What control mechanism he would be able to implement to protect his business and to prevent a recurrence of the current crisis? | 5| 3| Should he continue to run this business but take over the management from Jamel?Or was he better off selling the business to Robert? | 6| 4| References| 7| * SUMMARY The case is about a petrol station called Spetrol which set up in 1998 and located along the BPK Highway.
Spetrol is owned by Mat John, the owner of Jon Enterprise and it was recognized as one of the huge players in domestic petroleum products industry. The day-to-day running of the petrol station, however, was left to his nephew, Jamel and Mat Jon did not participate in the business operation. Initially, the business was doing reasonably well. Nevertheless, the business was performing gradually bad and the profit was declining significantly.This might primarily attributed to the emergence of new competition; two other petrol stations were operated at the same location. At the same time, an old colleague of Mat Jon, Robert Leung has made an offer to acquire and buy his business regardless of knowing the unfavorable condition the station was stumbling.
As a result, he asked Jamel to prepare him the financial performance and he had to analyze it carefully before considering accepting Robert’s offer. After he made the assessment on the financial position of the business for a three recent years, Mat Jon discovered a few abnormal in the reports Jamel had given him.He met Jamel and started giving a lot of questions and his dissatisfaction towards his nephew. However, Jamel was not confidently answering the questions and trying to hide some facts of what actually happened. Mat Jon then confronted Sudin, the supervisor of the pump station to get an explanation about the entire midst, and Sudin informed him of a complaint made by a regular customer, saying that he was scammed by a pump attendant and no action was taken.
Mat Jon then analyze the financial position for helping him in making a decision whether to sell off the pump station or not.Mat Jon contacted his friend, Fuad, an accountant, to assist him with the analysis and decision making. * PROTAGONIST / DECISION MAKER AND PROBLEM FACED The protagonist in this case reflected to Mr. Mat John as Spetrol owner which also as the one who make the decision. He is the one who responsible due to accidentally decision making in solving two main problems which might bring so many causes to the company’s future decision and performance.
He is also the one who is responsible to solve the issue the station is facing.It is either to: * Proceed or continue to run the business by improvising current practice and management. * Assist Spetrol in all ways possible to uncover the truth behind the firm’s questionable accounting practices and then sell the business to Robert. * MAJOR ISSUE IN THE CASE The major issue in this case is regarding the control within the business which comprises of mismanagement and absence of proper authorization involving business operations in the business. The solutions available would be for Mat Jon to improvise the business management and implement proper control mechanism in operating business activities. PROBLEMS Mismanagement occurred in the business because of not using the correct method or probably because of lack of expertise because Mat Jon himself did not have any expertise in accounting.
Absence of proper authorization on the other hand is about there are no evidence of appropriate mechanism for certain business transactions. This led to problem where the station’s attendant was swindling one of their loyal customers. * CASE ANALYSIS (THE MYSTERY OF THE DISAPPEARING OIL):- 1. Mat Jon wondered if it was possible that Jamel was short-changing him? Yes, there was possible ….
. 2.What control mechanism he would be able to implement to protect his business and to prevent a recurrence of the current crisis? Nowadays, control mechanism has been an important part of the successful business model to protect created values and generate profits. Refer back to the main issue which is regarding the control within the business operations which comprises of mismanagement, lack of competent from Mat Jon and absence of proper authorization. The solutions available would be for Mat Jon to improvise the business management and activities, plus re-organise the organizational chart structure.Firstly, in terms of improvise operational business, Mat John as the Managing Director should responsible to monitor financial reporting and review adequacy of internal control on regular and continuing basis. For instance, regard to damaging petrol pump machine case which give bad impact to the quality of service provided and it was due to human error as a result of lack of control. So, here the alternative would be is all transactions and inventory balance should be recorded consistently, clearly and computerized.
The segregation of duties is also important in a company’s management as to avoid any task redundancy, fraud, negligence, power abuse, inefficiency and work delay. It is to ensure the management works efficiently and effectively, For example, Mat Jon should segregate Jamel’s workloads to other personnel according to the relevant job descriptions. So it will decrease the risk of fraud and inconsistency in performing task.
Secondly, the organisational chart should be properly drawn with distinct functional departments to show distinct job description for each department and several important positions should be added to ensure ffective and efficient control. Furthermore, the position and function should be clarified clearly. Here the re-structure chart diagram :- . Review by SUPERVISOR Sudin Diagram 1 :Organizational Restructure for Spetrol 3.
Should he continue to run this business but take over the management from Jamel? Or was he better off selling the business to Robert?REFERENCES 1. Messier/Glover/Prawitt/Margaret Boh, Auditing and Assurance Services in Malaysia, McGraw-Hill Education (Malaysia), 2007. 2. http://www. scheidt-bachmann. com/uploads/media/Brochure_-_petrol_station_systems.
pdf 3. Case Studies for integrated case study course ,MIA