management control system case analysis solution and analysis
Analog Devices, Incorporated:
Microelectromechanical Systems (MEMS)

From a conference room on the top floor of the four-story semiconductor manufacturing facility, Ray Stata briefly took in the view of the Massachusetts
Institute of Technology (MIT) campus. In particular, he noticed the building under construction that would soon bear his name. Asked how this particular honor felt,
Mr. Stata responded with a humble shrug. However, when asked about the
Microelectromechanical Systems (MEMS) business, Mr. Stata was willing to show considerable pride.
Mr. Stata was Chairman of Analog Devices, Incorporated (ADI), a company which he co-founded in 1965. MEMS was one division. He had invested a tremendous amount of personal attention and energy to the success of MEMS – and risked his reputation. In fact, without his vision and dedicated leadership, this ambitious, entrepreneurial effort would have collapsed under mounting losses several years earlier. During one three-year stretch, from 1997 to 2000, Mr. Stata had decided to simultaneously serve as Chairman of ADI and General Manager of the MEMS division in order to keep the venture alive.
In 2002, Mr. Stata regarded the MEMS business as a jewel. With worldwide technical supremacy that had been built over fifteen years, the business was profitable, and the long-term growth prospects appeared tremendous. Still, he readily acknowledged that many of his colleagues disagreed with his assessment that the business was an unqualified success.
One such colleague was current CEO Jerry Fishman. MEMS, though in its second profitable year, had only recovered a small fraction of its total accumulated operating losses since it commercialized its first product in 1992. Wasn’t the jury still