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Transcription of this question: 5.Sam is still impatient and keen to grow the business. He is becoming increasingly frustratedby problems with suppliers, particularly AB Clothing (ABC). Frequently, orders are late andwrong, and quality is becoming a major problem. Sam has heard rumours of disagreementsamongst ABCs board members and discontent from major shareholders. ABC’s share pricehas fallen 25% in the last month. Productivity has fallen and strikes have been threatened.Recently, several press reports linked ABC to using child labour and suggested that thecompany did not always use organic materials for its products. Sam is wondering whetherto take over ABC He is sure that many of the problems at ABC could be resolved and thatABC would become, once again, a reliable supplier.Sam has put together some information. Figure 2 relates to AFA and shows a summary ofissues and additional information. Tables 1 and 2 provide data on ABC.Figure 2: Fishbone diagram Of the current situation at AFAGrowthOpportunitieslimited atthe momentSam still hasambitionsDifficult toQuality issueshave arisenQualityManagementDisagreementsLimited trainingof managersDifferent focus ofindividual managersUnreliabilityConfusionLack ofmanagementcontrolSuppliersOrganizationHas grownUnchangedstructureUnresponsiveLack of trainingfor employeesNot been atop priorityPoor controlof employeesPossibility oflean productionStill makingsignificant profiltsEfficiencyTable I: Accounts for ABC for the years ending 2017 and 2018Year endingDebt (Sm)Equity (3m)Fixed assets ($m)Current assets (Sm)Current liabilities (3m)Net profit (Sm)Share price ($)Number of shares (millions)Dec 201712320221.15Dec 20181532550150.86Table 2: Selected marketing information for ABCYearMarket growth for fair trade clothingMarket shareNumber of competitorsMarketing budget (Sm)Sales (Sm)20175%20.3520188%50.56.5Forecast201910%200.25.9using the case study, additional information on pages 4 to 7 and appropriate business tools,recommend whether AFA should take over ABC.120]

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