1st meeting Peter(Fyza) : good morning everyone. Thank you for attending this meeting.

Our company secretary already gives us notice of Board of Directors meeting and I think everyone already know what this meeting is all about. This is our first meeting and we are here to discuss on the issues in this company. So, I would like to let Mr.Jeffrey to explain. Jeffrey (ijah) : Good Morning everyone. So I¶ll just go straight to my point here. I¶ve just received letters from 2 of our major clients, KiKi and Houida last week, and I¶m telling you it¶s not a good thing. Both KiKi and Houida want to inform us that they might be looking to China to ³contract manufacturer´ for them since the prices there were very competitive. And if this really happens, we will be losing our major clients«even worst, other clients might be following their step as well, which mean bigger losses for our company. We can¶t afford other losses this year since HCF had been experiencing falling margin & profits over the last few years. Mr.Daniel will explain about our financial condition. Daniel (Amy) : Base on the Income Statement for the previous year there was a reduction in revenue but increase in the cost of good sold. It has cause low profit to our company. Our main customer which is Kiki contributes 26.7% from our sales and Houida contributes 17.5% from our total sales. If both left it may cause major losses to our company.

Jeffrey (ijah) : so, I guess everyone in this room are very clear on our financial condition and how important KiKi and Houida to our company. As stated by Mr.Daniel, losing both KiKi and Houida will cause us a major loss and we can¶t let it happen. Peter (Fyza) : so Mr.Jeffrey, do you have any suggestion regarding this matter? Maybe you can explain to us. Jeffrey (ijah) : I was thinking on moving our operations to China, since that is the only way we can survive in this industry. By doing so, we might be able to retain both KiKi and Houida as our clients. Peter (Fyza) : I see« but, why do you choose China? Don¶t you think China¶s label has poor quality? Everyone knows it. And that¶s why the price is cheap and easy to get.

So. Since Jitra and Chieng Mai had very small resale value as the factories were located in rural spots. we are able to still retain our foremost customer Kiki and Houida. where we can still maintain our quality but at much lower costs. why don¶t we just moving our manufacturing in China? So. And I believe it¶s mainly due to its low operating costs since human power are very cheap in China. That¶s why. Many of the European and American Fashion houses were looking at important clothes from China at very low prices. we have to close down the factories in Butterworth. if we were to continue retaining our major clients. But I would like to remind everyone in this room to not underestimate the µMade in China¶ labels anymore. Teoh(Shila) : No Elaine. Do you think that they will sell µMade in China¶s clothes at their store if their qualities are bad? I doubt that. It¶s terrible What if we retain the Malaysian operation and develop our own label for Malaysia and Asean market. Jitra and also in Chieng Mai. we should consider moving our operations to China. the bad perception of µMade in China¶ labels had changed as China now manufactured clothes that are of higher quality at lower operating costs. know most people were labeling China¶s products as a product with low quality. Elaine(linn) : Then.Jeffrey (ijah) : I. While moving to China. Most of them have been very loyal to this company and have been with us for more than ten years. But how many employees will lose their job. Our management team has been doing their research and according to them. We are like a family. We can¶t drastically shut down the Malaysian operations completely. almost 30% of the European Fashion houses were selling µMade in China¶ labels at their store. I knew that we can¶t operate the way we used to and I agree to restructuring and expand manufacturing operation to China is seems like a good idea. . Ok. We can¶t do that to them.

ok. Celestial Clothes had established itself as a high quality clothes manufacturer. can you start now? Daniel (Amy) : I have conduct research on the possibility of expansion in China with help of these 2 consultants here. an Agricultural expert. I assign you to make a research on the possibility of the expansion our manufacturing in China. Peter (fyza) : well. Miss Lynn. So.. its look likes you have difference opinion on this matter. The first option would require us to invest a large sum of money there.we find out that there is possible ways to expand into China which is to set up our own factory in China and the second one is to Joint Venture with Chinese manufacture. we are going to continue our discussion on what we had in the previous meeting. but we did not have sufficient funds to this. However new factory in China will able to manufacture a similar capacity of current operations in Butterworth.Or we can concentrate on developing our own label since we have talented designer. Thank you Meeting adjourned. Based on our research.. second option which is to Joint Venture.since there is nothing else. 2nd Meeting Peter (fyza) : good morning everyone. a Financial Expert and Miss Shahila. I have contacted several Chinese clothing manufactures and after evaluating all proposals. So Danial.hmm anyone have anything to say?. . I short-listed Celestial Clothes as a possible partner. Danial. Jitra and Chiang Mai. However this option had a higher risk than operating by our own. So today. I adjourn the meeting. : Compare to the first option.

