Vershire
CASE SUMARRY
Vershire Company was a diversified packaging company with several major divisions. In their organization chart, reporting to the divisional general manager were two line managers, vice president in charge of manufacturing and marketing division. These vice presidents headed all division’s activities in their respective functional area.
The Aluminum Can – which was one of the largest manufacturers of aluminum beverage cans in the United States – division’s revenue was growing slightly faster than the industry average. However, most of its customers had several package suppliers to control the quality and price. To effectively compete with other suppliers and maximums its market share, company had implemented a rigid budgetary control system for both production and marketing departments.
PROBLEM STATEMENT
1. Outline the strengths and weaknesses of Vershire Company’s planning and control system.
2. Trace the profit budgeting process at Vershire, starting in May and ending with the Board of Directors meeting in December. Be prepared to describe the activities that took place at each step of the process and present the rational of each.
3. Should the plant managers be held responsible for profits ? Explain !
4. How do you assess the performance evaluation system contained in exhibit 2 and 3 ?
5. On balance, would you re–design the management control structure at Vershire Company ? Explain !
ANALYSIS
1. Strengths and Weaknesses of Vershire Company’s Planning and Control System.
a. Planning System
i. Strengths :
• The market condition and capital expenditures predictions required in formulating the sales budget.
• Forecasting is conducted at the corporate level and then sent to the division manager for fine-tuning.
• Company controllers visit the factory each half a day before the final submission of the budget. ii. Weaknesses :
• The initial sales forecast uses assumptions which are entirely derived from corporate headquarters.
• The
Vershire Company was a diversified packaging company with several major divisions. In their organization chart, reporting to the divisional general manager were two line managers, vice president in charge of manufacturing and marketing division. These vice presidents headed all division’s activities in their respective functional area.
The Aluminum Can – which was one of the largest manufacturers of aluminum beverage cans in the United States – division’s revenue was growing slightly faster than the industry average. However, most of its customers had several package suppliers to control the quality and price. To effectively compete with other suppliers and maximums its market share, company had implemented a rigid budgetary control system for both production and marketing departments.
PROBLEM STATEMENT
1. Outline the strengths and weaknesses of Vershire Company’s planning and control system.
2. Trace the profit budgeting process at Vershire, starting in May and ending with the Board of Directors meeting in December. Be prepared to describe the activities that took place at each step of the process and present the rational of each.
3. Should the plant managers be held responsible for profits ? Explain !
4. How do you assess the performance evaluation system contained in exhibit 2 and 3 ?
5. On balance, would you re–design the management control structure at Vershire Company ? Explain !
ANALYSIS
1. Strengths and Weaknesses of Vershire Company’s Planning and Control System.
a. Planning System
i. Strengths :
• The market condition and capital expenditures predictions required in formulating the sales budget.
• Forecasting is conducted at the corporate level and then sent to the division manager for fine-tuning.
• Company controllers visit the factory each half a day before the final submission of the budget. ii. Weaknesses :
• The initial sales forecast uses assumptions which are entirely derived from corporate headquarters.
• The