Case 3-3: Rendell Company , Case Analysis on Management Control System
CASE CONTEXT
Rendell Company is experiencing some difficulties in implementing its modern control techniques due to the irking relationship between the divisional controller and the corporate controller. This is mainly because the loyalty of the divisional controllers rest with the divisional managers. Because of this current set-up, Mr Bevins believes that information regarding the divisions’ performance are not reported accurately and biased. .Mr. Bevins is interested if applying a control organization structure similar to Martex will resolve the conflict between the role of the corporate controllers and the divisional controllers.
STATEMENT OF THE PROBLEM
Given the status of goal incongruence between the Corporate Controller and the Division Manager; and the Division Controller caught between, should Rendell Company change its control organization structure similar to Martex?
FRAMEWORK OF ANALYSIS * Analysis on Rendell and Goal Congruence * Analysis of Rendell’s current control structure (Pros & Cons) * Analysis on Martex’s control structure (Pros & Cons) * Conclusion & Recommendations * Case Questions
Rendell Company
Rendell Company has seven divisions, each responsible for the manufacturing and marketing their distinct product line with little interdivisional business. The control structure of the company was organized such that Division Controllers (DC) report directly to his Division Manager (DM).
On Goal Incongruence
Because of the company’s control structure, there is conflict of interest between the roles of the Corporate Controller and the Division Managers and conflict on the working relationship between the Division Controllers and the Corporate Controller.
The goal of the corporate controller is to optimize the use of funds (minimize budget allocation and maximize use) for profitability.
The goal of the divisional managers is to receive a bigger budget for his division by reporting numbers that reflect
Rendell Company is experiencing some difficulties in implementing its modern control techniques due to the irking relationship between the divisional controller and the corporate controller. This is mainly because the loyalty of the divisional controllers rest with the divisional managers. Because of this current set-up, Mr Bevins believes that information regarding the divisions’ performance are not reported accurately and biased. .Mr. Bevins is interested if applying a control organization structure similar to Martex will resolve the conflict between the role of the corporate controllers and the divisional controllers.
STATEMENT OF THE PROBLEM
Given the status of goal incongruence between the Corporate Controller and the Division Manager; and the Division Controller caught between, should Rendell Company change its control organization structure similar to Martex?
FRAMEWORK OF ANALYSIS * Analysis on Rendell and Goal Congruence * Analysis of Rendell’s current control structure (Pros & Cons) * Analysis on Martex’s control structure (Pros & Cons) * Conclusion & Recommendations * Case Questions
Rendell Company
Rendell Company has seven divisions, each responsible for the manufacturing and marketing their distinct product line with little interdivisional business. The control structure of the company was organized such that Division Controllers (DC) report directly to his Division Manager (DM).
On Goal Incongruence
Because of the company’s control structure, there is conflict of interest between the roles of the Corporate Controller and the Division Managers and conflict on the working relationship between the Division Controllers and the Corporate Controller.
The goal of the corporate controller is to optimize the use of funds (minimize budget allocation and maximize use) for profitability.
The goal of the divisional managers is to receive a bigger budget for his division by reporting numbers that reflect