Red Star China Case
Unicord PLC
Group A
Florida Atlantic University
Professor: Dr. Hemant Merchant
Emerging Markets
MAN-6728
February 15, 2010
Problem/Decision
Dr. Juanjai Ajanant, a special advisor to Unicord PLC’s board, has been tasked with deciding the best strategy to take Unicord out of receivership. Unicord, as a relatively young company, was a leading tuna processor and one of the “shining stars” of Thailand. As a top tuna exporter, the company had shown year over year growth since its inception in 1978. It appears that their challenges began soon after the purchase of Bumble Bee in 1991. In four short years, Unicord quickly spiraled downward and seemingly out of control. By 1995, the founder and CEO, Dumri, was challenged by surging debt, plummeting share value, significant losses, creditors demanding repayment and falling per capita consumption; faced with these failures, Dumri committed suicide. Without a CEO and VP of Finance providing direction, Dr. Ajanant must determine the causes for the rapid demise of such a promising company and identify what information he needs to decide if a turn-around strategy is possible.
Fundamental Causes The two primary reasons for Unicord’s demise were the acquisition of Bumble Bee along with its deal structure and the dolphin controversy. A secondary cause was related to their senior leadership. Although, leadership can be an ambiguous cause, there were some senior level decisions and management style that accelerated the downfall. Without the acquisition of Bumble Bee, Unicord could have been a healthier and stronger company today. From a strategic perspective, the acquisition made sense given Unicord’s growth stage and the state of Thailand’s government and economy. The problem began with the purchase price and the structuring of the debt. Unicord was permitted to purchase a company twice its size because Chase Manhattan and Sutro banks were responding to Thailand’s economic
Group A
Florida Atlantic University
Professor: Dr. Hemant Merchant
Emerging Markets
MAN-6728
February 15, 2010
Problem/Decision
Dr. Juanjai Ajanant, a special advisor to Unicord PLC’s board, has been tasked with deciding the best strategy to take Unicord out of receivership. Unicord, as a relatively young company, was a leading tuna processor and one of the “shining stars” of Thailand. As a top tuna exporter, the company had shown year over year growth since its inception in 1978. It appears that their challenges began soon after the purchase of Bumble Bee in 1991. In four short years, Unicord quickly spiraled downward and seemingly out of control. By 1995, the founder and CEO, Dumri, was challenged by surging debt, plummeting share value, significant losses, creditors demanding repayment and falling per capita consumption; faced with these failures, Dumri committed suicide. Without a CEO and VP of Finance providing direction, Dr. Ajanant must determine the causes for the rapid demise of such a promising company and identify what information he needs to decide if a turn-around strategy is possible.
Fundamental Causes The two primary reasons for Unicord’s demise were the acquisition of Bumble Bee along with its deal structure and the dolphin controversy. A secondary cause was related to their senior leadership. Although, leadership can be an ambiguous cause, there were some senior level decisions and management style that accelerated the downfall. Without the acquisition of Bumble Bee, Unicord could have been a healthier and stronger company today. From a strategic perspective, the acquisition made sense given Unicord’s growth stage and the state of Thailand’s government and economy. The problem began with the purchase price and the structuring of the debt. Unicord was permitted to purchase a company twice its size because Chase Manhattan and Sutro banks were responding to Thailand’s economic