...Enager Industries, Inc. | Case on Management Control System | | | | | | | Case Context: Enager Industries, Inc. was a relatively young company, which had grown rapidly to its 1993 sales level of over $222 million. (See Exhibits 1 and 2 for financial data for 1992 & 1993). The company has three divisions which were treated as independent companies because of their differing nature of activities. The corporate office of Enager consists only of few managers and staff. The function of the corporate unit is to coordinate the activities of the three divisions. One aspect of this coordination was to that all new project proposals requiring investment in excess of $1.5M had to be reviewed by CFO. One of these proposals was submitted by Ms. Sarah McNeil, which was rejected by the CFO, Mr. Henry Hubbard. (See Exhibit 3 for the details of Ms. McNeil’s proposal). Enager had three divisions: * Consumer Products The oldest of the three divisions, designs & manufactures a line of house ware items, primarily for use in the kitchen. * Industrial Products Builds customized machine tools, a typical job takes months to complete. * Professional Services The newest of the three divisions, had been added to Enager by acquiring a large firm that provided land planning, landscape architecture, structural architecture, and consulting engineering services. Statement of the Problem: The problem occurred when the president was unsatisfied with the ROA (Return...
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...Portfolio Management Control SystemsHoofdstuk 11: Performance Measurement | | Naam :Docent : Klas : | HOOFDSTUK 11: PRESTATIEMETING Gebruikte informatie bij Control Managers: Zijn verantwoordelijk voor de effectiviteit en efficiency van het werk. Managers beheersen niet de kosten, maar beïnvloeden activiteiten van mensen die verantwoordelijk zijn voor de kosten. Managementactviteiten zijn gebaseerd op: 1) Informele informatie Observatie, face-to-face, vergaderingen en management by walking around 2) Operationele (output) informatie 3) Budgetrapportages: verschil in verwachtingen, plafonds en bodems. 4) Non financials Key variables, strategische factoren, key en kritische succesfactoren, key performance indicators Prestatiemetingsystemen Hoofd doel van prestatiemeting is om een hulpmiddel te zijn om de strategie te implementeren. Als de KSF’s zijn verbeterd dan is blijkbaar de strategie geïmplementeerd. Balanced Scorecard Voorbeeld: balanced scorecard, mixt financiële met niet-financiële informatie. Functie van balanced scorecard: 1) goal congruence (alle neuzen één kant op) 2) communicatiemiddel, interne communicatie verbetert 3) bepaling van organisatiedoelen 4) terugkoppeling vanuit realisatie naar strategie Grootste waarde: ermee bezig zijn, over nadenken en communiceren Gevaar: immuun worden, te gemakkelijk aan de kant schuiven Opstellen van de balanced scorecard, een set maatstavenkiezen: ...
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...into two major components-cost accounting and management accounting and control. Management 3130 deals with cost accounting and this course, Management 3131 deals with management accounting and control. Management control is the process by which managers influence other members of the organization to implement the organization’s strategies. As such, it deals with people and behaviour and is often referred to as behavioural accounting. The course shall consist of two types of learning situations. We will use cases from the Anthony and Govindarajan text to develop critical thinking skills, analytical skills, as well as oral and written communication skills. In addition, there are also many technical skills that are used in the management control systems we establish. I want you to be able to analyze a business case but you will need to develop the technical expertise required to do this. It is important that you come to class prepared to participate in the discussions of the case and reading material. When we are...
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...Chapter-11 Case Analysis Case 11-1 Analog Devices, Inc. (A) Time Frame: 1986-90 Q1A. What was Analog Devices’ strategy in the second half of the 1980s? Answer: Problems faced in mid 80’s Growing inventory Increase in defect level of product ADI’s strategy in 2nd half of 80’s Emphasis on quality QIP: Half-life by implementing TQM Scorecard. TQM OUTCOME Parameter Measured improvement On time delivery Increased from 70% to 96% Cycle time Decreased from 15 weeks to 8 weeks Average yield Increased from 26% to 51% Defects in products shipped Decreased from 500PPM to 50 PPM. Q2A. Critically evaluate the “half-life” concept, in light of Analog Devices’ strategy. What are the potential benefits and the limitations of the half-life concept? How would a company develop the half-life for different process? How is the half-life concept different from the experience curve concept? Answer: Benefits of half – life: Limitations of half life concept Difficult to determine half life as it is dependent on technical and organizational complexities Calculated based on historical data which may not give a very clear picture HALF-LIFE AS A TOOL BENEFIT Goal setting tool Rational determination of future performance Diagnostic tool Benchmarking improvement efforts against best practice for processes of similar complexity Measure of organizational learning To make comparisons with alternative methodologies. IMPLEMENTATION OF HALF-LIFE Half Life Learning Curve Rate of decline of defect...
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