Chicken Run-En Selamat

Topics: Financial ratio, Meat, Management Pages: 11 (2402 words) Published: April 29, 2013
Chicken Run Case Study: En Selamat

Key assumptions

1. En Munir had conducted cash skimming in the company which leaded to his resignation.

2. En Selamat has personal benefit from the deal with Cold Gold Sdn Bhd. Therefore although CG did not pay within the credit term, En Selamat did not stop the marketing department to continue supply products to the company.

3. There is possibility that the irregularities in the account balances is due to illegal transferring of a particular debtor’s balances to another debtor.

1. Financial

• Cash flow not liquid.

• Financial ratio analysis.

• Apply for short term borrowings from bank and financial assistance → Skim Pembiayaan Perniagaan MARA, TEKUN.

• To increase sales (new market, fully utilized=sell chicken poop and bulu ayam) → not only sell the meats. 1. Meats 2. Eggs 3. Fertilizer (poop) 4. Livestock (sell the chicks/breeds to other farmer) 5. Feathers

• Improve marketing → use En Selamat’s skill in marketing.

• Send reminder to debtor.

• Give good credit term.

• Cut cost → feed and labour expenses (hire relative).

2. Leadership

• Autocratic → laissez faire.

• Recommendation: democratic.

3. Conflict of Interest

• En Selamat and En Azman (“personally benefit from the deal”).

• En Selamat and BOD.


• Establish a clear set of policies and procedures within the company.

• Develop a whistle blowing policy.

• Ensure the independency of the management team.

• Conduct internal audit or investigation activities.

• Ms Choy: To persuade BOD that the issues in the company can lead to a deterioration of the company’s performance, esp. financially.

4. Internal control

• EncikSelamat

→ had responded to unrelated tasks to him.

→ approved the credit limit of CG without Ms. Choy’s authorization.

→ access to Ms. Choy information system.

• En. Munir

→ had not disclosed the receipt of payments from customer and the matter was pending investigation.

→ Left the company after committing fraud.

• Possible of fraud → Encik Selamat (has power, BOD support and benefited from connection with En. Azman).

• Account balance not tied up → may be due to Pn Azura’s carelessness. In which this encourages fraud to happen in the company.



1) SWOT analysis

2) Fishbone diagram

3) Financial evidence


~Recommendation and Action Plan

Executive summary: 1998, Excel Poultry & Meat Sdn Bhd (EPM) was a SME located in Kluang, Johor, operating business of chicken farming and supplying chicken throughout Malaysia. This subsidiary of PCK holding since 2005 was managed by Encik Selamat, a Certified Public Accountant (CPA). It became one of top 5 chicken suppliers within mid-tier producers in the country due to increasing demand in year 2000 from superstores and fast-food chains, high chicken consumption by Malaysian, and expansion of chicken industry. However, in 2008, cost of poultry production increased. EPM operating cash was low and severe, that it “had puzzled Encik Selamat” (p.4). Other problems were also identified.

Decision Maker: Credit Controller Ms Choy is the decision maker as she has the responsibility to make the right decision regarding unethical conduct of Encik Selamat, she can convince Board of Directors about En. Selamat. If she failed to convince BOD to take action, she can then reveal the issue to the auditor, besides mentioning to the auditor the lack of segregation of duty in the business operation. She can execute and monitor implementation and performance of employees under her responsibility and convince her friend, Puan Azura to do the same.

What should Ms. Choy do?


1) SWOT analysis


* One of top 5 chicken suppliers * Continuing profitability and growth * Good promotional strategy * Qualified accountant (Encik Kasim) * Reliable Credit Controller (Ms...
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