Reference no: EM132556359

GMPD is headed by Reynold Gambit who happens to hold both positions of the Chief Executive Officer (CEO) and Chairman of the board of directors while holding a significant shareholding of the company amounting 51%. The Chief Financial Officer (CFO) of GMPD, Johan Shah is not happy with Reynold's direct control and interference on GMPD's financial affairs. Johan is also concerned with the current selection process of potential contractors for GMPD's development projects, which is not based on merit. This is further aggravated by Reynold's unscrupulous act of instructing withdrawal of funds for unreasonable reasons to cater to his and Gambit family members' luxury lifestyle. Reynold had also gladly hired a few Gambit family members to hold managerial positions in GMPD even though they do not have the required credentials for the posts.

As the CFO of GMPD, Johan has been very vocal and determined to improve the company's cash flow position and turnaround the company's performance. However, he is fully aware that despite having the right turnaround strategies and plans to promote effective internal control, Reynold remains the fundamental stumbling block to the accomplishment of his plans.

Question 1: Discuss three (3) potential reasons why Johan believes Reynold is the fundamental stumbling block or major hurdle to turnaround the company.