alternative product prices from other
suppliers for more bargaining power.
Decision criteria

Alternative

Price

Time

Survey and
compare

Able to get
cheap
alternative
s product
or supplier

Required
much time
to survey
and
compare
and
update
into a list.

Stick to the current

supplier

Price
determine
d by
supplier

No time
required.
Everything
arrange by
supplier

Bargaining
power
Company
can
bargain for
cheaper
price since
many
options
are
available.
Supplier
the one
who
control
price.

Preferred alternative & predicted outcomes:

Salaman shall survey and compare price from many other vendors as maybe
there are chances to get cheaper alternative products or suppliers. Although
required much time to conduct survery and compare, at least company have
valuable informations to bargain with current supplier for cheaper price or
switch to another supplier or product since the switching cost is very low.

Key
player

Salman

Main
decision

To sell those sorted rubbish to appropriate company

N
o.

Alternative

Sell

Just throw into

appropriate dustbin

Decision criteria
Revenue
Increase
revenue
No
revenue.

Preferred alternative & predicted outcomes

Instead of just throw into bin, Salman shall search some recycle or
scrap companies and sell it to them.
Key
Salman
player
Main
decision
N
o.

To restructure personnel plan and benefits especially for local crews

Decision criteria
Alternative

Cost

Restructure it

Overtime
payment to
staff who
in charge
of this.

Continue provide old

personnel plan and
benefits

No
overtime
payment.

Time

Operating
expenses

Attractiven
ess

Time
spend on
restructure
it.

Lead to
reduction
in
operating
expenses

Attract
more local
people to
be
permanent
crews

No time
required

Operating
expenses
continue
increasing.

Local
people not
attracted
at all.

Preferred alternative & predicted outcomes

Salman can approach Ali for restructuring personnel plan and benefits
especially to attract more local people to be permanent crews. This can
leads to reduction in operating expenses as lesser foreign worker hired,
lesser expenses incurred for legal documents and procedures. Although
the plan will be more attractive such as increase in salary and bonuses
but it will not be as high as the cost for legal documents and
procedures. The differences between the increment for local people and
cost for legal documents and procedures will boost up company profits.

Key
player

Lokman

Main
decision

To determine whether to repair those rusty tools or ignore and keep

it for future use

N
o.

Alternative

Repair it.

Keep it.

Decision criteria
Cost

Safety

Maintenan
ce cost
incured.

Totally safe
for crews

No cost
incurred.

Injuries
may
happen to
the crew
who using
it.

Preferred alternative & predicted outcomes

Lokman should advise Ali to repair those rusty tools to avoid negative
consequences in future use.

Key
player

Lokman

Main
decision

Monitor and control the operating cost of each project strictly to

reflect efficiency and effectiveness.

Decision criteria

N
o.

Alternative

Operating
cost

Informatio
n

Monitor and control

strictly by setting
rules and recording
procedures.

Can save
up some
cost in
operating.

Reliable
and useful
for
decision
making.

Continue as usual
without any
improvement.

No
changes in
operating
cost.

Informatio
n not
accurate
and
reliable.

Preferred alternative & predicted outcomes

Lokman shall monitor and control strictly by setting rules and recording
procedures to obtain more accurate informations which is more reliable
and useful for decision making and also easier to identify which area
need improvement or changes to improve business operations
efficiency while reducing operating costs.

PART III: Action & Implementation Plan

Specify the action plan related to the decision made.
Who

Ali

Wha
t
How

To improve his current business

Who

Rita

Wha
t
How

To search for alternative funding method.

Who

Salman

Wha
t
How

To survey and compare alternative product prices from other suppliers

for more bargaining power.

Held a meeting with all the staffs

Clarify issues with them
Set priority on issues which need to be solve in consequence
Discuss those issue and provide the best solution to solve or at least
minimize the issues impact on company

Searching for business partner or joint venture with other companies.

Engage consultant for recommendations of some good contacts
which can help the company through equity funding method.

Search on the net for alternative product brand.

Get company information and product description from product packaging
Contact the company for further information such as quotation,
effectiveness of product and etc.
Compare the price with all the products and switch to cheaper product with
better quality.

Who

Salman

Wha

To sell those sorted rubbish to appropriate company

t
How

Who

Salman

Wha
t
How

To restructure personnel plan and benefits especially for local crews

Browse for information about recycling companies on the net

Get those companies contact number
Compare prices and sell to the company which provide highest price.

Identify which area need to be improve or redesign to attract more local

people.
Collaborate with all staffs to get a clearer image about the company
capabilities on financial and produce a better proposal.
Prepare a draft proposal to Ali for review and amendment.
Get Ali approval to proceed to officialise the new personnel plan and
benefits.

Who

Lokman

Wha
t
How

To repair those rusty tools for future use.

Who

Lokman

Wha
t
How

Monitor and control the operating cost of each project strictly to reflect
efficiency and effectiveness.

Identify which rusty tools are still in working condition.

Sell off the rusty tools that are unusable and could not work for scrap value.
Send those usable tools to 3rd parties for repair.

Set up proper recording procedures for crews to reflect proper usage and
cost of materials.
Set up policies and rules regarding to performance issue.
Impose penalty on crews who act not in accordance with the policies.
Reward those crews who outperform in each project.
Information acquired will reflect more accurate the performance of crews
and company.

Missing information:
In this case study did not stated about staffs and crews performance in company.

Assumptions:
I assume that basic salary for local and foreign crews are based on requirement
of labour laws in Malaysia. I also assume that KRS provide accommodation for all
the crews including those who stay outside which cost more than RM80.

Time taken to complete this chart:

15 hours