Vershire Case Study
Vershire Case Study
Case Background
Vershire Company was a diversified packaging industry organized with several divisions focused on different product lines. One of these is the Aluminum Can Division, which by far is one of the largest manufacturers of aluminum beverage cans in the United States. The company has a decentralized culture, with the division general managers exercising considerable autonomy in decision-making. Under a general manager were two line managers responsible for production and marketing functions.
Over the years, the Aluminum Can Division had built plants scattered throughout the country. Each plant is responsible to serve a geographical area, both for large and small-scale customers. The industry is very competitive, as each manufacturer employs the same technology and everyone was viewed by customers to have the same product quality as anyone in the industry. Thus, customers can readily shift from one supplier to another in cases that delivery schedules and product qualities were not met.
Vershire employs a long-term budgetary control system. Corporate sales budgets are prepared both in a top-down and bottom-up approach. These sales budgets are then translated to sales target per production plants and became the basis of target profits for each plant. Upon the end of the period, managers are then evaluated based on these target profits, even when budgeted sales are not met. Also, other performance measures are at place that is inconsistent and do not derived meaningful results.
Although Vershire has been successful especially in the Aluminum Can division, the changing environment and industry conditions may result to necessary changes to company policies and procedures.
Problem Statement
How can Vershire maintain its profitability and current position in the industry? How can the company delegate responsibilities to appropriate personnel to best serve the interest of both the company and the welfare of its people?
Case Background
Vershire Company was a diversified packaging industry organized with several divisions focused on different product lines. One of these is the Aluminum Can Division, which by far is one of the largest manufacturers of aluminum beverage cans in the United States. The company has a decentralized culture, with the division general managers exercising considerable autonomy in decision-making. Under a general manager were two line managers responsible for production and marketing functions.
Over the years, the Aluminum Can Division had built plants scattered throughout the country. Each plant is responsible to serve a geographical area, both for large and small-scale customers. The industry is very competitive, as each manufacturer employs the same technology and everyone was viewed by customers to have the same product quality as anyone in the industry. Thus, customers can readily shift from one supplier to another in cases that delivery schedules and product qualities were not met.
Vershire employs a long-term budgetary control system. Corporate sales budgets are prepared both in a top-down and bottom-up approach. These sales budgets are then translated to sales target per production plants and became the basis of target profits for each plant. Upon the end of the period, managers are then evaluated based on these target profits, even when budgeted sales are not met. Also, other performance measures are at place that is inconsistent and do not derived meaningful results.
Although Vershire has been successful especially in the Aluminum Can division, the changing environment and industry conditions may result to necessary changes to company policies and procedures.
Problem Statement
How can Vershire maintain its profitability and current position in the industry? How can the company delegate responsibilities to appropriate personnel to best serve the interest of both the company and the welfare of its people?