The case started with the dilemma faced by the protagonist, Jeffry Cheong when both of his major clients KiKi and Houida (European fashion houses) was writing to Jeffry to inform him that they may be looking forward to China as the prices are very competitive. Jeffry Cheong was managing director at Haute Couture Fashions Bhd (HCF). Loss of its major two clients (KiKi and Houida) would be catastrophic to HCF as now the financial statement of HCF showed HCF has been experiencing falling margins and profit over the last few years. HCF was established in 1974 by the Tan family with the first fully equipped factory in Penang Island. The founder was Tan Boon Kheong with a skilled master cutter, trained by British master cutter in the 1950 in Penang. He started the HCF with a small but successful business tailoring men’s clothing in Argyll Road, Penang until his retirement in 1980. Peter Tan, the eldest son of Tan Boon Kheong was left to Europe when he was 20 years old and returned to Malaysia with a wealth of experience of both men and women’s fashion. During that time, there was a trend of European clothes manufacturers looking at Asia for outsourcing. By having that opportunity, Peter started his business venture, especially with the European fashion houses. Due to limited production capacity, the second factory was opened in Butterworth in July 1980. HCF’s sales continued to experience growth throughout the early 1980s to mid 1990s and number of customers had also increased. Thus, in 1990, HCF opened its third factory in Jitra, Kedah. In 1995, due to non-stop increasing demand for its clothes, the fourth factory was opened in Chieng Mai, Thailand. However, in 1998, Peter Tan decided to shut down the Penang Island factory to cut operating costs due to loss suffered by the HCF during that year. After few years, its profitability increased progressively and HCF pulled itself out of the loss making situation. Issues
1. Possibility of losing two major...
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