1. The performance goals of a business set by managers and determined by business strategy, which is refer to how a company creates value for customers and differentiate itself from competitors in the marketplace. Here, the earn-out structure focus on development of a new product, product superior to existing technologies these two are obviously the business strategy foe setting goals, and the last point is directly relate to growth in earning goals , so this structure focus on the right performance goals.
Scepter pharmaceutical should employ the skilled person in the technology area, especially the founder of ATH technology for future development or control.
2. By clearing explaining the ATH’S organization structure and goals to employees and also measure the performance of employees on each division, set the prize for employees give good ideas for innovation or who did excellent job. Also, give challenge work to appropriate employees let them fell important.
As employees want a high salary, stable work, and generous post-retirement benefits. So the performance goals for employees to focus on are the survival of the organization and liquidity, which is relate to the profit and return on earnings Collect the information about the transactions of a business make sure the inflow of resources must exceed the outflow and set od procedures and dictate hoe and by whom information should be recorded and verified-provide checks and balances to ensure that assets are safeguarded and information collected are accurate.
3. The best financial measure is to look at the profit of the ATH, as its technology was an lower expensed, so it is important to make sure that the increase in growth does not lower the profit, . profibility is the key indicator to reflect the business success.
1. The ATH did bad during the growth period, it focus too much on development that leads to an dramatically increase in revenue but the expenses increased, which leads to higher losses.
The strategy for the business was to focus on research and development
We should collect the information of expenses spend on development and the revenue, analysis the data, compare them with previous accounting periods see whether the additional amount spend on doing development is reasonable.
The additional measures used could be the control on doing the development, we should control on the authority of ATH manager, no override in organization. The development in new product should be agreed by all the managers in Scepter.
A good measure should balance the profit, growth and control. adding incremental revenues that do not generate profits can only lower the returns to stockholders. It is important that we constantly assess whether or not managers have struck the right balance between profit growth and control.
2. Control sales on high cost products on sales department employees and see whether the data collect are accurate. Limit the amount spend on the development by not authorities them power. Pay more attention on accounting department to get the information on timely basis and meet the relative employees on meeting to analysis the problem continuously.
3. The measurement of ATH’S financial performance is by looking at its net income, using this method we can see the origination was did bad in 1990&1991, with market share increased, but loss had mounted precipitously, I would expect it to build holding current market share but increase in profit, turn the loss position in to profit.
1. The managers at ATH comes up with a program called “ push to profitability” to reach goals for 1992, if the objective was accomplished, each employee would receive a cash bonus of 20% of their salary and all expenses paid trip to Hawaii for two, so employees work hard to increase sales and cut costs.
The control system...