CASE STUDY

Mom & Pop Food Company Ltd (MPFL), established in 1990, is a food processing
company with annual turnover of Tk 1,650 million. It has a factory near Dhaka
with its own sales outlets and distributors. Up to 2010 it has enjoyed
profitable performance with exception of 1998-99 when it suffered its first
loss. But it came back on track under the effective leadership of its CEO of
that time, who was fondly known by his initials KK. After KKs departure in
September 2010, MPFL started to flounder. Last two years it registered losses
of Tk 9 million and Tk 83 million respectively. Year prior to that it had a
paltry profit of only Tk 0.20 million. The private Shareholders are very
unhappy, because during KKs time the net income CAGR was about 20%.

There is fierce competition in market. There is also increasing customer

dissatisfaction with the product and services. Recently in one of its 10
outlets there was a devastating fire. In last 14 months 23 people, both
managers and floor workers among them, left the company. Some joined the
competition. From exit interviews it came out that there was very poor
employee engagement. Also the exiting employee made comments that nepotism is
rampant.

At last months Board meeting the CFO presented an alarming picture, the
highlights:

The YTD profitability dipped further, there would be sever cash crunch
There is rapid erosion on companys net worth. Sales is decreasing.
The production costs are 10% higher than competition.
Finance cost is high
The OPEX has become 14% of Nets Sales, with rather high employee and
admin expense.
Cost of supplies are increasing.

The Board is also pondering to bring a new CEO to improve the situation.
Already a CEO left after being there only one and half years. However, a
slight majority of the Board members (6 vs 4) were willing to give the current
CEO some more time. After all he is on the job for only nine months.

The CEO knew his predicament. In his corner office overlooking a posh Dhaka
lake he was thinking hard. He has little time to prove himself and save the
company.
He was thinking what he can do now? He did a quick SWOT:

Strength Weakness
Committed employees. Over 40% have Vary traditional management
been with the company for more than mindset.
10 years. They saw good time and Employee productivity is low.
still believe it would return. High production cost.
Caring culture. Quality problem.
Lot of saleable idle assets, Poor brand image.
particularly land. Old machinery.
Solid distribution network. Nepotism & office politics.
50% outlets are profitable on their
own before common overheads are
added.
Opportunity Threats
Market growing at 17% pa. Many local players including some
Huge scope for exports. global players.
Niche markets are evolving, Power shortage.
opportunity for high Gross Margin. Supply irregularities.
Customers are becoming more quality
and price conscious, they have more
choices today

Activity/Question
1. Suggest critical performance measures for the new CEO. Include both lag and
lead indicators.

2. Write a mail to the CEO recommending ways to significantly improve HR

effectiveness of MPFL.