Johnson Turnaround Case Study

1492 Words May 10th, 2012 6 Pages
Executive Summary

In November 2009, the Chairman of Johnson Pte Ltd (JPL) had purposely hire Azmi as the company’s chief executive officer (CEO) to plan and execute an appropriate turnaround strategy for the company. JPL is a Hong Kong public non-listed subsidiary of a fast moving consumer goods (FMCG) group of companies based in the southern Indian region. JPL manufactured and distributed a range of products such as noodles, bread product, frozen chicken, pastries, yeast, and fat. It also traded in commodities such as oil. It owned a chain of restaurants and retailing outlets. JPL had on average, 1000 employees including 80 general administration staff.

JPL was wholly-owned by the Indian government before 80% of its shareholdings were
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This is including the debt or credit control management, inventory management, as well as asset management.

If there is a deficiency in debt or credit control management, there will be a possibility of slow collection of receivables. The longer an account goes without being collected, the bigger the risk that it will never be collected, which later leads to insufficiency of operating cash for the company.

The lack of inventory management shows that inventories move slowly to the customer, increasing storage and obsolescence cost. Because more money is tied up in inventory, the company was cashless and this will increase borrowings, which will increase interest expense.

An efficiently run business produces lots of sales for each dollar invested in assets. On the other hand, an inefficient run business will tend to have assets sitting around idle and not generating sales. This was what happens in JPL where there were a number of empty factories with old steel structures intact for the last 10 years, and there were heaps of obsolete spare parts left untouched in the store room.

Alternatives Available

There are two alternatives available for Azmi to choose on how will he plan and execute an appropriate turnaround strategy for the company. Firstly, Azmi could just plan a strategy that will give an immediate benefit for the company but only for short-term, or secondly, he could plan an appropriate strategy that will consistently