MANAGEMENT CONTROL SYSTEM – RENDELL CASE
I. Case Summary This case rises from Fred Bevin concern about the organizational status of his divisional controller. This concern occurred because Mr. Bevins foresaw increasing difficulties with the relationship between the corporate controller and the divisional controllers as the company introduced more modern control techniques. The existing relationship hampered him to could urge the development and use of new technique rapidly. His interest in the controller organization at the Martex Company led him to consider the adoption of Martex method in the Rendell Company.
Problem Statement How Should Rendell resolve the current reporting relationship of the corporate controller and the divisional controllers to achieve goal congruence? Is application of the controller relationship of Martex concept to Rendel would give more advantages?
Discussion Regarding the case, there are some issues that should be answer in order to give clear perspective before determining the appropriate method to organize the relationship between the corporate controller and the divisional controllers. Some issues consist of: 1. What is the organizational philosophy of Martex with respect the controller function? What do you think of it? Should Rendell adopt this philosophy? Analysis: The organizational philosophy of Martex with respect to the controller function is that divisional controller report directly to the corporate controller for transparency of information on budget issues. This indicates that Martex uses a solid line on the organization chart. Obviously, there are pros and cons that relate with the application of this concept. Some advantages using the solid line concept consist of: Strengthen the division controller role as a part of company’s control system and prevent misleading information or the concealment of unfavorable information by division manager. Supporting corporate controller in the preparation of...
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