UNIVERSITY COLLEGE OF TECHNOLOGY SARAWAK (UCTS)

BACHELOR OF ACCOUNTANCY (HONS)

MBC3823: INTEGRATED CASE STUDY

CASE STUDY: ERA PAPAN & PERABUT (EPPSB)

PREPARED FOR:

MDM. LIM WEE CHENG

PREPARED BY:

Lee Kuok Ngie BAC15070012

Kiing Kiu Hwang BAC15070015

Hii Shan Kai BAC15070017

Tiong Xiew Huei BAC15090033

 a. 1. Explain five (5) possible reasons for the company to be experiencing losses.
2. How could the performance in Part a (1) be improved?
No Reason for company to experience
losses
1  Era Papan & Perabut (EPPSB)’s 
factory is not operating at full
capacity, which means that the 
factory does not make full use of
their resources to produce their
products.
 The reason EPPSB’s factory is not
operating at full capacity is due to
the lack of funds to purchase new
machineries.
2  EPPSB is focuses on producing
two major items for export market
which is children bunk bed and
dual function chair. As EPPSB only
focuses on the production of two
major products, this means that
there are no variety of products for
customers to choose from. This will
eventually cause the company not
being able to attract the attention of
the customer and not satisfy the
customer’s preferences.
 In addition, the production of the
two major items has slowed down.
This is because the export market
Improvement
The factory should make full use of the
resources to produce their products.
The company should allocate its fund
appropriately. The company could
consider using the technology in
Malaysia instead of using technology
from others country. This will save the
company some funds to purchase new
machineries to increase production. By
doing so, the company profit can be
increased.
 The company can produce a variety
of products so that customer could have
more choices to choose the furniture
they prefer.
 Concentric diversification should be
implemented. Concentric diversification
involves adding similar products or
services to existing business. For
example, EPPSB that primarily focusing
on producing the two major items can
start to manufacture common type of
beds and chairs for export market.
 The company should reduce the
production for the two major items that
customers usually do not buy. On the
 for children bunk bed and dual other hand, the company should
function chair is less demanding. produce more furniture that customers
prefer on the market.

3  EPPSB does not have any  The company should allocate some fund
promotional activities to introduce for promotional activities purpose. They
its products to the market either should promote their company’s
locally or internationally. The products on the website. For example,
promotional activities can only be EPPSB can consider creating Facebook
make through word of mouth by page for their company as Facebook is
Encik Zahazan, his staff and by a global social media used by most
satisfied previous customers who people.
had bought furniture from EPPSB.

 The business of EPPSB is

depending mainly on local market
and upon special orders from
customers. Therefore, if the
company does not promotional
activities, customers will not be
able to recognize EPPSB’s brand
and may not prefer to buy its
products. This will influence the
profit of EPPSB.

4  The company has no qualified  The company should hire personnel to

personnel responsible for financial take charge of financial and accounting
and accounting function. in the company. This should be done to
prevent fraud and to help EPPSB in
 Therefore, En. Zahazan handles all
analyzing their performance. Through
financial management, from
financial information prepared by
ordering of raw material to paying
qualified financial personnel, the
 bills to supplier. company can conduct ratio analysis to
understand the company's performance.
 Not only that, but his account
If the performance is poor which
assistant does not have much
happens in the case study, the company
experience in manufacturing
can use the analysis to see where the
business.
problem rises and try to solve the
 There are no qualified and problems. Therefore, it is necessary to
experience personnel to handle hire qualified personnel of EPPSB.
financial and accounting matters,
 EPPSB should provide training for the
so that the budget used to predict
account assistant to enable the
future earning and expenditure
assistant to improve his or her
cannot be estimated.
accounting knowledge of manufacturing
 Furthermore, the company has no business.
segregation of duties where Encik
 The company's duties should be
Zahazan is the only person who
segregated. Even though Encik
takes charge of all the financial
Zahazan is an experienced person who
matters.
can handle all financial matters, he
should not do all the work by himself
and should hire more employees to
manage the financial matters.

5  Due to the existence of an  The company should prepare

improper system of documenting appropriate system of documentation in
financial transactions, accounts are financial transactions. By doing so,
being prepared based on available sufficient financial information can be
documents. Therefore, the lack of provided when preparing audited
supporting evidence due to financial statement to bankers.
improper system of documenting
may result the number of incorrect
finance transaction to increase.
b. Identify five (5) main issues/challenges that En. Zahazan is facing in the
company.

The issues that have been identified in the case study are, firstly the factory are
currently not running in full capacity because of lack of capital to require new equipment
or machineries. Secondly, EPPSB is eager to enter the world market by itself which
make the arrangement with HWI didn’t work out. Furthermore, HWI require strict quality
control and production operation. Next issues is, En Zahazan made the company
focusing too much on its children bunk bed and dual function chair for export. Fourth,
the marketing department itself don’t have any appropriate marketing plan or strategies
to promote their product, they don’t have any promotional activities to introduce its
product in the market. Last issues is En Zahazan don’t have the initiatives to enhance
the knowledge of his employees and his own.
c. Suggest how he overcomes those issues identified in part (b) above.

