China Dolls

ACC 4291

INTEGRATED CASE STUDY

SUMMARY ON CASE STUDIES

CHICKEN RUN

SECTION 2

LECTURER:

PROF. SHAMSUL NAHAR ABDULLAH

GROUP MEMBERS:

MUHAMMAD SYAZWAN BIN SUHAIMI 0812845

NUR SYAZANA BINTI JAMEL 0710448

KHAIRUL ZAHRA BINTI ISMAIL 0714542

FATIMATUL ZURIAH BINTI ZUKIFLY 0726988

DATE: 14th NOVEMBER 2011

A SYNOPSIS

This case showed about a problem faced by Haute Couture Fashions Bhd (HCF) in early 2009 where two of HCF’s major clients had informed to pull out contracts with HCF and looks forwards China as a supplier since the cost of productions in China is lower than other countries. In order to prevent from losing its major clients, HCF’s management team should come out with possible options which are weather to completely shut down operation in Malaysia and Thailand and move their operation to China or move to China to manufacture clothes for HCF’s current customers at competitive prices while developing its own label by manufacturing out of Malaysia and Thailand.

A PROTAGONIST

Jeffrey Cheong, the Managing Director of Haute Couture Fashions Bhd (HCF) from early 2009 upon retirement of Peter Tan is a protagonist in this case.

PROBLEM

One of the problems faced by HCF is the foreign market volatility. When Malaysia faced financial crisis on 1997, HCF is unable to predict the cost that HCF had to purchase from the fashion houses. Therefore, HCF managed to only sell its garments at very low margin and loss has incurred for the first time. Secondly, the operating cost is quite high to especially the labour cost. HCF faced labour shortage in Malaysia as many labours were moving to the cities for better prospects. Next, the contract manufacturing structure itself which seems a bit bias as HCF is too dependent on the European fashion houses on its manufacturing process. Any variation outside the contract stipulation would have to be borne by HCF itself. There are also items specified in the contract are not really suitable as HCF...