and at the end you need to bear the . The Butterworth and Penang factories would fetch a reasonable value as its equipment has just being renewed. If we just closed the factories and left it abandoned it might be a haven for drug addicts. There is no problem of product¶s shortage. we only would depend on our own label to survive.2 million. I¶m Miss Linn. you might end up producing too much or unreasonable products.1(Linn) : Thanks Mr. The other 2 factories in Jitra and Chiang Mai would be closed but the selling prices have low value. Also the pulling down cost of the factories could take us about RM1. running your operation in both countries. It will only cause redundant inventories. However we need to work very hard to survive because it is a new area for us. It cloud be sell about RM8.: However in order to expand into China. We have a large number of staffs. pleasure to meet you guys today. how about them? Why don¶t we just do the operation as usual and at the same time we also can do the expansion in China. I guess everyone does aware that operating both factories in China and Malaysia will incurred much higher cost rather than only running our operation in one country. It is because. Miss Linn? Point 1: Reasons why we shouldn¶t open both factories in Malaysia and China.Daniel. Both can give us profit right? Daniel(Amy): well. Moving your operation to China will incurred those listed cost (slide). Second. Miss Linn will explain about it in details. so why open more factories?.Hello everyone. : Another suggestion is for us to set our own label in Malaysia and Asian market. Con. about that. So. we need to close down factories in Malaysia & Thailand if we want to move to China. I also expected that there will be redundancy payments to cost around RM3 million at minimum. So. If we terminate all contracts with the Fashion house.5 million. if we close the factory. Teoh (Shila) : no! I don¶t think closing our factory in Malaysia is a good idea. from what I understand the factory in China is expected to produce as much as the Malaysia¶s factory can actually produce.

if you need fast access to local expertise. Cont 1(Linn): Joint Venture is definitely a good idea but it is a bit risky since you do not have 100% control on the operation. a joint venture strategy may give your company more direct access to decision makers. Last but not least. how about the factory in Jitra? Selling it will be a bad choice since the price is not good enough«so what will we do with that factory then? . it will save your time and expense needed to start your own operation from scratch. is you has the right joint venture partner with national recognition and reputation. you could build business and raise revenues faster by sharing the profits. and you can instantly raise the credibility of your business. Third advantage of JV is using the technology and resources already utilized by a joint venture partner. labor. Chinese customers and distribution channels. You still need to pay for the employee¶s salary. Additionally. A strategic joint venture can provide you with new marketing channels and geographic scopes. joint venture with a local Chinese partner such as Celestial will be a better choice. Not only can your company gain access to larger and new markets. However.storage cost and holding the excess units. Peter(Fyza) : oh. First advantage through JV is a strategic joint venture partnership can provide access to larger customer bases and geographical markets. Elaine (ijah): Hmm. but also you can extend your marketing reach.how about the joint venture idea that you mention before? Can we have more details on its benefit to us? Point 2: Advantage of Joint Venture. this suggestion to open both factories in Malaysia and China is not a good idea. rental cost and other cost related. Third reason why you shouldn¶t open both factories in Malaysia and China is because you still incurred the operating cost for Malaysia¶s Factories which is quite high. So.

500/per kilos There are several factors to be consider before conducting any of these two business Mushroom Farm It¶s required more attention and more cost compared to swiftlet house. instead you can think of operating a new business there. economical start up cost High profit RM10-RM15/per kilos 1 kilo=20 bags 1 box=RM40/month Low risk because easy to handle and not easily infected It grow everyday Swiftlet . Jitra is a good location for swiftlet industry since Northern Peninsular Malaysia have a large colony of swiftlet It does not require so many workers since the swiftlet does not need to be feed and care. RM4. only renovation cost will incur to accommodate the swiftlet.2 (Sheila): I already examine the location of your factory at Jitra. How can you ensure that it is a good investment? Daniel(amy): Miss Shahila. Teoh(fyza): so you means that we need to stop our current operation on manufacturing clothes and then replace it with something new? But we don¶t have the skills and expert in other industry.Linn: that factory should not be left abandoned. Jitra is suitable for agriculture business since it located at the Northern Penisular Malaysia and near the paddy field I think conducting either mushroom farm or swiftlet nest Mushroom farm y y y y y y Swiftlet y y y y Low cost because we already have a building. care to explain to us about new business that we can consider of? Con.

