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Japanese Ramen Pty Ltd. operates a noodle shop at Macquarie Shopping Centre. Park, James and Tan are the directors, whereas Yuki is the managing...
Japanese Ramen Pty Ltd. operates a noodle shop at Macquarie Shopping Centre. Park, James and Tan are the directors, whereas Yuki is the managing director ofthe company. Park is not interested in the management of the company. He left school when he was 17 years old and has no further qualifications other than being an expert on preparing and serving Ramen noodles. Ramen is a type of thick wheat-flour noodle of Japanese cuisine, which is often served hot as a noodle soup in its simplest form, in a mildly flavoured broth called kakejiru, which is made of dashi, soy-sauce, and some other Japanese spices. Park is in charge ofthe noodle manufacturing process. His heritage or background is a dynamic mix of Japanese, Korean, Chinese, Thai and Malay. This diverse background has enabled Park to create signature dishes for the business outlet. James is a non-executive director ofthe company and was appointed to the Board only because he is Yuki's spouse. James has a long history of depression, mental instability and lack of self-esteem. Yuki as the managing director of the company supported James's wish to become a board member even though he offered little by way of expertise. James has never read any document or financial statements ofthe company that have been sent to him. He did not check the company's financial returns for any of the years before he was appointed and he has never read any reports since he was appointed. James's role as a director has always been ornamental, and he never questions or opposes any decision ofthe board. He never attends the board meetings. Park's signature dish, 20-hour beef broth, with thin sliced Angus sirloin and brisket, bean sprouts, fresh Thai basil, fresh chili and wholemeal noodles made Japanese Ramen Pty Ltd. trade profitable. However, this was six months ago when a competitor selling seaweed noodles emerged rapidly gained market share. The directors deal with this by devising expensive advertising campaigns and attempting to undercut their competitors' prices. Yuki thinks that Japanese Ramen Pty Ltd. should open up outlets in other major shopping centres. Yuki calls a board meeting and tells Park and Tan that opening an outlet in the most expensive and prestigious city shopping centre will solve all the company's problems. She says that they will have to act quickly as seaweed noodle competitor is also interested in that outlets. Yuki does not tell Park and Tan that he has not carried out a feasibility study to the financial implications ofthis proposed expansion oftheir business. Javier, the accountant for the company, advises Yuki, Park and Tan that they have to refrain from their undercutting practices because their cash flow position is in peril. The directors tell Javier not to interfere in managerial decisions, but just to make sure that there is money to pay the employees' entitlements. 6 Tan is a professional auditor and also director of two other companies. He has had doubt about the entire proposal and felt that they are being rushed into making a decision without being given time to consider alternatives. Park, however, agrees to Yuki's plan without really understanding the financial implications. Within six months of opening the new outlet, it becomes apparent that the company was not in a financial position to have taken such a step and a proper feasibility study would have shown this. The company is unable to pay its debts, and a liquidator has been appointed. The liquidator is anxious to find sufficient funds to pay employees and creditors.
