Far East Optic Cable Inc.
Mr. K. Fourex, Chairman of the Board of FEOCI
I. PROBLEM STATEMENT:
How can FEOCI be rehabilitate in order to retain its business profitability?
II. STATEMENTS OF THE OBJECTIVE:
1. To be able to recover from its liabilities, capital deficiencies and debts. 2. To be able to rebuild the shareholder’s trust and confidence.
III. AREAS OF CONSIDERATION:
• FEOCI was incorporated in 1996 in the Philippines with BOI incentives, with a Manila office, and a modern plant in Mactan, Cebu. • FEOCI Philippines had hired 6 Filipino electronic and mechanical engineers who had acquired the technical expertise in supervising an FOC plant from the training experienced from its mother company in Belgium. • The construction of the plant, installation, test runs and FOC technology were all adopted from German manufacturer who was known to be as highly reliable. • The initial capital of P280M had a dramatic grew and with retained earnings of P330M for just 2 years only. • A highly-automated operating process of its FOC products. • The hiring of Ms. Lina Laxamana as Administrative Manager who later on was appointed as a Corporate Secretary of the Board. • The hiring of Mr. Opradicho to act as a “Consultant” who was then appointed as a Director and President in order to investigate closely the anomalies of the previous management (Mr. Y. Ezlamonte). • In order to enjoy a tax shield, FEOCI Philippines had its marketing activities in its subsidiary, FEOC Marketing Inc.
• No thorough background checks being made to prospective employees. • No system of check and balance implemented in the organization. • The compensation and benefits of the rank and file employees were overhauled by Mr. Ezlamonte’s daughter who had to background in Human Resource Management. • The Executive Secretary turned out to be a GF of Mr. Ezlamonte. • No orders were received from the supposed business contacts of Mr. Ezlamonte. • Bloated sales forecast.
• The contract with Mr. Ezlamonte was not implemented. No receipts were presented for his expenses. • No liquidity and insolvency.
• Expenses higher than Sales Revenue.
• FEOCI Philippines had a total liabilities amounting to P631.5M, a total capital deficiency of P310.5M.
• FEOCI is being classified under the Pioneer and Essential Industry of the IPP of the Philippine Government and located in the designated industrial zones in Cebu, where there is an international port for imports and exports, and with a Manila office where other international businesses and foreign embassies are headquartered. • The FOC products of FEOCI Philippines enjoyed a promising demand both domestically and internationally. • Provision of external auditors from Cebu and Manila Accounting firms respectively in order to check the transparency and accountability of its company officers and top level executives
• Possible market dominance of China in distributing FOC products due to its lower price and lower overhead cost. • Trust and confidence of FEOCI shareholders and investors might be put on the line due to the anomalies of the previous President.
IV. ALTERNATIVE COUSES OF ACTION:
ACA 1:Adaptation of good corporate governance in order to determine and control the strategic direction and performance of the organization.
ACA 2: Conduct organizational change by replacing the President and hiring additional qualified marketing and sales professionals.
ACA3: Shut down FEOCI Philippine operation immediately when there are still items to be salvaged/realized, sell all its properties and reconsider relocating to other Asian countries
ACA 1 -...