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I. TIME CONTEXT

During March 31, 1987 when the annual report was presented by Tan SriNasruddin.

II. POINT OF VIEW

The HICOM officials and also the executives of the three subsidiaries will decideif they want to continue the operations of the company.

III. PROBLEM

The poor performance of the three company subsidiaries of Heavy IndustriesCorporation of Malaysia Berhad (HICOM).

A. OBJECTIVES

Their objective is to recover the huge losses of the three subsidiaries.

IV. SWOT ANALYSIS

A. STRENGTH

The company has their domestic and export sales of their products. And at thesame time, they were supported by the government together with their parent company(HICOM) as their guarantors on their loans.

B. WEAKNESS

The three subsidiaries are suffering from a big debt that was used for theenhancement of their product lines, and also the officials that managed the companyhave lack of experience. Due to the lack of experience of the officials, poor planningarises, which means, they have the inappropriate management.

C. OPPORTUNITIES

They can solve the problem, and recover each of the subsidiaries by having anew management which can help them to resolve the problems or trials.

D. THREATS

They were suffering from economic depression. Due to the yen denominationagainst their currency, the Malaysian companies suffered from huge losses.

The existence of the aggressive competitors may give possibilities to patronizethe opponents’ product particularly in Kedah Company.

V. ALTERNATIVE COURSE OF ACTION

1. Close the three subsidiary companies (Perwaja Trengganu Sdn Bhd, PerusahaanOtomobil Nasional Sdn Bhd, and Kedah Cement Sdn Bhd.).

ADVANTAGE

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They prevent the incessant expenditures and liabilities’. By closing it the problemof the parent company will also lessen.

DISADVANTAGE

The company will suffer on the payment of the debt of these subsidiaries. At the

same time the operation will stop.

2. Sell the three subsidiary companies to the private investor

ADVANTAGE

There is an opportunity that they can pay their debts. They were not able to thinkabout the losses of the company once it is purchase by the private investors.

DISADVANTAGE

The HICOM will decrease its subsidiary companies and there is a tendency for

them to wait for the private investors to buy their subsidiary companies. As a result,there will be no business operation exist in the three companies.

3. Proper managing of each subsidiary

ADVANTAGE

There is a possibility that they will recover the huge losses and also earn a hugeprofit for the succeeding year, for the forecast of the forthcoming year, the company willrecover its depression.

DISADVANTAGE

The new management may not succeed in a competitive market as well as theproblem that encountered of these three subsidiaries.

VI. RECOMMENDATION

We recommend the Alternative Course of Action number three (ACA #3), whichis the proper managing of each subsidiaries. Where in the company had better chiefexecutive in terms of managing a company