Johnson Pte Ltd.

INTRODUCTION

Johnson Pte Ltd. (JPL), a public non-listed subsidiary of a fast moving consumer goods (FMCG) group of companies based in the southern Indian region. Before the takeover, JPL was wholly-owned by the Indian government. Then, 20 years after it began operations, the Hong Kong group of companies acquired 80% of the shareholdings. The takeover was made successful through arrangements made by an Indian local businessmen. JPL manufactured and distributed a range of products, including frozen chicken, noodles, pastries, bread products, yeast and fats. It also traded in commodities such as oil. JPL also own a chain of restaurants and retailing outlets.

Azmi had just joined JPL as a chief executive in November 2009. He had been handpicked by the Chairman to purposely plan and execute an appropriate turnaround strategy because the company has been besieged with problems ever since the takeover its operations from the previous owner. He need check the declining sales figures but the operating costs are increasing. He also need to check the JPL’s credit control and inventories management. Azmi get a mission from his chairman to plan and execute a turnaround programme for the company before it’s too late.

SWOT ANALYSIS

A SWOT analysis is a simple but widely used tool that helps in understanding the strengths, weaknesses, opportunities and threats involved in a project or business activity. This can help Azmi to gain a better understanding about JPL’s business activity. This analysis can provides him with a critical view of the organization’s internal and external environments. It is also can help him to evaluate the firm’s fulfilment of its basic mission.

It starts by defining the objective of the project or business activity and identifies the internal and external factors that are important to achieving that objective. Strengths and weaknesses are usually internal to the organisation, while opportunities and threats are usually external.

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Diagram 1: SWOT Analysis

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Strengths

1. Product diversification

JPL manufactured and distributed a range of products, including frozen chicken, noodles, pastries, bread products, yeast and fats. It also traded in commodities such as oil. This is one of the strengths that JPL had.  JPL can attract a new customer to buy its product. The noodles brand were marketed based on many product flavours, for instance, chicken noodles in a variety of flavour. This noodles line had highest gross profit margin.

1. Good relationship with local

JPL has a good relationship with local because before the takeover, JPL was wholly-owned by an Indian government. This will make JPL have easier way to market their product to the local.

Weakness

1. Poor Management

JPL have a poor management of the account receivable which is contributed to the company’s inability to service its debt. There was a significant $40 million total provision made for bad debts in the accounts over a 10 year period. This happened because of wholesale distributors who were defaulting. JPL also having negative cash flows due to the mismanagement of inventory and account receivable as well as the poor asset management.

1. Unprofitable product

According to the Appendix D, most of the product produced by JPL do not get a high profit. Only noodles get a higher profitable at $3,500,000 in 2008 and bakery only get $1,178,000. While the other product such as consumer flour, further processes meat products, cooking oil, retail food and beverage operations and bakery raw ingredients does not get profit.