I.

TIME CONTEXT

During March 31, 1987 when the annual report was presented by Tan Sri Nasruddin. II. POINT OF VIEW

The HICOM officials and also the executives of the three subsidiaries will decide if they want to continue the operations of the company. III. PROBLEM

The poor performance of the three company subsidiaries of Heavy Industries Corporation of Malaysia Berhad (HICOM). A. OBJECTIVES Their objective is to recover the huge losses of the three subsidiaries. IV. A. SWOT ANALYSIS STRENGTH

The company has their domestic and export sales of their products. And at the same 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 the enhancement of their product lines, and also the officials that managed the company have lack of experience. Due to the lack of experience of the officials, poor planning arises, which means, they have the inappropriate management. C. OPPORTUNITIES

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

They were suffering from economic depression. Due to the yen denomination against their currency, the Malaysian companies suffered from huge losses. The existence of the aggressive competitors may give possibilities to patronize the opponents product particularly in Kedah Company. V. ALTERNATIVE COURSE OF ACTION

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

They prevent the incessant expenditures and liabilities. By closing it the problem of 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 think about 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 huge profit for the succeeding year, for the forecast of the forthcoming year, the company will recover its depression. DISADVANTAGE The new management may not succeed in a competitive market as well as the problem that encountered of these three subsidiaries. VI. RECOMMENDATION

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