Because 35% of sales were paid at 28th of the month instead of the 25th, and with the 30
days credit system implemented by the company, bills of the current month were excluded
and pushed to the next one. In addition to that, most of customers were paying by bank
acceptance (their issue date is after 3 or 4 months) and 30 days credit term. Shanghai
Interiors had to accept those Bank acceptance notes in order to get paid. But the problem
was that the company wasnt monitoring or updating customers information in the billing
system they were susceptible to neglect existing terms and any eventual customers
unfavorable payment history.
Another aspect of failure was in the managing system; Middle managers were leading other
middle managers which caused a kind of frustration among employees. Interiors acquisition
of ADP was seen to be a downgrade and turnovers increased by 18%. Also, the annual
increase of salary didnt exceed 8% comparing with the average of 10% of industry.
Lack of direction
Lack of hard work
No communication
No monitoring/
between R&D
updating data about
department and sales
customers payment
department and
and credit history
customers
Customers couldnt
transmit their
feedbacks
Middle manager
leading many other
middle managers
Recommendations:
Shanghai Interior must recruit more qualified hand labor in order to resolve problems
related to manipulating production machines and also, the company must insist on training
to western suppliers in term of quality requirement and technical capability.
In a second hand, more communication effort must be done to guaranty a good feedback
transfer between R&D department and sales department and customers appreciation about
products. In addition to that, the company must implement a monitoring and updating
system able to identify unfavorable customers payment and record payments history.
Shanghai Interior must restructure its top managing strategy, and should put on top
management general managers and directors instead of middle managers.