But even with this positive impact. Peter(fyza): hmmm. starting an agricultural business here in Malaysia is a good idea. how about the possibility that we can manufacture our own label instead of using China¶s label? Jeffrey(ijah): I¶ve been thinking about this idea for quite sometimes since the day Mr. Our labels are completely unknown to Malaysian and Asean market since we had always manufacturing for the European and American fashion houses. The Joint Venture¶s proposal sounds promising since we don¶t have to invest a lot of money there and it doesn¶t take too much time to start our operation. that will be an advantage for us because we don¶t have to start everything from zero. We can still operate the factories in Butterworth and Jitra while closing down the Chiang Mai factory. Elaine(lin) : In my opinion.There is possibilities of external factors might harm the swiftlet colony and result in the colony move to another place such as pollution. funding will not be a problem. If we¶re to manufacture our own label for the Malaysian and Asean market. But. A large amount of money is needed to set up our own factory there. Furthermore.ok«now I understand about the option that we have just now. high advertising cost will be needed if we to produce our own labels..Teoh suggest it. And since Celestial Clothes are already established as a high quality clothes manufacturer. then again under the fashion houses labels rather than our own labels. there¶s a lot of thing that¶ll need to be considered especially the demand for our products. Jeffrey : well. there¶s also positive impact if we produce our own labels where we did not need to retrench all of our employees. So. I think this is a good deal even though it¶s a bit risky. I¶m afraid that we might not have sufficient demand to sustain our existence. so since we¶re going to sell our factories in Malaysia. Furthermore. Daniel(Amy): I think diversifying our business activities is a good idea since we cannot solely depends on one type of business only. I¶ve estimated the uncertainties in this . in order to attract customers we might need to price our products relatively low to penetrate the market. there is always demand for agriculture products even during economic recession compared to the demand for high quality clothes. personally I¶d prefer setting up our own factory in China that was large enough to manufacture clothing for our existing clients since it is less risky and will benefited us in a long run.

. there¶s anyone want to add anything on this matter?. 4th option is to focus on manufacturing our own labels and pull-out completely from the activity of contract manufacturing. Peter(fyza) : ok never mind« I think we should take a break.. Retrenchment cost of shutting down the Chiang Mai factory was estimated at RM 1. we might be able to decrease our operating cost but it is more risky. which opinion that we should take? «««.8 million. and invest in new business. 2nd option is to expand our operation to China by setting up our own factories. Peter(fyza): so.1 million per year.. 3rd option is to expand our operation to China and at the same time manufacturing our own labels for Malaysian and Asean Market. can you summaries all the option that we had? Then we will have vote session.. and closing our factories in Malaysia.option and there¶s only 30% probability that this option will have high success which is not good enough. The total cost for this option will be very high where the Fixed cost were estimated to be RM 30 million for the Malaysian factories. And we are going to continue after lunch.alright? Thank you. . let¶s continue our discussion. Mr.so now is the time for vote. This option will offer us a lower risk but the cost in setting up the factories will be very high. So. The costs of this option will be even much higher than other option.since we already considered all of the options. 3rd Meeting Peter(fyza): since everyone are here.ok. By doing this. advertising cost were estimated at RM 2. 1st option? 2nd Option? . and also investing in a new business. closing our Malaysia¶s factories. Peter(fyza): ok. There were uncertainties in this option and it can be a little too risky. Jeffrey(ijah): 1st option is to expand our operation to China through joint venture.Jeffrey.

. At first we are going to expand our business to China through joint venture and later when we have enough capabilities we will operate our own factory in China. Ok I think that¶s all of our meeting for today. Meeting adjourned.3rd option? 4th option? Since theres an equal number of votes for 1st and 2nd option and as chairman after considering all of the options I decided to combine these two options. Anyone wants to say anything.

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