Based on the main issues/ challenges listed above, there are several ways that
En. Zahazan or his company could do in order to overcome those issues/ challenges.
First of all, regarding the lack of capital, En. Zahazan should find more fund sources to
finance the company operation and its expansion. These sources may include whether
the fund from family members or loans from the banks. This fund is very important as it
will help the company to function at its full or maximum capacity, thus maximising the
profit.

Secondly, the company shall seek to maintain and find more companies to
cooperate with. This is crucial for the company vitality and stability, especially if the
company wants to penetrate both local and international markets. This is because,
based on the company resources and status, it may not be able to do it by itself. It is
evident from the failure of the arrangement with HWI during the initial stage.

Furthermore, the company seems to lack variety in terms of its product offering
which focusing more on children and school furniture. To overcome this problem, the
company should invest more time and money in offering more interesting and high
demand products. This will give a very good impression from people towards the
company for being an innovative company while increasing its income.

On top of that, the company must also invest more in promotional activities in
order to introduce its products and improve the company reputation. That is why, the
company needs to have its own marketing strategies, not only to increase the company
income by increasing the sales but also to maintain its reputation from the customers’
perspective.
 Last but not least, a continuous training also is very important to ensure that all of
the company staffs and the director himself which is En Zahazan, could perform at their
best for the sake of the company. In the article, it is mentioned that En. Zahazan
maintained the same working style since he was managing his sole proprietorship until
it became a company. His accounts assistant also does not have the appropriate skill
and experience in running a manufacturing business. Therefore, En. Zahazan has to
provide the appropriate training and guidance towards its employees and he, himself
must seek to improve his managing style to suit with the changes.
d. Elaborate five (5) most critical success factors in order to sustain business in
furniture industry.
Critical success factors Explanation
Marketing  Targeted marketing strategies will help allocate
resources where they can be successful. Appropriate
advertising and promotion planning should be provided
to maintain and sustain the business. The sales team
should be trained to familiarize themselves with furniture
products so as to be able to meet customer needs and
preferences.
Price  In order to maintain a business, profitability is very
important. This can be done by offering competitive
prices. The price offered should be reasonable and
suitable for targeted customer.
Product Quality  In order to maintain the furniture business, raw materials
such as wood from illegal or unsustainable sources
should be avoided. By providing high-quality furniture,
this will win the respect and reputation from customers
Technology and  New technology such as automatic machines can
innovation produce high quality of furniture product, shortens the
time for furniture production and improves efficiency.
Innovation is importance part in the furniture industry. In
order to sell the furniture higher price, it is necessary to
create original and attractive designs for customer to
buy.
Delivery  Timely delivery and proper after-sales service is
importance in the business. This is because customer
satisfaction is essential in sustainability of business in
furniture industry. So, the order to delivery cycle time
should be reduced.
e. In your opinion, should EPPSB remain in the government vendor scheme
project? Provide justification for your answer.

In my opinion, EPPSB should not remain in the government vendor scheme

project because EPPSB is unable to handle this project. We can see from the case
study above that stated EPPSB had started as a vendor of Hamra Wood Industries Sdn
Bhd (HWI) which is mainly export wood based furniture to world market especially to the
European countries under the government vendor scheme project.
The first reason of EPPSB should quit from the government vendor scheme
project is that the company was not performing well in the current financial
standing as it was experienced an accumulated loss. Ways that may use by a business
to solve the problem of suffered loss included trying to cut off their business cost such
as laying off employees, selling equipment or assets and closing underperforming
business facilities. Besides, business loss would also bring negative impact to their
production operations. Without income, they would not be able to produce their
production smoothly which this may cause the operational output to decrease. So,
EPPSB is unable to supplying semi-finished furniture components to HWI factory
In addition, EPPSB’s factory did not fully utilize its resources to produce their
products. EPPSB’s factory is not running in full capacity because the company is lack
of capital to purchase new machinery. Semi-automated machines are not sufficient
enough to produce a quality and large amount of furniture products. Thus, they are
unable to increase their productivity due to not have an additional source of income to
purchase new machinery. Without modern technologies of machinery, EPPSB would
not be able to meet the HWI requirement over quality control and production operations.
Lastly, EPPSB is eager to penetrate the market themselves. EPPSB is
concentrating on producing two major items for export market which are children bunk
bed and dual function chair. As EPPSB only focuses on producing two major products,
this means that they are unable to concentrate on supply of semi-finished furniture
components. This action may lead to failure of arrangement of EPPSB for supplying
semi-finished furniture components to HWI factory.