Case 3-3: Rendell Company , Case Analysis on Management Control System

1455 Words Feb 6th, 2012 6 Pages
CASE CONTEXT

Rendell Company is experiencing some difficulties in implementing its modern control techniques due to the irking relationship between the divisional controller and the corporate controller. This is mainly because the loyalty of the divisional controllers rest with the divisional managers. Because of this current set-up, Mr Bevins believes that information regarding the divisions’ performance are not reported accurately and biased. .Mr. Bevins is interested if applying a control organization structure similar to Martex will resolve the conflict between the role of the corporate controllers and the divisional controllers.

STATEMENT OF THE PROBLEM

Given the status of goal incongruence between the Corporate Controller and the
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- DC is more empowered and ‘work with’ and not ‘work under’ the Division Manager.
- Change in the organizational structure may be difficult to implement and may be out of jurisdiction of the Corporate Controller. Such change needs approval by the top management and may take a long time.

CONCLUSIONS & RECOMMENDATIONS

Rendell should retain its current control structure. Making drastic changes on the how control system is setup might be more of a disadvantage. Also, the current setup in Rendell Company works best for their organizational structure. They need their business units to be intact and work as a team since the goal is to have high profitability for their respective units. Changing the setup would make the divisional controller somewhat an outsider from the team, and may create further conflicts or problems within the unit.

Rendell Company is better off adapting dotted line controller relationships due to the following justifications:
* A structure similar to Martex might not fit with Rendell’s organizational structure. Such change may jeopardize the established line of authority.
* Changing the control structure may also cause loyalty issues because DMs might feel by-passed if Division…

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